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How Will Facebook and LinkedIn Respond to the Rise of Local Networks Nextdoor and Alignable?

This morning small business social network Alignable announced second round funding of $8 million. This brings the company’s total funding to $12 million. Alignable characterizes itself as the “fastest growing local business network.”

The company was launched in early 2014 and now says that it has a presence in “over 7,000 communities across all 50 states and Canada.” The idea is to connect local businesses with one another for mutual education, promotion and other opportunities. It’s not unlike LinkedIn in some respects but broader in its ambitions.

It’s “cousin” in the marketplace is the more established Nextdoor, which is more like Facebook for neighborhoods. The last time I spoke directly with Nextdoor CEO Nirav Tolia it was after its $60 million funding round in 2013. At the time the company was adding 75 to 100 neighborhoods a day and was in 24,000 neighborhoods across the country. Two years later the company says it’s in 75,000 neighborhoods.

For me Nextdoor has replaced Craigslist as a place to sell things. I’ve also noticed growth in membership and messaging volume, as well as the diversity of messages, in my own neighborhood on Nextdoor. More people in the past year are asking for and making local business recommendations. Nextdoor ‘s strategy is to get people deeply involved (daily usage frequency) before rolling out monetization scenarios.

Facebook is obviously focusing aggressively on SMBs and pitching itself as the only platform they need to market themselves. While that’s not true it’s a compelling pitch. However these newer networks, Nextdoor and Alignable, present Facebook and LinkedIn with interesting challenges and opportunities. While Nextdoor is not a Facebook replacement for consumers, it could eventually eat into some of Facebook’s use cases.

Facebook has generally responded to viable competitive threats by buying them: Instagram and WhatsApp. Will it try to buy Nextdoor? The company would probably want $1 billion to be acquired at this point. If Facebook were to buy Nextdoor it would likely allow it remain independent as it has with WhatsApp and Instagram (part of its portfolio strategy).

Facebook could serve relevant ads on Nextdoor, solving that headache for the site. However, CEO Nirav Tolia believes that Nextdoor has many and varied monetization opportunities. I wouldn’t be surprised if investors and founders were thinking the site could eventually go public. However I think that would be problematic over the long term.

Alignable could also be an eventual target for Facebook. But I’m thinking that LinkedIn is a better fit. However there you’ve got an integration question. Unlike Facebook LinkedIn has tried to incorporate acquisitions and broaden the utility and use cases for the site.

Putting aside the acquisition speculation, if Nextdoor and Alignable continue to gain momentum and grow, eventually the larger sites will have to deal with them one way or another.

What are your thoughts? What do you think will happen with Nextdoor and Alignable?

4 Responses to “How Will Facebook and LinkedIn Respond to the Rise of Local Networks Nextdoor and Alignable?”

  1. Mohan Medepalli says:

    I’ve been using Nextdoor for about two years now and from the day one, it looked like an ideal acquisition target for Facebook. I’ve only seen local businesses and classifieds presence on Nextdoor grow exponentially in these two years. At the time, Facebook did not have a well defined SMB/Local strategy and my thought was Nextdoor would open the door for them. Even a local listings site with a strategy centered around neighborhoods could gain a lot with a Nextdoor acquisition which would enable a local listings site to step into Facebook territory. In that respect, why not let Google throw in their hat as well! After all, it does want to get more local, fight Facebook for some space and has the resources to get Nextdoor which would probably have a steep exit price given its successful capital raising rounds and disbursement promises to take care of…

  2. Greg Sterling says:

    Indeed, in many ways Google is even a better suggestion. G+ has largely failed but Nextdoor might be an answer to Facebook.

  3. Rae Jenkins says:

    It’s a sad reflection on the state of neighborhood life in America that Nextdoor is held up as a communication solution for local communities. It’s like offering Olive Garden as your neighborhood restaurant, Starbucks as your neighborhood coffeeshop, and Wal-Mart as your local Main Street. They all pedal corporate crap and aren’t honest about their intentions. They want your data, they want to feed you junk that is bad for your health, and sell you products that are bad for workers and our environment.

    Neighborhoods are stronger with small, local businesses, farmers markets… and locally controlled media… traditional and digital.

    I realize that it’s uncool in these Silicon Valley-worshiping times to not bow low to our Unicorn overlords, and so this comment may be blocked. Last I heard Nextdoor was valued at $1.1B with zero revenue… those sharp-toothed investors must be salivating over all that glorious user data. People are leaving Facebook for similar reasons… will Nextdoor departures be next?

    P.S. And don’t get me started on the Nextdoor CEO’s values… hit-and-run, lying on his resume, stabbing co-founders in the back… http://gawker.com/245891/the-rehabilitation-of-nirav-tolia

  4. Greg Sterling says:

    I agree with your social commentary.

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