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Summary:

Most of the startups and networks focused on hyperlocal or community news and information try to be as open as possible, but Nextdoor is taking the exact opposite approach and making the barrier to entry for users as high as it can.

Serving hyperlocal community-level or neighborhood-level markets with news and information is a tough business — just ask NBC, which recently closed the doors on its EveryBlock unit, or AOL, which is still fighting to keep the losses at its Patch operation from sinking the ship. So why should anyone pay attention to a startup like Nextdoor, which just got $21 million in financing from a group of venture capital funds? Because Nextdoor is doing the exact opposite of what Patch and others have done — instead of making its network wide-open, it is keeping the barriers to entry high, and that could be the key to its future success.

At first glance, it might not look like Nextdoor and Patch are even in the same game: after all, Nextdoor describes itself as “the private social network for your neighborhood,” while AOL has always described Patch as a source of news and information, more like a community newspaper. But when it comes right down to it, these are really just two different ways of looking at the same problem: how to get important information about a community to the residents who care most about that information — whether it’s school closings or local government ineptitude or criminal activity.

Blurring the line between news and social network

That kind of content has always been the core of what small town and community-level newspapers have done, and the best ones have been similar to a social network in many ways as well — in the sense that readers pay more attention to the birth and death notices and the letters to the editor than they do to the actual “news.”

This is the goal that EveryBlock was going after, first as a data-driven startup launched by programmer/journalist Adrian Holovaty with a grant from the Knight Foundation, and then as a subsidiary of NBC after it was acquired in 2009. In 2011, the service added a lot more human-powered and community features — which Holovaty said he had come to believe were crucial for such a network to succeed — but it wasn’t enough to keep the service afloat.

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Patch recently did something similar: instead of relying exclusively on journalists, it is opening up the service in an attempt to make it more of a community noticeboard. The main goal seems to be to cut the costs of the network, which AOL has poured more than $150 million into. According to comments made during its latest conference call with analysts, Patch is doing well — but it is still well short of the revenue targets that AOL chief executive Tim Armstrong has repeatedly promised to hit.

Instead of starting with the news and then trying to add social-networking aspects later, Nextdoor started with the social networking side: the idea behind the service is that you and your neighbors need a place to talk about those school closings or crime reports or even where to find a good mechanic or babysitter, and doing it on Facebook or Twitter or another public network isn’t appealing for a variety of reasons, including privacy concerns.

High barriers to entry improve the signal

So what Nextdoor does is make it as difficult as possible to join — the exact opposite of what Facebook and even Patch try to do. Only people who actually live in a specific neighborhood can join the Nextdoor network for that area, and the service doesn’t just accept your word: it verifies it by checking your credit-card information, calling your home phone or sending a postcard directly to your house with a special registration code on it.

Nextdoor CEO Nirav Tolia says the company is sending out about 15,000 of these postcards every day, and admits that the service builds in “a lot of friction to join” the network.

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In part because of Facebook, we are used to thinking of social networks as being more powerful the more open they are, but in the case of Nextdoor the private and restricted nature of the network could be its biggest strength — and it’s almost certainly why David Sze of Greylock, an early investor in LinkedIn, was interested in the company. In many ways, Nextdoor is like a LinkedIn for your neighborhood, but even more restrictive: so if you are interacting with someone on the site, you have a high degree of confidence that what they say is going to be relevant to you.

When it comes to monetization, Nextdoor and its backers say there are some fairly obvious advertising or e-commerce tie-ins to such local content — and given the network’s focus on keeping the signal-to-noise ratio high, an argument could be made that it is more likely to succeed at this strategy than either Patch or the existing hyperlocal media players (newspapers, etc.) in those regions. Nextdoor says it has doubled in size in the last six months and now covers over 8,000 neighborhoods in all 50 states.

Images courtesy of Flickr users Jason Parks and Pew Center

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  1. Michael Sinsheimer Tuesday, February 12, 2013

    Very interesting – also some form of exclusivity may bring out aspirational desires to join. Can be viewed as a premium site with very limited membership.

  2. Too many Craig’s list type ads emailed out daily. Drives me nuts and quitting nextdoor…

  3. Mathew, I’m so glad you wrote this.

    I’ve been thinking about Patch and Nextdoor a lot lately. I started a Nextdoor community about a year ago in my neighborhood; several months later a Patch launched. Ironically, I learned about the Patch site through our Nextdoor site.

