The line outside Shizen, San Francisco’s hottest Michelin-starred hipster vegan sushi restaurant, is extremely long, but the wait is surprisingly short. After the doors open and the first wave of diners are seated, the line mostly disappears, despite it being one of the more popular spots in the city. Just a few people linger on the sidewalk. Why aren’t more people waiting to get in?
The line, or lack of it, is a weirdly effective real-world product demo for Yelp, the 15-year-old review site and local business directory. Shizen has put its reservation system and waitlist on Yelp. Which means that when impatient diners want to wait for a table, they can do so at a bar around the corner, or even at home, and then arrive just in time to be seated. In other words, you don’t have to stand in line to be in line. And so, before you know it, Jeremy Stoppelman, Yelp’s vegan CEO, is tucking into a roll made from beets, kale, and, uh, seaweed pearls. (Trust us on this one: 5 stars.)
Yelp bought a waitlisting company in 2017, and it rolled out new predictive wait times and notification features this year. It’s one of a slew of changes the company made in 2019, including introducing some new ways for it to make money. This follows years of moving beyond mere reviews. You can look up a restaurant's rating, sure, but you can also use it to get a quote from a chimney sweep or order delivery through one of its partners.
"One of the most powerful companies in the world didn't want us to succeed.”
And while rolling out new features and revenue streams, or even pivoting into completely different business models, are relatively normal things for tech companies to do, for Stoppelman and Yelp, it feels a bit existential.
“In Yelp’s case, it's been the thing that I probably have been most focused on for the last decade,” said Stoppelman, “finding a way to survive knowing that one of the most powerful companies in the world didn't want us to succeed.”
That powerful company is Google and its corporate parent, Alphabet. For most of Yelp’s history, it has been engaged in a painful and public spat with the search and advertising giant, with Yelp executives endlessly beating the drum about what they describe — in interviews, tweets, regular newsletters, and even cutesy animated videos — as Google’s anticompetitive practices.
For years, this seemed like a quixotic fight at best. Stoppelman or some other Yelp executive would take a swipe at Google, which Google would then more or less ignore as it casually snacked on YouTube or Motorola or Nest or Waze or Fitbit. But this view of Google — and big tech writ large — as too big and too powerful has gained traction in recent years both in Europe and the United States, and it is now facing multiple antitrust actions, and has already racked up billions in fines. In recent weeks, attorneys general from 50 states and territories (minus California) announced an antitrust probe into Google’s advertising and search business. The winds have shifted and are coming from the left and the right. The Donald Trump administration has been openly antagonistic toward Big Tech, and the president has said on multiple occasions in response to questions about Google that it might be a monopoly. Meanwhile Sen. Elizabeth Warren has a literal plan to break it up.
In short, the world has lined up behind Stoppelman, who, despite the changes he’s making to the site’s platform or the newfound seriousness with which his antitrust arguments are being taken, is basically doing what he always has. In a series of two wide-ranging interviews with BuzzFeed News, one at Yelp’s office and another at the vegan sushi place, he talked about the changes his company has been through the past 15 years. But mostly he talked about trust. Gaining it, losing it, and, of course, busting it.
Stoppelman is 41. He’s thin and athletic-looking, with cordlike veins that snake down his biceps and that hyperfit, low-body fat upgrade that tech execs seem to have all downloaded at the same time. A Virginia native, he moved to the Bay Area after college, in 1999, and went to work as an engineer during the peak of the first dot-com boom for @Home Network, which was in the early stages of a merger with the internet portal Excite, which Stoppelman said was “clusterfucked.”
“I finished all the coding ideas that my boss had. I'd be like, ‘Hey, I'm out of stuff. What do you want me to work on next?’ And he'd be like, ‘Oh, meet me at my desk at 4:45.’ I'd go by his desk and he'd be gone,” said Stoppelman. “But it was also late ’99, early 2000, so it was hopping in the Bay Area. I was getting recruiting calls already. My phone was ringing every day.”
