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When we started Nextdoor 2010, the Pew report on community in America said 30 of Americans could not name a single neighbor by name.
So 30 of our potential audience doesn't know any of their neighbors, even if they want to invite them.
We knew from the very beginning this was going to take more dedication, more resilience, more patience.
And in many ways we kind of wore that as a badge of honor because we knew that it would scare away the vast majority of competitors.
Welcome to How I Built This a show about innovators entrepreneurs, idealists and the stories behind the movements they built.
I'm Guy Raz and on the show today how the founders of Nextdoor wanted to turn physical neighbors into virtual ones, with a network that's grown to nearly 350000 neighborhoods around the world.
Nextdoor If you know most of your neighbors, that's actually pretty rare.
As you just heard in that clip, barely one out of three people in America know most of the people who live around them, and that number has gone down significantly over the past 30 years.
So when Nirav Tolia and his co-founders decided to start Nextdoor back in 2010, it was with that trend in mind.
They wanted to build real-world communities online that brought neighbors together to share tips and recommendations and local events.
But scaling that vision was anything but easy.
It started with a single neighbor sending a physical postcard, then another and another.
And then came the questions.
How do you get people to trust the platform?
How do you get them to keep coming back?
And eventually, how do you make money off of this?
Before Nextdoor, Nirov had already taken some pretty big swings.
He left Yahoo in the late 90s when it was one of the hottest tech companies in the world.
He co-launched ePinions, which was kind of an early version of Yelp, and then Fanbase, an almanac for sports fans.
That completely failed.
But that failure, it set him on the path to Nextdoor.
And as you'll hear, Nextdoor was always the company Nirov was most passionate about.
But even passion didn't make the journey easy.
It took years before the business earned any revenue and internal tensions grew.
So in 2018, Nirov stepped down as CEO.
Six years later, he's back, convinced that Nextdoor had never reached its full potential.
And now he's rebranding the company and trying to restore its relevance.
But he faces some pretty big challenges.
Years of financial losses and a stock price down nearly 90% from its peak.
And Nirav will talk about how he plans to turn the business around.
But for now, Nirav's story starts in Odessa, Texas in the 1970s and 80s.
His parents were both physicians who'd immigrated from India.
And when Nirav got to Stanford, he thought he might become a doctor as well.
But then he got hooked on the early internet.
And in the mid 1990s, he left Stanford and got his first job in tech.
I ultimately stumbled upon this thing called Yahoo which, in the early days of the internet, was the guide to all the websites that existed online.
And it was started by a couple of Stanford grad students in a trailer on campus.
And so, yes, ultimately I was able to meet them, join there as an early employee.
You know, the funny story is...
There happens to be a chocolate milk company called Yoohoo.
And true story.
I think my parents believed for the first few weeks when I was working at Yahoo that I was working for a chocolate milk company.
Interestingly, In a series of months after I joined Yahoo, the dot-com boom really ignited.
And at that point people were watching CNBC and they were seeing Yahoo as a public company and they were seeing the stock double and triple and quadruple.
And I was part of that.
It was like I had won the lottery.
It was not something I earned being at Yahoo.
I was not qualified.
I don't think they had their pick of the best candidates back then because it was such an unorthodox job choice.
And it was magical.
And from what I read, I mean your first kind of work at Yahoo.
I mean it was basically a version of like data entry.
Like you were physically, literally categorizing websites into a database.
Yeah.
It was marketed much better than data entry.
And the job was actually pretty cool.
It was called being a Yahoo surfer.
So at that time, and I was employee 84 at Yahoo, so there weren't that many people there.
We would go and surf the web and we would get submissions into the Yahoo directory, which we were responsible for reading and categorizing.
And then I would say the true... job was more like being a librarian, but it was way cooler.
We would joke, can you believe they're paying us to surf the web every single day?
And so again, it was the break of a lifetime, and that paved the way for everything that's happened since.
One of the interesting things about your time there was I mean, clearly you were, you are ambitious and you started this kind of informal like monthly meetup in the late 90s called Round Zero.
And I guess the idea was just to find like minded individuals, young people in working in tech who had dreams of building their own thing.
And you were one of them, even though you were at Yahoo.
And this became like a kind of a really hot ticket, right?
Like people really wanted to come to these meetups.
And I think, Like Larry Page and Reid Hoffman, people who years later would become known for LinkedIn and obviously Google, like lots of people before they were known, were coming to these monthly meetups.
Tell me about that.
Well, when I was at Yahoo, I realized something really striking.
As fortunate as I was to be there, the thing that was gnawing at me was I'm not actually building what's here?
And so then you start thinking, OK, well, what else can I do?
Because this is a great job, but I'm a young person, and I want to create my own Yahoo.
But that was a really scary thought, because who would be stupid enough to leave Yahoo to start a new company?
And so the way that I decided to de-risk that is I started talking to people.
First one of my colleagues at Yahoo and we would talk together about our dreams of being entrepreneurs.
And when we got together for dinner, ultimately in about six months, we realized we were onto something, because entrepreneurs need community.
They're helping each other, whether it's intellectually helping each other think through Whether or not they should start certain companies or emotionally helping each other, or just hiring each other.
And this thing did turn into a pretty big organization.
And so we picked this name Round Zero.
That's really about entrepreneurs coming together before they go and get round one financing.
Yeah.
We then incorporated it as a nonprofit.
We got some sponsors.
And yes, Reid Hoffman, Larry Page, many of the other stars of today were just attendees at Round Zero.
I would imagine that that experience, kind of being around other people who had dreams and ideas and ambitions, start to shape your own or start to kind of push you in that direction.
And in 1999, so roughly two and a half, three years after you join.
You decide to leave Yahoo to start your own company, to co-found a company with some other smart people, including Naval Ravikant, who's now a pretty well-known investor and podcaster, and others who are involved.
Tell me a little bit about –.
It's kind of crazy in one sense, because you could have just stayed at Yahoo and just with your stock options alone you probably could have been – worth 50 plus million dollars, but you left.
