As soon as you visit the popular website yelp.com, you'll know you're looking at the future of the yellow pages business ... and you'll also see why yellow pages publishers are finding it so hard to get real traction online.The young start-up combines an accurate and deep city-specific directory of all types of local businesses with user reviews and ratings that provide site visitors with plenty of information to make informed choices about local vendors. Beyond this, Yelp provides local event guides and works hard and apparently succeeds in building a sense of community among users of the site. Yelp also innovates. I previously wrote about Yelp's clever process for summarizing user comments to make them more useful.
But a recent profile of Yelp in the New York Times leaves me thinking that the company's founder is offering up more attitude than answers to the company's growing pains.
You see, Yelp generates revenue by selling advertising to the very businesses its users are posting comments about. Invariably, those two activities come into conflict. The article cites a business that called Yelp after a sudden and unexplained drop in its overall rating, and got no assistance. Yelp's founder, Josh Stoppleman, dismissively blamed the problem on an "overly vigilant" spam filter meant to cull suspicious reviews. If Stoppleman had even the slightest concern that his algorithms were impacting revenues of small businesses - the very businesses he wants to advertise - it didn't come across in the article.
When a local restaurant complained about a negative review regarding a dish the restaurant didn't even serve, Stoppleman told the Times, "We can't referee factual disputes. Why believe the business owner who has skin in the game?"
Throughout the article, the implicit message from Yelp to the business community is that "you need us more than we need you." And quick, can anyone think of another group that adopted that same attitude towards local businesses? Right, the yellow pages publishers.
And what of the late lamented yellow pages industry? Well, while Yelp exhibits more and more hubris rather than trying to address real issues with its business model, the yellow pages industry is in fact going back to the drawing board on its business model.
One great example of fresh thinking comes from SuperPages.com, which just launched a program called SuperGuarantee that guarantees its users a satisfactory experience with any service provider sporting the SuperGuarantee logo. Complain to SuperPages, and they'll resolve things to the customer's satisfaction or offer reimbursement up to $500. Best of all, users must register with SuperPages to take advantage of the guarantee, providing incredibly powerful proof of ROI back to participating advertisers.
Why is a giant yellow pages publisher willing to roll up its sleeves and get involved in messy customer disputes when the young, hip, cool start-up is so unwilling to address even clear-cut factual disputes? I think some of the answer is cultural. Too many online start-ups I see seem intent on building black box systems designed to avoid any customer interaction. Great work if you can get it, but the real world is messy, and most of the online services I see really can't deliver maximum value and utility on a totally automated basis. User needs can't be reduced to online forms. What the article on Yelp screams to me is that Yelp simply doesn't want to do the work - too messy, too slow, too labor-intensive. Unfortunately, that's a big part of what publishing is all about. And that leaves an opening competitors can drive a truck through.