By Joseph Galante
Feb. 20 (Bloomberg) -- Yelp Inc., the Internet site where consumers read and write reviews of local businesses, will still be able to turn a profit even as advertising revenue growth slows, Chief Executive Officer Jeremy Stoppelman said.
Yelp's diverse group of local advertisers have shielded it from the economic slump and the site can still be profitable by late 2010, Stoppelman said yesterday in an interview.
"As we're trying to sell to high-end restaurants, that's become more difficult," Stoppelman said. "But as we're trying to sell to auto mechanics, that hasn't necessarily become more difficult because people still need to get their car fixed."
Yelp has Web sites for more than 20 U.S. cities and is expanding into the U.K. and Canada. Users rate local businesses on a five-star scale and post comments. The site competes with online directories such as IAC/InterActiveCorp's Citysearch, Zagat.com and YellowPages.com.
Restaurants account for about 30 percent of Yelp's advertising customers, Stoppelman said. Businesses can sponsor their pages and write back to users. They can also pay to be listed at the top of search results and highlight their favorite user review.
The East Bay Express, a weekly newspaper based in Emeryville, California, reported this week that of dozens of businesses it contacted over several months, six said Yelp salespeople had offered to remove negative reviews from the site if they bought ads.
The allegations are "demonstrably false," Stoppelman said yesterday. It's against company policy to offer such deals and no salesperson has the authority to pull reviews, he said.
BlackBerry Application
Yelp, which has developed an application for Apple Inc.'s iPhone, is working to create a similar program for Research In Motion Ltd.'s BlackBerry smart phone, Stoppelman said. That may be ready this year, he said.
Yelp was founded by Stoppelman and Russel Simmons with a $1 million investment from Max Levchin, who co-founded EBay Inc.'s PayPal unit, where Stoppelman was vice president of engineering.
Yelp has raised $31 million in funding and was valued at $215 million after a $15 million investment last year by DAG Ventures, Stoppelman said. Bessemer Venture Partners and Benchmark Capital also own part of the company.
Even amid the economic slump, Yelp hasn't cut jobs. Stoppelman said the company has no plans to seek further investment.
"We feel we can get to profitability on current cash," he said.
To contact the reporter on this story: Joseph Galante in San Francisco atjgalante3@bloomberg.net
Last Updated: February 20, 2009 00:01 EST
