Why Yelp works
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).
- 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
- 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.
May 13th, 2008 at 11:02 pm
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.
May 14th, 2008 at 8:48 am
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.
July 27th, 2008 at 9:45 pm
So can anyone tell me what is Yelps Business Model? And is it actually working?
Thanks