I think you you forfeited 10 million dollars in stock options at that point.
You know, it always depends on where the stock is right.
So ultimately, depending on when i would have sold, it would have been some number of millions of dollars, but that wasn't ever part of the consideration.
I always wanted to start something and i was crazy enough to think Maybe I can create my own Yahoo.
And I remember at my goodbye party from Yahoo, because I was one of the first people who left.
No one was leaving Yahoo.
And people were banging the doors to come into Yahoo, right?
100%.
And so Jerry Yang, the founder of Yahoo, was at my going away party.
It was so nice of him to stop by.
And he came up to me and he said, you know, I'm wondering, why are you leaving?
Because you know you got a great opportunity here and you're doing good work and we're doing so many exciting things and the company's on an amazing track.
And I said Jerry, when I walk into the office every day and I look around and I think about what you built, I would love to do the same thing.
Like I would love to build a Yahoo myself.
And he was dead quiet.
And he kind of looked at me and Jerry's got a bit of a sarcastic sense of humor.
He's a great guy, but he will definitely shoot you straight.
And he looked at me right in the eyes and he said you're a lot less intelligent than I thought you were.
Do you have any idea how hard it is to build something like Yahoo?
Well, you're about to find out.
Okay, so you leave Yahoo to start this new thing called ePinions.
And tell me how that came about, how that happened.
Yes, I mean at round zero.
I had met several people who ultimately became my co-founders of Opinions.
And one of them is Naval Ravikant, who's gone on to incredible success.
And numerous other co-founders at Opinions have gone on to do amazing things.
And I can't imagine how difficult and lonely it is to start a company by oneself.
I never would have the courage to start this thing without Naval and Mike and Guha and our other co-founder, Dion.
And Opinions was Naval's idea.
And I wouldn't have jumped if it weren't for those other folks.
For me, the journey has always been more about who and then what.
Alright, so so there's this idea that Naval has and basically, if my, if I understand it correctly, it was supposed to be like sort of user generated review site for everything, not like Yelp, which is mainly sort of services, but this is going to be for products, anything you could get expertise from anybody, and it would be gathered at this site.
Is that a fair description?
Yeah, Naval had this great expression, nobody is smarter than everybody.
And so way back, we would make purchasing decisions based on periodicals like Consumer Reports.
We would make our purchasing decisions or our decisions around where we wanted to travel or how we wanted to spend our time.
We would make really important decisions based on these so-called experts.
And Naval had this idea that expertise is distributed.
Can you create a place where people can submit their opinions on a wide range of things products services, experiences and then you put in certain mechanisms that will ensure that the best opinions float to the top and the worst opinions sink to the bottom, you will get the most valuable database of information that exists and it's freely available online.
And that idea and that notion.
I don't think opinions was the first, but it was one of the first and it was certainly one of the first mainstream examples of user-generated content and online community.
And you launch, you guys raise some money.
But I think not that long after you launch, you've got the.com crash, right?
And you guys survived it.
But tell me, before we get into what happened, what was the business model?
How I mean, did you have a business model?
How are you going to make money on on people writing reviews?
We certainly had a business model, and that was the same business model that most of the experts at the time had when they would publish content as well.
And that's advertising.
And so it was going to be a free service.
And if we had enough eyeballs, we were going to monetize.
Now, this was something that was very familiar to me because I'd been at Yahoo.
This was not a far-fetched thing.
And so, opinions, yes.
We launched in, I think we started the company in April of 1999.
We launched a couple of months later.
And I would say about a year to the day after we launched, the dot-com bust started.
All around us, companies are going out of business.
It was incredibly difficult.
We almost ran out of money ourselves.
We lost most of the employees.
I think we probably were up over 100 employees.
We went down to 20 employees at some point.
Many of the co-founders left.
Without a doubt, the failure or imminent failure of something- was the fulcrum for really learning about what it might take to survive.
Why did you stay on?
I mean, as things started to really collapse, you know there were other opportunities you could pursue.
But why did you have a feeling?
Because I think you guys had massive layoffs.
I mean, you were weeks away from folding.
You had to beg investors for money.
Yeah.
And I'm assuming it was around this time that you also become the CEO of the company.
Yeah.
Yeah, all of those things sound bad laying people off and begging for money and being weeks away from shutting down the lights.
If they sound bad, imagine how they feel.
And I became the permanent CEO, probably less because I deserved the role and more because, in the middle of the dot-com bust, we had no chance of hiring someone who could be a real CEO.
Yeah.
What did you do?
I mean, aside from get some emergency funding once the crisis kind of begins to subside, what were you doing to try and salvage it?
Well, around that time, I won another lottery, which is one of my investors, Benchmark Capital, general partner, Bill Gurley, who I've worked with for many years, decades, who I think the world of.
And he gave me the opportunity to be coached by someone who'd been the CEO of a real public company into it.
It was a guy named Bill Campbell.
And Bill C., coach as we call him, became my mentor.
And it wasn't just for me, it was for our entire management team because, you know, I was not the reason that opinions ultimately survived.
It was all of those people.
And so slowly but surely, We grinded our way to being breakeven, to being profitable.
We merged with another private company.
We renamed the entire thing shopping.com.
And believe it or not, shopping.com ultimately went public.
Yeah, had a bit of a mixed track record, but ultimately was bought by ebay for, i think, about 620 630 million, so not a terrible outcome.
But when we think about our original dreams, we wanted to build something like yahoo, which at the time was a hundred billion dollar company.
But when we think about almost dying, it's very improbable that we ended where we did.
Yeah, All right.
So around this time, this happens in 2004, you resigned.
You stepped down.
But in the press release that the company sent out they said you know, we became aware of that Mr Tolia had misrepresented his background.
Tell me about that.
I mean, you were in your early 30s.
And what happened?
Well, look, I think there are always – things that we do that we wish we didn't, right?
There are times when we have to pay for those mistakes and sometimes we don't, right?
I mean, this was a case of me having to pay for it.
