reDesign

May 6, 2012

Weekly reader: GrubHub, Yelp, Groupon, computer science

Filed under: groupon, yelp — Rakesh Agrawal @ 8:23 pm

I was in New Orleans for Jazz Fest this week, but managed to get more writing in than I expected.

For the first time this week, we saw Groupon drop below 50% of its initial IPO price of $20, closing the week just below $10. Anyone who invested at the IPO and help (are there any of these people?) would have lost half their money.

This coming week, I’ll be in San Francisco. To make up for my lack of Groupon writing the last two weeks, I’ll be doing one Groupon post each day.

My work

GrubHub is bringing restaurant ordering into the 21st century – GrubHub is giving restaurants converted Kindle Fires to confirm orders. This is making it easier for restaurants while at the same time reducing customer service costs. It’s the kind of smart thinking I like to see in local.

Why Yelp is the Digg of local – Yelp has essentially failed to innovate in the last three years. It’s using an old publishing model that doesn’t make sense. But for consumers, it’s delivering one-size-fits-all results that really fit no one.

Top sales talent leaving Groupon as its woes mount – Many Groupon deals these days are seeing really low volumes. This breaks the overall Groupon model, which was predicated on selling thousands of units to cover the extremely high cost of sales. As volumes drop, salespeople can’t earn enough money on commissions and the best ones are leaving for greener pastures.

Silicon Valley needs to end its snobbery about computer science degrees – In the wake of Yahoo CEO Scott Thompson’s resume scandal, I take a look at Silicon Valley’s snobbery around computer science degrees. I want to be clear that I’m in no way defending Thompson. He lied and there should be serious repercussions, both from Yahoo! and the SEC. (Otherwise, what’s the point of having CEOs certify statements to the SEC?) But I think that Silicon Valley ends up getting tunnel vision because of the focus on C.S. degrees for roles that don’t need them.

Me quoted elsewhere

When Yelp advertisers yelp at rates – CBS MoneyWatch takes a look at Yelp advertising. I continue to believe that Yelp local advertising is a terrible deal and no advertiser should ever run ads at the rates Yelp charges. (I’m rarely this absolute — even with Groupon, I can think of cases where running a Groupon makes sense. I can’t think of a case where I’d recommend Yelp to a business.) I found more examples this week that I’ll write about soon.

February 23, 2012

How small businesses should use Yelp

Filed under: advertising, local search, yellow pages, yelp — Rakesh Agrawal @ 11:08 am

Although I’ve strongly criticized Yelp‘s business model in recent weeks, Yelp is an incredibly important platform for small businesses to be aware of and engage with. And unlike Groupon, which has almost no redeeming value, Yelp has created a valuable consumer resource. I consider it the best resource for ratings and reviews of restaurants, bars, and local retailers in the United States.

According to the review site’s S-1, more than 60 million people turn to Yelp each month for its ratings and reviews. Small businesses should pay attention, because Yelp has become an important tool in the consumer decision flow. Yelp provides businesses a lot of tools for free.

If you run a business that regularly interacts with consumers, I recommend that you do this on Yelp:

  • Claim your business page. This allows you to edit key business information. According to Yelp, more than 600,000 businesses have already claimed their pages.
  • Add hours of operation. This is especially important for categories like bars, restaurants and retailers, where hours of operation can vary dramatically. With Yelp’s “Open Now” filter, consumers can restrict their search just to businesses that are listed as open.
  • Add photos. Photos convey a lot more information than words. In many cases, ambiance is an important part of the decision-making process.

That’s the minimum.

If you have the time, I also recommend reading and responding to reviews. It may be tempting to dismiss Yelp reviewers as unrepresentative of the overall population of your business. Yes, some of them are entitled hipsters who think the world owes them something. But many of them are your target market. Regardless, their opinions shape buying decisions. Yelp provides a helpful guide on how to respond to both negative and positive reviews. It’s not necessary (or wise) to respond to every review. But if a review materially misrepresents your business or if you’ve changed something about your business since a review was written, it’s worth pointing out.

One way that people judge a business is by how it responds when something goes wrong. Any business, even a 5-star restaurant, will have an off night. Showing that you care about it and are willing to fix things goes a long way toward instilling confidence in your business. By reading reviews, you might also discover areas where you do need to improve.

Yelp is an important tool for small businesses in competing with chains and franchises. One of the important functions that chains provide is to de-risk purchase decisions. If I go to a Starbucks or Quiznos, I know generally what to expect. There’s a lot more variability among independent business — some can be outstanding, while others are terrible.

It’s unlikely that I’ll have a terrible cup of coffee at Starbucks — corporate works to prevent that from happening. When faced with uncertainty, people will often choose the consistent.

It’s also unlikely that I’ll have an outstanding cup of coffee at Starbucks. Yelp helps to de-risk selecting an independent business. Yelp’s reviews make it easier to pick out the 4- and 5-star places that provide great products. These can be much better values because they don’t have the overhead that chains have.

By providing more information, you’re making it easier for people to select your business. And you can do all of this without paying Yelp a penny.

February 18, 2012

Yelp advertiser agreement

Filed under: yelp — Rakesh Agrawal @ 7:58 am

This is a Yelp advertiser agreement that I received from a source. I’ve removed elements that might identify the source or the salesperson.

ADVERTISING TERMS AND CONDITIONS
AD IMPRESSIONS PROGRAM AND ENHANCED PROFILE PROGRAM

These Advertising Terms and Conditions (the “Terms”) are entered into by and between Yelp! Inc., a Delaware corporation (“Yelp”) and the Client identified below, and govern the terms of Client’s participation in Yelp’s advertising program on the Yelp’s websites, mobile applications, and other properties (the “Site”). The Terms are effective as of the date that you send this email to Yelp (“Effective Date”), and that as the signer of this Agreement, you represent that you are authorized to sign on behalf of and bind the Client to the obligations under the Agreement. The Agreement (including its Purchase Order) becomes void if not accepted within the calendar month in which the Agreement was sent to Client by Yelp (“Agreement Expiration Date”).

