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Yelp Files For $100 Million IPO

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Re: Yelp Files For $100 Million IPO

#41

Post by derwiki »

mkr-hn wrote: post #30
betterlabs wrote: post #28

Yelp is an awesome service, but I am surprised to see that they are still not profitable. Considering an annual revenue run rate of approx. $70m, I am wondering what costs them $70m a year to run the site - with most online businesses salaries and marketing are the biggest expenses and considering Yelp's amazing organic rankings, I doubt they are buying a lot of traffic. Any idea what the other big costs are? Sales t…

Probably paying people to go out and try places to review. Organic traffic (and ad revenue) comes from having content, so it's a good investment.

People are addicting to writing reviews -- some have as many as 3000, with "Elite" being the only reward.

Re: Yelp Files For $100 Million IPO

#42

Post by blantonl »

wavephorm wrote: post #36
earl wrote: post #11

Yelp seems like another business that would have worked much better for the users as a nonprofit ala craigslist (I know craigslist isn't a nonprofit but it's more or less run as one.) See the sporadic bursts of drama about businesses being forced to buy ads on yelp to influence reviews [1:3]. You have to wonder what they're going to do to get enough revenue to support their desired $1-$2B valuation. [1] http://www.cb…

But you're forgetting that this time it's different. With social networks, you don't need a business model. Because of the network effects, and increasing number of mobile devices, they will be able to leverage the cloud and produce real-time location-based analytics. So, as you see, Yelp doesn't require a conventional business model to have a multi-billion dollar valuation.

But you're forgetting that this time it's different.

I'm betting this quote was used in the Color pitch-decks to Venture capital prospects.

Re: Yelp Files For $100 Million IPO

#43

Post by mbreese »

wavephorm wrote: post #36
earl wrote: post #11

Yelp seems like another business that would have worked much better for the users as a nonprofit ala craigslist (I know craigslist isn't a nonprofit but it's more or less run as one.) See the sporadic bursts of drama about businesses being forced to buy ads on yelp to influence reviews [1:3]. You have to wonder what they're going to do to get enough revenue to support their desired $1-$2B valuation. [1] http://www.cb…

But you're forgetting that this time it's different. With social networks, you don't need a business model. Because of the network effects, and increasing number of mobile devices, they will be able to leverage the cloud and produce real-time location-based analytics. So, as you see, Yelp doesn't require a conventional business model to have a multi-billion dollar valuation.

I honestly can't tell if you're being serious or sarcastic.

Re: Yelp Files For $100 Million IPO

#44

Post by mbreese »

derwiki wrote: post #39
pbreit wrote: post #35

Earlier quoted context omitted.

It makes no sense to shoot for profitability when you are growing rapidly. Yelp has only just started expanding outside the US. It's cash is much better spent on growth than sitting in the bank.

Amazon did the same thing, if you remember their end of Q3 statement -- instead of profit, they re-invested in themselves (probably Kindle related purchases to have a bigger Q4).

That's not a good analogy. Amazon made a profit, they just chose to reinvest it in infrastructure. The above mentioned companies are still losing money (I believe).

True, it can be a good decision for a starup to optimize for market share first, profitability second. But even an IPO only gives you so much runway. Eventually you need to start turning a profit. And the longer you emphasize market over profit, the bigger the whole you've dug for yourself.

Re: Yelp Files For $100 Million IPO

#45

Post by bomatson »

wavephorm wrote: post #36
earl wrote: post #11

Yelp seems like another business that would have worked much better for the users as a nonprofit ala craigslist (I know craigslist isn't a nonprofit but it's more or less run as one.) See the sporadic bursts of drama about businesses being forced to buy ads on yelp to influence reviews [1:3]. You have to wonder what they're going to do to get enough revenue to support their desired $1-$2B valuation. [1] http://www.cb…

But you're forgetting that this time it's different. With social networks, you don't need a business model. Because of the network effects, and increasing number of mobile devices, they will be able to leverage the cloud and produce real-time location-based analytics. So, as you see, Yelp doesn't require a conventional business model to have a multi-billion dollar valuation.

I think I count 15 buzzwords

Re: Yelp Files For $100 Million IPO

#46

Post by tryitnow »

Wow, I knew there was some people viewed Yelp negatively, but judging from the comments here, Yelp has a credibility problem more serious than I realize.

The thing that I've found Yelp most useful for nowadways is little tidbits of useful information like store hours and the key combinations to Starbuck's restrooms (I hate having to ask to go the restroom like a 4 year old).

Re: Yelp Files For $100 Million IPO

#47

Post by pg_bot »

pbreit wrote: post #35
pg_bot wrote: post #27

Why are all these recent tech companies that have gone through an IPO not able to turn a profit? Groupon, Pandora, LinkedIn, and now Yelp are all valued so highly yet they are not making money off of their services. If you have been in business for over 5 years and don't make a profit when are you expecting to?

It makes no sense to shoot for profitability when you are growing rapidly. Yelp has only just started expanding outside the US. It's cash is much better spent on growth than sitting in the bank.

How do you know that your rapid growth isn't a result of your service being unprofitable? Wasn't that the lesson that we were supposed to learn with pets.com and kozmo? Also I believe that profitability and rapid growth are not mutually exclusive. I understand the theory of operating at a loss, but it leaves very little room for uncertainty in the marketplace. If you have new competition, capital dries up, or you make any sort of mistake, the company could go belly up. I wouldn't want to invest in any company unless it could show a clear path to becoming profitable.

Re: Yelp Files For $100 Million IPO

#48

Post by rishi »

Yelp is 1 of 3 apps on my Android that I actually use. They have the best mobile experiences for reviews about a restaurant before you eat there. They have built a strong brand and I hope they do more with it. I for one, am really excited about their IPO.

Re: Yelp Files For $100 Million IPO

#49

Post by jerf »

tryitnow wrote: post #46

Wow, I knew there was some people viewed Yelp negatively, but judging from the comments here, Yelp has a credibility problem more serious than I realize. The thing that I've found Yelp most useful for nowadways is little tidbits of useful information like store hours and the key combinations to Starbuck's restrooms (I hate having to ask to go the restroom like a 4 year old).

For better and for worse, we are not representative of the population at large. My wife... has never heard of Yelp, so I suppose that's not the most positive sign for them either... but she certainly doesn't hate them.

Re: Yelp Files For $100 Million IPO

#50

Post by bkbleikamp »

betterlabs wrote: post #28

Yelp is an awesome service, but I am surprised to see that they are still not profitable. Considering an annual revenue run rate of approx. $70m, I am wondering what costs them $70m a year to run the site - with most online businesses salaries and marketing are the biggest expenses and considering Yelp's amazing organic rankings, I doubt they are buying a lot of traffic. Any idea what the other big costs are? Sales t…

3 offices (SF, NYC, Phoenix), approaching 1000 employees, servers, marketing costs, etc. — gets expensive.
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