When you are a company that wants to go public, you want to be as unencumbered by controversy as possible, right?
And the best thing for me to do at that point was to step away.
Now, did I have a choice?
No, not really.
I mean, they kind of asked me nicely to do it.
I understood that it was the right thing to do.
But yeah, I mean, it was devastating for me.
On a number of levels.
One is, you know, you don't want to publicly fail.
So that's one piece of it.
The second piece of it is I loved my job.
I loved working with those people.
I love trying to solve that problem.
And so when you lose that opportunity, that's the hardest thing.
Yeah, I think one of the things that they said was that you had claimed you had a degree from Stanford, which you didn't, because you hadn't graduated, which I don't think is a big deal.
You went there.
You just dropped out early, which today is a badge of honor.
I did actually get my degree at Stanford.
You did eventually get it, right?
Yeah.
And then I guess that you had worked at McKinsey and maybe you didn't.
And I'm just curious.
I don't want to put you on the spot and bring this up again because we all make mistakes.
We all do things like this, especially when we're younger.
Do you think that – some of that just came from a culture and environment that you were around, where people were like sort of I don't know, fake it till you make it or become it.
I don't know, I'm just- No, look, I don't think there's ever any value in justifying things based on the environment or based on some other thing.
I think the best thing to do is to acknowledge mistakes, to learn from them and then to move forward.
And that's something that's not easy to do.
One of the fallouts of the merger was a lawsuit that your former co-founders, who you speak about with reverence and respect Naval and the others they had left the company.
They were not involved.
But they felt like the merger, basically, I guess their shares went down to nothing.
They were worthless.
And so they felt like...
They were misled with the merger because they had to approve it and all these things.
And so they filed a lawsuit against the investors.
You were named in this lawsuit.
Tell me about how that I mean, I imagine, just on a personal level that massively impacted your relationship with those other co-founders.
You're definitely taking me down a trip of memory lane that I've tried to avoid in my own mind.
I'm sure.
Because we don't want to – most people don't want to – we want to avoid pain.
I'm the same way.
I –
But we are talking about your life and it's part of it.
This was 20 years ago and it is for me even today.
A huge bummer that those relationships that I had were affected by this outcome.
And so I've tried over the years to put myself in their shoes.
It took friendships and it fractured them and they've never been repaired.
Never been repaired to this day, 20 plus years later.
That's unfortunate, right?
I doubt very much, given the incredible success that they've had, that they're thinking about this ever right.
And that's good.
And this is not something I think about on a daily basis, right?
But when I go back and think about it, yeah, those were people that were really important to me.
It was eventually settled again about 20 years ago.
But it's got to be a low point.
I mean, there's a lawsuit.
You're out of a job as CEO.
I'm sorry to bring you back to this place.
But I mean, I imagine at moments in your head, you might have thought, I'm done.
I'm finished.
I'm not I don't have what am I going to do with the rest of my career?
I don't know what's going to happen next.
Without a doubt, all those things go through your mind.
And you know I was definitely in a situation where you get so cooked as a founder like being in the tunnel.
You haven't had the opportunity to take a step back and say, hey, what does all this stuff mean?
What have I learned?
Am I qualified to be a CEO?
Am I a good founder?
Is that the thing I should be doing?
Should I go work for someone else?
And so leaving, while it was incredibly painful, also gave me the opportunity to do a lot of self-reflection.
One of the hardest things about being a founder, in my opinion, is you never have the space to to really absorb the greater lessons.
You're just in motion.
And so to stop for a second and have a little bit of reflection, it was actually quite valuable for me.
So, you didn't just leave, you moved.
You left San Francisco, the Bay Area, moved to New York City after this went down, I think.
It was a year later.
I decided that I wanted to take the opportunity to live in a place that I always wanted to live in.
I'd visited New York and I was so enamored with the city that I thought to myself gosh, I mean, maybe I'll just live here for a year.
And for me, it was always the plan of I'm just gonna go for a year and just see what it's like.
And I didn't know what the professional opportunities in New York were.
Now ultimately, when I was there, I met entrepreneurs and I started doing some consulting and I started doing some investing and I started realizing that I was missing being part of the flow.
And I called up Bill Gurley, who I talked about before, from Benchmark, and he said something really interesting.
He said, okay, well, you want to start a company in New York?
All right well, but let me just ask you a question, since you're in New York how many billion-dollar consumer internet companies are there in New York?
And at the time, the answer was zero.
And so what he was really saying is look, if you really want to optimize the probability of success, you should probably move back to San Francisco.
And so when it got to be time to get serious about starting a new company...
I was lucky enough to have one of my first colleagues from Opinions, a woman named Sarah Leary.
We went and joined Benchmark as entrepreneurs in residence, together with the intent of starting a new company.
But as part of that, I moved back to Silicon Valley.
And I highly encourage entrepreneurs who are coming off of one journey to To take a sabbatical, because I learned some of my greatest lessons in New York.
They have nothing to do with business, right?
But about life.
All right.
You had had this experience with the opinions and –
I guess while you're at an entrepreneur in residence for Benchmark, you guys start to talk about a new idea that would become basically a database of every college and professional athlete.
Tell me a bit about how this idea came about.
How did you start to come up with this idea for what would become Fanbase?
So we really felt that we knew we wanted to do something in the areas of user generated content and online community.
Because you had that experience already.
We were people who had spent more time thinking about how to solve some of those problems than anyone else.
And so we had competitive advantage, right?
And I had grown up in a place Odessa, Texas where the idea of sports and team, particularly around football you know the book Friday Night Lights that was written about the football team in my high school when I was a junior.
And then the third piece was going and trying to find an area that we could build a successful business and a user-generated content and online community version of ESPN.
So ESPN was the old guard.
ESPN had all of the professionals that were writing about these things.
But where was the fans' perspective?
So you get together, and you manage to convince a pretty top Google engineer to come join you.
Prakash had also been at Opinions.
And so we were getting the band back together, and it's Prakash Janakiraman.
Janakiraman, yeah.
He had gone to Google.
