How Yelp works some more……. a totally delusional, mindless, idiotic ramble that I choose to pull from the threads *there* to this site *here* for multiple reasons. If you need to know the reasons, just make up your own… they will suffice. =) I just go back to it a lot and my searching here is better than the search function there.
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They make the rounds to venture capitalists (like some people that love yelp and actively participate) and get equity through that. They look for David Cowan and Tim Draper types to flush the yelp account with money…. and yelp uses it as operating funds. Earlier in Feb they got another $15 Million of VC funding from DAG, totaling something like $30Million in four rounds of VC exploration. Revenue is widely state to be less than $10 Million.
the ad model does not bode well for 2.0, as Facebook was massively overvalued and is having money problems
https://www.techcrunch.com/2008/10/31/facebooks-growing-problem/
and Stopplemen has suggested that “But revenue from these sources isn’t enough to make Yelp profitable, Mr. Stoppelman said.” (https://bits.blogs.nytimes.com/2008/05/12/why-yelp-works/)
If Yelp isn’t able to secure VC funding through 2010, the economy is such that it simply will not be there later. Depending on how much money yelp is burning through, I really can understand why their sales people are aggressive….
Unlike linkedin I don’t think this VC funding is going in the bank:
https://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/22/BUAI141O97.DTL
But the problem here is that the ad and business model does not offer enough cash to prop up the coffers enough for it to be profitable. And… yelp is *not* profitable.
YET. maybe. hmmm….Period.
I think the linked comment in this article from 2006 says it best:
https://www.techcrunch.com/2006/10/04/yelp-secures-10-million-more-for-local-reviews/#comment-243531
the end is that there are people out there with a SHIT TON of money looking to fund some ingenious ideas. Those people are not idiots…. and they watch Yelp very, very closely. I am sure it will be fine, but this quote from Jeremy, and actions I have seen in the last couple months, suggest the leadership is not as strong as it should be.
https://venturebeat.com/2006/10/02/silicon-valley-the-industry-of-cool/
“When asked where they want to be in five years, Stoppelman responds: “Sitting on top of a pile of money … [in unison with Simmons] … surrounded by women! Yeah! [high five]”