Yelp

Yelp Inc.

File:Yelp Logo.svg Yelp logo
Company type	Public
Industry	Internet, online reviews, social networking
Founded	2004 (2004)
Founder	Russel Simmons, Jeremy Stoppelman
Headquarters	San Francisco, California , United States
Area served	Worldwide (32 countries as of 2024)
Key people	Jeremy Stoppelman (CEO)
Products	Yelp.com website, mobile application, Yelp Guest Manager (table reservations)
Number of employees	Approximately 4,375 (estimated based on layoffs and furloughs mentioned)
Website	www.yelp.com

Yelp Inc. is a United States-based enterprise responsible for creating the Yelp.com website and its mobile application, which features user-generated evaluations of various businesses. The firm also manages Yelp Guest Manager, a service designed for reserving tables. Its main office is located in San Francisco.

Established in 2004 by ex-PayPal staff members Russel Simmons and Jeremy Stoppelman, Yelp has grown into a prominent platform for consumer-submitted business reviews. By 2010, the company had reached $30 million in revenue and hosted roughly 4.5 million reviews. From 2009 through 2012, Yelp broadened its presence into European and Asian markets. Following unsuccessful acquisition negotiations with Google in 2009, Yelp proceeded with an initial public offering in March 2012 and attained profitability two years afterward.

As of December 31, 2024, the platform contains around 308 million reviews and draws more than 76 million distinct visitors across desktop and mobile devices. Reports indicate that over fifty percent of its users have an annual household income above $100,000.

Yelp’s revenue model predominantly depends on online advertising income from businesses featured on its site. Nevertheless, the company has faced allegations of unfair conduct, including the preferential display of negative reviews for non-advertising clients and the prominent placement of competitor advertisements. Some advertisers have also complained about aggressive sales approaches by Yelp’s representatives. Furthermore, the presence of fraudulent reviews—both favorable and unfavorable—has posed challenges to the credibility of its review system, leading Yelp to adopt strategies aimed at identifying and curbing such astroturfing practices.

Origins (2004–2009)

Yelp was created in 2004 by former PayPal employees Jeremy Stoppelman and Russel Simmons within the business incubator MRL Ventures. The original idea centered on an email-based referral network, inspired by Stoppelman’s difficulty locating reliable online recommendations for a local healthcare provider. Max Levchin, co-founder of PayPal and founder of MRL Ventures, contributed $1 million in angel investment. The company name "Yelp" was coined by MRL co-founder David Galbraith due to its short length, ease of recall, and connotations linked to "help" as well as the yellow pages.

Initially, investors declined to support Yelp’s email referral system, which also failed to gain traction beyond friends and family users. Usage gradually shifted toward unsolicited consumer reviews through the "Real Reviews" feature. After a redesign in 2005 that introduced the recognizable Burst logo, the site experienced significant growth in popularity. Early financing rounds included $5 million from Bessemer Venture Partners in 2005 and $10 million from Benchmark Capital in 2006. The number of reviewers expanded from 12,000 in 2005 to 100,000 by 2006, with monthly visitors reaching one million by mid-2006.

Later investments consisted of $15 million from DAG Ventures in 2008 and a major $100 million infusion from Elevation Partners in 2010—divided into $75 million for equity buybacks and $25 million allocated to sales team growth. Between 2007 and 2008, monthly visitor counts rose from 6 million to 16.5 million as Yelp extended its operations from 12 to 24 cities. By 2009, the platform contained approximately 4.5 million reviews. In 2010, Yelp’s estimated revenue reached $30 million while employing close to 300 individuals.

Private company (2009–2012)

Yelp began its international expansion in 2009 by launching platforms in the United Kingdom and Canada, followed by the introduction of bilingual content for its French site in 2010. Between 2010 and 2011, the company extended its reach to Austria, Germany, Spain, and the Netherlands, resulting in a doubling of its international user traffic. In 2011, Yelp entered the Australian market through a collaboration with Telstra, offering one million business listings despite encountering initial technical challenges. By the close of 2012, Yelp was active in 20 countries, including Turkey and Denmark, and had established its first Asian presence with sites in Singapore (2012) and Japan (2014).

In December 2009, Google engaged in acquisition talks to purchase Yelp for approximately $500 million but withdrew after Yahoo presented a $1 billion bid. Both negotiations were ultimately discontinued due to conflicts between Yelp’s executive team and board members. In June 2015, Yelp released research accusing Google of manipulating search algorithms to prioritize its own services.

