University of Arkansas

Walton College

The Sam M. Walton College of Business

Ep. 12 | Keeping Empathy as a Core Value with Sarah Friar

Sarah Friar
March 22, 2021

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On this episode of It’s a Customer’s World podcast, host Andy Murray speaks with Sarah Friar, CEO of Nextdoor, the neighborhood app. Sarah was formerly the CFO of Square, and she has held executive-level leadership roles at Salesforce, Goldman Sachs, and McKinsey & Company. She holds masters degrees from the University of Oxford and the Stanford University Graduate School of Business, and she joins Andy to share her career journey and the insights it has taught her. Sarah explains how she found her passion in life, details what she does as a CEO to keep her organization’s focus on the customer, and answers faculty and student questions.

As the conversation begins, Sarah encourages those on the cusp of their careers with input from her own journey, encouraging pursuit of passions along with knowledge that no experience will be wasted. Sarah further shares about her development of empathy, Nextdoor’s focus on both data science and observation, and the way in which her company approaches new endeavors. Nextdoor is driven by a growth mindset, but its pursuit of growth is tempered by its commitment to customer-centrism.  Sarah shares how she, as CEO, hones this commitment, and also explains other aspects of her work, such as the importance of community-orientation and the Nextdoor kindness reminder.  As she fields faculty and student questions and offers concluding thoughts, Sarah considers topics ranging from business mistakes, to current trends, to her hope in technology and the next generation of workers.  


Episode Transcript:

Andy Murray: (00:05)

Hi, I'm Andy Murray. Welcome to It's a Customer's World podcast. Now more than ever, retailers and brands are accelerating their quest to be more customer-centric, but to be truly customer-centric, it requires both a shift in mindset and ways of working, not just in marketing, but in all parts of the organization. In this podcast series, I'll be talking with practitioners, thought leaders, and scholars to hear their thoughts on what it takes to be a leader in today's customer-centric world.

Andy Murray: (00:40)

Today I have with me Sarah Friar. Sarah is Chief Executive Officer of Nextdoor, the Neighborhood app. She previously served as the Chief Financial Officer of Square, and has held executive level leadership roles at Salesforce, Goldman Sachs, and McKinsey. She's earned her Master's in Engineering and Metallurgy, Economics, and Management from the University of Oxford, and an MBA from the Stanford University Graduate School of Business.

Andy Murray: (01:05)

Sarah and I will talk about how she went about finding her passion in life through a fascinating journey, and what she does as CEO to keep the organization truly focused on the customer. She also answers questions from students and the Walton College faculty. I left my conversation with Sarah really inspired, and I hope you will as well.

Andy Murray: (01:32)

Hi Sarah. Welcome to It's a Customer's World podcast. It's great to have you here today.

Sarah Friar: (01:36)

It's great to be here. Thanks, Andy.

Andy Murray: (01:38)

You know, now's an interesting time, and I was looking through your bio. You've got quite a fascinating career progression across some very, very nice assignments. If you think about the students that might be listening today, and they're coming into graduation soon perhaps, a lot of them are, and thinking about the uncertainty in front of them, if you could take me back to that moment in time when you were undergraduate, Oxford, and thinking about that first job, and how important it is. Is it going to define my career or not? How did you think about starting on this journey when you were back then, and any advice to students as they think about it?

Sarah Friar: (02:15)

Sure. I often say actually the older I get, the less I know. I feel in some ways' everything felt definitive, but this was the most important choice I was going to make in life, and in reality, it's not, so calm down everyone. It's really, as you get into your jobs what you make of it. I call it first principles, in both finding the thing you're going to be passionate about. Don't think about being a CMR, right? You're taking a marketing course of CMO or CFO, or whatever. Think about more... Where do you find energy and passion in your life? What are you excited about right? I love to travel. So I guess I could have become an airline pilot, but that would be a little too literal. So instead I thought about careers where travel was kind of a very natural part of what you were doing and actually took me towards consulting banking.

Sarah Friar: (03:05)

Remember previously I was an engineer, so I'd taken a year into great. I love analytics. I love... I always have never been a number. I didn't like I wanted to be in a career where analytics and data were going to be a clear part of it. That was big piece too. And I think the third thing that I learned definitely I look back now in hindsight, I would actually commend myself on which often will don't because we're all taught to look for the things we should have done. And women in particular sometimes have a hard time saying that but I think I was willing to take a lot of risks, particularly around the places I went right in my first internship was in Ghana, on a gold mine of all places. I learned a lot about going from academia into real-world applications, but I also actually learned a lot about what it was like to be a woman in a very male environment.

Sarah Friar: (03:52)

And that was a good lesson about... I was still going to end up working in male environments, but what would make me successful and kind of learning to look for places where Quant would really show through was important. When I got to my first job at McKinsey, I remember very clearly that moment I'll tell one anecdote, and then we can move on. We were getting put on different studies is what McKinsey called it bright eyes, bushy tail and I was so excited and someone got put on Burberry. And I was like, Oh my God, Burberry. And then someone else got put on like a bank. And I was like, Oh, finance, I'm super interested in that too. I'm like, literally it got to me. And I got scheduled on a study for a company called AEA, which stood for the atomic energy authority.

