How did you get your job as a founder and investor?
I grew up in a family where entrepreneurship and small business owners were everywhere. My grandmother started a business with her two brothers so I just grew up thinking that that's what everyone's grandmother did. I started my career at Microsoft and had a chance to work on the first launch of Microsoft Office. Even then I kind of knew it was Bill Gates and Steve Ballmer’s company. It got me hooked on the idea of starting a company from the ground up. After going to business school, I pretty quickly found myself in the early-stage startup game in Silicon Valley. I loved being in a place where you could build the team, culture, and product and have a lot of impact. When I graduated, I joined a company as employee number 15 and it ended up going public. You would've thought I had scratched the itch of being in a small company, but I still wasn't there at the very beginning. Nirav Tolia was the founder of that first company so we joined forces as co-founders and started to think about new ideas for another company.
Today, Nextdoor is a well-known company with massive success. You talked about an early product that didn't work out. Tell us about that.
My co-founder, Nirav, and I were entrepreneurs in residence at a VC firm, and we initially started a company called FanBase. We worked on it in stealth for about a year and a half before we launched it. Big mistake. When we launched it, we could tell from the engagement, retention, and usage that we really hadn't figured out something that people loved. So we hunkered down, shrunk the team, and took a radically different approach in developing our new ideas. The big mistake that we made was not wanting anyone to know what we were working on. A lot of founders think, “I don't want anyone to steal my idea.” The reality is, the idea is a part of it, but it's also about the execution. You need to talk to users before you build a full prototype and test it with users as quickly as possible. Building something and not getting feedback along the way is very dangerous.
The way I think about it is: you’re trying to hit a target that's far in the distance. If you’re off by even a little bit in the beginning, you’re going to miss the target. Instead, go out and talk to people who might be your target users and find out if they agree with your hypothesis. If you can't get people to light up as you're talking, it's going to be hard to convince them to adopt a new app, website, or a community. Even experienced entrepreneurs can get overconfident. You can get to a point where you're fearful of telling the world what you're working on because it's not fully formed yet. You're going to be subject to more scrutiny because you've done it before. I just encourage people to share it with an audience that can be helpful in understanding if you are meeting a real need. Try and figure out if you have Product-Market Fit before you fully commit to building out the entire company. That was our big learning.
Before we started Nextdoor, we implemented a new rule where you couldn't start building anything until we answered a few questions: Was there really a problem? What were the alternatives? Was our solution potentially better? You have to be able to clearly articulate why you are a better option than a competitor and if not, go back to the drawing board. I now feel very strongly about how you go about finding that new idea. For us, that idea became Nextdoor. Part of it was inspired by our own experiences in our neighborhoods. We could talk to people all over the globe with Facebook and connect with people in our industry with LinkedIn, and yet we didn't know the people who lived right down the street from us. That seemed to be a missed opportunity so we went out and tested the idea in a couple of neighborhoods. It turned out we weren't the only ones who felt that way. Then we were off to the races and started building Nextdoor.
You started Nextdoor with five neighborhoods. What did that look like?
In the beginning, do not be afraid of doing unscalable things. I think one of the biggest challenges was thinking about the fact that we were going to have to build 200,000 small neighborhood networks across the country. (That's just in the U.S.) To get around that, we decided to focus on just five neighborhoods. By the end of the first year, we had 176 neighborhoods—all before we publicly launched. The trick is scaling that initial playbook. Can you do it in 15 or 25 neighborhoods? That’s when you start to see patterns. What is the essence of making it work? Then you can build that into a product or service at scale. In the beginning, it's very granular, tactile, and hands-on. That process is where a lot of innovation and insight is found.
At Unusual Ventures, when we talk to founders, we encourage them to pick a part of the market, over-deliver for that segment of users, and build a product that people actually love. Then you can think about expanding out the market from there. The worst thing to do is create a mediocre product for a large number of people early on. You're looking for true believers. Focus on the people who will be evangelical about telling their friends about your product.
How did you fuel Nextdoor’s network effects?