One of those calls came from a recruiter at X.com, a banking and payments processing company founded by Elon Musk, who had already founded and sold a previous company. Stoppelman went in for an interview.
“At the end of it I met Elon, and I was blown away. I was like, I want to be like this guy! He's only 28 years old but was much like he is today. He’s like, we're going to take down Visa! He's wildly ambitious and knows what he wants to do. Who knows if it will happen, but I’d never met anyone like that.”
They did in fact make it happen, succeeding beyond what was probably in any way realistic in those early days (although Musk himself was pushed out of the CEO role along the way to make room for Peter Thiel). X.com was renamed PayPal; in 2002, as the dot-com boom was going south, eBay acquired the company for $1.5 billion. Those early PayPal employees were suddenly quite rich.
This was the origin of the “PayPal Mafia,” so named for the group of former PayPal employees who went on to found a slew of successful businesses and invest in many others. In many cases they started companies together, or invested in each other’s startups. The group includes Musk, Stoppelman, Thiel, Russell Simmons, Max Levchin, Reid Hoffman, Keith Rabois, David Sacks, Chad Hurley, Steve Chen, Joe Lonsdale, and Dave McClure, among others. Together they would start some of the best-known companies in Silicon Valley, among them LinkedIn, Tesla, SpaceX, Palantir Technologies, and YouTube, while their capital investments helped give rise to Facebook, Uber, Lyft, Pinterest, Stripe, Airbnb, Square, and a host of others.
Stoppelman attributes much of their success to timing. The dot-com market correction began in early 2000, its deflation accelerating after the Department of Justice won a ruling against Microsoft in April that year, and continuing all the way through 9/11 and beyond. Once high-flying companies like Pets.com and Kozmo.com became nothing more than correction roadkill as the market sloughed off trillions of dollars in value. But the PayPal guys, on the other hand, did great.
“While the internet was collapsing around us, our company was successful. We didn't go through the trauma of the dot-com bust,” said Stoppelman. “Everyone had some capital and confidence at a time when most people that had been anywhere near the blast radius of the internet were completely dismissive. The mainstream thinking was ‘Yeah, that internet. Maybe it's a utility, but it's not this exciting commercial thing we thought it was.’ That created a very fertile soil. You have people with capital, interest, confidence, motivation, all at the right time in their career — late twenties to late thirties — pretty good odds.”
In 2004, after he spent a year at Harvard Business School, Stoppelman along with Simmons, also of PayPal, cofounded Yelp with investment from yet another PayPal alum, Levchin. In its early days, it was going to have more of a social networking–style structure, where people could ask friends for recommendations. But as Stoppelman and Simmons absorbed a lot of what was happening elsewhere on the internet, particularly with blogging, Yelp settled on local business reviews as a sort of “directed blogging.” The focus was mostly restaurants and small businesses, but you could review just about anything you could think of there: plumbers, doctors, gas stations, cannabis clinics, hotels, parks, monuments, dog parks, you name it.
Problems began almost immediately.
Trust is hard to come by, especially on the internet, where everything anyone doesn’t like is fake. Facebook has spent years awash in fake news and misinformation. Amazon ratings and reviews are notoriously compromised by bad actors. Photos are shopped. Videos are doctored. That account is a bot. The chans have wormed their way into our brains. And even when we see the same stuff, we can’t always agree what happened.
For Yelp, the trust problem was fake reviews. Restaurants were paying people, or offering them discounts, to write nice things on the site. Or people would, for one reason or another, trash a restaurant they had never been to. Maybe it was a competitor, or maybe the owner was an outspoken Democrat. Yelp’s solution was to take an aggressive stance. Most of its users probably didn't notice, but it created a lot of headaches for its relationship with the businesses it relies on for ad dollars.
But trust was also something Stoppelman and Simmons had thought about, extensively, at PayPal, a company whose entire business depended on getting strangers to send each other money via the then-new internet. In fact, they had seen PayPal’s business boom and were now rich precisely because it had cracked down on fraud and established consumer trust. They had a low tolerance for scammers.
