EDITOR'S NOTE: When this story appeared, Yelp CEO Jeremy Stoppelman decided to shoot the messenger, reporting on Yelp and other websites that writer Karen Solomon is a current "employee" of Zagat and therefore biased against Yelp. Sorry, Jeremy, that's false: Solomon once did some freelancing for Zagat, but she doesn't any longer, though she does freelance for many lifestyle websites, which makes her like lots of other contractors around town.
Still, we should have mentioned her website work in the article, which is why I'm doing so now. Read on: Her piece is the most responsible summary of Yelp published to date, fair to both the company's big success in the Bay Area and to its uncertain prospects nationwide.
—Bruce Kelley, Editor-in-Chief
While transforming his South of Market restaurant, Hawthorne Lane, into the more casual Two, owner David Gingrass did some unconventional market research. He went to Yelp.com and started reading restaurant reviews written by the amateur twenty- and thirtysomethings who frequent the popular review and social-networking site. After pinpointing about a dozen of the most qualified and thoughtful members, he invited them to wine and dine at the new eatery as his guests, in hopes of receiving favorable reviews. "Lots of people Yelped it," Gingrass recalls, using the verb that the site's owners want to make as ubiquitous as Google. The reviews, he adds, were mostly positive: "If you invite these guys, give them free shit, and get them drunk, they will go on and write nice things about you." But, concludes Gingrass, "It didn't pay off. Not a nickel." The website's limited demographic of "alcohol-imbued horny people," he says, wasn't a good match for Two. "If I were opening up a groovy place in the Mission with a $30 check, I would do it again. But my next place will probably be in Napa, and that's even farther from Yelp's core user group."
Ever since Yelp became a media darling in 2005, San Francisco small-business owners, including restaurateurs like Gingrass, have been bent on winning accolades from the Yelp community any way they can. After all, the site’s mythology is full of tales like the one about the dentist whom, thanks to good reviews on Yelp, no one can get in to see; and the hairdresser who now works 12-hour days to keep up with Yelp-driven demand. But, as Gingrass learned, the site that some call “the people’s Yellow Pages,” while growing like gangbusters in its particular niche, has yet to become the knee-jerk source for anyone born before Reaganomics became a noun.
In theory, that’s fine—no one gives Facebook or MySpace any grief for being populated largely by kids. And if your favorite phrases are to die for and illest, cruising Yelp is a kick. Message-board comments fly fast and furious, with bored computer drones and cute girls (personal photos are de rigueur) chatting about everything from San Francisco rent control to the Spice Girls reunion video to the virtues of Miracle Whip. The users cover restaurants and plumbers, boutiques and ex-lovers—though restaurant reviews are by far the most popular. Yelp also capitalizes on what the Internet does best: It allows people to flirt from behind their keyboards. Over a couple of hours in December, hundreds of people weighed in on heavily tattooed Eric “Feel My Heat” W.’s pressing question: “How come women in S.F. don’t like white guys?” “Wait,” responded Jessica “I Never Wanted to Be Your Weekend Lover” V., “is this about your small penis again?” To be fair, there are signs of earthly intelligence on the site. After some hunting, a reader can spot someone she likes the look of, hear him roar (“Chris Daly is the real embodiment of Claude Slagenhop, dragging down the producers of the world to feed the looters,” blurts Danko-disappointed Eric M.), then shift into pursuit mode and contact him for a private chat. Or just ask, as Asia de Cuba–loving Jocelyn S. did recently, “Can anyone recommend an interior designer that is environmentally sensitive, familiar with midcentury modern design, and is affordable?”
The novel interface of democratic opining and social interaction has struck a nerve locally, and little wonder—Yelp’s genesis story is a familiar one in Silicon Valley. Its creators, CEO Jeremy Stoppelman, 30, and CTO Russel Simmons, 29, both worked for PayPal and made a few wealthy acquaintances there before eBay bought out the company. One was Max Levchin, the first to offer the duo a million dollars in seed funding. Levchin also helped propel other valley child stars, like YouTube and LinkedIn, to success. These South Bay contacts—or the PayPal Mafia, as they’ve been nicknamed—all have “wives and girlfriends and friends who want to support Yelp,” says a former Yelp insider. As a result, the site’s early days were expectedly heady, with an office staff of 10 that managed to spread the buzz and call on friends, lovers, and former colleagues to follow suit. Now, four years after its birth, Yelp is a corporate culture of young entrepreneurs (with a lone canine in the office), tequila shots, and company-sponsored events that end in make-out sessions. Very young, very Silicon Valley startup, and very Bay Area.
