VV Show #46 - Jeremy Stoppelman of Yelp
Jeremy Stoppelman is the co-founder and CEO of Yelp, a site where users can write and share reviews of local businesses. Everyone's now a restaurant critic. However, local reviews were not the original focus, but just one of several features in the earlier versions of the site. Noticing the growth of this buried feature, Yelp re-tooled the site around reviews and hasn't looked back since. Does this story sound familiar? Jeremy's the former VP of Engineering at PayPal, which also had to drastically alter its business early in its life. Listen in to hear Jeremy's thoughts on growing a local enterprise, giving users and identity, and how to recognize and act upon the need for change.
1:45 Early Internet experience
- Joined PayPal at 22
3:10 Uniqueness of Paypal
- Always knew they were "doing something of value"
- Macro environment was the problem: surviving the bust
- IPOed when IPO's were not happening
- "The elephant in the room was how do we charge"
6:00 Switch to business school, but why?
- Interest in business strategy
- Wanted to start a company, but didn't feel he had the full toolbox
7:05 What was the value of B-school?
- Case studies, referenced to this day
- Yet, only stayed for 1 year
9:30 Yelp is born
- Fascinated with the local space
- Local hadn't happened yet on the Internet
- Yelp catalyst:sick and looking for a doctor, no good method to gage reputation
- "Word of mouth amplified"
11:06 Yelp, an evolution not a revolution
- Original idea: "It's the same concept, broadly, but we had a different focus"
- Find out who your friends use, if no responses, then reach out to a broader audience
- Reviews were an afterthought, "buried in the site"
- Looking at the site usage, some people jumped on the reviews
13:25 Earlier on, what did the company look like?
- Expected a long road, "sipping the cash"
15:25 How did you know when it was right to change the strategy?
- Passion for the problem
- Data tells the story
18:50 Please yourself
- "I built a site that worked for myself, and that translated well to other people"
- Used personal impressions from use to develop new features
19:30 Catering to a female audience
- Found that females were responding well to the site
- Altered the color scheme
- Softened the word Yelp with visual elements
- Effects were immediate
22:15 Strategy discussions
- Paid reviews? Only in the early stages of a city.
- Broad or focused?
25:12 Citysearch differentiators?
- Citysearch = editorial, Yelp = reviews
- Citysearch users are semi-anonymous, Yelp users have a profile and identity
26:40 How do you make it popular?
- Get it right, and people will spread it.
30:10 Yelp gets Googled
- Adapted overtime to search engine
- Early 2005, site was not crawler friendly
- Fixed search engine optimization, still paying off today
32:50 Expansion beyond the Bay
- Use Craigslist and other examples to locate ideal cities for local services
- Require cities and population that are "properly wired"
- Employs representatives in each major city
- Local reps and marketing staff seed the content
- But Yelp has a unique spin
37:18 Revenue model
- Sponsorship program provides an upgraded page for a business
- No editorial content (a la Citysearch)
38:42 Is Yelp a tough sell?
- Yelp users and business customers make the introduction by going to places they discover on Yelp
- Word of mouth makes it to the owners ears
- Existing positive reviews motivate owners to join
40:07 How do you scale a local business?
- "The short answer is we don't quite know"
- But building a sales force
- Small businesses don't spend a lot of time looking at innovative ways to market themselves
- They need to be reached out to
- Employing VC dollars to build the sales force
41:01 Current state of Yelp
- Raised $16 Million
- Just over 50 people
- "Growing as fast as we can manage"
- "Revenue's great"
- VC backed so not profitable, but a lot of potential in the model
43:20 Biggest challenges?
- "Not screwing it up"
- Hiring the right people
- Not moving too fast
- Most important: taking care of the community
45:45 Any desire to grow faster to secure a large buyout?
- Not really
- Always external noise, learned to ignore it a PayPal and focus on the product
- "We're one of the rare start-ups that actually does have a pretty crystal clear picture of what our total business looks like"
47:10 Words of wisdom
- "Be prepared for the ups and downs"
- Volatility goes down after time, and it's very rewarding past the hump
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Great job Greg! I hope this is a sign the painful (for me) VV hiatus is over :-)
You're damn good at this stuff.
Posted by: John P. at June 25, 2007 9:52 AM
Fantastic interview! I thoroughly enjoyed it, particularly Jeremy's note on customers driving the business and where it should go, as well as the need to create a great community of yelpers (focus on that first, making $ comes later).
Min, over at the other podcast :)
Posted by: Min at July 3, 2007 1:58 PM
A great interview. We are in the middle/late angel investment stage. Each day is filled with ups and downs and outside distractions like you described. We are staying focused on our vision and tactical goals to get to the next phase - VC land. Any words of wisdom based upon your VC experience? Our initial 'toe in the water' was eye opening. Feels like selling our souls is required until we have a product that is at a point where we may not need VC money. Where's the optimal intersection point?
Posted by: Jon Adler at September 20, 2007 2:00 AM
Nice podcast. What I find so interesting about this is that Yelp and Judy's Book were essentially the same service backed by VC funding, but yet Yelp is thriving while Judy's book took a dive. It could be attributed to a lot of things, but it is truly remarkeable the success Yelp has had.
Posted by: Josh at November 2, 2007 11:40 PM
Hi.. the world is wondering.. will there be any new VV podcasts soon?
Posted by: Ahmad Humeid at November 3, 2007 6:14 PM
Has this podcast stopped? No interviews for almost five months now.
Posted by: Ajay at November 22, 2007 1:06 AM
So why did Yelp Thrive and Judys book dive??
I'm fascinated to find out so any replies appreciated!
Posted by: Helen Gaynor at July 27, 2008 4:51 PM
Maybe it's because Judy's book seems for female centric.... It would turn me off as a man...
Great interview Greg!!!!!
Posted by: Kevin H at June 3, 2009 3:51 PM