Yelp facts for kids
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Screenshot
Yelp.com homepage
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| Type of business | Public |
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| Traded as |
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| Founded | October 2004 |
| Headquarters | 350 Mission Street,
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U.S.
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| Owner | Jeremy Stoppelman (6.3%) |
| Founder(s) |
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| Key people |
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| Industry | Local search, business ratings and reviews, online food delivery, local homeowner services |
| Products | Online advertising |
| Revenue |  US$1.34 billion (2023) |
| Operating income | US$79 million (2023) |
| Net income | US$99 million (2023) |
| Total assets |  US$1.01 billion (2023) |
| Total equity | US$750 million (2023) |
| Employees | 4,872 (2023) |
| Native client(s) on | iOS, Android, Windows |
| References: | |
Yelp Inc. is an American company that develops the Yelp.com website and the Yelp mobile app, which publishes crowd-sourced reviews about businesses. It also operates Yelp Guest Manager, a table reservation service. It is headquartered in San Francisco, California.
Yelp was founded in 2004 by former PayPal employees Russel Simmons and Jeremy Stoppelman. It has since become one of the leading sources of user-generated reviews and ratings for businesses. Yelp grew in usage and raised several rounds of funding in the following years. By 2010, it had $30 million in revenue, and the website had published about 4.5 million crowd-sourced reviews. From 2009 to 2012, Yelp expanded throughout Europe and Asia. In 2009, it entered unsuccessful negotiations to be acquired by Google. Yelp became a public company via an initial public offering in March 2012 and became profitable for the first time two years later.
As of December 31, 2021, approximately 244.4 million reviews were available on its business listing pages. In 2021, the company had 46 million unique visitors to its desktop webpages and 56.7 million unique visitors to its mobile sites. Over 50% of the company's audience has an annual household income of more than $100,000.
The company has been accused of using unfair practices to raise revenue from the businesses that are reviewed on its site – e.g., by presenting more negative review information for companies that do not purchase its advertising services or by prominently featuring advertisements of the competitors of such non-paying companies or conversely by excluding negative reviews from companies' overall rating on the basis that the reviews "are not currently recommended". There have also been complaints of aggressive and misleading tactics by some of its advertising sales representatives. The company's review system's reliability has also been affected by the submission of fake reviews by external users, such as false positive reviews submitted by a company to promote its own business or false negative reviews submitted about competing businesses – a practice sometimes known as "astroturfing", which the company has tried to combat in various ways.
Contents
Company history (2004–present)
Origins (2004–2009)
Two former PayPal employees, Jeremy Stoppelman and Russel Simmons, founded Yelp at a business incubator, MRL Ventures, in 2004. Stoppelman and Simmons conceived the initial idea for Yelp as an email-based referral network, after Stoppelman caught the flu and had a difficult time finding an online recommendation for a local doctor. Max Levchin, the co-founders' former colleague as founding chief technology officer of PayPal and founder of MRL Ventures, provided $1 million in Angel financing. MRL co-founder David Galbraith, who instigated the local services project based on user reviews, came up with the name "Yelp". Stoppelman explained that they decided on "Yelp" for the company's name because "it was short, memorable, easy to spell, and was familiar with 'the help' and 'yellow pages'".
According to Fortune, Yelp's initial email-based system was "convoluted". The idea was rejected by investors and did not attract users beyond the cofounders' friends and family. Usage data showed that users were not answering requests for referrals, but were using the "Real Reviews" feature, which allowed them to write reviews unsolicited. According to The San Francisco Chronicle, "the site's popularity soared" after it was re-designed in late 2005 with the distinctive Burst logo. Yelp raised $5 million in funding in 2005 from Bessemer Venture Partners and $10 million in November 2006 from Benchmark Capital. The number of reviewers on the site grew from 12,000 in 2005, to 100,000 in 2006. By the summer of 2006, the site had one million monthly visitors. It raised $15 million in funding from DAG Ventures in February 2008. In 2010, Elevation Partners invested $100 million; $75 million was spent on purchasing equity from employees and investors, while $25 million was invested in sales staff and expansion. Yelp grew from 6 million monthly visitors in 2007 to 16.5 million in 2008 and from 12 to 24 cities during the same time period. By 2009, the site had 4.5 million reviews. By 2010, Yelp's revenues were estimated to be $30 million and it employed 300 people.
