Yelp, a user-generated database of customer reviews of local businesses, first launched in October 2004. Users rate and leave reviews for local businesses, participate in forums, and can generally get social around local businesses.

Yelp almost immediately caught on organically in San Francisco, but founders Jeremy Stoppelman and Russel Simmons ran into some early criticism. Rumors circulated that they were paying people to leave reviews on the site. Some users were outraged, claiming that paid reviews couldn’t be untainted. Yelp claimed that they were only “marketing assistants” employed by the company to “get the ball rolling” in new cities, and the reviews themselves were honest.

2006 proved to be the year of new competition, with Judy’s Book receiving an $8 million round in November 2005, Intuit releasing Zipingo in October 2005, and idealab’s Insider Pages receiving a cool $8.5 million Series A in March 2006. A daunting situation for a new startup to be in. But Yelp pulled through it to secure a $10 million in a Series B from Benchmark Capital in October 2006 and was named one of the 50 coolest sites on the web.

Then the competition started dropping like flies. Insider Pages laid off 2/3 of their staff and sold quickly to CitySearch in February 2007, Intuit said “goodbye” to Zipingo in August 2007, and Judy’s Book closed their doors in October 2007. Yelp was the sole survivor.

When Yelp released their API in August 2007, they were doing pretty well, getting 1.4 million U.S. visitors and 6 million page views per month. They’ve seen rapid growth since, now at almost 15 million U.S. visitors per month, surpassing competitor CitySearch in March (via Compete). Yelp has raised $31 million in capital, and mainstream press is all over them.

All that press gives business owners the idea that they need to pay attention to Yelp. So they ask their customers to leave positive reviews. Those customers then become Yelp users, and may leave reviews on other businesses, too. A virtuous and self sustaining cycle is created.

But when can you truly say that a company has “made it?”

It’s when people start hating you, of course.

Sites like Yelp-Sucks and IHateYelp have been popping up, with the general theme being an angry business owner who was Yelped. Those business owners that think they must use Yelp for competitive reasons are getting frustrated over some of Yelp’s policies, and are starting to complain about it. Loudly.

The good news for Yelp is that when businesses are afraid of you, it’s only because they realize how much power you really have. See, for example, Paypal and Ebay, two of the most reviled and profitable businesses on the Internet.

The major complaint is negative reviews, and how to get rid of them. But business owners are also complaining that they can’t use their accounts to leave reviews on other businesses, as well as a number of other complaints.

Yelp CEO Jeremy Stoppelman said recently in the NY Times, “We put the community first, the consumer second and businesses third.” Their goal is clearly to make businesses need Yelp, but not to expect a lot of help when it comes to disputes. Complain all you want, you’re just proving that you need Yelp more than they need you.

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If Yahoo Local were a standalone startup, it might look like Center’d. Partly that is because CEO Jennifer Dulski used to be the general manager in charge of Yahoo Local. Center’d, which publicly launches today, is a mixture of an event-planning/invitation site and a highly targeted local search engine, with a little social networking thrown in.

The entire site is set up to do two things: plan and explore. You import your email contacts, put in your zip code, and off you go. There is a calendar view for local events, and a map view for local destinations.

The company started out as FatDoor, a failed social network for neighbors. It took the $5.5 million it raised last October from Norwest Venture Partners and Keynote Ventures, and rebooted as Center’d. The chief technology officer is Chandu Thota, previously the lead developer on Microsoft Virtual Earth. I reviewed the site last April:

Center’d is both a local search engine and an event-planning application. You can search places for restaurants, hotels, schools, museums, stores, etc., and the results appear on a Google map. There is also a calendar view. Once you connect with friends on the system their events pop up in your searches. And you can also create your own events and get your friends to help decide the details. For instance, things like the location and date can be voted on. Want to have a party by the sea? Ask your invited guests if they’d rather go to Stimson Beach or Montaro Beach, and if next Sunday is better than this Saturday. You can also assign tasks for them to sign up for: bring lobsters, bring wine, bring volleyball.

