In Praise of Yelp, the Newest Billion-Dollar Web Company

The consumer-review company, which went public today, has forever changed the relationship between businesses and their customers.


Yelp was originally going to be called "Yocal." The site's founders, Jeremy Stoppelman and Russ Simmons, when they launched it as a review service in 2005, sought a name that would convey the idea of "local" (makes sense) and "yokel" (???). Fortunately, though, Yelp was launched as part of a tech incubator, and Stoppelman and Simmons were surrounded by a team that was large enough to talk them out of the ill-conceived moniker. The group discovered that was available for purchase -- from a squatter, for $5,000 -- and "Yocal" gave way to a name that was webby, punchy, and, by now, familiar.

This morning, seven years after its launch, that no-longer-fledgling company made its debut on the New York Stock Exchange, pricing its initial public offering of stock at $15 a share. Share prices jumped to $24 directly after today's open, valuing the company, at the moment, at $1.4 billion.

This is, in the scheme of things, not world-changing news. Yelp, as a social network, is no Facebook. Yelp, as a search engine, is no Google. But it's worth considering, today, what the site is: a communications mechanism that has changed the way consumers and producers relate to each other, online and off.

The restaurant owner and the diner. The bartender and the drinker. The florist and the lover. In building an infrastructure for dialogue between producers and the people who buy their products, Yelp has created an unprecedented space for a continual, and dynamic, conversation between the two contingents. No longer, in the digital world, is the relationship between producers and consumers defined at its core by polarity and antagonism, with counterparties engaged in a cynical game of mutual outsmarting. (All yours, for three easy payments of $29.99!) Markets, sure, will always move toward efficiency, and purchasers and producers will always be, to some extent, opposed in their interests; but the Internet in general, and Yelp in particular, have helped to merge their motivations. They have helped to turn everything -- products, pricing, everything -- into a conversation. And a bargain. Nothing will work, but everything might.

In all that, Yelp has brought Internet-size scale to a very old idea: that businesses, given the opportunity, can be very personalized and responsive and human things.

Last year, in a seminal essay, Paul Ford declared the Web to be, at its core, a customer service medium. The Internet, he argued, brews in its users a pungent blend of empowerment and entitlement. The wisdom of crowds. The Wikipedia entry. The SOPA protest. We are all, suddenly, netizens.

But that engenders, as a result, a related sentiment: indignation. It's not just that we can create things on the Internet; it's that we expect to be included in their creation. And so we are miffed when things are done without our feedback. "'Why wasn't I consulted,'" Ford wrote, "is the fundamental question of the Web."

It is the rule from which other rules are derived. Humans have a fundamental need to be consulted, engaged, to exercise their knowledge (and thus power), and no other medium that came before has been able to tap into that as effectively.

Within that medium, nothing has been more effective than Yelp at directing and valuing our need for engagement. Yelp has provided an infrastructure for that impulse. It has empowered and enabled us as customers, helping us to be much more active agents of the service economies we participate in every day -- by giving advice to the businesses that drive those economies. Before Yelp came along, even local business was pretty much a take-it-or-leave-it affair: Producers offered a set service, and customers could either buy it or not. There was very little nuance to the process; consumers reviewed products with their pocketbooks. And so the relationship between consumers and producers was binary and reductive, because, if a business was anything bigger than "tiny," there was simply no other option. Customer feedback, in an analog world, is exceedingly difficult to scale.

Online, though, scale is simple. The Internet, actually, is scale. And Yelp has given it a shape and a purpose and a value -- and, as of today, a market value. Yelp has transformed, permanently, the psychography of consumerism. Its reviews -- a collaborative literature of prescription, persuasion, and snark -- are a commercial manifestation of the cognitive surplus: They channel our creative and critical impulses into feedback that benefits the entire community and economy. The writing of a Yelp review is an act at once of ego and of generosity. And it is the act of a consumer who has no doubt at all about the worth of her opinions.

Image: Google/Yelp.