Update: See Troubled Insider Pages Acquired By CitySearch
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Insider Pages, a user generated review site for local businesses, has been acquired by a public company, according to sources close to the deal. I also spoke with Insider Pages’ VP Marketing Anne Raimondi, who declined to comment.
The company, originally founded by idealab, has faced heavy competition from Yelp and others. They closed a $8.5 million round of financing from Sequoia and Softbank Capital in March 2006, but let a substantial number of employees go at the end of the year. Another company in this space, Judy’s Book, made substantial changes to their business model to avoid the same layoffs.
Our understanding is that the acquisition price is more than the total capital raised by the company, but not by much. More details as they become available.
There is also such kind of site in China which is focusing on the local restaurants: http://www.fantong.com.
Its domain name is very funny which in Chinese it means people who only know to eat!
Our site, http://www.Menuism.com, focuses on rating local restaurants and food in the US and Canada. Â One of the perks of being self-funded is that we don’t have the obligations of investor capital…
Justin
When I read this post, I thought one thing:
LIQUIDATION PREFERENCE
I wonder what the price tag on that one is. Do they generate any revenue at this point?
Justin, how long you had your site up and running? How many restaurants are reviewed so far?
As Michael pointed out last month , these companies seem to be swimming upstream (see
http://www.tech...g-the-deadpool/ )
Now I wonder if Yelp has a secret recipe (which allegedly comes from the more developed social aspect of their site), or if they’ll have to capitulate too.
We should find out soon…
It’s bound to happen when there are too many companies trying to do the same thing, only with slight variations.
spammers go away! . . . please. . .
Again, more than $8.5 mil for this such a startup.
1) intense competition in what they are doing
2) nothing to put them apart from competitors
Yelp seems to the emerging winner -
http://snapshot...s.com+yelp.com+
Justin, Menuism is really great.. how much traffic are you guys seeing? good growth so far?
Kudos to you for bootstraping your startup.. sure did not need $8.5 mil to build menuism..
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Payscroll.com – The answer to the “How much am I worth?” question. Coming Soon.
@peter:
who’s a spammer so far? your post is the most unrelated. oh, i get it, you’re the spammer.
if insiderpages getting bought for the amount of cash put in doesn’t say liquidation preference to you, you don’t know anything.
Well its obvious all of these companies are in it to get bought, what else is there? Practically impossible to support even a skeleton staff on the ad revenue crumbs after the large buys have been placed in the tier one networks, particularly since Google and Yahoo can do so much more to target small business ads beyond the local reviews sphere.
But what are reviews worth? It seems all you really need is one or maybe two well written, accurate reviews for a business with a feedback loop. Most of Yelp’s reviews read like blog posts or amateur comedy (amusing, but rarely informative).
Rumor has it that they were for sale for less than $10 million.
Gannett?
For all the talk of how local search is the next big thing it’s interesting how little success there is in that space, even including Google’s problematic efforts.
I think that we will continue to see acquisitions like this that appear to be more of an exit for an exhausted investor base then anything else. Spending 10mil to try and build a community that can be monetized through ads at about 10 to 20 cents a month per user seems like “running to stand still” to me.
mathew – before you take peter’s head off again, i removed all of the spam from this after he wrote but before you did.
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Now I wonder if Yelp has a secret recipe
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How about creating fake reviews?
Seriously I follow this company for a while and their top employees/freelancers/paid users from day 1 post 95% of the reviews. Just view their joblistings and you can see how it works.
Sad to see that nobody has the balls investigate in stuff like this.
Mercedes is correct. Not only have I heard from several sources that Yelp posts bogus reviews, but it’s also obvious that they have people posting 471 reviews. Come on. 471 reviews? That is a full time job. And how many people have been to 471 places in a town enough to write a long review about them? The whole thing stinks to high heaven.
@15 and 16.
I am a former Yelp! contributor (Austin) and your assessment is off base. At face value, it is easy to say, “they are paying people to review things, so it’s fake!” However, that is not the case.
There is an unfortunate connotation out there that just because someone is being paid to do something means that they are doing it in a disingenuous manner. I was paid by Yelp! to write about my city. Since I love Austin and I love to write, taking the position was a no-brainer.
Colin.
I hate to say it, but that is what is totally wrong with the Yelp business model. When someone is PAID to write a review, then can you take that review at face value. Did that person really like that restaurant enough to spend 30 minutes creating a Yelp account and writing a nice review? Or did that person write a review because they were getting paid to do it? Also when you have paid people milling about the website, a user has to ask himself “Is this review by a paid person or unpaid?” It’s difficult to compare one review to another because of this model. I truly wonder how many legit reviews are on that website that are not written by a paid person or employee of Yelp.
