Sarah Friar - Building the Local Graph - [Invest Like the Best, EP. 249]

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Invest Like the Best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at joincolossus.com. Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast. My guest today is Sarah Fryer, the CEO of Nextdoor, which connects people in local neighborhoods together. Sarah's CV sparkles with impressive achievements at interesting businesses, and we spend a lot of time in this conversation thinking through what excellence looks like as a CEO, CFO, equity analyst, and board member. The rest of our discussion is focused on Nextdoor and how the soon-to-be public business is fostering connections between people and businesses in their local areas. I do this podcast so I get to meet and learn from people like Sarah. I could have talked to her for hours. I hope you enjoy this great conversation with Sarah Fryer as much as I did. So Sarah, I was trying to think of a fun way to begin our conversation that respects your very unique CV. You're an equity analyst at Goldman, so you have an investing background. You're a CFO. You're a board member at Walmart and Slack. You're the CEO of Nextdoor that's going public. You've got this wild smorgasbord of experience. And so I thought it'd be fun to open with asking what excellent means in each of those categories to you. And I'll start, maybe I'll go chronologically and I'll go all the way back to your equity analyst days. What do you think makes an excellent equity analyst? I think the number one thing that makes a great equity analyst is... fundamental research where you actually do proprietary research and go talk to all of the stakeholders of a company. And I think too much gets done at a quite superficial level. And I think the best, both sell side and buy side, the best outcomes are where you're deep in the trenches talking to ideally customers first, but I think it's great to talk to everyone surrounding the company, their community, their employees, and so on. Because I think those are the moments where you have true insight and aha moments.

When you were at Goldman, what cemented that lesson? Was there a company or an episode that drilled that home for you? So when I started at Goldman, my patch was security software. And this is 2000. The bubble is bursting all around us. Nobody wants to touch tech at all. And I actually started life as an investment banker. It's the secret for that first year at Goldman. And there was nothing to do. And I had been at McKinsey. And so I was just curious and was like, okay, well, I'm... going to go to a conference or two. So I went to the RSA security conference and I came back and I wrote up this whole deck. And I remember my VP at Goldman was like, how did you find all this stuff out? And I'm like, I just went to this conference and talked to people. And he was like, this is brilliant. We need to go out and talk to companies. Long story short, I ended up transferring into research. Because we needed to end up covering those companies because they were the only companies that were investable to the positive in that period of 01, 02, maybe 03. Because Code Red Nimda happened. You had all these viruses proliferating. Companies like Symantec and Network Associates, who became McAfee, oh my God, I am old because I'm really old, were the only stocks doing well. And then actually from an IPO perspective, companies like Netscreen and so on came about. But it was just such a... better lucky than good moment that I went to that RSA conference. I spent all that time doing first party research and it just really shocked me into, oh my God, this is going to be huge. I can remember walking into the conference going, oh my God, we are so screwed if we don't fix security in our technology stack. These companies are going to be massive and important in this period. And that kind of cemented the beginning of my research career. I've noticed recently, and maybe it's just a weird selection bias, that I've talked to a lot of founders who had investing careers at some point. They were an analyst, they were a banker, they were something in the sell side or the buy side. And I'm always really curious for those that move from investing to operating, what lessons you port with you as really important? What do you think you've done differently as an operator because of the time that you spent as an investor?

Number one is that curiosity. And so today, what I tell everyone who works with me is get out of the building. Today, it's your home, but it used to be your office. And actually go talk to customers. It's in that moment where you may talk to hundreds of them over a course of time. So you'll either pick up a theme that's building. Or there'll be that insight moment. So when I was at Square, I remember we had this dinner for a whole bunch of SMBs. We'd had this offsite and we had this great idea to bring a bunch of customers in. And I sat next to this guy who ran a series of hair salons, actually. And I kept asking him. What about like CRM systems? And one of your payments, I kept asking, asking, asking. And then towards the end, we started to talk about Square, what became Square Capital, but this idea of lending. What was really tough in your business? He's like getting access to working capital. And I was like, oh, what if we did something like this, which became the genesis for Square Capital? And that was the point where he handed me his business card. He said, if you do that, call me. Like everything else was me like pulling teeth. I was really excited. but he was not super excited. There are moments in your life where I feel like you almost see the light bulb go off. And so I think it's the same theme of don't get stuck in your ivory tower. Don't kind of end up in your echo chamber with all the people who agree with you. Get out and be curious. And I think the second part of it is actually, I'm a big believer in range. If you've read the book, you learn things in one area. that actually you start to pattern recognize in a second area. I think research and banking and investing are very good at that because you actually have to be very broad all the time and look for trends. When you go inside a company, you can become very narrow very fast because you're literally working on this. It's like you work on one stock only. And so pushing yourself to stay broad and to stay curious. And to not get too caught up in like, well, I don't want to go meet with that person because they don't do exactly what I'm doing right now, or I don't want to go to experience that conference or whatever, because it's not exactly what I'm working on. I actually always push myself to go to the things that seem most tangential to what I'm doing, because in those moments, I find I have bigger, better ideas. It's interesting that at Square, you were the CFO, but the first story we've heard is one of customer discovery or insight.

Same question on the CFO role. What do you think makes for an excellent CFO given your experience there? I think it's exactly that. Typically, when people come to me to ask for advice on hiring a CFO, I usually talk like there's two paths. There's a more traditional path with someone who came up through the more accounting side of the house. And they're great. You absolutely need that discipline. But I think people who have come with other life experiences, who have maybe run a product, started a company, they just bring that incremental empathy to bear of understanding. what it's like for the product team as they're trying to build, what it's like for the sales team as they're trying to go to market, what it's like for your marketing team if you're doing kind of scalable data-driven marketing. I think you actually make better decisions alongside the whole team than if you really only come with this one lens around everything has to have a dollar sign in front of it for you to be interested. How much of the capital allocation story of the business was under your purview at Square. And how did you think about the role of the CFO in capital allocation, which seems to become a more important function as the company gets bigger and is more successful? For sure, it's in your purview, but if it's just... Coming down to you, there's something missing because in the end, there's a big thing to be said about the wisdom of the crowd. So making sure that you're getting everyone's input. It's where we used to always say great ideas can come from everywhere. Try not to be hierarchical or domain driven when you're thinking about something like capital allocation. I think in the CFO role, can see the model building up. There's kind of, quote unquote, the maintenance level. What are you entering a year with which people are working on when you cost it all out? It's kind of your run rate of capital allocation. I don't totally subscribe to zero-based budgeting. I remember when that was a thing back in the day. But I do think that every year you should re-look and truly test, do you need that? I call that core. And then there's strategic investing. So what are things that are...