And was one of the early engineers on Google Maps.
And so – but he had been someone that we had known, Sarah and I had known and had worked with for many, many years prior to him leaving Google.
All right.
So you guys get together with this idea to start a fan website like the ESPN, but for fans, but without a clear vision for what exactly it was going to be.
Yeah.
And by the way, let me just say one thing.
I don't think that it's a fatal flaw to not have the clearest vision, because there is no doubt the vision will change.
What happened to us is that we had many different visions And when none of them worked, we didn't really fall back on one of them and try to force it.
And so sometimes having too much vision can be a problem, right?
Because you don't stick to the simple things and we couldn't ultimately find enough success in the simple things.
But you know, when Fanbase launched, In a matter of months I think we had 10 million users or something crazy like that.
So there was a lot of usage, but it just never clicked.
You launched in August of 2009.
You've got rosters and scores on 21000 teams of college and professional teams, because you guys have raised a little bit of money to do this.
And, as you say, I mean within a couple of months, you had over 10 million users, which is that sounds great.
But but there was a problem.
Right.
And the problem was what what was the main problem?
Well, the users would come in and then they wouldn't stick around.
So maybe they would come again, maybe they would come one more time, but then they didn't come back.
And they didn't contribute.
We had some contributors.
You know, most of these contributor communities, Guy...
Of 100 users who visit, you only need one to contribute.
So think about YouTube.
99.9% of the users of YouTube have never uploaded anything.
They've never contributed anything besides their viewing hours, right?
So it wasn't so much.
I would say actually interesting learning from that was we probably got the contributor side right.
Yeah.
What they contributed though, was not resonating strongly enough with people who were looking for information, and part of the reason at that point, youtube was starting to ascend and, as a result, all of the holders of professional content began to protect their licenses much more aggressively.
And so what happened very quickly for fan base is if a Michael Jordan fan came and said here are my three favorite dunks of Michael Jordan of all time, and I'm going to upload them because I think it's kind of cool.
If you're a Jordan fan, you want to come and see them as well.
We knew at that point if we posted those things we didn't own the rights because Yeah, you couldn't keep that up.
So how quickly after launch did it become clear to you that you could not make this work?
It was pretty quick after the launch.
And then I think for probably the next six months, we tried everything.
To get this thing to ignite again.
And you know, when you try everything as an Internet company, it means you change the user interface.
You think about developing a mobile app if you have a web app.
You think about activating a different community.
You think I mean, you think about every idea that you possibly can.
And none of those worked.
So you come to the conclusion pretty quickly that this is not salvageable.
And I guess you'd raise some money.
You went to your investor, Bill Gurley, again and said, hey, this isn't working.
And I think your idea was return the money to the investors and fold this thing up.
Yeah, and look, you said you came to the conclusion pretty quickly.
Any founder knows that you're talking about dog years for every year of being a founder, right?
And when things are going well, the time flies by.
But when things are tough...
You are forcing yourself to pick yourself up off the ground and go into the office, even though you were kicked the day before.
And so, when I say for six months, we came into the office every single day knowing that what we were working on had no future, but we were gonna try to change it.
And so it was a very, very challenging time.
And so in early 2010, we say, we've kind of tried everything here.
Maybe we give the money back because most of it's still intact and we go take the summer off, and then we think about what's next.
So I have a meeting with Bill Gurley And so I start to give him my narrative of gosh.
We've tried everything and I really wish this could have worked and I feel so bad.
You took a chance on us.
And he slides over a piece of paper and says, read this.
And I look at it, and it's a poem.
Actually, one of my favorite poems.
He probably didn't know that, but it's If by Rudyard Kipling.
Yep.
And it was a very powerful way for him to say, I don't think you can give up.
And...
It was surprising because I didn't have a contingency idea.
And so I took the poem back to my co-founders and I said, here's what Bill said.
And Bill followed by saying, I believe in the team, come up with a new idea.
See if you can do it.
And if so, we'll back it.
And so when you finally have the courage to say this didn't work, I'm shutting it down, to then find the activation energy to say, actually we're not shutting it down.
We're going to start from scratch, because you know The energy you have at the beginning of a journey, when it's brand new, it's amazing.
It's just possibility.
So the three of us said, okay, we're gonna try to come up with a new idea.
But it's not like you can schedule a meeting 10 a.m., come up with billion-dollar idea.
I mean, that's not the way these things work, at least in my experience.
But we met.
We crowdsourced ideas from each other.
Prakash in particular said as the person writing the majority of the code.
He said I'm sitting on my hands and not writing a line of code Until you can prove to me with user feedback that whatever idea we have is something that's worth building.
So tell me about some of the ideas that you started to talk about.
It's funny, there was an idea called need feed.
And it was this idea that we're all looking at news feeds these days.
Would you create a feed where people say, I need advice on this particular thing.
I need to be prepped for this particular meeting.
I need to find a trustee plumber.
That was one of the ideas.
We probably had dozens of bad ideas.
And ultimately, there was this one idea, and it wasn't called Nextdoor at the time.
It was called Neighborly.
And the idea is, can we create the next generation of a neighborhood message board?
And it'll look like a news feed.
It'll look like a social network.
It'll be more fully featured.
And we felt like local message.
Thank you.
We were scared.
We were anxious.
What if this turns out just like fan base?
What if this also doesn't have legs?
What if we put everything that we have into this thing and it ends up being a waste of time?
And so in the moment...
Let me come back in just a moment.
How do you turn a bunch of neighbors into a new online community?
One postcard at a time.
Stay with us.
I'm Guy Raz, and you're listening to How I Built This.
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Hey, welcome back to How I Built This.
I'm Guy Raz.
So it's the summer of 2010 and Nirav and his co-founders decide to ditch fan base in order to work on a totally new concept.
And eventually they land on the idea of a digital version of a neighborhood bulletin board, like the kind you'd see at a local hardware store.
We ended up building this little prototype.
It was drawn initially, meaning hand drawn, shown to neighbors.
