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.

San Francisco restaurant owner Mike Pierce has a morning ritual: he checks his bank balance, e-mail and

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--good and bad--of small-business owners 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 became a verb for searching the Web.

"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."
--Jennifer Simpson
senior analyst, Yankee Group

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 slightly 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."

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