Client Name and Address:
[redacted]

Purchase Order:
[X] Enhanced Profile Program
[X] Ad Impression Program: 500 ad impressions per month

Optional Features
[X ] Video hosting*: USD 50.00 per month

- Total Fees: $[redacted] per month
- Payment type: Client to pay in advance by credit card
- Payment Frequency: Monthly
- Payment Currency: USD
- Service start date: [redacted]
- Commitment period:12 months from service start date
- Renewal: month to month
- Early termination fee: $1000
- Yelp salesperson: [redacted]

* Yelp has engaged a third party video production company to produce your business video. If applicable, Yelp will conditionally waive the one-time cost of the video production fee of $300 per video if Client purchases Ad Impressions Program with a Commitment Period of 12 months or longer. If Client downgrades within the Commitment Period to a non-Video hosting program, a shorter Commitment Period of six (6) months or less, or an Enhanced Profile Program, Client will be charged by and pay to Yelp $300 per video for the video production fee.

I. Advertising Account
Yelp will establish an advertising account enabling Client to purchase advertising services (“Yelp Ads”) that Yelp makes available to Client from time to time in connection with Yelp’s websites, mobile applications, and other properties, including properties set forth in a Purchase Order (“Site”). Each such purchase will be set forth in a purchase order agreed to in writing by both parties which sets forth the Yelp Ads being purchased, applicable fees, the duration of the advertising commitment (the “Commitment Period”), renewal terms, and the date that advertising will commence, among other information (“Purchase Order”). Each Purchase Order is governed by and incorporated into the Terms, and any conflict between them will be resolved in favor of the Purchase Order. Client’s initial Purchase Order is attached to these Terms
II. Yelp Ads
Yelp Ads encompass a range of different advertising programs.
The “Enhanced Profile Program” allows Client to access premium features in connection with its business profile page, such as competitive ad removal, photo slideshow, and dedicated account support. As it develops new advertising features, Yelp may from time to time replace any of the foregoing features with features of substantially similar value.
The “Ad Impression Program” directs Yelp to make commercially reasonable efforts to deliver a specified number of ad impressions to the Site per month. An “ad impression” is a single display of an advertisement on the Site which incorporates content provided by Client and/or the Site’s users.
The optional “Video Hosting Feature” allows Client to display a video on its business profile page, subject to Yelp’s video hosting specifications.
The “Cost-Per-Click Ad Program” (for eligible Clients only) directs Yelp to make commercially reasonable efforts to deliver a variable but unguaranteed number of ad impressions (as defined in the Terms), at its sole discretion, based on available inventory and other factors. Fees for the variable Cost-Per-Click Ad Program are based on the number of “ad clicks” rather than the number of “ad impressions” displayed. An “ad click” occurs when a Site user clicks on an ad impression.
A Purchase Order may contain additional Yelp Ad products available for eligible businesses.
III. Fees and Payment
Client will pay Yelp the fees specified in each Purchase Order for the duration of its term. All fees are solely based on Yelp’s measurement for the applicable Yelp Ad, including the measurement of all clicks and ad impressions, unless otherwise agreed to in writing by the parties. The fees are fixed for the duration of the commitment period specified in the applicable Purchase Order, but may be modified by Yelp thereafter by providing one month’s prior written notice to Client. The fees are net of any taxes Client may be required to pay in its taxing jurisdiction. Payments are due in advance of the period for which they apply, or as otherwise set forth in the Purchase Order. Unpaid amounts or errors may be billed in subsequent invoices. If Client’s payment method fails or Client’s account is past due, Yelp may collect past due amounts using other collection mechanisms, and Client agrees to pay all expenses associated with such collection, including reasonable attorneys’ fees.
IF CLIENT PROVIDES YELP WITH CREDIT CARD, DEBIT CARD, OR BANK ACCOUNT INFORMATION, CLIENT AUTHORIZES YELP TO USE SUCH PAYMENT INFORMATION TO AUTOMATICALLY CHARGE CLIENT ON A RECURRING BASIS TO COLLECT ALL FEES DUE HEREUNDER. CLIENT REPRESENTS THAT HE OR SHE IS AUTHORIZED TO INCUR CHARGES AGAINST THE PAYMENT CARD USED TO PURCHASE YELP ADS. THE FORM OF PAYMENT CANNOT BE CHANGED OR ALTERED UNLESS ALL AMOUNTS DUE UNDER THE TERMS HAVE BEEN PAID IN FULL OR OTHERWISE AGREED TO BY THE PARTIES IN WRITING.
IV. Representations and Warranties
Each party represents and warrants to the other that it is duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it was organized; all contact and entity information is complete, correct and current, and the execution and delivery of the Terms, and the performance of the transactions contemplated hereby, are within its corporate powers, and have been duly authorized by all necessary corporate action.
Client represents and warrants to Yelp that any information or materials that Client provides in connection with Yelp Ads (“Advertising Materials”) will (a) be true and complete, (b) not contain any material which violates Yelp’s content guidelines or which is otherwise unlawful, defamatory or obscene, or which infringes or violates any third-party rights (including any intellectual property rights or privacy or publicity rights) or which may encourage a criminal offense or otherwise give rise to civil liability and (c) comply with all applicable laws and regulations in its performance of the Terms (including all applicable privacy / data protection laws and regulations and laws related to Promotions). “Promotions” are any contest, sweepstakes, coupon or other promotion appearing on or promoted through the Site by Client. Yelp reserves the right to reject or remove any Advertising Materials at its sole discretion, and to alter any Advertising Materials to conform to technical specifications.