And almost from the beginning, they resonated with this concept that I do want to know my neighbors.
I do want to know what's going on around me.
I don't have an easy way to do that today.
So there's Facebook for our friends.
There's LinkedIn for our colleagues.
There's Twitter for people whom we find interesting.
But there was no network comprised of what we believed was one of the most important communities of them all.
And that was the people who live right next door.
Now, we didn't even have the name next door at that point, right?
It was more about, I think one of our co-founders, Adam Ginsberg is his name.
He lived in an area in San Francisco.
I'm trying to remember the name of the neighborhood now, but they had a listserv.
They had a little news group that they were using to communicate.
And he would show us the kinds of conversations.
And it was about trying to fix potholes.
And it was about letting people know if there was construction.
And it was about recommending service providers.
And it was actually very valuable.
Yeah.
So basically, you start to test this out.
And what gives you confidence that this was going to work?
What kind of data did you gather or feedback did you get where you thought okay, let's do this, let's pursue this?
Well, certainly we had a strong intuition, having built products in the past and certainly having failed at building products, that this felt different.
Which is to say, when you do user testing, people are excited.
I mean, there was a time when we were changing servers and so we went down for a couple of hours and we got tons of incoming messages from our users saying what happened.
What happened to this thing that I'm using?
It's important to me.
Did you take it down?
Is there a site outage, right?
And it wasn't even called anything at that time.
It was just called a neighbor site.
It wasn't called next door.
It wasn't professional, right?
But that's a very strong sign.
So there was strong user feedback.
And then there was another person that came on.
We were very lucky to have him on the board as well.
Rich Barton, the creator of Expedia and then, more recently, Zillow.
And I remember pitching him many of the ideas we had and then showing him the idea that became Nextdoor.
And he said, that's the right one.
And then Sarah and I said to him okay well, are you so passionate about this that you would join our board?
He said, yeah, I'm passionate about this one.
And so we had kind of the investor viewpoint, we had the user viewpoint and then we had our own intuition.
And you had a little bit of money from the previous venture that you just kind of carried over from Fanbase.
So Fanbase essentially becomes Nextdoor.
I mean, this is still I guess I should mention 2010, 2011.
It's still a more, let's say, innocent time in the history of the internet.
So Some of the things that user-generated companies deal with now, including Nextdoor, were not quite as much of a problem back then.
But how, for example, were you going to make sure that people really lived in the neighborhoods, that they were who they were?
So, over and over again, what we heard is well, I need to make sure that the people on this thing are my actual neighbors.
Okay.
And so that led us to many innovations, including looking at a map, breaking the map down into specific homes, and then we had to verify that they lived there.
And so we would do very old school things like send them a printed postcard via US mail with a code, and you would have to enter the code to verify your address.
And so in the early days I mean look, we weren't thinking what's gonna happen when we have a hundred million users.
I mean, that's a pretty expensive postcard bill, but we had a hundred users.
500 users, a thousand users, right?
But we built it with quality from the very beginning because that's what the neighbors asked for.
And we felt like we'll solve the scalability issue later.
How were you thinking about making sure that the content was appropriate?
You know, even if it's just local people, neighbors with their real names, I mean, they can still post a bunch of kooky stuff, right?
I mean, they can still go on rants.
They can I mean, all kinds of things could happen.
Was there any way for you to prevent that?
I think about it less as prevention and I think about it more as you build the system and the reference of the system with high quality content.
Because if you see high quality content, you just assume this is a place for high quality content.
It's a little bit like if you go outside and you see trash on the ground, you might actually throw something on the ground too.
If you go outside and it's perfectly manicured, you're gonna feel really bad about throwing a little trash there, right?
So that was a very important decision.
The other thing we did is every single neighborhood had a founding member.
And it was their responsibility to ensure that the conversation was very relevant and of the neighborhood.
There are neighborhoods that are a little more fractious.
Yeah.
And they discuss things in a little bit more of a fractious way.
And there are neighborhoods that are much more homogenous, where politeness is the cultural custom of the neighborhood.
We have 335,000 distinct neighborhoods that use Nextdoor.
And we needed to build a system that would be flexible enough that all of those neighborhoods could feel authentic to themselves.
So in that first kind of year of building it out before you launched, how did you sort of determine what constituted a neighborhood?
I mean, a neighborhood in the middle of Nebraska is very different.
I mean, houses can be two, three miles apart compared with a neighborhood in San Francisco.
Every single neighborhood boundary was something that was drawn in consultation with someone who lived there.
We asked our members and then we built a tool.
I mean, in the early days Sarah, my co-founder, and other co-founders maybe Prakash as well would be looking at maps, taking a Sharpie and drawing a polygon around areas to ensure that we were getting the user feedback and then baking that into the code.
It kind of bears mentioning that, this idea that it's okay to do unscalable things initially, And so many young entrepreneurs, particularly technology ones, are always thinking well, I can't do that.
That's manual.
That'll never scale.
Worry about solving the scalability problem after you have product market fit.
Doing manual things to get product market fit is perfectly fine.
And in fact I would say the number one learning from user-generated content and online communities.
The number one learning don't be afraid to do things manually at the beginning, because it's a people business building community.
And you can't do that at scale.
You have to do that one conversation at a time.
So most of these challenges, what do you want to talk about?
What's the shape of your neighborhood?
What should the interface look like?
Those are all things that we would take to the neighbors.
How many people did you have before you launched?
How many people did you hire?
It wasn't that many.
I mean, I think, when you're experienced enough to have laid off people and to have been part of a company that failed, I think in general, we were very cautious about hiring people, about spending money.
I...
Love this old expression in Silicon Valley, more companies die of indigestion than starvation.
I think we probably had 50 people or so when we launched, but the idea came to us in the summer of 2010.
We didn't actually launch until the fall of 2011.
And that is not because it took us a year to build the thing.
It was more because we wanted to be sure.
Before we uncloaked publicly, we wanted to be sure that we were on to something.
And when we launched nationally, we had 176 neighborhoods using Nextdoor.
