2012-10-22

The Future of NeighborGoods

A few months ago we shared the news with you that we would be closing down NeighborGoods in order to shift our attention to our new project, Favortree. Now I’m writing to share yet another shift in plans. If you want to skip the details, the short story is that we have been unsuccessful in launching the new project. Meanwhile, many new members have continued to join NeighborGoods and have used the service to share with their neighbors. We’ve decided not to close the site. We will continue to maintain NeighborGoods.net for your use.

For a bit of history, NeighborGoods launched publicly for the first time in 2009. The company very quickly attracted press from hundreds of outlets including Techcrunch, Fast Company, NPR, Oprah Magazine, and NBC Nightly News. NeighborGoods was at the forefront of an emerging industry that is now the hottest trend in Silicon Valley, Collaborative Consumption. We were even mentioned in the book that coined the term. It was clear that our vision of connecting neighbors to share physical goods was resonating with people. As we iterated the product and grew the community, the accolades continued. We were honored as one of the 100 Most Brilliant Startups of 2011 by Entrepreneur Magazine and we won the award for Best Bootstrapped Startup at the Startup Competition at SXSW that same year.

But we were still having trouble raising money. We raised enough cash from angels to keep our small team working but we never reached the point where the company was interesting to VCs. Eventually, the money ran out and the team moved on to other things. Then I heard from the Knight Foundation. They were interested in the potential for NeighborGoods to build stronger local communities by connecting neighbors to share with each other. They suggested that I apply for funding through their Tech for Engagement program. What passionate entrepreneur wouldn’t jump at a second chance to make their company work?!

I saw this as an opportunity to explore what was working and what wasn’t working with NeighborGoods. This was my chance to refocus and rebuild my vision. I reached out to my friend Daniel Hengeveld who I had known both personally and professionally for the past 8 years. We started brainstorming what the next generation NeighborGoods might look like. The funding came through and we set on a course to building a startup that investors could get behind.

We made a list of things we’d learned and tried to boil down our offering to its most basic values. First and foremost, friends and neighbors help each other because it feels good, not to make money. Financial transactions work best between strangers and when the value is clear (and high). But when you’re doing something to be helpful, mixing financial requirements into the transaction muddies the experience and makes it less fulfilling for both parties. When is the last time you accepted cash for letting your friend borrow a video game, or offered money to a colleague for giving you career advice? It’s just not how the world works. We were confident in the knowledge that friends and community members like to help each other. They want to lend their stuff and be helpful. Getting people to share was not the problem. What we needed was to find a way to encourage more borrowing.

People don’t like asking for help without having some way to reciprocate. Asking to borrow something is actually much harder than offering to others. We started exploring social currency and complementary currency systems. We hypothesised that if we created a fun and engaging social currency, we could smooth the social friction of borrowing from others while rewarding folks for sharing at the same time. We were very excited about this new direction and we began pitching it to our advisors and close investors. We kept getting the same advice. “NeighborGoods is old news. You can’t raise money by adding social currency to your old idea. You need to start fresh.”

What we should have realized at that point was that we already had money. We were so worried about Knight Foundation’s small investment running out that we set our eyes on one goal: to raise more money. Our goal should have been to increase activity on NeighborGoods. Our goal should have been to better serve our community by improving the product and making it more useful by working to build critical mass. We already knew our idea was hot. We already knew people were passionate about NeighborGoods. We had thousands of users and the support of the Knight Foundation - who had reached out to us to give us money.

Instead, we decided to throw out all that value and start fresh because we thought it would be more appealing to investors. We thought we could take what we learned on NeighborGoods and build a whole new product and a whole new community and make it appealing to investors with $250k. After a couple false starts with the product, the money was draining quickly, much more quickly than the first time around. And with that effort, we have learned the same lesson as countless entrepreneurs before us. Our job is not to please investors. Our job is to delight our users. Period.

We were already half way there with NeighborGoods. But we got caught up in the desire to build the next hot startup and the next new thing rather than building on the value we already had. We certainly made things difficult for ourselves.

And now we find ourselves back where we started six months ago. We’re a passionate team with a very small bank account and a growing community of users who believe in the benefits of sharing with their neighbors. In all, that’s not a bad place to be. It’s an honor to have the support of many thousands of people who believe in NeighborGoods enough to register and be a part of this community.

Our goal now is not to raise more money. Our goal is to keep NeighborGoods up and running for our community. We’re going to be making some improvements to NeighborGoods in the coming weeks, mostly by removing unnecessary features. We’ll also be adding a donate button so our community members can help us cover the costs of hosting and upgrades moving forward. If you would like to help out in other ways, feel free to contact me directly at micki@neighborgoods.net.

Thanks, as always, for sticking with us on this journey - missteps and all.

- Micki Krimmel, Founder and CEO


posted by Neighbor Al

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Yay! NeighborGoods rules!

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It was very unfortunate if this site could have been stopped.


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Appreciate your openness about the process, and doing my part to spread the word!

Thanks for being vulnerable about the process of making Neighborgoods work. I'm looking forward to your success.

great update. thankful for the transparency. will do my part spreading the word as well. i believe wholly in the mission. what you said offering sthg in return has merit. maybe one can post 'favors' s/he can offer in return, and it can be even a 'groupon' coupon you have no intention to use, or a parking spot you don't use certain days of the week, etc. good luck.

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