Small reviews site packs a loud Yelp

Locally written reviews site captures the attention of small-business owners and armchair critics across big U.S. cities.
Written by Stefanie Olsen, Contributor
San Francisco restaurant owner Mike Pierce has a morning ritual: he checks his bank balance, e-mail and Yelp.com.

Pierce's restaurant, the two-year-old Maverick in San Francisco's gritty Mission district, has 252 customer-written reviews on Yelp--a fast-rising social network for user-generated commentary and information on local businesses. And Pierce's likely read them all, drawing on praise and criticisms from regular diners to curtail recipes or even let go of wait staff.

"I take it seriously," Pierce said in an interview this week. "I hate to fire people, but these reviews helped give me backup to let go of someone who was consistently singled out for bad service."

In fact, Pierce takes it so seriously that he has even been known to joke with customers who have seen him spill wine, for example, saying: "You're not going to Yelp me, are you?"

To be sure, Yelp may be having its "verb" moment with locals in cities like Los Angeles and San Francisco, where the company started out three years ago. Though still relatively small compared with major local city guides like CitySearch, Yelp has managed to capture the attention of small-business owners--good and bad--and the writing devotion of hipsters and armchair critics across these big cities. So much so that in some circles Yelp has become synonymous for locally written reviews the same way Google once became a verb for searching the Web.

"It's a more of hipster-type review place, you know, down with corporate chain stores. You won't see a good review for California Pizza Kitchen."
--Sonya Yu,
Yoga teacher and Yelp regular

Yelp, based in San Francisco, has gained most of its traction in the last year, while expanding to cities like Seattle and Chicago and continuing to build buzz in San Francisco and Los Angeles. In June, it attracted just more than 1.4 million unique visitors to its site, up 124 percent from June 2006, according to research firm ComScore.

(The company uses Google Analytics to track its visitors and it estimated more than 4 million monthly visitors in May, up 400 percent in the last year. It now has more than a million reviews on the site, according to the company.)

In contrast, veteran city guide CitySearch drew about 15.7 million visitors in June, up 15 percent from the previous year, according to ComScore. Yahoo's Local Guide, the top-ranked site for local information on the Web, was down 12 percent over that period to 29.5 million unique monthly visitors.

Google may be giving Yelp a lift, too. The two companies promote each other with their mapping products. Yelp is in Google's developer network, meaning it uses the search giant's application protocol interface to serve local Google maps on its site. And Google features Yelp reviews prominently on its map service. Stephanie Ichinose, a Yelp spokeswoman, said she could not disclose details of their arrangement.

But analysts say that that relationship could point to a potential reason for Google to buy Yelp, especially considering that the search giant has been aiming to augment its social-networking tools with a potential acquisition. Its long been rumored that Google has sought to buy Facebook.

"Yelp is interesting because it's been able to distribute itself smartly and get people responding to each other in a way that ties them to the property," said Jennifer Simpson, senior analyst at the Yankee Group. "Social networking is a hole for Google and it makes sense for them to make an acquisition. Yelp might be a good one."

The privately held company was founded in 2004 by two former PayPal veterans, Jeremy Stoppelman and Russel Simmons. In that time, it has received $16 million in venture funding from Benchmark Capital and Bessemer Venture Partners. Like most social networks, Yelp still isn't profitable, but it's on an aggressive expansion schedule to capture more audience and advertisers. It plans to enter 25 more cities by mid-2008, Ichinose said.

The company makes money by charging business owners anywhere between $100 to $2,000 monthly to advertise on Yelp and maintain a Web page, Ichinose said. For the package price, business owners can tailor their page with slideshows, comments and menus; and their business listing will appear in results for related searches, such as a pizza place showing up in sponsored listings for the search term "pizza."

So far, the package works for people like Kimberly Jones, owner of waxing service Eyebrows to Die For. She pays Yelp $100 a month to be an "optimized" advertiser, with her own page. She said that on average, 7 out of her 10 new clients a month come from Yelp. "At first I was like 'what?' Now I get tons of business," she said.

Dan Strachota, an Oakland, Calif.-based writer and concert booker, has felt both sides of the sword on Yelp, as an employee of a maligned business and as a reviewer.

Late last year, he said he signed up on the service because he wanted to write about a bad experience with the owner of a local cafe in Oakland. "Finally, payback," he said. The business owner gave him guff when he hadn't spent the minimum $4 required to use the wireless Internet service at the cafe, according to Strachota, who said he spent another $3 on top of the $2.75 to stay. "It's not the money; it's really just the attitude of the person." But Strachota's rant on Yelp spiraled into an antagonistic back-and-forth with the cafe owner and his friends. The owner, for example, posted references to Strachota on his Yelp page, saying "We don't need customers like Dan S."

Strachota said he stopped the interchange when his friends asked him, "How old are you?"

On the flip side, Strachota works at a San Francisco club that has received some "wrongheaded posts," he said, and he's defended the place against attacks.

Such tit-for-tat is fairly common on Yelp and it reaches the corporate offices of the company. Yelp's Ichinose said that the company has received complaints from business owners to take down negative reviews, but so far, no lawsuits like other review sites have had to grapple with. Yelp's standard policy allows positive and negative reviews on the site, excluding write-ups that are hearsay or could be considered harassment to an individual, such as, "I dated that waitress. She's crazy and the restaurant is awful."

Some local reviewers have received threats of defamation from business owners themselves, which they talk about on discussion boards at Yelp.

But the fervent reviews and petty exchanges can be what attracts spectators like Sonya Yu, a San Francisco-based yoga teacher who doesn't post herself but regularly visits the site.

"It's a more of hipster-type review place, you know, down with corporate chain stores," Yu said. "You won't see a good review for California Pizza Kitchen." One downside Yu sees is that it's not useful in other cities like Las Vegas or Philadelphia, where she recently traveled and couldn't find a good restaurant on Yelp. And she also sees it being sort of cultish in San Francisco.

"It's definitely in San Francisco lingo and most of it has to do with bad service," she said.

Maverick's Piece, who has a frenetic personality, has drawn at least one bad review himself, but he said he's tried to take it in stride. After the restaurant first opened, his frantic manor made some of his customers nervous, and one of them wrote a scathing review.

"I'm a man and a Leo and I could have taken the attitude of 'screw him,' but I tried to become much more calm," he said. "Everyone thinks they're a reviewer, but sometimes there's truth in it."

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