
Yelp Is Exploring a Sale - prostoalex
http://www.wsj.com/article_email/yelp-is-exploring-a-sale-1431018383-lMyQjAxMTA1MDA2NzcwNTc0Wj
======
incongruity
Yelp seemingly stopped innovating years ago – really, there's very little in
the way of new experiences with them to keep the attention going. I say this
as a former Yelp Elite user for 5? years, but no longer, though still an
active user with ~350 reviews.

As a result, they've squandered their early advantage.

Ideas off the top of my head:

\- Imagine all that they could have done to help small businesses gain
deep(er) insight and understanding into their existing customers and/or
potential markets.

\- A (pay for use) tool that let prospective business owners size markets and
get feedback from real, local "expert" consumers (aka: yelp elite users?) –
all for a fee (and maybe a small pay-off to yelp users?)

\- Revenue sharing to verified, top reviewers or test marketing that allowed
reviewers to get something back for all their engagement

\- Product reviews (really, can Amazon be the only one to own this?) Review
anything with a UPC mark.

\- A Yelp branded credit card – discounts/cash back for reviewed experiences
(this allows: 1) Deeper consumer intelligence, 2) Prompting for reviews
3)Truly verified experiences/more reliable reviews

\- Brokering partnerships between complementary businesses – e.g.: free Lyft
rides between the dinner and movie/music/museum venues for consumers for
special events, etc.

~~~
dogma1138
Well instead it went the ol' fashion way of bullying small businesses.

TBH at this point I'm not sure what can they sell, their user share might be a
worthy investment however anyone which will be interested in acquiring Yelp
e.g. Google, Facebook, Amazon etc. already probably owns most of Yelp's user
base via other means anyhow.

And as far as Google goes Yelp (Ireland) has given them quite a bit of trouble
in the EU in the anti-trust case against Google (heck they've spearheaded the
"public" campaign against Google).

This pretty much leaves Amazon and Facebook to buy them, and I'm not sure any
one of those will want to do it. I have a strong feeling that Yahoo will end
up buying them which will result in another flop at the end. If not them then
maybe one of the emerging Chinese companies like Baidu or the Alibaba Group
(I'm actually thinking that it would make quite a bit of sense for Jack Ma to
go after them especially they want to expand to the US and EU markets since
they own tons of site that provide C2C and B2C services, heck this might be
even more likely than a "US" tech company since Ali has a metric ton of money
to spend these days)

That said I'm not sure if on the tech side Yelp is worth anything at this
point, my personal view on that companies is that the main reason if not the
only reason why they kinda dwindled and never really exploded is that they
didn't find any clever use for their data which means they don't have some
amazing IP to sweeten the deal for potential buyers.

~~~
calbear81
The most likely buyer will be Tripadvisor or Priceline. They both are flush
with cash and Tripadvisor has been aggressively getting into the restaurant
review space and has much broader penetration abroad in all the places Yelp
isn't at. Tripadvisor also bought reservations tool LaFourchette and Yelp
could be a way to get more into the US game.

Priceline owns OpenTable and Yelp could be an interesting way to build out
more reviews and get more restaurants using OpenTable.

~~~
dogma1138
That makes quite a bit of sense also, tho restaurants only make a small
fraction of Yelp's total reviews, yes they are the biggest single category but
they are not anywhere close to being a majority. I still think that it makes
more sense for a C2C/B2C group to buy them which aren't focused on specific
industries, and i do see Chinese and Indian tech/business giants aiming to own
western companies a core strategy for their future.

~~~
pbreit
I'm not sure if they are more than 50% but restaurant reviews are definitely
way more than a "small fraction".

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primitivesuave
_Yelp is the worst company_. I'm not saying that just because of the small
business owner bullying that I was subjected to, or the frivolous one-star
review that they refused to remove, or the horrible customer service I was
subjected to when I paid for their premium advertising plan. I say that
because Yelp provides a platform for businesses to work _against_ each other.
Unscrupulous business owners that see a local competitor on Yelp will write
bad reviews to lower their Yelp rating and write fake positive reviews for
themselves.