Private company (2009–2012)
Yelp introduced a site for the United Kingdom in January 2009 and one for Canada that August. The first non-English Yelp site was introduced in France in 2010; users had the option to read and write content in French or English. From 2010 to 2011, Yelp launched several more sites, in Austria, Germany, Spain, and the Netherlands. International website traffic doubled during the same time period. An Australian website went live in November 2011. It was supported through a partnership with Telstra, which provided one million initial business listings, and was initially glitchy. By the end of 2012, Yelp was publishing reviews for establishments in 20 countries, including Turkey and Denmark. Yelp's first site in Asia was introduced in September 2012 in Singapore, which was followed by Japan in 2014.
In December 2009, Google entered into negotiations with Yelp to acquire the company, but the two parties failed to reach an agreement. According to The New York Times, Google offered about $500 million, but the deal fell through after Yahoo offered $1 billion. TechCrunch reported that Google refused to match Yahoo's offer. Both offers were later abandoned following a disagreement between Yelp's management and board of directors about the offers. In June 2015, Yelp published a study alleging Google was altering search results to benefit its own online services.
Yelp began a service called Yelp Deals in April 2011, but by August it cut back on Deals due to increased competition and market saturation. That September, the Federal Trade Commission investigated Yelp's allegations that Google was using Yelp web content without authorization and that Google's search algorithms favored Google Places over similar services provided by Yelp. In order to avoid an FTC anti-trust lawsuit, in January 2014, Google agreed to allow services like Yelp the ability to opt out of having their data scraped and used on Google's websites.
Public entity (2012–present)
Having filed for an initial public offering (IPO) with the Securities Exchange Commission in November 2011, Yelp's stock began public trading on the New York Stock Exchange on March 2, 2012. In 2012, Yelp acquired its largest European rival, Qype, for $50 million. The following year, CEO Jeremy Stoppelman reduced his salary to $1. Yelp acquired start-up online reservation company SeatMe for $12.7 million in cash and stock in 2013. Yelp's second quarter 2013 revenue of $55 million "exceeded expectations", but the company was not yet profitable.
In 2012/13, Yelp moved into its new corporate headquarters, occupying about 150,000 square feet on 12 floors of 140 New Montgomery (the former PacBell building) in San Francisco.
The company was profitable for the first time in the second quarter of 2014, as a result of increasing ad spending by business owners and possibly from changes in Google's local search algorithm. The algorithm dubbed Google Pigeon made authoritative local directory sites like Yelp and TripAdvisor more visible. Over the course of the year, Yelp websites were launched in Mexico, Japan, and Argentina. Also in 2014, Yelp expanded in Europe through the acquisitions of German-based restaurant review site Restaurant-Kritik and French-based CityVox.
In early February 2015, Yelp announced it bought Eat24, an online food-ordering service, for $134 million. Then in August 2017, Yelp sold Eat24 to Grubhub for $287.5 million. The acquisition resulted in a partnership to integrate Grubhub delivery into the Yelp profiles of restaurants.
In late 2015, a "Public Services & Government" section was introduced to Yelp, and the General Services Administration began encouraging government agencies to create and monitor official government pages. For example, the Transportation Security Administration created official TSA Yelp pages. Later that year Yelp began experimenting in San Francisco with consumer alerts that were added to pages about restaurants with poor hygiene scores in government inspections. Research conducted by the Boston Children's Hospital found that Yelp reviews with keywords associated with food poisoning correlates strongly with poor hygiene at the restaurant. Researchers at Columbia University used data from Yelp to identify three previously unreported restaurant-related food poisoning outbreaks.
On November 2, 2016, concurrent with its earnings report for Q3 2016, Yelp announced it would drastically scale back its operations outside North America and halt international expansion. This resulted in the termination of essentially all international employees across Yelp's 30+ international markets from the sales, marketing, public relations, business outreach, and government relations departments. Overseas employees now primarily consist of engineering and product management staff. These layoffs affected only 175 individuals or 4% of its total workforce.
