Nextdoor might have a hard time keeping up with Joneses



People who walk their dogs react to seeing lawyer Jessica Pride driving her husband, dressed as an Easter bunny.

NEW YORK, July 6 (Reuters Breakingviews) – Nextdoor is trying to track Joneses. The neighborhood social network is merging with a blank check company sponsored by Khosla Ventures in a deal that values ​​it at $ 4.3 billion. What Nextdoor is trying to build – an online community that unites, helps, and improves the places where its users live – is admirable. He is also, unfortunately, vulnerable to the Facebook Bulldozer (FB.O).

Founded in 2011, the company run by former Square executive (SQ.N) Sarah Friar aims to be a hub for information on yard sales, missing animals, restaurants and crime. About one in three households in the United States turn to the site and it has 60 million verified users worldwide, just under half of whom visit it once a week. Nextdoor has also been successful in attracting big financial names to its neck of the woods, including fund manager T. Rowe Price and Silicon Valley investor Bill Gurley.

Specialized acquisition companies like Khosla Ventures have injected capital into many bizarre ideas and products that don’t even exist yet. Nextdoor, however, has the opposite problem. Facebook is richer, more popular, and already targeting Nextdoor residents. In May, Mark Zuckerberg’s company launched “Neighborhoods,” designed to help people connect with people nearby. Facebook may not have the originality on its side, but it has an annual sales and marketing budget of around $ 10 billion.

Competition extends to Nextdoor’s revenue providers. About 55% to 65% of Facebook’s $ 84 billion in advertising revenue comes from small businesses, Pivotal Research estimates. Certainly, Nextdoor is growing faster. Its revenue increased 49% in 2020 compared to 2019. But it is starting from a much smaller base and the company remains unprofitable, resulting in its putative enterprise value being 20 times higher. forecasted sales for next year – more than double the multiple sports enterprise of wealthy Zuckerberg.

Friar’s business is trying to position itself against toxic content hosted by Facebook, Twitter and other mega-networks – even taking the ticker symbol “KIND”. But kindness may not help him in the end. If lawmakers place restrictions on the ability of tech companies to evade responsibility for what their users post, it’s small businesses like Nextdoor, with less to spend monitoring their users, that could see their very existence threatened. The rewards for being a good neighbor have never seemed so uncertain.

To pursue @jennifersaba on Twitter


– Nextdoor announced on July 6 that it has agreed to merge with a special purpose acquisition company sponsored by Khosla Ventures in a deal valued at $ 4.3 billion. The transaction includes a $ 270 million “private public equity investment” component backed by funds managed by T. Rowe Price, Baron Capital and Dragoneer, among others. Nextdoor CEO Sarah Friar also helped fund PIPE.

– Nextdoor, a neighborhood social network founded in 2011, reported revenues of $ 123 million last year. He lost $ 75 million in 2020.

Editing by John Foley and Karen Kwok

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