Nirav Tolia: Nextdoor. How neighborhood chatter went global
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
In this episode of How I Built This, Guy Raz interviews Nirav Tolia, cofounder and CEO of Nextdoor, about his journey building the neighborhood social network. (03:56) Tolia discusses how Nextdoor emerged from the failure of his previous startup Fanbase, driven by a 2010 Pew research finding that 30% of Americans couldn't name a single neighbor. (02:36) The episode covers his early career at Yahoo, the dot-com boom and bust, the challenges of building local communities online, and his recent return as CEO after stepping down in 2018. (59:02) Tolia explains Nextdoor's evolution from a simple neighborhood message board to an "essential local application" serving 335,000 neighborhoods worldwide, while addressing the ongoing challenge of making the platform profitable and relevant in an increasingly competitive landscape.
- Main themes: Building authentic local communities, the importance of persistence through failure, scaling trust-based platforms, and the unique challenges of monetizing neighborhood-focused social networks
Speakers
Nirav Tolia
Nirav Tolia is the cofounder and CEO of Nextdoor, the neighborhood social network serving 335,000 communities worldwide. Born in Odessa, Texas to physician parents who immigrated from India, Tolia started his tech career as employee #84 at Yahoo in the mid-1990s. He previously cofounded Epinions (which became Shopping.com and was acquired by eBay for $620-630 million) and Fanbase, a sports fan community that ultimately failed but led to the creation of Nextdoor in 2010.
Guy Raz
Guy Raz is the host of How I Built This, NPR's popular podcast about innovators, entrepreneurs, and the stories behind the movements they built. He conducts in-depth interviews with founders and business leaders about their journeys building successful companies.
Key Takeaways
Embrace Manual, Unscalable Solutions Early On
When building Nextdoor's neighborhood verification system, Tolia and his team manually sent physical postcards through US mail with verification codes to confirm users' addresses. (42:52) This approach was expensive and completely unscalable, but it solved the critical trust problem that neighbors had - ensuring people were actually who they claimed to be. Tolia emphasizes that young entrepreneurs often avoid manual processes thinking they won't scale, but the key insight is to worry about scalability after achieving product-market fit. For community-based businesses especially, manual intervention is essential 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."
Use Failure as Your Competitive Moat
After Fanbase failed to retain users despite reaching 10 million users quickly, Tolia learned that some challenges can actually become advantages. (38:37) When starting Nextdoor, he knew from Pew research that 30% of Americans couldn't name a single neighbor, making customer acquisition incredibly difficult. Rather than seeing this as a fatal flaw, the team "wore that as a badge of honor because we knew that it would scare away the vast majority of competitors." The lesson is that extremely difficult problems often have less competition, giving persistent founders a better chance at building something meaningful and defensible.
Sequential Business Model Building
Nextdoor operated for five years without generating revenue, focusing entirely on building vibrant communities before introducing advertising. (55:54) Tolia explains this was an "indirect business model" where you don't ask primary users to pay directly. The key insight is that when building this type of business, "it's not simultaneous - you attract the user and you attract the advertiser at the same time. It's a sequential build." However, he now believes they made a mistake by not involving small businesses from the beginning, as it would have created more vibrant communities while building the foundation for future monetization.
Know When to Step Away From Leadership
By 2018, despite Nextdoor's success, Tolia was experiencing severe burnout affecting both his intellectual and emotional capabilities. (59:24) When his board suggested bringing in a new CEO, he recognized the truth in their assessment rather than fighting it. His advice: "Everything was making me feel stressed... and it was the stress that got in the way of seeing clearly, thinking clearly." The ability to recognize when you're no longer the right person to lead your company, even when it's painful to your ego, can be crucial for the company's continued success.
Take Sabbaticals Between Ventures
After leaving Epinions following legal and personal challenges, Tolia moved to New York for a year of reflection before starting his next company. (24:13) He emphasizes that "one of the hardest things about being a founder is you never have the space to really absorb the greater lessons. You're just in motion." His year in New York, while not business-focused, taught him "some of my greatest lessons about life." He highly encourages entrepreneurs coming off one journey to take a sabbatical, as this reflection time is crucial for processing experiences and preparing for the next challenge.
Statistics & Facts
- According to a 2010 Pew report on community in America, 30% of Americans could not name a single neighbor by name. (02:36) This statistic was foundational to Nextdoor's mission and highlighted the community disconnection problem they aimed to solve.
- Nextdoor currently serves 335,000 distinct neighborhoods around the world with 100 million verified neighbors, of which 25 million use the platform weekly. (67:25) This demonstrates both the scale achieved and the engagement opportunity still available.
- When Nextdoor launched nationally in 2011, they started with only 176 neighborhoods, leading a board member to calculate it would take 100 years to reach all US neighborhoods at that pace. (48:02) This illustrates the daunting scaling challenge they faced early on.
