"Why the f*** would I use Yelp?" Investor Bets $5,000 Yelp Will Fail

New York consultant and angel investor Peter Shankman is betting $5,000 Yelp will go out of business or change its operating model by August 2015.

Angel investor and publicity guru Peter Shankman is betting $5,000 that Yelp will go out of business or change its operating model in the next two years. In a public Facebook post, Shankman called out Yelp for shoddy practices including a lack of trust in who actually posts reviews and (alleged) burying of positive reviews for businesses that don't advertise with them. He then went on to promise to donate $5,000 to charity on August 21, 2015 if Yelp is still in business.

Followed up with Shankman via email, he said that "it'll die very, very hard. If both Facebook and Google both let me type in 'Italian Food' and the first thing I see are three reviews from people I trust, why the f*** would I use Yelp?” On his blog, he added, "If I log into Google Maps and find a restaurant, if anyone in my network (or extended network) has reviewed it, that’s what’s going to show up. If I’m friends with Mark, and Mark’s friend Michelle reviewed a restaurant, I have a web of trust there. Michelle, to Mark, to me. If I find out Michelle is a shill for the restaurant, that reflects badly on Mark, my friend. That’s the active policing that invokes trust, and that’s so profoundly missing on Yelp."

It's important to note that Shankman is an angel investor in companies that compete with Yelp in certain market niches, and that his consulting firm Shankman Honig specializes in what they call the “conversation economy.” Shankman also loves publicity stunts: To promote his agency, he jumped out of an airplane, and his first company launched with him promoting his consultancy by standing on Park Avenue wearing a sandwich board--which he successfully pitched to USA Today. In fact, Shankman has written a whole book on publicity stunts.

Will donating $5,000 to charity over Yelp's business model be a part of that? We will see.

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40 Comments

  • Tash

    Granted, some changes to business practices need to be made, however Yelp has become a utility in the lives of people in most metropolitan cities, putting to use the wisdom of crowds. The reason these businesses give a damn whether they have high Yelp reviews is because in the eyes of the consumer, Yelp reviews have value and meaning, thereby solidifying Yelp's dominance in the market. 

  • Businessmanroger

    Our business also has been scammed by Yelp.  We have twenty five-star reviews and one one-star review, but Yelp just shows one of each.  They started "filtering" out the other 19 five star reviews once we passed on adding to our advertising budget on their site.  It didn't matter that we already had a "special offer" posted on their site.  The sales rep said that wasn't generating enough profits for them.  The reviews are totally manipulated to increase ad sales.  Of course, so are Google's rankings.  At least Kudzu just shows everything, good or bad, impartial or not, rather than pretending it is filtering for the viewer's benefit.      

  • Utongbra

    How much would you wanna bet? 3 months salary?
    I bet Yelp will be alive and thriving, come Aug 27th, 2015.

    Put your money where your mouth is.

  • Ryan Critchett

    A Yelp Advocate!! Don't see too many of these in the wild :) -  Guess they haven't caused massive revenue loss to your company. Err.. wait, do you have a company? Don't answer that.

  • SunnyDeigo

    Quality reviews?  I want you to Google “Yelp 100 Challenge” 

    What you will learn is that Yelp is holding a contest for its “yelp elites”
    to write 100 reviews this year (about one review every three days).

    Do you think that these are going to be quality reviews when
    they are created under the pressure of winning a contest?  People should write reviews (aka add free content to yelp) when they actually have a meaningful, spontaneous or organic experience.  Not ones created out of a need to “write 100 reviews this year” and you get a cute badge and invited to an event with free knosh’s and alcohol. 

    I don’t know about you, but I feel that since yelp has created these “Elite squads” and relies on them for most of the content, you are not really getting a cross section of opinions.  You’re getting stories written by people who are, for lack of a better word. bored. They have too much time on their hands.   And will look for things to write reviews about, maybe even if they never patronized the business.

  • Dee

    Lol you made some great points! I totally agree, it's really become entirely too competitive rather than honest.

  • James

    Awesome! Every time that I see the truth about Yelp get more publicity it makes me happy. Especially in the investment world, as Yelp is a BUBBLE. Inflated by reviews solicited from the "elites", and burying countless legitimate positive reviews of businesses whose reputation are often harmed by Yelp. They did it to me, and countless other businesses across the country, and its a matter of time before there is proof that allows the sun to shine on Yelp's shady and mob like tactics. Use graph, google, foursquare, anything but Yelp as they are both unprofitable and untrustworthy.

  • Angeli Galloway

    My trusted sources haven't tried everything I'm interested in trying. If I'm looking for a doctor who is close to my house, I go to Yelp. I base my judgement on the overall response and then spot check dissenters to see if their argument seems reasonable. I do the same thing with Amazon or any website that will offer me opinions on people, goods, and services. I am not a Yelp cheerleader by any means. Its interface is sometimes tiring, the map function is limited, etc.

  • Kmcdon07

    It's an internet company. OF COURSE it's going to change within 2 years. Any internet company that DOESN'T change in that span of time is going to go out of business anyway. This is a stupid bet.

  • Ryan Critchett

    Nice try - but you're better than a comedian here, in your overt exhibition of missing the point entirely. I was definitely a bit stuffy today. Needed this laugh.

  • douchey mcgee

    Shankman may be a publicity whore and a douchebag, but he's right about his feeling. But I still think Yelp will live on because something that horrible doesn't die easy. The Yelp "Elite Squad" is a bunch of jackasses and their reviews focus on how "clever" they are versus telling me details.

  • Ironmantodd

    Shankman? Who dat? Either way he just pulled off a great publicity stunt via FAST COMPANY. And I use YELP when I need to find a restaurant just to see whats around.  

  • jlopez85

    Not sure I'd agree; if you go to a new city, how do you find good recommendations? It's also assuming his friends have reviewed a lot of restaurants (mine don't). You need a way to trust recommendations; that's the issue. Either read reputable sources like SF Chronicle, or sites with reputations like Oomea or City Diners