During this time of great uncertainty—marked by protracted pandemic-related risks, rising geopolitical tensions, expanding cyberthreats, and talent market upheavals—senior leaders are sharpening their focus on resilience. What makes some companies so much more resilient than others? How can we build resilience into our organizations? How should we think about potential trade-offs between resilience and more immediately obvious benefits such as speed, efficiency, and cost?
McKinsey recently hosted a virtual leaders’ summit on building resilience in uncertain times. Among the guest speakers was Nextdoor CEO Sarah Friar. According to its website, “Nextdoor is where you connect to the neighborhoods that matter to you so you can belong.” The app currently operates in 11 countries and 285,000 neighborhoods. Prior to becoming CEO at Nextdoor, Friar was CFO at Square and senior vice president of finance and strategy at Salesforce. She has also held executive roles at Goldman Sachs, and she started her career at McKinsey in London and South Africa. Sarah currently serves on Walmart’s board and on the advisory board of HOPE Global. She is the cofounder of Ladies Who Launch, a nonprofit that celebrates and empowers women entrepreneurs. She was interviewed by McKinsey senior partner Olivia White, a member of the firm’s Financial Services, Risk & Resilience, and Public & Social Sector Practices. The following are edited excerpts of their conversation.
Olivia White: How have you been thinking about resilience—for Nextdoor and the neighborhoods you serve—during the pandemic?
Sarah Friar: Even before COVID-19 struck, we knew that Nextdoor bolsters neighborhood resilience. In 2018, resilience expert Dr. Courtney Page-Tan1 analyzed interactions on Nextdoor in high-density neighborhoods hit by Hurricane Harvey. He correlated high levels of engagement on Nextdoor with faster recovery times. He also highlighted the platform’s function as a place where residents could help one another at a time when public agencies were overwhelmed. His work resonated with our strategy in that the power of proximity comes into play when a neighbor boats over to a nearby home, rescues a family off the roof, and delivers them to safety. Page-Tan advises policymakers to invest in hyper-local communities, online and offline, to build resilience ahead of the next crisis. In so doing, they fill a critical, local need not met by today’s dominant tech platforms.
With respect to the pandemic, in February 2020, I was in the UK. At this time, COVID-19 was in its early stages, but we immediately started to see a massive spike in global daily active users on Nextdoor; our numbers were doubling week over week. The huge increase in traffic tested our resilience, but Nextdoor is built on a modern, scalable architecture—so we did well with that test. As the pandemic spread, we also observed how quickly people stepped up to offer help, so we built features to support that. This included “help maps,” where those requesting help—for example, an elderly neighbor looking for someone to go to the grocery store—could be paired with someone ready to run that errand.
We also worked to ensure that the information we provided on the platform was trustworthy, leveraging the strong relationships we had previously built with public agencies, including, for example, the Federal Emergency Management Agency (FEMA) in the US, the mayor of London, and many others. In that moment, Nextdoor acted as a megaphone for governments to get their messages out. As the pandemic has continued to unfold, we’ve extended the platform to local businesses and beyond.
Olivia White: Have you improved your ability to predict when tricky issues might pop up?
Sarah Friar: We absolutely have developed that muscle. Of course, no one role-played a pandemic, but we did considerable work around the elections, for example, to manage misinformation and disinformation, and that informed our pandemic response. Even if we can’t foresee the exact situation, we see commonalities in terms of what to expect and how to respond. Many tech companies excel at using playbooks that lay out, step by step, what to do in the event of a site outage. Playbooks can be helpful in preparing for all manner of unforeseen risks.
Of course, no one role-played a pandemic, but we did considerable work around the elections, for example, to manage misinformation and disinformation, and that informed our pandemic response.
Olivia White: What did you learn about managing risk in your past roles at other platform companies that you’ve been able to apply to your current position?
Sarah Friar: Much of what I’ve learned is translatable, starting with the imperative to surround yourself with diverse opinions. Beyond that, I’ve also learned to have a healthy fear of cyberrisk. At Square, prior to launching any new product, we’d conduct a red-room exercise to stress-test our security protocols. We’d sit around a table, and invariably someone would ask, “How could I steal money using this product?” As the CFO of the company, that was my least favorite and my favorite question. Anxiety comes from not knowing what you’re up against. Once you imagine the risks and put plans in place to mitigate them, it eases the anxiety and builds resilience.
At Nextdoor, before we launch a new feature or product, we repeatedly go through the exercise of considering how it could go off the rails. We also occasionally set aside time for a multiday off-site meeting where we step back and look at the big picture and what could go wrong at the company level.
Olivia White: Moderating content on a social media platform is not easy. Can you share a challenge that you’ve encountered, what you learned from it, and how it informs your thinking about resilience?
