Talking tech since 2003

When Google wants to copy or mimic your idea you take it as a sign that your company and venture is taking a step in the right direction.  When Google puts an offer on the table and wants to buy your company and idea, though, you know that you’ve hit a home run.  So imagine how it felt for the folks behind Groupon to turn down Google’s acquisition offer – estimated to be at around six billion U.S. dollars – late last year.  Pretty liberating, right?  And better yet, such a substantial offering for what in reality is a very young startup company means that Google saw a huge potential in what Groupon was building.  And with Google’s history, I think it’s safe to say that the company is more than qualified at sensing killer business ventures.

Maybe it’s just me and perhaps it’s just the fact that deal-based services had caught my eye after the Google/Groupon deal caught media attention, but it really seems to me as if services offering “daily deals” have become more and more popular in the last nine months of so.  I mean, look at how far deal site Living Social has gotten in the past couple of years, utilizing the poor state of the economy and the tighter budgets of just about everyone to push their service; even to the point of placing an ad during the February 2011 Super Bowl.

So imagine my sheer disappointment this week when I read a PC Magazine article covering the fact that online restaurant and business rating site Yelp is on the verge of “trimming”, while not entirely cutting, its daily deal service.  In an official post on the company’s blog, Yelp CEO Jeremy Stoppelman said that the company took “a 30 person team that was selling daily deals and local ads and made it a 15 person team focused solely on daily deals.”  While the employees focused on daily deals are now focused exclusively on that task, it still seems to me as if the online reviews site has edged its focus elsewhere.  Why else would the company cut the number of people working on deals instead of adding more employees to build upon that venture?

For a company with over 400 employees, I seriously can’t understand why they don’t just hire more employees if they need the extra manpower in other areas.  Why take away from deals?

Now, I know what you’re probably thinking; why does this crazy blogger care so much about Yelp?  Aren’t there a handful of other daily deal services out there that focus exclusively on deals already?  And of course those of you asking this question are entirely right.  The market already has Living Social and Groupon, and even Google has gotten in on the action with Google Offers (although it hasn’t taken off that much thus far; I actually didn’t know about it until researching for this article).  But the fact of the matter is that none of these sites have the potential that Yelp has.

You see, Yelp is already established.  The service started in 2004, which is pretty “established” with respect to many similar sites on the Internet.  And on top of their age, Yelp has phenomenal brand recognition and a loyal user base.  Quite literally, I have never found a restaurant that didn’t have a review on Yelp.  Even new restaurants – on opening weekend – typically have Yelp reviews by the end of their first business day.  That is how loyal their user base is, and in my opinion speaks for how much weight Yelp has in the restaurant industry and with other local businesses.

Really.  Yelp already has the biggest thing that they need in order to be successful in the daily deals game: visitors.  Be it people who frequent the site (I know a couple of Yelp addicts myself) or people who simply pop in to see if the new cafe down the street is worth checking out, Yelp is a visitor magnet.  So why would they shift focus away from daily deals?  What would be wrong with me finding a new restaurant with good reviews and a special deal?  I don’t see an issue, do you?

And that’s really why I can’t wrap my head around this whole thing.  What are your thoughts?  Share them in the comments!

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