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"Yelp Seeks Buyer Amidst Slow Growth, Rising Costs" - Article in the Wall Street Journal


DaveO
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According to the Wall Street Journal Yelp is reportedly fishing around for a buyer.  The article does a reasonable job of summarizing its financial history and aspects of its controversial existence.

From a different perspective, this media source describes how difficult it is to successfully monetize a major social web site.

From still a third perspective Comscore a major data provider on digital properties ranked the most popular websites in the US for this past March, here:  By comparison Google, ranked first, was measured at 255 million unique devices/people in the US;  Yelp ranked 23 and accessed by 83 million different devices/users.

Big numbers any way you look at it.  Regardless, historically they have had a difficult time achieving profitability, and after a couple of profitable quarters last year, slipped back in the last quarter to a loss.

Now as seen mentioned in this forum by many restaurateurs, and acknowledged in myriads of articles, small businesses, the advertising targets of Yelp, have had an incredibly tough time dealing with this social media web monster.

Without expressing any other comments, I can only wonder what is in Yelp's future?

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"If you let me write $200 billion of hot checks every year, I could give you an illusion of prosperity, too."

-- Lloyd Bentsen, 1988

There's going to be a nebulous concept that emerges from all this called something like "virtual profitability," where there's no actual profit, but an "effect" on the global situation. Yelp probably *is* responsible for $5 billion worth of societal change; it's just not going to flow into the coffers of Yelp.

The reason people hate Yelp so much is that Yelp has built its worth by aggressively extracting that "virtual profit" from society, and turning it into cash in their coffers - this, in the form of shaking down businesses, harassing them to take out advertisements, threatening them with censored reviews, etc. This goes directly against the natural order of things, which would (without aggressive money-grabs) result in Yelp being powerful and influential, but not wealthy.

And as much as I hate to say it, Wikipedia - a wonderful product that I adore, admire, and use daily - is going to have the same problem. Wikipedia is powerful and influential, and has created untold amounts of societal wealth, but they're not in a position to shake down businesses, so it's going to be extremely difficult for them to cash in on their wonderful product (people are essentially assuming that Wikipedia is some sort of "government agency" that they're entitled to, but it isn't and they aren't).

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"If you let me write $200 billion of hot checks every year, I could give you an illusion of prosperity, too."

-- Lloyd Bentsen, 1988

There's going to be a nebulous concept that emerges from all this called something like "virtual profitability," where there's no actual profit, but an "effect" on the global situation. Yelp probably *is* responsible for $5 billion worth of societal change; it's just not going to flow into the coffers of Yelp.

The reason people hate Yelp so much is that Yelp has built its worth by aggressively extracting that "virtual profit" from society, and turning it into cash in their coffers - this, in the form of shaking down businesses, harassing them to take out advertisements, threatening them with censored reviews, etc. This goes directly against the natural order of things, which would (without aggressive money-grabs) result in Yelp being powerful and influential, but not wealthy.

And as much as I hate to say it, Wikipedia - a wonderful product that I adore, admire, and use daily - is going to have the same problem. Wikipedia is powerful and influential, and has created untold amounts of societal wealth, but they're not in a position to shake down businesses, so it's going to be extremely difficult for them to cash in on their wonderful product (people are essentially assuming that Wikipedia is some sort of "government agency" that they're entitled to, but it isn't and they aren't).

Definitely lots of funny money at play here but have to remember that an IPO changes everything. Especially in terms of the discussion about "coffers." Once a company is floated, founders and significant equity holder coffers are very different from the corporate coffers. In many (but not all) cases like this, the former do incredibly well while the latter struggle, as you root cause. Also, I do believe it very possible to generate sustainable profit while not crossing the ethical and societal lines Yelp has crossed. FWIW.

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And as much as I hate to say it, Wikipedia - a wonderful product that I adore, admire, and use daily - is going to have the same problem. Wikipedia is powerful and influential, and has created untold amounts of societal wealth, but they're not in a position to shake down businesses, so it's going to be extremely difficult for them to cash in on their wonderful product (people are essentially assuming that Wikipedia is some sort of "government agency" that they're entitled to, but it isn't and they aren't).

Wikipedia and its owner the Wikimedia Foundation are charitable institutions not seeking any sort of profit. If you give them money, you can deduct it for income-tax purposes.

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Wikipedia and its owner the Wikimedia Foundation are charitable institutions not seeking any sort of profit. If you give them money, you can deduct it for income-tax purposes.

