Jeremy Stoppelman

Cofounder of Yelp

• Born: November 10, 1977
• Place of Birth: Arlington, Virginia

Primary Company/Organization: Yelp

Introduction

Jeremy R. Stoppelman is one of a new generation of Internet entrepreneurs revolutionizing Internet commerce and opinion sites. Stoppelman learned about Internet commerce while working as a vice president of engineering at the online payment company PayPal. Online auction site eBay bought PayPal while Stoppelman was employed there. With the introduction of Yelp in 2005, Stoppelman and partner Russel Simmons made it possible for customers in the San Francisco area to rate local businesses. Yelp subsequently went nationwide, and ventured into public stock trading.

Early Life

Jeremy Stoppelman was born in Arlington, Virginia, in 1977. His family moved to McLean, Virginia, during his early childhood. His father, John, was a securities lawyer, and his mother, Lynn, a schoolteacher before she began a marketing business. After graduating from Langley High School in McLean, he entered the University of Illinois at Urbana-Champaign in 1995, graduating with honors in 1999 with a bachelor's degree in computer engineering.

Stoppelman went to work for Excite@Home, where, according to his LinkedIn profile, he “designed and implemented various website features using Netscape Livewire for @Home's proprietary billing and provisioning system.” After six months with the company, Stoppelman moved to PayPal. PayPal was the premier online payment site, allowing customers to pay safely for items purchased online by linking PayPal accounts either to credit cards or to bank accounts. The ease of PayPal usage also facilitated easy usage of the auction site eBay. At PayPal, Stoppelman managed a forty-three-person team in charge of software development.

In 2003, Stoppelman entered the Harvard Business School. Stoppelman says his enrollment there was “deferred” after “successful completion of one year.” In reality, he had begun work on the project that would become Yelp. The success of that start-up would preclude his return to graduate school.

Life's Work

As of 2012, the preeminent element of Stoppelman's career was Yelp. Stoppelman and Russel Simmons were both at PayPal when eBay bought the company. They both took cash-out offers, then started looking for new opportunities. Both men were fans of San Francisco food (burritos are a favorite of Stoppelman), and Yelp sprang from an idea to help people find good food and services. Their original idea was to take reviews in the form of e-mails from friends, load them into an algorithmic database, then make the reviews available online. Stoppelman and Simmons approached an old friend from PayPal (and another University of Illiniois almnus), Max Levchin, who advanced them $1 million to try the idea. They did three months of preparation, then rolled out the site.

It failed. “It didn't work perfectly right off the bat,” Stoppelman told writer Angela Balcita. “We had to do quite a bit of tuning.” Stoppelman noted, however, that they discovered that their friends loved writing reviews, so he and Simmons set about changing their vehicle to include witty reviews from local people writing about businesses they knew.

With this new idea in mind, Stoppelman and Simmons got another $5 million in venture capital from Bessemer Venture Partners and another $10 million from Benchmark Capital. The new idea was to marry the popularity of reviewing with the viral capability of the Internet. If enough reviews on a business began appearing on Yelp, then Yelp ad reps would contact the business's owners and try to sell them advertising space.

Yelp functions like an interactive Yellow Pages, or perhaps a cross between the Zagat review site and Facebook. Yelp encourages users to write witty reviews, then marries them to the popular aspects of social media. Yelpers can see which reviewers are becoming popular, their style of reviewing, and the businesses they patronize. That type of social popularity encourages more people to review, which, in theory, encourages more people to patronize featured businesses. In turn, that should equate with more paid ads on Yelp sites. Reviewers can become “elite” Yelpers over time, earning badges and online notoriety, as well as invitations to Yelp parties. Stoppelman, however, has not elaborated on what it takes to become a member of the elite.

Stoppelman explained the name Yelp on the question-and-answer site Quora:

David Galbraith (a guy in Max's incubator MRL Ventures who was helping us with Yelp in the early days) found it on his own. It was available for purchase from a squatter for 5k. Russ and I didn't immediately like the name since it was “the sound of a dog being kicked” and I was strangely enamored with “yocal,” a terrible name. Fortunately Scott Bannister (another guy hanging out in the incubator, who was also involved in the naming of PayPal) immediately loved it. He told us he'd buy it and sell it to us the next day when we came to our senses. In the ensuing discussion Jared Kopf (yet another incubator employee) put down his credit card and actually bought the domain. The next day it was transferred to the company (we paid back Jared) and the rest is history.

