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So we're delighted today to have Sarah Fryya, the CEO of Next Morgan the NFX podcast, and Sarah, last month, you were at the fortunes most powerful women's summit in Washington, DC. First of all, that's quite a title, most powerful Morgan. And congratulations for all your incredible work you've done at Nextdoor. And the Square CFO before that. And also co founder of ladies who launch, which is such a great group.
It's been quite a career to work, so it's a real delight to have you on the NFX podcast today. Thank you, Pete. You know, in some ways, it's a return, the favorite moment. Pete did an amazing conversation with my prod dev team. So now everyone's gonna call you and wanna do that with you as well, but just a phenomenal product person to talk to. Thank you for that as well. Oh, well, thank you as our pleasure.
And so, you know, the NFS podcast is really a way to give early stage founders and CEOs access to tactical and computer building insights from amazing world class operators. And so let's start with you. You've had a, you know, an incredible career working across Summer Silicon Valley most famous brands, but you started your career as a finance leader. And you've made this transition from a finance leader to a CEO of a major consumer company. And that seems you know, fairly unusual.
And I'm curious if there were things in that journey that you've had to learn or, in fact, unlearned during the process. Yeah. And I actually would go back a hop because technically, I started my career as an engineer. So I came out of college as an engineer, did my Flint internship on a gold mine in Ghana, because my engineering degree was material science Morgan the time it was called metallurgy.
And so I feel like I started my career deep though in data and the way an engineer would think, like, very logical, very kind of systems approach. And so, of course, as I got further into my career, I did make a pivot to McKinsey and then ultimately to Goldman on the finance side.
And part of that was frankly a little bit diversity and welcoming something we'll talk about when we talk about next door where we really try to ladder up to being a welcoming platform, but I didn't feel particularly welcomed as an engineer at time in that sort of career.
So something I think a lot about now, how do I make sure we get the best brains in the room and that people from all walks of life feel very welcome to be in any part of our company and any part of Silicon Valley and what we're building. On your question of a flip from going from a, you know, maybe something deemed a more finance role, Square CFO, to next door as the CEO. In the end, I really try never to focus so much on titles. And I think I think that has been one big career learning for me.
Titles feel like cement. Right? They effectively flag to someone. This is what you're supposed to do. And then often people go and look at other people doing that job, and then they try to emulate that rather than going back to 1st principles. What are you really good at? What are you passionate about? What do you love to do? Where can you put that to work? Right? Look for the gaps in your company or in the world, and can you build it as a business? Right? Can you get paid for it? Right?
I'm talking about a framework called achy guy now as I think about those 4 circles, but that has been the big unlock for me is not defining myself by a title or what people think a job should look like, but rather really zeroing in where the gaps are where I can have impact I'm just curious to sort of build on that.
If, I mean, the world is and many sort of like, you know, you're on boards and you sort of like, you know, maybe one of the board is like, we need a new, a CFO, for instance, and you kind of probably have a CMO, you have a sort of like, okay. This is what the person, like, you should have done before they're doing this role. And then clearly, you know, you in the Morgan how do you frame those conversations?
Like, how do you get hiring managers to not think about this is the sort of the mold that we should be hiring, but look for other things. If so, what are those other things you look for? Yeah. So what I told my team and how I try to run my own hiring is I look for 3 things. I look for smarts first, actually, loyalty second. And then I look for experience as a distant third, and I always say it that way. I'm very particular about it.
What I mean by that is if you get smart people who are able to think broadly, they're good problems all you know, often what people would term the kind of best athlete approach. But then you also look for people who have shown loyalty is my word for grit. They have hook around.
Like, one of the things that is a red flag for me on resumes is people who have been in a lot of companies for approximately 18 months to 2 years because I think companies go through these cycles and jobs go through cycles where you typically start on the high. Right? Otherwise, you wouldn't have taken the job. You're super excited. In about 6 months in, it's usually the depths of your despair because you suddenly realize all the stuff you don't know.
It's actually quite hard and you're kinda slogging in like having a baby when you're like, I haven't slept in 6 months, and this thing still doesn't do anything. And then as you hit about 12 months, you come up the other side. And then typically, you go through another cycle that looks a lot like that. And the people who hang on, who build a lot of, you know, today, what I called social capital in the organization. They learn how to get things done informally, not just formally.
They are the people who really you want in your Morgan. Now, of course, folks younger in their career, you can't see they've not had a chance to go to one company or multiple companies. But looking for things where they had to find that grit, that kind of loyalty to something, like playing a musical instrument, learning a language, learning a sport, those are other good indications of someone who'll stick at it even when the going gets tough.
And then by saying experience a distant third, it's giving permission to myself or to my team to recognize that that might not, you know, don't look for just the resume of the person who's done the job exactly the way that you imagine it should be done. I actually love people who don't have a playbook. Right? They don't open up, you know, it's not day 2 63 and they open up the page and they're like, this is what we do today.