“Within the first two weeks we could see some business owners generating obvious reviews for themselves. The fake content popped up pretty quick. We could tell that spam was going to be a problem,” said Stoppelman. “And we also looked at the competitor that we were up against in those days, Citysearch. They had a consumer review feature, but it was just totally spammed out.”
From those early days, Yelp focused on taking down reviews that it thought were spammy or bogus. Those takedowns became something of an arms race, and the company has sometimes gone to extremes to try to keep things in check. Yelp will publish consumer alerts on businesses pages when it detects inauthentic activity, for example, and even runs sting operations.
“We have a team that tries to buy reviews from people, and then also try to identify businesses that are buying reviews,” said Stoppelman. “If we catch someone red-handed, we'd take screenshots of correspondence and all that and put up a banner saying on their business page, saying, ‘Hey, this business is trying to game the system, and here's the evidence.’”
It also takes action when people start reviewing businesses simply because they are in the news for other reasons, often political — because everything is political now. For example, in 2018, when the Red Hen restaurant in Lexington, Virginia, refused to serve then–White House press secretary Sarah Huckabee Sanders, online mobs from all across the country turned to Yelp to pummel the restaurant with negative reviews — even though they had never set foot in the door.
This is a relatively common occurrence, and it doesn’t always take a national story. Local issues can also send people to a business’s page for punitive reasons, which means Yelp has to police these kinds of review-brigading all over the country, even when the company isn’t aware of whatever the issue is that triggered the action. So it has an algorithm to detect what the company calls an “unusual activity” alert that it adds to the business’s page until the activity subsides and it can mop up.
It also surfaces reviews algorithmically via recommendation software. It segregates reviews that the software flags for being solicited or biased, or because it doesn’t know enough about a user. Which means Yelp hides almost 30% of the reviews posted to its site, according to the company. This review filter is, to put it mildly, enormously unpopular among businesses. It has also led to a rash of false conspiracy theories (covered previously by BuzzFeed News) that the company takes down good reviews in order to get businesses to buy ads. It also means Yelp leaves money on the table — it could easily juice engagement and user numbers if it took a less aggressive approach to policing content. But here’s the thing: It works. The company is approaching 200 million reviews, and it may even have passed that milestone by the time it announces its quarterly results this week.
Moreover, when you see an average review number on Yelp, it’s a pretty good indicator. A 4.5-star restaurant is probably going to be pretty great. A 2-star restaurant? Not gonna eat there. You might also see an alert about a restaurant’s cleanliness on Yelp. In more than 30 states, it makes that information available right on a restaurant’s page. It’s another transparency measure that’s good for consumers but has probably cost the company money with the communities of small businesses that populate its site.
"If you optimize for maximum attention, you're leaning into human nature of rubbernecking at train crashes, and all the worst stuff that humanity can provide."
“I’m sure we could have been making a lot more money if we allowed ourselves to be compromised and just said: Anything goes on Yelp. You want 5 stars? Tell your friends to go write a bunch of reviews for you and they'll be on Yelp and then you can advertise. And wouldn't it be wonderful?” said Stoppelman.
Instead, Yelp went another route. It is vigilant about reviews, and has passed on some easy ways to make money from users' data. It doesn’t let businesses target users who happen to be walking by with an ad, for example. Despite persistent rumors, it’s hard to imagine Yelp fitting in as an acquisition target for Big Tech — in just two interviews with BuzzFeed News, the outspoken Stoppelman took shots at Facebook, Amazon, and Google.
Which is all the more curious as Stoppelman is a member of perhaps the most successful circle of investors ever, in the PayPal Mafia, and yet his business runs counter to so much of the prevailing wisdom in Silicon Valley, which argues for growth at any cost.
“When I look out at other companies,” Stoppelman said, “I see other priorities, namely growing revenue as much as possible. So why didn't Facebook crack down on certain types of content, or why did they allow sensational stories or stories that are not true to blast across the network and get amplified so much? Had they had the foresight to say, ‘Hey, this is bad for the world’ or ‘This is bad for our long-term brand, we should shut it down,’ it probably wouldn't have turned into an eventually traumatic political issue.
