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Yelp Eyes Future IPO

Penelope resists the suitors

It’s official: Yelp has now turned away more suitors than Penelope, the long-suffering wife of Odysseus.

In December, the blogosphere reeled at the announcement that Google was stepping-up to buy restaurant-review site for a cool $500 million. Not bad for Yelp, considering it brief history as a startup, nor for Google, considering its botched attempts to dominate the local review market.

Observers did a double-take a few days later when it was announced that Yelp had walked away from the offer, citing fiduciary duty. It was further disclosed that an unnamed suitor was willing to pay more than 50% above Google’s offer price. Some observers correctly predicted that the only company desperate enough to make such an offer was Microsoft, which has never balked at paying excessive prices for a piece of the social networking pie. We now know that it was, indeed, Microsoft, which approached Yelp with an offer north of $700 million.

Which Yelp rejected.

Founder Jeremy Stoppleman is now sharing more details about his vision for the company, including a distant IPO:

Yelp “will definitely not go public this year,” he said. “2011, who knows? But why rush out the door if I can avoid it?”

This disclosure suggests at least a couple of things–

  1. Yelp has enough cash in the bank to make it for a while, to which its recent injection of $100 million from private equity-shop Elevation Partners certainly attests.
  2. Yelp estimates its true value north of $1 billion.
  3. Yelp expects the IPO market for tech startups will significantly improve after 2010.

Time will tell if Yelp’s holdout strategy will work. It is a risky business, however, considering how quickly the market can turn against review sites.

Just ask CitySearch.

Yelp CEO Doesn’t See An IPO Anytime Soon.

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Associated Press Does It Again

Mad as Hell

The Associated Press never seems to miss an opportunity to miss an opportunity. First, the flap about preventing bloggers from snippet-izing its content. Now it has decided that, rather than send traffic from its Twitter account to its own website, it would rather send it to Facebook.

Say what?

The AP obviously has a ton of media partners, and they could easily link to any of those, or even the story hosted on their own site. But no, instead they’re copying all these stories to their Facebook page and linking there for no apparent reason.

As a result, Facebook gets to count all those page views as its own, while AP probably continues to wonder why it is not seeing a significant lift in its own site metrics. Painful.

via The AP Is Using Twitter To Send People To Facebook. Wait. What?.

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MySpace’s New Plan: It’s All About the Reco Engine

chart

It doesn’t seem to take much for the digital press to slam MySpace these days. First, concerns about the usability of MySpace Music. Then the highly-publicized ousting of founder Chris DeWolfe. Insert layoff. Then, the recent announcement that new CEO Owen Van Natta had been sacked. And against all of this, the steady, exploding phenomena that is Facebook’s gravity-defying growth.

TechCrunch was on-hand at MySpace’s recent company meeting, and reports on the social networking giant’s new plan:

MySpace’s go forward vision was presented to employees, say our sources, and it was all about a single feature thrust that they’re calling “Discovery.”

The idea is to hit users over the head with new stuff when they come to MySpace… If they get this right, the thinking goes, people will want to visit the site over and over again to see what new stuff they can do.

This is effectively a recommendation engine around new content, says one source, but MySpace doesn’t want people calling it that.

A reco engine is MySpace’s deus ex machina? This could prove tricky, as many observers have noted that who a person says he or she is on MySpace may have little resemblance to who they are in real life. How can MySpace hope to effectively unearth its users’ preferences when it cannot verify much factual information about them? (The counter-argument to this is that, regardless of who I say I am on MySpace, I reveal my true preferences through the multimedia content I consume. Tracking my “digital fingerprints” this way may eliminate the need for greater identify verification.)

I hope MySpace finds its mojo on this one, but hearing astute observers like TechCrunch describe this new strategy as a “Hail Mary” play does not inspire confidence.

via MySpace’s Hail Mary Strategy: “Discovery”.

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Foursquare’s Growing Business Model

You’ve got to love Foursquare: in a few short months, it has gone from one of the myriad background apps struggling for respect into the new darling of hyper-connected users. Unlike many of its digital brethren, however, Foursquare is demonstrating a sophistication in its business model which other startups would do well to emulate.

According to AdAge, Foursquare is working on a new suite of tools and services:

…there will be three tiers of paid services: ones for small (local) businesses, ones for retail chains, and ones for big marketers. With these offerings, Foursquare would offer up analytics packages. “Then, deals could be sold against impressions such as web ads, clicks such as search ads, or a completely new model: cost per check-in,” Kunur Patel writes in the AdAge piece.

The complexity of Foursquare’s approach shows that it is determined not to rely upon the unimaginative approach of simply counting on ad revenue. I am increasingly hearing this refrain echoed by angels and VCs, and it’s clear that Foursquare is getting the memo.

via As The Deals Roll In, So Does Some Revenue For Foursquare.

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Is Twitter Cherry-Picking its Metrics?

Concerns have recently been voiced about Twitter’s user base: churn is over 90%, and the average number of tweets sent by a Twitter user is, er, 1.

Twitter, however, is undaunted by such stats, and, instead, promotes the fact that its monthly number of tweets continues to climb ever higher:

Tweets per month

But what is the value of a tweet? Metrics I’ve seen range from a couple of cents to a few fractions of a cent. Is Twitter selecting the data that presents it in the best possible light, while ignoring the fact that its astronomic growth rate may have peaked? And how many of the tweets in the above graph are result of spam bots?

Now that Facebook, and, more recently, Google, have gotten into the realtime microblog scene, expect to see Twitter’s user base numbers continue to erode in the months ahead.

via Twitter Is Still Growing Rapidly [STATS].

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