Client further represents and warrants to Yelp that Client will not, and will not authorize or induce any other party, to: (x) generate automated, fraudulent or otherwise invalid impressions, inquiries, conversions, clicks or other actions; (y) use any automated means or form of scraping or data extraction to access, query or otherwise collect Yelp content and reviews from the Site, except as expressly permitted by Yelp or (z) use any Yelp trademarks in any manner without Yelp’s prior written consent. All rights not expressly granted to Client hereunder are reserved by Yelp.
V. Information About and Use of the Site
The Site allows consumers to post reviews about businesses like Client’s. The Site employs automated software to help it showcase the most relevant and reliable reviews while suppressing others. Client’s purchase of Yelp Ads will not influence the automated software, or otherwise allow or enable Client, directly or indirectly, to remove, alter or reorder the reviews on the Site.
Yelp disclaims all liability arising from Yelp’s access to Client’s account on Client’s behalf in order to make changes or post information to the Site (“Client Instructions”). It is Client’s responsibility to confirm that Client Instructions are executed as requested. Client’s use of the Site, including any use by someone else acting on Client’s instructions, is governed by the Terms of Service posted here: http://www.yelp.com/static?p=tos (“TOS”). Any conflicts between these Terms and the TOS will be resolved in favor of the TOS.
VI. Termination
Each Purchase Order will expire at the end of the Commitment Period unless (i) otherwise terminated earlier under these Terms or (ii) the Purchase Order contains a renewal period that automatically extends the term of the Purchase Order beyond the Commitment Period (collectively the “PO Term”). Client must provide written notice (an email to Client’s assigned Yelp account representative is permissible) to terminate a Purchase Order on or before the 15th day of the month in order for the Purchase Order to terminate at the end of that month. If Client provides written notice after the 15th day of the month, then the Purchase Order will terminate at the end of the following month. Unless otherwise terminated as provided under the Terms, the Terms will automatically expire three (3) months after the termination or expiration of the last surviving Purchase Order.
IF CLIENT TERMINATES A PURCHASE ORDER BEFORE THE END OF THE COMMITMENT PERIOD, CLIENT AGREES TO PAY ANY AND ALL EARLY TERMINATION FEES SET FORTH IN THE PURCHASE ORDER(S), RECOGNIZING THAT YELP BEARS CERTAIN UP-FRONT COSTS, AND THAT THERE IS AN IMPLIED PRICING DISCOUNT BASED ON THE LENGTH OF CLIENT’S CHOSEN COMMITMENT PERIOD.
Yelp may terminate any Purchase Order or the Terms at any time for any or no reason without liability, effective immediately, by providing written notice to Client. In the event of such termination, Client will immediately pay all unpaid Yelp Ad fees through the date of termination, and Yelp will reimburse any fees that were prepaid for Yelp Ads to be rendered after the date of such termination.
VII. YELP’S DISCLAIMER OF WARRANTIES
CLIENT ACKNOWLEDGES AND AGREES THAT YELP ADS ARE PROVIDED TO CLIENT ON AN “AS IS”, “WITH ALL FAULTS” AND “AS AVAILABLE” BASIS. YELP MAKES NO WARRANTIES, EITHER EXPRESS OR IMPLIED, ABOUT THE YELP ADS AND EXPRESSLY DISCLAIMS THE WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. FURTHERMORE, TO THE FULLEST EXTENT PERMITTED BY LAW, YELP SPECIFICALLY DISCLAIMS ALL WARRANTIES AND GUARANTEES REGARDING (I) THE PERFORMANCE, QUALITY AND RESULTS FOR THE SERVICE, (II) CLICK RATES, CONVERSIONS OR OTHER PERFORMANCE OR RESULTS FOR THE SERVICE, (III) THE ACCURACY OF THE INFORMATION THAT YELP PROVIDES IN CONNECTION WITH THE SITE OR YELP ADS (E.G. REACH, SIZE OF AUDIENCE, DEMOGRAPHICS OR OTHER PURPORTED CHARACTERISTICS OF AUDIENCE), (IV) YELP’S ABILITY TO TARGET ADS TO OR IN CONNECTION WITH SPECIFIC USERS, TYPES OF USERS, USER QUERIES, OR OTHER USER BEHAVIORS, (V) THE ADJACENCY OR PLACEMENT LOCATION OF YELP ADS, AND (VI) AN AD IMPRESSION’S QUALITY, TIMING OR THE NUMBER OF AD IMPRESSIONS DELIVERED. YELP SHALL NOT BE LIABLE FOR NON-PERFORMANCE DUE TO CAUSES BEYOND ITS REASONABLE CONTROL.
VIII. LIMITATIONS OF LIABILITY
THIRD PARTIES MAY INADVERTENTLY OR FOR FRAUDULENT OR IMPROPER PURPOSES GENERATE AD IMPRESSIONS OR CLICKS (“INVALID CLICKS”), WHICH MAY IMPACT THE FEES YOU PAY YELP AND THE PERCEIVED EFFECTIVENESS OF YELP ADS. CLIENT ACCEPTS THE RISK OF INVALID CLICKS WITHOUT LIABILITY TO YELP. AS SUCH, THE PARTIES AGREE THAT YELP HAS NO LIABILITY FOR CLAIMS ARISING FROM OR IN CONNECTION WITH INVALID CLICKS EXCEPT WHERE AND TO THE EXTENT PROHIBITED BY LAW, IN WHICH CASE YELP’S MAXIMUM LIABILITY AND CLIENT’S EXCLUSIVE REMEDY IS A REFUND IN THE FORM OF ADVERTISING CREDITS.
YELP’S MAXIMUM LIABILITY AND CLIENT’S EXCLUSIVE REMEDY IN THE EVENT OF ANY (A) UNDER-DELIVERY IN ANY GIVEN MONTH, OR (B) AD IMPRESSIONS OR CLICKS THAT ARE INADVERTENTLY GENERATED BY YELP, AS DETERMINED BY YELP, IS, AT YELP’S SOLE DISCRETION, FOR YELP TO EITHER (I) DELIVER THE SHORTFALL OF IMPRESSIONS IN SUBSEQUENT MONTHS OR (II) PROVIDE A REFUND OF THE OVERCHARGED AMOUNT, EXCEPT WHERE AND TO THE EXTENT PROHIBITED BY LAW.
FOR ALL OTHER CLAIMS ARISING FROM OR IN CONNECTION WITH A PURCHASE ORDER, YELP ADS, OR THE TERMS THAT ARE NOT EXPRESSLY ADDRESSED IN THIS SECTION TITLED “LIMITATIONS OF LIABILITY”, YELP’S MAXIMUM LIABILITY AND CLIENT’S EXCLUSIVE REMEDY IS THE AGGREGATE FEES PAYABLE TO YELP HEREUNDER DURING THE SPECIFIED COMMITMENT PERIOD EXCEPT WHERE AND TO THE EXTENT PROHIBITED BY APPLICABLE LAW.
NEITHER PARTY NOR ITS AFFILIATES WILL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR EXEMPLARY DAMAGES (INCLUDING LOSS OF PROFITS OR REVENUE, OR INTERRUPTION OF BUSINESS) ARISING OUT OF OR RELATED TO A PURCHASE ORDER, THE YELP ADS, THE SITE, OR THESE TERMS, REGARDLESS OF THE THEORY OF LIABILITY, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
