Facebook’s social networking skills have inspired a few others to set up their own networking channels. For instance, LinkedIn established a professional focused networking service. A smaller organization is San Francisco-based Nextdoor, which has established a social network based on neighborhoods. Nextdoor has managed to attain a Billion Dollar Unicorn status, but its financials are still a matter of concern.

Nextdoor’s Offerings

Nextdoor was founded in 2006 by serial entrepreneur Nirav Tolia, Sarah Leary, and Prakash Janakiraman. Nextdoor offers a private social network based on the users’ residence, allowing them to connect with their neighbors. The network allows residents to share information about handymen and events, establish watch groups and act as a highly localized newspaper and classifieds portal. Today the networking site connects more than 160,000 neighborhoods in the US, UK, Netherlands, and Germany.

For the first ten years of its existence, Nextdoor had not focused on monetizing its business. Due to the nature of the network, Nextdoor users use real names and addresses. To ensure their security, Nextdoor only allows users to register for the secure HTTPS website after they have verified their addresses. The security requirements do not allow Nextdoor to openly share user database, and this has delayed its monetization capabilities.

But since last year, Nextdoor has begun to focus on advertising capabilities. Users are now seeing a limited number of sponsored posts from paying businesses in their daily digest email and newsfeed. Nextdoor still maintains security by denying participating businesses access to the users’ personal information, neighborhood, or the directory. The service is still being tested. Nextdoor claims that since advertisers can target specific locations, they are delivering higher click-through rates on the ads placed. According to Nextdoor, click-through rates on its ads range from 5%-7% compared with the industry average of 2%.Nextdoor believes that this will allow it to offer the service to all sizes of businesses to help them connect with its neighborhood communities.