SArah Fryer, CEO of Nextdoor Holdings, has a somewhat Pollian perspective on how the neighborhood social networking platform will fare during the next downturn.
“Nextdoor is still in a really good position to continue to show growth even in a full recession,” says Fryer. People come to the platform during difficult times like 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 under the symbol KIND, which she coined.
Fryer sounded remarkably upbeat, even though her employer last month cut full-year revenue expectations 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 competitors like Facebook on Meta Platforms are much bigger.
Fryer, 49, a native of Northern Ireland, has master’s degrees from Oxford and Stanford universities. She took the helm of San Francisco-based Nextdoor in 2018 after working as a management consultant for McKinsey, a software analyst for Goldman Sachs and a CFO for Salesforce and Square.
Heeding the criticism, Friar pushed to remove racist and other toxic content from Nextdoor. Its efforts represent “a promising solution for any social media company struggling with toxicity,” TIME’s Alison Van Houten wrote in Nextdoor’s 2022 100 Most Influential Companies.
Friar recently spoke with TIME about her strategies to curb toxic content, Nextdoor’s depressed stock price, her strategy for international expansion and America’s persistent gender bias.
This interview has been shortened and edited for clarity.
Why your earnings growth spurt won’t come to a screeching halt if the economy turns sour in 2023?
All of our competitors in the digital advertising space have recently lowered their estimates. We’re still doing pretty well comparatively because we offer something unique to advertisers. We reach over 75 million neighbors in 11 countries. We have [also] it took time to confirm that we only have real neighbors.
Why did Nextdoor introduce two more features this spring to mitigate implicit bias and encourage better conversations? A system you launched last year scans posts for red flags and encourages users to reconsider before posting anything problematic. Plus, your courtesy reminder now prompts users if it sees signs of a heated conversation, such as negative language.
The amount of platform content reported for harmful reasons is small. It was 0.34% in 2021. But there is always more we can or should do. Unfortunately, the job of being a welcoming platform is never done.
Now we’re doing a little more work around the commercial goals of the platform. We’d like to help businesses come up with better ways to engage their community so I don’t feel like you’re trying to sell me something all the time. Someone who posts “$10 off your next window cleaning” five times a day, for example, can be toxic if it seems really spammy.
Are your competitors managing their toxic content adequately?
We would love to see the industry do more of what we do. They have to be willing 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.
Neighboring investors, however, don’t seem impressed with your efforts to improve civilized online discourse. Your stock price has been trading well below the $13.01 level seen when Nextdoor went public. How soon can your share buyback plan worth up to $100 million revive your depressed stock price?
Our share price has performed slightly better than most other competitors. A share buyback is a signal to the market that we believe our stock price is very undervalued. A pretty good business decision is to buy back shares in the range of $3 to $4 per share. This will help the stock price because it will remove the stock 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 U.S. How many countries will you be operating in by 2032? And when will the company be a global player?
We must be in more than 11 countries. Our goal is to be a global player, although I’m not ready to put a date on that. Making the platform more global is a great way to continue to show growth.
We launched in Canada, our newest country, about two years ago. We have a country selection guide that gets better every time. Scale matters. So do countries where digital phones have already penetrated well. The third thing we look for is a disposition towards community. Fourth is digital ad spend because that’s our monetization engine.
More than 30,000 small and medium businesses advertise on your platform. How will you attract more such businesses?
We have a very thriving ecosystem with them. We’ve seen about 55 million business recommendations from Nextdoor neighbors. We’ve also had about 3.4 million small and medium-sized businesses request a free business page on Nextdoor. They can then grow further through Nextdoor ads.
Awareness is the limit right now. Some businesses still don’t know that Nextdoor is for business. We need to help them understand that we can be their perfect way to advertise and make it effortless to attract more customers. They want to understand efficiency. Our new ad platform, for example, gives them a dashboard so they can actually see performance.
What’s the best leadership advice you’ve received from more experienced CEOs who have mentored you?
Build something that has real scale. Don’t get caught up in repetition. Consider the biggest needle motors you can spend time on instead of getting stuck in too many weeds.
Describe a potential move to Nextdoor that you passed up because you realized it would only be a baby step.
For a long time we wanted to get into the idea of bartering within our marketplace for selling and free. But about two years ago we pulled out. I said, “Strategically, we have to stick to the big stuff. For example, we need to have an ad platform that is fully functional.” Focus and discipline are especially important in a business like Nextdoor, where you could probably do anything because most things are local.
Should CEOs of public companies be outspoken advocates for social change? You experienced harrowing upheavals growing up in Northern Ireland during the protracted religious conflict and later living in South Africa after the end of apartheid.
More CEOs are being asked to think much more broadly about stakeholder value, in part because you see trust eroding in government, media and other elements. With my life, I want to work on things that can have an impact on society, not just be in the business for cold, hard dollars. I grew up knowing that a small group of people is the only thing that ever changed the world.
But you have to be very careful. If you stand for everything, you stand for nothing. We have a very clear framework at Nextdoor to define which social issues we are committed to as a company. It depends on whether this issue aligns with our purpose, mission and core values. It’s also no use being the squeaky voice if you have absolutely no ability to influence. The third step involves assessing whether our users are directly affected. We’ve taken a stand on issues like tightening federal gun control laws.
You believe that sunlight is the best disinfectant, so you share board materials with all Nextdoor employees before board meetings. Why should more corporate executives adopt this transparent approach?
Leading with transparency and empathy are perhaps the two best leadership traits you can demonstrate as a public company CEO. Transparency removes many fears that employees often have.
Within the confines of being a public company and keeping in mind 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 niche area. Forced to read widely, they can recognize patterns. Wide sharing of knowledge will generate great ideas.
At the same time, trust is our core value. You have to show that you lead from the front on trust if you really want it to become part of your culture.
You recently said that there are a lot of mediocre men in the business world, but “no room for mediocre women.” Why are you and other female executives in the US still held to a higher standard than their male counterparts?
There are still many inherent implicit biases in the system. The statistics prove it. Female founders secured just 2% of venture capital in the United States in 2021. That’s the smallest share since 2016. And 2021 was the second year in a row that the percentage of women in venture capital funding shrank. I am part of this group of women who are trying to raise capital. I’ve raised a lot of money in my lifetime, whether it was with Square or now with Nextdoor.
We’re going backwards. How can this happen? It would be great if we could get more blind reviews of founder dude decks like big orchestras [do with auditions]. Meanwhile, female executives must work harder, better, and ultimately make more than the majority of the business community—which is white, heterosexual males.
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