    I have been a longtime Patch skeptic but have found it increasingly valuable and complimentary to our Nextdoor site. Through Nextdoor I learn about breakins within a three-block radius of my house; through Patch I learn about the proposed apartment complex being discussed at the town council meeting. Through Patch, I learn about a restaurant opening; through Nextdoor I learn whether my neighbors like the new restaurant.

    I love that my town of Safety Harbor has both — a town that has never been covered by the local paper (which my employer owns). Without Patch and Nextdoor, I would know almost nothing about this community of 17,000.

    It’s been fascinating to live in an experimental news zone and see the results firsthand.

    Julie Moos (Director of Poynter Online)

  4. How do we know they are doing anything right other than raising money? Revenues? Traffic? Might be a tad early to declare victory.

  5. What Burns My Bacon Wednesday, February 13, 2013

    As a former Patch editor I’m interested in seeing how Nextdoor plays out. I take it that it’s like Patch in that it will report on local news?

    If that’s the case, Nextdoor already made the same mistake that Patch did — using a non-news/media sounding brand name. I worked for a lot of news publications that had a newsy name and people got what those publications were about just by hearing the name.

    But one of the biggest problems while working at Patch was trying to convince people who never heard of it before that it was a news website. Many people thought it was a blog I was doing on my own and one of my co-workers had a few readers thinking that her Patch was a gardening website.

    I can tell you now that based on my experience people want local news and they don’t have time for any thing with a cute name. So Nextdoor better rethink its name, but I do wish them the best of luck. I will be keeping an eye on them.

    1. Having my second cup of coffee and waking up a bit, I re-read the story and discovered that Nextdoor is a local social media place and not a full-on news website. Let’s see how it works out.

  6. NextDoor is destined to fail for the same reason as Patch is now — it won’t be able to attract the local advertising from SMBs. This kind of service is only attractive to a narrow band of people so it won’t have enough reach to make it worthwhile for advertising. Print still rules — even Tim Armstrong is reportedly mystified about the ability of traditional community newspapers to survive, even thrive, where their electronic cousins have failed or are failing.

  7. gigaom_reader_like Wednesday, February 13, 2013

    A lot of startups that get funded won’t succeed, and I think Nextdoor is destined to be one of those — funded by failed.

    I won’t comment on the comparison to Patch, but rather, point out that Nextdoor is making a fundamental assumption mistake and is executing their business poorly.

    The fundamental assumption mistake: That strangers who happen to live in the same neighborhood want to be part of a social network together. This is sometimes true but oftentimes not the case at all. (The one dynamic that works here is schools/education. Many neighborhoods exist solely or nearly solely for their public school district. Those are parents who could be persuaded to join the same socnet. But many of them already have achieved this with a Facebook Group.)

    Nextdoor’s executional mistake is their site experience sucks. It’s full of spam, junk, nothingness, and no one’s here-dness. Try some random neighborhoods that it supposedly covers and the actual user experiences of being in that socnet is junky. No value. Stay on Facebook.

    I do wish “local” would be figured out and would succeed. But Nextdoor ain’t it.

  8. The problem I have with NextDoor is that the service creates arbitrary neighborhood boundaries which are not necessarily reflective of the neighborhoods people identify with and where they believe they live.

    Here in San Francisco, neighborhoods are not precisely defined and they frequently overlap for several blocks around the borders. People living in these “border regions” may identify more with the neighborhood on one side or the other, based on their own lifestyle, travel patterns, shops and restaurants they frequent, etc. But then they go to join NextDoor and are forced into a neighborhood they don’t identify with and don’t feel they live in — or want to live in. It feels almost hostile to me, and has soured me on the service.

    Within my own neighborhood association, we have several board members whom NextDoor insists do not live in our neighborhood. It’s pretty ridiculous, and NextDoor refuses to reconsider the arbitrary borders they have set. And folks assigned to the “wrong” neighborhood cannot view all of the content from the neighborhood they identify with, and are bombarded with unwanted content from a neighborhood they aren’t as interested in.

  9. Juliette van Eeten Wednesday, February 20, 2013

    I’m really excited after reading this article. I work in the Netherlands for the news website called ‘dichtbij’ (close-by). We have an open community and people can even comment on a post anonymously. Hearing this about Nextdoor makes me really interested. It’s a shame that I can’t take a closer look on the site…

  10. Fruzsina Eördögh Tuesday, March 26, 2013

    Nice piece, Ingram, but I don’t think you can compare the two. Nextdoor (and Everyblock) are social media services (like Facebook), not a blog network/news outlet like Patch (or Huffington Post’s local sections).

    Both services DO aggregate content though, so I can see why you lumped them all together.

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