starting to get product market fit are kind of so obvious based on your competitive advantages that of course you should go invest in those. And they should have a timeline where you can put a P&L to them and you can see revenue that's coming within one to three, maybe five-year, but really one to three-year timeline. Revenue ahead, but profits might come a little bit more. It has to get to scale. But then I think as a good CFO, you have to cut out a portion of your P&L that's truly for experimentation. Next door, we call it venture bets, where you're ring fencing an amount and you have to get comfortable like what's the right amount. You might do it as a percent of. total costs. You might do this percent of people. Today, we kind of talk about a 20-person team to get going on a true venture bet. And I think the worst thing as a CFO that you do is you try to put a P&L on it because no one yet knows what the right way to monetize the idea is. And you can actually break it by getting the product team so fixated on... this is how the business model works, that they craft the whole product to that business model, when in actual fact, a different business model might be the true unlock as to why the product works. I'll come back to CEO and board member excellence, but just to take a little sidebar really quick, because I think it's so interesting that you worked after leaving Goldman for Benioff and for Jack Dorsey, two really well-known iconic CEOs. And I'm always interested in... What successfully sells someone of your talent to come join somewhere else? And so I'm curious if you think back to those two episodes, what was it that convinced you to join Salesforce and Square? I'm looking for generalizable lessons here for recruiting very high-end talent successfully. I mean, today I've kind of learned a framework that I use with a lot of people. It's called Ikigai, I-K-I-G-A-I. It's a Japanese framework. I wish I'd been able to articulate this back in the day, but it's four overlapping circles, which is what you're good at, what you're passionate about, or what you love, what the world needs, and then what you can get paid for. I thought the fourth is just a hobby. And I think if you can get people to really construct what it is that they do.

but are they passionate about it, right? That's often the bit that's missing. I was a good research analyst, but I was not passionate about picking stocks in my life. I was super passionate actually about my team and the people and tech trends, but I wasn't super passionate about the day-to-day kind of stock junkie piece. Was it what the world needs? I don't know. That really, in the end, was what got me a little. I wasn't sure it was what I felt the world needed. No offense to your entire listener base right now. I could certainly get paid for it. It was like very good pay. When I went to work with Mark at Salesforce, he found a role where I was very good at it. I certainly got a lot more passionate because it was much more, when you're inside of a company, so much of it is about people. You get your people right, everything else just works. So I kind of started to recognize that that was a real passion of mine. Again, with Salesforce automation, what the world needed. Not totally sure. I do think there was a lot. Mark is excellent at turning it into a movement. There's a reason why he loves Star Wars. He made you feel like you were on the side of the good guys with the lightsabers because you were going to the cloud. You could still get paid there. By the time I got to Jack, the circles were starting to get much tighter for me. I was good at it because I was getting into an area where my data analytics skills could... come to the fore where I was passionate about space. I actually do really like FinTech. I was passionate about the people side and the growing a company. I was super passionate about what we could do for small businesses. And Jack, like Mark, is phenomenal at this idea of raising a purpose statement. At Square, it was economic empowerment. I certainly felt that was something the world needed. And again, you could have a really good financial outcome. stops being such a big driver for me, probably at this period of my life. But it's easy to say that when you're in a place of privilege. And then when I got to next door, the circles now feel really tight. They really, really work for me. I love that initial episode of moving from square to next door. And like, if you're right at the center of that bullseye, which is incredibly well articulated, definitely going to steal that concept.

Describe what that felt like. What did approaching the business for the first time feel like? What ignited your pattern recognition from your equity days that this could be a really good business to satisfy that, make a lot of money condition? Walk me through the initial appeal of joining Nextdoor. If you go back to the circles, I really started to understand this passion in life about people. And then it was extending out into community. Big arc in my life starting back in Northern Ireland. my mom and dad, totally what we'd call community activists today, we just didn't have a fancy name for it, to this idea of community. And I truly believe in terms of what the world needs, I think this is on the same par with stopping climate change or fixing our issues with climate change. The degradation that's happening in our society. And in community, I actually think one of the offshoots are things like our lack of care for the world. In terms of the circles, it really fixed the passion, what I could be good at. But you asked me with like a research analyst hat on. I also love the trends. You could see that people were edging back towards local. Now, when I joined... the beginning of 2019, I was still felt like I was evangelizing that. I think what COVID has done is I no longer feel like I need to evangelize this power of proximity. So that's kind of number one. Number two is it's hard to aggregate people onto a platform. Most of the graphs are taken. The friends and family graph Facebook has kind of owned. The professional graph LinkedIn has owned. But no one owned this local graph. And that's one of the most powerful things in building a network is that you own a graph. And Nextdoor had firmly stuck their stake there. Nextdoor equaled neighborhood. Very powerful business models get thrown off of. owning a network effect business. So what could they be? So then I looked at that and said, okay, wow, what I see in this company, it sits on top of a mountain of data, proprietary data, very akin to Square. When I looked at Square, what I saw was a huge data lake. What most people saw was a little point of sale system. And I'm like, no, when you have that data, your ability to build a really powerful business model on top is massive. So with Nextdoor, what I see is the ability.

to take our proprietary first-party data and then to really make it home for neighbors to find what they're looking for on next door. It might be a large brand, like maybe it's a McDonald's or a Chipotle or a Walmart, but it can also be that really small business, the local plumber all the way down to the dog walker or the babysitter. And no one has been able to connect at a local level that huge opportunity. So that's what I get excited about from a research analyst perspective. I don't think he'd mind my sharing this little story, which was, I was sitting, I think it was soon after you joined with Bill Gurley, and it was the first I had heard of Nextdoor. And I remember him showing me the app on the phone, just like, can you believe the amount of different things that we could do with this graph, basically, like exactly what you just said. And it was this almost like giddy excitement for the different kinds of business models that are different, that are unlocked because of this information, which I just think is so cool. And it harkens back to the point you made that I want to dig in a bit on, which is this notion of community. Maybe it's time to go to your personal story. I'm curious what you learned from your parents about community and to dig into that degradation word that you use. What is it that was breaking or is broken or is still breaking about community and how might we start to fix that? Yeah. So I'm going to start by sounding a little pessimistic, which for those who know me is not me. I'm the eternal optimist, which by the way, I think is another point of excellence for a CEO, for anyone, but eternal optimism. If you go back and look in the literature, you'll see starting in kind of the 1950s, particularly in the United States, but it's true globally, you start to see this downtick in people joining community-driven type organizations. Bob Putnam at Harvard is the guy who's written most on this, or at least written in a way that most interests me when he wrote this book called Bowling Alone. He doesn't actively say blame television, but he does talk about this beginning of the technology revolution, which often people think about it as more than 1990s, beginning of computer processor, but really takes it back to TV. So we went from...