Andy Murray: (04:38)

Oh my! That could be exciting, I suppose?

Sarah Friar: (04:41)

Well, my face probably said it all. I was like, I got the nuclear power industry. You've got to be kidding me. But what was amazing about that study is actually it was this interesting organization that was trying to go from being in the public sector to becoming a private sector company. They were a company of like in the UK, what they call boffins, but everyone... The lowest degree in one had, was a masters and everyone had multiple PhDs and they had gone in and just found these super unique patentable technologies, but they've no idea how to turn them into businesses. And so as the McKinsey team, we came in and we really kind of thought through this, how to operationalize kind of patents and technology into actual businesses.

Sarah Friar: (05:28)

So ask forward to what I do today. I could not have gotten a better outcome, but it's amazing how I think when you're early in career, you get very kind... Of you love fancy names and things that sound cool, but you need to kind of dig into the thing that's in front of you. And going back to what you're passionate about, find a way to bring your passions to the fore and then keep putting your hand up for more like more risks, go travel, all the stuff you can do in your early twenties, but get harder. You start having kids and my case, a husband, and so on [inaudible 00:06:03] moving a whole family. If I'm making a decision to have to go travel.

Andy Murray: (06:06)

That's great. You know, I think me too, I'm looking back at my career at the different pieces. One might not make sense of it, but today I'm like I'm using all of those. Nothing was really wasted. And does that same true for you that you looking at the different experiences and you're still able to draw from things that look quite disconnected on the surface?

Sarah Friar: (06:24)

I think that's exactly right. Nothing is wasted, right? The next study at McKinsey, they sent me down to South Africa and I learned a lot about entrepreneurship down there because the South African office, even though we were part of a bigger company was very much an entrepreneurial startup, right? There were 17 of us, I think when I arrived. So it was like working for a company of 17 people, not a big global brand. And in fact, no one had heard of our brands. We needed branding, marketing help. And so you really... The power was in the substance that you were going to bring to your customers because the brand was not carrying you. And that's something again, thinking about what my last kind of set of career choices have been. It's been working in companies that are just starting. We don't have something brand to sit underneath. You really have to show, not tell their customers what's in it for the customer. And so lots of learning from that early part of my career to today.

Andy Murray: (07:18)

Yeah. You know, I have to ask you total story on a previous podcast you had done on mastery X scale, I think around your time... I think Ghana where people's names were on post-it notes and you were trying to work through and someday one day came in that guy's post-it note wasn't there and he had contracted HIV. And it really sounded to me like you had a pretty deep sense of what empathy is all about. And even to a colleague or an associate, because empathy is so important and being customer-centric and authentic at that is that where that happened or was it... Was just something that was always part of who you were.

Sarah Friar: (07:55)

Yeah. So I mean, that story is very real. It's actually in South Africa and it was apartheid[inaudible 00:08:00] but Africa generally right. Was going through a massive HIV crisis at the time. And can empathy be learned or nature-nurture? It's an interesting question. I definitely would grant my parents a ton of kudos on that empathy development. So my dad was the local HR manager of the local mill. So he knew everyone in the village. My mom was the local nurse. So you couldn't have met two people that were more kind of community-minded and deeply empathetic at the same time. I do think that you can coach yourself on the empathy front. I mean, a big part of it if you're going to be customer-centric and what you're doing is are you spending time with your customers as much as you possibly can?

Sarah Friar: (08:44)

And even though it may feel unscalable, I think over time, you kind of just, you hear kind of the same stories coming out. When I started at Nextdoor, I set myself a goal, actually, goodness, it was 2019, not 2020 of visiting every country that we're in, we're in 11 countries. And I want to hear what does community mean for a community in Paris versus a community in Melbourne versus people that you might talk to in a rural community in Hawk, for example, and while you can see the differences like we often joke that our Italian neighbors are a little circumspect coming in the door, right? They're like, why do you need all this information about me? The minute they're in the door they're like, hell yeah, come on over the doors open. We have a pair of teeth tonight at 6:00 PM. I don't know you but come into my home.

Sarah Friar: (09:32)

And Americans are almost the opposite. Americans are like, I'm happy to fill out a whole form about myself, but I do not want you to talk to me directly until I know if I really am comfortable with you. And there're commonalities of meeting your customers that start to speak to you. In fact, one of the things I heard consistently meeting customers was actually a sad outcome it was this kind of conversation about isolation and loneliness. And I think the pandemic has probably, even more, exaggerated that outcome. But no matter where I was and it wasn't just... I think people pejoratively think older people feel that way. And they are definitely a part of our community that often does end up in a much more isolated state. But I was hearing it from young moms in neighborhoods in France, I was hearing it from middle-aged people who maybe we're going through a divorce.

