The Rise And Fall Of Yelp

Yelp is eleven years old, okay? What have you done to us? Before there was fake news,
there were fake reviews. All of us are critiquing
each other all the time. We’d like to apologize? Local review site Yelp made quite a
mark on how we find restaurants and services. We’ve gone city by city now, over
100 different cities across the world. So it’s actually become
an international phenomenon. It was the first big success story
in the early days of user-generated reviews, and the company enjoyed rapid
growth in those early days. But it hasn’t been so easy for
Yelp lately with increased competition and a stagnant business model. I think you had a lot
of execution errors at Yelp. And you don’t go from tech darling to
tech giant without a few bad reviews. I would stay away. Yelps for sale. Would you buy it? I don’t think so. You have it in the back of your
head that Yelp is out there, lurking. Yelp was founded in July of 2004 by former PayPal employees Jeremy Stoppelman and Russel Simmons to compile word-of-mouth suggestions for local businesses and services. Stoppelman And Simmons originally decided on the name Yokel, but that domain had already been taken. So at the advice of a
colleague, they went with Yelp. Yelp and Yellow Pages kind of sound
familiar and Yelp and help, you know, is another thing that
the site provides. The duo launched the first iteration of
their site in October of 2004, which was basically a
huge email listserv. Seems antiquated, but remember, this was
almost three years before the launch of the first iPhone. Yelp was built almost
community by community. They would send out an organizer,
almost like a grassroots local organizer, to host events in towns
and cities for local businesses, letting them know about Yelp, how consumers
could and would use Yelp, and how local businesses could increase their
business by advertising on Yelp. By 2009, Yelp became so popular that
Google offered the owners $550 million for the company. Yahoo! countered that offer with a
$1 billion check, and Yelp refused both. Stoppelman, according to sources at the
time, never really wanted to sell the company, so they ran this process,
they did get some interest, but he felt like the price that was being
offered for Yelp just wasn’t high enough to merit selling the company. Instead, Yelp went public in 2012 and
stocks surged on the first day of trading. We want to bring Yelp to the world. We want to manage this
mobile transition that’s happening. We want to play a big part of that. And we want to be the broadest
and deepest content’s source for local information. Really, the Amazon of local,
when we think about it. These are Yelp employees that are here
that have been brought in for the day. It’s a big day for them. Priced at $15, now open at $22.01. Important thing is, stock opened
very much to the upside. At the time it had 22 million reviews
on its site and 61 million unique monthly visitors. In 2018, it had 177 million reviews
and 164 million average unique monthly visitors, including the mobile site,
desktop site and mobile app. Originally, Yelp was sort of the only game
in town when it came to reviews. And this goes back to the initial
question of why were investors so gung ho on Yelp originally? They were the only game in town at
first, when it came to reviewing a local business. Amid all of Yelp success, the company
claimed that once suitor Google was favoring its own content in search
results and that Google was scraping data from Yelp for its own
Google Places service, which spurred antitrust investigations. And Yelp released a
pretty convincing presentation to demonstrate how Google was
hurting its business. Let’s be clear, Google is no longer
in the business of sending people to the best sources of
information on the web. It now hopes to be a destination
site itself for one vertical market after another, including news, shopping, travel
and now local business reviews. But Yelp was dealing with
some internal problems as well. Business owners started noticing suspicious
reviews According to a study done at Harvard, which included every
Yelp review for restaurants in the Boston metropolitan area between 2004 and
2012, minus the 1 percent that violated Yelp’s terms of service, 16
percent of reviews were flagged as fake. Rival business owners would write
negative reviews to lower their competitions overall rating and write
positive reviews on their own businesses. Yelp says it deals with
these fake or extreme reviews by filtering them out. Every Yelp review is automatically
evaluated by Yelp’s recommendation software based on quality, reliability
and user activity on Yelp. We try not to highlight reviews written
by users we don’t know much about or those that might be fakes
or unhelpful rants or raves. And since the early days of Yelp,
some business owners have not been too keen with how Yelp makes its money. A majority of its
revenue comes from advertising. So this is no different than, say,
what Facebook or Google does, where they’re all on the same
hunt for digital ad dollars. Yelp’s niche in this is that if
you’re going and looking for a small business or restaurant, those restaurants
can advertise right up there against your search on the site and
therefore you can make money that way. An upcoming documentary that was announced
back in 2015 interviewed local business owners who claimed to have
received shady phone calls from Yelp sales representatives. If the Mafia had done what Yelp
is doing, they’d be thriving in every county and every jurisdiction in the United
States by doing it over the Internet. These reps reportedly offered to move bad
reviews to a lower position on the businesses Yelp page in exchange
for an advertising package and threatened to dock the page
if they didn’t advertise. The Federal Trade Commission looked into these
allegations but found no cause for charges against Yelp. In a blog post, Yelp