a nation of joiners, which is what the Tocqueville called us, to a nation that moved off of their front stoop where they really knew their community and into the living room and started to engage in what is actually much more of an individualistic form of entertainment. From there, computing happened. We started to build networks and connections, the phone. social media as it stands today. And so we often say in a world that's never been more connected, yet people have never felt more alone. That's a huge trend, first of all, from a technology standpoint. The second trend you see is just even how communities are designed. We built roads that cut through communities. There were a lot of bad things that happened to segregate communities. So again, that caused a lot of downfall. People moved from rural and more suburban areas into major cities and lost some of that community fabric. And then the third thing is this cultural shift that's happened around our values. You've seen institutions like the church or institutions like, say, the Boy Scouts, the Girl Guides, and so on. There's very little trust. There's very little trust in government. has fallen away. And so this cultural shift is also all of these negative trends, right? If you were an analyst writing a research report, you would not be a buyer on this stock right now. I'm not going to turn it around. What I get excited about is I actually think that we as humans just have this need to connect with one another. It's just an internal mechanism for us that we recognize this power of human to human connection. We've also done a lot of research at Nextdoor that shows it's just good for your health. So frankly, even if you're living in a more selfish world, knowing six or more neighbors has a dramatic impact on feelings of loneliness and social isolation, which have both bad psychological. and physiological impacts. So fast forward, disasters are one place where next door tends to really shine. We've seen it in microcosms like a Hurricane Harvey, but now we're seeing it in this macrocosm of COVID-19 where people have recognized this power of local. And I think it's a structural change that we're not going back, that people are recognizing this need for community. And you see it in all of these other macro trends.

that many of your folks are investing behind, whether it's shopping local, eating local, wanting to know the etymology of the produce that you're eating, people coming together from a societal standpoint to kind of help each other. These are all now big trends that I think we have really latched onto and want to drive, frankly. What have you learned about the physical component of community and interaction? Because it seems like we are kind of entering a nice golden age of online community. And maybe this also is COVID driven, but it just seems like it is the buzzword in the technology investing world. Community building, infrastructure building companies have become very popular, but in-person is not talked about probably enough. And obviously it's something that you have in your arsenal. What have you learned there? Like if you're sitting on top of a pile of data, what are some interesting data points about in-person interaction, neighborly community, et cetera, that you find compelling? We have done research. Julianne Holt-Lunstead is a researcher out of Brigham Young. She's the world expert on loneliness. Her research showed two things. Number one is just small acts of kindness, but in real life, have a really significant impact overall on our feelings of well-being. And then the second piece about knowing six neighbors, that's all it takes. You think about... All the advice you get around your life, run five miles or eat your colors, know six neighbors, is the equivalent of doing those other things as well. I think the second thing we've seen in our research is about resiliency of communities. So we had a researcher go very deep on communities. pre, during, and post Hurricane Harvey. And so what they saw is that communities where people had stronger connections, frankly, where there was more proliferation of next door, I'm going to sell my own book right now, that those communities, first of all, during a time of tragedy or a disaster, responded much better. The neighborhoods helped each other, so fewer people died. And then they recovered much more quickly. So communities tended to rally around each other to help their communities recover. And so the community stuck around and thrived. Versus communities where there was very low social ties, people would just move away. They would give up. They're like, I'm not going to rebuild this home, or I want to live somewhere where we don't have fires. And so communities would disperse and break apart. So we know that there is a very active link.

for real in-person connections. I get that we might be moving to the metaverse, but I think we cannot, cannot do away with real live in-person connections. It seems like for this business, when you came to join it, network density, which is a topic that network effect businesses talk about a lot or analysts talk about a lot, is absolutely critical. Like if I show up on Nextdoor and none of my neighbors or no one in Greenwich, Connecticut, where I live is on there, like it's immediately useless to me. When you showed up, what did that look and feel like? What was the network density? And is that the driving variable that you think about for product quality in Nextdoor because of how important it is that I'm able to connect with my local community? Yeah. Network density is clearly important for network-driven businesses. Network-driven businesses are amazing when you can find them. And all the research has shown that. When I showed up at Nextdoor, if you looked at density, in the U.S., we were probably about one in six households on the platform, maybe one in seven. Today, we're one in three. And so for sure, once you start getting to one in three households on the platform, the good news is that, first of all, we blanket this country. We're in 11 countries. I'll talk about it. the more nascent countries. But in the U.S., when you show up, there will be an extra neighborhood that exists. And the likelihood that it's a very vibrant community gets higher and higher as time goes by. So what we see for sure is that neighborhoods per se, we have 5% to 10% penetration. Start with okay weekly active engagement. But as you get up into kind of our first quartile. the weekly active engagement more than two Xs. And that's because if you think about people come for utility or they come for community, if you come with a utilitarian question, hey, neighbors, what's the best ISP to use? I just moved in. Or hey, neighbors, I need an emergency plumber. The likelihood you get an immediate and good answer gets higher and higher as more people join the network. And then from a community perspective, the chances that you connect to neighbors that are like you, the chances that you start to...

create friend groups or stronger bonds gets higher, the more people in a community that are on the platform. So yes, when you ask the question, we build for active, valued communities. Those three words. So we don't want people to be passive. We are actually going to push you to be active in your community. There will, of course, always be some lurkers and so on. But we're going to push you to have a reaction, have a comment, reply to that neighbor in need. And then we want to tip you over into willing to be that poster to kind of start to get things going. We want you to feel like the community is valuable. I think COVID, again, helped here because for sure we belong to other communities. Facebook wasn't helping me when I needed toilet paper. Facebook wasn't particularly helpful. Reddit wasn't particularly helpful if I needed someone to go to the pharmacy for me. Nextdoor is a valued community. And then, of course, this word community, which is a really strong word about social connections being made. If we come back to the local graph being the key driving engine of what makes Nextdoor the business interesting. What have you learned about leaning in on that relative to other competitive social networks? So maybe the most obvious one would be, I think there's like a Greenwich Dads Facebook group or something that solves probably some of the same things, but certainly not others. How do you drive the appropriate wedge as a business between what you can do because of how your platform is built versus like a general purpose platform like Facebook? I think you have to stay very true to like, what's our core competitive advantage? So number one is trust. Nextdoor was founded on trust. We verify that you live in the neighborhood. It probably slowed us down to do that, but we don't want growth at any cost. We expect you to show up as a real neighbor with a real name at a real address. So again, very different from say a platform like Twitter or Instagram, where they actively in the product push you to handle. On Twitter, I'm at the Friley. That was my nickname at business school. And I thought, this Twitter thing will never take off. Don't tell Jack I said that. So I didn't feel compelled to have my real name. Second thing is local perspectives and utility.

