New online network for neighbors gains momentum

Los Angeles TimesFebruary 17, 2013 

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Nirav Tolia has found an infusion of capital for his San Francisco-based startup, Nextdoor. The site lets users create social networks specific to their neighborhoods, then swap safety tips, troll for merchant recommendations or exchange second-hand goods.

DAI SUGANO — 2011 MCT FILE PHOTO

— Nirav Tolia is trying to build the next big social network – block by block.

Nextdoor is like Facebook but for a neighborhood: a private network to find a baby sitter, borrow a cup of sugar, organize a block party or spread word of a break-in.

It’s not the first time a startup has tried to network neighbors, but Nextdoor is one of the first to gain momentum. So far, more than 8,000 neighborhoods across the country have signed up for the service. That’s double the number of just six months ago.

Now Nextdoor is getting a big vote of confidence from David Sze, an early Facebook and LinkedIn investor. The San Francisco company announced Tuesday that Sze is one of the venture capitalists who raised $21.6 million for Nextdoor in its most recent round of funding.

“Every social network on Earth pitches me, and I say no to nearly every single one of them,” said Sze, who wrote a check for $15 million and took a seat on Nextdoor’s board. “I put the largest check I have ever written on the table to work with these guys. I think this could be another one of those seminal networks.”

Tolia, who launched the service in 2011, says Nextdoor is targeting the “hyperlocal” market.

For years, Internet companies – including AOL, Facebook, Google and Yahoo – have been homing in on these small communities to capture a piece of the local online advertising action, with limited success.

People make most purchases locally, and the Internet and mobile devices are increasingly influential in those purchase decisions, said Greg Sterling, a senior analyst with Opus Research. Market research firm Borrell Associates predicts that U.S. local digital advertising will reach $24.5 billion this year for a 25 percent share of total local ad budgets.

“It is a huge market, and company after company after company has gone after it with mixed success,” Sterling said.

Yelp and Craigslist are two of the winners. But most companies struggle to attract users and advertisers, and many startups fail.

One of the most ambitious hyperlocal sites, EveryBlock.com – owned by MSNBC.com – was popular with civic-minded users but suffered such heavy losses that it announced it was shutting down last week. In December, OhSoWe, another neighborhood social networking service started by OpenTable founder Chuck Templeton, also shut down.

Analysts say Nextdoor, which is spreading mostly by word of mouth, will be buffeted by many of the same challenges.

“I don’t know if Nextdoor will succeed, but the odds are not in their favor,” said Gordon Borrell, chief executive of Borrell Associates.

Tolia, one of the early employees at Yahoo, is betting that he can beat the odds. He founded product review site Epinions in 1990 and merged it with Shopping.com in 2003. In 2005, eBay bought the combined company for $620 million.

Tolia’s Nextdoor team originally worked on an online sports almanac called Fanbase, but scrapped the idea. Tolia, who hails from Odessa, Texas, the small oil town depicted in “Friday Night Lights,” hit on an idea that tapped into his own nostalgia for that sense of tight-knit community: replacing online bulletin boards and email lists with a social network for neighbors.

In July, Nextdoor raised $18.6 million at a $100 million valuation. Tolia would not say what valuation investors assigned to the most recent round of funding.

Tolia’s social network has helped him fuel Nextdoor’s growth. He organizes a supper club for Silicon Valley hotshots. Apple’s Jony Ive, Twitter’s Dick Costolo and Yahoo’s Marissa Mayer were among the guests last month.

Tolia says Nextdoor, which is aiming for tens of thousands of neighborhoods and international expansion, is “100 percent focused on user adoption.” Eventually Nextdoor will explore ways for advertisers to target special offers to the communities they serve, he said.

“Where you live and who lives around you is an essential part of your life. Yet there is no easy way to keep track of everything that happens in your local community, and it’s even more difficult to stay connected to the people in your local community,” Tolia said. “Nextdoor can change all that. Nextdoor can be the service that connects you to everyone and everything that matters around where you live.”

The concept intrigues social scientists who study neighborhoods. In creating a social network based on real-world proximity, Nextdoor is helping neighborhoods become more connected, not so that neighbors can be friends but so they can build ties and trust, said Robert Sampson, a Harvard University sociology professor.

“Nextdoor provides the potential for interacting in a way that goes beyond the more traditional, old-fashioned kind of neighbor-to-neighbor connection,” Sampson said.

Local partners

Nextdoor says that each day more than 30 neighborhoods of 10 people or more join the service. Members share basic information about themselves, post updates and comments and send messages. All of the conversations are archived, so it’s easy to search for a recommendation for a gardener or electrician.

The company has created virtual neighborhood watches through partnerships with city governments and police departments. And it has rolled out a new “Nearby Neighborhoods” feature to enable members to share information with surrounding neighborhoods.

Communities that signed up for Nextdoor said they were drawn to the idea of having a private, secure way of networking with neighbors.

Josh Kline, chief strategy officer of Final Draft, a company that makes screenwriting software, organized a Nextdoor group for Los Angeles’s Laurel Canyon neighborhood in May.

He says Nextdoor has proved useful for sharing news about restaurant openings and school events, chatting about zoning issues or checking out neighbor’s recommendations for a contractor.

But Kline says he has had trouble weaning his neighbors off a popular email distribution list there. Residents still rely on it for breaking news in their neighborhood. People join Nextdoor all the time, Kline said, but fewer than 200 households belong.

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