commented on the business owners. There’s no relationship between advertising on
Yelp and the reviews that are recommended. Uh, That’s just no way to run a business,
and it’s not how we do things here at Yelp. But documentary director Kaylie Millikin was not convinced, not even by the FTC. I have spoken with a lot of the
lead attorneys in cases brought up against Yelp and the FTC never went to
them for the documentation that those attorneys have, the evidence
that those attorneys have. Dismissing the FTC, dismissing five federal
judges who all found no wrongdoing, dismissing all of that seems a
little weird when all of it has very exhaustively debunked
the claims. You’re willing to dismiss an FTC
investigation which found nothing wrong and say yourself that maybe they didn’t do
a good job and you’re doing a better job. I’m not dismissing what they said. I am going to touch extensively on that
in the documentary and I will let the experts speak for themselves. To this day, there is a divide
between business owners who love Yelp and those who resent it. One business owner who asked to
remain anonymous for fear of retaliation from Yelp hasn’t had the
best experience using the service. It’s an uneasy partnership for those of
us in this business that advertised with Yelp because we kind of feel like
we have to rather than we really choose to. And there’s a, sort of a wink and
a nod and a whisper that it’d behoove you to advertise with Yelp
rather than to a-shoo their advances. Sorry if I sound like I’m talking
about, you know, the mob, but that’s sort of, it’s a little bit what
it feels like to people or business. Other businesses, on the other hand,
have found great success in Yelp’s advertising program. I actually have positive reviews for Yelp,
I’m an advocate for it, so… We are on the 21st floor so advertising
is really big for us being that we’re not on the ground level
for people see where exactly. But, like, it’s just like the quickest
way to get your business out there. Yeah, it’s been very positive for us. I’m happy with it. Despite these allegations and the
encroaching tech superpower’s like Google and Facebook and Instagram, Yelp’s
stock continued to climb. It peaked on March of 2014 at over
$100 a share due to positive Wall Street analysis. But it hasn’t been able
to get back there since. I think you had a lot
of execution errors at Yelp. It’s a tough business to scale. Yelp has had a difficult time
monetizing the business of recommendations into a growthie tech company that can
can compete with the biggest tech companies out there like
Facebook and Google. Investors were chomping at the bit
to see Yelp become an advertising powerhouse, but it fell short
of many investors expectations. Yelp, on the other hand, Scott, I just look
at this name and I look at the fact they don’t make money yet. I don’t know when they’re going to
start making money and when they do,what’s the PE level of Yelp? I think this is one of those
names that’s way up into the stratosphere with plenty of room to the downside. I would stay away. And the products that Google and Facebook
had been creating to compete with Yelp started looking better and better
in the eyes of the investors. Google has increasingly introduced more
more local information, local services information,
restaurant reviews. They’ve kind of, that’s the, that was
the reason for existence of Yelp and Google increasingly starting
encroaching on that. Google took its services and prioritized
them on searches, driving less and less people to Yelp site. This self-favoritism was a setback for
Yelp, but some analysts say Yelp has not been innovating at
the pace it should be. I think Yelp, in a way,
was too slow to innovate. Some of these things that they have
rolled out now, so they called a Request a Quote where you can actually
go on the site and request a quote, they should have been rolling
that out several years ago. I think this company was good on
innovation, but not great on innovation. And I think that slowness is what
really created the opportunity for other companies. A recent wakeup call to Yelp comes
in the form of an activist investor. These investors buy up large sums of
a company’s stock and use it as leverage to get the company
to change its strategy. So SQN has been an investor in Yelp
for more than four years and they decided to go public and in
essence become an activist shareholder. SQN released a 112 page document
outlining Yelp’s pitfalls and what it needed to do to get back on track. And if it doesn’t comply, SQN is
going to shake things up, starting with Yelp’s board of directors. SQN came out and said, look, there’s
a whole bunch of different changes we want you to make, and if you don’t
think you can make the changes, we want you to try to sell yourself. Yelp responded fairly quickly. The first thing they did was
that they actively replaced three board members. They also reported
a very strong quarter. But Yelp is trying to
diversify and gain some momentum. Yelp as a company is going
through a couple of transitions. From a consumer side, it’s going through
a transition of being purely an information or a research site to
one that’s more transactions oriented. If you could actually go to the
site, see those reviews and make a reservation at one of those sushi
restaurants or order delivery through a partnership that Yelp has
developed with GrubHub. So it’s moved from being a purely
information site to being more of a transaction site. And as for Yelp’s future? This is the $64,000 question, right? Can Yelp survive as
an independent company? At this stage, I would say Yelp is
probably too small to survive as an independent company. I would not be surprised at all
if they sell to a larger competitor. There’s always a chance for companies to
catch up, and that’s what Yelp is finding out now. Whether it’s too little, too late. I don’t know. But I don’t know why you would-
why one would have to reach that conclusion.

, , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Post navigation

100 thoughts on “The Rise And Fall Of Yelp

  1. It did harm for business than benefit. That's why i never use it because people have different experience. It mostly full of rants.

  2. Yelp has helped my business tremendously. I dont pay for advertising but clients still call! I am very grateful. Yes they have hidden half of my reviews in the “not recommended “ but those are still 5 stars so i don’t mind. Every app, website, software uses an algorithm and unfortunately we cant change anything about it. Should have sold for 1B. I wish the best to ALL small and big businesses that use yelp 🙂

  3. It’s a black mail site, I Refused to sponsor an event and then the negative reviews started to come, coincidence I don’t think so!

  4. I actually took Yelp to court and won my case for libel. it is because Yelp posted a review of someone who had been sentenced by the court for libel. Even though I sent them the judgment they still didn't take it off. Yet they took off practically all of my positive reviews. If there is an organization against Yelp, I can send them the judgment. Does anyone know?

  5. yelp has no credibility. I was the victim of illegal towing by a company called "Auto Towing," n an Francisco and won a judgment against the company and I posted the website and the case number. The owner contacted Yelp and yelp removed the review because it is allegedly not firsthand. Yelp sides with business owners because that is where it gets its $$$$$. The consumer is the least of their concerns!

  6. YELP fell off for me when Google reviews was integrated into Google Maps and I could start leaving reviews on Google Maps. It's much easier and more intuitive and less app-clicking (I can get the menus, phone numbers, pictures of items, recommendations, etc) without leaving Google Maps. That simple.

  7. Back when I worked at a local ice cream shop in 2015, I was opening the store and I got a computerized call from Yelp saying that if the business paid Yelp money, they would boost our ratings. Yelp is nothing more than a psychopathic mafia-style extortion business.

  8. Yelp, like many of these other ideas, started out as a great concept and a very usable app. And like many of these other ideas, it became less and less usable and good as time went on.

    BTW, I believe this also applies to YouTube. These companies become too big and too greedy and lose their way.

  9. We Should All Contact Visa and Mastercard to ask them to ban processing transaction payments to Yelp for Extorting businesses

  10. Ok, I helped a friend start a business. Small business. Yelp got him to agree to be listed. Paid for ads. After few months discounted, got the first bill. $470 per month. BAHAHAHAHA. To be listed on a bloody classifieds website that makes you sign up in the most annoying forms you have to fill out just to see the ad. Bye bye

  11. our business had bad reviews on yelp and google.
    However, we paid attention to them and most of our customers still came in by word of mouth

  12. No-Yelp or any other app will ever beat to Google. Nothing else to say. Google has been there since i was a kid and till now i dont see an app at least 10% as good as google is. Sorry for yelp but just as the others before it, it will be forgotten or it will dissapear with the time.

