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Yelp Turns 10: From Startup to Online Review Dominance

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A look at the dramatic history of Yelp.

Yelp's San Francisco Office.
Yelp's San Francisco Office.
Photo: Yelp

In 2004, two former PayPal employees, Jeremy Stoppelman and Russel Simmons, raised $1 million in funding for a glorified "e-mail circle" that allowed friends to directly swap business reviews. They called it Yelp. Now the sometimes maligned site celebrates its 10th anniversary with a staggering valuation of $5 billion and some 130 million unique visitors each month. Their shares are hovering at about $68 today.

Yelp's aggressive growth can be traced back to its incredible success in fundraising as well as to its continuously evolving services. Its tremendous reach today comes as a result of a decade of establishing itself as a leader in the field of local community coverage. Along the way, Yelp has dodged extortion allegations, walked away from a half-billion purchase offer from Google, and gone public.

Yelp shows no signs of slowing. CEO Jeremy Stoppelman tells USA Today that he sees Facebook as his "wild card" competition and that Yelp's next task is to convince business owners that the company is on their side: "We're determined to do better at showing business owners how we can help them grow and, in turn, savvy businesses can take action based on our feedback and raise their game."

Below, Eater takes a look at the dramatic history of Yelp:

2004

jeremy-stoppelman-russ-simmons-yelp.jpg

Russ Simmons and Jeremy Stoppelman. [Photo: Jeremy Stoppelman/Facebook]

July: Stoppelman and Simmons co-found Yelp while involved in the entrepreneurial incubator MRL Ventures. Stoppelman describes his inspiration in the Wall Street Journal: "I got sick and needed to see a doctor. Back then there was very little information on the Internet; it was frustrating. We realized the best way to find a doctor, or other services, was by word of mouth." MRL Ventures invests $1 million in the San Francisco-based company.

Stoppelman describes how Yelp got its name in the company-produced video below. The name is "short," "memorable," and ties into what the site does because Yelp sounds similar to "yellow pages" and "help." He also goes into the company's origin story:

Video: YouTube

October 13: Yelp launches, based around the concept of "e-mail circles" and asking friends for recommendations. Here's how a PBS "I, Cringely" blog post describes it:

"Here's how Yelp! works. Go to the web site (it's in this week's links, but I'll just bet you can guess the URL without even looking) and sign up for the service. Tell it what you are looking for (a plumber), put the need in some context (for my broken Jacuzzi bathtub) and give it a location (Charleston, SC). Then Yelp! expects you to tell it the e-mail addresses of a couple people whom you would contact with the question yourself if this service didn't exist. That's all. Then Yelp! sends e-mails to the folks you have listed along with any other people in its database who are in the same geographical area and/or have expressed opinions on similar queries. Part of what Yelp! does, too, is to ask these people if they can recommend yet another person who might better know the answer. Then Yelp! monitors and compiles the responses and makes some effort to get back to those who don't reply. Eventually, a list of resources is sent back to the original questioner along with information gleaned from other databases about how to reach these people and maybe even how to be a better-informed consumer."

2005

February: Yelp launches a revamped version of its site "that let[s] users share their reviews" and the Yelper of today is born.

The New York Times explains why the revamp made Yelp stand out from a pack of local review sites like Citysearch and Angie's List:

"What Yelp did differently than these others, as Jeremy Stoppelman, the site's co-founder and chief executive describes it, was to spend most of its energy attracting a small group of fanatic reviewers ... It didn't subordinate the users' contributions to professional reviews, as on Citysearch, or to directory information, as on yellow-pages sites. Instead, it structured the site to motivate people through the praise and attention that their reviews receive from others."

Stoppelman would later tell the WSJ that this was the moment when he started to feel the site might really take off.

November: Yelp receives $5 million in Series B funding from Bessemer Venture Partners, the first of many investments from the venture capital firm.

2006

Summer: By the Summer, Yelp has "amassed 100,000 reviews and [is] attracting more than a million users a month" according to data in Inc.

October: Yelp raises $10 million in funding from Benchmark Capital. VentureBeat reports data from Yelp putting unique users for September at 1.5 million, a 200% increase from the month prior.

Jeremy Stoppelman talks the early days of Yelp, 2013. [Video: Bloomberg]

Urbanspoon is founded in Seattle. The self-funded company aggregates reviews from local city papers, Citysearch, and the like. Users can also leave "comments" about restaurants, which are ostensibly reviews.