Yelp launched the Yelp Deals feature in April 2011 but scaled back operations by August amid intense competition within the daily deals sector. In September 2011, the Federal Trade Commission initiated an investigation into claims that Google used Yelp’s content without authorization and biased search results toward Google Places. To avoid an antitrust lawsuit from the FTC, Google agreed in January 2014 to allow companies like Yelp to opt out of data scraping on its platforms.

Public entity (2012–present)

Following its initial public offering (IPO) filing in November 2011, Yelp began trading on the New York Stock Exchange on March 2, 2012. That same year, Yelp acquired Qype—its largest European competitor—for $50 million. In 2013, CEO Jeremy Stoppelman voluntarily reduced his salary to $1. The company also purchased SeatMe, an online reservation startup, for $12.7 million during that year. Despite an increase in revenue—reaching $55 million in Q2 2013—Yelp had yet to achieve profitability.

During 2012 and 2013, Yelp relocated its headquarters to 140 New Montgomery Street in San Francisco. The firm reported profitability for the first time in Q2 2014, driven by growth in advertising revenue and adjustments to Google's local search algorithm. That year also marked expansion into Mexico, Japan, and Argentina alongside acquisitions of German restaurant review platform Restaurant-Kritik and French site CityVox to bolster its European footprint.

In February 2015, Yelp acquired Eat24, an online food-ordering service, for $134 million but later sold it to Grubhub in August 2017 for $287.5 million. This transaction included a partnership to integrate Grubhub’s delivery options directly into Yelp profiles.

Towards the end of 2015, Yelp introduced a "Public Services & Government" section featuring official pages from government entities such as the Transportation Security Administration. The platform also began displaying consumer alerts related to restaurant hygiene ratings. Studies have demonstrated that Yelp reviews can assist in detecting foodborne illness outbreaks.

On November 2, 2016, Yelp announced a strategic reduction of its international operations and ceased further expansion outside North America. This decision led to layoffs affecting approximately 175 employees—around 4% of the workforce—primarily within overseas sales and marketing teams. Subsequently, international personnel focused mainly on engineering and product management roles.

In early 2017, Yelp expanded through acquisitions of Nowait—a restaurant reservation app—for $40 million and Turnstyle Analytics—a Wi-Fi marketing firm—for $20 million.

The COVID-19 pandemic severely disrupted Yelp’s business activities; search queries decreased by as much as 83%, prompting layoffs of roughly 1,000 employees and furloughs impacting about 1,100 staff members in April 2020. Executive compensation was reduced by 20–30%, with CEO Stoppelman opting to waive his salary for the remainder of that year.

In September 2021, Yelp downsized its headquarters by moving to a smaller office located at 350 Mission Street in San Francisco through a sublease arrangement with Salesforce. By mid-2023, the company had closed offices in Phoenix and Hamburg due to limited usage and had previously shut down locations in New York City, Chicago, and Washington D.C. Currently, Yelp maintains one U.S.-based office in San Francisco along with operational centers in Toronto and London. These consolidations are projected to yield annual savings near $27 million over fiscal years 2023–24.

As of February 2024, Yelp's platform features reviews for businesses across 32 countries worldwide.

Features

Yelp.com operates as a community-driven platform focused on local business reviews and social networking. It provides dedicated pages for individual businesses where users can assign ratings from one to five stars. Businesses have the ability to update their contact information, operating hours, and promotional offers. Users engage by responding to reviews, organizing events, and participating in social interactions.

Around 80% of businesses listed hold ratings of three stars or above. The reviews range widely, encompassing both personal experiences and creative expressions. Since 2014, the platform has incorporated "thumbs-up" votes from users to emphasize favored reviews. The "Review of the Day" feature has been part of Yelp since 2008.

Mobile devices account for the majority of searches, making up 72% of user activity. Yelp introduced its iPhone application in December 2008, subsequently adding capabilities such as the augmented reality Monocle feature in 2009, check-in options in 2010, and reservation functionalities through acquisitions like SeatMe in 2013. Prior to this, reservation services were linked with OpenTable.

In 2013, Yelp broadened its offerings to include food ordering and delivery services, hygiene inspection ratings, and spa appointment bookings. Its data has been integrated with Apple’s Siri and iOS Maps starting in 2012. By 2014, Yelp expanded booking options to cover manicures, flower deliveries, golf outings, legal consultations, and hotel stays through a partnership with Hipmunk.

The company launched a cash-back initiative in 2016 at select U.S. restaurants via Empyr, which connected credit card transactions with advertising incentives offering 7–10% returns. In 2017, Yelp introduced a Questions and Answers feature allowing users to pose venue-specific queries.