Personally I could never believe a review of a place on Yelp (that I have yet to visit) because of that primary flaw in logic. And isn’t that the entire reason people use reviews? Yelp is not ZAGAT where I can trust a complete stranger based on his reviews. That person is a professional.
To the previous poster (aka “Go Away Yelp”)…
You trust Zagat? How quaint.
In December, Business Week published an article on Yelp’s practice of hiring freelancers to write reviews. See Yelping for Dollars.
I don’t see anything inherently wrong with this — don’t let the current wave of user-generated content make you forget that magazines still hire writers — but it could be abused if the writers have an undisclosed bias.
18 – I understand your point, but would be much more inclined to agree about the reviews being tainted if the person were being paid by the restaurant/club/etc. It’s not different then Netscape paying users, for example, or Michael paying Marshall to review a company. Using your logic, we can’t trust Marshall’s reviews because their is a paycheck attached to them. Where do you draw the line between what’s valid and what’s been compromised by personal gain?
As an aside, do the ZAGAT folks publish their material for free? The authors aren’t paid? I didn’t realize that.
I really like their map feature for each of the listings.
Actually, the contributors to Zagat are not professionals – the reviews and ratings are compiled by their editors. Anyone who considers themselves an avid diner can contribute. The difference is the number of respondents a survey like Zagat gets versus a Yelp or Insider Pages – thousands vs. handfuls per establishment. My concern when I read these local reviews is not that the writers are being paid, but rather that the writers do not have a clue what they are talking about. Yelp obviously has contributors that are passionate and knowledgeable about the subjects they write on, but they also have a fair amount of blowhards that get off on seeing their own writing, regardless of how verbose or dramatic their reviews may be. Is there a site where people use exclamation points and extra “o”s more gratuitously than Yelp (as in, “the spicy tuna roll @ SushiBoy was sooooo amazing!!!!). As for the people that write 471 reviews, if they are not being paid, how can I trust someone that spends the majority of time filling out reviews for fun. Maybe they would enjoy the restaurant a little more if they weren’t so concerned about writing their Yelp postings. In fact I would rather Yelp pay some professionals (food critics, personal shoppers, chefs), label it as such, and have these experts post their reviews on their favorites.
As for Insider Pages, a more appropriate name would be OutsiderPages. Aside from all the confusing ads they throw at you (not exactly contextual when you do a search for Nobu, and you see ads for refrigerated trucking and a modeling agency), every review seems to be written by a tourist. I spent some time on the New York edition, and one of the “insider” tips on shopping and attractions that received 5 stars from a number of “experts” and was a “can’t miss” was the South Street Seaport. Probably the city’s biggest tourist trap (even bigger than Time Square because of its location), it is home to national chains like GAP, Bath&Body Works, Abercrombie – not exactly hidden gems of commerce that New York City is known for.
I did a search for a local bar in my city (a popular one at that) and the results I got for InsiderPages was downright pathetic. First you have to navigate a bunch of complete CRAP from Google (in my case there were sponsored listings from New York City….hundreds of miles away!). I live in Ohio.
Then the actual search results contained nothing I was looking for. The top result was for a male strip club.
Well done IP.com
As for these yelpers, you can’t argue that the probable motives behind a review for a paid vs. non-paid will be different. For yelp to secretly “mix” these people in some of their markets to me seems pretty weak. If someone is a paid yelper, they need to disclose that info to the general public. How do I know that the review is not being written by the owner of that local business too? #23 made a good point. Anyone who writes 471 reviews is someone I could care less about. Either they are driven on ego; wanting to see their stuff online (in which case I am not valuing their opinion). Or else they are on Yelp payroll (in which case I am not valuing their opinion). For someone to tell me how good or bad a place is with absolutely no motive one way or the other is the purest form of referral/non-referral.
And to not think Zagat and Yelp are different is silly. They don’t allow joe blow to put content in their book. they also have a pretty clear monetization strategy.
Nice comment macl29, but it’s a market segmentation issue:
if Insider Pages’ audience love South Street Seaport, maybe you – and I – are the Outsiders as far as this site is concerned.
As for #15, “When someone is PAID to write a review, then can you take that review at face value”, makes no sense to me. Professional critics are paid and can write useful reviews.