2007

May: Yelp's audience grows "124% from May to May ... with monthly visitors increasing to 1 million," according to Nielsen/NetRatings data cited by USA Today.

urbanspoon-logo.jpg

September: Urbanspoon is poised to launch nationally, with 14 city sites. TechCrunch reports the site has "1.5 million monthly page views on 500,000 unique visitors."

2008

January: Yelp closes "a $15 million round of venture capital from DAG Ventures and earlier investors, gaining a healthy $200 million valuation," Bloomberg reports.

February: Yelp introduces business owner accounts, allowing business owners to contact reviewers privately. The New York Times quotes a research analyst who says "smart business owners would get involved in Yelp, listening, responding and being an active part of the dialogue, some going so far as to place signs on their physical doors requesting reviews.'"

May: A New York Times article describes Yelp as being "slow to add advertising." Stoppelman says: "We put the community first, the consumer second, and businesses third."

July: The App Store launches via iTunes. Urbanspoon and Yelp launch iPhone apps.

Yelp-big.jpg

Photo: planetc1/Flickr]

August: Yelp goes international and launches in Canada.

November: Yelp shares analytics with TechCrunch that show 15.8 million unique visitors and 4 million reviews over the previous 30 days. TechCrunch writes: "Not bad for a company that was born just four years ago." Also in November is Citysearch's relaunch. TechCrunch cites Comscore's report that Citysearch had 14.6 million unique visitors in October. The race between Yelp and Citysearch continues.

December: Yelp's iPhone app is the third most popular travel app according to TechCrunch, behind Google Earth and Urbanspoon. Citysearch releases its own app.

2009

February: Yelp is hit with a class-action lawsuit. Plaintiffs claim "that they were contacted by Yelp for ad sales in exchange for erasing unfavorable reviews from their pages. In some cases negative reviews were allegedly added after sales offers were declined." Stoppelman tells Mashable that class action lawsuits are basically a coming-of-age for startups: "My thoughts to someone with a successful Internet business that gets hit with a lawsuit is, 'Welcome to the big leagues.'"

Yelp-Business-Owner-Accounts.jpg
[Photo: Yelp]

April: Yelp introduces "public commenting" for businesses, allowing business owners to reply to reviews on their pages for free (after they've claimed their business page).

Also in April, Urbanspoon is acquired by IAC. It remains an independent brand.

October: Urbanspoon enters the reservations business with the launch of Rez.

December: TechCrunch reports that Yelp turns down Google's acquisition offer, which would have paid "around $550 million plus earnouts" for Yelp. Stoppelman would later tell the WSJ: "Yelp's continued success as an independent company suggests we made the right choice and nothing is more rewarding than charting your own course."


Jeremy Stoppelman talks to Charlie Rose, 2013. [Video: Charlie Rose]

2010

January: Yelp gets $100 million in funding from Elevation Partners, a private equity firm. Bloomberg quotes sources near the deal who say "the investment values Yelp at $475 million." Yelp claims 26 million unique visitors the month prior.

yelp-opentable.jpg

Screengrab: Yelp/Eater

June: Yelp integrates OpenTable reservations, allowing users to check availability and book reservations directly from a restaurant's Yelp page. Yelp takes another step closer to becoming a one-stop-shop for restaurant information on the web. Eater's analysis of the news: "Yelp claimed that this integration was based on user feedback, but really it was necessary for Yelp and OpenTable to partner and compete against Urbanspoon who just last month announced their RezBook iPad application that allows restaurants to book and manage reservations, as well as a pilot program in Seattle and Los Angeles called Rez that allows diners to book tables (Rez is to go national in 2010)."

Also in June, co-founder and CTO Russ Simmons steps down. TechCrunch reports he will remain in an "advisor role" and that he "remains a 'significant' shareholder in the company."

A parody of compulsive Yelping. [Video: YouTube]

2011

September: Google acquires Zagat and is now in the local review business. Stoppelman calls the purchase "a funny move."

Later this month, Stoppelman testifies about Google in a Senate antitrust hearing. He puts his written and oral testimony on the Yelp blog. Quote: "In some instances, Google simply excludes competitor results as a matter of design, not as a matter of objective, algorithmically-driven analysis."

Yelp Testimony by Luther Lowe

Yelp Verbal Testimony by Luther Lowe

October: Apple's new voice-controlled "personal assistant" Siri uses Yelp data for queries based on restaurants, bars, coffee shops, and the like.

