Efficiency, Accuracy and Strategy: How Nextdoor’s Equity Compensation Program Is Poised to Fuel Company Growth
It started with a simple concept – to connect neighbors to neighbors online. The idea quickly caught on and propelled San Francisco-based startup Nextdoor into a billion-dollar company. But after five years of steady growth and aggressive hiring, Nextdoor’s equity compensation plan became too complex to manage with a spreadsheet. Now, the company uses Shareworks to manage a stock plan that will support future growth, at home and abroad.
Tapping into the power of community
Conversations that used to take place over the back fence are now happening online on Nextdoor’s private social network for neighbors. “We want to bring back that strong sense of community that got lost over time,” says Wilson Chan, the company’s Vice President of Finance.
The free, online social platform has grown in popularity and has attracted many major investors. In less than five years, the private company has raised over $210M achieving a valuation of more than US $1 billion.
Nextdoor is using its sizable capital to expand globally and build “a great product that will change the world,” explains Chan. To accomplish that, he says, the company plans to “grow aggressively” over the next few years, expanding its workforce in both the United States and internationally.
Outgrowing its cap table spreadsheet
From the beginning, Nextdoor’s stock plan has been an important part of its recruitment strategy. In 2011, when Chan was one of only eight employees, managing the plan was a breeze.
Chan had used several different software programs during his 20 years in stock plan management, but when he started at Nextdoor his tool of choice was Microsoft Excel. He was so familiar with the software he joked that he could manage the cap table “with one eye closed.”
Things got more complicated as the workforce grew. The plan now covers more than 100 full-time employees, including a growing number of international employees, who receive the same benefits package as those in the US.
“I needed a smarter system to help me manage option grants for all the new hires and refresher grants,” he says. Not only was using a spreadsheet too time consuming, Chan was also concerned about the integrity of the data because it was so easy to make mistakes and so difficult to catch them.
Empowering employees to take control
Nextdoor operates with a one-person finance department and “that one person is me,” says Chan, whose responsibilities include everything from balancing the books to managing the stock plan. It’s little wonder that when he went looking for a new solution, ease of use was at the top of his wish list.
His search started with the cap table management software he was already familiar with: CapMx. Then he discovered the product had been acquired by Solium, a company whose suite of products also includes the Shareworks platform.
The more he learned about Shareworks, the more he liked its ease of use and broad capabilities. He was also impressed with the attentive customer service and enthusiastic support he received from the Solium team. “The passion and dedication from the Solium team was so much greater than what I saw from the other two vendors I was evaluating at the time,” says Chan.
By his estimation, Shareworks has been a great tool for employees as well. Back when he used a spreadsheet, he often had to tell employees it would be weeks before he could get back to them with answers about their stock options. Now employees can access that information instantly by simply logging into their Shareworks accounts on a 24/7 basis.
Easy access empowers employees to take control of their own equity plans. And automated transactions have freed up more time for them to focus on supporting the company’s growth.
Saving time while improving accuracy
After just five months, Chan says Shareworks has already saved him a significant amount of time. When he looks back on how much time he used to spend on tasks like processing new stock options after every board meeting, he says, “the difference is night and day.”
He’s been able to transition his role from “day-to-day operator” to “strategic thinker.” “Now, I can really use my time to think strategically about how to position the company in terms of granting stock options for recruitment and retention – I can do what I was hired to do five years ago.”
Chan explains that Shareworks has also reduced overhead. “Without Shareworks, I would have had to hire a senior finance team member – with an expensive salary of paying such a professional – to run the plan.”
Chan says another big benefit has been around improved data accuracy and consistency. “The data integrity is so much stronger in Shareworks.” He says with tighter checks and balances, the finance team is better able to fulfill its fiduciary responsibilities to shareholders and investors.
Taking on the world – one neighborhood at a time
Nextdoor recently hit a major milestone – 115,000 U.S. neighborhoods now use the platform to share information about everything from lost dogs to crime trends.
The company’s next wave of growth will take it into more international markets. It’s already in the Netherlands and the UK, and Chan says, “that’s just the beginning”.
With Shareworks, Nextdoor can now be confident that its equity compensation plan is in good hands, supporting future growth and giving employees a chance to share in the company’s success.