Instead, they're somewhat unconstrained by experience, which is a night way, nice way to say they're probably still naive, but it means they're very creative because they don't have that playbook to fall back on. Now there's some roles, you know, CFO or maybe a controller is a better example where clearly they need experience.
They have to have a certain degree of, you know, understanding of accounting, understanding of the rules like your GC is probably a place where you wanna they have good legal experience. But even there, I think you can be a lot more broad in the candidates you look at, and I think it'll help you build a much more diverse company with people who have really deep fundamentally good skills, not just a resume that, you know, that says, okay, I did this in other places.
You know, that's terrific advice. And, you know, it's similar to device that we give in the sense that, you know, the experiences you might think you're hiring someone who needs this experience and then 6 months in, the world changes, and the skills that they previously had are no longer relevant for the future. And so if you're focused on the kind of first two core things, then that's gonna be the most essential foundation. And talking about the changes in the world, let's talk about next door.
You know, you're a CEO of next Morgan then obviously the COVID pandemic hit. And, you know, for many of us, it turned into an essential service. I'm curious from your perspective, what were some of the biggest challenges and opportunities in leading next door through that period of growth and change? Yeah. So thank you for that. It definitely was a big shot in the arm to local, which, of course, next door, our graph is a local graph, next door equals neighborhood.
So as people needed more around them locally and recognized the power of that next door kind of came into its own. If I go back a tick and just what does next door, why do people come to next door. So we are the place where you connect to the neighborhoods that matter to you so that you can Beller, but it's really three things. They come first of all for trusted information. Next Door was founded on trust. It's a place where we really try to push off of other platforms out there. Right?
We ask you to be a real neighbor. At a real location. You're not an avatar. You know, you're not a handle. You're a real person. The second reason they come is for local of. So their next door unlocks all that social capital of your neighborhood. So when you go and ask a question, you're truly getting the local perspective, not someone who's maybe travel there for a couple of weeks, not someone who lives outside the community, and that's really valuable.
If you think about a lot of the trusted questions you ask, like even asking for a plumber might not feel like a particularly high trust interaction, but that's someone who's probably gonna come into your home. So getting the recommendation from a neighbor is really gold dust. And then the 3rd and final really big reason people come is all about proximity.
So next door is uniquely positioned because we know where people live, and we're able to bring people together because they're close to one another. And what that does is it allows us to push from online to offline. And this is where in COVID, you know, if you kind of take those 3 things I just said, we always knew that next or worked in times of emergency because it is not usually your friends and family who save you in the moment of an emergency read.
If there's a flood happening outside your home and you're on the roof waiting on a boat to pick you up truly what happened in Hurricane Harvey, it unfortunately wasn't your brother, your sister, your mom, or your dad, it was your neighbors who came for you. Similarly in COVID, right, when people needed everything from toilet Pete, to maybe something more serious. Like, Beller was quite serious at the time, but going to the local pharmacy, it was the people nearby who stepped up.
And we really feel like that is what differentiates us. You can create a group on any social platform, but you don't know with certainty that that group could meet in real life. And so if that group includes things like a dad's group or a mom's group or a book club or a cooking group, right, the power of being able to connect in real life is huge. As we all kind of start to talk about the metaverse, I really don't want us to leave behind this incredible need for humans to connect in real life.
And how important that is for our society. So long way to say, we had 3 core things that drove people to next door. Challenge of the pandemic was just a massive lift in doubt. We saw almost a 100% lift on almost a week over week basis. So the platform had to stay up. There was just, you know, tactical fundamental things that had to happen. There was the fear my employees were concerned like everyone else, what it meant for them, but they're very purpose driven.
So they stepped up and they met that moment. They built things like help map and help groups, like things we needed immediately. And so it was a wonderful moment of, you know, realizing we have this incredible, purpose driven company. And these people in this moment are going to rise because this is what they showed up Morgan it's I'm curious.
I mean, a lot of companies went through, you as a kind of like a CEO, you as a family person, you as a friend, And then as the CEO, you know, I think it's we're still sort of in sort of PTSD from it, but it's and things are clearly not back to normal, but I'm curious, like, you know, how did you personally kinda navigate that? Were there any things that, you know, because the pressure went up as you say, like, things doubled, but everyone had all these scenes going on.
Was there anything that you personally did that was in retrospect a critical thing enabling you to be a great CEO during that period? Yeah. In looking back, 2 words kept bringing to mind transparency and empathy, I think you can't start to be and it's always bad if you're starting something in the middle of an emergency. So there is a, no, I don't wanna call it better lucky than good, but there's a moment where you're thankful for what you've laid as your groundwork, your foundation.
I find transparency is always a good thing to have done in any situation because it takes down the fear Right? Even if the news is bad, when people aren't afraid of a ghost, but can actually see the reality, I think that is a huge thing that a leader can do for her company or your company. So we've always been really transparent at Nextdoor. It was true when I was at Square true even at Salesforce where I feel like just getting information to all nooks and crannies over the organization helps.