“But at the end of the day, collecting attention is the way that they make money, and they dial up the algorithm — the same as YouTube, same for Google. You know, it's like Google and Facebook did the same thing: Use the algorithm to optimize for maximum attention. And if you optimize for maximum attention, you're leaning into human nature of rubbernecking at train crashes, and all the worst stuff that humanity can provide. And that's where you end up. And I'm sure it was like rocket fuel for their business, but now we're paying the price.”
Yelp’s headquarters are in the old Pacific Bell Building, once the tallest building on the West Coast, and the first skyscraper in San Francisco’s SoMa district. When Yelp moved in, it was an early tech colonizer of this particular section of downtown San Francisco, today known as the East Cut. Now, the East Cut is swimming with internet giants, and the Pacific Bell Building is dwarfed by the Salesforce Tower, just a few blocks away.
Yelp’s windows look out on that building and the park next door that bears Salesforce’s name. You can see the offices for Slack, Trulia, and Facebook as well, all of which ring the new multibillion-dollar park and transit center. LinkedIn and Google have offices nearby. To the west, on a blighted section of Market Street, are Uber’s and Twitter’s headquarters. Pinterest is a few blocks south. So is Airbnb. Yelp is hemmed on nearly all sides by tech behemoths.
Yelp is small compared even to Twitter. It’s endured years of ups and downs, including a stock slide last year over the way it sells ads. (It eliminated fixed-term contracts.) The company has a market cap of only about $2.5 billion — nothing compared to Alphabet or Amazon, both of which have market caps of nearly $900 billion. Or, for that matter, Apple and Microsoft, which have both blown past trillion-dollar market cap territory.
Yet Yelp is a tidy, profitable business that pulled in $55 million in profit on $942 million in revenue last year. Seventy-three million people open it up on their phones every month. One hundred million look at it on the web. That’s not shabby. But in 2019, in the era of billion-plus user companies, a mere 100 million people puts you at a disadvantage.
"Google didn't stick to the plan.”
“The question is, is there a path to independence?” Stoppelman said. “Distribution is always the centerpiece. If you create a great product or service, how do you get it in the hands of the people? The problem with Big Tech is they control the distribution channels. Distribution is the key. If Google is the starting place for all of the people that are tapping into the web, to the extent they get in front of consumers and block them from finding the best information, it's really problematic, and that can stifle innovation.”
To that end, much of what Yelp has been doing recently is aimed at connecting directly with its audience. In addition to things like reservations and waitlists, it also introduced new customization features, which let you set up dining preferences, dietary restrictions, and other personalized options. These are nascent but represent a big push for the company as it tries to provide individualized recommendations — which means that when you search for a place to get lunch in the near future, your results will be different than your coworkers’ at the next desk over. Yelp has rolled out new tools for businesses as well. A new “Connect” tool lets businesses communicate directly with people who have shown an interest in it — maybe they've checked in there or written a review. It also added features designed to help new businesses without many reviews reach audiences, and as a way to build new revenue streams outside of search ads.
But it is the roiling national debate about the role Big Tech plays in our lives — from the way it enables disinformation to how it relies on unfair business practices — that has thrust Stoppelman into the center of a national conversation. Yet he didn’t just end up there. Much of the newfound traction that the antitrust argument is getting is due to a long game from Yelp, which has leaned on regulators across the world for years now. The company began when Google’s business was under far less scrutiny.
“We really started Yelp to do something noble,” Stoppelman said. “We wanted to help people connect with the best local businesses. There was this platform called Google, and we essentially did everything that they said. We generated really fantastic content, we cultivated community, we did all these things that were expensive, that were hard to do, and required a lot of innovation. Google didn't stick to the plan.”
Google tried to buy Yelp in 2009, but the deal fell apart. And so the larger company built out its own local business reviews, and today it promotes those above content from Yelp, TripAdvisor, or other competitors. Search for “Thai restaurants in Hollywood,” for example, and Google will spit back the top-rated ones from its own listings. Yelp’s listings will generally be there, but farther down the page.
