Tech Watch: Yelp!—PayPal co-founder pops first venture out of incubator
By Tom Foremski - October 12, 2004
As reported here nearly a week ago, Max Levchin, the hugely successful co-founder of PayPal, has launched the first startup out of his MRLV incubator.
I would describe Yelp as a type of “ Friendster Yellow Pages” in which you can ask friends, and friends of friends, for a good recommendation on a restaurant, plumber and other such stuff.
Personally, I like to keep a lot of that info to myself, or as Yogi Berra once said, "Nobody goes there anymore--it's too crowded."
Max believes his team has spotted a huge business opportunity. Although Max is chairman of Yelp, he says he doesn’t want the Max brand to obscure the achievements of the Yelp team. “The vast majority of the people involved are close and long-time friends of mine,” Max said. They are also mostly former colleagues of his at PayPal. Jeremy Stoppelman, who heads up Yelp, used to run the engineering group at PayPal.
Here is the Yelp pitch:
“Yelp! is a simple online tool for people to ask their friends for quick help in finding restaurants, dry-cleaners, and any other local service. This is already exactly what happens when you ask friends for help via email, all we've done is taken it to an entirely new level.
The process is made much more effective by adding friends of friends into the mix, and much more convenient with features that enable faster, more complete responses, caching previous answers, and making the whole process very 'single-click.'
What we are doing to the 'hey, does anyone know a good...' type email is the same thing Evite did to email party invites."
The revenue model? Grabbing a chunk of that fat Yellow Pages market, and the billions local businesses spend on local advertising. The competition? I would say damn near everybody. Google, Yahoo, and a lot of other online companies, such as Ingenio, are trying to get a piece of the "local business" pie. CitySearch, for example, has had a very similar service in place for a long time.
[My venture also seeks to target local people and local businesses through media based products and services--such as this web site and others.]
Those trying to profit from this “local business” market are approaching it from different directions. Yelp has taken the social network approach of Friendster, Tribe or Linked-In.
But what is to stop those already established social networks from adding such referrals as a feature of their service? Nothing at all. In fact, Tribe yesterday offered a $25 gift certificate to its San Francisco based members if they would take on a role of referring their friends to products and services.
I wouldn't write off Yelp too soon. Success is all about execution--not being first to market. Coming late into the market enables a company to learn from the mistakes of others, and figure out how to do it cheaper and better.
And Yelp has a very simple user interface--hugely important to the success of any consumer online service.
Check it out at Yelp.com.
By Tom Foremski - October 12, 2004 | Permalink | Comment
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Comments (2)
I'll be the downer here - Yelp is too much of a me-too product in a crowded category for a start-up - it's just going to require too much marketing to get above the noise of the other social networking companies, and they won't have the money or the uniqueness to help them out.
All of this is really starting to feel like 1998-99 where people put together plans around marketing concepts rather than around great products. Yelp, at the end of the day, is a solution in search of a problem. How often do I need references or have the time to plug in references? How many times am I going to give up my friend's emails before they start getting annoyed? Getting silly again....
Posted: October 13, 2004 7:11 AM
I agree, to a point, with Damian.
Yelp.com is launching a almost a week after Insider Pages launched pre-Web 2.0 conference. Here's the C/Net story .
Beyond Insider Pages, Yelp is going to face competition from Judy's Book, Craigslist, Friendster (desperate to find a real business model), Infospace, among others.
Posted: October 13, 2004 1:45 PM