  13. I'm not even a business owner and I know Yelp ratings are worthless. Their restaurant reviews are meaningless- decent places have three stars, terrible places have five. Some of my own reviews have been hidden for reasons that aren't obvious; a few Yelp labelled 'rants', but they were 100% genuine (in one case a senile dentist with a five star Yelp rating abused me during a procedure because he thought I was lying about not being numb- imagine going to a dentist based on their Yelp review, having that happen, going to Yelp to report it and coming back a week later to see your comments were suppressed. I even attempted to contact Yelp to explain it was a legitimate review and they refused to re-instate it. If the site doesn't care what I have to say, why should I care what it has to say?)

  14. The MySpace of local business review. You should have accepted the $1bn from Yahoo initially – Sell your shares and run as fast as you can!

  15. Yelp needs to go. I used to work with small businesses and businesses that would not advertise with them would see higher bad reviews. Also Yelp forces you to use their app which is a huge inconvenience Goodbye!

  16. I don't understand people who post fake reviews. Sure, I get posting a negative view after a very bad experience at a business, and I've posted a couple of honest negative reviews, myself.

    But, who is so angry at a business that they post a FAKE negative review when they received good service, or about a business they've had no dealings with? I just don't get it.

  17. I recommend before anyone buys ads or other packages from anyone, that their business is listed on Google Maps and the Business Page is setup in Google's My Business. That is the first step to any business that deals with the public. This is an example of a business I helped them setup their google map –

  18. IMO Yelp is the modern day mafia "protection fees" !!! It's a sham of a company and should be taken down a long long time ago !!
    FTC is a laughing stock….remember Madoff was chairman at FTC
    FTC DID NOTHING for 10 years when Mark was flagging them on and on that Madoff was a gigantic ponzi scheme!
    Actually…you're better of to bet AGAINST Ftc's judgments 😂😂

  19. What happened to word of mouth? Ya know, real conversation? Personally I have no friends, so I must use Yelp/Google to find out which establishment I'm going to eat at while I stare into my phone

  20. My company had 21 five-star reviews and two four-star reviews. Yelp drove leads to my company because people liked our reviews. I swore to the naysayers Yelp wasn’t corrupt. I was a cheerleader for Yelp. Later Yelp called asking me to advertise with them. I did. It was awful traffic so I cancelled. After this, I began to see Yelp slowly “un-recommend” reviews for my business. I now have eight recommended reviews, 15 “un-recommended”. Yelp is corrupt.

  21. What Sebastian Maniscalco says about Yelp. Who has time to sit around and write reviews???
    Yep, Yelpers
    "The Salmon sucked, let's get the hell out of here…that's the review…we don't go home and tattletale on the restaurant"

  22. Well, where do I start. Right! They can’t monetize their service other than bullying businesses into buy their “services”. The company is a scam. I left a review for other professionals in my field to steer clear, it got read more than 25 000 times in 4 years. I hope that helps.

  23. Yelp is a stupid website. Its hard to post my reviews. They have policies thinking that most of the reviews are a scam
    This policy made people not interested to write reviews with yelp

    Google plus is so much easier to write a review

  24. Yelp is a "Billion Dollar Bully" Check out the Documentary. This company takes advantage of and harasses small business owners. They're pure evil.

  25. I am a small-business owner in Arlington, Virginia. Yelp blocked all of my client's real reviews when I refused to pay for ads.. The same day I got off the phone with Yelp, my real reviews disappeared… ALL of them!!! They are a Yelp Mafia. BOYCOTT YELP!!!!

  26. I hope Yelp goes out of business and someone beats the you know what out of Stoppleman. Yelp doesn’t allow yelp reviews to be written about yelp because they no they’d get all one star reviews

  27. So basically it goes like:
    Documentary director: " Yelp is willing to manipulate how people see your reviews, but you have to pay them first"
    Interviewer: "The FTC didn't find anything, do you dismiss that?"
    Documentary director: "No, but you have to watch my documentary first"
    At least she learned some business tips along the way 😀

  28. Oh man, i know that song and dance. In the travel/hospitality industry, TripAdvisor is what matters. At least it was when i was in the industry. Anyway, my boss had franchised the hotel, so he was super agressive about making it a good place. Every time someone left a negative review on TripAdvisor he would have me flag it and convince the people at TA that it was inappropriate so they wpuld delete it. It actually worked really well. Looking back, it's really comical and petty.

