Nextdoor CEO Friar opens doors for small businesses

SArah Friar, chief executive of Nextdoor Holdings, takes a somewhat Pollyyan view of how the neighborhood social networking platform will fare in the next downturn.

“Nextdoor is still very well positioned to continue to show growth even in the midst of a recession,” Friar said. People come to the platform during difficult times such as COVID-19 because it aims “to cultivate a kinder world where everyone has a neighborhood to rely on,” she explains. The first CEO took Nextdoor public through a Special Purpose Acquisition Company — or SPAC — in November 2021 with the KIND symbol, which she designed.

Friar seems remarkably optimistic even though his employer cut his expected annual revenue last month amid uncertain advertising demand. Nextdoor makes money from ads and sponsored content. Nearly one in three US households use the free app to find plumbers, sell things, or complain about neighbors. But rivals like Meta Platforms’ Facebook are much bigger.

Friar, 49, from Northern Ireland, has a master’s degree from Oxford University and Stanford University. She took command of San Francisco-based Nextdoor in 2018 after serving as a McKinsey management consultant, Goldman Sachs software analyst and chief financial officer for Salesforce and Square.

Heeding the criticism, Friar lobbied to remove racist and other toxic content from Nextdoor. His effort represents “a promising solution for any social media company struggling with toxicity,” TIME’s Alison Van Houten wrote in listing Nextdoor as one of the 100 most influential companies for 2022.

Friar recently spoke to TIME about his strategies to combat toxic content, Nextdoor’s depressed stock price, his international expansion strategy, and America’s lingering gender bias.

This interview has been condensed and edited for clarity.

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Why won’t your income growth spurt come to an abrupt halt if the economy deteriorates in 2023?

All of our competitors in the digital advertising space have recently revised their forecasts. Comparatively, we are still doing quite well because we bring something unique to advertisers. We reach over 75 million neighbors in 11 countries. We have [also] took the time to confirm that we only have real neighbors.

Why did Nextdoor introduce two additional features this spring to reduce implicit bias and promote friendlier conversations? A system you launched last year scans posts for red flags and encourages users to reconsider before posting something problematic. Plus, your kindness reminder already nudges users if it detects signs of a heated conversation, like negative language.

The amount of platform content flagged for harmful reasons is miniscule. It was 0.34% in 2021. But there is always more we could or should be doing. Unfortunately, the job of being a host platform is never done.

We are now working a bit more on the business intent of the platform. We’d love to help businesses find better ways to engage their community so you don’t feel like you’re trying to sell me something all the time. Someone who posts “$10 off next window cleaning” five times a day, for example, can be toxic if they seem really spammy.

Are your competitors adequately managing their toxic content?

We would like to see the industry do more of what we do. They should be prepared to slow people down to create more welcoming spaces, even if it disrupts engagement. We’ve seen people follow in our footsteps with features similar to Kindness Reminder.

However, Nextdoor investors seem unimpressed with your efforts to improve civilized discourse online. Your stock price has hovered well below the $13.01 level seen when Nextdoor went public. How soon could your buyback plan of up to $100 million worth of stock revive your depressed stock price?

Our stock price has performed slightly better than most other peers. The stock buyback is a signal to the market that we believe our stock price is significantly undervalued. It is a very good trading decision to buy back shares in the range of $3 to $4 per share. This will help the stock price as it will remove stocks from the earnings per share calculation. Assuming the market is rational, we will have higher earnings per share with fewer shares.

Nextdoor is growing faster overseas than in the US How many countries will you operate in by 2032? And when will the company be a global player?

We must be present in more than 11 countries. Our goal is to be a world player although I’m not ready to put a date on that. Making the platform more global is a great way to continue showing growth.

We launched in Canada, our last country, about two years ago. We have a playbook for choosing countries that get better every time. Scale matters. The same goes for countries where digital phones are already pretty well penetrated. The third thing we look for is a community orientation. Fourth, digital ad spend, because that’s our monetization engine.

Over 30,000 small and medium businesses advertise on your platform. How are you going to attract more such companies?

We have a very thriving ecosystem with them. We’ve seen around 55 million business recommendations from Nextdoor neighbors. About 3.4 million small and medium businesses have also claimed a free business page on Nextdoor. They can then grow further through Nextdoor ads.

Awareness is the limit right now. Some businesses don’t yet know that Nextdoor is for businesses. We need to help them understand that we could be their perfect way to advertise and make it transparent to attract more customers. They want to understand performance. Our new ad platform, for example, gives them a dashboard so they can actually see performance.

What is the best leadership advice you have received from more experienced CEOs who mentored you?

Build something that has real scale. Don’t get caught up in iterations. Think of the biggest needle movers you can spend time on rather than getting stuck in too many weeds.

Describe a potential Nextdoor move that you skipped because you realized it would only be a small step.

For a long time, we wanted to get into the idea of ​​barter within our For Sale & Free marketplace. But about two years ago we retired. I said, “Strategically, we have to stick to the big things. We need a fully functional advertising platform, for example. Focus and discipline are especially important in a company like Nextdoor, where you could probably do anything because most things have a local twist.

Should SOE CEOs be strong advocates for social change? You experienced heartbreaking upheaval growing up in Northern Ireland during its protracted religious conflict and later residing in South Africa at the end of apartheid.

More and more CEOs are being asked to think much more broadly about stakeholder value, in part because you’re seeing a decline in trust in government, the media, and other elements. With my life I want to work on things that can have a societal impact and not just be in business for cold hard dollars. I grew up knowing that a small group of people is the only thing that has ever changed the world.

But you have to be very careful. If you represent everything, you represent nothing. At Nextdoor, we have a very clear framework for determining the social issues we commit to as a business. It depends on whether this issue aligns with our Purpose, Mission, and Core Values. There’s also no point in being hoarse if you have absolutely no ability to influence. The third step is to assess whether our users are directly impacted. We have taken a stand on issues such as tougher federal gun control laws.

You think sunlight is the best disinfectant and that’s why you share board materials with all Nextdoor staff before board meetings. Why should more business leaders take this transparent approach?

Leading with transparency and empathy are probably the two best leadership traits you can exhibit as CEO of a public company. Transparency takes away a lot of fear that employees often have.

Within the limits of being a public company and aware of material non-public information, we share everything. It can be so easy for employees to get caught up in silos and become experts in a very specialized field. Forced to read widely, they can recognize patterns. Broad sharing of knowledge will spawn great ideas.

At the same time, trust is our core value. You have to show that you are leading on trust if you really want it to be part of your culture.

You recently said that there are a lot of mediocre men in business, but “there is no place for mediocre women”. Why are you and other American female executives always held to a higher standard than their male counterparts?

There are still many implicit biases inherent in the system. The statistics prove it. Women founders secured just 2% of venture capital in the United States in 2021. This is the smallest share since 2016. And 2021 was the second year in a row that the percentage of women in venture capital- risk has decreased. I am part of this group of women trying to raise capital. I’ve raised a lot of money in my life, whether it’s with Square or now with Nextdoor.

We step back. How can this happen? It would be great if we could get more blind reviews of founders pitch decks like big bands [do with auditions]. Meanwhile, female executives have to work harder, better, and ultimately do more than the majority of the business community, which is made up of white, straight men.

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