So we write a lot of things down, for example, at store, people get the board materials before the board gets them because I want people to feel like an owner and to feel like there isn't some other conversation going on that they're not party to you because that really raises fear. So I think transparency was key. And the second piece was empathy. Like, really trying to understand how our customers were feeling, how our neighbors were feeling, how all the stakeholders were feeling.
And in the pandemic, that got hard because you couldn't go meet people in real life. Like, pre pandemic, I went to every country next door was in. I sat down and broke Brad around tables with just neighbors and different communities through the pandemic. I've done that virtually. And so I would definitely say, keep meeting with your customers.
However, you have to do it and however kind of synthetic can feel, still meet them because that's where your best insights are gonna come from, but it's also where you develop that empathy. I think the final thing I would say is knowing yourself. So for me, exercise is key. Getting out into nature. I know a lot of people have talked about it. It's really important to me. I grew up in the countryside.
If I don't get green and feel like I'm in the middle of nowhere, at least a couple of times a week. Mentally, I know I can't Morgan. And so that, you know, again, you have to think a lot about not just your physical ability to perform, but your mental ability form if you wanna be that leader because a lot of people are depending on you, and you have to lead from the front. And so we did talk a lot about mental health through the pandemic.
We talked a lot about it and how the platform can help people's mental health, but we really have to live that. And you have to show that vulnerability yourself. Yeah. You know, having sort of been through the real estate crisis in 2008 and then sort of travel crisis in 2001 and really the either storm. The transparency piece is critical. And when you're anxious, you have all these fears Morgan kind of unfounded.
But but if you can sort of create this sort of, like, transparency, but also direct transparency that can drive the team to the right direction. Yeah. People's own narratives are always worse, I think, than reality. And, you know, you should just think about that yourself. Like, think about when you were a kid. You still have an anordinate fear of the dark, which, you know, the lights came on. I'm like, oh, I'm just in my bedroom.
And I think about little things like that about just, you know, I Flint, like, when I talk to people in performance reviews that because we're about to go through that cycle. Their fear of what their peers think of them or their boss thinks of them is just always so heightened. And the reality is usually so much more benign. So bringing, you know, that spotlight or, you know, sunlight is the best disinfectant.
Like, that is just a really good thing to remember as a founders, as CEO, as a leader, the more that you can just be very open and transparent, the better and better it is for the world that you work in. So you've referred to Nextdoor as a purpose driven company. And curious, how do you define that internally? And, you know, and Morgan, is there a a metric or an old start that you use to to kind of measure that or keep track of that to help you drive product and growth?
Yeah. So there's clearly the purpose statement of your company. Right? And next door's case, our purpose is to cultivate a kinder world where everyone has a neighborhood to rely on. And of course, every company has their statement, you know, that often you put up on the wall.
My learning on this kinda came as I shifted from Goldman over to Salesforce and worked for Mark And what I could see is that Mark had this incredible way of taking something like Salesforce automation tools, frankly, not really that you know, like, Pete up in the morning to do and turn it into, like, a movement. Right? If you read, like, his, I think it's his first book, beyond the cloud or above the cloud. I can't quite remember what it was called.
But, you know, he talks a lot about this moment where he was in Hawaii and he's in the waves and he realizes that's shifting to the cloud is this massive, you know, journey that he's on, but it really becomes almost a, you know, a good and evil And so he made you feel like, you know, on premise software where Oracle became the kind of the example of the evil character and Salesforce was on the side of good and right.
And so it was a learning to watch that in action because it allowed people to really almost feel their job was vocational. Right? It goes back to that Iggy guy framework. They could find a feeling that the world needed it. Beyond just that they love doing it and they were good at it. When I got to Square, I saw that same pattern in Jack. Right?
We I mean, if you really boiled it down, Square was creating a not particularly sophisticated point of sale system for small businesses, but we never felt that. We were on this journey of economic empowerment. Right? We were on the side of the good, helping small businesses who would otherwise be discriminated against, get on the stum that didn't want them. Like, you really felt this, like, zeal.
And so when I got to next door, I mean, it's much easier because what we do is all about connecting communities, making communities stronger, more resilient. So I don't have to create such a big story around it, but it is so important that you're crisp on what is that purpose that people can really rally behind and then that you're constantly showing the purpose in action. This is where I actually think it is a coming together of storytelling, the power of qualitative pieces of your company.
And then, of course, quant. Like, you wanna be able to measure it in all the ways we measure on social platforms. Like, what's our growth at the top of the funnel? Like, how many verified neighbors have we added? What's our weekly active usage in neighborhood vitality, we look at things like how within a neighborhood is abuse of content on the rise or is it falling.
We would define abusive content, not just as really bad things like discrimination, but even just hurtful things, right, things that clearly when people read them, they don't feel kind. And that's again where the metric goes from feeling very Flint to getting a little bit more blurred, but it's so important that we still hang our hat on something that speaks to vitality, which has this direct connect to kindness.