Sarah Friar: (10:27)

There are always moments in your life where I think people feel very isolated students, actually, people who are freshmen at their first kind of college experience, right on the one hand college is built up to be this time of your life. You meet all these people, you're partying. I know you're doing it, but on the other side, right, it's, you've left behind that familial support network, probably friends, like in my case, friends that I had from kindergarten who suddenly weren't around me and the feeling of wow, maybe I'm not having the experience everyone else having was pretty deep. And so when I think about my product, maybe it's the better thing to [inaudible 00:11:06]it. I think a lot about, okay, how can I, as an online platform, pull together those threads to give people the building blocks to start creating social capital with each other, ultimately connectivity.

Sarah Friar: (11:18)

But the way I got there was you kind of asked me, what was I born with it? Certainly a lot of being born with it, but it's a muscle. You got to work it out every day and so everyday I try to touch customers. Yesterday I did a box set like this with five customers from Australia. So five neighbors from all over Australia, but just talking about how they're using our platform and if I don't exercise that muscle regularly, even in COVID, I actually think you start to miss the true aha moments of your product.

Andy Murray: (11:48)

What's really fascinating about what you're saying. And for those listening that might've been hearing, some of the other series, there's a little bit of a... I don't want to call it a debate, but there's certainly a tension you have to harmonize between how much you can learn about a customer through big data, data science, and AI, which you've got quite a depth of mathematics and engineering skills to completely understand it and use that and probably do use a lot of data and how much you have to learn or can learn through observational interaction boots on the ground. And you talk very viscerally about that. How do you harmonize those two different approaches because empathy certainly plays up big here. It's a little bit harder in the data science, but one, if you didn't know any better, you might think you can get almost any insight out of data from data science and AI. But I don't hear you talk that way.

Sarah Friar: (12:37)

No, I think it is the melt of both. So I think naturally like particularly working in Silicon Valley, right? People tend to be very high on data science. [inaudible 00:12:48] But I don't go to AI. It's kind of a different discipline, but machine learning, right? The ultimate black box on data. And for sure, right? Every product you launch, you should... Every product manager, every marketer should be absolutely watching the data daily, just to see what's shifting? Why the shifting. When I do this, what happens? Right. We believe deeply in AB testing. So you should always have a whole [inaudible 00:13:12] group. So if you make a change who kind of understand what's happening between the two different grips, but I also really buy into actually Clinton Christianson's framework is the one I gravitate to called jobs to be done. And then the jobs to be done framework, right?

Sarah Friar: (13:26)

The insight is that when you actually see a customer engaging with your product, that can be an even bigger aha moment. So the white paper, one that I love is about dairy queen and the milkshakes. And if you haven't read it, you must read it. But dairy queen looking at their data could actually see that one of the things that was happening as a tick up in milkshakes before being bought in the morning and the hypothesis was kids going to school, maybe parents were showing up at a dairy queen and giving their kid a milkshake because milk is good for you. The actual alcohol was people were buying milkshakes. I'll spoil the whole story for entertainment on their drive to work. Because now if they had coffee could spill and like burn, you bagels could drop a butter all over, like your outfit.

Sarah Friar: (14:11)

And the milkshake was very contained, had a lid and a straw, but in the entertainment world, how do you make a milkshake more entertaining? And so one of the things they did was to put raw fruit, like little pieces of peach, so that it would be second on your milkshake and a little peach would go up the straw more entertainment. But that is a human insight. You have to watch what's happening. And you mean the granddaddy of them all in Silicon Valley is Scott Cook from Intuit who did this whole concept of [inaudible 00:14:39] homes, which always sounds a bit stalker-ish.

Sarah Friar: (14:43)

But he was going to people's homes and watching what they did with a CD ROM that they put into their computer on accounting software. And he found often that what people said they did and what they actually did, the two didn't even compute. And wasn't that your customer is trying to lie to you. It's like sometimes they get so bought in by a marketing message that they think this is what they're doing. And the reality is very different. So this is where I do think those two things have to come together.

Andy Murray: (15:12)

That's really helpful. And you know, another thing you can help with that I hear is a lot of people approach customer-centricity. And when they're in their early stages, they'll look at NPS or customer proto score and focus on eliminating the dissatisfies, which is good. I mean, that's low-hanging fruit but those are a bit obvious. You see that. And far fewer companies get comfortable in the more blue ocean, new value propositions where you haven't been there before, because the financial systems, how you measure new no case study, no history. And yet you've been in a space where almost everything you're doing is blue ocean with Nextdoor. I'm curious how you look at that because you need some different things to be true, to get comfortable with uncertainty of new things. And you're always bringing new things. How do you have confidence that it's going to work? Or is it just explain a little bit, the idea ecosystem you've built to keep bringing new things to market.

Sarah Friar: (16:09)

Yeah, so, I mean, it's not always blue ocean, or I actually normally call it blue skies. I'm going to have to think about this blue ocean, but if you think about innovation, I'm still a consultant at heart. So I like to buy two. And you think about kind of more iterative innovation versus true blue sky. And then you think of current customer base and your prospective customer base, right? The scariest space is step-change innovation within your customer base because that's where you have leaked expertise, but you do need a portfolio of those things. The I want to call it easier is kind of the iterative innovation on your current base. And I think sometimes people get less excited about that space. Because you'll hear words like incremental pushed against it. But as you know, having worked at very large corporate, but a small ripple on top of a huge base is amazing.