The ideal replacement for Yelp in my mind would be a service that allows
customers to state positive and negative aspects of their experience, and a
Foursquare-like search that lets you easily see on a map which businesses are
operating in your area. Business owners should be able to address the negative
aspects, and consumers should be able to vote up/down positive and negative
aspects of business to combat frivolous statements.

~~~
roadnottaken
How would your suggested replacement prevent unscrupulous business owners from
writing fake reviews?

~~~
AwesomeGriffin
Perhaps some way that Yelp independently verifies the identity of the reviewer
(maybe some two-factor authentication such as an SMS message), but keeps the
reviewer's identity anonymous from the public to prevent harassment of honest
reviewers.

This identity would also include some additional checks such as business
affiliation and location, so for example a restaurant owner in a given zipcode
can't post reviews on other restaurants within a certain radius of their
business premises.

Not sure how scalable or workable all this would be though.

~~~
kbar13
i'm not sure that having to provide PII to make a review is a good idea. Maybe
if yelp is able to provide a kind of "reviewer's score" based on the
reviewer's online activity then people will be more likely to trust reviews
for being genuine.

~~~
incongruity
The key here is developing good points of convergent measures - not all of
which would have to be valid for any one review to be weighted (think a
Bayesian scoring approach?)

\- Age of account

\- Account engagement (patterns matter too)

\- Check-ins via a mobile device at the business

\- Check-ins at other near-by businesses (patterns matter too)

\- Partner with a Credit Card company to offer Yelp-reward bucks to encourage
reviews, track usage and validate reviews (and reviewers) [Use this to feed
into the engagement score, above]

\- Partner with OpenTable (they do this) & prompt reviews after attendance
(they do this) – weight these reviews more heavily. [Use this to feed into the
engagement score, above]

\- Let me actually identify myself to Yelp or to the world (or to just
business owners, ONLY if I want to [Use this to feed into the engagement
score, above]

\- Reviews of similar businesses (e.g.: I like thai food) -- patterns matter
here. Do I rate all competitors poorly, etc? Did I post all reviews in one
day, etc?

\- Do my reviews vary significantly in a systematic way from others in a
category? (This shouldn't be enough on its own, but variance might mean
something)

\- Do I post photos of the place? (Factor into engagement score, above -- but
if it's only for one business, it might be a flag)

etc., etc.

Really – a statistical model shouldn't be that hard to do -- maybe processor
intensive, but hard? It doesn't feel hard, given all the data they're sitting
on...

~~~
derwiki
I'm pretty sure the review filter (that everyone loves to hate) works this
way.

~~~
incongruity
I've assumed it's something like that - but it shouldn't be too hard for them
to be a little more forthcoming to explain their methodology a little bit
without compromising the value of it.

------
bkjelden
The problem with yelp is that I don't trust other reviewers.

Too many bad reviews are docking a business for things I don't care about, or
the reviewer went in with drastically different expectations than I have, or
they are simply trying to extort the business.

A buyer like facebook could have some interesting abilities to fix this
problem. Filtering to only reviews from people I know would drastically reduce
the noise. Additionally, I theoretically know a few things about the reviewer
- what their tastes are, what their level of expertise is, etc. That added
context seems like it would add a lot of value to the review. In a sense, it
becomes more of a recommendation than a review, which is what I really wanted
in the first place.

~~~
lbotos
I've always wanted a "friend circle" yelp where It showed you recommendations
from friends of friends/people you know so you could temper the rating with
what you know about the person reviewing.

~~~
lazerwalker
Foursquare does this. Explicitly shows you your 4sq/Swarm friends'
relationships to the place (have they been there? saved it to a list? said
they 'like it' or 'dislike it'?), and then in the list of tips/reviews
surfaces the stuff your friends have left before others.

When searching, you can even filter for "only show me places my friends have
been".