And, again, I think it's all just a loop of That means that you can hire people that really care about what you do and why you're doing it. And I think purpose driven employees I mean, they're amazing because it's not just a transaction. When it becomes transactional, it really becomes about, what are you doing for me? It's my career growth happening, and am I getting paid, it becomes so much more than that. And I think people do extraordinary things, you know, particularly in times of duress.
Yeah. I read through your get exactly what was, but maybe the Investor Day presentation, I mean, you were weaving it in and throughout the Morgan. The investor deck is full of narrative, I seem to remember. Just storytelling and people and their lives and their experiences. So, you know, you're truly authentic, you know, for how you present the story to the finance guys to everything else.
Yeah. Even, like, one of the first things when I join I joined next door, I think, on, like, December 2nd or 3rd. And we had a board meeting on December 7th. Yeah. That's 2018. 2018. And we had a board meeting on December 17. So it was quite a extraordinary 2 weeks. But even the materials, like, I changed them immediately to start, like, if only you could see, but this a podcast. Right? The first page of our board preread has a picture of a neighbor.
It's always a new story, and then it has a short story about what they did on the platform. And then in every break, you know, ahead of the financial section, ahead of the deep dive section, right, we have these little Vignettes about neighbors on the platform. And that kinda really surprised the board because after a couple of board meetings, they're like, wow, like, we've never really thought about the platform coming to life like that.
Similarly, the office was a very Silicon Valley office, but there were, like, no pictures of just people, like, of what we did. One of my pet peeves, like, I wanted to see the sales deck. I'm like, okay, Salesforce, when you go out and talk to advertisers, show me what you're showing them. And, you know, I couldn't even get past the cover page because the cover page was this picture of, like, cul de sac of houses with no Pete. It's literally growing up in Northern Ireland. Very religious.
We always talk about the rapture, which no one knows what that is, but it's this idea that, you know, everyone who's worthy has not disappeared up to heaven and the rest of us are all left behind. There's no people. I'm like, oh my god. Like, the rapture happened. Like, where don't people go? And so I wouldn't even let them start to present. I was like, please go away. Let's add back the people because this is what we stand Morgan.
And so to go away, restart, you know, get another meeting on the calendar to come back to pitch me their pitch, which, you know, changed dramatically in terms of suddenly you started to see the the storytelling coming through. And I learned this, by the way, as an analyst. So when you're a research analyst, you do this thing called the morning call. So you have approximately 1 minute. To pitch a stock to the entire Salesforce of, you know, at the time I was a Morgan.
And, you know, you can give them the, you know, you always start with this is Sarah Fry. I'm on the morning call to pitch a buy on, you know, pick a company on Salesforce. And you wanna close with that, and you want the price target. But in the middle, you can get into a whole bunch of technical stuff or if you just tell them a story. Like, last week, I was with the CIO of Merrill Lynch. One of the biggest bear cases on Salesforce is that financials will never move their data to the cloud.
They'll always stay, you know, in their own data centers. I talked to the CTO, and he's moved everything. And it's moving, making Merrill or they're making more money. You ask a Salesforce person, like 3 weeks later, why buy Salesforce? They actually remember that story. They will not remember any of the technical stuff you gave them. Like, human beings are wired to remember stories they're not particularly wired to remember numbers, like, unless they're just a number of free.
Like, I love numbers. I love remembering numbers, but the vast majority people don't. And I think that's something for founders to think about, whether you're pitching for money, you're pitching for a customer, you're pitching for a partner. There's just tremendous power in the story of your company and don't lose that because that's also been the thing that gives a purpose and feeling and meaning. You're listening to the NFX podcast.
If you're enjoying this episode, feel free to rate and review our channel and share this conversation with someone you would benefit from these insights. Follow us on social, add n effects, and visit nfx.com for more content. And now back to the show. It also fills in 2021. Here we are in Facebook. Just recently changed his name to Meta. This sort of idea of kind of social networks is changing rapidly. And we spent the last 18 months or so kind of living an increasing digital life.
And curious from your, like, how do you see the notion of community changing, you know, the kids and teenagers and, you know, even it us or older folks, you know, not that old yeah, other folks are kinda spending their time on zoom or day and digital devices. I mean, you're in the center of community. How do you think that's changing? And curious, what do you think of disemerging metaverse idea?
Yeah. I mean, so first of all, I really, I mean, if you leave with one thought, moving to the metaverse is not going to be good for our Beller. It's not gonna be good for our physical health, mental health. It's not gonna be good for our communities. It's not gonna be good for our society for the world. Right? I think all of these things are deeply interconnected Right?
When we become more individualistic, it's all about I. Now we we stop caring about everything around us, and that's what I think leads to these intractable problems like global warming, for example. So it's not that I am anti technology. I'm a massive fan of tech technology, built my whole career around it, but I think it's a balance. You can't lose that power of human to human. Now what I see happening is You know, we do a lot of insights on the platform.
