SNextdoor Holdings’ chief executive, arah Frar, has a rather Pollyannaish perspective on the future of the local social networking site.
“Nextdoor is still really well positioned to continue to show growth even in an outright recession,” Friar says. People come to the platform during tough times such as COVID-19 because it aims “to cultivate a kinder world where everyone has a neighborhood to rely on,’’ she explains. The first-time CEO took Nextdoor public via a special purpose acquisition company—or SPAC—in November 2021 with the ticker symbol KIND, which she devised.
Friar is remarkably positive despite the fact that her employer reduced its full-year revenue last month due to uncertain demand for advertising. Nextdoor earns money through ads and sponsored content. A third of U.S. homes use Nextdoor to sell things, find plumbers and complain about their neighbors. But rivals like Meta Platforms’ Facebook are far bigger.
Friar, a 49-year-old native of Northern Ireland, holds master’s degrees from the University of Oxford and Stanford University. Following stints in McKinsey’s management consulting, Goldman Sachs’ software analyst and Square finance executive, she assumed the command of Nextdoor San Francisco.
Friar, who was subject to criticisms, has tried to get Nextdoor’s racist and toxic content removed. Her effort represents “a promising solution for any social media company struggling with toxicity,’’ wrote TIME’s Alison Van Houten in ranking Nextdoor among the 100 most influential companies for 2022.
Friar recently spoke to TIME about her strategies to curb toxic content, Nextdoor’s depressed share price, its international expansion strategy, and persistent gender bias in America.
This interview has been edited to be more concise.
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Why won’t your revenue growth spurt come to a screeching halt if the economy sours in 2023?
Our competitors have recently lowered their digital advertising forecasts. We’re still doing quite well comparatively because we’re bringing something unique to advertisers. Our network includes over 75 million neighbours in 11 different countries. We’ve [also]haben taken the time to ensure that they are real neighbours.
Nextdoor added two new features to its platform this spring in order to reduce implicit bias and encourage kinder conversation. Your system that you created last year detects red flags in posts and prompts users to reconsider publishing problematic content. A Kindness Reminder automatically notifies users when it detects a heated discussion, like negative language.
There is very little platform content that has been reported to be harmful. This was only 0.3% in 2021. But there’s always more we could or should do. Unfortunately, it’s not easy to be a welcoming platform.
We’re now doing a bit more work around the platform’s commercial intent. We would like to help businesses figure out better ways to engage their community so it doesn’t feel like you’re trying to sell me something all the time. Someone posting ‘$10 off the next window cleaning’ five times a day, for example, can be toxic if it feels really spammy.
Are your competitors able to effectively manage toxic substances?
We would love to see the industry do more of what we’re doing. They should be willing to slow people down to create more welcoming spaces—even if it disrupts engagement. We’ve seen people following in our footsteps with features similar to the Kindness Reminder.
Nextdoor investors don’t seem impressed by your strides at improving civilized discourse online, however. Nextdoor shares have been trading at a level far lower than the $13.01 mark. What is your timeline to revitalize your stock?
The performance of our share price is slightly higher than that of most peers. Our stock repurchase signals to the markets that we believe our stock is significantly undervalued. It’s quite a good business decision to buy back stock in the $3-to-$4-a-share range. This will boost the share price as it will take shares out of the earnings-per-share calculation. We will earn more per share if the market is rational. However, this means that we have a lower share number.
Nextdoor’s growth is faster overseas than it is in the U.S. What countries will your company be operating in 2032? When will Nextdoor be an international player?
Our goal is to play in at least 11 more countries. Our goal is to be a worldwide player though I’m not prepared to put a date on it. To continue showing growth, it’s great to make the platform more international.
Canada is our latest country. It was launched two years ago. The playbook we use to choose countries is better with each passing year. Scale matters. Countries with digital phones have a higher penetration rate than others. A predisposition towards community is the third factor we are looking for. Fourth is digital ad spend because that’s our monetization engine.
Your platform has more than 35,000 small- and medium-sized businesses. You can attract even more of these companies.
They have created a vibrant ecosystem. We’ve seen about 55 million business recommendations from Nextdoor neighbors. We’ve also had about 3.4 million small and midsize businesses claim a free business page on Nextdoor. Nextdoor advertisements can help them grow.
The limit is awareness right now. Some businesses don’t yet know that Nextdoor is for business. We need to help them understand that we might be their perfect way to advertise—and make it seamless to get more customers. They need to know how performance is being measured. For example, our new advertising platform gives them a dashboard that allows them to actually view the performance.
What’s the best leadership advice you’ve gotten from more experienced chief executives who have mentored you?
You must build something of real scale. Don’t get caught in iterations. Consider the best needle-movers that you have to spend your time with, rather than getting bogged down in too many plants.
Nextdoor: Describe the next step you missed because it was too small.
For a long time, we wanted to get into the barter idea within our For Sale & Free marketplace. We stopped trying to get into the barter business two years ago. I said, ‘Strategically, we need to stick to the big things. We need to have an ad platform that’s fully functioning, for instance.’ Focus and discipline are particularly important in a business like Nextdoor, where you could probably do anything because most things have a local spin to them.
Are public company chief executives expected to be open advocates for social reform? As a child, you experienced traumatic upheaval in Northern Ireland’s protracted religious conflict. You also lived with apartheid in South Africa.
More CEOs are being asked to think much more broadly about stakeholder value partly because you’re seeing trust go down in government, the media, and other elements. In my personal life I would like to make a positive impact on society and not be in business just for the hard dollar. As a child, I learned that only a few people can make a difference in the world.
You must be careful. It is not possible to stand up for all things if you aren’t careful. Nextdoor has a clear structure to decide which social issues it engages in. This will depend on whether the issue is in line with our mission, core values, and purpose. It’s also not helpful to be the squawky voice if you have absolutely no ability to influence. Third, we need to assess whether users are being directly affected. We’ve taken a stand on issues such as tightening federal gun control laws.
You believe sunlight is the best disinfectant and that’s why you share board materials with all Nextdoor staffers ahead of board meetings. This transparency is why corporate chiefs should adopt this approach.
As a CEO of a public company, transparency and empathy can be two of the best traits for leadership. Transparency can reduce the amount of fear and anxiety that employees feel.
Everything is shared within the limits of being a publicly traded company. Sometimes employees can become experts in their own niches and fall into silos. Employees will learn to pattern recognize when they’re forced to read more. They will be able to share their vast knowledge and generate great ideas.
However, trust must be our central value. Trust must be demonstrated that you will lead by example if you wish for it to be part of your culture.
You recently said there are a lot of mediocre men in the business world, but ‘ there’s no room for mediocre women.’ Why are you and other U.S. female executives still held to a higher standard than their male counterparts?
There’s still a lot of inherent implicit bias in the system. Statisticians prove this. Only 2% of US venture capital was received by women founders in 2021. That’s the smallest share since 2016. And 2021 was the second year in a row that women’s percentage of venture capital funding shrunk. This group is made up of women looking to raise capital. I’ve raised a lot of money in my life whether it was with Square or now with Nextdoor.
It is happening backwards. What is the problem? It would be great if we could get more blind reviews of founders’ pitch decks like big orchestras [do with auditions]. Meanwhile, women executives must work harder, better, and ultimately do more than the majority of the business community—which is white, straight men.
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