Neighbors have lots of things to talk about — yard sales, crime, recommendations for local service providers, public works projects, safety issues, block parties and lemonade stands, gripes and gossip. There are online places to do that, like email lists, message boards, blogs and newspaper Web sites — but to date there hasn’t really been a successful local social network.

The ambitious Nextdoor has been in tests for the last year and has 176 active neighborhoods throughout the U.S. Spearheaded by Epinions founder Nirav Tolia, it is backed by Benchmark Capital and Shasta Ventures.

Tolia said in an interview with AllThingsD last week that Nextdoor has become essential in some test neighborhoods — for instance, some teachers in Woodside, Calif., apparently told parents this fall to sign up for Nextdoor to receive community updates.

Why won’t Facebook conquer this particular social space? Because, Tolia concluded, answering his own rhetorical question, “your neighbors and friends are different people.” Nextdoor is also built with the assurance that all participation will remain private and trusted (that is, to whatever extent you trust your neighbors).

If you go to Nextdoor today, hoping to sign up in your neighborhood, you may not find much. The company has instituted a high barrier to entry for each new local network, in an attempt to ensure they each get enough members to become active from the start.

Nextdoor communities start when someone who lives in a neighborhood registers, draws the neighborhood boundaries on a map and then gets 10 more people to verify in the next 15 days that they live within the boundaries.

Community members then verify themselves through a variety of methods, including entering the code they receive on a Nextdoor postcard sent to their home address. People outside the community can’t register or view any content.

Users can post their email, phone number, photos and names of family members — whatever they feel comfortable sharing. They can put up local reviews, list items for sale, or just spew what’s on their minds. Eventually they will receive local offers, should Nextdoor get to the point that it needs to start making money, Tolia said.

Nextdoor is actually an extension of Tolia’s last company, Fanbase, a “Wikipedia for sports” that grew to 10 million users but didn’t turn out to be as impactful and interesting as he had hoped. That company raised $12 million from Benchmark Capital and Shasta Ventures, which Nextdoor continues to use.

For a comparison between Nextdoor and another approach, see also Will the Local Social Network of the Future Be More Like Facebook or Twitter?

[Updated with new details about deal, including who worked on it and info on a cash component.]

About three weeks ago, Facebook and Twitter ended several weeks of serious talks, in which Facebook was offering to acquire Twitter for $500 million of its stock, which also included a cash component.

While rumors of Facebook’s interest were brought up in an interview with Facebook CEO Mark Zuckerberg at the Web 2.0 Summit a few weeks ago, some shot down the idea as silly.

Quite incorrectly, as it turns out, since top execs at both Facebook and Twitter were right then at the tail end of discussions, which were initiated by the privately held Facebook in mid-October, about bringing the two together.

Those talks, sources on both sides said, are now over.

So why did the deal break down?

Well, as is usually the case, over price–was $500 million worth of Facebook stock actually worth $500 million?–and the typical concerns about integration and costs.

But, more important, it seems, was a feeling among Twitter investors and execs that the start-up should still take a shot at building its revenues–there are none right now–as well as it had done at building its growth.

“It’s more about timing,” said one person familiar with Twitter’s motivations. “There is a strong feeling that there is still an opportunity–even with the economic downturn–to blow this thing out.”

Still, combining the world’s fastest-growing social-networking site with what is quickly becoming the best-known microblogging service is actually a natural fit.

That’s especially true given that Facebook–for all its powerful online social connections–has seen Twitter race past it in innovating in the “status update” arena.

While some sources at Facebook said Zuckerberg was becoming frustrated by the buzz Twitter was getting–a market that should have been dominated by Facebook–others at the company said he was interested in buying Twitter because of his respect for its progress.

Indeed, at the Web 2.0 interview, Zuckerberg called Twitter an “elegant model” and said that he was “really impressed by what they’ve done.”