In March 2017, Yelp acquired the restaurant reservation app Nowait for $40 million. In April 2017, Yelp acquired Wi-Fi marketing company Turnstyle Analytics for $20 million.
In early 2020, Yelp listed space at 55 Hawthorne Street, San Francisco, for 235 employees as available for sublease. Business closures and stay-at-home orders during the COVID-19 pandemic in the United States caused a massive decline in searches on Yelp (down 64–83% from March to April, depending on category) and company revenues. On April 9, the company announced it would lay off 1,000 employees, furlough about 1,100 with benefits, reduce hours for others, cut executive pay by 20–30%, and stop paying the CEO for the rest of 2020.
In September 2021, Yelp announced that it was relocating its corporate headquarters to a smaller space at 350 Mission Street to be subleased from Salesforce.
On June 1, 2023, Yelp decided to close its offices in Phoenix, Arizona and Hamburg, Germany. According to an announcement made by the company, less than 6 percent of the available workstations in these offices were being utilized. This move comes after Yelp had already shut down its New York, Chicago, and Washington, D.C offices.
As of mid-2023, Yelp maintains a single remaining office in the United States in San Francisco. Additionally, the company will continue its operations in Toronto, Canada, and London, United Kingdom. The closure and downsizing of these offices are expected to result in approximately $27 million in annual cost savings for Yelp during the 2023-24 fiscal year. As of February 2024, its website listed reviews for establishments in 32 countries.
Features
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Screenshot
The homepage of Yelp's iPhone app.
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Type of site
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Local online reviews |
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| Available in | 15 languages |
| Owner | Yelp, Inc. |
| Commercial | Yes |
| Registration | Optional |
| Users | 142 million unique visitors per month |
| Launched | 2004 |
| Current status | Online |
| Written in | Python, Java, and a custom framework |
Yelp's website, Yelp.com, is a crowd-sourced local business review and social networking site. The site has pages devoted to individual locations, such as restaurants or schools, where Yelp users can submit a review of their products or services using a one to five stars rating scale. Businesses can update contact information, hours, and other basic listing information or add special deals. In addition to writing reviews, users can react to reviews, plan events, or discuss their personal lives.
78% of businesses listed on the site had a rating of three stars or better, but some negative reviews were very personal or extreme. Some of the reviews are written entertainingly or creatively. As of 2014, users could give a "thumbs-up" to reviews they liked, which caused these reviews to be featured more prominently in the system. As of 2008, each day a "Review of the Day" was determined based on a vote by users.
72% of Yelp searches are done from a mobile device. The Yelp iPhone mobile app was introduced in December 2008. In August 2009, Yelp released an update to the iPhone app with a hidden Easter Egg augmented reality feature called Monocle, which allowed users looking through their iPhone camera to see Yelp data on businesses seen through the camera. Check-in features were added in 2010.
Yelp users can make restaurant reservations in Yelp through Yelp Reservations, a feature initially added in June 2010; in 2021 the service was consolidated with others into "Yelp Guest Manager". Yelp's reservation features have been done through SeatMe, which was acquired by Yelp in 2013. Prior to that, Yelp had offered reservation services through OpenTable. In 2013, features to have food ordered and delivered were added to Yelp as well as the ability to view hygiene inspection scores and make appointments at spas. Yelp's content was integrated into Apple Inc.'s Siri "virtual assistant" and the mapping and directions app of Apple's September 2012 release of the iOS 6 computer operating system.
In March 2014, Yelp added features for ordering and scheduling manicures, flower deliveries, golf games, and legal consultations, among other things. In October 2014, the company, working in collaboration with hotel search site Hipmunk, added features to book hotels through Yelp.
Yelp started a 7–10% cash-back program at some US restaurants in 2016 through a partnership with Empyr, which links credit card purchases to online advertising.
On February 14, 2017, Yelp launched Yelp Questions and Answers, a feature for users to ask venue-specific questions about businesses.
In June 2020, Yelp launched a COVID-19 section that enables businesses to update their health and safety measures as well as their service offering changes. Starting January 2021, users can provide detailed feedback regarding what health and safety measures the business has implemented through editing in the COVID-19 section on Yelp business pages.
