Three reasons why NextDoor is unlikely to be that hyperlocal platform with network effects that Bill Gurley would like it to be

Disclaimer first: If the headline feels unnecessarily lour or provocative you must blame ChatGPT for that. I used some lazy prompt to generate a title and this is what I got.

Now read on to see if the title fits the post.

Bill Gurley has many podcasts, interviews, articles talking about Network Effects. As the legendary backer of Uber, OpenTable his theory on market places and network effects make for great reading. His investment in NextDoor through BenchMark Ventures however is an intriguing case.

While Bill Gurley may have seen potential in NextDoor, there are some compelling reasons why this hyperlocal platform might not achieve the network effects he envisioned:

Neighbourhood is not a private social network

NextDoor defines a neighbourhood as a private social network or a closed group with gatekeepers to manage members. To join a network in NextDoor (last I checked) you need to go through a verification process that ensures that you indeed live or belong to a locality. In real world, there are no private citizens doubling up as administrators of a locality (at-least not in India where I live).

Conversations is not the primary use-case for neighbourhood interactions

NextDoor assumes that having a rigorous onboarding process builds trust and would automatically enable users to open up with social neighbourly interactions. In the real world, neighbourhood interactions are more about people consuming local services and discussing service providers in the vicinity than about discussing personal interests or concerns. So people-to-people conversation in a closed group does not make it friendly to accommodate service provider interactions.

Where are the local creators?

Monetizing a hyperlocal platform while maintaining its community-oriented essence is a delicate balancing act. There are enough people creating Reels on local businesses on Instagram and they have no role to play in NextDoor (again last I checked). Because NextDoor visualises a neighbourhood as a private social network where people living nearby can talk-to-each-other digitally without sneaky interference, the act of bringing in third party creators will remain inimical the core premise.

Addressing the aforementioned challenges will be crucial for NextDoor to realize its vision as the go-to hyperlocal platform with strong network effects.

In the dynamic realm of tech investments, the journey of NextDoor serves as a compelling case study that highlights the complexities of building a hyperlocal platform with lasting network effects. Stay tuned to see if Onemyle solves for this.