And so I think the good news is vast majority of people are coming to a realization that community is really Morgan, right, 73% of the neighbors we survey say that actually their neighborhood is their most important community in their lives.
And that's a, you know, if you look at kind of a meta trend, We've lost a lot of faith and trust in typically institutions like government, like the church, things like the boy scouts, you know, the local rotary club, they're all in decline, but people are still very sure of this power of community around them. The other thing that you see is when communities are stronger, when more social capital is built, it's good for everything. It's good for Beller, scores rise.
Wealth scores rise because the equity of your home rises. Schools do better because as parents care collectively, it really helps kids. So kids, yes, benefit from their own parents, but they also benefit from just parents across the board caring. I was reading an amazing article about a tough school in an inner city community predominantly black that was really suffering from, you know, effectively police, policing the corridors of the school.
And so a group of dads said, we're gonna go in and just show up. Yeah. I saw that too. It's a great article, right, just in this showing up and showing you cared. The impact you could have very quickly on teenagers. Right? So we know that this all improves when we show up in real life. And so I do think that there is a big shift happening, of course, around things like the metaverse, but I also think there's a big shift happening societally that I think people are recognizing this.
And I think we'll see more and more focus on it. One of my most interesting conversations of the last the weeks was with the surgeon general with Vivek Murphy. He's written some incredible pieces on loneliness. You know, he kind of summed it up talk about the power of a quick story or anecdote by saying, you know, loneliness is the equivalent of smoking a pack of cigarettes a day. Like, So the ability to combat it, he's looking for a way to combat it.
Our research shows that just knowing 6 neighbors has a really statistically significant impact on feelings of loneliness and social isolation. So imagine if you went to the doctor and they said, okay. You need to eat your colors, you know, take this amount of sugar out of your diet. You need to walk you know, 10,000 steps a day, and you need to know 6 neighbors. Right? Those are actually very doable things for collective health.
So even if you're doing it selfishly for yourself, I think there's a big eye reason to start to get to know your community as well. Yeah. No. I feel like in California, the wildfires for sure brought folks together in certain communities, and I hope the pandemic does as well. It's you know, we'll see as a lot of people have kind of, like, reshuffled around, but I hope that's gonna happen for sure. Yeah. And I think there's a little more theme in here.
Again, as founders think about opportunities companies and so on. So in talking to Brian Chesky recently, we're both really caught up in this. Is this the true mobile on. Right? The original one was the fact we were untethered and you could walk around with a phone in your pocket and figure a lot of stuff out that previously, you know, you had to be attached to something to do. But is there now true mobility where people have realized, you know, work is a verb, not a noun?
And work was one of the thing that Beller does most to a place. And so if we have more ability to be truly mobile, what does that mean, you know, in a future state? I think we still don't wanna just, you know, sounds delicious to be able to, I don't know, go to Venice for 4 weeks, you know, to work from home, but it's going to be a very, like, unsatisfying place to go visit if I don't have any human connection. And so we're trying to think about how do you melt that community Pete?
Like, how do you quickly let someone come into a community who isn't just a visitor for 2 weeks? Maybe they're a visitor for 4 months. So now they're gonna need the utility of maybe the emergency dentist or the gutter cleaner or the plumber, but they're also gonna want to find whatever their tribe is, like their running group or their mom's group or maybe a trusted babysitter or a trusted dog walker. Right? How do we allow them to not just, you know, Brian tends to go quickly to experiences.
Like, how do they really experience the true neighborhood? I think a lot about you know, before you, you know, make paella in Barcelona, how do you just do some practical things? Like, what's the best, you know, local supermarket to go buy the best veg goals. Right? You know, it's, there's a lot of utility that's also required about knowing what's around you locally. So if you have this big mobile shift going on, how do we think about community in that context as well?
Yeah. I'm sort of visualizing these hitches of kind of like the home office in the 80s where you had sort of like 30 different devices and it's been collapsed into 1 or 2 now. And great technology in many ways is becomes invisible at scale. And so it think it's very interesting. And how do you productize that? Because there's a portion of society that is, you know, digital nomads and that you separate consumption from production and it unlocks a lot of things, but belonging is unchanged.
So fascinating. How you do that? And I love that you said belonging because that's exactly the emotional piece. Right? Yeah. Products aren't just, like, I think good product leaders really understand the emotional attachment that people have to products and services, not just the utilitarian attachments that they Beller. So let's, you know, we're both big fans of network effects, and you're talking about people joining neighbors.
It's been kind of fascinating to kind of watch, you know, since, you know, up to next one the earliest days, how you solve the chicken and egg problem and, you know, have expanded globally. Now I'm curious as you kind of evolve the playbook there. To get new neighbors going. It's a incredibly challenging problem. So I guess what are the playbooks you've used? Have they evolved and any advice you would give other founders trying to build these highly localized network effect businesses.