We are about accessing the social capital of your neighborhood. So we drive people in the product to know that it's a place where you can ask a neighbor for advice. And we really norm that behavior and then we amplify that behavior. And then this third piece about proximity and in real life connection. Again, we're very uniquely positioned because yes, you could create a dad's group on another platform, but you can't guarantee that you could all get together to go for a beer or you could all get together. I literally just went to... dad's group in Virginia, back to meeting your customers to see how they interacted. And they all were able to drive to Panera Bread, where we had dinner together. And this is a group that's been together now for three years. So we're to join our cooking group. And next door, you actually probably could go meet in someone's kitchen and do the recipe together. So we have to lean into the fact that our differentiator is proximity. So trust, local perspective, and proximity. Pardon the nerdy specific product question, but I just love this stuff. How do you think about platform leakage? So because you are local, it'd be an amazing way to maybe meet people locally and get to know them originally, but I could start a WhatsApp group or something with that group that went to Panera Bread and probably coordinate pretty well and not need to use and constantly go back to Nextdoor. So how do you think about that challenge of... You're so good at something local, but then the function could cease to be useful on the platform and could leak somewhere else. Brings me to this idea of compliments and true competitors. I think on the compliments, often it's worth seeing why someone might form a WhatsApp group. Or in the case of the father's group or the dad's group, he was using a different tech tool to just deal with the logistics. And so to me, that's either a product opportunity. Why aren't we doing the logistics for him? Or it's an API opportunity, not to get all kind of techie, but... This is where the platform should come into its own. We're not going to build absolutely everything. It's certainly not. I almost think of it as like a chessboard where you're going to fill in every single square over time. But in the short run, you have to pick the squares where you have unique competitive advantage. And then in the other squares, you should absolutely go partner. And the more you do that through APIs, the more scalable and it's faster. So that's on the complement side, one thing I'm always looking for and hearing for. And then on the competitive side, which is where you're going, where true leakages happen.

You need to really understand the why. But again, I come back to, I don't want to sound Pollyanna-ish, but Nextdoor is incredibly unique because no one owns the local graph. No one has gotten to our scale of 11 countries. I said I would come back to that. But if you look at the UK, we blanket the UK. Canada is our youngest country. It's only two years old. And yet already we see incredible blanketing of the major cities of Canada, which is really how Nextdoor often starts. a true competitive threat because I don't think anyone owns local or is doing the breadth of local that we are doing. How do you launch a new country? So maybe Canada is the right example where network density matters. Like I always think about Uber. Uber story was always so interesting here that have these notorious city heads that would go by hook and crook, just build the network on both sides of the marketplace. What is the strategy that you've learned for successfully getting a good wedge into, let's say, Canada? So this is what makes it hard to do. And again, coming back to what I saw as a research analyst on Nextdoor, I don't know if I would have had the courage on day one to build this company because it is hard. But once you get to a certain tipping point of scale, I think it's an incredible moat. So when we go to a new country like Canada, it's really about first and foremost, thinking about the map of the country. Metropolitan areas are always easier because they have density of people to start with. And then very quickly, you want to break it down into neighborhoods. Remember what is incredible about Nextdoor is we're not talking about metros or DMAs, often a term used in advertising. We are actually talking about neighborhoods that are anywhere from maybe 800 to 1,000 households, quite small. And so once we map that, then we can overlay using a lot of census type data. demographic data, what are the neighborhoods where we know next door will typically really take off? So for example, we do really well with millennial parents.

30% of people who come to Nextdoor say they come to meet local parents with same age children. So it probably doesn't shock you. So it's really good to overlay where do you have a demographic of younger parents, for example. And then we go into those neighborhoods and this is where it becomes a little bit more qual and not exactly quant anymore because you're just trying to kind of light the initial spark or fire. So you're trying to find the people who are natural. community activists. Today we call them our neighborhood team. And those people we want to ignite to show them, here's the power of what this platform can do for you. It will be a way for you to aggregate people when you want to do things in your community. But first you have to help us get the people on. So we will do neighbor to neighbor invitations. We often will do our own pushes next door. We layer on top of that. So when we launched Toronto, right, we brought the mayor and Mayor Tory. We brought in the Red Cross to talk about how a big platform like the Red Cross, who had used us a lot in the United States, could use us in Canada. We brought in some Canadian-specific small businesses or brand names that people would recognize. And so that kind of lights the PR media push. And then often we'll go to public agencies. So we have found throughout our time that working with the local mayor or working with FEMA United States or working with UK government, these are institutions that almost immediately see the power of it. Like they've almost... often been trying to build it themselves, which makes no sense because they're not technology companies. And so they see the benefit of getting more people onto Nextdoor because then we act as this amazing channel for them, either in an emergency like FEMA or U.S. Census when they wanted to count people or UKGov right now when they're trying to put out messaging about staying safe during COVID. So it's kind of a whole melting pot of all of those constituents coming together. And then as you see... neighborhoods heat up, then of course, the two bigger unlocks for us right now are, first of all, we're getting much better at letting content travel to anyone who could be interested in it. So we used to keep content only within the neighborhood. And now we've kind of said, that doesn't make sense.

When the California wildfires happened the summer and they evacuated Lake Tahoe, yes, the Lake Tahoe neighborhoods were extremely energized because they were saving themselves on next door. But the next door neighborhoods wanted to know if they were safe all the way down to the Bay Area and then even beyond where people wanted to know what could they do to help. So now we let content travel. And then the final thing we're unlocking is this idea of you actually being able to follow more than one neighborhood. So a big insight. I kept hearing it when I joined with people who honestly I felt had first world problems of two houses and they wanted to be in two next door neighborhoods. But I will admit to being a little dismissive. As I went through COVID and saw people wanting to follow their parents' neighborhood or their kids' neighborhood or the neighborhood where their business was shuttered, finally said, OK, let's back off. This is a true need. People care about more than one neighborhood. So let's let them belong. And so, of course, that actually amplifies and actually accelerates. newer countries because people are now showing up in more than one neighborhood, which is a good way to create more liquidity on the platform. Does this then all manifest in sort of a curated feed for each individual user? Like is the feed the home base of the product in your mind? It is. Although the caveat I would say is that one of the things we're very mindful of is not creating a true echo chamber. I have many beefs with other companies, but let's say other companies in the social media space. I feel like they have often led with kind of a growth-first mentality. And we definitely view that as not the right way to create great communities. One of the manifestations of growth at any cost is that people love to hear from people like themselves. And it just becomes like an echo chamber that feeds on itself. And suddenly you think you're right about everything you fundamentally believe. What we next door love about neighborhoods, our neighborhoods are inherently diverse. different socioeconomic groups, people who've moved from all different parts of the world, different age groups, you name it. There's all these different things that make our neighborhoods so beautiful. And so we want to keep some of that serendipity. As a base example, I always say I'm not a huge...

Pet lover. I grew up in a farming community. Dogs worked. They didn't lie on your sofa. But if someone loses a dog around me, I want to know about that because I'm very community driven. And I would, of course, look out for your dog and hope I could save them if it came to it. So it's an example where you'll never see me super interact with pets and my feet. Yet in the moment, you won't be there. So we don't want to be such an echo chamber, if that makes sense. You've mentioned quality growth a number of times. So I'm curious, the other side of the coin, what have been the biggest mistakes that you've seen the business make when it comes to growth? And what are the lessons that you take from them? So when I joined Nextdoor's strategy was to be the private social network for your neighborhood. What I saw in there, I mean, mistake is a strong word. I think we're all just iterating and learning. But number one... Private was important because it was part of trust, but I think we got so focused on singularity of neighborhood that we didn't allow for the fact that people have this broader purview. They care about more than one neighborhood. I think the second piece is social network as opposed to community platform. Nextdoor has kind of found its zone in being this community platform. kindness is at our core. I know it's one of your favorite questions, but our ladder up purpose is to cultivate a kinder world where everyone has a neighborhood to rely on. So I think we got rid of that social media moniker for your neighborhood, the singularity of just one neighborhood. Today, we are the place you connect to the neighborhoods that matter to you so you can belong. You can hear in that, first of all, a much more expansive view of the neighborhoods. We invited in a lot more people, including the local businesses, the local public agencies, local nonprofits. It's not just about residents. We opened it up to multiple neighborhoods, but we also injected this emotional piece. I think one of the mistakes product people often make is they're very good about what what the utility of the product is, but they forget that we as humans have to have a real emotional connection to great products and services. And so injecting belonging was a really big part of shifting how the product development was happening. So much of it is almost like...

