Nextdoor’s Crossroads: Can Community Scale into Sustainable Growth?
For 15 years, Nextdoor carved a unique niche in the social media landscape. While others chased global reach, Nextdoor focused on hyperlocal communities, becoming the go-to platform for neighborhood news, lost pets, and local recommendations. This strategy initially proved successful, establishing Nextdoor as a dominant player in the neighborhood conversation space.
However, the company eventually hit a growth plateau. User engagement beyond transactional uses declined, and the platform struggled with issues like misinformation, racism, and petty disputes, driving some users away.
Now, founder Nirav Tolia is back at the helm, tasked with revitalizing the company he led until 2018. Ousted by the board over a potential acquisition disagreement, Tolia returned in 2023 after Nextdoor’s public debut via SPAC at a $4.3 billion valuation faltered, with flattening growth and waning advertiser interest. The company’s market cap now sits around $1 billion.
Tolia’s return is driven by more than just a desire to prove himself. As Nextdoor’s largest individual shareholder, with significant financial stake, he’s deeply invested in the company’s success. He claims that he and Benchmark, the largest institutional shareholder, haven’t sold any shares since the IPO.
Tolia expresses confidence in his turnaround strategy, citing progress like the reported 45.9 million weekly active users as of September’s end, a 13% increase from the same period in 2023. Nextdoor’s valuable proprietary data, which Tolia affirms they won’t sell like Reddit, is another key asset.
Despite these positive signs, Nextdoor faces significant challenges. Its relatively small size limits its options, including attracting larger institutional investors. Key questions remain: How much time does Nextdoor have for this turnaround? Would it be better off as a private company?
These are some of the topics Tolia discussed in a recent interview, alongside his relationship with longtime board member Bill Gurley of Benchmark.
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