IX. Indemnification
Client will indemnify, defend, and hold Yelp and its officers, directors, agents, and employees harmless from and against any and all claims, actions, losses, damages, liabilities, costs and expenses (including but not limited to attorneys’ fees and court costs) (collectively a “Third Party Claim”) arising out of or in connection with (i) the Advertising Materials, Client Instructions, or Client’s use of Yelp Ads, (ii) any breach of representations or warranties provided under these Terms by Client in Section IV, (iii) any Promotion, including any claims for any violation by the Promotion of any applicable law, rule or regulation, (iv) Client’s products or services or the provision thereof to end users or (v) if applicable, failure to obtain the consent from all parties to recorded phone calls originating from the Tracking Numbers if you have enrolled in the Pay-Per-Call Program. Yelp will notify Client promptly of any Third Party Claim for which it seeks indemnification and will permit Client to control the defense of such Third Party Claim with counsel chosen by Client; provided, that Client will not enter into any settlement that contains any admission of or stipulation to any guilt, fault, liability or wrongdoing on the part of Yelp without Yelp’s prior written consent.
X. Choice of Law and Arbitration
(a) Any claim, controversy or dispute arising out of or relating to the Terms (“Claim”) will be exclusively governed by California law consistent with the Federal Arbitration Act without regard to conflict of law provisions or giving effect to any principles that may provide for the application of the laws of another jurisdiction.
(b) All Claims must be exclusively and finally resolved and settled by final and binding arbitration administered by and in accordance with the rules of the American Arbitration Association (“AAA”) before a single arbitrator who is a member of the AAA. Arbitrations will be held in San Francisco, California, but the parties may choose for themselves whether to appear in person, by phone, or through the submission of documents. The arbitrator will issue a ruling in writing, and will detail all findings of fact and law upon which the ruling was made. The arbitrator will not have the power to commit errors of law or legal reasoning, and the ruling may be vacated or corrected on appeal to a court of competent jurisdiction for such errors. The arbitrator’s ruling will otherwise be final and binding on all parties, and may be entered in any court of competent jurisdiction. Notwithstanding the foregoing, any dispute as to the enforceability of this arbitration provision or its applicability to a specific Claim shall be adjudicated by a state or federal court located within San Francisco County, California (“Court”), and not by an arbitrator.
(c) THE TERMS MUST BE CONSTRUED AS IF THEY WERE JOINTLY WRITTEN BY BOTH PARTIES. CLIENT AND YELP AGREE THAT EACH MAY BRING OR PARTICIPATE IN CLAIMS AGAINST THE OTHER ONLY IN THEIR RESPECTIVE INDIVIDUAL CAPACITIES, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. UNLESS BOTH CLIENT AND YELP AGREE OTHERWISE, THE ARBITRATOR MAY NOT CONSOLIDATE OR JOIN THE CLAIMS OF OTHER PERSONS OR PARTIES WHO MAY BE SIMILARLY SITUATED, AND MAY NOT OTHERWISE PRESIDE OVER ANY FORM OF A REPRESENTATIVE OR CLASS PROCEEDING. IF A CLAIM IMPLICATES THIS SUBSECTION (C), AND THIS SUBSECTION (C) IS FOUND TO BE INVALID, UNENFORCEABLE OR ILLEGAL BY A COURT, SUCH CLAIM MUST BE ADJUDICATED BY A COURT AND NOT BY AN ARBITRATOR.
Notwithstanding anything to the contrary in these Terms, Yelp may apply for injunctive remedies (or an equivalent type of urgent legal relief) in any jurisdiction.
XI. Miscellaneous
(a) The Terms and its exhibits are expressly limited to and made conditional upon Client’s acceptance of its terms and conditions before the Expiration Date. Any of Client’s terms or conditions which are in addition to or different from those contained in or added by way of interlineation to the Terms or any Purchase Order as originally provided to Client by Yelp which are not separately expressly agreed to in writing by both parties are deemed material and are hereby objected to and rejected by Yelp. No conditions, printed or otherwise, appearing on other contracts, orders or copy instructions which conflict with, vary, or add to these Terms will be binding on Yelp, and any conflicting or additional terms contain in any other documents or oral discussions are void. The Terms embody the entire and exclusive agreement between the parties respecting the subject matter of herein, and supersede any and all prior related oral, emailed or written representations and agreements between the parties. No statements or promises by either party have been relied upon in entering into these Terms, except as expressly set forth herein.
(b) Anyone agreeing to the Terms on behalf of Client represents and warrants that it has full legal power and authority to enter into these Terms, perform its obligations hereunder, and authorize the fee payments set forth in the Purchase Order(s).
(c) Notices under these Terms must be in writing and sent via facsimile, registered or certified mail or commercial courier to the parties at their respective addresses set forth herein, and in the case of Yelp, to the attention of its General Counsel at 706 Mission Street, San Francisco, California, 94103.
(d) The Terms may not be amended or modified except as agreed upon in writing by the parties. No provision in the Terms may be waived, except pursuant to a writing executed by the party against whom the waiver is sought to be enforced. Client may not assign any rights or obligations under the Terms without Yelp’s prior consent, and any purported assignment by Client shall be void. If any provision of the Terms is held to be invalid or unenforceable, the parties will substitute for the affected provision a valid or enforceable provision that approximates the intent and economic effect of the affected provision. Sections VII, VIII, IX, X and XI of the Terms will survive any termination of the Term.
[END TERMS]