Sounds like a public good that you become sort of digital infrastructure for better local communities. But going back to your Ikigai and the fourth economic opportunity to really hit the bullseye, I'd love to understand the business model a little bit. And I love the question, when and why does the cash register ring at Nextdoor? And most social networks, obviously, historically have been advertising driven models. We're seeing some... paid versions of that emerge. But how do you think about the options for business model in that same spirit of iteration versus mistakes, moving towards a model that's most aligned with the advertisers, with the local community members, et cetera? As I said in the beginning, when I looked at Nextdoor, I saw a lot of what we just talked about, this beauty of community. But I also saw a company sitting on... To me, this data lake of amazing proprietary first-party data. When someone joins the platform, they tell you where they live. So you don't have to go guess it by dropping cookies and following them around the web. It's like we actually just know. So today our business model, so when the cash register rings, it's really all to do with advertising today. And the digital ad market is huge. It's about $143 billion in 2020. It's supposed to go to $262 billion by 2024. Every advertiser I speak to is taking spend away from old world advertising like TV. print and moving to digital. So the good news is we are in a big pond chasing a big market. Like I never loved stocks that were like the big fish in the small pond because at some point you always ran out of town. For us, when we go after advertisers, we do break it down into enterprise mid-market and then small. And if you think about what we do for each, first of all, for large advertisers, what they get is a very unique platform. So today what we see is when About a quarter of next door neighbors don't actually use any other social media platforms, believe it or not. Those who are using other social media, about 82% don't go to Snap. That's probably not so shocking. 56% don't go to Pinterest. And 16% don't go to Facebook or Facebook Messenger. So what we're telling a brand is, if you have a brand message to carry...

We're going to get you to a unique audience. That's kind of number one. Number two, what we can tell a brand is we are going to get you in as very community driven. So if you want to tailor your message to being seen as much more generous, you're not just trying to sell stuff, but you actually want to help this person or this community. That's a place where Nextdoor really thrives as well. So Walmart has worked with us on things like help maps. H&R Block is a great example of a brand that has done a whole campaign about make every block better. And so we go out and we ask for inbounds from all of our neighbors for great things that have happened in communities that they want funded. And then H&R Block picks, I think it's their top 10 or their top 20, and they give them $10,000 to go out and build the baseball diamond or build the community garden. The third thing though, because we have all that data is we are really good for direct response as well. So often people talk about top of the funnel, brand awareness, direct response. A lot of platforms have struggled with being both. The great ones have done it well. The ones that are still trying to figure it out have never gotten to direct response. We do really well in direct response because people are coming with really high intent to begin with. So they're often coming with a question where an ad becomes content, not just an ad. desperately need someone to unclog my drains, and I see an ad for the local Roto-Rooter or whatever, that's like, yay, how do I call you right now? And we've made it better and better to do a call to action, like click to call, click to schedule. So we make that direct response better and better. And of course, anything that involves a call to action that is in real life. So come visit the new Albertson store. That really performs on Nextdoor. You started to allude to other business models. I mean, this is definitely where I get excited over the long run because you could imagine business models around small businesses where we are their ad platform, but maybe we're their CRM system. Someone tied up with CRM systems in my life. Twice I've mentioned them now. But there's all sorts of interesting things you could do there. We have a platform called Fines where people put stuff they want to get rid of from their home for sale or free. We don't take any transaction on that today. Could we do that?

for sure. You could imagine events. There's all of these other ways that I think we can monetize local. But as my wonderful CFO always reminds me, don't lose sight of that ad market where you started because it's so big and we're just getting going. Obviously, there's been some of the best businesses in the world built in this market, Facebook and Google, most specifically. I remember talking to a early Snap investor and just talking about how hard it is until you reach scale. in the advertising business, that it's just a slog. And then when you do reach scale, it's sort of a peerless business. I mean, again, those are probably the two most amazing business models on the planet in Facebook and Google. So talk to me a bit about the importance of scale in advertising. If that observation is true, what have you learned about scale and advertising? Are you there? If not, how do you get there? So I would completely concur. It's literally when you get to scale, it's like the clouds part. And you're, you know, when you're flying, you're like... Blue sky everywhere. And so what I've learned in that is for sure, I would say Nextdoor has been in a slog motion for the last couple of years because we're getting to scale. Broad-based, we can get to a lot of people, one in three households, but the minute you want to do really granular level targeting three years ago, two years ago. One year ago, the bucket that you could go after would end up getting a bit small. Today, I would say in the US, we're cracking through. Now, what we had to do, though, in that three-year period is you had to really come up with innovative things that people couldn't do elsewhere. We used to call it never been done before type of outcomes. So it's led us to invest in places like our map surface. So again, anything to do with place. works on Nextdoor. It's a core tenant of how we build product. And so if you think about a map, a map is all about place. Maps are something we can uniquely do. So we've had repeatable formats, like we do a treat map every year. This year, it's sponsored by Hershey's. Last year, it was sponsored by Party City. We do a cheer map around the holidays. In disaster times, we'll do a help map. And what we're kind of realizing is that's got us through the early days of...

figuring out there's a there there, figuring out it's very unique and different and it helps tell our story. It also has really high engagement for neighbors because again, they think of it as content, not an ad. But what we're learning is, okay, now we need to make this whole map surface much more just dynamic, extensible. Why do we make it that Hershey sponsors TreatMap? Why wouldn't we let any advertiser in any jurisdiction? And an auction model can own that area. Why wouldn't we let them just win? There's a learning of going from, I would say, more static, never being done before, to more dynamic, to ultimately truly unique elements of your ad platform that no one else can copy you in. Maybe now's the time to ask about CEO excellence. So I'm really curious in facing this kind of opportunity set where you're getting to scale, but you also have all this surface area in the product. What have you learned in your tenure so far at Nextdoor about effectively steering the company's strategy? There's so many different things you could do. You can actually only execute on a subset of those things. How do you do that? What is your personal OS for running that part of the company? One of my... Really dear friends, Roloff over at Sequoia Capital, when I was first moving to Nextdoor and I was picking his brain on lots of things, he said this phrase that always stuck with me. He's like, oh, you're a feast, not famine business. And I was like, what do you mean? He's like, oh, you're going to die from overeating. You're not going to die from lack of food. And where he was going was... There is so much we can do that prioritization is everything. And that I think for me as the CEO, I always actually love titles, but as a major contributor to our strategy at the time, one of my main things is to force prioritization. And you'll recall at the very beginning of this conversation, I talked about range, how maternally curious. These are two traits that often can be in conflict with one another. I also need to surround myself with people who are really good at pulling me back. Sometimes when I'm ranging out there, starting to partake of the feast, to say, nope, we're literally going to reprioritize. We just did this with our product roadmap in the middle of the year. We have a relatively new product leader that came in from LinkedIn. And so sitting down with Karen and literally saying, okay, here's everything we're working on. And now we're going to stack rank.