There is a controversial story about wikipedia and its founder which is well summarized here.  Now, frankly, I too use it an enormous amount, although once in a blue moon I try and search for original sources and not a summary from an encyclopedia type of reference.  If not referenced in that article, its reported elsewhere that a significant number of entries in wikipedia's vast resources are virtual word for word copies of some original source.  Anecdotally I've found that to be the case twice.  I'm not necessarily criticizing the site, merely reporting on this claim and my anecdotal experience.

If nothing else, it is a dominant information source on the web.

I see almost no connection between wikipedia and yelp other than they both float  around on the web and the internets.

Meanwhile, yelp, is actually like a fair number of other "web oriented" entities that market to small businesses and provide "something else".  In Yelp's case its reviews, and further Yelp is the one such entity that has severely impacted the restaurant business more than any of the others.   While yelp is extraordinarily controversial some of these other entities have similarly notorious reputations.  Search on "reviews of ReachLocal" or "reviews of yodel" and you will see a wide array of small business complaints.

Yelp is still a different animal, and simply the one that has had the most impact on the restaurant industry while also having a miserable reputation, (deservedly so) within the industry. It really revolutionized the world of consumer reviews used on a very wide spread basis.

Still though, if it is for sale, it just might attract an enormous number.  Who knows???

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?..Still though, if it is for sale, it just might attract an enormous number.  Who knows???

I think it highly probable to fetch a premium and be very lucrative for Stoppelman and other large shareholders. Less likely to provide the same kind of returns to common shareholders and other small fry within and beyond the walls of the company.

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Bottom line is a business is worth something if it is profitable. Less so if it generates cashflow or revenue. Less so if it loses money but has a desirable product. Meh.

I think it would be hilarious if Yelp and Open Table merged. BWHAHAHAHAHA!

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At least Yelp is involved in something positive... in a sense... I guess... stupid douche.

Well, at least yelp is taking down the reviews, in so far as they are not related to his actual practice....though some of the commentators have reasonable commentary on whether to take them down or not.

This type of thing has erupted several times in the past.  Reviewers blast a business for an action the business or one of its representatives takes that people find offensive.  For instance this is a partial story on one of the issues concerning the actions of a Texas bait shop and cafe.  The review explosion and some other responses occurred last year.

In 2011 an Alabama deli owner spoke up about issues with the state's immigration laws.   HIs deli was bombarded with at first attack reviews and then defense reviews.  Lets face it.  None of these hundreds or thousands of reviewers had eaten one of his sandwiches.  A summary of the event

At times review sites are part of the wild wild west of the web.

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"Yelp Screams as Stock Plummets ...." by Dawn Kawamoto on thestreet.com

I'd like to write this message to anyone and everyone on Yelp: You are welcome here with open arms, and I want to assure you that your posts here will *never* go away. If you've spent hundreds, or even thousands of hours posting on Yelp, and that company dissolves, or changes in some fashion, then the same thing that happened to my 1000+ posts on MarkSquires.com (at one time the world's most popular wine board) might happen to yours: they could disappear - in my case, behind a paywall that I have no interest in paying for. I spent so many long, wasted hours posting on that bulletin board that it makes me ill.

I promise you that we're going to be around longer than Yelp, and that the valuable time you spend writing your posts here will *never* be wasted on words that disappear into the ether.

Join us, Yelpers. We'll be waiting for you.

And Reddit users, we're going to be a lot more than just a food community. Restaurants and the Culinary Arts will *always* be our backbone, and we'll never turn our backs on the DC Dining community, but this community is going to be everything it currently is, and much more. No topic is off-limits (*), and the future is unbounded - everything you write here will be curated for what is essentially eternity.

(*) With the four exceptions of 1) personal attacks (on members, or non-members, famous or otherwise), 2) gratuitous profanity (profanity as humor and artistry is fine), 3) religious and political diatribes (discussion of religion and politics as historical and sociological issues is welcome and encouraged), and 4) completely off-topic (**), one-line comments that don't make the Laugh Committee laugh - your writing will not be censored. I consider myself an organizer; not a moderator.

If you don't see a forum that "fits" what you have to say, don't worry about it - we'll make one for you.

(**) Going off-topic in-and-of-itself is perfectly fine, and often leads to brand new discussions. Like "The Outer Limits" controlling the horizontal, the vertical, and the volume, we control the Titles, the Tags, and the Threads - but only in the spirit of organization and findability (yes, that is a word).

Welcome in advance,

Rocks

Daily Candy has a writeup today (click) on this place, called Plum Blossom with chef Lance Hanan, address is 1915 18th Street NW, phone 202-232-8881.

 

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