And I remember a board meeting where...
One of the board members said, okay, you got 176 neighborhoods.
How many neighborhoods do you think there are overall in the U.S.?
Of course, no one knows the answer, right?
But we said, I don't know, it's probably like a couple hundred thousand maybe, right?
And the board member said, okay, so if it's taken you a year to do 176...
It's going to take us 100 years to get all the neighborhoods, right?
But that was kind of a very daunting challenge.
But 176 then, as soon as we launched, though, people were starting their neighborhoods.
Mm-hmm.
So my parents started their neighborhood in Odessa, Texas.
My brother started his neighborhood in Dallas.
My sister-in-law started her neighborhood in San Diego.
My brother-in-law started his neighborhood in Southern California.
So very quickly, very soon thereafter, we had all 50 states.
And what were the guidelines you were giving people?
What were you encouraging people to post on?
Because one of the challenges you had at Fanbase was the quality of the content.
Wasn't that great right?
That was the challenge.
You know, the quality of content was not the real challenge with Nextdoor.
The challenge was people don't know their neighbors.
And so how do we get people to join?
How do you hear about it?
You don't bump up against the content.
Your neighbors can't invite you because they don't know who you are.
And so that led to a lot of different innovations, including we would pay for them to send postcard invitations.
All right.
So you have this idea, right?
And you're ready to launch it in October of 2011.
But you know from fan base that getting enough users isn't enough, right?
And in this case you needed not just the users, but you needed them to stay there and to really participate in the site in some ways.
But I'm assuming back then there wasn't a whole lot of pressure to generate revenue.
It was more about getting users and gathering them into the site.
You know, there's always pressure to have a business model.
You are making money indirectly through advertising or through some other means.
When you're building that kind of business, it's not a simultaneous you attract the user and you attract the advertiser at the same time.
It's a sequential build.
So I don't want anyone listening to think that we started next door thinking oh, it doesn't matter how we're going to make money or when we're going to make money or why we're going to make money.
No, no.
We wanted to build a successful business on day one, but we had articulated a vision that where the reason advertisers would care about advertising on Nextdoor is because there were vibrant communities and community audiences.
And so on Fanbase.
A bunch of people showed up on day one and by day two it was slightly less people.
By day three, it was less, and then that just kept happening.
On Nextdoor, it was exactly the inverse.
On day one, hardly anyone showed up.
We just had to find the neighborhood, the founding member and the lead.
But then those people would invite two or three people.
And those people would invite two or three people.
And two weeks later, there would be a couple dozen.
But when we started Nextdoor 2010, the Pew report on community in America said 30 of Americans could not name a single neighbor by name.
So 30 of our potential audience doesn't know any of their neighbors, even if they want to invite them.
And so this was.
We knew from the very beginning this was going to take more dedication, more resilience, more patience.
And in many ways we kind of wore that as a badge of honor because we knew that it would scare away the vast majority of competitors.
If it just devolved into, let's say, misinformation, people were –
Saying things about neighbors that weren't true, for example, like how did you think about trying to control for that possibility?
Because that could have had an impact on the credibility and then the business.
Yeah, it's a great question.
So ultimately, we created neighborhood guidelines.
You can't discuss national politics.
If you do, you can get reprimanded, right?
You can get disciplined, right?
A much harder one is when someone wants to discuss politics, something that the local government's doing and it's relevant to the community, but other people are like you know what?
I don't care.
I don't want to hear this, right?
And so the real antidote in today's world is personalization, right?
It's this idea that over time, we are smart enough using technology and it's primarily machine learning to learn.
Here are the people and the topics that Guy wants to hear from.
And if he doesn't want to hear about what's happening at City Hall, that's okay.
We don't have to silence the entire neighborhood because there are people in the neighborhood who do want to have that conversation.
So it's much more sophisticated today at our scale and with the technologies that we have in place.
But in those early days our only real arbiter was the people we had chosen to to start those neighborhoods.
And now it's algorithmic, basically.
Now it's algorithmic, but it's not algorithmic in a bad way.
It's algorithmic in that, based on your behaviors, we show you more of the things you like and less of the things that you don't like.
It just so happens though, that we all have different, we have different tastes.
I'll give you an example.
I get a lot of feedback these days on Nextdoor that there are too many posts about lost dogs.
A lot of posts on lost dogs.
I'm actually looking at mine here in Marin County and there are a lot of lost dogs and cats, which tugs at my heart because I have dogs and cats.
So you said exactly the thing that I was going to say, right?
Which is, before I had a dog...
I didn't want to see any lost dog postings.
Two years ago, we got a dog.
If I lost my dog, it would be like losing a family member, right?
And so that has changed my perspective completely.
Another example that is maybe a little bit more nuanced but still makes sense is if you're in a neighborhood and they're having a conversation about some place to take the kids for ice cream.
That's a great conversation if you have children.
If you don't have children, you don't care.
You wanna have the conversation about where to get an after dinner drink, right?
So being able to facilitate those things in the same neighborhoods, That's got to be part of what makes Nextdoor special, because we're not robots.
And we got to figure out a way to unite around common things and then let all those people express themselves in different ways and still feel like Nextdoor is for them.
Tell me about.
From what I gather, from what I've read, it seems like the first four, maybe five years you didn't have any revenue coming in.
I mean, it was, there was no paid advertising.
There was no and it really was only in like 2015, when you start to experiment with having like local businesses grow, set of pages and start to advertise.
Tell me about why you waited so long before you started to experiment with ads.
It's a really hard thing to generate revenue.
But in our case it's much harder to think about establishing ubiquity of all neighborhoods and having all of those neighborhoods be vibrant.
And as a startup, I think it's very difficult to work on multiple hard problems at the same time.
And so it's not that we didn't feel working on the advertising product was important.
It's that we were so consumed certainly in the first five years and even today, to be honest with trying to create the most vibrant atmosphere for people who want to be part of their local community.
That we didn't invest enough time on the advertising side.
And as I listened to your question, I think we probably made a mistake not thinking about how to bring small businesses into the conversation from the beginning.