November 18, 2011

NOT first! Where the heck is Rocky’s analysis of Yelp?

Filed under: journalism, newspapers, yelp — Rakesh Agrawal @ 9:23 pm

I had several people comment to me this week that they would like to see more timely updates in response to breaking news on companies. For example, the Yelp S-1 was released on Thursday and I probably won’t post my analysis until Monday.

So what’s up with that? No, it’s not because I’m lazy or slow.

For starters, I am not equipped to compete in the “first” game that the media like to play:

  • As much as I have formed a mutual admiration society with the folks at Bloomberg over the last five months, they haven’t (yet) comped me a Bloomberg terminal. I don’t get instant access to filings as they happen.
  • Even though it seems like it sometimes, this is not a full-time job for me. I’m usually juggling clients, briefings and other responsibilities. Unfortunately, I can’t drop everything else.

But, just as important, I don’t value the “first” game. If you strive to be first, more often than not, you end up regurgitating management’s story. To me, posting a leaked memo that management wants out is not a “get.” A “get” is posting critical analysis or information that management would rather not see published.

My renewed interest in financial journalism was sparked by a supposed local expert who was raving about what a great company Groupon is shortly after their initial S-1 filing. He clearly hadn’t read it and it just posted management’s talking points. Too many reporters don’t read the underlying documents that they’re reporting about.

Then there’s the fact that the information isn’t immediately actionable. Because Yelp is a private company that won’t be trading for at least a month or two, it doesn’t really matter if I don’t post until Monday. Given that dynamic, I’d rather do a more thorough analysis than make mistakes that need to be corrected later.

But in the meantime, if you want to read about Yelp, check out my five-part series on local search, specifically how Google Places is a strong competitor to Yelp.

September 8, 2011

Why Google’s acquisition of Zagat matters

Filed under: facebook, foursquare, google, groupon, yelp — Rakesh Agrawal @ 6:17 pm

Today, Google announced its acquisition of Zagat, the company that publishes the venerable restaurant and hotel review guides. It’s a terrific acquisition. If Google executes correctly, this deal could be as significant as the YouTube deal has been. (I was also a big fan of that deal.)

Although Zagat is primarily known for its maroon pocket-sized guidebooks, it has long been working with innovators to get its data in the hands of mobile users. I first used Zagat on a mobile device on my Newton MessagePad 110 in the mid-90s. I later used it on a Palm V and Palm VII as part of the Vindigo service. (Vindigo eventually switched to Gayot and other data sources because they didn’t want to pay Zagat’s licensing fees.) There are aspects of those services that still haven’t been replicated by the leading mobile products.

Competition with Yelp

The most direct competitor to be affected by this deal is Yelp.

I love Yelp and use it all the time. But it’s way too much work. Half of each review seems to be about the personal life of the reviewers. Sorry, but I couldn’t care less that your girlfriend dumped you; I just want to know how the food and service was. Yelp has made great strides over the years in making sense of the reviews but its five-point scale that homogenizes food, service, ambiance and cost isn’t very helpful. Add to that the fact that a lot of restaurants are rated 4 stars and quickly discriminating among places is hard.

When it comes to restaurant reviews, comprehensiveness is less important than conciseness. There isn’t a “correct” answer — I’m just looking for a good-enough answer quickly. I don’t want to engage in a 30-minute research project and read 20 reviews to choose where to go to dinner. That’s where Zagat has excelled. Just glancing at the ratings, I can quickly pick a place. (I think my food threshold was 24.)

All that said, I stopped using Zagat when Yelp took off. The primary reason: I didn’t want to pay the fees and Yelp provided a good-enough solution for free. I fully expect that Google will take down the Zagat paywall and offer the ratings for free. (I’m surprised that hasn’t happened already.) I also expect that Zagat ratings will be syndicated across various Google properties, including mobile properties.

Zagat’s team is good at synthesizing information into actionable data. If Google can translate that knowledge into algorithms acting on data collected by Google Places, that could be really powerful.

Mobile

Mobile has been a godsend to companies like Yelp, Fandango and others that have strong brands. Unlike the Web, they’re not held hostage by Google’s search algorithm for traffic. Google has continually expanded the presence of its own local products on the main search results pages to the detriment of sites like Yelp.