One, if we're going to do one thing, it's one. If we're going to do two things, it's one, two. And then we're going to put our resources against these until we're full, until we literally don't have anyone left in prod dev. And it's not quite as fungible as I'm making it sound because usually I build in pods. So you have an engineer, a designer, data scientist, product person. So it's kind of more pod-like, but we're literally going to fill the bucket until we reach our level and then we stop and everything else. We're going to put into maintenance mode, maybe, but we also may just kill. And that process for companies is one of the hardest. And I think companies just by nature, you do that and you feel it's like a New Year's resolution. You're like, this is great. I'm running, I don't drink anymore, and I'm eating healthily. And then the year goes on and you just keep adding some stuff back. And so I almost feel like every six months, you need to take a very hard look at what you're doing and why you're doing it. And then being quite callous on the things that maybe are working, but not working to the extent that they need to work. And that's the other thing. At scale, it's actually something you mentioned, Walmart. It's something that is both the blessing and curse of Walmart is that it takes a lot for it to matter. When you do half a trillion dollars of revenue, it turns out, you know, when someone shows up and they're like, I think I can do $10 million of revenue. You're like, it doesn't matter. And the same we've got Truett Square. As we got bigger, people will get real excited with new product ideas. Like this can do 100 million. I'm like, yeah, I actually don't care. Don't care. Come back if you think it's bigger, but if it's not bigger, let's kill it and let's move those people to another place where they can do something more at scale. And so learning to do that over and over again, now at Nextdoor, it's great because it keeps me on my toes and it's painful because sometimes you really have to drop things that are painful to drop. There's something very interesting about the pruning concept and also this competitive idea that like if a hundred million is not worth it to you at Square, like for some young startup, it is. It's a fascinating tension of, yeah, you have to move the needle, but make sure that something doesn't come at you convexly that really disrupts you quickly. Exactly right. Yeah. Why don't you like titles?

Because I think they get people into a mindset of what they imagine they should be doing, not what they could be doing. In growing companies, what I've learned is when you give people a title, Salesforce is a very title-dominant environment because title is part of reward. You hire a VP of Eng. And then if companies are doing what they should do, they outgrow people quite quickly. And so what do you do now? Do you hire an SVP of engineering? And then your VP of engineering is now totally pissed and probably leaves. And then your SVP lasts for a period of time. And now what are you going to do? You hire an EVP. And then you hire a chief architect. Start just making up titles versus I prefer people's titles to surround their work. So you say you are the head of neighbor value, all right, would be a starting point for next door. And then over time, as we've gotten bigger, we can see that we're big enough to now have neighbor value focused on engagement. and neighbor value focused on growth. Like how do you bring more neighbors in? How do you engage the neighbors you have? So now you sell divide the title where no one feels like they got screwed in that move because they're still now managing something that's still growing and is still even bigger than where they started versus titles just put you in cement. As you think about the key strategic priorities back to pruning and focus for Nextdoor in its next chapter as a business. How would you articulate those? What are the couple things that you think will most drive the right kinds of outcomes as you steer it forward from here? Obviously, you're going public soon, a new chapter in the business's history. Three areas that we are focused on. Near term, it's about driving. engagement. So the neighbors we have, we know that when they go from mouths from monthlies to weeklies, their propensity to go to daily is incredibly high. So once you've experienced next or on a weekly basis, we're going to turn you into a daily. So our focus is in that now to wow motion. And so a lot of our product development is on things like notifications. We're a platform that brings people back, but how do we do that much more fine grained and really smartly? So that's where investments.

and data science really help. Connections is another area that we've talked about where when Nexter started, we had this idea that you didn't know your neighbors. The Pew Institute survey that began it all said 28% of Americans knew one neighbor and 29%, don't totally quote me on these numbers, 29% didn't know any neighbors. And so we never thought that there's this need for connection. Now that we're in one in three households, it's actually important to let people know that people they know live around them. Like it can be a moment of like, oh, wow, I didn't know that. just talked to someone last week who I worked with way back in McKinsey in South Africa. It turns out he lives in the next town. So I would really love to have known that we're kind of neighbors. Connections is a big investment because the other thing we know that... People you know talking about things you care about is the number one engagement driver. But people you know talking about things you don't care about is number two. Humans care more about the human and the connection than they actually do about the topic. So it behooves us to do better on connections. So that's kind of one big area. Second is SMB. We feel like we're really uniquely positioned to win with small, mid-sized businesses because so many of them are inherently local. the pizza place, the hair salon. These are things that only happen physically close. You can't Amazon Prime them or whatever. So S&B growth. And then I think the third area continues to be on the ad platform because ultimately, as you talked about, that rings the cash register. So it brings money back into the business and make sure that we can keep investing for growth. How do advertisers evaluate platforms like yours? It strikes me that Facebook's product for advertisers is elite. It's just incredibly good. And that a lot of the way an advertiser might evaluate things is return on investment. What am I getting for dollars spent on Facebook? What are the KPIs or something? And if I'm shopping my dollars to be spent across different ad platforms and diversifying it or trying to accomplish different things, how do they think? How does an advertiser approach a next door and evaluate you?

Advertisers are very metric-driven, and we have gotten better and better at meeting them where they're at, either through third-party measurement, which everyone likes when you're not grading your own homework, which would definitely be a critique, I would say, of some of the bigger platforms, but also even our first-party measurement. So being able to drop a pixel on a next-door ad, so now we can be much more sophisticated about attribution. A little anecdote story, but I was talking to the CEO of someone who advertises on us in the home services world, and we were really trying to... press on them that we think they're under attributing Nextdoor's sheer awesomeness. I can't think of the right phrase for it. And the work we had done, it's in my brain now, is that we saw that people who are 45 and above tend to click on ads. So the good news is they're so easy to attribute that demographic. But people who are 45 and below who grew up much more internet natives, they see something and then they've been taught to go Google search. So it goes into their brain. And then when they want to go back to it, they go do a Google search. And so if you can drop a pixel, so you know they've seen an ad, but then attribute over the next 24 or even 48 hours, did they subsequently do a Google search? You actually get a much better idea of the efficacy of the ad. And because we could see it, so distinct when we cut it by age that's what really makes me believe it that we're not just trying to tell you honestly don't worry these ads are performing I thought the next layer down of analysis was so smart and so interesting. It goes back to like advertisers really want us to show that we are bringing them something unique and differentiated. I'll give you another example. In talking to the CEO of a really large insurance platform, his take was my team is really caught up in CPAs. They're all about the CPA. But he's like, but if I acquire you when you're at the beginning of your career. Maybe you start out with car insurance, but then you buy house insurance, then you buy life insurance, right? Your LTV is off the charts for me. But if I acquire someone else who doesn't do those things, then the CPA is nonsensical. What I really want is an LTV. And so he was pushing his team to go deeper and deeper. And that goes back to when you have first-party data, the ability to build much more sophisticated, longer-term LTV models is higher.

