You see, Yelp's value proposition is that reviews are based on a very intelligent "algorithm" that crunches hundreds (or thousands) of opinions from people who have directly experienced specific small businesses everywhere. These businesses are everyday neighborhood restaurants, retail shops, and a host of service companies. The more customers enter their opinions on such topics as price, service, quality and brand appeal, the more relevant Yelp becomes to any consumer who wants valuable information before deciding to buy from a particular small business.
Here's the catch. Yelp makes money by selling advertising on its site to small business owners. Many of these small business owners are up in arms (and have been posting their angry comments on Internet chat boards) because they claim that Yelp sales representatives are pressing them to buy advertising with a clear threat that if they don't...the reviews will be manipulated in a not so flattering way. Talk about a conflict of interest and a serious legal dilemma, if in fact, these accusations are true.
Last Sunday, this Q&A with Yelp's CEO appeared in The New York Times (link to Talking to the Chief of Yelp, the site that businesses, love to hate). You can see that Jeremy Stoppelman tries to diffuse the crisis by answering a number of very pointed questions about this small business owner claim (which he flatly denies ever took place) and a variety of other misunderstood issues regarding Yelp and its model. The company has also recently posted direct answers to these heated questions on its blog and this video tries to simplify what Yelp is all about by proactively answering a variety of questions in a very friendly tone with explanations that are also easy to understand.
With the exception of one critical flaw, I commend Yelp for moving quickly to try and diffuse this situation through open, transparent communications to all stakeholders. Unfortunately, this flaw is something I can't overlook, though and it focuses on Yelp's nebulous algorithm. Yelp's entire positioning is to provide the consumer with trustworthy reviews that can be counted on. Yet, the algorithm used to calculate this information is murky. And, when Jeremy is asked (in The New York Times article) to explain how this algorithm (or filter) is used to determine whether a review is trustworthy, he refuses to reveal anything. In fact, his answer is downright patronizing ("I really can't be very specific. The more that we explain the algorithm, the less effective it becomes"), as if we (the readers and his consumers) are too small minded to understand it.
I'm a firm believer in measurement. But, whether one uses formulas, algorithms are anything else to get at an end outcome, the methodology has to be something that can be implicitly understood. If not, why should anyone believe that the actual score (or in this case, review) is verifiable. Jeremy's absurd answer stopped me in my tracks and turned me off to Yelp. That's kind of ironic since it's the lesser of the issues that this company is actually dealing with right now.
I think that Yelp still needs a little help...