During the COVID-19 crisis in 2020, Yelp created a dedicated section for businesses to communicate health guidelines and operational updates; by January 2021, customers were able to leave detailed feedback regarding safety protocols.

Recent developments include the rollout of Yelp Guaranteed in 2023, providing refunds up to $2,500 for certain projects; enhancements powered by artificial intelligence for search functionality; support for video review uploads; and in April 2024, the launch of Yelp Assistant, an AI chatbot designed for professional recommendations. Additionally, Yelp released an API that allows developers to integrate its data into external applications.

Features for businesses

Since 2008, business owners have had the option to publicly reply to reviews on their profiles or communicate privately via messaging tools. This engagement often fosters improved customer relationships and can lead to revised reviews reflecting more positive feedback. Businesses can "claim" their listings to respond directly to reviews and access analytics on visitor traffic. Yelp also provides a "check-in" feature that enables companies to offer discounts to repeat customers. A mobile app specifically for business owners was launched in 2014 to facilitate profile management and review responses while on the move. Furthermore, businesses have the ability to report reviews that breach content policies.

Advertising constitutes Yelp’s main revenue source through sponsored listings and targeted ads aimed primarily at small enterprises. Advertisers invest in premium placements within search results or competitor profiles, contributing to a 30% annual increase in ad revenue during 2016. Previously, Yelp offered sponsored "favorite reviews" that appeared prominently but discontinued this practice in 2010 due to concerns over pay-for-positive-review allegations.

In June 2020, Yelp introduced a feature allowing businesses to identify as black-owned to improve visibility amid rising consumer demand. This initiative resulted in over 2.5 million searches for black-owned establishments between May and July 2020 and saw a surge of approximately 2,400% in such searches throughout that year. By August 2021, Yelp had added filters enabling users to find businesses based on COVID-19 safety practices including vaccination requirements.

Relationship with businesses

A 2011 investigation by Harvard Business School demonstrated that each additional "star" in a Yelp rating could influence a company's revenue by 5–9%. Research conducted in 2012 by economists at University of California, Berkeley indicated that increasing a restaurant's rating from 3.5 to 4 stars resulted in a 19% boost in reservations during peak hours. Furthermore, a 2014 survey involving 300 small business proprietors by Yodle found that 78% expressed concern about negative feedback, while 43% questioned the authenticity of online reviews due to lack of customer verification.

Controversy and litigation

Yelp’s interaction with small enterprises is multifaceted and often contentious. Critiques focus on the authenticity of reviews, accusations of manipulating ratings to enhance advertising revenue, and issues surrounding reviewer confidentiality.

Astroturfing

With Yelp’s growing market dominance, the incidence of fabricated reviews—commonly referred to as "astroturfing"—created by business owners or rivals has escalated. An analysis by Harvard and Boston University examining 316,415 reviews from Boston revealed that fake reviews increased from 6% in 2006 to 20% by 2014. Yelp employs a proprietary algorithm that identifies and filters approximately 18% of reviews deemed suspicious. This filtering system removes questionable content from public view in order to uphold review integrity according to the platform’s Terms of Use. Originally developed early in Yelp’s history after detecting fraudulent postings, this filter sometimes excludes genuine feedback, which has led to complaints from business owners. New York Attorney General Eric Schneiderman acknowledged Yelp as having the most stringent astroturfing detection among crowd-sourced platforms. To prevent manipulation, Yelp does not reveal the specifics of its filtering process.

Yelp also undertakes undercover operations to identify businesses engaging in fake review practices. In October 2012, consumer warnings were added to 150 profiles suspected of purchasing reviews. In June 2013, Yelp initiated legal action against BuyYelpReview/AdBlaze for producing paid fraudulent reviews. Additionally, Yelp filed suit against an attorney allegedly involved in orchestrating review exchanges among law firms; despite efforts to dismiss the case, it proceeded. In September 2013, partnering with the New York Attorney General’s Operation Clean Turf, Yelp helped uncover 19 astroturfing operations. A jury awarded damages in 2017 to a jeweler who suffered from a competitor’s malicious negative review posted on Yelp.

In December 2019, a court ruling upheld Yelp’s transparency regarding its review recommendation system and found no evidence of deceptive conduct. This decision stands among several judicial affirmations supporting Yelp’s operational model and approach to managing reviews.