Sarah Friar: (16:58)

And particularly when you're in markets where for example, like at square, we were a recurring revenue stream business. So if you could get your customer to do 1% more with you that accrued across your whole base and that then accrued every single year. So the kind of DCF on that little bit of incremental was massive. So there was insight there and new stuff, which is really where you were pushing me. How do you get comfortable? I mean, some of it is, first of all, first principles of what are the big themes going on in the world. Like I do actually create brain space for just somatically. Where do we know the world is going? Right. I'm pushing my team right now. Thinking about 2021 is the year of the vaccine. Hopefully. How could we think about that? Like what are some of the bigger trends?

Sarah Friar: (17:46)

So number one is, first of all, you have to educate people on a vaccine, right? There's a lot of people who are very skeptical about just even the medical industry, right? Particularly in our more minority communities. So that's a place that a neighborhood app can actually play. People need to know where to go, to get their vaccine. So in the same way during COVID people needed to know like was their local Walmart open. And if they were elderly, was there special hours for them to go shop? The map part of Nextdoor is actually incredibly potent. So there's informational about the vaccine itself, but then there's the behavioral shift. Okay. I'm going to finally escape from this room, but what am I going to do? Like what are the things that I probably will change? I actually don't think I will travel as much as I did, but that means I do need to think about, okay, what are the ways I still can get this interaction with neighbors?

Sarah Friar: (18:41)

For example, like I just talked to you about. And so starting with kind of some top-down sematic, right? New movers is one we're thinking a lot about right now because people are moving out of cities back into more suburbia because they can get more space. They're no longer tied to their job, perhaps because people have kind of proven they can be really productive working from home. So new movers are a very fertile ground for a neighborhood app to go kind of look with them. So there's tucks down. And then of course it's being very decisive about your core competitive advantages and then needing those two things in the kind of space of product ideation. And then from there it's a start small motion and that's where the data kicks in. Right? And you start, you test, you look at the data, you test again, you look for where you're getting on blocks. Like, Whoa, something's actually happening. And then you go kind of push behind that.

Andy Murray: (19:35)

I've seen a lot of companies approach that, where they might take a skunk works team off to a side to go do that. Do you integrate this idea development and your product ideation into the core business? Or is it a separate department?

Sarah Friar: (19:48)

My preference because of our scale of company and who we are is I actually don't like siphoning people off right? I find where [inaudible 00:19:57]I am super offended a lot of people probably, but I find like big companies often do the we've got the innovation team.

Andy Murray: (20:05)

Oh yeah I hate that by the way.[crosstalk 00:20:06]

Sarah Friar: (20:07)

Because all that does is it tells everybody else, not your job. Don't worry about innovation or strategy, that's their job. And I just think it just creates the wrong dynamic. I think instead think about for us at Nextdoor growth. So every single PM and PMM, where our marketing organization meets our product or efficient, right? Anytime they present something, I said, what's the growth angle? And how's this going to cause viral growth to happen for the platform. And so they know that's going to be the question. So they're always cycling on that, but I keep it within the core business there's not really too many side projects. Now at square, maybe a little differently. We wanted to start a lending business. And we had a payments business. We had a ton of data. We said, okay, we think we can use... We know there's a customer need.

Sarah Friar: (20:55)

We think we have a unique, competitive advantage in the data. And that was a case where for a period of time I had a small team that was testing because lending can be a dangerous business to [inaudible 00:21:08]. It's not how much you land, it's how much you get back. And so that was a place where I wanted to protect them, to allow them to experiment and take a lot of risk and not worry so much about the loss rates because they needed to learn what loss to understand how to protect against it. If you start in this perfection of bone of like, we shall have no loss, you'll actually have no learning. You've got no data to actually then put models on top of. So you're actually searching for the bad thing so that you can train products to react to the bad things. It's kind of a hard mental model.

Andy Murray: (21:45)

That makes a lot of sense. Well, you mentioned something about, as a leader trying to manage some of these tensions, especially at square that happened. I can speak firsthand. You know, even though I was the chief customer officer at asset, the CEO is really, has to be very passionate and Roger is and was. But people I think would be surprised because he would think, well, why aren't all companies, customer-centric? Well, there are a lot of real tensions in business when that could make you be tempted to do compromises, whether you're going to have to short-term growth, the short-termism that we all have to deal with. And these are real business pressures and you mentioned growth, but I've heard you speak before about what you do as a CEO to keep customer-centric.

Andy Murray: (22:25)

It's not something that just is an energy field by itself. I mean, you have to do it otherwise there'll be some tensions that creep in whether it is chasing scope to a new direction, it provides growth, but is it really or advertise? I mean, there's so many things you could get into that you've got to protect that as a CEO. So how do you protect it? How do you do it? Because I know you're active in being a customer-centric champion for everything at Nextdoor.