The app-centric nature of mobile devices to data means that companies with strong brands can intercept that traffic before Google gets a chance. Zagat is a brand that carries its own affinity and a free Zagat app would instantly become a strong competitor to Yelp.

Brand

One of the biggest assets that Google gets with Zagat is the power of the Zagat brand, which in many circles is synonymous with fine dining.

As powerful as Zagat is with consumers, it’s also incredibly powerful with restaurateurs. Here is my subjective assessment of various local brands, as perceived by restaurateurs:

  • Zagat. Highly positive.
  • Facebook. Positive.
  • Google. Neutral to positive.
  • Groupon. Slightly negative, but heading downhill rapidly.
  • Yelp. Strongly negative.

Where Zagat is viewed as a friend of restaurants, Yelp is often viewed as an enemy. Part of the problem is that Yelp has sold advertising to restaurants and many restaurateurs view Yelp ad sales people as extortionists. (I believe Yelp management’s claims that they separate editorial from advertising, but that doesn’t change the widely held perception.)

If Google can use the Zagat brand as an in-roads to better engage with restaurateurs, that alone would be the price of the acquisition.

Facebook — and why all this might not matter

The biggest problem I have with local reviews as they’ve been done to date is that they largely ignore the social layer that has been built up over the last four years. When it comes to matters of taste, I’d rather get recommendations from people I know than random strangers.

It bugs my friends at Yelp and foursquare that every time I go on a trip, I post a Facebook status message asking for restaurant recommendations. Bill at Yelp will tell me to check Yelp. Tristan will tell me to check out foursquare Explore.

Yelp has its own social layer, but the people in my Yelp friend graph aren’t my real friends. The few that are rarely write reviews. Foursquare has my real friends, but for the most part doesn’t have enough data density to suit my needs. (A recent trip to Chicago was an exception.)

Even without any optimization, Facebook has both. Most of my status updates generate 3-4 restaurants, which is all I need. There’s another important benefit: I know how my tastes compare with the tastes of my friends. There are some friends that I know have a positive affinity with; if Dariusz offers a restaurant recommendation, I’ll go there without thinking about it. There are others with whom I have a negative taste affinity; if they recommend it, I won’t go.

A lot of people have looked at Facebook’s recent public announcements in local — killing its Deals product and removing the Places product from mobile — as a sign that Facebook doesn’t care about local. That couldn’t be further from the truth.

I’ve seen Facebook testing product concepts that point at its future direction in local. One test asks you to compare recent places you’ve visited. Another feature lets users contribute data on restaurants and other venues. Facebook realizes that most average people won’t go to the trouble of writing long reviews like those on Yelp. It’s better to collect small nuggets of data from massive audiences. See my post, Heading toward the Facebook recommendation engine.

Ironically, Ted Zagat, son of Tim and Nina Zagat, works at Facebook. That should make for some interesting dinner conversations. The question is how they’ll decide where to eat.

See also:

August 19, 2010

Heading toward the Facebook recommendation engine

Filed under: facebook, lbs, local search, maps, yellow pages, yelp — Tags: — Rakesh Agrawal @ 9:13 am
Image representing Facebook as depicted in Cru...

Image via CrunchBase

There’s an interesting thread over at Mike Blumenthal’s blog on the effect of Facebook Places on the local reviews space.

My view is that reviews and updates will coexist, much as blogs and Twitter coexist. People who were less committed to reviews will migrate their activity to Facebook Places updates. But Places could lead toward the ultimate recommendation engine.

In the local space, there’s really only one review site that matters: Yelp. They’ve got a strong set of tools and an active and engaged community. New restaurants and bars, which are often of the most interest, will have a dozen reviews on Yelp a year before they even show up on many Yellow Pages sites.

There are three big challenges with Yelp:

  • It’s been too successful. Many restaurants have hundreds of reviews. Although Yelp provides great tools for analyzing the data, it can still feel overwhelming. It also discourages participation from more casual users. In the early days of Yelp, I was an active reviewer. That’s tapered off substantially — what’s the marginal benefit of me writing the 426th review of a place?
  • These aren’t my real friends. I don’t know how compatible their tastes are with mine. It also affects the propensity to write reviews. People are more likely to do something that helps their friends than something that helps a generic audience.
  • Skewed demographics. Yelp primarily caters to a young, urban demographic. If you’re a mom in the suburbs, its value is more limited.

Facebook Places lowers the bar to participation and ties it into real-life social networks. Instead of writing out a long review, a few clicks is all it takes. Combine that with Facebook’s large user base on mobile devices — its monthly uniques on mobile devices is 4x Yelp’s monthly uniques on the Web — and we’ll see a tsunami of local data. (For more on importance of massive amounts of data, watch Google’s Peter Norvig’s talk.)

While each blip may not be as rich as the data in Yelp, you could build a recommendation engine to infer a lot from that data.

If I see that a place I am considering visiting is regularly frequented by my friends with families, I can infer that it is good for kids. Positive reviews can be inferred by friends going back to a place regularly. There are some friends who I have negative taste relationships with. If I know that they’re regulars somewhere, I know not to go there. Facebook can also make recommendations based on places I’ve visited and the overlaps with places my friends have visited. Facebook also has real demographic information which could be used to tailor recommendations.

Status updates in the social network also prompt discussions. Even if the original poster doesn’t write a review, it may be followed up by “hey, I was thinking of going there. what did you think of it?” Facebook could also close the loop by prompting people to add star ratings, Like or add comments a few days after a check in.

When it comes to restaurant reviews and recommendations, most people are looking for “good enough”. While you could spend hours reading every Yelp review of several restaurants and possibly get a better answer, a recommendation based on your friends’ activity is probably nearly as good. Facebook has done really well with good enough; Facebook Photos dominates online photo sharing, despite many functional weaknesses when compared with flickr.

