About seven years ago I sat with then Yahoo Local GM Paul Levine in a restaurant — it might have been in San Francisco or maybe New York — and had a conversation about how to generate more local reviews. This was before Yelp, InsiderPages, Judysbook, etc.
We discussed that developing more “community” around reviews was key. And when Yelp later launched this is exactly what it did: put a human face on reviews for trust and created community around reviews, both online and off. In fact the offline part was key to success for Yelp in the early days.
That sense of community generated momentum that built a larger body of reviews on Yelp vs. its competitors. And that reviews volume became self-perpetuating to a significant degree. Today Google is quickly amassing reviews and ratings from its own users; however they tend to be much “thinner” by comparison: stars and quick tips or one liners.
In the early days of Yelp in 2005 and 2006, you had the sense that there were real people writing the reviews. That’s the tagline as well: “real people real reviews.” There were also lots of community interaction tools on Yelp. Unlike Citysearch and Yahoo Local, Yelp had come into the world during the “Web 2.0” era and the rise of MySpace and Facebook. Community was just a part of everything you were supposed to do.
Matt McGee at SEL offers an “academic” take on why Yelp “won” and his own views about how Google is copying Yelp’s playbook with HotPot, now folded into Places.
I’ve told Yelp that Places (especially on Android) is a threat to the company in mobile because it’s a good product and so well integrated into search and Google Maps. Yelp’s long form reviews content doesn’t play as well in mobile either. However Yelp’s brand is strong and the company says that the rise of Google Places — there are reportedly now five million “reviews” on Places — hasn’t impacted it.
Yelp spurned Google’s substantial takeover offer and is moving toward an IPO. In order to successfully go public Yelp will have to show significant revenue growth. It’s not clear to me, however, whether revenue growth at this point is commensurate with the growth of consumer reviews.