Sarah Friar: At the highest level, the challenge we deal with every day is moderating engagement to nudge people to be their better selves but without prompting legitimate concerns about censorship. Neighborhoods are the fulcrum of change—and frequently where contentious conversations about local issues are occurring. In Northern Ireland, where I grew up, the conflict that began in the 1960s and finally ended in 1998 would still be going on if people living side by side but divided by religion ultimately hadn’t come together to have constructive—albeit difficult—discussions aimed at reconciliation.
On Nextdoor, we’ve built infrastructure to facilitate those discussions. An interstitial may pop up at a relevant moment with a kindness reminder or a request to source information—for example, about COVID-19 or vaccines—that could be inaccurate or misleading.
Olivia White: How do you manage the many global uncertainties that challenge business and societal resilience currently?
Sarah Friar: In my roles as a company executive and a board member, it’s easy to get mired in the pressing, day-to-day considerations and to lose peripheral vision. It’s important to stay broadly educated and to zoom out to the 50,000-foot level at times to retain a broad perspective. Scenario-based risk assessments can be great for providing corporate leaders with a vehicle for exploring long-term issues like geopolitical shifts and for moving the conversation from the abstract to the concrete. I credit this approach with leading me to determine, for example, that we needed much more diversity on our board to properly confront the big issues related to race in this country. That imperative—to include many different voices—applies equally as we build out our global footprint.
Olivia White: In your roles as a company executive and a board member, how do you balance your short- and long-term perspectives with an eye toward building resilience?
Sarah Friar: That’s a relevant question at this moment because we recently took Nextdoor public. In the early days of building a private company, investors tend to give you a long leash, and you spend quite a bit of time thinking about the long term. In a public company, by contrast, you can very quickly find yourself focused on quarterly earnings. It’s my job to push against that mindset, including by surrounding myself with people who will continually ask, “What does this look like ten years from now?” Additionally, if you position yourself as a growth company, as we have done with Nextdoor, then you hopefully will attract investors who support investing to grow.
At Nextdoor we talk about core, strategic, and venture bets. At our scale, core is still a primary focus; we’ve got product-market fit, we’ve learned to monetize it, and there’s still white space. Strategic bets have a one- to three-year return. And then we place one or two venture bets with a five-year time horizon. I treat these like a venture capitalist does with a seed round of investment—here is X amount of money; now lean into our “experiment and learn quickly” value and see what we uncover. Hire great engineers, build a product, and see if you can find product-market fit. Come back when you’re 80 percent done, and then let’s decide on the right metrics—often engagement and growth—and whether we can create a flywheel on the platform to deliver viral growth. All this is happening long before there’s revenue attached to it.
In the short term, I’m more into the cycles of resilience of neighborhoods: how do we keep gleaning insights from our customers and then apply those ideas globally?
Olivia White: What do you do internally to bolster that resilience at the local level?
Sarah Friar: It begins with having diverse voices in leadership positions. Nextdoor neighborhoods reflect the diversity of the world; if we’re going to build a product for them, then we need to look like them. Seven out of ten people on our executive team were born outside of the US.
We also rely heavily on advisory boards; we have four despite our relatively small size. A Client Advisory Board helps give guidance on product innovation. A Neighborhood Vitality Board—a diverse group of academics and experts in the fields of social psychology, equality, and civic engagement—counsels us on the necessary elements of thriving communities and how to build deeper connections among neighbors. We also have a Small Business Advisory Board focused on small and local businesses and a Public Agency Advisory Board that connects us to the voices of public-sector constituents and customers at various levels of government.
Olivia White: As you look ahead, how do you think Nextdoor and other tech companies must adapt to succeed in a postpandemic world?
Sarah Friar: There has been a structural shift to local that likely will endure. Additionally, the second wave of the mobile revolution—following a mobile phone in every pocket—is now upon us: it’s been proven that a large portion of the workforce can work from anywhere. It’s almost hard to believe that just two years ago we were issuing noise-canceling headphones to newly hired engineers to help them concentrate in our open-office layout.
On the flip side, we fundamentally believe there is power in people coming together, so we’re making sure to support that value at Nextdoor. It’s especially critical for junior people who really need those informal mentorship moments. Innovation also suffers when we don’t have those impromptu conversations between, say, a product manager and a designer who may not work together every day. We also build up social capital when we meet in person, which gives us resilience during contentious conversations.2
Olivia White: What key takeaways would you suggest that would help a company be resilient?
Sarah Friar: First, ensure diversity of thought—among the leadership team and the board of directors—and use advisory boards to provide specialized guidance. Second, conduct scenario-planning exercises and develop playbooks to be ready to respond to emergency situations. Third, before launching new features, think long and hard about potential unforeseen consequences and how to mitigate them. Fourth, think locally about how to build resilience in neighborhoods. Glean insights from customers, build for them at a local level, and then find ways to take that database of great ideas across the globe. There’s tremendous power in applying local fixes to global issues.