  29. There are many reasons to dislike or not use Yelp, but seriously, have people ever seen their website? It's awful. They put reviews for sponsored places at the top, before you get to the actual reviews!

  30. I can attest that virtually NONE of my customers go to Yelp since Google reviews hit stride. Yelp isn't dying…it's dead.

  31. I started hating Yelp when they started forcing their app. There is seriously nothing worse than needing to access something that should be easy as pie but you can't. Screw that, too many years of having Yelp's app shoved down my throat.
    Die Yelp!

  32. Thank you for keeping me engaged and interested throughout the entire video. I wish Bloomberg's YT channel would learn from you.

  33. Yelp is a horrible horrible place to ruin people’s businesses. If there wasn’t evil or cheaters in this world, it may have worked. But, people will pay to cheat, and find ways to extort money for small business owners

  34. Not sure about other cities, but Yelp is good in NYC. There are loads of detailed accurate reviews. Plenty of businesses scam customers, it gives us a chance to avoid the bad ones.

  35. Yelp was great. But they are exactly why Facebook became successful. Facebook never sold out, but they never used alternative means to make money.

    Meanwhile, Yelp tried to get bigger by artificially support business for profit.

    Yelp was big when it comes to local usage. 1 Billion was a fair price for Yelp. Because nothing about Yelp can do to pass FB traffic. Once someone finds what they need from Yelp. A user no longer needs to be on it.

    Once people realize when it's able to be paid for, nothing can change that.

  36. A business owner didn't want to reveal his name in fear of retalliation from Yelp; they didn't give his name but played his voice (face palm)

  37. It should die, that place is so corrupt. It has been one big SEO spam universe for a long time. Review sites in general should go away because they are covered in paid reviews and SEO spam as well. You can buy reviews for a few bucks and people outside of the country will review whatever. Businesses hate these websites.

  38. I used to manage a very large and popular bar in my city. Many times i received emails and phone calls from Yelp saying that we should throw a party for their "elite reviewers." In exchange, they would give the bar positive reviews that would filter right to the top. Of course, that meant thousands of dollars in free food and drink, in exchange for positive reviews. There was no mention of lowering our reviews if we did not accept, but it did feel a bit like a shakedown.

  39. I was a big yelp user & reviewer back in the day – elite reviewer for 7 years in a row… until I found out from business owners what the company was doing, and after a couple of years of pressure form the company to tell businesses that I was reviewer when I went in so they would treat me better. Also, the app was pretty crappy. Haven't used it for years now.

  40. I'm sorry for the business owners who have been hurt for the very same company that purposedly was helping them to thrive.

  41. Get rid of reviews altogether, Daym Drops did a series of videos on visiting the beast and worst. Half of the "worst" restaurants were actually really good. Karens leave spiteful overblown reviews all the time: hurting genuinely good diners.

  42. Is google more trustworthy?

    Maybe we should go back to the days of using the Yellow Pages to find things. Back then, it was just a crap shoot. This place may be good, may be bad, but their quarter page print ad caught my eye…

  43. I actually wrote a bad review on an awful experience I got and yelp just deleted it. Every time I wrote something negative about a business because they sucked, my review was deleted and I just stop using yelp and hated them ever since. What's also sad is these lousy business all had 5 star rating with positive reviews that read like their friends and family wrote them. That when I figured out, yelp couldn't be trusted. I have to add the founder is a POS with zero integrity imho.

  44. I hate tech Companies. I don't need their help generating business or retaining customers. They finally stopped calling me because I would keep them on the phone, counterselling their ridiculous sales pitch. Do an awesome job with an awesome product/service, and let word of mouth work. It works.

  45. Blocking legitimate positive reviews over negatvie, unless you pay; is no different that Bruno offering you "pertekshun inshurance fer yer bidness. Be ashame if a brick were to be thrown through yer winders."

  46. I think yelp would work well from selling to a smaller internet browser company such as Microsofts edge/ie with Bing or duckduckgo., given that Google already has a large dataset of google reviews. I think the said companies can benefit from a large infrastructure and dataset Yelp has curated. MSFT can bring their AI expertise to Yelp for some quality control work. Hmmm

Leave a Reply

Your email address will not be published. Required fields are marked *