Nextdoor Co-Founder Sarah Leary on The Journey of the Pivot | #ProductSF

In this episode, Nextdoor co founder Sarah Leary talks about the journey of pivoting fan base to Nextdoor. She shares both the emotions and learnings their team took away from the Pivot and how they identified the burning need for a social network for your neighborhood. This presentation was recorded at Product sf, an event hosted by Greylock Partners that brings together founders, PMs, and product leaders to talk about the challenges of building new, innovative products that change lives and create habits. For more podcasts, please visit news.greylock.com I am thrilled and really privileged to introduce Sarah Leary, one of the co founders of Nextdoor. People may not know that Sarah actually was, in her very early career, an associate at Greylock. So she's been part of the Greylock family for a long time. We invested in Nextdoor about four years ago, and she can tell the story of Nextdoor, which is a great story of a pivot in a really interesting way that they've gotten to just an important local community. So thank you, Sarah. Thank you. Thanks for coming up. Perhaps it's an interesting story. There's certainly a fair bit of drama along the way. And what Josh really wanted me to do today was to share a little bit of the story and to pull the veil back and tell you a little bit more about the ups and downs. This is an audience of a lot of experience, product people, co founders, founders, people who have been through this journey. And so I'm going to go in the route of trying to share with you a little bit of behind the scenes of what happened in the hopes that we can learn from each other. So how many of you use Nextdoor? Come on. All right, great. So you know what nextdoor is. We're gonna talk a little bit about it, but let's actually shift gears here, and we're going to talk about the Pivot and how we got to Nextdoor, because it's not a straight shot. We didn't wake up with this brilliant idea of Nextdoor and just go straight for it. It starts with a failure. How many of you have heard of Fanbase? Oh, God bless you. All right, so my co founders and I, Nirav Tolle and Prakash Janakaraman, started a company back in 2008, eight called fanbase. It was designed to be the world's largest online almanac for college and pro sports fans. And it was something we were very excited about. We spent a couple years building it, we launched it. We got up to 15 million unique visitors in the first month. And after about six months, we realized that we weren't on to the next ESPN Killer, and that was a very difficult journey to go down. And we actually made the decision to try and give the money back to our investors and. And to go and say, we're going to go do something else. And fortunately, our investors at the time said, well, we invested in the team and we want you to take a summer and think about whether or not you want to pivot in a different direction. And I think a pivot is one of those things that sounds great. In hindsight, I will tell you that the actual pivoting sucks. And I think the first thing that we really tried to do was to learn from our mistakes. We had been successful entrepreneurs beforehand. We had a lot of confidence coming into the start of Fanbase, and when we looked at what actually had gone wrong, because we had spent two and a half years working on Fanbase and realizing that we had failed, that is a lot. Two and a half years, wow. If you look at what went wrong, we built something that was nice to have, not a must. Have. We took too long to get the product into the market. We lacked any market feedback during the entire process. We completely missed on the product market fit. And I think our optimism about, we can do this. We're entrepreneurs, we're right. And by the way, we got a lot of external feedback from people telling us that we were onto something. Unfortunately, those weren't the people that we were trying to get as users of our product. And so we tried to take a different approach as we thought about nextdoor. And the context of nextdoor was that actually building on a lot of the stuff that Reid had done and a lot of conversations with Reid about what was happening, where people were having social networks for all these different parts of their lives. They had it for their friends and family on Facebook, their professional connections on LinkedIn. And Reid was actually one of the important people that when we talked to him about the idea of having a social network for your local community, he was very encouraging, saying, that is a distinct part of your life, and it's great when someone like Reed says, you're onto something, it's great. The problem is that's not enough that got us going, but we decided that we needed to take a much more rigorous approach to launching what became nextdoor. And so if you look at the process that we took, I'm gonna go through this in a little bit more detail and show you some of the artifacts that we developed over that summer of 2010. The first thing that we wanted to focus on was making sure that we had a real need. This actually came back to my days as an associate at Greylock. A guy named Bill Kaiser. I remember him saying to me, you want to be in the business of selling painkillers and not vitamins? And when we took a really harsh look at fan base, it was very clear that we were trying to build a vitamin. And we said, above all else, we want to build something that people really need, that if we turned it off in the middle of the night, they would actually notice and care. And that's where we wanted to create something that was a painkiller. And that sounds great, but how do you go find those? So the first thing that we did was actually go talk to members. This is the real survey results from the survey done in July of 2010. Selena, you may recognize this because this is a survey monkey