“The only way that we could get them to do the right thing in the early days was by shaming them in the press. So that's where this all began — they would do something egregious like steal our content and put it in every Android phone and the Google Places app. We would talk to TechCrunch or something, and someone would write it up, and they'd be shamed into doing something. And then eventually they got tired of that and … as we would shame them, they'd get less responsive. And so we would naturally progress to the next level, which was ‘Okay, the only source of power now that might be able to check them is government.’”
Google, via a spokesperson, denied these claims.
In 2011, Yelp’s senior vice president of public affairs, Vince Sollitto, gave a presentation to the Conference of Western Attorneys General, in which he charged that Google was engaging in anticompetitive practices that hurt its smaller competitors. Meanwhile, Luther Lowe, Yelp’s vice president of public policy, aggressively continued to make the antitrust argument to the press. (If you write about Google, Lowe is probably already lurking in your inbox.)
“What happened is that the government lost its will to prosecute.”
“I’ve always had a view that the government could and should play a role. I was born in the late ’70s, a child of the ’80s. My dad was an SEC lawyer who worked on insider trading cases. My worldview has always been government regulation isn't the end-all, be-all, but the government can and should play an assertive role in shaping a market economy,” said Stoppelman. “But what happened is that the government lost its will to prosecute.”
Yelp’s effort has ramped up as Google began delivering more answers on the search results page itself — including local information that had been Yelp’s bread and butter — rather than linking out to third parties. As of this past summer, more than half of all Google searches now end without a click, according to a SparkToro analysis of Google’s clickstream data. That is, most of the time when someone searches for something on Google, they just get the answer they are looking for in the results themselves and don’t have to click through to another website (and see another website’s ads).
But who cares if I get my restaurant reviews from Google instead of Yelp or see hotel rankings right in a Google search rather than on TripAdvisor? The convenience of getting exactly what you are looking for without having to click out or wait for another page to load, especially in the era of mobile, is great. No question.
Yelp needed to show that Google delivering its own answers and own products above others hurt actual consumers, and not just Google’s would-be competitors. So Yelp launched a campaign to try to show how the search giant’s practices did just that. In short, Yelp’s argument is that when Google displays its own results it deprives consumers of choice and, worse, that Google’s local reviews are, well, not good.
“Google’s reviews... It is kind of comical that they call theirs reviews!” Stoppelman said. “Most, probably like 60% or 70%, of their reviews are actually ratings with no text. But they have to compete against us, so they're generous with what they call a review.”
It’s been a slog. But there is also now real movement — and not just in Europe, which is more prone to regulation than the US — on the issue of antitrust. And on the issue of user trust, there have also been a litany of tech scandals that have roiled Google, YouTube, Facebook, Amazon, Twitter, and Uber. High-profile startups like Theranos and WeWork turned out to be little more than elaborate cons. Tech, and Big Tech in particular, has few political friends on the left or the right. What was once one of the more admired industries suddenly seems more like a politically convenient punching bag.
There was a time when all that seemed to matter in tech was scale. Everything was about getting to a billion, and then the next billion after that. Growth was good for its own sake. And anyone who deviated from these lines was unrealistic, or flat-out irrational. But today those ideas are very much in retreat. Facebook and YouTube and Amazon are so large now that they seem almost beyond policing. Companies are increasingly being asked to defend their scale and practices. It turns out, when you put a billion people together on the internet and let them say whatever they want, the marketplace of ideas bends toward propaganda and Nazis.
Stoppelman seems to be playing a long game, counting on some of the scale we’ve let these companies stack up to be leveled off by government actors. It is often said in and around Silicon Valley that we are in the early stages of the internet. And the question before us now is really about how much control we want to place in a handful of companies, be they in the US, or China, or wherever.
“The first seven years or eight years, there was a lot of eye-rolling in Silicon Valley about Yelp being a complainer, or I'm a whiner, or this is a stupid issue,” Stoppelman said. “I think the reality is now the world has caught up.” ●