Sarah Friar: (22:50)

Right. So one example I would give you is you know, I just said growth.... The number one priority but we also have to balance this idea of not growth at any cost, right? We are a community platform. And so there are things we do that actually actively slow our growth. One example is we verify a member. And so mostly when you create a technology platform, the last thing you want to do on any onboarding funnel is put any friction in the funnel. Like ideally I just show up and I have access to the product, but we actually stopped [inaudible 00:23:23] we're like, no, hold on, we need to prove that you actually live in this neighborhood because it's a big part of the underpinning of Nextdoor is the sense of trust. And so that's an example where I have to insert a little bit harder because if I just say growth, I could get growth at any cost, but I have to be willing to say, okay, we're going to give something up because we think it's long term greedy.

Sarah Friar: (23:46)

And that's a phrase I've stolen from my Goldman years. There's another example in moderation. So humans by nature, right? We love competition things, right. You know, if there's an argument going on down the street, I'm probably all ears. If I go out for a walk and I mean, that's what the media feeds on. But similarly, we know on our platform, that while it drives engagement in the short run, six months later, many people don't come back because they don't love seeing all those arguments on the street. And so that's a place where data is my friend, because even though the short-run data says, okay if we allow conversations about national politics, you'll get way more near-term engagement. But if you allow conversations, but national politics, because many people won't come back in six months.

Sarah Friar: (24:30)

So that causes us to say, okay, well, there's still a need to have conversations about national politics, but let's shift it to different surface. And so that caused the kind of innovative moment, but let's create groups and let's allow people to make that move in a very seamless way. So if I start to talk about national politics, now I won't mention any names. The actual conversation immediately goes into a group. We almost don't give you the choice, but you don't feel it. It just kind of happens.

Andy Murray: (24:59)

That's a brilliant example. And one of the new features that came in your roadmap, I think fairly recently, is this niceness.

Sarah Friar: (25:05)

Kindness reminder.

Andy Murray: (25:06)

Yeah. Explain that for people because I thought that was genius. A matter of fact, I wish that would be in outlook and all business emails that get sent because of it's like, Whoa, that's genius. And so the [inaudible 00:25:20] how that came about.

Sarah Friar: (25:21)

It's funny. I actually did talk to some director at Google and he said, wow, we should have that just in our internal mail system.

Andy Murray: (25:28)

I know, I agree.

Sarah Friar: (25:29)

So what kindness reminder is, so kindness reminder came from a lot of work. We've done with some behavioral scientists at Stanford. So if you haven't read her book by us to Dr. Jennifer Everhart is the world expert on bias, generally speaking. So we really wanted to play on two things. One, we know that people often want to talk about contentious issues in the feed, but we also can see that those conversations go off the rails fast and then often get moderated off the platform. So it was how do we keep the content and keep the spirit of people need to disagree, but not be disagreeable. And so the two things that Dr. Everhart's team talked to us about were one people's biases, right? Come from this part of their brain, right? The dinosaur brain.

Sarah Friar: (26:12)

So when they're moving fast and in fact, most social platforms live off that they want you to like hit the retweet button as fast as possible. And so we took a tack of how do we slow people down? And that brought us to think about a design element, which pops up and interstitial. So first of all, just by popping up the [inaudible 00:26:30], you're brought back to part of your brain because something happened and then you have to read and reading is a classic wire, right? If you're ever in a meeting and getting frustrated, I actually start counting. But anything that makes you cognitive, like bank, allows you to kind of move out of your rapid[inaudible 00:26:45]. And then the second thing is humans. When they think something they're doing, they get reviewed at a later date, they actually typically behave better.

Sarah Friar: (26:55)

So we actually wrote in that kindness reminder, "Hey Andy it looks like what you're writing, make it moderate it later haha". So remember, great communities are created with kindness. Would you like to edit? So it's a choice. And some people are like, no, I'm still hitting the go button, but actually about 30% of people re-edit and what was important is they edit, they don't cancel because we don't want to shut people down. So it's actually a place where it's not even just data science and customer insights, but it's data science, behavioral science, and customer insights. And I think this is a future that the IQ plus the EQ brain of technology has not been kind of maybe muscled up enough. And I think that's a place we've done a lot of good work at Nextdoor.

Andy Murray: (27:43)

Well what's so interesting about that. And this is why we've started this initiative. You just mentioned three different disciplines that aren't always integrated as people think and especially in the university setting. And so when I say the word customer-centricity, what comes to your head in terms of what that means from a scope and such?

Sarah Friar: (28:00)

Yeah. When I heard customer-centricity, right? First of all, I hear insights-driven. So as a marketing team, being out there, hearing from your customers directly, the next thing I hear is this coming together, these two sciences. So how do I use data that drives insight about behavior? And then how do I think about the psychological side of what will drive a behavior that I want? And so I would think of all of those coming together and in particular, how do you, when you sit in any organization, make sure your customers are just all around you all the time? It can be simple things like even when we used to go to an office, having pictures of our customers everywhere, right? Because it's just a memory jog of like, Oh, this is who we serve. It's our board materials. When I shut up at Nextdoor, board materials are very classic board materials, I just happened to have one right here because I had a board meeting last week.