And because the company was successful, we could raise money.
We were spending zero on marketing.
We were not hiring hundreds and thousands of people.
I think we were sub 200 employees.
We had one office.
We were kind of slow and steady, but...
I've been reading this book since coming back to Nextdoor called The Founder's Mentality.
And one of the principles in The Founder's Mentality is you have to innovate and execute at the same time.
Some people will say, this is my innovation phase.
And then some people will say, well, this is our execution phase.
We're not innovating right now.
The books made me think, gosh, you know, you got to figure out the muscle so that you can do both.
You may be 60, 40, 70, 30, something like that, but you can't be a hundred zero.
And I do believe now that from the beginning, if we'd involved small businesses, it would have created a more vibrant community.
When we come back in just a moment, Nirav has the conversation with his board of directors that every founder CEO is afraid of.
Stay with us.
I'm Guy Raz, and you're listening to How I Built This.
Hey, welcome back to How I Built This.
I'm Guy Raz.
So by 2018, Nextdoor is in about 200,000 neighborhoods, including internationally.
And after a few rounds of fundraising, the company has reached a valuation of over a billion dollars.
I was getting burned out.
I was tired.
I was not operating at maximum intellectual capability or emotional capability.
So an intellectual capability is, all right, I know how to start companies.
Now this company's got 200 people.
We still haven't really figured out revenue.
What's going on?
Was that making you feel stressed that you weren't making a whole lot of money?
You weren't bringing a lot of revenue?
Look, everything was making me feel stressed.
We're not growing fast enough.
We're not generating revenue.
Our product isn't moving fast enough.
The quality of the experience isn't where we need it to be.
Like everything was making me stressed, right?
And it was the stress in my world that got in the way of seeing clearly, thinking clearly, and then, on the emotional side, the stress is where you're short with people.
So by 2018, I think I would have been totally happy selling the company.
Did you try?
Did you look around?
No, no.
I mean, Bill Campbell used to say this great expression, companies are not sold, they're bought.
And the idea is you don't go like putting a shingle out saying I'm selling my company.
You build something so great that someone wants to buy it.
But I definitely was not feeling fulfilled.
And as a result, I was probably not fulfilling other people.
And it started to show up in the progress of the company.
And so I think the board felt at some point, gosh, has he plateaued?
Because they didn't think that the opportunity had plateaued.
And so you know they have a conversation, and in Silicon Valley these conversations are kind of interesting.
They start with hey, have you ever thought of bringing on a CEO and you can be the chairman and you're the founder and you know you have the great ideas, but you need someone who's got the operational rigor and discipline and understands what scalability is like.
But you know what that conversation really means.
I mean, what that conversation really means is it's time for a new leader, right?
And I knew in that moment that what they were saying was true.
And we hired a wonderful woman, Sarah Fryer, who's now the CFO of OpenAI.
And, you know, I felt like she would be a great leader.
And by the end of 2018, I was out.
Yeah.
I'm curious about that time because it's – I have to imagine that in 2018 –
You're in your sort of mid to late 40s and not old by any stretch of the imagination.
I'm sure I'm in my 50s.
But I mean, did you feel like at a crossroads?
Like, what am I going to do next?
Or maybe I just kind of go in a completely different direction with my life.
I mean, what was going on in your mind?
I have been through enough difficult transitions that I was 100 focused on leaving in the best possible way.
Yes, of course, from an ego standpoint, it hurt like crazy.
I wanted to be the person who could take it from day one to day infinity.
I wanted to be the person to take the company public.
But...
What was driving me was wanting Nextdoor to be successful, because it felt like the best thing that I could do professionally ever.
So I didn't think, oh, the next thing I do is going to be bigger than Nextdoor, right?
I thought to myself, I love Nextdoor.
And so, when it was clear that I wasn't going to be the person to take it to the next stage yeah, that was a blow.
But honestly, at that point I knew it was the right thing and I was going to make it the right thing.
All right.
So you step down as CEO, but you stay on the board.
But over the next several years, a lot happened, right?
I mean, the company did end up going public.
It happened in 2021.
But in your personal life, you actually took your family and moved to Italy for a few years.
Tell me what you did there.
I experienced my own personal renaissance.
I mean, I was in the cradle of the renaissance.
And I think for me and my wife and three kids, we were undergoing our own.
We were in Italy for seven months and then COVID hit.
So within a number of days, we left everything in Italy and we rushed back to San Francisco.
Within a series of weeks, San Francisco was shut down.
And so then, within a series of months, COVID had run through Europe enough that there was some herd immunity.
And so we left San Francisco that summer and went back to Italy and did a second year there.
And during that year, the border was shut down.
But it was a magical time because it wasn't the tourist season that you experience in Florence and Rome and Milan and Venice.
It was real Italy.
Meanwhile, at Nextdoor, Sarah's taken over.
She's building the company.
She's taken it public.
The company goes through a transition.
Yes, I'm paying attention.
I'm on the board.
I'm the chief cheerleader.
And at that time my wife and I decided that we weren't going to move the family back to San Francisco.
We were going to move to Dallas because I didn't have a job to get back to and she didn't have a job to get back to either.
We really wanted to be close to family.
And so yeah, there was no anticipation, expectation or even wildest dream that I would go back to next door, because that was November of 21, starting in January of 22.
The whole market went down.
Yeah.
And Nextdoor went down as well.
And that ultimately led us to where I'm sitting today.
You return in the spring of 2024, and you've now been there a little over a year.
Tell me about the circumstances that – brought you back?
First of all, what was going on?
And then why did you agree to do it?
So the company had fallen into a place where there was a lot of adversity being a small cap stock.
There was a lot of adversity dealing with the bump of COVID that had then returned to normal.
There was a lot of adversity in... managing a remote organization.
We definitely felt as a board this includes Sarah that the company needed to go in a new direction.
And in particular, we felt that that direction needed to be deeply steeped in a new product.
And we could have found someone external, but that would have been very risky.
