Yelp started with restaurants to acquire users fast, then pivoted to home services like plumbing and auto repair. Those categories had clearer monetization paths and eventually became a major revenue driver, even though they attracted fewer visitors than restaurant listings.
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I wanted to dig in a little bit deeper on some specific kind of topics. And, you know, going back to Yelp, though, it's more of a horizontal kind of marketplace, you know, where you have home services, for instance, and restaurants. So how did that kind of impact how you first thought about sales and that kind of strategy?
I think the strategy around it being a horizontal marketplace impacted both the consumer acquisition side, as well as the supply side, you know, with the businesses. You know, initially, the real way to attract consumers was in the restaurants category, right? People are dining out multiple times a week. Therefore, there's an opportunity both to write reviews and read reviews multiple times per week. So from a marketplace perspective, you think about it from a frequency of use perspective, and restaurants, you've got a lot of frequency of use there. So when you think about, okay, how do we drive adoption on the consumer side? Restaurants was the clear adoption vehicle for doing so. It drove the most value for people initially from a quantity perspective, right? And so people liked writing reviews about restaurants. So we kind of had better product-market fit on the reviewer side, right? Which was driving all of the activity. Also, when you think about Yelp, this was sort of the golden age of SEO, And so you think about other companies like Zillow who grew through SEO at the time. This was before Google Maps even launched. So people were using Yahoo Maps and MapQuest. So you think about driving content and building out content that can then pull in SEO. Restaurants was really the clear winner for that, both from a search volume perspective on Google and from a recency of content and interesting content. So there's a lot of things around starting with restaurants, but then expanding beyond restaurants. And what ends up happening is, in some ways, it's almost like a loss leader, right? Where you draw people in through the restaurant content, but the content is really hard to monetize, right? It's really hard to have a restaurant spend money on advertising. It's a really tough business. It's hard to track the value of the advertising for the restaurant. But it brings in a lot of eyeballs from a consumer perspective. Once those eyeballs are there and you start to get other categories like home services, local services, auto repair, and you start to get some valuable review content around those other categories, now you've got a really valuable consumer tool, right? I can find a daycare for my son. There's a ton of value in that. Now, I wouldn't be able to find a daycare if I didn't have all that activity that started with the restaurants, right? Now, from a business perspective, you can start to go in and selling advertising to an auto repair shop, to a plumber, to a painter. There's a clearer ROI on that. So I could go, I mean, we could talk about this for an hour, but you can kind of see how there was a deliberate strategy around restaurants drawing in consumers. And then over time, we started to see On the supply side with the businesses, wow, there's actually a lot of opportunity here with home services, local services, and that became a really important part of the playbook as we got into 2008, 2009, and so on and so forth. Now, home and local services makes up 50% of Yelp's revenue, despite only being maybe 10 or 20% of the overall traffic. So to give you an idea how that has kind of played out over time.