Sarah Friar: (28:51)

So not front of our board materials has a story about a customer. And if I were to click through, at the beginning of each section, we have a customer story because even an [inaudible 00:29:03] should know the individual stories of our customers. We do a weekly all-hands. We always have customer stories there. And by the way, they're not always like unicorns and rainbows often. They're where we let a customer down. Because I think it's both the, what did our product do that uplifted people because that's inspiring, but where did we kind of fail? If the other part is customer-centricity, like where did we in the jobs to be done? Where are we fired? Which is the worst or where did we not get hired? which is kind of the second-worst because you're like, Oh wow, there's a whole product space where I'm not strong enough for my customers, but they would buy from me if I filled that job.

Andy Murray: (29:40)

Yeah in my neighborhood, which I'm a huge next-door user. There's not a lot of in the community, so we're inviting them in, but I still get huge value from all of the other bits of local businesses and others that I know these people and connecting in with them. And so there's something for everyone in it. Even if you don't have a huge local neighborhood of individuals, there's still a lot of value in being part of that community, I think.

Sarah Friar: (30:05)

Yeah. And that was another insight about a neighborhood, right? If you just walk around it, is that a neighborhood, not just residents and neighborhood is very much the local business. It might be the local mayor. It might be the local nonprofit, the local school, the local church. Right. There's a lot of constituents of that neighborhood. And so I think the great thing for our platform is that gives you a lot of customers to go after the bad thing for our platform is that sometimes it's you really have to focus, right? A VC once said to me, Oh, you'll be a feast not farming business. And I was like, what do you mean? He's like, Oh, you were going to die of overeating, not from lack of food. Other words you're going to do too much and maybe not do anything well, instead of doing, not being able to kind of think of the next thing to do. And so that always sits with me when we're doing planning is how do we really focus? But you're so right. There are all these amazing neighbors in a neighborhood that we can serve.

Andy Murray: (31:03)

Well, speaking of people, locally are professor of marketing, Molly Rapert. Who's very involved in this whole customer-centric initiative sent me a few questions. You mind if I play one for you that she sent me in this morning, she loved to ask you a question.

Molly Rapert: (31:16)

Sam Walton once said you can make a lot of mistakes and still recover. If you run an efficient business, I was curious what you think is a mistake that has been made at Nextdoor and how you were able to recover from that.

Sarah Friar: (31:30)

Yeah, that's a great question then. I do love Sam's book made in America. I think it's a great example of customer-centricity. I'm talking about someone who just visited his customers all the time.

Molly Rapert: (31:40)

All the time, yeah.

Sarah Friar: (31:42)

On the mistakes I don't have labeling things per se mistakes. Because sometimes they were just decisions that we made that as we got bigger don't hold truth anymore. So I would say there's two things that we're thinking a lot about. One is that whole verification process that I talked to you about, right? The cream it's kind of the one thing to rule them all, but there's lots of information in your neighborhood that actually should be open for anyone to see, right? What's the best place to grab a coffee that is not a state secret? That is very different than me saying ham on vacation can someone pull up my trash cans?

Sarah Friar: (32:17)

And so one of the things we're thinking about is like, was it a mistake to be so kind of singular about verification, or is there a more grid dated way we can do verify so that information can flow a little bit more freely. So for example, and if you were to come to my neighborhood, I don't know because in my case, because I'm driving my sound all over California and play soccer in a non-COVID world. When I show up in that neighborhood, I would love to know the best place for our coffee that morning. And I should be able to find it on Nextdoor because neighbor recommendations are the best. They're the people actually drinking the coffee, not the marketers who are telling me the best place-

Andy Murray: (32:56)


Sarah Friar: (32:57)

But we don't allow that today. And I think that's a mess. So the mistake is I think it's curtailing the utility that Nextdoor has for the world and therefore for limits our growth.

Andy Murray: (33:09)

That's an interesting that's not an easy one to harmonize those two different options. One more from Molly Rapert

Molly Rapert: (33:17)

I'm an avid Nextdoor user and I love the way that it's authentic. It's the voice of the consumer. I feel like I get to co-create content as somebody that's posting on it or answering questions. And I'm just wondering, those are three big trends that we see in the marketplace today. Authenticity, consumer voice, and co-creation what other trends do you see Nextdoor capitalizing on as it moves into the future?

Sarah Friar: (33:43)

First of all, Molly, thank you for being a good neighbor. I really appreciate that. And you are drawing out a lot of what we think makes the platform great, right? This idea that I'm a creator in my neighborhood. When we think about what are the strengths that we have to lean on? Hyper-local right. Local has never been more important. So if there's a silver lining of COVID, people have really recognized that actually, their neighbors are their first line of defense. So when my parents couldn't get actually their groceries in Northern Ireland and I figured out Asda, it was our next-door neighbors who did that first kind of run for me when I was actually genuinely worried that my parents weren't going to get the food they need because they couldn't leave the house. Right? All my friends in the world were going to help me and my professional network is certainly not stepping up to the plate.

Sarah Friar: (34:29)

It was literally my neighbors. So I think there's tremendous power and local. I think the second kind of big thing for us is how do we draw in that local business piece? So the authenticity that Molly just spoke about local businesses have an incredible authenticity when they market well. Right? If I'm going to buy honey and it's someone down the street, who's got beehives and they're telling me that these bees literally running around my garden are flying around my garden. There's something really authentic about the feeling I have when I eat that product. Right? You've lived this and be in your world, etymology of a product is incredibly important to people or the story. Right? What I find with them, for example, I work a lot with women on businesses. There's often a very personal story of how they started their business.

