Interesting article in the New York Times yesterday on why Yelp has been a success. It is relevant for a lot of startups here including TrustedPlaces and Qype.

First some stats – according to Comscore Yelp had 3.3m users in March, up 87% on a year ago. At the time of writing their Alexa is 808.

That is a good performance, to be sure, but it is too soon to call it a runaway success.

According to the NYT article there are two things that have made them successful where a large number of other firms have struggled (including the much larger Citysearch).

  1. A focus on the reviewer as the most important aspect of the site – they didn’t pay for reviews, or subordinate them to professional comment, but instead motivated reviewers through praise and attention from other users, including ratings of their reviews
  2. An initial focus on San Francisco which allowed them to get to critical mass

A religious focus on the early adopter (for Yelp the reviewer) and getting critical mass in a tight community are good strategies for any consumer internet service.

  • Yelp did pay for reviews in the early days of the service as I understand it. Also, they are yet to achieve any scale beyond San Fran and New York? Finally, the amount of capital invested has been huge – Trusted Places is run on a shoestring in comparison. Agree they have been good at making it ‘cool’ to add reviews there and building community though.

  • Yelp did pay for reviews in the early days of the service as I understand it. Also, they are yet to achieve any scale beyond San Fran and New York? Finally, the amount of capital invested has been huge – Trusted Places is run on a shoestring in comparison. Agree they have been good at making it ‘cool’ to add reviews there and building community though.

  • nic

    Thanks James – I have also wondered if Yelp is over-hyped. The NYT article criticises Citysearch for not having found a profitable business model, yet the same is also true of Yelp.

  • nic

    Thanks James – I have also wondered if Yelp is over-hyped. The NYT article criticises Citysearch for not having found a profitable business model, yet the same is also true of Yelp.

  • Helen Gaynor

    So can anyone tell me what is Yelps Business Model? And is it actually working?
    Thanks

  • Helen Gaynor

    So can anyone tell me what is Yelps Business Model? And is it actually working?
    Thanks