Nextdoor Business Model – How Does Nextdoor Make Money? – Business Model Analyst

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Nextdoor Holdings, Inc is an American public company founded in 2008 with its headquarters in San Francisco, California, and its current CEO is Sarah Frair. Nextdoor operates a hyper-local social networking service for neighborhoods and allows neighbors to keep up to date with local news — including crime in the neighborhood — and hire sitters for their dogs or babies. The Nextdoor business model allows them to make money from sponsored posts, as well as run local deals and ads on their app. 
Unlike other social media platforms like Facebook and Instagram, which allow people to connect with users around the globe, Nextdoor aims to connect exclusively people who live near one another. It has an app designed for this purpose. Once users are registered with Nextdoor, they have access to a lot of benefits, such as:

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Nextdoor Inc. was founded by four people: Nirav Tolia, Prakash Janakiranam, David Wiesen, and Sarah Leary in 2008. However, the company’s history started in 1999, when Tolia and some people co-founded a website for reviewing consumer products, Epinions
Epinions soon merged with a company known as Dealtime, which dealt with price comparisons. In 2004, both companies went public. Due to the merger, the value of the companies rose and skyrocketed to $750 million. 

 

However, due to being untruthful about his schooling and previous work experience, Tolia, one of the founders, was fired. To save him from losing face, he was hired to work at Benchmark as an entrepreneur in residence, leading to the start of Nextdoor three years later. But the issues had not ended. Raj Abhyanker, one of Tolia’s business partners, sued Tolia and Benchmark for copyright infringement. Before Nextdoor was created, Abhyanker had researched and started a social network in the Lorelei neighborhood in Menlo Park. He told Benchmark, who told Tolia, and Tolia began a similar company not quite long. 
Nextdoor was tested for a year before it was officially launched, with 175 neighborhoods in 26 states already registered on the website in 2011.
Nextdoor was jointly founded by Nirav Tolia, Sarah Leary, Prakash Janakiraman, and David Wiesen. However, its concept was derived from Raj Abhyanker, who invented FatDoor, in 2006. Nextdoor revealed its ownership structure when it went public in November 2021.
Benchmark, represented by Bill Gurley, has the largest boring power with a common stock of 16.88%. This is followed by Shasta Ventures with a total of 8.77%, Greylock with 6.80%, and Tiger Global Management with 5.37%.
The rest is divided among the co-founders Sarah Leary, Prakash Janakiraman, and David Wiesen, and each owns less than 1%. Only the current CEO, Mrs. Sarah Friar, was granted a stake of 4.40%.
Nextdoor is founded on the idea that the neighborhood is one of the most important communities in an individual’s life. It aims to be a platform where neighbors everywhere can make trustworthy connections and exchange helpful information, goods, and services.
As a venture-funded company, Nextdoor Holdings Inc. was not mandated to generate revenue for its operations, so it only started making money four years ago. By 2016, Nextdoor started testing various income sources. Currently, its business model has three different income streams.
This is Nextdoor’s main advertising program. Here, Nextdoor receives a fixed amount of money from businesses for their deals to appear on the user’s feed. These deals can be as low as $3 but often range from $60 to $90, depending on the area;
This deals with content creation from businesses that benefit from Nextdoor’s advertising program. Because Nextdoor has as many as 36 million active users, it is an excellent avenue for brands and business owners to make sponsored ads to reach a wide range of people. However, only national brands or big local businesses can use sponsored posts. These companies must pay a monthly commitment fee of about $25,000 before using this feature.
The sponsored posts are optimized so that they are only shown to users who are closer or have easy access to the brand or business advertising. Nextdoor also posts local deals, which is perfect for smaller businesses as the cost isn’t much. The average price of posting a local deal is as low as $75. These local deals are only posted to those within a two-mile radius of the business for easy accessibility. It could, however, be extended to a 10-mile radius.
Local service businesses can advertise their services on the website through neighborhood sponsorships. Such businesses include home insurance/renovation/mortgage experts, roofers, real estate agents or brokers, and vacation rental experts. These businesses, known as neighborhood sponsors, pay a fixed amount monthly to Nextdoor to show up on the users’ feeds.
The Nextdoor Business Model can be explained in the following business model canvas:
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Nextdoor’s customer segments consist of:
Nextdoor’s value propositions include:
Nextdoor’s channels consists of:
Nextdoor’s customer relationships consist of:
Nextdoor’s revenue streams include:
Nextdoor’s key resources consist of:
Nextdoor’s key activities are:
Nextdoor’s key partners consist of:
Nextdoor’s cost structure consist of:
The swot analysis of Nextdoor’s business model must be analyzed to understand its success.
Nextdoor is one of the fast-rising social networks where neighbors communicate and build strong relationships without speaking in person. Missing pets can be found. People who are new in the neighborhood can find an excellent doctor or a nice restaurant to dine at. Neighbors can advertise events or post items for sale. However, Nextdoor can host hate-filled political arguments. Neighbors sometimes argue about the neighborhood’s rights and wrongs, such as walking a dog off-leash. They can also call each other out for bad driving habits or loud music.
When used safely and thoughtfully, Nextdoor is a social network where people can make new friends, socialize, share essential resources, or post warnings of criminal activity. Since Nextdoor is based on geography rather than one-on-one relationships, people from all over North America can connect on the social platform and build vibrant neighborhoods.

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