Indeed, with about six million registrations, as reported in October, up 600 percent over the last year, the San Francisco-based Twitter–launched in 2006–has had impressive growth.

(It has also been plagued by technical issues, which are–to be fair–decreasing.)

In any case, for those not familiar with it, the premise of Twitter is dead simple: A registered user logs in via the Internet or a mobile phone and answers the “What are you doing?” question the service asks in only 140 characters or fewer.

It’s quite a clever idea, although–so far–not a money-making one.

To try to goose that, Twitter’s board replaced the engineer who created Twitter, Jack Dorsey, with another founder, Evan Williams, who had served as its chairman and chief product officer.

The more experienced Williams (pictured here) had already built one company–Pyra Labs, which created the Blogger blogging service–that he sold to Google in 2003. He also started the audio and video search site Odeo, where Twitter was actually born.

Still, its investors have not come down on Twitter to hold back its growth efforts, and have handed over $20 million to the start-up so far. In its last round, Twitter was valued at $98 million.

Its funders include: Union Square Ventures, Charles River Ventures, Digital Garage, Spark Capital and Bezos Expeditions, backed by Amazon Founder and CEO Jeff Bezos.

In addition, well-known Silicon Valley figures, such as Marc Andreessen and Ron Conway, have also invested. Interestingly, Andreessen is also on Facebook’s board.

Other private investors include FeedBurner Co-Founder (and now Googler) Dick Costolo, former Epinions Co-Founder Naval Ravikant and former Googler Chris Sacca.

Twitter needs all the investors it can get, since it has no revenue, although it has been exploring things like charging business customers and adding advertising into the consumer service.

Lack of revenues was an issue for Facebook, said sources, especially related to fees Twitter pays for delivery of its messages to cellphones.

While the issue has been manageable in the U.S., Twitter cut off its SMS support in some international markets this summer because of too-high costs.

But, if Twitter was offered to Facebook’s 120 million users, Facebook execs estimated that it might have to deal with huge SMS fees–up to $75 million annually.

“Facebook has its own revenue-generating challenges,” said one person close to the company. “As much as Twitter would give them a lift in the status area, it was still a worry.”

Not enough, said several sources, to stop Facebook from making another approach at some point in the future. “We’d hate to see Twitter go to another company,” said one source.

Indeed, while all are even more price-conscious than Facebook, large companies that could also be interested include: Google (GOOG), Yahoo (YHOO), Microsoft (MSFT) or a large telecom company, such as Verizon (VZ).

If it had completed the deal to buy Twitter, it would have been Facebook’s most significant acquisition by far.

Zuckerberg and Williams did meet and get along well, but the deal was primarily negotiated by Spark Capital partner Bijan Sabet (Spark is a Twitter investor) and Facebook deal guy Dan Rose.

But in this time, at least, the Twitter side was still not interested in selling at the price Facebook had offered.

The $500 million offered was in an all-stock form, said sources on both sides, at the $15 billion valuation that came from the Microsoft’s investment in the company last October.

The Twitter side felt that figure was inflated and the shares should be valued at the lower figures that have also been reported for Facebook’s true valuation, more in the $5 billion range.

That would have given the deal a $150 million price tag, which was seen as too low, especially since it was in Facebook stock and not cash initially.

In fact, Twitter wanted cash, which some sources say was offered by Facebook in the $50 to $100 million range, in addition to stock, but taking too much stock was still a major issue.

There are other ways the pair could have approximated a safer choice for Twitter, via warrants, of course, or other methods.

But, said several sources close to Twitter, the primary reason for not selling was because its board simply did not want to yet or perhaps ever.

Said one source: “The question is, is it really a good idea to sell on the first chance you get?”

Well, for Twitter, we’ll just have to wait and see about that, of course.

[Photo of Evan Williams by Joi Ito. Licensed under Creative Commons 2.0 By-Attribution license.]

Earlier today, BoomTown posted a video of star venture capitalist John Doerr’s 10 tips to start-ups for surviving the econalypse that he ticked off at a roundtable in Silicon Valley on Wednesday.

