Yelp CEO Jeremy Stoppelman has made a name for himself by snubbing companies whose billions in cash dwarfed what was available to Yelp, as he sought to maintain control over the company’s mission and approach to content and users. It turns out he rejected even more money than most thought.
In 2009 Yelp fielded a bid from Google for $550 million, a deal that was quashed when Yahoo came in with a higher bid of $750 million, as TechCrunch reported close to a year later.
Now we know that Yahoo wanted Yelp even more than people outside the companies knew. In the first quarter of 2010, according to a person familiar with the negotiations, Yahoo discussed a price of $1 billion without giving a formal offer. To put that in perspective, Yahoo’s market capitalization at the end of 2009 was about an eighth of Google’s. Google was also working with $24.6 billion in cash at the time, compared with Yahoo’s $4.5 billion.
Yelp balked at the idea, saying a deal would probably take $1.5 billion to $2 billion, the person said. That was higher than Yahoo was willing to go. Google later bought Zagat Survey LLC, the review service known for its burgundy-colored restaurant guides, adding features designed to boost ad revenue from local businesses. So while the review business has grown in importance, the barrier to enter the market is now even higher for Yahoo.
(With thanks for reporting by Douglas MacMillan.)