result. And we asked a simple question. Would you like to be more aware of what's happening in your neighborhood? And 78% of people said, yes, that's a big deal. 7 to 8% of people actually agreeing to something. You don't get that that often. That was great. But we kept going to say, all right, well, what are the alternatives that you have today? And look at this list of where people were getting information at the time. You're getting them from word of mouth, local newspaper, maybe they're discussion groups like Yahoo groups. These were old world offline ways that most people were getting information. We said, look, there's a need and there's not a very good option available for people. But we did want to make sure that this was something that was not just a nice to have, but important to have. And so we asked people, basically, what interest level do you have on different types of information? And you can see across the board how interested they were. And it's interesting here I highlight the one that's about crime information. And this one really stood out for us. And this started to get at like Maslow's hierarchy of needs. This was something that people had an emotional reaction to that they weren't able to get this information in an easy way. And so all this was done before we ever wrote a line of code, before we actually designed a mock up before we did anything. And honestly, my technical co founder, Prakash Janakaraman, literally would sit on his hands and be like, sarah, I'm not building anything. And until you actually have verified that this is something that people need. And so with this we started to say, all right, well, there seems to be a need and there seems to Be an important need that people have, but let's actually go out and get some real feedback. And to do that, as much as we want to talk to each other in Silicon Valley, we tried to actually talk to potential users of our product and even getting out of the Silicon Valley echo chamber to try and get that feedback. And so that meant going out and doing a lot of coffees and meeting with folks in different parts of the country. And we actually started this with simple wireframes. This is the wireframe From August of 2010 for Nextdoor. And you may not be able to read it, sorry, in much detail, but we have a couple product managers from nextdoor here who have joined in the last couple years and they'll be shocked to see this because things like issues, topics, polling organizations, businesses, we started with a really broad view for what we thought nextdoor could be. We had these high minded ideas that people were going to take positions on different political issues. At the time, if you were living in San Francisco, there was the sit lie law that was on the ballot in the 2010 election. That was actually one of the inspirations to be like, hey, people want to weigh in on these issues. When we showed about five different groups of people, these wireframes and tried to explain it to them, they said, these are all really nice. We have these issues maybe once every five years. But really what I'm trying to do is I want to find a babysitter for Friday night, I need a plumber, and I need to figure out why there's a white van parked in the wrong direction at the end of the street. What they articulated to us was that they needed something that was helpful for them on a daily basis. And if we had gone down the path of building this entire product, we would have missed that completely. Fortunately, we found this before we even started doing wireframes. So most people that we talked to though, had a hard time really understanding wireframes. So we took it a step further and we started to create something that was a mockup. This is one of the ugliest mockups that you'll ever see, but it was actually what we used. The product managers created this as a way to go out and talk to people about the idea of nextdoor. And what you see is a news feed on the left and I don't know if you can tell, but on the right that's a map. It's a map of the inner sunset, actually. And when we showed this to people, they totally got the left hand side. That's a social Network, we understand that, but they really lit up when they saw the map. The idea that you could visually think about your neighborhood looking at a directory in a visual format of a map. And even though this was incredibly crude, it was very helpful for us to understand where there was excitement and energy about the concept of Nextdoor. And again, we haven't written any code yet. So at this point, we decide we actually probably need to test this in the real world and figure out whether or not people were going to use it the way that they said they were going to use this. And we were very lucky. We found a community down in Menlo park that was willing to be our guinea pig. It's the Lorelei neighborhood. This is a photograph that I took one afternoon when I was down in Menlo park, one of the four times that I had to go down and pitch the idea of Nextdoor to a group of 10 folks that represented the homeowners association in Lorelei. And God bless them, they were willing to be our guinea pig and to actually use Nextdoor. And within six weeks, we built a simple prototype. Now, I have to give a call out to Reid. How many of you have seen this quote before? How many of you have used it as a reason for. We have to release this. Okay. Exactly. So I have to tell you that the prototype that we built was rough. We like beautiful things. We want it to be perfect. We're experienced entrepreneurs. We want to be proud of the products that we get out there. And yet we have to be able to put things out there when it's not so perfect. And I think this captures it. You actually have to be a little embarrassed. And so I'm going to show you actually what next door looked like in that first neighborhood. And it is a little embarrassing to look