Yelp's IPO Update
Few things are more heartening than when Yelp admits what we’ve been saying all along: Their review filter sucks! In short, in their own words, “determining the credibility of reviews is difficult, and we cannot guarantee that our efforts will prove to be effective or adequate.” If I were the SEC I’d make them rewrite it again! The filter doesn’t work, there is no intelligence behind it, to my knowledge they have no PhD statisticians designing the scoring algorithm…
“While we have designed our technology to filter content that we believe may be offensive, biased, unreliable or otherwise unhelpful, we cannot guarantee that our efforts will be effective or adequate. In addition, some consumers and businesses have expressed concern that our technology inappropriately filters legitimate reviews, which may cause them to stop or reduce their use of our platform or our advertising solutions. If the performance of our filter proves inadequate or ineffective, our reputation and brand may be harmed, users may stop using our products and our business and results of operations could be adversely affected.”
Now there’s the smoking gun! 🙂 And my hunch is that the word “IF” is going to have to be removed and replaced with “WHEN” to meet the stringent SEC requirements for full disclosure and perhaps that is why the rumor mills are churning about the cancellation of the IPO. That is one (of many) great thing about the SEC and disclosure requirements. They can often dig up what us mere consumers have been saying for years.
And why the rush to IPO? In Feb. 2010, private-equity firm Elevation Partners bought $25 Million in stock in Yelp and allowed six Yelp founders and executives to cash out a portion of their stockholdings to Elevation. Jeremy Stoppelman cashed out $15 million in the deal, so it’s not like he’s only a paper millionaire. With all the hoo-ha going on behind the scenes and the requirements involved in being a publicly traded company, I’m not holding my breath.