Sarah Friar: (35:20)

That comes from a real experience and that makes me want to buy from them. And so how do we get that authenticity as businesses speak to neighbors in the neighborhood? Because I think it's a huge unlock. Unlike other platforms, we have to go get likes and follows. Nextdoor gives you instant distribution with people who have a vested interest in keeping your business alive. So I think those are two big themes for us. Like how do we really lean into this hyper-local, locals never be more important including in a disaster. And how do we lean into the business local business opportunity?

Andy Murray: (35:53)

Well the way it's set up, it's much like LinkedIn and a lot of ways, but there's such a thirst, I think for what is true, what is good and what is beautiful kind of thing. And I think that authenticity is very much in the same spaces, is this true or not? And the ability to count on it being true because it's so transparent on who you are and what you do. So I just think that that's such an in demand. When you look at all the platform options, you can connect in out there at two quick questions from students. And I got to tell you upfront, and this will demonstrate a little bit that the customer experience if you get into the vernacular that into a typical business school, it's like, what is that mean a bit? And so they'll come in from this, this one's from Cole.

Cole: (36:40)

Hi, I'm Colin, I'm a student studying marketing. Can you briefly explain the customer experience and the role it plays in areas of business?

Sarah Friar: (36:47)

So the thing I've actually not spoken about throughout, which I cannot believe this word is coming out later in this podcast is purpose and purpose-driven brands are the future, right? You have to stand for something. Your brand has to have a point of view in Next door's case, right? We're super clear. The ultimate purpose is to create a kinder world where everyone has a neighborhood to rely on. And that is a motivational statement for the people who come to work at our company. It's something that when we talk to the outside world, right, who doesn't want more kindness, and I think that's the point where the customer comes back into the loop of what we're creating and why. And I think this is really kind of in the last decade, right? This idea of purpose-driven brands have come to the fore and even brands that maybe historically weren't so purpose-driven are really kind of finding a niche here.

Sarah Friar: (37:44)

I'll give you an example, like on Nextdoor right now, there's an advert for McDonald's and it's about feeding essential workers. And it's literally just has the heartstrings moment where you see this firefighter... Right, I live in California and we've really been devastated by fires. I see this firefighter showing up at the window McDonald's is handing over a bag of McDonald's and I never think to eat McDonald's. And yet this ad really speaks to me because of the purpose that's behind it, right. They're standing for more than just fast food. They're standing for feeding these people in the community that deserve our love and our gratefulness. And so that I think is something as a marketer that you really got to think how we tap into because it's authenticity, you just talked about truth, it's belonging, right? It's all of these words that I think really bring us back to customer-centricity too.

Andy Murray: (38:37)

Just goes to show you how much I think the world's changed from an academia standpoint on just teaching marketing because product management... Should marketing kind of cover the product management space? When we went to Walmart with Janie, the chief customer officer, they move product management into that space and product management for non e-commerce companies would typically be over the e-commerce guys or it's not really connected there. So there's a whole new language set, I think in a marketing programs to understand product management in the game. And you can't be a good marketer without thinking about product management, because the customer experience, I mean, 10 years ago, most ad agencies or marketers or CMOs weren't customer experience was more like customer service. It wasn't a discipline that you had to really wrap your head around where I think all that's changed and it is quite challenging to keep up. I think for a lot of marketers that have been grown up in a more traditional space.

Sarah Friar: (39:35)

Because you're not being handed the product and go position this and sell it right. I'll give you another example internally at Nextdoor product we released midpoint of this year is called sell for good. So we have a platform called for sale and free its classifieds prep platform. So if this couch is no longer giving me joy, I can put it on the platform and sell it for 50 bucks or it could give it away for free. Even we kind of looked at the fact that you know, back to how do you create product? We said, one of the big trends is that without being able to be in person, many non-profits can't raise money at the moment. And these people live in very thin balance sheets. So they will go out of business, which means your local humane society isn't there for you.

Sarah Friar: (40:14)

Your local kid's after school program. So how can we help them raise money? And it's really the marketing function at Nextdoor who got deeply involved in the iteration of this product. And it's like she is the one who's pushed us to say, okay, the insight I'm hearing when I go out in the market is yes, people love this idea, but they're also hurting for money themselves. So the 50 bucks for the couch, they want to take home 25 and then give 25. And we hadn't done an ability to do a partial. And so that was a great example for coming back into the product team and saying, we need the ability for partial giving, not holistic giving and the product team wouldn't I don't think would have gotten there very quickly, except that the marketer was out in market hearing customer feedback. And this was one of the main piece of feedback. And the minute we have unlocked partial, we're now seeing kind of another step-change in growth.