Stoppelman and Simmons realized early that their site would not work if it became deluged with fake reviews—either bogus good reviews written by business owners themselves or bad reviews that business owners targeted at their competition. Stoppelman says that Yelp has encountered both types, along with attempts by business owners to pay friends to write reviews for them. They therefore created a “review filter,” an algorithm (maintained in secret), that looks at patterns and weeds out fake reviews. Stoppelman said Yelp probably would not have lasted five years without the filter. The filter is “conservative” in its approach, and Stoppelman admits that some legitimate reviews may be rejected and some shills may get through. The site also encourages “self-policing,” which dedicated reviewers seem to embrace. In early 2012, the Yelp review filter busted a “business association” for posting bogus reviews. Members of the association allegedly competed with each other for prizes to see who drive up Yelp ratings the most.

After Simmons's departure from Yelp in 2010, Stoppelman expanded Yelp from a site that covered only the San Francisco area to one with nationwide coverage. Yelp has also entered all the major European countries and Australia. As of 2023, Yelp had more than 60 million unique monthly viewers through the mobile web and 36 million monthly desktop viewers, and reviewers had written more than 256 million reviews.

Stoppelman long remained opposed to any outside control of Yelp or buyouts. In 2009, after low-key talks with Google, Stoppelman abruptly walked away from a $500 million buyout offer. Soon after, he reportedly did the same thing to a $700 million purchase offer from Microsoft. He opted instead for another round of venture capital, this time $100 million, to either compensate employees better (most of whom sold advertising the old-fashioned way, by phone) or allow them to cash out shares. As of 2012, Yelp had yet to make a profit. In 2011, it made $83 million but lost $16.9 million.

By 2012, however, Stoppelman was ready to take Yelp public. With Citigroup and Goldman underwriting its initial public offering (IPO), Yelp placed 7.15 million shares on sale on March 2, 2012, for $15 each. Trading was strong, reaching a high of $26 per share and closing at $24.58. Though Yelp made an earnest effort to expand internationally, by 2016 it had greatly scaled back its operations in Europe after struggling to gain traction.

Yelp's popularity was not without some controversy. Some business owners have feared that they would not get good reviews if they did not buy ads on Yelp. Stoppelman has assured customers, however, that 85 percent of all reviews are three stars or more on a five star scale, regardless of advertising status. In 2009, a California dentist who was the target of a bad Yelp review sued to have the review removed. While the Yelp reviewers argued it violated their right to free speech, a California court upheld the dentist's request.

Stoppelman has also tangled with Internet giant Google. In testimony before a U.S. Senate antitrust subcommittee on September 21, 2011, Stoppelman alleged that, rather than maintaining a search engine that drives users to “the best sources of information” on the Internet, Google hopes to be “a destination site itself for one vertical market after another.” He also charged that Google Local was favoring its own content in site searches and forcing Yelp content out of merged search results.

Stoppelman hailed remote work after working from home during the COVID-19 pandemic. In 2022, he announced plans transition the company to permanent remote working conditions and sell 450,000 square feet of office space in New York, Washington, DC, and Chicago.

Personal Life

Stoppelman is a private individual in a very public business. He eschews the manic, long-hour, day-into-night work schedule that so many computer geniuses embrace, preferring an orderly schedule of work and relaxation. He is devoted to his vizsla, Darwin, and is an avid reader of nonfiction.

Bibliography

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Hansell, Saul. “Why Yelp Works.” Bits. 12 May 2008. New York Times.com. Web. 12 Aug. 2012. views to stimulate readership, rather than relying on professional reviews.

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Tong, Anna. "Yelp CEO Jeremy Stoppelman on Why He's Been a YIMBY Since Day One." The San Francisco Standard, 27 Sept. 2022, sfstandard.com/2022/09/27/yelp-ceo-jeremy-stoppelman-on-why-hes-been-a-yimby-since-day-one/. Accessed 6 Mar. 2024.

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