Or you can bring the founder back.
And no, I never thought about it.
I wouldn't have joined 11 boards.
I wouldn't have put my kids in school here in Dallas.
I wouldn't have done any of those things.
But when the opportunity arose, I love Nextdoor.
And I went to talk to my wife about it.
And she said I do feel that if you don't take this opportunity and next door fails at some point in the future you can ask yourself why didn't I do whatever I could to help it succeed?
And so from there, with her blessing, I jumped in.
And so I ultimately brought back my co-founder, Sarah Leary, who we've talked about a little bit, and was blessed that she came back to join me.
And so we're both re-founding or re-founders of the company.
And Sarah used to say, let's go back and finish the job.
I think calling it a challenge is not an understatement.
It is a challenge.
I mean, it's a very well-known brand.
It's a brand that lots of people like and even love.
But I mean, you're looking at the same number that I'm looking at, which is the only metric, but the stock price is one metric.
And it's like you know, as we speak today, it's like a little over two bucks a share down from its high of you know.
$13 in 2021.
I know that you're focused on revamping relaunching, creating a new kind of, a new face of what next door will be.
Tell me a little bit about your plan to turn it into something bigger and different.
Well, the goal is to make it the essential local application.
And that's very ambitious.
Essential means people are using it every day, several times a day.
And today, of our 100 million verified neighbors, 25 million use Nextdoor every week.
Not even every day, right?
So just based on the measurable numbers, there's a lot that we can do.
And we don't think 100 million is the ceiling.
And so, yes, I think it is a big challenge.
It was almost easier to not be the active CEO because...
When you're the former CEO, people say, oh, I love the concept of Nextdoor.
I believe in it.
But when you're the day-to-day CEO, people say, hey, you know that idea that you pitched me on?
That's not what I see when I open up my app.
Yeah.
That isn't what it feels like.
It's few people complaining and it's some irrelevant postings about this and that, right?
And so there was a gap.
There is a gap between the potential of Nextdoor and the reality of the product today.
I also think no one has won local.
Google hasn't, Meta hasn't, Apple hasn't, Amazon hasn't, right?
Why is that?
It's really hard.
Yeah.
And it's because it's incredibly difficult to get the same outcome from one locality to another.
But I think we can do it.
I think we can do it with a community-centric approach.
But the product's got to be way better.
And that's what we're trying to do.
Yeah, I mean, in a sense, right.
And we'll talk about the evolution of what you're trying to do now and sort of the relaunch.
But you could have sort of gone head to head earlier with like Angie's List or even what Yelp did you know with, because at the end of the day, neighbors trust neighbors right.
And if a neighbor's like, oh, your lawn looks great.
Who did that?
Oh, my landscaping guy's amazing.
I'll give you his number, right?
And that's the best way to find people to do work around your house or contracts, whatever.
What babysitter do you use, right?
And so I understand the impulse that you didn't want it to be like a marketplace.
You didn't want it to be like just people constantly selling.
But at the same time, if done right, it can actually be really valuable and useful for people.
Thank you for having me. brought in third-party content.
All of our content historically has been from neighbors.
But now, with the new Nextdoor, we have 3500 local publishers that are publishing 50000 articles a week, and they're real journalists.
And that's really important in the same way.
What we haven't built and what we should have built, which is Angie's List, and Yelp and Thumbtack and many others have done exceptionally well.
We haven't built the button after the conversation happens that says okay, book this for me.
Yeah.
Particularly in a world of AI, where most consumers are going to go to one place, ask a question and everything's going to be taken care of behind the scenes.
It's not going to be.
You go to Google, you get 15 links, you click on all of them, you hit back, you keep searching, you keep ultimately going from one place to another, to another.
That's the old world.
The new world is you go one place, you ask a question, you get an answer, and you act on it.
And so I think this is going to be a critical part of Nextdoor's evolution.
So Ian, I know that one of the things that you're focused on also is like real-time alerts and public safety and emergency, like I mean, you know, flooding or if there's a power outage.
So Nextdoor could be sort of a repository for all that stuff, if you could sort of look out in five years from now.
And it was the perfect sort of expression of what you want it to be.
What does it look like?
What is my experience like when I log into Nextdoor?
You open the app several times every single day because you wanna know the most important things that are going on around you.
And there is no easy way to know what's going on around you today.
Do you know what's happening this weekend in your San Francisco neighborhood?
Do you know all the power outages as they occur?
Do you know the next new restaurant that's coming in after that other restaurant closed?
It's the person who wants to bake fresh empanadas in my neighborhood and you can walk right over and buy one.
Those things are what make neighborhoods feel like home.
Why can't Nextdoor be the place where you continually discover those things over and over again?
When you think about the journey you took and where you are now.
I mean, you know sort of this kind of second chance to really do something cool and interesting with this thing that you co-founded.
How much of where you are now do you attribute to the work you put in and the grind?
And how much do you think has to do with just being lucky at the right place at the right time?
It's all luck.
I mean, the opportunities all emerged because of luck and timing and other people.
Someone hired me at Yahoo.
Someone let me into Stanford.
My parents paved the way for all of this stuff.
Bill Gurley supported me even when the chips were down.
Sarah Leary has been my partner for 25 years.
These are people that they've made it all possible.
But when I've been given that opportunity, I've done everything I can to ring the bell.
And most of the most successful people I've met.
It hasn't been just because of skill or just because of luck.
It's been some conflation of the two.
And that's kind of what makes it magical.
That's Nirav Tolia, co-founder and CEO of Nextdoor.
Please sign up for my newsletter at GuyRoz.com or on Substack.
This episode was produced by Casey Herman with music composed by Ramtina Rablui.
It was edited by Neva Grant with research help from Catherine Seifer.
Our engineers were Kwesi Lee and Jimmy Keeley.
Our production staff also includes Alex Chung, Sam Paulson, Carrie Thompson, Chris Messini, Ramel Wood, Andrea Bruce and Elaine Coates.
I'm Guy Raz, and you've been listening to How I Built This.
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