Yeah. So you're right. The cold start problem, like how do you get going in any network effect business is really hard because it's great if you get someone to join a neighborhood, but if there's no one else there, it's just crickets. And so people won't come back. So you can actually almost like burn scorch the earth if you don't also then bring relevant content.
I think so I'm not sure I would have had the courage of our founders to get going on day 1, but I did get to inherit it when it was ready at a scale. I think when I joined next door 3 years ago, we were at about in the US about 1 in 5, 1 in 6 households on the platform. Today, we're at 1 in 3. So we have this great benefit of scale. And with scale, you can do a lot of data aggregation and drive a lot of data inside.
So where does next door work and why, you know, our marketing team would boil that down into kind of 4 key groups, which is millennial parents, that moment where people really kind of put down roots in a community. And Morgan, they're making their next generation of friendships, what we call rapid responders. So we already about kind of emergency situations. This year, we really focused in on, vaccine interested.
The 3rd group is new movers, which, again, I've already alluded to, right, the people who are in that first 6 months of finding out everything about their local community. And then the 4th group is urban enthusiasts, which are newer. And I think this is in a city Atmosphere, we're finding more and more people want to find ways to find their tribe.
So when I talk about those as both a pure quant exercise and then a qual, is now when we go to a new country, for example, or a new city, we quickly map the city. You can always find a lot of demographic big data. And then we look for patterns of places that we know next door naturally tends to thrive. So that's where you kind of use big data to tell you, okay, where do you go first?
But from there, it kind of then flips to the other side because you still just need a person, or you gotta go find that first community activist. Sometimes it's a public agency. Really, they tend to get it very quickly because often they're trying to build this internally. Like, how do they find a distribution mechanism to their constituents. Big social media doesn't really work for them because when you put it on Twitter or you put it on Facebook, it just goes broad.
It doesn't go, you know, surgical to your constituents. Bottoms up is hard to do. They often have email Flint. So they tend to understand very quick light. So you're trying to find a couple of folks who under stand, and then you kind of have to help them light the fire. We do it initially through what we call neighbor to neighbor invitations. So, you know, you kind of find the first Pete on the network. They'll invite a hundred Pete. Often, they'll already have a mailing list.
You get those people to come in and join, and then they invite a hundred people. And so that very quickly in a neighborhood context can get you quite a lot of density. But then there's a couple of things we've done from a product perspective that have kind of changed the pace at which we can now grow. The first is, you know, most social networks, they plant their flag and own their graph. And then the next thing they do, I mean, this is really all Facebook did to grow.
Was to get your contacts and the because it was a network effect business. The network worked better for you, the more people you knew were on it. So you had a high incentive to go invite Pete. We never did contact sync. And I think, you know, I I don't know if it was a mistake or we just weren't ready for it. Today, we do. So now we're really building out this idea of connections and the people you know. And then the second thing was allowing content to go a lot more freer.
So originally, when I joined or our strategy was to be the private social network for your neighborhood. So it was very kind of insular and very singular And so when someone spoke in a neighborhood and a neighborhood remembers only about 800 to maybe a 1000 houses, it's quite a small physical presence. That content was stuck.
So you talked about the California fires, or one of the things I see is when a fire breaks out the community that's impacted is very active on Nextdoor because they're saving themselves. They might be evacuating, but the next door neighborhoods immediately wanna know what's going on? Do I need to evacuate? Am I safe? And then the next door, next door neighborhoods often wanna help. And so by tying that content to just one place, we really lowered the liquidity of content on the platform.
And so we changed that a year ago where you can now post to anyone. Right? We gave control to the user So you can decide how far you want your content to travel, but most people in the end post to anyone. And that not allows us to use technology. To allow relevant content to keep moving, and that just creates far quicker, faster liquidity.
So I think our combination of our playbook is both very granular bottoms up Pete connections, but now with top down, much smarter about how the overall content created and then gets distributed. And that's made a big difference. If you look at Canada, it's our youngest country. We launched it 2 years ago. It's our fastest growing by far are wow doubled again just in Q3 in the quarter that we just finished. And I think that was a perfect playbook.
Of bringing all the stakeholders together, figuring out the influencers, bottoms up country manager, phenomenal work, layered on the top down really smart use of data, data aggregation, and understanding where Nextdoor works and targeting. Are you still using postcards? I seem to remember in the early days. Like, it was like, what? Like, still using postcards? Like, really sort of contrarian idea. I'm sure it worked, but I just used to doing that now. It does.
We call them to their neighbor's neighbor invitations because they're not a postcard. They're a letter. That comes in the mail, but we do because it's, first of all, it's our own proprietary channel.
So one of the things everyone listening who uses any form of other people's networks to go to market they're frustrating because you're always beholden to the feels like the big guys who at a moment's notice can decide to, you know, move you down the ranking or change your versus our neighbor to neighbor invitations, we have optimized the life out of them. And so it's actually a very economically sound cost of acquisition.