at, so don't laugh. But we didn't even have the name next door. We called it Lorelei Neighbors. I remember one of the members of the Lorelai neighborhood who was being very helpful to us looked at it and was like, okay, guys, but it's kind of ugly, right? And we said, we know, we know, we know. Because one of the important things that we tried to do here was say, look, our big question is, will neighbors actually have things to talk about? Because if they don't have anything to talk about, then it's not worth it for us to build all the invitation mechanisms and all the address verification tools and all the geospatial tools that we need to do. Let's figure out if people will have interesting things to say and so we launched this in the Lorelei community almost exactly six years ago today. I think it is literally today. And we got a little lucky. It turns out that Halloween is one of the most neighborly holidays of the entire year. And so within a number of days, we found that the Lorelai community was using next door to talk about organizing a parade to get together on Halloween, to talk about sharing information about someone who could paint the house, other get togethers. And so within really two weeks, we got some validation that actually all those things that we thought might happen would actually happen. And we did it after only six weeks of development time, with two and a half engineers working on it. And so that gave us the impetus to be able to go forward and say, great, it worked in Menlo Park. But as many of you know, most people outside of Silicon Valley say, well, that's only going to work in Silicon Valley. And so one of the things that we did was to try and validate this product market fit and to make sure that it was going to work across the country. We actually spent almost an entire year testing this across the country in 26 different states. And we definitely held our breath. And we had it used in Hamilton, New York, which is an upstate New York, very rural area. We had it in Austin, Texas, outside of dc, the south side of Chicago. And what we learned was that while people talked about very, very different things in each of these communities, there was a shared interest in having an easy way to talk to the people who lived around you. And based on that, we decided and a lot of development work to make it such that I didn't have to drive down and actually sit it to them. I didn't have to draw the neighborhood boundaries by hand. We didn't have to get on the phone with every founding member and convince them as to how and why they should be using nextdoor. We actually took the product that we had done in a very manual way in that first month, and we worked backwards and we built out the capabilities such that anyone could come in, they could draw their neighborhood boundary, they could get it started, and they could use next door, and they could use the mechanisms that we had created to help get the word out to their own neighbors. So we actually, as we go out and we launched this October 26, 2011, we were very lucky. We got a lot of positive feedback from the likely characters that are out there. And that obviously is super helpful, and we felt good about that. But I will tell you that we certainly didn't feel like it was a success because Ultimately, what we needed to do was, was track how people were actually using this and a real commitment to data and understanding not just the qualitative data that you get, but the quantitative data, but also the qualitative data. What were people saying? How were they using the product? Where were they happy? Where were they frustrated? And that allowed us to figure out how we could accelerate growth. And most of the story that I've told you today is really about the product cycle and figuring out product market. And at the time when we're in the beginning stages, obviously that's all that matters. But it became very clear that one of the challenges for nextdoor was figuring out how do you grow this, how do you get all these neighborhoods across the country starting to use nextdoor and growing it. And that's really where we shifted some of this approach to how we thought about growth. I've spent time as a product person and as a marketing person, and I think the experiences of the failure of fan base and how we actually started nextdoor really shaped the way that we think about growth and marketing at Nextdoor. And it's really this idea of you need to have a hypothesis and be willing to test really crazy things, things that most people won't think is a good idea, most things that you don't hear are the best practices. That's actually how I think you come up with innovative ideas, is being willing to test things, do it as cheaply as possible, and figure out what's working and what's not working for your product. The things that we did on growth here are things that are a little bit different. And part of this was we were willing to try unscalable things in the beginning. You'll hear some people talk about this and it's one of the things, if you've spent any time working on community products, that I believe is one of the first principles. You can think about scale and how you get to tens of millions, hundreds of millions of people. And it can freeze you from actually doing the right work to seed the communities and get things right. And that means getting in your car and going into a community and talking to people. That means hand drawing neighborhoods early in the process. That means being willing to do non traditional growth things that make sense for your product. And if you simply sit there and say, look, if it's not, it's not SEM, it's not SEO, I can't calculate my virality coefficient, then I shouldn't do it, it won't work. You have to be intellectually honest about your own product and your own market and your own users to understand what problem do we have to