Andy Murray: (41:07)

Yeah that's great. I guess, to wrap up a little bit here, as we look at students and such when you look out over the next couple of years, Sarah, what gives you hope? What do you see out there? Are we going to enter some will say we're going to be entering a golden era of creativity. The retiring CMO of Facebook just said that which I thought was fascinating. His view that creativity is going to be in demand. There's a lot of uncertainty, but when you look out into the future, tell me what brings you hope.

Sarah Friar: (41:37)

So I'm the eternal optimist. And so first of all, what gives me hope is all of your students. So just when I see what the next generation is bringing, I get a lot of help. I have a 13-year-old and a 15-year-old. And I just think they, they look at the world so differently, right? They really want to embrace. The first question you asked me was about career, but they really think about this melding of community impact philanthropy and work all together in a way that I don't think my generation or our generation really did to the same degree. So that's number one. Number two is I absolutely think we're unlocking massive productivity. Right? I think we are going to look back on COVID and 2020, clearly with lots of sadness about the people who got impacted. But I think it's also unlocked a whole step-change in productivity gains.

Sarah Friar: (42:23)

Right? My company we for sure have learned... I struggled forever. Should people work from home or do they need to be in the office? Oh my God. People can work from wherever because they're so productive. I don't totally buy into it because I think there's also for community platform about in real life. But I think there's way more of a balance. Like why would I make all my best people commute two hours a day, three hours a day, just to show up in an office and put headphones on, which is what a lot of our engineers do. I'm like, Oh my God, stay at home and code the two more hours or go for a walk and be creative.

Sarah Friar: (42:58)

So I'm hugely optimistic on that. And then I just think generally right where technology is taking us, right. Just look at how fast right. We've gotten to vaccines, right? I was reading about RNA and this whole new way that vaccines are being delivered, but that came out of necessity. I think things like climate change and stuff, it's coming out of necessity. Now, how people are starting to think about changing their behaviors and so on. So I am a huge quest on the power of necessity to drive constraints are actually some of the best things in organizations to drive innovation.

Andy Murray: (43:32)

Well, speaking of that, I think one of the things I've seen from talking to people as well, that this reduction of so many corporate objectives, I mean, we had probably eight things before COVID that were strategic mandates. We had to do and really long lead times on a lot of that stuff to transform a company, but then all like, boom, no, it's this and that unlocks so much creativity to accelerate roadmaps. Like we'd never seen before, never dreamed. And to me, I think that's a little bit about that sense of focus and letting everyone know here are the two things that really matter in a crisis. And I just wonder your perspective because it would be really easy and tempting as a CEO to fill that strategic objective pipeline back up. I'm not sure you cut it or not but there is some power in this idea of what this, what COVIDs done to help us focus. And can that stay ongoing? I don't know.

Sarah Friar: (44:29)

Yeah. I mean, I think you need to be careful of organizational burnout, right? The whole never waste a crisis. I think a lot of us as leaders definitely kind of glommed on to that to kind of push our agenda forward where we thought it was good for the world too. I mean, the other thing that COVID really showed me certainly in my role is that went back to purpose, right? That in March there was this perfect alignment of the purpose of my company and what was needed in the world that allow that meant that people were doing extraordinary things like my employees.

Sarah Friar: (45:02)

I had one engineer who was launching our help map, which I know that you look at, like Walmart actually get a full sponsorship off who I looked at one time. And I was like, wow, you look really tired. He's like, "Yeah, I haven't slept for like 48 hours because we need to [inaudible 00:45:17]out" like, that's not normal, but that's a good example. When you have purpose alignment with the thing you're doing and it's, so how do you take that spirit of really aligning purpose to strategy, to roadmap, to execution, and then to your point, keep it tight because focus has been our friend and that is a huge learning as a leader that I know I want to take into 2021 and beyond.

Andy Murray: (45:42)

One real quick. Last question. What leadership trait you think is most important for leaders today going forward?

Sarah Friar: (45:48)

I'll go back to empathy. I mean, I think you can't beat it because it both helps you be a good product person, good customer, kind of a good salesperson, but also a great recruiter and then coach and mentor. And if you get your team right, everything else just works.

Andy Murray: (46:05)

Well, Sarah, you've been fantastic, great insights for people, no matter where you are in the customer journey of being customer-centric, right at the beginning or advanced do you just got a masterclass on how to be customer-centric. So thank you so much, Sarah, and best of luck to you and all you're doing.

Sarah Friar: (46:20)

Really appreciate it. Thank you. Good luck.

Andy Murray: (46:27)

You just listened to an amazing conversation with Sarah Friar CEO of Nextdoor. Sarah brings such an authentic passion for being purpose-driven and customer-centric, and it comes from so many rich life experiences. My big takeaway from the conversation was that staying committed to the kind of experience you want customers to have can sometimes come at the expense of growth, but in the long run, it is always the right decision. That's it for this episode of It's a Customer's World. If you found this helpful and entertaining, I would be so grateful. If you could share our show with your friends and I'd be super happy if you subscribe. So you can be updated as we publish new episodes. And if you really want to help leave us a five-star rating and a positive review on Apple Podcasts or wherever you listen, It's a Customer's World podcast as a product of the University of Arkansas customer-centric, leadership initiative, and a Walton college original production.

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