Alleged unfair business practices

The relationship between Yelp and small business owners has often been fraught with tension amid claims that Yelp manipulated review visibility to favor advertisers. Some business owners alleged that sales representatives proposed removing or suppressing unfavorable reviews in return for ad purchases. Others reported that negative feedback was emphasized while positive comments were hidden prior to sales engagements. Although Yelp acknowledged permitting advertisers to highlight a "favorite review" marked as sponsored at the top of their profiles, it denied broader review manipulation and discontinued this practice in 2010.

Multiple lawsuits accused Yelp of extortionate tactics by pressuring businesses into buying ads for improved review placement; however, all such cases were dismissed. A class-action suit filed in 2010 claimed Yelp demanded payments to conceal negative reviews but was dismissed in 2011 under protections granted by the Communications Decency Act. Subsequent appeals upheld this dismissal, ruling that even if review manipulation occurred, it did not amount to extortion.

In response to concerns from business owners about removed or fraudulent reviews, Yelp organized town hall meetings across major U.S. cities in 2013. Research from Harvard Business School found no meaningful correlation between advertising expenditure and favorable reviews. Between 2008 and 2014, the Federal Trade Commission received over two thousand complaints related mainly to unfair or fake reviews on Yelp; nonetheless, no enforcement actions followed after investigation.

Criticism has also been directed at Yelp’s practice of selling advertisements for competitors displayed above business listings and charging fees for their removal. These allegations are prominently featured in the 2019 documentary Billion Dollar Bully.

In a landmark decision during Hassell v. Bird (2018), the California Supreme Court ruled that businesses cannot compel Yelp to delete defamatory user reviews, thereby reinforcing protections for online platforms.

A 2019 exposé revealed that Yelp occasionally replaced restaurants’ direct phone numbers with GrubHub contact numbers on listings. This rerouting funneled calls through GrubHub and led to charges under marketing agreements with restaurants—raising questions regarding transparency within Yelp’s commercial practices.

Political commentary and reviews driven by political motives

From 2012 through 2015, Yelp encountered situations where user feedback incorporated political remarks concerning businesses or their proprietors, frequently surfacing after events with political sensitivity. These politically charged evaluations occasionally overwhelmed a business’s profile. To preserve the platform’s credibility, Yelp took measures to eliminate and suppress such reviews.

Legal challenges surrounding review disclosures

By 2014, Yelp was receiving approximately six subpoenas each month requesting the identities of anonymous reviewers, mainly initiated by businesses engaged in legal disputes over unfavorable critiques. In 2012, courts in Virginia found Yelp in contempt for declining to reveal reviewer identities in a lawsuit involving a carpet-cleaning company. Yelp appealed this decision to the Virginia Supreme Court in 2014, backed by prominent technology firms advocating for online free speech protections. The court ultimately determined that Yelp, as an out-of-state entity, was not subject to subpoena by Virginia’s lower courts.

Also in 2014, California passed legislation banning businesses from including "disparagement clauses" in contracts that penalize consumers for posting negative online evaluations, thereby strengthening safeguards for customer expression on platforms like Yelp.

Investigative reports

A 2020 investigation by Business Insider highlighted concerns related to Yelp’s internal culture, ethical standards, and sales tactics. Additionally, an April 2022 article from Vice revealed that certain members of Yelp’s Elite community profit by marketing their review-writing status.

Community

According to Inc. Magazine, the majority of Yelp contributors ("Yelpers") write reviews as a form of self-expression, to hone their writing skills, or to creatively interact with businesses. Incentives include earning achievement badges, being among the first to evaluate new establishments, and attracting attention from other users. Reviews often contain engaging content and accumulate "thumbs-up" endorsements that enhance their prominence. Daily "Review of the Day" selections are determined through user voting. Demographically, many reviewers are digitally literate adults aged 18–25 or suburban baby boomers.

Users are encouraged to post under their real names accompanied by photos. The yearly "Yelp Elite Squad" invites individuals based on the quality and quantity of their reviews; nominations require verified identities and exclude business owners. This group is overseen by a council and consists of several thousand members who receive badges and benefits such as exclusive event invitations and gifts. Originating from Yelp-hosted social gatherings in 2005, the program was officially established in 2006. By 2017, there were more than 80 local Elite Squads across North America.

Yelp employs upwards of 80 community managers who coordinate events for top contributors, foster community engagement, and provide educational sessions for small business proprietors. While anonymous reviewing is permitted, Yelp promotes identity disclosure to build trustworthiness and authenticity.

See also

• Crowdsourcing
• Reputation management
• You're Not Yelping

External links

• Official websites
  • United States
  • United Kingdom
• Yelp Reservations official website