I think the second thing which, you know, if you think about it, it's very aligned to our purpose and to, like, what next door is all about? Like, how would you go about inviting neighbors? Well, you would either go knock on their door, or maybe you would slip something through their lighter box. And so it actually feels we know that the people who arrive via neighbor to neighbor invitations have a very high propensity to stick around.
So they come with high intent They're very sticky and they tend to engage much faster because they feel like they got that warm welcome. And then the third thing that we find with neighbor to neighbor invitations is, of course, we can change what's in that letter depending on what we're trying to amplify or norm in that moment in time. So it gives us a lot of creativity on, you know, what's the message that we're sending. If we're really trying to lean in to say our finds marketplace.
We can make that invitation about the fact that did you know you can buy style or get for free here on next door. Right? And so we can actually almost advertise parts of our product depending on what we're leaning in on in a particular moment in time. So, yeah, it still works incredibly well. I'm Yeah. And rarely do I kind of memorize or remember the social network invitation? But this one, I clearly did. And so it's like, it's clearly worth it.
Yeah. And we're actually about to lean in on local business in the same way. Like, when I was at Square, direct mail was one of our most potent forms of growth, and I think Nexstar will be no different on that front. Founders take Pete, direct mail. So let's talk growth for a second. So you say to tech company's social platforms of founders, they should consider slowing down versus growth at cost. Can we talk about tactically, like, what that means for founders and CEOs listening?
They need something that is there anything they can use some framework to kind of help them balance the slowdown versus growth at all costs. Yeah. I think, you know, the growth at any cost, it's the unforeseen consequence. And, of course, you know, we're being very logical We've used a lot of data to show that when people come to next door, of course, negative content is very engaging in the moment.
But over a longer period of time, it really causes people to disengage because they're left with a feeling of this is not a group I wanna belong to or even like, a disappointment. Oh my goodness. I live here, and these are the people that live around me. So it's good for our business, frankly. To build a much more vital network up front. So it's founded on, you know, good data that is a business reason. I think that's number one that needs to be said.
I think the second thing is going back to our purpose. Right? It feels very antithetical to be amplifying very negative things going on just because of benefit us and we can sell against it. One of the things I find as a founder, we spend a lot of time collectively thinking about all the new things that we can do and getting super excited to launch the next product or the next feature.
But one of the things I took away from working in Flint is that at that moment where we were about to launch the product, we would actually get the same group of, you know, completely amazing individuals together to then say, what are the unforeseen consequences? Right? In Flint language, we would say, how are you gonna steal money using this product? We would do a whiteboard session on stealing money. Which as the CFO used to those were not nights when I slept well.
And I think the same was true in any product, right, in social media, I think a lot of the, you know, call them unforeseen, just unthought about consequences, we're all very seeable, right, because usually if it happens on a plot form around Pete. It's gonna happen in real life too. So things like bullying and trolling, things like people's body image, But these are not you didn't have to be a rocket science to imagine that these could be unforeseen consequences.
And so I think this is the moment where you actually want your team also using their brains to think about, okay. We know that this can happen. So how do we make sure even as we launch that we're also putting guardrails around it. Right? A group that has done a really good job here is out of Australia, the Pete safety commission.
And they actually have a set of guardrails, not just for boards, for founders, for the company to say not just have you taken into account, you know, sort of governance risks and so on, but have you also thought about as you build your product? Is it being built with trust and safety in mind? And so that's really what I mean about not just growth at any cost. It's about thinking about what's further down the line.
And by the way, like, with the metaverse and feel the same way, right, and it's extreme. We know exactly what the consequences will be. Right? Black of human to human contact, lack of social being built. People only caring about themselves. Right? Think about how much time my, as a parent spend, kinda make sure my son doesn't play box all night. Right?
And I want him out there physically in the world, right, experiencing nature, playing with his friends, And so if we care about that, you know, one on one with our family, why don't we care about that, you know, in a broader context with all of customers. So I just think there's so much that we should be accountable for here. We're not gonna be perfect.
We're gonna make mistakes, but bring in the people who are the naysayers, the people who will criticize you, the people that will say, not not good enough, because I think you need those voices around the table as well. Yeah. I've seen some companies. I mean, it's a very tactical thing, but using it rather than a postmortem pro post offer for the launch a pre Morgan? Like, what is the thing that could go wrong here and kind of think about it?
I mean, it's tech startups have forced to move fast and Morgan encouraged to move fast and break things. Beller, you kind of absolutely have to be conscious about what is what you're breaking. So that makes sense of sense. Shifting gears a bit to the finance side of things. So, you know, throughout your career, you've sort of seen this in many, many different forms from kind of obviously working at Goldman for a bit.
And then with the process of going public, So Beller I think slack, you did a direct listing. We're on the board of directors Square. You did the IPO. And then now at next door, you're going or gone through the spec process. So I would love I mean, if you can share with us, like, just break down some of trade offs and pros and cons of those different options and how you thought about it, what was best for for next door? Yeah. I mean, in the end, it's all, it's a fundraising journey.
