Report: Google-Yelp Deal Not Happening Now
Dec 21, 2009 at 9:36am ET by Greg Sterling
Something apparently happened. First TechCruch reported Yelp was going to sell to Google for $500 million or more. There was a frenzy of speculative coverage (including by me) that followed this initial report. The NY Times appeared to independently confirm that Yelp was going to sell. And I spoke to someone (not at Yelp) who confidently said that a deal was happening though he indicated its particular form might be different than what was reported.
Back in the hall of mirrors TechCrunch is now saying that the deal is not happening, that “Yelp walked away” and that the “deal went sideways.” TechCrunch says it was CEO Jeremy Stoppelman’s decision. If so it was in consultation with others, including VCs/board members. This is not a decision that Stoppelman would make — or have the authority to make — on his own.
Mike Arrington speculates that another bidder/party came in and “gave Stoppelman the confidence” to say no to the deal (”Apple, Microsoft”). TechCrunch also says its sources convey that Yelp will remain independent for the time being.
Some Yelp partisans may rejoice at the apparent rejection of Google’s offer: “Jeremy join us and together we can rule the (local) galaxy as father and son.” To some this deal might have seemed a betrayal of Yelp’s community values and mission; however that wouldn’t be a legitimate basis for rejecting it. Something much more specific and concrete that must have happened.
As Arrington suggests, perhaps a third party investor has come forward with the promise of a big cash infusion. Or perhaps the board now sees an IPO opportunity down the line. But you don’t walk away — and your hungry investors don’t let you walk away — from this kind of money without some very clear and concrete alternatives.
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Funny, I was having this discussion with a friend of mine over the weekend re: Apple. Seems like the fit there would be SO much better and would give Apple a pretty strong starting point in Local Search if it ever decided it wanted to get into that game…
Google should look at PlanetBuzz.com PlanetBuzz has better functionality, charges far less to businesses, has a fundraising approach for 501(c)3s and has REAL consumers offering reviews/comments…not paid Yelper journalistc wannabe’s.
PlanetBuzz is the best resource for seo, viral word of mouth and business social media built on a fully loaded business directory w facebook/twitter capability to extend loyalty between consumer and business and create MORE traffic/sales. .
@david… local search and/or the new map service that’s supposed to replace Google Maps on the iphone (see Apple Placebase acquisition).
Perhaps that’s what Google’s original motivation for wanting to buy Yelp was… a strategic blocking of Apple buying yelp to integrate with Placebase…?
“As Arrington suggests, perhaps a third party investor has come forward with the promise of a big cash infusion. Or perhaps the board now sees an IPO opportunity down the line. But you don’t walk away — and your hungry investors don’t let you walk away — from this kind of money ”
Why people give yelp such credit is beyond me. Another entirely possible explanation is that yelp/board did not like the deal terms. We have seen with newscorp/myspace that Google likes to structure in guarantees when a large amount of money is on the line, and all $500mm deals are not equal.
Given the exorbitant price quoted, if I was google, I’d insist on specific revenue upside targets being met out of this deal. Would yelp actually fire anyone out of this deal? Very unlikely, so they would have been expected to deliver in a pretty big way.
So as I gather, yelp will sell for $500 mil in cash without accountability. Add in any guarantees or other stipulations, and the deals off.
I have to agree with Greg. As a sane human, you cannot walk away without an alternative.