November 17: Yelp files for an initial public offering of up to $100 million of Class A common shares. The Wall Street Journal breaks down the numbers and reports that from 2005 to 2010, Yelp had received $55 million in funding "from venture capital firms Bessemer Venture Partners, Benchmark Capital, DAG Ventures, and Elevation Partners" over the course of five rounds. Bessemer is the largest shareholder at 22.5%. Stoppelman holds 11.1%.

2012

Photo: @Yelp

February: An updated filing with the SEC show Yelp's plans to price its IPO shares at $12 to $14.

March 2: Jeremy Stoppelman rings the bell on Yelp's first day trading on the New York Stock Exchange. Mashable reports the stock "was up 64% to $24.58 per share midday."

May: At the end of its first quarter as a publicly traded company, Yelp has earned $27.4 million in revenue, but has lost $9.83 million. The LA Times describes the situation as "nothing to yelp home about, not worth a bad review either."

June: Microsoft partners with Yelp, incorporating Yelp's business reviews into Bing searches.

July: The first in the series of "Real Actors Reading Yelp Reviews" goes live on YouTube.

consumer-alert-yelp.jpg

Photo: Yelp

October: Yelp cracks down on businesses buying fake reviews with a "badge of shame."

In October Yelp acquires Qype for $50 million. TechCrunch describes Qype as Yelp's biggest competition in Europe. Together the sites garner 93 million monthly unique visitors and 32 million reviews, according to a Yelp blog post.

Also in October, Village Voice Media sues Yelp for using the phrase "Best Of," claiming: "Yelp has irreparably damaged the valuable reputation and goodwill of VVMH and its 'Best Of' marks."

2013

January: A Freedom of Information Act request unearths 700 complaints filed with the FTC against Yelp. The most common complaints claim that Yelp filters out positive reviews and allows negative reviews through, especially in cases where the vendor in question did not purchase advertising.

Also in January, Yelp adds health department scores to restaurant pages in SF and NYC. (By 2014, NYC health officials would be using Yelp to find unreported cases of foodborne illness.)

yelp-ordering.jpg

Photo: Yelp

July: Yelp launches its direct-from site ordering platform for take-out and delivery.

Also in July, OpenTable acquires Urbanspoon's Rezbook and partners with Urbanspoon to power their reservations. Later in the month, Yelp acquires SeatMe, an online reservation system, for up to $12.7 million.

At the end of the month, Yelp's financial reports show it is coming closer to profitability. After Q2, the company has lost $5.6 million, versus 2012's $11.7 million by midyear. Net revenue in Q2 sees a 69% increase over 2012's Q2 numbers.

August: Tips on Foursquare are reportedly growing faster than reviews on Yelp.

Yelp allows mobile reviewing for the first time.

September: New York cracks down on companies selling fake online reviews, fining 19 such businesses more than $350,000. A new study from Harvard Business School suggests nearly 16% of Yelp restaurant reviews are fake.

October: A group of Yelpers file a California class action lawsuit against Yelp, claiming that they are actually unpaid employees and legally deserve pay for their work.

Panzer v. Yelp Class Action

2014

January: A landmark decision by the Virginia Court of Appeals forces Yelp to reveal the identity of Yelpers who left bad reviews of Virginia businesses, on the grounds that the reviews are "not protected First Amendment opinions" if they were fake accounts or not actual customers. Yelp vows to protect free speech for anonymous reviewers.

February: A Virginia court rules that one woman's scathing Yelp reviews of a local contractor are defamation.

March: Yahoo incorporates Yelp ratings into its search results.

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Screengrab: Yelp SeatMe Official Site

May: Yelp makes good on its acquisition of SeatMe and launches Yelp Reservations, an online reservations service that restaurants can use for free as long as they "claim" their Yelp profile page.

July: Yelp introduces a video feature allowing users to add videos to their reviews. Later in the month — and following complaints from Yelp — Google revises its search to allow Yelp to be the top search results when the world "Yelp" is used in the search phrase.

Yelp reports a profit in the second quarter. As the Wall Street Journal reports, the profit means Yelp is "switching to the black side of the ledger for the fist time since the San Francisco business-review website made its market debut in March 2012."

Chefs read their restaurants' worst Yelp reviews at Aspen Food & Wine.

August: The current valuation of Yelp is $5 billion and the site claims over 130 million unique visitors monthly, reports USA Today. Stoppelman looks back: "It's easy to forget what life was like before Yelp, but when I travel to places we aren't (there), I'm reduced to once again picking restaurants based on how many people are inside ... those days seem like a long time ago. Consumers are determined to spend their money wisely now, and we're happy to be a part of that shift."

· All Yelp Coverage on Eater [-E-]