I built a prototype of this when I was at AOL Search and even with a few users in the system, it worked really well.

More on: Facebook, local search, Yelp

See also:

July 29, 2010

Why small businesses are snapping up the daily deal

Filed under: advertising, google, local search, marketing, yelp — Rakesh Agrawal @ 1:05 pm

A sample daily deal from Living Social.

In recent months, we’ve seen daily deal sites like Groupon and Living Social grow like crazy. Groupon is valued at $1.35 billion. That’s more than 4x the valuation of the McClatchy Company, one of the country’s largest newspaper publishers. It also ekes out The New York Times Company. Others are scrambling to get into the business, including DealPop in Seattle and CrowdCut in Minneapolis. Yelp is also testing its own entry in Sacramento.

A while back, I wrote about why small businesses were reluctant to get online. So what changed?

Well, the daily deal providers addressed most of the challenges I laid out.

  • No one was asking them to get online; now they are. Groupon, Living Social and others are rapidly building up local sales forces to approach small businesses.
  • It’s a lot simpler. Bidding on keywords is beyond the experience level and time commitment most small businesses can afford. Putting together a special offer is much simpler and the daily deal sites are doing a lot of hand holding. Even Google has realized this, with simplified pricing for its Google Tags product aimed at small businesses.
  • There’s no upfront commitment required. Unlike most advertising products, businesses don’t have to spend hundreds or thousands of dollars on an ad and pray that it works. Instead, they get paid for the deals sold before they’re actually redeemed.
  • Results are evident and compelling. Businesses can clearly see how many people are buying their deals in real time. They can also see customers as they walk through the door with the coupons. It’s a lot more trackable than other forms of advertising.

On the consumer side, the daily deal sites have turned coupons from something that were looked down on to a fun, social thing. Friends who wouldn’t use coupons in the past are touting the great deals they’ve found online.

A big challenge for providers will be providing enough new businesses to keep the deals interesting. Many of the deals I see these days are too far to drive to; a metro area is too large a geography. As the novelty of the daily deal wears off, deals will have to be more targeted based on location to avoid becoming perceived as spam.

See also:

September 10, 2008

I am here, where is everyone else?

Filed under: apple, facebook, flickr, gps, im, instant messaging, iphone, lbs, mobile, social networking, twitter, where, yelp — Rakesh Agrawal @ 12:02 am

Since the iPhone app store came online, I’ve been playing with a number of mobile social networks. There’s no shortage of them: Limbo, Loopt, Where and Whrrl are all attempting to play in the space.

The central idea of mobile social networks is to connect you with your friends while you’re out and about. Unfortunately, they all require you to rebuild your friend list. Early versions of the Loopt app went so far as to spam people in your iPhone’s address book with text messages.

Local events on Where

Local events on Where

Here are some of the keys to success in mobile social networks:

  • It’s the network, stupid. Getting people to create Yet Another Network won’t work. I’ve already created my network. Use it. My only friend on the iPhone version of Loopt is 2,500 miles away — hardly someone I can run into when I’m out in San Francisco on the weekend. Loopt and Where have Facebook apps, but their iPhone versions don’t seem to tie into them.
  • Let me control when I update my location. Location is very personal. Don’t automatically update my location just because I’ve launched your application. I may just want to check something.
  • Let me publish beyond your app. Early adopters who try your app are willing to accept that there is a ramp up period, but they aren’t going to do work for zero return. If I my update my status and no one is there to see it, have I updated my status? Let me automatically publish the information I collect using your app to Facebook, Twitter and my blog. Not only does it give me a reason to use your app, it becomes a distribution vehicle for you, providing exposure to my friends who just might say “How’d he do that?” I taught a lot of my friends about Facebook mobile simply by updating my status from my phone. (Facebook puts a mobile phone icon next to such updates.)
  • Seed your app with other content sources. If I don’t have friends, at least give me other content that makes your app worth using. Where does a good job of this, pulling in content from Yelp, eventful and Zipcar. If you can, get ego bloggers like Scoble to use your app.
  • 128 King St is not a place. Pete’s Tavern is. Whenever posting information, it should include a human understandable version. You’d never post a location of 37.778911, -122.391223; a street address is marginally more helpful. With the margin of error built into GPS and density of urban areas, place names are critical.
  • Let me take pictures. For a long time, mobile developers haven’t had access to cell phone cameras. With the iPhone, they do. The ability to take and send a picture makes it easier to communicate a lot of information quickly. And it adds life to your application. (Bonus points for dropping a copy of the picture in my flickr account.)
  • Tie into IM and SMS. Loopt claims that the most commonly asked question via SMS is “Where are you?” That claim is probably made up marketing b.s. without any hard data. Nevertheless, it is a frequent question. Make it easy for me to answer it. Let me send an SMS or IM that includes where I’m at (Pete’s Tavern, 128 King St.). To anyone. Include a URL with a map and optionally a picture.
  • Don’t spam my friends. What you do with my friends’ contact information reflects on me. If you spam my friends, I will never use your application again. And I will tell everyone you’re a spammer.

Tying into the various APIs I mentioned may seem like a lot of work — and it is. But the alternative is spending a lot of money on distribution and marketing.

See also:

July 14, 2008

Unlocking the creativity of the masses

With the launch of the iPhone last year (and the millions of dollars in ad spend around it), Apple did more for wireless data adoption than wireless carriers had in the last 10 years. With Thursday’s launch of the App Store, they’re doing it again by unlocking the creativity of the masses.

Wireless carriers had long held on to core cellphone features with an iron grip. Want access to the camera, GPS, microphone or address book? Good luck. It usually involved spending a year or more negotiating with a carrier and then writing and (rewriting) your app to work on dozens of phone models. And when you were all done, you brought it to a market with little distribution support at a price few people would pay.