By the end of Yelp’s third year, PC World had already named the company one of the web’s most useful sites of 2006. Time featured it in a piece on “the next YouTubes,” and BusinessWeek called it “the go-to site for hip, twentysomething SFers.” Restaurateurs (like Gingrass) started paying attention, trying to glean a bit of consumer wisdom in the free-for-all. Users were sucked in. Not only were they able to expound ad nauseam and potentially make a love connection, but there was an added impetus to post often. A select group of the most popular—and prolific—reviewers is chosen as members of the Yelp Elite Squad, whom company pooh-bahs invite to party at new clubs, restaurants, and galleries.
On paper, Yelp’s growth appears to bear out its early hype. By mid-2007, the founders had scored $16 million in venture funding, and locally, though the site has yet to turn a profit, more than 70 percent of users were in the magic advertising demographic of less than 35 years old, with half of all users ranging from 25 to 36. Metrics-analyst firm Hitwise, which uses a broad na-tional sampling rather than a targeted local one, reported a 210 percent increase in traffic from October 2006 to October 2007. The firm also reported that during one month last fall, 75 percent of the website’s traffic came from new users, most of whom got there by way of Google or Google Maps.
If you peek behind the numbers, though, you’ll start to see the challenges as the management looks beyond the 415. Yelp has been used by 5 million people, and Citysearch by 10 milli
on, but both of those figures pale in comparison with Facebook, which has 59 million users; YouTube, which had 34 million visitors in just one month; or Craigslist, which on average sees 15 million people cruising for deals, apartments, and casual sex each month. With 40 percent of Yelp’s users still primarily in the Bay Area (according to Hitwise), it’s safe to say that the site has yet to keep up with the Joneses.
Of course, getting the ball rolling in a new city is always difficult, but many people feel that the magic of what happened here with Yelp simply can’t be repeated: the notoriously rich young founders, their on-the-ground friends and acquaintances who served as an instant free staff, the financial angels who do their best to promote the site. So far, Yelp has set up an office in Los Angeles, where it has had a presence almost from the start, and also has marketing teams in Chicago, D.C., and Seattle. In smaller cities, Yelp has no such angels, and there may be only one staffer, which makes it hard to gather many troops. In an ironic contradiction of its slogan, “Real people. Real reviews,” the company has even had to pay for reviewers, generating considerable controversy in the process. CEO Stoppelman is “unapologetic” about these hired hands and says that nowadays, any paid reviews are identified as being written by “scouts.”
Certain aspects of the site itself—particularly as it draws more and more verbiage—may keep it from breaking out. Who has the time, for example, to read all 680 reviews of Mission restaurant Foreign Cinema, especially when half of them include tangents about how the reviewer’s dinner was a first date that went bad, or how he didn’t like the color of the waitstaff’s uniforms? The experience can feel akin to checking out a couch on Craigslist and having to hear from everyone who ever sat on it. People always want their voices heard, but eventually the mix of good and bad reviews grows cacophonous. And with the site’s five-star rating system, good reviews cancel out bad ones, so after around a hundred reviews, the pendulum tends to get stuck in the middle. The majority of the restaurants on Yelp have a three-and-a-half- to four-and-a-half-star rating, which hardly helps the site serve as a critical decision-making tool.
All this might not matter to the core users, for whom the chatter is part of the site’s allure, but for anyone who just wants to know where to go for a great birthday dinner, it’s more of a headache than a help. “I was in town recently, looking for a place to eat,” says Alison Mundy, a 51-year-old yoga studio manager from Hartford, Connecticut, “and there was no way I was going to plow through that junk when I could get what I wanted quickly from Zagat.”
