What is NextDoor? How Does it Work?

By Justin |  Oct 26, 2021 (5 min read)

Business | Marketing | Social Media | Trends

Just when you thought there was a social media app for everything, along comes an app specifically designed for your local area. 

In days gone by, neighbors would gather on the street to talk about local issues or share helpful information. Today, thanks to the proliferation of smartphones, we can do the same thing through an app.

Nextdoor is a hyperlocal social networking service designed for connecting neighbors in a local area to each other. With the purpose of reconnecting locals, the Nextdoor app has evolved to include buying and selling services and hosting social interest groups. 

In 2021, Nextdoor is a hybrid of Facebook groups, Meetup, and Yelp, all rolled into one, paid for by local and national advertisers and sellers.

According to internal company data, 1 in 3 households in the U.S. are Nextdoor users. It is currently available in 11 countries, with a total user base of more than 10 million people and 260,000 active neighborhoods.

The History of Nextdoor

The company was founded in 2008 and is based in San Francisco, California. In 2010, the first lines of code we created for a prototype originally called “Neighborly.”

The initial app idea that became Nextdoor was a pivot Fanbase, an online crowdsourced almanac of professional and college athletes. The app had raised $5 million in venture funding from Benchmark and had 15 million monthly active users before being morphed into Nextdoor.

Nextdoor launched in beta in the United States in October 2011, with over 100 neighborhoods active even before it was publicly released.

As Nextdoor CEO Nirav Tolia explained in 2011, ​​”We ‘friend’ more people than ever and ‘follow’ strangers we’ve never met, yet we don’t have a good way to communicate with the people who live right next door. There are many ways our neighbors can help us, but these days people don’t know their neighbors or how to contact them. Nextdoor was created to change that.”

In 2015, Nextdoor was generating a lot of buzz in Silicon Valley and the greater tech world for becoming one of the few technology companies to reach a $1 billion valuation without earning any revenue.

As of 2016, Nextdoor began to generate revenue by offering businesses the opportunity to advertise through sponsored posts and listings. In 2021, Nextdoor had revenue of $123 million , up 49% year-over-year.

What is the Purpose of Nextdoor?

At its core, Nextdoor is a social media app that helps you communicate with your neighbors. As an alternative to traditional forms of social media, Nextdoor offers a more localized, filtered way to build connections with your neighbors and people in the local area.

Through the Nextdoor app, you can start discussions with your neighbors that bring attention to important issues within your community. You can also buy, sell, and share free items that you want to give away. On top of that, you can also connect with like-minded people around interests such as fitness, hobbies, parenting, local events, and dining.

Of course, some restrictions limit where you can join. To become a member, you must verify your address to join. You can use Facebook, Apple, or a Google account to verify your Nextdoor neighborhood. This security feature helps keep neighborhood conversations among members of a community. 

Once you are verified, you can begin to customize your profile and add interests that might be valuable for you. You can also visit the general Home tab to see the most recent posts from your neighborhood and begin posting yourself.

What is Nextdoor, and How Does it Work?

Similar to other social media platforms, Nextdoor also features a news feed where you can view and interact with neighbors’ posts and even buy products and services from local businesses. 

The options for filtering categories  on Nextdoor include:

  • Classifieds
  • Crime & Safety
  • Documents
  • Free Items
  • General
  • Lost & Found
  • Recommendations

Some examples of common Nextdoor app posts include:

  • Neighborhood maintenance issues
  • Items for sale
  • Childcare options
  • Missing and found pets
  • Homeowner concerns
  • Recommendations for home care or maintenance
  • General neighborhood concerns
  • Real estate recommendations

How Does Nextdoor Make Money?

Until 2016, Nextdoor was funded by venture capital investors. However, with the platform’s growth, it began to offer several options for advertisement and commercial promotions.

In 2021, Nextdoor is funded by three types of paid posts:

Sponsored Advertisements

The Nextdoor app displays sponsored advertisements from large regional and national businesses that offer products and services to share with Nextdoor’s neighbors. Similar to Facebook, these ads populate in between community posts.


Neighborhood Sponsorships

Local home service industry experts and real estate agents can promote their listings and advertise their expertise in their zip codes by purchasing a Neighborhood Sponsorship on Nextdoor. This product is currently only available in the U.S. 


Local Deals

Neighborhood businesses can purchase local deals on Nextdoor to advertise special offers to Nextdoor neighbors in their area. This product is currently only available in the U.S. 

Nextdoor makes money primarily through these three types of sponsored content and partnerships. 

These three programs – Local Deals, Sponsored Posts, and Neighbourhood Sponsorship – are available to businesses by paying a fixed or monthly fee to Nextdoor in return for advertising exposure. 

The Nextdoor advertising service is also available to local real estate professionals, who can share local market trends and be a helpful resource for local homeowners. 

Nextdoor claims that 74% of users are homeowners, and a quarter of all conversations concern real estate. As a result, real estate neighborhood sponsorships may be quite lucrative for those in the industry.

There is also a great opportunity to local service providers to connect with and be referred and rated by a Nextdoor member, similar to sites like Yelp and Google My Business.

For companies that want to promote their products and services, a Nextdoor business page is a great way to grow awareness. It’s a great way to offer a local deal for local communities, or to even become a neighborhood sponsor.

Is Nextdoor Considered Social Media?

Technically, Nextdoor is a social media app that connects individuals. However, it is driven by location rather than by one-to-one relationships. The app is also positioned around the purpose of being a useful neighbor and community member.

As founder Nirav Tolia explained in an interview, “It’s about all of the things you would talk to your neighbors about to solve real problems in your everyday lives. So, even though it’s called a social network, it’s not necessarily about being social. It’s about being useful. It’s about solving your problems by the knowledge that your neighbors have all around you.”

Using the app gives you access to the knowledge and experience of an entire community around you. While there has been some criticism for the app in terms of profiling and some scams that have taken place, the overall majority of users have added a lot of value to their communities.

As a way to get to know your neighbors and become a more active member of your local community, Nextdoor can be an excellent social media tool. It can also be a lucrative way to build brand recognition in your local areas and grow more revenue for your business. 

Want to grow your influence and reach on social media? Brandastic is a digital marketing agency with offices in Orange CountyLos Angeles, and Austin. We specialize in creating marketing campaigns that impact and increase revenue for your business. Contact us today to see how we can help you grow.

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