Yelp has quietly become a home services powerhouse

When the COVID-19 pandemic abruptly shut down normal life more than four years ago, few tech companies endured more wrenching change than Yelp. The familiar tool for researching restaurants and retail stores “was kind of at the center of the bull’s-eye of the blast radius of the pandemic,” remembers Jeremy Stoppelman, its cofounder and CEO. With everyone stuck at home, traffic to the site plummeted by half. Eateries and shops that couldn’t even stay open had no need to buy ads. The existential crisis led the company to lay off and furlough thousands of employees. Today, with the world having learned to live with COVID, it’s not surprising that Yelp’s business has recovered. In 2023, the company hit $1.3 billion in revenue, up more than 30% from 2019’s pre-pandemic total. Its revenue for the most recent quarter reached an all-time high of $357 million. As Yelp marks its 20th anniversary—its first review was posted on October 12, 2004—it offers a comfortably familiar experience. Its homepage looks much as it always has, dominated (in my case, at this particular moment) by glamour shots of burgers, tacos, and tom yum noodle soup submitted by users. Under the surface, though, the company hasn’t just bounced back. It’s also evolving in ways that aren’t immediately apparent. For one thing, it’s leaner now: The 4,713 employees the company had at the end of 2023 represent a reduction of 20% from 2019. That’s partly because it’s reduced its reliance on outbound sales as a tool for finding advertisers. For years, “what we would do to grow revenue was add more local sales reps,” Stoppelman explains. “We grew to have an army of something like 4,000 local sales folks reaching out to small businesses to bring them on board.” That investment reflected the fact that small-business owners’ expertise and attention often lay in areas other than online marketing, requiring Yelp to prime the pump. More recently, however, such local entrepreneurs have gotten more digitally savvy—in part due to the popularity of services such as Yelp—and have grown comfortable buying ads using self-service tools. Additionally, a higher percentage of Yelp advertisers are now larger operations with multiple locations, which typically make larger, consolidated ad buys. Bottom line: Yelp has gotten more efficient at monetizing its audience’s eyeballs.  Jeremy Stoppelman [Photo: Aaron Wojack] Perhaps more significantly, it’s expanded beyond its traditional restaurants-and-retail domain. The app’s Projects tab is dedicated to helping users find professionals to perform tasks such as electrical work, plumbing, pest control, and kitchen upgrades. For Yelp users, these big-ticket purchases often involve complex questions, multiple bids, and other logistics far more complex than deciding where to go for lunch, requiring the company to reimagine itself with features such as Request a Quote, which lets you contact several service providers with a few clicks. So far, it seems to be working. The pandemic “really lit a fuse on that side of our business, and we’ve never looked back,”  Stoppelman says. In the most recent quarter, 62% of revenue came from ads for home services, a segment that increased by 11% year-over-year. That boom offset softness in retail and restaurants, which decreased by 3%. One persistent reality about Yelp’s business is Google. The search giant is not only a source of traffic for Yelp but also an aggressive rival. It’s long placed its own Yelp-esque summaries of information about local businesses atop search results, thereby lessening the chances that anyone will keep scrolling and click on a Yelp link. Yelp has frequently decried this practice; it also says that at times Google has scraped its content to use without credit or compensation. In August, it turned its long-simmering anger into action. After a U.S. federal circuit judge declared Google to have a monopoly on internet search, Yelp sued the company in federal court, accusing it of abusing its overall dominance in search to gain an unfair advantage in local search, harming both Yelp and advertisers who’d benefit from more competition. “Google doesn’t play by its own rules,” Stoppelman told me. “And that is what we’re trying to get them to do.” The resulting 66-page complaint is an interesting read full of highly specific accusations, involving matters such as Google counting simple star ratings as reviews in the metrics it uses to determine a business’s overall score. (According to Yelp, that’s misleading and can reward spammers.) Google’s tactics “really keep competitors like Yelp from growing at an even greater scale,” says Yelp general counsel Aaron Schur. “And it also increases the costs of anyone who wants to enter this market, and in fact it keeps many from entering the local search market.” Of course, it was never a given that Yelp would survive long enough to take on Google so directly—not just in court, but at all. Back when the company was a startup, Stoppelman points