Yelp Inc. was founded in 2004 by former PayPal employees to provide reviews of local businesses online. While the company has grown significantly and gone public, it remains unprofitable due to high sales and marketing expenses required to expand into new markets. The company currently generates most of its revenue from advertising but faces challenges in maintaining business clients and keeping users engaged with the platform. To improve its financial situation, Yelp may need to focus on enhancing the user experience, developing new revenue streams, and controlling marketing costs.

1. The Importance of User Experience
Yelp Inc.
Team 3
Chia-Hsin, Fan(Carrie); Chun-Yu, Fan(Claudia);
Ittitep Tepkasetkul(Jim); Kanlayarat Santiwijit(Tipp);
Nawaporn Chirananondh(Wow);
Pakanun Poolvoralaks(Ib); Pei-Jung Huang(Patti)
Dr. Barry Unger
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AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and Services

2. MetropolitanCollegeMetropolitanCollege Background
Background:
• Founder: Jeremy Stoppelman and Russel Simmons in
2004 (ex-employees from PayPal)
• Motivation: the perfect pizza (yellow page only have
paid ads)
IPO in 2012/3/2
Small group of contributors that Yelp “Take
the lead”
Current situation & Dilemma:
• Charging local businesses (current) vs. readers
• They don’t know what they are
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AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and
Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp

3. MetropolitanCollegeMetropolitanCollege What is Yelp?
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What they think their product is
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and
Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp

4. MetropolitanCollegeMetropolitanCollege
Ideal
Product
Generic
Product
Expected
Product
Whole
Product
For Business: messaging
system, account manager
For Reader: Order Delivery,
Deals & Coupon, Health
Score
Sponsorship Program
Yelp Ads
Banner Ads
Activity Feed (Free)
Platform
Data (Click Rate, Review)
Community
Product Analysis
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What their product actually is
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and
Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp

5. MetropolitanCollegeMetropolitanCollege Target Customer & Revenue Model
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Partner
ProductTarget
Market
Revenue Model
Sponsorship Program
Yelp Ads
Banner Ads
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and
Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp

6. MetropolitanCollegeMetropolitanCollege Expense Causes Loss
Expand new markets increases revenue
but also increase expense
• Sales & Marketing costs 55%
• Sales Staff’s commission
Once achieve saturation point, Yelp will die.
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S&M
55%
Expenses in 2013
Why Yelp isn’t profitable?
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and
Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
-50
0
50
100
150
200
250
2010 2011 2012 2013
Inmillion
Revenue
Expenses
Net Loss

7. MetropolitanCollegeMetropolitanCollege Industry Analysis
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Threat:
• Low-profitable
industry
• Powerful substitutes
Opportunity:
• Highly dependent
users(readers)
Existing Rivalry
- User Review Site
• High competition
• Low-profitable (advertising
expense, sales force)
• Keep changing revenue model
New Entrant
- Info Media
• Low entry barriers
• Capital requirement
Potential Substitute
- Social Network
• Similar feature can easily replace
• Large financial support
• Large loyal community
Why Yelp isn’t profitable?
Winners must find the
Blue Ocean to contain users
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and
Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp

8. MetropolitanCollegeMetropolitanCollege Complaints about Yelp
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AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and
Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
Why Yelp isn’t profitable?

9. MetropolitanCollegeMetropolitanCollege Losing Business Clients
Yelp is useless due to neglect of user experience
• Not enough local database to attract readers
• Biased comments or fake reviews
• Unfriendly user interface
• Unprofessional interaction and communication
• Poor customer services
New idea of product, “Filters”, but it’s
overwhelming
“Old tech isn’t surpassed by disruptive tech but
because the market demand” (Bower & Christensen, 1994)
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Why Yelp isn’t profitable?
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and
Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp

10. MetropolitanCollegeMetropolitanCollege Prick the Bubble of Engineer (1/2)
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Tactics
Kick It (UI) Simple and Stupid
• Website: make homepage simple and
focus on searching
• Mobile: make it ease to share (i.e.
picture menu, restaurant atmosphere)
Create “Pick for Me” (advising feature)
• Randomly select three 4-stars-
restaurants by location
Excepted
Product Platform
Strategy Enhance features
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and
Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
Recommendation

11. MetropolitanCollegeMetropolitanCollege Prick the Bubble of Engineer (2/2)
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Tactics
Click rate: “Activity Feed” (= Google Analytics)
Reviews: Filter by system and then
monitor by user-support team
• Fake: Delete biased reviews to maintain
reputation (= Google Scorecard)
• Negative: Consulting Program
Accumulate more database
Excepted
Product Data (Click Rate & Review)
Strategy Develop new business model
AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and
Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
Recommendation