solve to actually get distribution. And it's something that I think has been a real guiding principle for nextdoor even to this day. Let's take the last one Offline invite mechanisms. It turns out that one of the key opportunities with Nextdoor, one of the challenges we're trying to solve, is that most people don't know their neighbors well. If they don't know their neighbors and they don't know their names, then they probably don't have their email address. So you can't use traditional email invitation virality mechanisms to grow next door. You have to think about the real world in which we operate. And in this case, it's really about offline ways of growing your neighborhood. So what you're seeing here, those are mailed invitations, postcards that we send out, we have flyers, we have lawn signs. Not a traditional way that you think about growing a Silicon Valley company. And yet it makes all the sense in the world for nextdoor. And we were willing to try these things on a very small basis and understand if they worked and if they made sense and if we could make them make sense financially, we've gotten pretty good at doing these. The second one that I'll bring up is partnerships. You'll hear a lot of people when they think about partnerships in Silicon Valley, it's like, are you working with Facebook? Are you working with Google? Kind of the traditional folks. We actually partner with over 1800 city officials and police departments across the country. You can imagine bringing this up in a board meeting and say, these are the folks we're going to partner with. And our board members kind of tilt their head and say, wow, that's not a traditional way to grow. But it made sense for nextdoor. Very early on, we had members who were using nextdoor. That said, we'd like to be able to hear from our local police department, how do we get them onto the platform? And they've been incredible partners for us. We've partnered with over 75 of the top 100 police departments across the US and then the last one I'll just call out is using local press as a way to get the word out about nextdoor. Nextdoor is a hyperlocal product. We have incredible stories about neighborhoods coming together, using the platform to make their community better. And even though a lot of people think about local media as being this dying breed and no one watches the local news, turns out that people still watch those things and they still read the local paper and our content and our stories and how people are using nextdoor fits right in with some of their needs. And we've been able to use this quite a bit in the last five years. I think we average about 3,000 stories a year across the country in local media in the U.S. and it's been a great way for people to learn about nextdoor. The last thing that I will just touch on is you look at fast forward. We started with 176 neighborhoods. We're approaching 115,000 neighborhoods. But I think the thing that I'm most proud of is that we've solved a real problem. We've become a lifeline to people in their neighborhood. One of the most important moments for nextdoor happened about seven months after we started that pilot period. And during that time, we only had about 15 neighborhoods. And one of the engineers said, hey, I need to take down the site, I need to make some changes, and I want to do it before I go to lunch. Okay. Took down the site for 15 minutes. Took make a simple change on the back end. And within 15 minutes, I got a phone call from one of the founding members saying, what happened to next door? It's down. I need it right now. I need to contact one of my neighbors. And I thought, wow, we had actually built something that people needed and that if we shut it off at some point in time, people would scream. That's when you actually know that you've built something that people need. And it's not just a nice to have. Most recently, I'll just close with this, is that we are now taking this internationally and a lot of these tactics that I talked about that we used in the US we are now repeating much faster in other countries. We launched in the Netherlands back in February. We already have over 30% of all the neighborhoods in the Netherlands using Nextdoor. And it started with a few neighborhoods. Early founding members who were starting to use nextdoor who could give us feedback about how people in the Netherlands thought about their neighborhood and how they could use the platform. And we've repeated that most recently in the UK where we launched about three weeks ago. And already we have thousands of neighborhoods across the UK using us. And it's just fun to be able to take some of those best practices that we learned in the beginning and hopefully run the play a little bit faster and better as we move out across the entire world. So I just leave you with this, is that as you think about starting new projects, even if it's not at the very beginning of a company, even if it's not just product, it could be product and marketing. This idea of taking an approach of having a simple hypothesis, testing it as quickly as possible, and iterating on that is really important. And I believe that it is the key to actually coming up with innovative solutions. So with that, I wish you the best of luck and thank you. How do you think about network effects between neighborhoods? Not within a neighborhood, but among them, or from one neighborhood to, let's say, a city, and city to a country? Great question. So really, when we thought about Nextdoor, initially, we were entirely focused on the atomic neighborhood, individual neighborhoods. It became pretty clear early on, though, that when people think about their neighborhood, they think about it not just their own neighborhood, but also the adjacent neighborhoods. And I think one of the most important innovations that we introduced was about three years ago, something that we