Features for businesses
Yelp added the ability for business owners to respond to reviews in 2008. Businesses can respond privately by messaging the reviewer or publicly on their profile page. In some cases, Yelp users that had a bad experience have updated their reviews more favorably due to the business's efforts to resolve their complaints. In some other cases, disputes between reviewers and business owners have led to harassment and physical altercations. The system has led to criticisms that business owners can bribe reviewers with free food or discounts to increase their rating. However, Yelp users say this rarely occurs. A business owner can "claim" a profile, which allows them to respond to reviews and see traffic reports. Businesses can also offer discounts to Yelp users that visit often using a Yelp "check in" feature. In 2014, Yelp released an app for business owners to respond to reviews and manage their profiles from a mobile device. Business owners can also flag a review to be removed, if the review violates Yelp's content guidelines.
Yelp's revenues primarily come from selling ads and sponsored listings to small businesses. Advertisers can pay to have their listing appear at the top of search results or feature ads on the pages of their competitors. In 2016, advertising revenue grew at a rate of 30% year over year. Yelp will only allow businesses with at least a three-star rating to sign up for advertising. Originally a sponsored "favorite review" could place a positive review above negative ones, but Yelp stopped offering this option in 2010 in an effort to deter the valid criticism that advertisers were able to obtain a more positive review appearance in exchange for pay.
On June 5, 2020, Yelp launched a tool to allow businesses on the platform to identify themselves as black-owned, allowing customers to search for black-owned companies they want to support. There were more than 2.5 million searches for black-owned businesses on Yelp from May 25 to July 10. Searches for black-owned businesses were up 2,400% in 2020. In August 2021 Yelp added a feature to let users filter businesses based on their COVID precautions.
Relationship with businesses
A Harvard Business School study published in 2011 found that each "star" in a Yelp rating affected the business owner's sales by 5–9%. A 2012 study by two University of California, Berkeley economists found that an increase from 3.5 to 4 stars on Yelp resulted in a 19% increase in the chances of the restaurant being booked during peak hours. A 2014 survey of 300 small business owners done by Yodle found that 78% were concerned about negative reviews. Also, 43% of respondents said they felt online reviews were unfair, because there is no verification that the review is written by a legitimate customer.
Community
According to Inc. Magazine most reviewers (sometimes called "Yelpers") are "well-intentioned" and write reviews in order to express themselves, improve their writing, or to be creative. In some cases, they write reviews in order to lash out at corporate interests or businesses they dislike. Reviewers may also be motivated by badges and honors, such as being the first to review a new location, or by praise and attention from other users. Many reviews are written in an entertaining or creative manner. Users can give a review a "thumbs-up" rating, which will cause it to be ranked higher in the review listings. Each day a "Review of the Day" is determined based on a vote by users. According to The Discourse of Online Consumer Reviews many Yelp reviewers are internet-savvy adults aged 18–25 or "suburban baby boomers".
Reviewers are encouraged to use real names and photos. Each year members of the Yelp community are invited or self-nominated to the "Yelp Elite Squad" and some are accepted based on an evaluation of the quality and frequency of their reviews. Members may nominate other reviewers for elite status. Users must use their real name and photo on Yelp to qualify for the Elite Squad. To accept a nomination, members must not own a business. Elite Squad Yelpers are governed by a council and estimated to include several thousand members. Yelp does not disclose how the Yelp Elite are selected. Elite Squad members are given different color badges based on how long they've been an elite member. The Yelp Elite Squad originated with parties Yelp began throwing for members in 2005, and in 2006 it was formally codified; the name came from a joking reference to prolific reviewers that were invited to Yelp parties as the "Yelp Elite Squad"." Members are invited to special opening parties, given gifts, and receive other perks. As of 2017, there are over 80 local Elite Squads in North America.
As of 2017, Yelp employed a staff of over 80 community managers that organize parties for prolific reviewers, send encouraging messages to reviewers, and host classes for small business owners. Yelp reviewers are not required to disclose their identity, but Yelp encourages them to do so.
See also
- Crowdsourcing
- Reputation management
- You're Not Yelping