12. MetropolitanCollegeMetropolitanCollege Prick the Bubble of CEO
Reducing marketing expense
• Suspend expanding international markets
• Decrease budget on Elite program
Collect more user experience
• Setup feedback feature on site
• Encourage Yelper to give feedbacks
• Fix the problems seriously
Develop new products
• Host event advertising (i.e. restaurant week)
• Create “Consulting Program”
Find a big brother: Sell to Facebook
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AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and
Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp
Recommendation

13. MetropolitanCollegeMetropolitanCollege References
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2014, from InsideFacebook: http://www.insidefacebook.com/2013/04/30/facebook-earnings-preview-changes-to-ads-payments-gifts-and-
other-revenue-streams-in-q1/
• Lardinois, F. (2012, 10 10). Shrink To Grow: Citysearch And Urbanspoon Parent Company CityGrid Lays Off 15% Of Its Employees.
Retrieved 3 30, 2014, from TechCrunch: http://techcrunch.com/2012/10/10/shrink-to-grow-citysearch-and-urbanspoon-parent-company-
citygrid-lays-off-15-of-its-employees/
• Piskorski, M. J., Chen, D., & Smith, A. (2013). Yelp. Boston: Harvard Business School.
• Tsai, L. (2009, 12 9). Chowhound Comes of Age (For Better or Worse). Retrieved 3 31,2014, from East Bay Express:
http://www.eastbayexpress.com/oakland/chowhound-comes-of-age-for-better-or-worse/Content?oid=1524763&showFullText=true.html
• Chris Silver Smith (2010). Is “Yellow Pages” Becoming An Obsolete Concept?. Retrieved 3 31, 2014 from
Searchengineland:http://searchengineland.com/is-yellow-pages-becoming-an-obsolete-concept-38752
• Nick Stamoulis (2012). Why Yellow Pages Will Be Dead in Five Years. Retrived 3 31,2014 from searchenginejournal:
http://www.searchenginejournal.com/why-yellow-pages-will-be-dead-in-five-years/40008/
• Rusell Perkin (2011). Rating the Zagat. http://infocommerce.typepad.com/my-blog/2011/09/rating-the-zagat-deal.html
• Laurent Kirchner (2011). Zagat Remains a Profitable Brand. Retrieved 4 1, 2014, from
CJR:http://www.cjr.org/the_news_frontier/zagat_remains_a_profitable_bra.php?page=all
• Tsuruoka, D. (2012, 07 24). TripAdvisor Q2 Sales Miss Analyst Views; Shares Down. Retrieved 4 1, 2014, from investors:
http://news.investors.com/technology/072412-619352-tripadvisor-second-quarter-sales-miss-estimates.htm?p=full
• Trefis Team. (2013, 09 05). TripAdvisor Revised To $79: Advertising Business Has A Brighter Future. Retrieved 4 1, 2014, from Trefis:
http://www.trefis.com/stock/trip/articles/201440/tripadvisor-revised-to-79-advertising-business-has-a-brighter-future/2013-09-05
• Bussgang, J. (2012, 08 17). Scaling is Hard, Case Study: TripAdvisor. Retrieved 4 1, 2014, from Inc: http://www.inc.com/jeff-
bussgang/scaling-is-hard-case-study-tripadvisor.html
• SAUL HANSELL. (2008, 05 12). Why Yelp works. Retrieved 4 1,2014, from New york times.
• Paula Forbes. (2013, 4 22). SF Restaurant Calls For Yelp Boycott: 'Stop the Bully’. Retrieved 4 1, 2014, from EATER.
• Michael Luca. (2011, 9 16). Reviews, Reputation, and Revenue: The Case of Yelp.com. Retrieved 4 1,2014, from Harvard business school
case study.
• Sandy Banks. (2013, 4 22). Putting Yelp in their rear-review mirror. Retrieved 4 1,2014, from Los Angeles Times.
• THE YETI. (2013, 10 29). 4 Reasons Why You Shouldn’t Trust Yelp Nightclub Reviews. Retrieved 4 1,2014, from THE YETI
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AD741 D2 (Spring 2014) The Innovation Process: Developing New Products and
Services Team3 Carrie, Claudia, Jim, Tipp, Wow, Ib, Patti - Yelp