Yelp, which has at least 35 employees in NYC, is 
rumored to be bought by Google for nearly half a billion dollars, according to TechCrunch.
Yelp has been growing aggressively, particularly over the past 12 months leading up to this news. The growth is fueled by an estimated $30M in 2009 revenue and over $31M of venture capital raised since the company’s inception in 2004.
In the past year Yelp has expanded internationally into the UK, deepened its coverage in major US metros and aggressively grew its inside sales team, which boasts an estimated 150 employees alone.
Yelp clearly sees premium subscription advertising packages to small and midsized business (SMB’s) from restaurants to hotels reviewed on its platform as its core business model.
Yelp’s inside sales team looks something like this according to a source close StartupAlley:
- 115 people in San Francisco and 35 in New York City with an eye on scaling that to 50.
- Plan to open new office in the Midwest where the majority of the inside sales team growth will be focused going forward.
- The team breaks down into 1 VP, Sales, 1 Director of Training and Lead Generation, 2 Directors of Sales (SF & NYC) and 1 on the way to cover the Midwest, 13 sales managers, 100 account executives, 13 lead gen reps and up to 25 account managers.
- Some back of the envelope math would indicate that Yelp’s SMB revenue is in the neighborhood of $20M, assuming average gross revenue of $200k x 100 active sales people.
- With 28M unique monthly visitors according to Compete.com, brand advertising could easily be up to an additional $10M.
Yelp’s founders are no strangers to big exists. CEO Jeremy Stoppelman and CTO Russel Simmons are both members of the PayPal Mafia, a group of former PayPal employees who have either gone on to found, invest in or join uber successful startups, including LinkedIn, Slide, Yammer, YouTube, Tesla Motors, SpaceX and many, many others.
In hindsight, this seems is an obvious acquisition for Google for at least two big reasons:
- It gets a hyper local vertical search engine with deep penetration into the longtail SMB market, which Google can scale and monetize like nobodies business both from AdWords as well as their massive inside sales team.
- It gets distribution for Google “Favorite Places” and “Local Business Directory“ by piggy backing on Yelp’s “People Love us on Yelp” window sticker program with its own bar-code stickers.
Hopefully Google’s recent acquisition spree will continue and venture capital markets will start to loosen up a bit more in 2010!
