Last year, while working out of Javelin Venture Partners in downtown SF, our offices were next door to a company called Nextdoor. Yes, that’s true. I am not a Nextdoor user. I didn’t think much of them at the time, but I had to walk by them everyday to go to the bathroom. And, looking inside, I could see there was increased activity. This was the summer of 2012. Since then, I’ve read a few longer-form pieces about Nextdoor, and obviously they’ve attracted smart venture money. Despite all that, I tend to think about Nextdoor differently, in terms of a confluence of mega-trends that touches on some previous academic work and philosophies about the state of the U.S. economy and political atmosphere. From this angle, thinking about investment into products where societal trends are shifting is fascinating to me. Briefly, those are:
- Local Advertising, from Yellow Pages to Online: This is the market Groupon and others tried to go after, and it’s so huge, all of those ad dollars will get sliced up in many ways. Yelp is v1.0 of this, with a long way to go.
- Location or Proximity as Context for Knowing People: Buzzy apps like Highlight or Yobongo before it promise to present us with information about who is around us, but most of them struggled to provide enough context to make a persistent connection with depth.
- Poor State of Municipal Finances: The city of Stockton, CA is legally bankrupt. Income inequality is so high in America, and because states, by law, are not allowed to go bankrupt, those problems get pushed down to the city level. When city finances are in the toilet, budgets get cut, so things like community shelters or even police get cut down in some cases. (This meme has been picked up, as folks are suggesting people are using Nextdoor as an “eye in the sky” neighborhood watch.)
- Facebook Feed Losing Local Relevance: Maybe local papers will also die off. They’ll have to come online, and they’ll need a Facebook page, and then their stories will get stuck in a huge feed. But the desire to read local news is high, just not distributed well. A platform like Nextdoor’s mental model could solve this.
- Collaborative Consumption on a Local Basis: This is old hat, but bears repeating in this context. If it were easy, I think more and more people would share and/or resell slightly-used but quality goods with people they know, and I believe we are just in the early innings of this trend. One reason is the overall stagnation of the economy, but also an attitudinal shift away from excessive commerce and accumulating material items in favor of spending disposable income on experiences.
[One Caveat: To play devil’s advocate, home ownership may continue to decline, which means people will rent more, implying they may switch neighborhoods more often (especially in cities) and then be less likely to invest in a service like this.]