Why Social Media Kills The Competition – Yelp.com Case

I just came back from a trip to San Francisco and apart from having a great time I discovered a new social media site that just blew my mind and blows the competition away. Yelp.com is not a new idea by any stretch of the imagination, i mean reviews of local restaurants, nightlife, bars, businesses etc. hasn’t that been done to death? Citysearch, for instance was founded in 1995 by idealab and you would imagine would have cornered the market in local reviews, right?

We created yelp expecting to find all these cool local businesses, and what we found was a bunch of cool local people (from the user generated documentary at the end of this article)

Yelp vs Zagat vs CitySearch

Yelp.com may not be as big as citysearch yet, but at 2 years old it is growing at an enormous rate, and based upon my experience the quality and reliability of the reviews puts everything else in the shade. I mean, I had never heard of Yelp before, and somehow ended up finding the most amazing sushi restaurant through it. The sushi restaurant I found, via google’s municipal wifi in Union Square (SF), was called “sushi zone“, hardly visible from market street, only open 5pm to 10pm, and the line starts forming before 5, what a treat. The person I was standing in line next to said he had lived in San Francisco for several years before he found this place, and I had only been there for 2 days, and it was brilliant. Interestingly Sushi Zone garnered 77 reviews on yelp and a 4.5 out of 5 star rating, Citysearch on the other hand had only had 17 reviews, and although still a healthy 9.5 out of 10 rating (remember citysearch is 11 years old and yelp is 2).

Well, needless to say my experience just led me to be curious as to how this site got so good so fast in an area with some incredibly well established players. Here’s my summary of ideas that I think any social media effort needs to pay attention to:

Reward The Behavior You Want To Encourage

yelp_32cropWhat can I say, if you want the community to do good work then provide a mechanism to motivate good work. Too many organizations just reward and measure quantity, but if you reward and measure quality and you will get it back ten fold. Yelp has done an amazing job of measuring and rewarding the right things. Apart from counting the number of reviews members have done, Yelp gives special kudos for being the first person to review a location. That IMHO is a little stroke of genius as I’m sure the first review of a location is usually the hardest one to get

Get Bloggers Involved

The yelp widget provides a little map that bloggers can embed showing locations they have recently reviewed.

With 1.2 million incoming links from 14,000 blogs, according to technorati, you establish quite a foot hold

Trust Should Be Built In

The mechanisms that reward good quality also raise the level of trust.

“We’ve created a trust mechanism with Yelp,” Stoppelman says. “Customers can make the decision to patronize better businesses, and local businesses are able to compete with larger ones.

Be passionate and participate

If you and your employees are not part of the community then who is, take a look at the CEO’s profile

CEO Stoppelman spends two to three hours a day surfing the site, writing reviews and complimenting people. He said he’s found gems like Red Box Sushi in the Tenderloin, Mefhil Indian Cuisine on Folsom and Canteen in Nob Hill thanks to other users.

Sell Out Selectively

Communities don’t mind if you sell out as long as you do it with their interests at heart, we all know you’ve got to make a buck.

Yelp is also highly selective about the advertisements it will accept — only businesses with a minimum of a 3-star user review rating are allowed. Though the privately held company has yet to turn a profit, 60 percent of yelpers are between the ages of 26-35, a highly desired demographic for advertisers. In November, Bessemer Ventures provided Yelp with $5 million — its second round of funding.

What does all this add up to? Well if you do a search on google for “yelp” the third search result is “Courtney P at http://courtney.yelp.com“. Her profile provides a great example of what yelp does to build community and reward valuable participation. Courtney has reviewed 33 restaurants so far and according to the community at large 18 were Useful, 3 were Funny, and 8 were Cool. She has 36 friends, 2 fans, and 5 “firsts” (you get kudos if you are the first to review a restaurant). All of that adds up to being an “elite” member which I think gets you invited to some cool parties.


Want to know more about Yelp.com, watch the user directed and created video:

By Katie Zarling Buono

One potential scenario: Google buys yelp, merges it with dodgeball

This entry was posted in Marketing. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.


  1. Posted August 1, 2006 at 4:30 pm | Permalink

    I checked with Alexaholic, and at the rate that Yelp is increasing, and CitySearch is decreasing, Yelp should pass Citysearch in the next few months.

  2. karl long
    Posted August 1, 2006 at 4:39 pm | Permalink

    Thanks Mack, they sure are growing at an incredible rate, and when you consider that they have been primarily “bay area” for the first couple of years it’s almost unfair to compare them to citysearch which is hundreds of city’s if not countries. IMHO Yelp nailed it and will smoke citysearch, zagats, and more.

  3. Posted August 2, 2006 at 10:40 am | Permalink

    Great post Karl. One thing that I find interesting is how travel review sites like Yelp, which are great for aggregating user contributed content and opinions, might also find a way of credibly merging other content such as semi-pro videos from sites like Turnhere.com, which I wrote about here. If Yelp.com can find a way to integrate content like this while still setting it apart in the same way Wikipedia lists “external links” – I believe Yelp.com can really become the best go-to resource for all kinds of travel information online.

  4. karl long
    Posted August 2, 2006 at 10:53 am | Permalink

    Hey Rohit, thanks for that link, turnhere.com is a very interesting example, sort of geotagged video. It would be great in my opinion if yelp.com actually was able to “mashup” geotagged content related to it’s reviews, take zooomr.com photo’s, turnhere.com videos etc.

    Also, great implications for mobile social media (are you listening Paul)



  5. Posted March 9, 2007 at 5:47 pm | Permalink

    Great article Karl. Yelp and Dodgeball would be really interesting actually. I currently in Fremont but I’m up in the city enough that I’ll check out some of the places you’ve Yelped already!


  6. Posted May 10, 2010 at 11:48 pm | Permalink

    To buy aidaihua online.

3 Trackbacks

  • By Anonymous on August 1, 2006 at 3:41 pm

    Why Social Media Kills The Competition – Yelp.com…

    Karl long takes a look a the relatively new competitor to citysearch, yelp.com and comments on what he thinks any social media effort needs to pay attention to….

  • By lucasjosh.com » Blog Archive » Why Yelp Works on May 16, 2008 at 11:12 am

    [...] More on Yelp and it still holds true even from 2006. [...]

  • [...] Why Social Media Kills The Competition – Yelp.com Case Aug 1, 2006 – This is hands down one of my favorite case studies that I wrote from participating in a community, yelp is an extraordinary example of a social media business model. If they fail it will not be due to a lack of a powerful business model, it will be a lack of executing and scaling that business model. [...]

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