------
shanev
My very first iPhone app was a Yelp client called Places. It launched on day
one of the App Store. I worked closely with Yelp on the app, sending them
screenshots, talking about API limits, etc. They never told me that they were
also working on their own app. To my surprise the App Store launched with an
app from Yelp that looked exactly like my app Places. Soon after they started
limiting my API access and changed their terms of service to only allow access
to 3 reviews per restaurant. They also injected text into my API responses
telling my users to download the official Yelp app. In retrospect I should
have known not to build an app entirely on a third party API, but the
situation could have been handled more professionally for sure.

~~~
impish19
That's a little sad to hear.

------
cjensen
I'd love for Google to buy them so I could trust them.

Pro-tip: if you have a credibility problem so severe that you need to put up
notices saying that your site does not bias reviews, you probably should stop
sorting and filtering reviews based on criteria so opaque that it is
indistinguishable from bias.

~~~
mawburn
>I'd love for Google to buy them so I could trust them.

I don't, you can still retain some bit of anonymity on Yelp. Google would
probably try to force you to use your real name. I don't know what Google's
problem with real names are, but it needs to stop.

The last time I left a _legitimate_ bad review for a restaurant on Google, I
was harassed through both Google and Facebook. I blocked the owner, his wife,
and others, but it made me extremely uncomfortable.

~~~
ISL
Sounds like real names have power, then, no?

If I know that you, as mawburn, are backing a review with your personal
reputation, I'm going to believe it a lot more.

~~~
mawburn
Why should it matter if it's my personal reputation or an online persona? A
legitimate review, is a legitimate review. There are plenty of people out
there writing legitimate things online under online personas, like mawburn.

If I read a review from Joe Bob, I don't know Joe Bob and I don't really care
who he is. The fact that I can see his real name makes absolutely no
difference to me as a user. All I care about is what he said. To me, his real
name is no more different than if he was _Joe B._ or _J. Bob_ or _redneck69_.

~~~
vonklaus
> A legitimate review, is a legitimate review.

To filter for legitimate reviews, real identity can be important. That turned
out to be what set facebook apart. People transacted online as themselves, and
they incorporated real life experiences into their profiles. Reviews that were
verified to be by a person, with a verifiable identity, track record, and
reputation can raise the signal to noise. If you simply need a valid email
address, anyone can make as many reviews as they want with no stakes, which in
turn, devalues everyones ratings in general.

------
guelo
Geez, people really have it in for Yelp on here. I trust Yelp reviews more
than I trust some shitty diner's owner complaining about the bad reviews.
Overall I've found the ratings to be spot on.

------
adventured
In terms of preserving maximum value for shareholders, Yelp has no choice but
to sell itself, and the sooner the better.

They're currently able to generate $10-$12 million in net income on $377m in
sales. Their growth rate has slowed down drastically. Take their 52 week high
(much less their all-time high), which is a roughly $6.4 billion market cap.
Their best case scenario, ten years from now, is that they're worth ~$6.4
billion.

$200m in net income on that $6.4 billion market cap pegs them at a 32 PE
(plausible, if not a bit rich, ten years out). To get there, they probably
need - even giving them the benefit of expanded margins with scale - $2 to $3
billion in sales.

The only way they're going to exceed those types of numbers, is through using
their equity on acquisitions.

Here they're sitting on a very rich stock market valuation, in one of the
greatest bull markets the US has ever seen, and it's unlikely they're ever
going to top their 52 week high. Selling is the obvious move.

~~~
pbreit
Yelp could easily roll out "AdWords" and absolutely kill it. It's insane
they've dragged their feet so heavily on this.

~~~
jinushaun
Kill it with SMB money? Business like Yelp have always had a hard time
monetizing mom and pop shops, and keep them repeat customers. The real ad
money is not Uncle Joes' Falafal Shop down the road.

~~~
pbreit
I think it is. I had a small retail store and would definitely have advertised
against [my retail category] + zip code. A no-brainer from my perspective.

------
zwtaylor
Sometime in the last year I started to find myself exclusively using the
reviews and filtering within Google Maps to search for restaurants, bars and
other businesses. I can't say I've really touched Yelp at all in months.