Advertisers absolutely want measurement. They do expect us to perform versus the other platforms they're going to. But the good news is in many cases, we are more than standing up. I saw a data point last night of a place where we were just killing a couple of other well-known platforms because of our ability to drive to something that was happening more in real life. These brands that are around getting your oil changed, a whole segment I'd never really thought of. Another place is healthcare. I never thought I would see brands like GSK, Moderna, and so on advertising on Nextdoor. And yet, of course, because they're advertising things like vaccines, but not just COVID-19, but things like the shingles vaccine or the measles vaccine. And we're better to have that being talked about than in a community level, often where there's a lot of vaccine hesitancy. I'm very early in my career of being a formal board member at other companies. You've had a cool... multi-perch approach on this. You've worked with board members, you've had boards, you're on the Walmart and Slack boards. I'll finish off my series of excellence questions here. What do you think is an excellent board member? What have stood out about the ones that have been most effective? And what have you tried to do to be effective as a board member of big, well-known companies? There's two things I always look at when I'm thinking about becoming a board member. It's a relationship. So first of all, Can I have impact on this company? Is this something I'm passionate about? Someone said it the other day, like, don't become a board member if you wouldn't go work there. Sounds so darn obvious. And yet it's a good way to think about it. And then on the other side, what are you going to learn? Because if you're not getting something back in that relationship, over time, you just naturally will get pulled away to other things. So what's the give get? The second thing I would say about board members, I often... describe them as like grandparents, because you get to show up for a lot of the fun stuff, the strategy and so on. But in the end, you have to walk away and let the company operate. And I think very good board members really understand that. And I think often your board members are those that just can't get out of their operational DNA.

start to try to run the company. If you're trying to run the company, I actually think you have a CEO problem. So as a good board member, you should be fixing the CEO, but you shouldn't be trying to run the company. That's just not sustainable, nor is you end up trying to serve multiple masters is never good for any team. And then beyond that, to me, it comes back to the passion piece. Am I truly passionate about what they're doing? Slack was such an easy board to take on and I really miss them, not their part of Salesforce, because I live in Slack. I was renowned at Square for my 4am Slack messages or my 5am Slack messages. I never gave up my West Coast analyst roots. So I'm a CNBC junkie first thing in the morning and I would be slacking the whole company with something that I had just seen that I thought was of interest. But I was passionate about the product and the way it was changing. the way we collaborated at work. And so it just made it so easy to show up with energy every single time they needed me. I'm always interested in the things that are most precious to you as habits or practices as a leader. If you were to leave next door and go work at any random company, no matter what, you would still take these practices or habits with you. What of those stand out most? What would definitely be in your bag? Number one, as a leader... Two kind of words I always try to lead with, transparency and then empathy. So on the transparency front, I'm a super transparent leader and therefore I push that into the company. So I really don't want to call it like no conversations in dark corners. Begins with, first of all, we write a lot of stuff down. The reason I use a lot of writing alongside discussion and meetings, like often meetings will split 50-50, is actually because I think it drives diversity. So what I found is that For minority groups, often the introverts, often actually a lot of technical people, when it's just a talk meeting, they often end up being much more shut down. And so what I love about writing things down first and reading and commenting on the reading is that you allow the quieter voices to come forward. What I love about writing things down and being transparent and sending it out to everyone, so for example, our board pre-reads go to the whole company, is that there's no revisionist history.

Relationships start to matter a little bit less, which might sound odd for someone who's just told you how much human-to-human connection matters. But it's no longer just about who you know. It's about truly what is your talent? What's the talent density you're building as a company? The bad sides of majorities ruling start to dissipate. So transparency is huge for me. You'll see that in every company I've ever worked in. And then on the empathy side, it goes back to walking in their shoes. So I will always drive my team. anywhere I am to get out to talk to all the stakeholders of the company. And actually, it's the one way you'll get me a little mad as well. You come with an idea, but it's not based on any actual conversation with your customer. Because then I just think we're making stuff up that we think people need, but not necessarily what they do need. I know you're not going to tell me the buggy web story and dah, dah, dah, dah. I just think those things are... so used in Silicon Valley and are super hypocritical. Yeah, there are people like Steve Jobs who saw things that maybe no one else saw. But in reality, 99% of all products are created because of really strong customer insight-driven work. I'd love to learn a little bit about Ladies Who Launch, another program that you're a part of. And I don't know a whole lot about. What is it? What is your participation? And what does it hope to do in the world? LWL is a nonprofit organization. I started it with my co-founder, Kelly McGonigal, back when we were at Square. It was driven out of customer insight. So we wanted to create an event for women to celebrate International Women's Day. And the thing I knew about creating an in-person event is he is always the keynote. And I was like, we are going to win because Jack Dorsey is our keynote. We had this great event. What we discovered was that the women... Most benefited from meeting each other, finding each other for peer mentorship. They really benefited from education. There isn't a lot out there of how to start, run and grow your own business, the real specifics. And then they do benefit from the inspiration, but... Don't tell Jack, I'm putting it in a podcast. He was not the home run. People were like, yeah, Jack Dorsey's great, but he doesn't look like me. I find it hard. He doesn't really, hasn't really walked in my shoes. And he talked much more about inspirational stuff, like good stuff. What I've found subsequently is when you get women or women who have done it, they often end up talking about the really tough times. They talk about like when they were vulnerable, the things that didn't go right for them. And often for other women listening,

That's the moment where Oxycontin flows, where they're like... I totally get this. I can do this now because I understand that it's tough for everyone. And so that began this nonprofit, which originally was a series of in-person events. So we've done them all over the world, including back home in Northern Ireland and Belfast for three or four years in a row. We did a lot virtually during the pandemic. And actually one of the things I'm really proud of during the pandemic is we launched our launch program, which actually gives grants to these women because access to capital is one. of the major hindrances they have to growing their business. Absolutely fascinating. I love it. I love the program. I've been so fascinated in what makes those things tick and work. And focusing on the hard times is a really interesting flip of the script from a typical event of that type. We were talking before we hit record about, you mentioned CNBC and being a stock junkie can't escape that. You have teenagers. And I think that's kind of the age at which... Kids maybe start getting interested in businesses or in stocks or whatever. That's certainly been a democratization of access to these things in the last couple of years that's notable. How do you teach your kids about all of this stuff? There's so many lessons that we've covered here today. It's hard to get your kids. I have younger kids, but it's hard to get them to listen to you as the parent sometimes. How do you think about financial literacy and business lessons? Like you've got this wealth of knowledge, but you're also a mom. How do you do it? This is definitely on my mind at the moment. financial literacy for all, not just my children, but generally across the world. Like it is shocking to me that most kids leave school, do sex ed, they understand nutrition and exercise, but they have no idea how they would balance a bank account. It's insane. We kind of just imagine that people will pick that up through osmosis. And so I think it's a real failing of our educational system. There's something we use a lot in product development called the five whys. And I was trying to push on a group that I belonged to about the whys. And they were like, well, why is there's no teachers? And I'm like, well, why are there no teachers? Well, we don't get paid enough to do this. They go into banking instead. And I was like, well, why don't we get the bankers to go? There was not a good reason.