And some of it really is junk. Recent stories in the San Francisco Chronicle, the New York Times, and the Los Angeles Times revealed out-and-out howlers, like the ones in reviews of Elisabeth Prueitt and Chad Robertson’s restaurant Bar Tartine. “We were getting negative posts on food that we’d never even made,” says Prueitt. “Something really specific, like a tuna-and–winter melon dish. I called Yelp up, and they said, ‘Sorry, we can’t take that off.’” Stoppelman defends the decision: “Our team evaluated the reviews and determined that they did not violate our review guidelines,” he says. (The site’s Frequently Asked Questions page stipulates that reviews are removed only if there are issues with disclosure, hearsay, personal vendettas, or slurs.) In addition, accusations of shilling have been lobbed at the site: Popular restaurant-gossip site Eater SF uncovered a half-dozen glowing reviews, some of which even gave five stars, of local restaurants that had not yet opened their doors. Despite her skirmish with the site, Prueitt reports that Yelp’s sales team aggressively pursues her bakery, Tartine, and, shockingly, Bar Tartine, trying to get her to advertise. “I just try to stay away from the site,” Prueitt says.
Yelp’s advertising model doesn’t make it easy for the company to turn buzz and traffic into dollars. Small-business owners know that word of mouth within a local community is key, says market analyst Greg Sterling of San Francisco’s Sterling Market Intelligence. But Yelp will need to hire a large sales force in every city to capitalize on users’ plugs. Asked how the site can achieve revenue without spending gobs on street-level salespeople, Stoppelman says, “The short answer is, we don’t know. So we’re building a sales force.” But even with a full-bore sales presence, the catch-22 is that if a business has already garnered good Yelp reviews, why should it pay for an ad? Similarly, if a company fares poorly on Yelp, why should it give the site money?
Despite such obstacles, it’s not unprecedented for a site that shows its Bay Area roots to prosper outside the region. Case in point: Craigslist, another web property whose power is based solely on the value of user-generated content. Though Craigslist doesn’t need a sales team—after all, the users are also the advertisers—the company quickly learned that its one-size-fits-all template wouldn’t do. It has since added specialized apartment listings for cities like Boston and New York, and it’s working on acquiring local-language support for Spanish- and French-speaking countries. After a slow rollout over several years, Craigslist now serves 450 cities worldwide. According to Sterling, Yelp’s success depends on its ability to make these kinds of adjustments. “They have to reinvent the wheel in every new market they enter,” he says. “It’s going to be hard to replicate their Bay Area success.”
Take restaurant reviews: For all the success Yelp has had in becoming the Bay Area’s egalitarian dumping ground for food opinions, in other cities it’s facing something unfamiliar—competition. Chicago has LTHForum and MetroMix. In L.A., MetroMix is king, with a number of blogs that offer food discussions and restaurant recommendations following close behind. Elsewhere, Yelp’s pulse is just weak. In Orlando, Florida, for example, Norman’s Restaurant, the five-star culinary brainchild of chef Norman Van Aken, is not even listed on Yelp, despite the restaurant’s numerous accolades from the national press. In the same city, Food Network chef Emeril Lagasse’s namesake restaurant, Emeril’s, has garnered a scant three reviews.
The experts in other cities aren’t paying attention to Yelp yet, either. Los Angeles magazine’s lead food critic, Patric Kuh, says he “used it once to find a restaurant in La Jolla,” but otherwise has little familiarity with the site. Jeff Ruby of Chicago magazine has come across Yelp in a Google search from time to time, but says he’s “never heard anyone talk about it.”
It’s too early to relegate Yelp to Judy’s Book or Insider Pages status (remember those?). But simply because Yelp is doing something new and seemingly cool doesn’t mean it has an essential role in enough people’s lives to hit the big time. Craigslist is an invaluable tool for selling stuff. MySpace and Facebook are easy-to-use virtual communities that navigate the whole world. YouTube has revolutionized how people share digital media. And each of these sites costs so little to run that they all made serious money quickly. Yelp, on the other hand, is a collection of provincial ghettos scattered across the country, and no matter how cool, clubby, and contagious they feel from the inside, they don’t accomplish any one essential thing really well for masses of people. Yelp’s founders may someday make money—especially if their site is bought by Google, which widespread rumors predict it will be—but it’s hard to imagine Merriam-Webster’s making the site’s name a verb.
Still, in the ever optimistic spirit of Web 2.0, hype springs eternal. As Yelp user Donkey K. wrote recently,
“One thing I have to say: Ladies, hurry up and hook up with the Yelp employee geeks before they all get taken. Once the site is sold, they will be rich$$$$$$$$$$.”
Karen Solomon is a freelance writer living in San Francisco.
http://www.yelp.com/topic/san-francisco-sf-magazine-talks-about-yelp