It definitely seems like Google has devoted a lot of effort to improving these
features as I remember a time when their review sections were a veritable
ghost town. I won't be surprised if Google ends up buying them.

------
JoshGlazebrook
Why do I have a feeling Google, Apple, or Microsoft are going to buy them and
then proceed to remove Yelp integration from each other's ecosystems...

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rajacombinator
Gonna chime in with a positive vote for Yelp. I live and die by Yelp reviews -
I basically won't patronize a new business unless it checks out on Yelp. If
you know how to interpret the reviews, they are incredibly useful.

~~~
jinushaun
But I don't have time for that when I'm hungry and swimming in a see of bad 4s
and great 3s because Yelp is too stupid to implement recommendations and taste
profiles. I'm an elite Yelper with a shit ton of data in Yelp, they should've
been able to figure out how to automate this by now.

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chollida1
I wrote about this a couple of weeks ago here.
[https://news.ycombinator.com/item?id=9467649](https://news.ycombinator.com/item?id=9467649)

Public social networks are really starting to feel the squeeze from wall
street as people are getting tired of giving social companies large multiples
on the promise of massive revenues that are only a few quarters away.

By the looks of the intra day chart, people are excited about this news. Not
really sure who would make a good acquirere however....

------
egusa
I know Yelp gets a lot of criticism (and some of it deservedly), but I always
respected how they did their best to provide an honest platform for reviews.
Compared to other competitor sites (Ex: CitySearch, which basically allowed &
many times encouraged businesses to post their own fake reviews on their own
companies), I think Yelp is very ahead of the pack.

------
hinkley
I hear the Mafia is struggling to improve their relevance in a progressively
technological world.

They would be perfect for each other. The things Yelp could teach the Mob
about extortion and protection rackets... Oh, and computers, too. I hear
they're also good at that.

(can you tell I boycott Yelp? what was your first clue?

~~~
koube
Honest (and possibly stupid) question: Where do you go for your reviews, and
how do you know that they don't do the same thing?

~~~
walterbell
Amazon reviews have their own vulnerabilities, but Amazon makes money from
ecommerce rather than selling ads to the owners of the products being
reviewed.

------
igonvalue
> By 2009, Yelp found itself in talks about a possible takeover by Google for
> at least $500 million, the Journal reported at the time.

An interesting bit of history is that the acquisition offer was scuttled when
Yahoo put in a competing bid that Google could not match. Supposedly the
management team did not want to work with Yahoo, but the board had a fiduciary
duty not to accept an inferior deal, so both offers fell through.[0] In
retrospect, it was a good outcome for Yelp; the market cap is now several
times higher than either of the acquisition offers.

[0] [http://techcrunch.com/2010/10/01/the-ugliest-girl-at-the-
dan...](http://techcrunch.com/2010/10/01/the-ugliest-girl-at-the-dance-how-
yahoo-destroyed-yelps-google-acquisition/)

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byoung2
Any guesses who would be the most likely buyer? Google, Yahoo, Apple, or
Microsoft would be obvious candidates, maybe Facebook. I'd be interested to
see Facebook buy them and get all those reviews and reviewers integrated into
the graph. It would be amazing to be able to target Facebook ads at people
based on how they reviewed specific businesses or categories of businesses.

~~~
aaronbrethorst
I don't know if "amazing" is the first word that comes to mind when I think
about my reviews of businesses being made available to advertisers in this
way.

~~~
byoung2
It would be amazing for Facebook and people who buy Facebook ads

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abetaha
Would be interesting to see who's interested in buying them given most of the
negative comments about them here. Perhaps Yahoo can scoop them up like it did
with other startups in a similar situation.

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jinushaun
The Google argument is bullshit because if your site is worth visiting, people
will always append "yelp" to the query; just like I routinely append "wiki"
and "YouTube".

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CyberDildonics
I hope before the buyer closes the deal they go to the last page to see the
bad reviews about the company.

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toephu2
who leaked this info?

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wehadfun
AngiesList should buy them

~~~
adrr
AngiesList's market cap is 350m, don't think they are in a position of buying
anyone.

