What happened to Yelp?
Yelp, a popular platform for writing and reading reviews about restaurants, shopping centers, and entertainment venues, has experienced a decline in relevance over the past decade. The peak in interest for Yelp was exactly 10 years ago, and since then, interest has fallen by 77%. Yelp’s stock price has also fallen roughly 61% since their 2014 peak. However, Yelp is fundamentally doing better than ever, with revenue rocketing 27X from $50 million to $1.35 billion over the past 14 years.
The company’s net income is also looking quite healthy, with a healthy PE ratio of just 24, meaning that the company has a tamer valuation than most of big tech. Yelp’s rise and fall can be traced back to two PayPal employees named Jeremy Stoppelman and Russell Simmons. After the sale of PayPal to eBay in 2002, Max Levchin, one of the co-founders of PayPal, established a business incubator called MRL Ventures, and the duo decided to spin up an email-based referral system.
Despite not getting any traction, they were able to land on a name for the business: Yelp. It’s supposed to be a combination of “help” and “yellow pages.” Finding a name was the easy part, though. Now, they had to pivot the business and drive users. They tried doing more and more email campaigns requesting for reviews in different ways each and every time, but users weren’t responding, at least not to their emails. However, Yelp…