And I actually think it starts with saying, do we need to raise capital? And if so, can we deploy it in a really ROI positive way? And by the way, whether you go out to raise capital or not, that's just an important exercise to do on a fairly regular basis at your company, not just once a year during your annual planning, but I would kind of say probably every 6 months, like every quarter is probably a little too frequent.
And if the answer to that is yes, then, you know, then it's the tree of decision making. So do we wanna raise money privately or public life. Private money is certainly available right now. I know in very large quantities, but it does tend to be more expensive. I think the good thing about deciding to shift gears into a public market context is, you know, number 1, I think it's a credentializing moment. So I think it's truly a moment where a company comes out back to transparency.
There's a lot of transparency now. Like, for companies like Square, it was really good because you could see our balance sheet. And that mattered a lot because we were handling people's money. In the case of next door, I think it puts a spotlight on us to make sure that we are stepping up to the plane on some of those unforeseen consequences of of platforms in our space.
I think the second thing it does in getting public company ready, probably the most important thing you do is really understand your business because you need to be able to forecast it. Right? The street will really demand that there is some predictability And so that and is also a very good exercise to go through with your team. So you're not just hand waving about, oh, and then this will happen.
Like, you're actually showing how it will happen, how you're measuring it, what gives you the confidence, what sort of probabilities can you add to it? And then if you decide to go public, there are, of course, now all of these different ways that you can do it. Right? It used to be just there was the traditional IPO Pete. You wrote up an s 1 and then offered your shares.
In the s one process, what I found when I did that with Square is that it was a lot of work to be unsure at the end about your valuation, how much money you would raise. We went out in an incredibly tough Morgan, and so we ended up cutting the amount of the company we people never remember, but we were originally gonna sell 14% of the company.
We ended up selling 7, which was literally the minimum to make the IPO work because we hated the price And it felt like we had done all this work to have a lot of uncertainty at the end, which much of it was all macro related uncertainty because we certainly haven't changed. Our estimates were the same. Our business had only gotten stronger as we've gone through the, you know, the IPO process.
On the direct listing, I mean, today, certainly, they're beginning to be some shifts there, but you're not gonna raise primary funds. So in a direct listing situation, you need to feel really good that you can raise ahead of it. Slack had done a great job of that. Think what a direct listing did is, you know, slack and right ahead of it, Spotify, bear McCarthy actually deserves a lot of the credit for this.
You know, it was really good PR moment because there was just so much conversation about this whole direct listing thing that it got slack on the roadmap of the investor community, which then kind of tends propagate out into the enterprise community. And those were our customers that we were trying to persuade, hey, this is a whole new way to think about how work happens, how you collaborate, pre the pandemic would have died without slack, but it wasn't an accepted then.
I think for next door, the reason we chose this back route was, you know, 1st of all, there clearly, you know, a bit of a demand supply imbalance in the market, which we were able to take advantage of because there were lots of funds looking for targets. Second, what I really enjoyed about it was the ability to meet and talk to investors over this much more extended period of time.
So unlike the IPO process where do a whole bunch of work behind the scenes, and then you do this mad dash Pete roadshow that is exhausting where you meet with, I don't know, 50 investors over a we can have 2 week period, maybe even more. It's nuts. Actually, it's more if you think about, like, the group lunches and so on. You're probably meeting 200, 300 investors over a 2 week period. I went through that, and it was horrible. It's totally horrible.
We went through, you know, in the Pete process, we probably met the same number of investors, but we met them over a 6 month period. Which actually allowed us to get a lot sharper on our story, how we positioned it. We did an investor day. We're seven fifty people. We're able to tune in. Did an Analyst Day. It's just felt like a much more well paced way of building partnerships. And then, of course, we have price certainty because we set our price back in July.
So we kind of know what the goal is that we were running to. And so that took down a lot of the stress. I mean, of course, there's the stress of how your stock will trade. And when we flip our ticker on Monday behind on the NYSE, right, then the stock will trade the fundamentals. And, you know, my job is to keep reminding the company that, you know, in the short run, the market is a popularity machine or a voting machine, but in the long run, it's a weighing machine.
And I think that's an incredibly powerful quote from, you know, the grandfather of all and bestowing folk Graham about remembering that you have to control what you can control, which is the fundamentals of your company, the growth rate of your company. Are you doing the right thing in the world that cusp customers want, and that's, you know, where stocks will trade to over multiyear periods. But don't look at a stock over a month and a day a month a Currier.
Then it's just about, you know, more buyers than sellers or more sellers than buyers on a particular day. Well, Sarah, I think on that note, what a terrific conversation we've had it's so insightful from, you know, deep community building to go in public. So we'll be watching keenly at the growth of Nextdoor. I'm so it's incredible to have you on today's Thank you so much. Thank you so much, team. Appreciate it.
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