Can NextDoor Monetize Its 10 Million+ Users?

When we think about “what’s next” in local, we always think it could be Next Door. Despite an unchartered path to revenue, the hyperlocal neighborhood network has raised $210 Million and was recently valued at $1.1 Billion

San Francisco-based NextDoor was founded in 2010 and now has more than 10 million members, who share hyperlocal and local information within 116,000+ neighborhoods in the U.S. There are also subsidiaries in the UK, Netherlands and Germany.

Posts are un-moderated and generally focus on local service recommendations, but also include posts on giveaways, used goods, events and fundraisers, lost animals, wild animals, local political and school issues, suspicious activities and crime reporting. There have been complaints that NextDoor has been used for racial profiling, but the company has strongly disavowed such usage.

A 2016 analysis found that recommendations represented 26% of postings; classifieds represented 19%; Crime and Safety represented 16%; Lost and Found represented 8%; Free items represented 8%; while Events represented 7%.

NextDoor isn’t positioned as a local newspaper or a media links/topic-based forums, like Topix. It has, however, run experiments with news in partnerships with Hearst, McClatchy and several hyperlocal news outlets. It doesn’t seem to have renewed these tests, but it claimed to boost local readership of the news articles by 2x.

While NextDoor’s usage is uneven from community-to-community, usage is persistent and healthy in communities like Ashland OR (population 22,000), where I live It is one of the leading media sources in this community, which doesn’t have a lot of local media. A popular post might have 20 or 30 commenters.

How the company will monetize continues to be the biggest question mark, especially, given its self-imposed restraints on targeting local users. NextDoor’s best bet – other than getting sold to a major news or search company — seems to be real estate advertising. Under its current rules, however, real estate listings can’t be targeted at the neighborhood level — a natural application. But these could be modified.

The company has also been running an extended test of Facebook-like sponsored posts, based on topics raised by community members. It also might monetize relationships with local utilities, transportation and safety groups. It recently claimed relationships with 1,700 such groups.

The company also leverages its volume of users by selling general advertising to companies such as RING, HomeChef and Casper.

A couple of years ago, NextDoor began to aggregate local recommendations to form local service directories, which could be the basis for a next generation Angie’s List. During a recent presentation, it claimed a base of 17 million recommendations to work with. These haven’t really been rolled out in most markets, however.

Here’s my pet peeve about NextDoor: the address verification feature has been a great way to give it credibility and win initial signups. But most community news and posts aren’t neighborhood centric. They are more reflective of large sections within a community.

While the average NextDoor community has 45 neighborhoods – each with 500-750 residents — some of the defined “neighborhoods” don’t really exist to anybody other than a cartographer. For instance, I live in “Upper Diamond.” Most of my neighbors would ask “what’s that?” And the only thing we would care about really, are deer vs. dog issues, and bear, coyote and mountain lion citings.

Perhaps, it is time for NextDoor to focus on broader community boundaries to reflect the reality of what people actually do with their neighborhoods.

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