Beside the words of wisdom from the Kleiner Perkins Caufield & Byers partner, I also trolled for advice from the panel of well-known entrepreneurs I moderated at VentureBeat’s “How to manage your start-up in the downturn” event.

Thus, here is the i-will-survive take from Jason Calacanis of Mahalo, Toni Schneider, chief executive of Automattic, the company that makes the WordPress blogging software, Nirav Tolia of Web 1.0′s Epinions and Max Levchin of Slide.

As an added bonus, Ram Shriram, one of Google’s first investors, also weighs in. And, of course, the inevitable blogger Robert Scoble gives his two cents (and also freaks me out once again!).

Here’s the video of the entrepreneurs, and below it, for your viewing pleasure, two versions of “I Will Survive” by Gloria Gaynor (the classic) and Cake (the weirdly good one):

Here’s a video of star VC John Doerr reciting his 10 tips for start-ups to follow in the economic downturn.

Doerr gave out the advice at VentureBeat’s “How to manage your start-up in the downturn” roundtable event, which took place at the Stanford Park Hotel in Palo Alto yesterday morning.

The Kleiner Perkins Caufield & Byers VC got a lot of attention for his list, which he culled from a survey of 18 of the companies his firm has invested in.

Doerr didn’t need a massive, noisy PowerPoint like Sequoia Capital to make his quick and clear points, which he delivered in four minutes flat.

Doerr was on an investors panel with Ram Shriram, one of Google’s first investors, Ron Conway, Kittu Kolluri of New Enterprise Associates and Matt Cohler of Benchmark Capital.

I moderated the second panel of entrepreneurs, including: Toni Schneider, chief executive of Automattic, the company that makes the WordPress blogging software; Max Levchin of Slide, Jason Calacanis of Mahalo; and Nirav Tolia of Web 1.0′s Epinions. Video of interviews with them and also Shriram to come later today!

But here’s Doerr reciting his 10 tips:

It will take place at the Stanford Park Hotel in Palo Alto from 8 a.m. to noon.

Toni Schneider, chief executive of Automattic (the company that makes the WordPress blogging software) will join Max Levchin of Slide, Jason Calacanis of Mahalo, O’Melveny & Myers’ Sam Zucker, and Nirav Tolia of Web 1.0′s Epinions.

Along with my group, for whom I am planning all sorts of verbal tortures (“Exactly how much do you make?”), there is also a panel of investors, moderated by VentureBeat’s Matt Marshall, which features: John Doerr of Kleiner Perkins Caufield & Byers; Ram Shriram, one of Google’s first investors, Ron Conway, Kittu Kolluri of New Enterprise Associates and Matt Cohler of Benchmark Capital.

Oh, it is sure to be a festival of Web 2.0 pondering.

Said Marshall in a post about the gathering:

One goal of this event is to provide context and advice for start-up CEOs and founders facing the recession. We’ve handpicked the speakers for their remarkable records and experiences in the previous downturn. …

While the Sequoia [Capital] ‘RIP Good Times’ presentation gave a broad overview of the economic problems facing the tech world, it provided mostly a macro analysis, and a general prescription for companies.

Now is the time to take the analysis one step further, and discuss the variety of situations we see among valley investors and their start-ups: How cleantech companies are different from Internet start-ups, and how under certain conditions, a profitable company may actually be poised for aggressive growth, hiring and M&A–and not necessarily ideal for cost cutting. We intend to explore all of this and more.

Given the fairly predictable ‘Silicon Valley is in circle-the-wagons mode’ story line we’ve been seeing so far in the media, this event is also the Valley’s opportunity to help dispel this myth and explain how the area’s start-ups are actually quite diverse and that there are a mix of strategies at play.”

The event is sold out, but it will be streamed live.

And, as usual, look for a shaky video report of the roundtable from me later!