And I'm actually working with an organization called Operation Hope. John Hope Bryant sits on my board at Nextdoor. But this is a lot of the why of Operation Hope is financial literacy, particularly in underrepresented communities. But back to how do you teach your children? My husband and I are both. My husband's a hedge fund manager. We're both really interested in investing in stocks. So it's just part of the dinner table conversation. We definitely have gotten them to open up their SoFi accounts and buy some stocks. And we've talked them through why they're buying. So they have a small budget to put to work, but we wanted them to create a portfolio. But we wanted them to lean into things they cared about. So my daughter bought some Adobe. It's had a great return. My son bought Electronic Arts because he loves gaming. It's been a good return, not great. But then we started to get into plant-based food. We watched the David Attenborough show. And so we were like, what can we do that's around climate change? So we bought Beyond Meat, which actually hasn't been a great return so far. But then there's a really good lesson in that about really trying to understand the fundamentals. And their estimates have come down. And so talking to our kids about this is what happens when you're not... beating your results or meeting your results, but how do you think about it over maybe a three and five year point of view, right? If you still think this is a major trend and where would you be comfortable buying the stock again? A lot of it is just the sheer osmosis of sitting around a table and talking about it. But as parents, I just don't think we do it enough. So we really try to push it in our household. I don't know what we'll end up with in terms of our kids' outcomes. And I'll tell you one more thing. My son, because of this, we actually pushed my son into a course this summer. And again, this is all from like a place of privilege because we can do that. The teacher who was the CFO of the local school taught this course and he made them do like a retirement plan. And it was like the first time my son came home and I was like, well, how much do you think you need for retirement? And he had a number and I was like, wow, it's a pretty big number. He was like, well, I've got to maintain my standard of living. But I'm like, this is great. Do you understand?

maintaining a standard of living. Talked about social security for the first time. Like again, it made me realize just how much that vocabulary is missing from any conversation I ever have with kids. I think collectively, we all have to dig in on this. It's not good. And it's not setting up our society for good outcomes. It's amazing to me the lack of improvement in this area, despite so many smart people understanding that it's a problem. Back to your five whys. There's some incentive chain problem that's just somebody needs to crack, or maybe it's a grassroots thing, but it's a neat topic because it could change a lot. It's so cool to imagine the 14-year-old kid. coming home and figuring this stuff out. I didn't have that as a kid. I grew up in finance. It's crazy. Is there anything that we haven't talked about that matters a lot to you, whether that's in your life, in the business, in just things more generally, any major topic that you think we haven't covered that we should? We talked a little bit about this, not growth at any cost, but I think we should also just talk for a minute on... welcoming platforms and what it means to be welcoming. You want to make sure that platforms are diverse, they're kind, they're trusted. And so it's a place where at Nextdoor, it's easy to lean out when you start to hear words like racism and so on, because everyone gets fearful. And yet it's a place where we've explicitly leaned in. The downside of a community-based platform are some of the things that we don't like about our society show up there. We could easily try to, I don't know, put a lick of paint on us, like, don't look here, when in reality we've said, no, this is absolutely something that happens on Nextdoor, but we have to use the product. to begin to make it better. So we've built in things like anti-racial profiling. So when someone is putting a post into the newsfeed, if we recognize that they're starting to go down a track of, in particular, talking about a crime, we take them through a flow that is very explicit about making sure you recognize that a detrimental, a post that includes race can be if that person is innocent. Would you feel differently?

if that person was a different race. So it just causes a lot of motion from dinosaur brain back to your frontal lobe just by asking you questions. It slows you down. And again, this is a trade-off because in a lot of platforms, they want to heat up conversations because that gets people engaged and more and more content being created. We actively slow you down. We've used things like kindness reminder. in order to stop you in your tracks almost to remind you that great neighborhoods are created with kindness and ask you to edit something that you're about to post. So I think these are all places which are a little bit antithetical to Grouse. which is often what investors will push you for as a CEO. But long-term, we believe a much better outcome for the business and for the business model is that we are viewed as someone who's helping communities, not being detrimental. We think it's a really good long-term greedy approach. Well, I haven't often had the opportunity to ask my final traditional question of someone for whom kindness is a key part of their business model. It's going to be a treat to ask you the same question I ask everybody. What is the kindest thing that anyone's ever done for you? I love that you asked this question. I feel like I now need to have a great answer. I was thinking back on this because I know that you asked this question. And so it took me all the way back to growing up in Northern Ireland. And when the first bomb went off in our local village, I grew up in this really small little village of about 1,200 people. The local police barracks got blown up and it took out all the windows in the back of our house. We didn't live in a particularly big house. All the windows in the back, my bedroom, the dining room, the kitchen, all the windows blew in. So there's glass everywhere. And it had been a pretty traumatizing day because I had been in primary school. So I was probably about 10 and we'd all had to shelter on our desks. The bomb finally went off. The glass there came in around us. It almost makes me tearful thinking back on it. But what was amazing in terms of an act of kindness is the minute we walked in the front door, my mom picked us up from work. Our neighbors.

came in, took a look, and they went back out and they had figured out where they could go buy plywood. And my dad wasn't super handy, so we're very grateful for this. They came in and they boarded up all our windows. And I remember Marcella, the mom, bringing us hot food because our kitchen was a disaster. But what made that really poignant is the whole divide in Northern Ireland was religious. And we were Protestant and our next-door neighbors are Catholic. And so technically we were meant to hate each other. That's why people were blowing up things. And yet the fact that kindness, that they just came that night, I just had such a sense of warmth still because it was a brutal, like a day you never forget in your life. That family still lives next door to my mom and dad. They still show amazing kindness to us, but that night really sticks with me. One of my all-time favorite answers, just an incredible, incredible story. Sarah, I have so enjoyed this conversation. Your reputation precedes you as someone that I was really excited to talk to. This has been fantastic. Thank you so much for your time. Thank you, Patrick. It was awesome. If you enjoyed this episode, check out joincolossus.com. There you'll find every episode of this podcast complete with transcripts, show notes, and resources to keep learning. You can also sign up for our newsletter, Colossus Weekly, where we condense episodes to the big ideas, quotations, and more, as well as share the best content we find on the internet every week.