call nearby neighborhoods. And so with Nextdoor, not only can you talk to your immediate neighborhood, but you have the ability to share information with adjacent neighborhoods. And that has certainly helped in terms of content, information, sharing of information, and virality and network effect. We also have some of that when you look at our partnerships with city officials. So you think about our growth really comes down to city by city, and we really think about it by city, not just the individual neighborhood. I see that you use this term founding members for these people that help start these neighborhoods, which is kind of. It gives a sense of responsibility and probably pride in being the initial member. How do you select who these people are and also how do you convince them and how do you make them feel kind of the pride of being part of Nextdoor? It's a great question, and I think it's something that we probably spent the most amount of time early on when we were in that early pilot process. In the beginning, obviously, me and my co founders were on the phone talking to folks who are starting their neighborhoods, and we needed to find a way to actually productize that because it didn't scale. And so there's a number of steps in the product. If you put in your address and we don't already have a neighborhood in that area, you're asked, do you want to be the person who wants to be the founding member? We actually make it sound like it's some work, it's a special person. We make you fill out a little form, kind of like an application, and then based on how you respond to that, we give you the opportunity to start the neighborhood. The next thing you have to do is that you have to draw the neighborhood boundary and give it a name each one of those steps. If you guys do anything on growth hacking, know that. Wow, the funnel, you're losing people along the way. Hopefully we're losing the right people along the way. The people who don't want to take ownership and responsibility for getting the neighborhood started. And then even after they do that, they've created a pilot neighborhood and they are given 21 days to go recruit nine other verified members to join. And if they do, then it becomes a launch neighborhood. If they don't, we'll expire the neighborhood and give someone else the opportunity to start it. So it serves as a voting mechanism. And to your point, we do think about that name. We thought very carefully about that name that gives that pride of ownership. Because one of the things that's very important is that as members use our platform, they need to feel like it's their next door neighborhood community. That certainly is important in the us but think about when we go into the UK and the Netherlands, it needs to feel like their local community. And I think it's one of the things that we had to experiment with a lot in that first year and I think we got most of it right. There's a lot of things we could improve upon that, but there's clearly a sense of ownership that people have when they start a next door community and pride that they have that they will always be the founding member of that community. One more question. Can you talk a little bit about what it was like to corral and get the most out of your team during the wayfinding process when it came to the pivot? But then even as you had an initial hypothesis tested that I'm sure that led to another one and sort of a zigzag process. When we were fan base, we actually had 11 people on board and we pulled the whole team together and we said, look, we're going to go in a different direction. That's not what everyone here signed up for. And we made it very clear that if you didn't want to go on this unknown journey, that was the pivot that you could get off and we could part as friends. We actually gave financial incentives for people to get off at that point in time. And we actually got down to seven people who wanted to be a part of the pivot that started in May of 2010. Some people have heard this story before, but we had a standing 10am meeting every day to come up with billion dollar idea. Thank God. We had lunch every day to actually stop the madness, take a break and we came up with lots of ideas in the morning, and then in the afternoon we'd go work on it. And by the next morning, we had killed off most of those ideas. And so while we talk about Nextdoor and how we got there, there were three or four other ideas that people were passionate about that they were working on and they were working in parallel. And so part of the reason that Nextdoor had to go through all of these steps and all these surveys and mock ups and designs was because it needed to win the enthusiasm of everyone in the group. There were other projects that people were working on, and so there was a little bit more of a market force that was happening internally and different people were passionate about different ideas. But over time we were able to demonstrate with data that, hey, this next door idea was the one that was winning. But it's a really important point and one that I think often gets overlooked. I think we were smart about making it something that people opted into the pivot. They chose to be on this journey and for some people it wasn't a good match and. And they left. One of them actually came back and joined us about four years later because he was so excited about it. But you have to have everyone who's on the team excited to go on that journey that is filled with uncertainty, that has an unclear outcome at the end, and the fact that we had seven of us during that time, that was a little bit bigger than what we intended, what I would ideally have. But it led us to be able to have multiple ideas that we were working on in parallel and getting feedback on and. And eventually coming to the data was clear. This was the winning one. Thank you so much, Sarah. Thank you.