But it’s true that there are two models, the expert view vs the wisdom of crowds. In the latter, some reviews may be worthless, but they’re offset by the large number of other reviews on the same topic.
All in all, the problem is not *should they* pay reviewers, but *can they afford* to pay enough reviewers to make the site broadly useful.
i just got a release from down2night with san francisco as their recently launched city i think leaving a local service up to the open public may be the way to go. i love yelp! i wish someone mash up yelp w/d2n…just a thought
Interesting discussion in these comments.
The Zagat survey *is* completed by thousands of participants, but it can suffer from a prominent selection bias. It’s an open survey that anyone can volunteer to take, not a representative sample of all diners. An eager chef can ask his diners to take the survey and sing his praises. See The I’s Have It, from a 5/06 NYT food blog.
If you poke around, you can find a lot of questions and criticism around Zagat’s methodology.
I don’t really believe in canonical Best Of lists, because they all come with biases. I have my favorite restaurants, and I can tell you why they’re my favorites, but reasonable people can disagree with me. The trick is finding a cluster of people (or even a single person) with tastes similar to your own and trading information with them.
While Yelp and IP have similar business models it seems like Yelp is more focused and aware of its core purpose then IP. Yelp is fun, and a great place to get a bit of info on a restaurant/bar/club/or other retail based business.
On the other IP has more of a business feel to it, targeted to consumers/providers of services such as hair salons, medical/dental, and home repair services.
Both firms cast a wide net but Yelp is getting a better results because they cater to a more specific audience . It feels like IP failed to gain traction in their market segment and then went for the be everything to everyone model, which also failed.
IP has some great technology and may be valuable to a larger company that can re-purpose it. No knock to IP, I just don’t see the same user passion or focus as Yelp.
I have a question, if you raise 8.5 million and get sold for a few million more, is that money split according to each parties stake, or do the investors get their money back first and what ever is left goes to founders and equity holding employees?
in this case, most likely the latter MistOne.
The investors will likely own preferred stock, which puts them first in line.
Visit Local.com, I find this is a better web site to find local business than IP or Yelp. It contains additional useful links and information as well.
You mean the Local.com with 20+ ads per page?
Local.com is a mess. I love all of the annoying $0.18 CPM display ads everywhere, as well as the non-local Sponsored Listings. When I actually clicked on a local business at the bottom of the page, it gave me a 10 word review of that business, followed by “Powered By Insider Pages”
WTF?
Insider Pages has way too many error pages. In fact when adding a business they demand that you agree to terms that is actually an error page:
“Insider Pages could not find that page…
Oops! We can’t find the page you were looking for. If you followed an incorrect link from elsewhere on our site, please accept our apologies; it should be corrected soon. We’re sorry for the inconvenience.”
Yelp is a hookup site disguised as a review site for foodies who would like to have some dinner before sex. Partially joking but I like Yelp mobile, it’s helped me when I land somewhere and need some tips to start conversations with locals.
Insiderpages is a name I cannot ever remember when I want a review site/yellow pages.
I like these sites. It is very helpful in holding businesses accountable for their actions and ensuring customers have fair treatment (though they probably will need to build a site that allows businesses respond to bad customers).
Honestly, what could InsiderPages possibly be worth?
Not much, I suspect. I’d love to see a YP or someone like Gannett plunk down cash for nothing.
And Yelp. Come on. Does anyone really think they are any different.
It’s not just reviews. It’s business detail and decent search.
Kudzu.com blows every one of these guys away. Regrettably, these guys only cover four markets (San Diego, Phoenix, Las Vegas and Atlanta) — and Atlanta is where they truly shine. But they actually have advertising and actionable info.
Judy, Angie and so on and so on are flavors of the month.
Its def not worth hundreds of millions but 600k+ local reviews across the country, on more than just wal mart and burger kings is very valuable. now for how much longer until old reviews are no longer relevant? who knows?
I agree about http://www.kudzu.com (except the name of the site …)
Having spent the last couple of hours comparing all these above mentioned sites, it is my n°1 choice.
N°2 is Judysbook.
It looks like Kudzu is now building out the whole country. They have an interesting biz model: They’re owned by Cox communications in Atl and utilized the Cox traditional media outlets (radio/newspaper/etc) to build the brand with consumers. There’s a similar site here in Palm Beach, Fl called mybeeswax.com (they’re tag is funny name, serious business) They are using multiple radio stations and also billboards. It looks like they’re getting decent activity.
Yep, i agree that YP are more recognizable than insiderpages.