The core of any community is trying to get one or two people in the beginning of any community to be your real champions. At Nextdoor, we had this concept of a Founding Member in each neighborhood. That person was the individual who brought Nextdoor to their community. We would ask them: What's the name of the community? Why do you want to bring Nextdoor to your community? What are the boundaries of the neighborhood? We wanted to know if they were the right person to do this in their neighborhood. Then we told them they had 21 days to go invite nine other people to join their neighborhood. Only the neighborhoods that could get over that hurdle would be allowed to continue. Otherwise, we would give someone else the opportunity to do it. What that was doing was identifying a local champion within the neighborhood whose objective was to recruit other people in the neighborhood to join. Then everyone who joined the neighborhood was asked to invite a few neighbors themselves. This was an essential way to build a grassroots community at scale. It starts off with one or two people who plant the seeds to create the community from the ground up.
Now more than ever before, having a community is critical, even for D2C brands and SaaS/B2B companies. What advice would you give to anyone that is looking to use community building as a tool for growth or a competitive advantage?
The biggest thing I encourage people to focus on is authenticity. The thing about a community is that you can't cheat or fake it. If you think community is an important part of your strategy, it should be a part of what you're doing from the very beginning. It's not the type of thing you can just bolt on later. If you do, it will not feel authentic. Treat early users as co-collaborators in building the product. It shouldn't be, “Can you promote my product on your social network?” It should be, “I want you to be a part of this. Tell us what we could do better. How could we improve the product?” Then, you have to listen. If not, then the community won't have authenticity you’re trying to infuse into your company as a whole. A mistake I see people do is, “Oh, we're going to build the product. And then later on, we're going to think about community.” That rarely works. It has to be part of the DNA of the company for it to be something that rings true with your community. There's a macro-trend that's happening in the world where we are increasingly less trusting of large institutions. Instead, we rely much more on more democratic, grassroots, “word of mouth” recommendations. You can't convince people to be advocates for your product/brand if they don't actually feel that way.
Why did you decide to join Unusual?
I moved on to the board at Nextdoor and took some time to think about the next step for me. At that point, Nextdoor was almost 400 people. It was a much larger organization. I realized I was most excited to sit down with entrepreneurs in the early stages of their creation process and help them understand how to find Product-Market Fit and avoid some of the pitfalls we had faced with FanBase. I got turned on to the team at Unusual because they are the types of investors who truly want to roll up their sleeves and help entrepreneurs in those early stages. It’s fun to see the creation of new companies and entrepreneurs going through that journey. If I can be helpful in that process then, that's fantastic.
What are some of the interesting ideas that are being pitched to you right now?
The key thing is that we try to be helpful with entrepreneurs where they need the help. On the Consumer team, Andy Johns and I are both people who have worked at building companies. Me, founding companies and Andy, growing and scaling companies. So we have a lot of experience of what it's like to be in the trenches. We can help entrepreneurs, especially in those early stages of trying to find Product-Market Fit, positioning, and creating organic, viral growth loops in the product. We can also connect them to other folks who we have worked with where they need expertise. Over the course of the last year, a couple of things that have happened. FinTech and anything to do with local communities has really exploded once again. We've also been going deep on video. With people working from home, the role of video in the workplace and in our lives is really important. If you combine that with these network effects, we have some unique insight into those areas where we can be helpful to folks as they get off the ground.
Any final words of wisdom?
The biggest thing to think about as you're going on these entrepreneurial journeys is who you are working with. That starts with your co-founders and the team that you build. These are intense journeys that often go on for 5-10 years. You want to pick people who are complementary to your skillset, but also people who you're going to enjoy working with through the ups and downs. The same applies when you are looking for investors, especially early-stage investors. Who is going to bring something that's additive? Whether that's specific domain expertise, stage of company expertise, etc. One of the things that we were smart about with Nextdoor is that we didn't always optimize for price and valuation. We were much more looking for who could be a great partner for us at the specific stage in our journey.
Listen to the full conversation here and follow Unusual Ventures on Twitter for the latest on seed-stage funding, entrepreneurship, and more.