q&a Last week, business reviews site Yelp (famous for its wild parties and opinionated members) announced that it had raked in $15 million in Series D venture funding--and that the San Francisco-based company would be opening a new office in New York. I caught up with Yelp co-founder and CEO Jeremy Stoppelman over the weekend to talk about a few numbers other than the five-star rating.
Yelp New York, in Manhattan's West Village, opens Monday. But according to Stoppelman, they won't be celebrating with one of the bashes that made his site a bit notorious.
You guys just raised $15 million. What was the first thing you did when you closed the round?
Jeremy Stoppelman: (Laughs.) I think it was in the afternoon, so I checked my e-mail. We haven't really done any celebration or anything like that.
But you're Yelp! Didn't you at least do a happy hour?
Stoppelman: Well, we have our events going on. Almost every week there's an event in some city. So I guess the day after we closed we met with some of the investors and had some drinks, but really it's been a low-key type of thing. We've had greater festivities in the past. I think a greater part of it is just like, for us, it's not as much of a milestone. It's obviously a great thing because we need the money so that we can grow the company at the maximum rate possible, but we're past a lot of the more "scary" stages where it really is like a, "Wow, we made it!" Things have been going really well. We've got a lot of traction. The brand is growing stronger and stronger. So this is just like a continuance.
So why did you choose to open an office in New York? Is it for proximity to the ad industry?
Stoppelman: There was the connection to the ad industry; and ad buyers, there are a lot of them there, and then there are all the media industries. And then it's simply that New York is one of the linchpin cities or key cities in the U.S., and so we feel like it's going to be our biggest market or one of our biggest markets, and that we should be there physically as well.
Is it your second biggest market after San Francisco?
Stoppelman: No, it's like San Francisco Bay Area, then L.A., and then New York.
Did you consider opening the office in any other cities?
Stoppelman: (New York) seemed like the logical choice, you know, covering each coast.
How many people are you going to have in that office?
Stoppelman: Initially it's just a handful, under 10 people, but then towards the end of the year we'll be adding a lot of sales folks.
What's your projection for the number of Yelp employees by the end of '08?
Stoppelman: I don't really know. I don't have a number for you.
What're you at right now?
Stoppelman: We're at a hundred-something, a hundred and ten.
I know that in San Francisco "the Yelper" is almost a cultural figure now, and it's not always a good image. Are you ever feeling like you're doing damage control?
Stoppelman: We hear from businesses daily. People are writing reviews, business owners are watching them, (and) sometimes they feel like it's unfair and so they let us know, in which case we take a look at that review and see if it meets our guidelines. There's no damage control, there's always a dialogue around, you know, conversation that's happening on our site. There's nothing outside of that that we really actively do.
The other key point is just to say that 85 percent of businesses on Yelp have a three-star rating or above. And so it's easy to take a single comment personally or get really bummed out about it, and we tend to remember those most vividly. The reality is, the vast majority of comments are neutral to positive.
Where do you see Yelp in five years?
Stoppelman: I guess the first step is expansion in the U.S., geographic expansion, so seeing Yelp to expand to pretty much every major city in the U.S. is the next logical step.
Do you have international expansion plans?
Stoppelman: Yeah. Of course we'll get to international. I think there's a timing question of when does that hit, when does that happen, but certainly the formula continues to work all across the U.S. so you would think that this site would be just as well-received in a lot of other countries as well. There's just a whole lot of engineering work that goes into preparing the site for international (editions) because it would need to be able to handle multi-language, et cetera, et cetera.
Will that $15 million go in part toward server and other hardware costs? Are those going up?
Stoppelman: It's not changing that dramatically. Our site is fairly low-data-intensive compared to some of the other stuff out there. We're not pushing a ton of video or anything like that. It's actually pretty manageable, cost-wise, from a technology perspective.