In the last couple of days, I’ve downloaded more apps than I had in my entire history of cell phone usage (dating back to 1996). There’s one big reason: once developers had access to features like GPS and the camera, they created compelling applications.

The most compelling apps have come from independent developers or startups. Some have used public APIs for other products; although there isn’t an official flickr app, there are several apps that interact with flickr. AOL is the lone exception among large companies, with apps for AIM and AOL Radio.

Here are some of the apps that caught my eye. With the exception of iMilk, all are free. That’s another refreshing change: Apple is making it easy for application developers who want to distribute free applications. Even paid apps can be relatively cheap, with a one time price of $3-$10 being common. (Versus the previous $3-$5 per month.)

All is not perfect in app land, of course. Much like when Facebook launched their app platform, some developers are having a hard time keeping up with the demand. I’ve also had my phone reboot at least half a dozen times when using various apps.

The functionality in some of these apps is limited compared with their other incarnations. For example, in Jott, you can’t send Jotts to others. As these apps are revved, they’ll become even more compelling.

Jott

Jott allows you to record a voice “note to self”. The note is then transcribed and put in your Jott account, which is available by phone or Web. It isn’t as robust as Jott’s

Where

A mobile social network that lets you plot friends on a map, look for restaurant reviews, find and reserve Zipcars and even look at a map of the night sky where you are with the constellations plotted. (Video of the app.)

There are a number of players looking to create mobile social networks. Whrrl, Loopt and Limbo offer somewhat similar apps. Where offers a range of features beyond social, while Limbo is the most social.

(Disclosure: I did some consulting for Where last year.)

Facebook

Facebook took an early lead with the iPhone 1.0 by having one of the best iPhone optimized sites. The lead developer released a toolkit that was used by other developers. The application version adds the ability to upload photos and IM, but lacks some of the features found in the browser version.

AirMe

Upload pictures to flickr (or an AirMe account). The pictures are automatically geotagged with your location. AirMe also tags you pictures with the current weather conditions.

NearMe

See pictures from Panoramio of places around where you are.

Twittelator

See and update Twitter. Post pictures and location updates. Twitterific has less functionality and also has ads.

Urbanspoon

Kind of like a Magic 8 ball to decide where to eat. Uses GPS to find where you are. Shake your iPhone and it will select a place for you.

iMilk  ($2.99)

“Drink” virtual milk. Uses the iPhone’s accelerometer to empty the glass. If you prefer, you can pour it into a glass before drinking.

Remote

Control your Apple TV or iTunes. Play songs, see album art and search your iTunes library. Works over Wifi, so you don’t have to be in line of sight. Much better than the flimsy remote that ships with Apple TV.

Pandora

The world’s greatest music discovery service now streams to iPhone. The app is beautifully simple. Add in an aux in jack or FM transmitter for your car and say goodbye to the $14 a month you’re paying to XM or Sirius.

Yelp

Why settle for the hand-picked (usually glowing) reviews displayed in the restaurant window? Pull out your iPhone and check Yelp. My favorite feature is a filter that limits the search to restaurants that are open now. Very helpful for those midnight cravings.

December 13, 2007

Yahoo! Local gets Yelpy

Filed under: advertising, city guides, local search, search, web 2, web 2.0, yahoo, yelp — Rakesh Agrawal @ 2:09 pm

Yahoo! Local has rolled out some new features to increase the Web 2.0-ness of its local search product:

  • RSS feeds. You can subscribe to feeds of all reviews near you. If you find a reviewer you like, you can stay up-to-date on his or her reviews.
  • A “first reviewed by” designation to highlight contributors who are the first to review a place.
  • Attribute drill down. You can narrow your search using filters such as “family friendly,” “casual” or “elegant.”

It’s been a few months since I last checked in on Yahoo! Local. Overall, it’s a huge improvement. It has a ways to go before catching category leader Yelp. (The metric being by my subjective opinion of product quality.)

Yelp has had the first two features for at least a year.

Among the local players, Yelp has had the best incentive system for contributors. Its “First to Review” designation is one of many things that Yelp does to encourage frequent participation. An “Elite” system rewards frequent contributors with a badge on their profile and invitations to parties. The front page of the site highlights a review of the day. Featured Yelpers also appear on the home page.

It may sound corny, but such incentives are important to keeping people engaged. Most social systems have some sort of perk system, including ODP’s edit-alls and metas and the Wikipedia cabal.

Although Yahoo’s design is more visually appealing than it used to be, it’s still cluttered.

Unlike Yelp, the map scrolls off the search results page, making it hard to see where results 3-10 are located unless you have a very large screen.

Getting reviews is more work than it should be. Yahoo! breaks its 69 reviews for The Italian Store across 29 pages, 3 at a time. Yelp shows all 42 of its reviews on one page, making it very easy to scan.

Then there’s the ads. I’m all for ads — I work in the Web space and like to get paid — when they’re relevant. The ads on Yahoo! Local are anything but. Here is an example of the ads that appeared above the listings for restaurants:

Irrelevant ads on Yahoo! Local

The top two ads are for services that compete with Yahoo! Local. Ads on the side (not shown) pitched “Watch mouth-watering videos of Oklahoma’s best restaurants” and one from Target offered “Find restaurant online. Shop & Save at Target.com Today.” (I’ll admit to clicking through on the Oklahoma ad just to see what would constitute a mouth-watering video of Okahoma restaurants. Unfortunately, they linked it to a video of a bad rendition of Rudolph the Red-Nosed Reindeer.)

I understand that local advertisers are scarce, especially outside the Bay Area. But Yelp takes the right approach.

More on: local search, yahoo, yelp

Disclosure: I used to work on local products for AOL.

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