Yelp’s Not Yet Concerned About Profitability–And Investors Don’t Mind

Investing in growth takes precedence over profitability.

Yelp’s Not Yet Concerned About Profitability–And Investors Don’t Mind
Pictured from left: PayPal cofounder Max Levchin, Yelp cofounder Jeremy Stoppelman, Fast Company's Tyler Gray [Image: Alice Truong]

Yelp’s not yet profitable, and investors are okay with that. Instead of putting pressure on the review site to focus on the bottom line, they’re pushing the company to invest in its growth.

“When you have this kind of opportunity, what your investors want–the smart ones–is to invest in this opportunity,” said cofounder Jeremy Stoppelman at Fast Company‘s Innovation Uncensored conference in San Francisco on Wednesday. “There aren’t a lot of companies our size growing at that rate.”

Yelp currently has about 57,000 paying customers. What’s standing in the way of profitability in the immediate future is meant to drive profits long term, Stoppelman said. If the company slowed down its investments in growth, including hiring, the bottom line would certainly benefit. But he cautions: “Then your revenue starts to slow as far as growth is concerned, and the ventures don’t want that. They want you to get bigger,” Stoppelman said.

Stoppelman’s comments come one day before another high-growth, low-revenue tech company goes public–Twitter, which to date has made no profit at all.

About the author

Based in San Francisco, Alice Truong is Fast Company's West Coast correspondent. She previously reported in Chicago, Washington D.C., New York and most recently Hong Kong, where she (left her heart and) worked as a reporter for the Wall Street Journal.



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