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I'd like to understand Nextdoors reach and engagement. What is their general business strategy? whats their market penetration (how many users/homeowners)? how have they grown since launch? What is their growth strategy? Pretty much a full end to end competitive analysis.
Hello, and thanks for asking Wonder to provide an analysis of the social network NextDoor. In summary, NextDoor is a private network (web and app-based) for neighbors & communities that has experienced major growth since its founding in 2010. It's currently being used by over 160,000 neighborhoods around the globe. Until this year, NextDoor didn't earn a penny of income and was funded entirely by investors, but they've recently introduced sponsored ads.
The best source I found in seeking info on NextDoor was actually the company's own website, which includes a robust FAQ section and lots of information on all aspects of the company and its service. This interview with NextDoor's founder and CEO, Nirav Tolia, is also very insightful. See below for a deep dive of my findings.
OVERVIEW
NextDoor is a private, free social network for neighbors and communities. It allows users to connect with those living near them and includes features unique to the service such as requiring users to sign up with their real names and to verify their address, thus confirming they live in the neighborhood of the network they are joining. Neighborhoods can contain anywhere from 100-3,000 households and the boundaries are generally determined by NextDoor (although users can request to be assigned to a different neighborhood if they feel the boundaries aren't correct.)
Users can use the network (both app-based and online) to do things such as advertising local events, asking for recommendations, sharing info on lost pets, offering items for sale/free, and more. Currently, around 26% of NextDoor's traffic is recommendation-based, which accounts for about 4 million messages a day.
NextDoor was founded in 2010 (launched in 2011,) funded entirely by venture capitalists and angel investors. Per their website, NextDoor is currently available in the U.S., the Netherlands, Germany, and the U.K.
Business Strategy
NextDoor has always been free for its users (homeowners) and neighborhoods, with no plans to change this. Up until this year, the company has been entirely funded by venture capital firms. However, in early 2017 they began testing a “sponsored content” program where local advertisers can purchase ads that will appear to the local users on the app. This has been done in a limited capacity so far, and the website states that the program is currently closed to new advertisers (and thus no pricing info is available).
In a recent interview, the NextDoor CEO stated "In terms of our business model, we believe that there are opportunities, whether they’re through traditional in-feed ads or maybe more native things to Nextdoor like local deals and coupons that might feel more like Groupon. We think that there are a tremendous number of opportunities that exist to connect folks to local businesses."
Market Penetration
As of June 2017, NextDoor is used in 145,000 U.S. neighborhoods, and around another 15,000 globally. The company has never released exact numbers in terms of how many individual households use the app, but in 2016 they claimed to have “double digit millions.”
NextDoor claims to be in 75% of U.S. neighborhoods, 50% in the Netherlands, and 40% in the U.K. (they got a significant boost in the U.K. after acquiring a similar company, StreetLife, earlier this year.)
Growth Since Launch
NextDoor has experienced significant and rapid growth since its launch in 2011. Founder and CEO Nirav Tolia has stated, “We are growing 100 percent year over year and have done that since inception.”
According to their CEO, in the first year of operation, NextDoor had 150 neighborhoods participating.
Growth Strategy
As of June 2017, NextDoor has raised around $210 million in funding and was last valued at $1.1 billion. According to their CEO, the majority of their last round of funding ($110 million in 2015) hasn’t been touched. He stated that the company hopes to expand to Asia and Latin America and will continue to raise money to do so, via investors and by raising money via their new sponsored content.
NextDoor's CEO has indicated that while growth is a focus, extremely rapid growth has never been the goal, and the company is careful to consider where and how to expand before jumping into new markets. He's also stated that it's likely (but not guaranteed) that the company will go public at some unknown point in the future.
In terms of growing its user base, NextDoor focuses on expansion via several methods. Users can invite their neighbors via e-mail, or by postcards that NextDoor will send them (for free) upon request. They can also print flyers, share a link, or use “share this app” to share the app via ios or Android. NextDoor even provides a demo site which users can present to groups or other prominent individuals to demonstrate the app before signing up.
Competitive Advantage
NextDoor’s biggest competitors are more general social networks where neighborhoods might use the Groups feature to communicate, such as Facebook, Yahoo, and Google Groups. The benefits to using NextDoor versus a more general Group via another social network include:
-Address verification (to ensure those joining are actually neighborhood members)
-A built-in neighborhood map and neighborhood directory which is automatically tied to user profile pages (although users do have the option to hide their street number if they prefer.)
-The ability to communicate with those in nearby neighborhoods via the “Nearby Neighborhoods” feature.
-Sections and categories to help organize postings, such as a separate section for Crime & Safety and categories for Recommendations, Classified & Free Items.
-The ability to send urgent text & e-mail alerts to neighborhood members for emergency situations.
The main disadvantage of the NextDoor app, when compared to competitors, is that it requires its users to sign up for yet another social network, which some may be reluctant to do. The address verification process also requires some additional steps beyond simply signing up. Some users may have privacy concerns over the requirement to use their real name and street, but NextDoor stands by these requirements and their commitment to user privacy and safety.
CONCLUSION
To wrap it up, the NextDoor app is a growing neighborhood-based social network that offers distinct advantages over its more general competitors, but still comes with some drawbacks.
Let us know if we can help with anything else. Thanks again for asking Wonder!