No, not really.

I am as much of a Yelp fan as I am a Facebook fan — which is to say, not much at all. As a writer, I find the write-for-free-we’re-going-public approach of Yelp/Huff Po/Seeking Alpha utterly reprehensible.

As a gourmand — and a fat bastard — I prefer the Zagat model. There is a value to intelligent editing/curation, and that is worth paying the $25 per year to me. It also removes the gamesmanship and paid & fake reviews from the process.

I am (obviously) not a Luddite — a tech geek who loves his favorite websites, apps and gadgets. But I also recognize that the “Good Enough Revolution” as Wired called it, works great for certain audiences: College students, cash crunched, budget conscience.

However, I think that too often, we seem to be overlooking quality as well.

My issue isn’t Yelp per se — I love the massive set of choices online and mobile (I have both the Yelp and the Open Table iPhone App but hardly use either).  You can vote with your feet (or mouse, to use a quaint antiquity) if you want to go elsewhere.

My VC friends are not going to be happy with my saying this, but I wonder if $100 Million IPO makes much sense for a user generated, advertising supported model.

Category: IPOs, Technology, Valuation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

16 Responses to “Yelp Going Public; Billions to Flow to Reviewers”

  1. Yelp! = “paid & fake reviews”

    and, don’t forget about the ‘Extortion’ ~!

    the ‘Service’ is a, Total, Fraud.

    the ‘Fund Managers’ that buy that IPO, w/OPM, should be made ‘well-known’..

  2. KidDynamite says:

    The Fat Bastard Luddites would be a decent band name…

  3. Chad says:

    I don’t think $100 million makes much sense. While, I use Yelp, if it went away it wouldn’t really bother me. Neither Yelp or Facebook should be valued where they are currently valued at, as the user generated content will drop in quality and quantity over time (especially for Facebook).

  4. In an old post discussing the as yet unaddressed impact of the Internet on economics I pointed out how ‘businesses’ like Facebook and Yelp are exploiting this change:

    “Yet in many cases, and as a result of the Internet’s unique nature, the value is actually produced from a distributed network which extends beyond the boundaries of the entity which focuses that value into marketable form and derives the market’s benefits.

    “The Internet is a landscape not a business. But as a landscape its qualities are unlike normal geographies since proximity is fundamentally redefined (farther in space and longer in time become closer and shorter respectively). This results in both greater productivity but also reduced opportunities to extract surplus value from the points along that chain from product to consumer since that chain no longer exists.”

    Miscellaneous on Status Updates, Distributed Intelligence & New Economies

  5. lalaland says:

    I LOVE Yelp. I’m a broker in Brooklyn NY and, unlike most of my competition, I’ve got 14 5 star reviews from actual clients. Yelp is now the #2 source of traffic to my website, and it doesn’t cost me a cent. The guy down the block from me owns a food-by-the-pound place and has 39 reviews with a 4.5 star average, and Yelp has driven his business from day 1. It helped me find an awesome dentist, a clean tuxedo rental, and lots of great food.

    I tried paying for advertising on Yelp though, and it was a disaster – didn’t get me any extra traffic, and the ad I was using promised a %off, so between the cost of the ads and the discount it was a total money loser. But that’s also because as a real estate broker I don’t have a lot of repeat clients (the way, say, a coffee shop or restaurant would), so it was just the wrong model.

    I’d say this Barry: you probably know full well where to find the best X, and cost isn’t an obstacle for you, but in NYC, where the choices are overwhelming and much of the population is fluid (changing neighborhoods) or temporary (students, etc), being able to sort quality from crap is a valuable bit of knowledge indeed. I think sites like Yelp are bringing the Cnet + Amazon reviews to brick+mortar businesses, and will definitely help put losers out of business and reward the good guys, so I think it’s got a future, at least here.

  6. chavan says:

    The problem you are touching on is who are our trusted sources of information. The primary problem with the free business models, where regular users are the ‘product’, is entirely one of trust. How can Yelp and these other companies ultimately be trusted since they aren’t meeting our needs. We’re just the product.

    Personally I’d pick Not For Tourists over Zagat.

  7. Bob A says:

    who uses this site? and why?

    you do a google search for just about anything and you’ll see links with reviews but rarely if ever have i seen or clicked on a link for yelp. the only time i actually visited that site was to see what it was and determine i never needed to go there again.

  8. theexpertisin says:


    Glad to see you mention SeekingAlpha in your post. I consider this site to be amongst the most dangerous aveneues for investors. Folks taking advice on this manure-laden platform are in big trouble.

  9. Omnivore says:

    I have the same low opinion of yelp reviews, esp of restaurants. Most people don’t know how to eat. Also of doctors. They think their vet if good if he/she is “nice.”

    However, I recently moved to a different state and in finding a decent grocery, hair cut, and local eats yelp was very helpful.

    For food I like Chowhound. Hard to search, which means it is also hard to game. I hope they keep it that way–just a bunch of folks who really like food.

    Any open system can be gamed. My membership fee to Angies list has saved me thousands. I’m sure its gamed too but I think there are more barriers.

    Thx @chavan for the Not for Tourists rec. I’ll check it out.

  10. PrahaPartizan says:

    I took a quick glance at the headline for this posting and could have sworn that I saw: “Yelp Going Public; Billions to Flow to Receivers.” Maybe I was glimpsing a headline from the future?

  11. tsetsaf says:

    Yelp, unlike the many look alike local review sites (including Google), performs an excellent job of weeding out the bogus reviews for the real ones. In my humble opinion they are the best at this.

    The problem with “professional reviews” is that in a profit driven business model they are way too easily distorted by advertising bias (ie we are here to review your business and oh by the way our 2012 directory comes out next week…).

    Given the alternatives, think Yellow Pages, the user generated local business review model works well. There are flaws by category (as Barry points out with the Zagat reference) but for a global all industries review site Yelp performs well.

    From an investment standpoint there is no way I would buy into a public Yelp. As others have noted above, their sales tactics and advertising products leave a lot to be desired and this for a company that is not public. Imagine what they will have to resort to in order to grow revenue after becoming public!


    BR: Since you use a homail address, I am suspicious of this comment

  12. Jojo says:

    I’ve used Yelp for reviews on occasion. But the other day I noticed that they had some link to click on to “show hidden reviews”. When I clicked there, I saw a lot of negative reviews for the subject I was researching. So I would recommend looking for and clicking on any such link on Yelp if you see one.

  13. Frwip says:

    Yeah, the problem nowadays is not access to data and opinions. It’s weeding out the noise.

    Good comment by Kevin Drum on a incident issue, here:

  14. bulfinch says:

    Don’t shoot the dog just because he’s got some fleas, folks. Yelp has aided me in finding some interesting out-of-the way spots when commuting. For example: I was in Joshua Tree last spring and spent a little longer in the park than I’d intended. I hit Yelp to look for some nearby grub on what seemed like a pretty desolate stretch and discovered an Indian restaurant tucked behind a filling station advertised on the exterior as a Pizza place. Yes. I never would’ve happened on this place otherwise, and it was a seriously damn fine curry.

  15. DeDude says:

    There are so many other alternatives and nothing special that they can use to keep people from moving around.

  16. DiggidyDan says:


    I trust expert paid sites much more than masses. Then again, I am a misanthropic recluse these days. Perhaps a combination of both with a qualitative estimation of which opinions count, such as on metacritic, is the happy medium.