The site is perfectly serviceable and looks like it will do a decent job with both event planning and local search. The interface is heavy on Ajax, with the screen telescoping open as you go through the options. It is very similar to Pingg in that regard, except it is much more limited in what it can do. But Center’d is also not doing anything appreciably different from many other startups on the event-planning side, including Pingg, Socializr, and MyPunchbowl. It does have the local search piece, but so does Yelp, Yahoo, and Google.

Still, when you are starting out with FatDoor, anything is an improvement.

Since then, the site has been improved. Places can be saved and commented on. And it lets you connect to people through places, such as schools, stores, or museums. Social + local. Isn’t that the original definition of community?

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Smalltown, a company out to help local businesses establish themselves online, is spreading its reach on the web and in the real world by founding a new site at WebCards.com.

We first reviewed Smalltown in October 2006 when it launched a destination site for so-called “WebCards”. These compact mini-sites provide overview information about businesses located in any of 6 Bay Area cities. They are categorized according to business type and designed to show up highly in search results, despite being based entirely in Flash.

By default, they show information leased from a local data source and are displayed for free. However, businesses can claim their webcards for $600/year, thereby taking control of them and gaining the ability to add special content like videos, photos, coupons, and contact forms.

Until now, these webcards could only be found in the areas of Smalltown’s destination site designated for particular cities. But now with the launch of WebCards.com, businesses from the world over can create their own webcards and embed them anywhere on the web. Smalltown has also formed partnerships with companies like Trulia to distribute them more proactively to external sites. And when webcards are visited through search engine results, they’ll appear as standalone sites instead of just part of a local directory.

It’ll cost $9/month for businesses to create webcards on WebCards.com. The company plans to create more destination sites around particular cities on Smalltown.com; just which cities depends on those that accumulate the most webcards on WebCards.com. When new city destination sites are established, business owners will have the opportunity to pay extra and have their webcards posted on them.

CEO Hal Rucker says the new WebCards.com property constitutes a strategy to broaden the company’s scope, in contrast to the depth and focus of Smalltown.com. So far only about 600 businesses have created so-called “enhanced webcards” for $600/year. It’ll need over 60 webcards created on WebCards to make as much revenue as one on Smalltown, where these cards have higher visibility. Businesses will have to be convinced that the cards’ portable nature and SEO juice pays off, although $9/month isn’t a hard sell.

Smalltown differs from other sites for local business information like Yelp in that it focuses on merchant-created content. While Yelp has recently given more power over listings to businesses, it remains a consumer and reviewer-focused site.

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Local businesses have a love/hate relationship with review site Yelp: The site sends new customer leads to the businesses reviewed. But businesses can also be reviewed (and trashed) without even knowing Yelp exists.

Businesses like Oakland coffee shop Cafe Rooz felt slighted by the ratings site when a few vocal customers posted poor reviews. They went so far as to declare No Yelpers. But still others have benefited. According to Yelp, Joe Alexander’s San Francisco based mattress store, Keetsa, gets 80 percent of its total monthly business directly from Yelp.

In either case it’s a sign of the influence the site has over businesses as a lead generation - or degeneration - tool. Now Yelp is releasing a suite of business tools to give business owners tools to participate more directly in the conversation.

The suite is available at biz.yelp.com and lets businesses:

• Message customers who have reviewed their business
• See how many prospective customers viewed their business page
• Update business information instantly (i.e. hours of operation, categories)
• Receive new review email alerts

Yelp, which has raised $31 million in venture capital, continues to grow briskly. Comscore says they have 3.7 million unique monthly visitors; Compete says it’s more like 9 million.

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Yelp, the popular local review site, will soon announce a new $15 million dollar round of financing led by DAG Ventures. The valuation is rumored to be in the $200 million range. Yelp says that they will be using the money to expand geographically, add onto their sales team, and establish an office in NYC (they are based in San Francisco). This is Yelp’s fourth round of funding since their founding in 2004.

Yelp is also boasting some impressive stats: 8.3 million uniques in the past 30 days and over 2.3 million reviews (with the 1 million mark being reached on May 2007) (these are internal Google Analytics stats that the company shared with us). Yelp is in a competitive space with InsiderPages (acquired by Citysearch), and YellowBot. The real competition, though, will eventually be Google Local and Yahoo Local.

With this latest round, DAG joins previous investors Max Levchin ($1 million, Summer 2004), Bessemer Venture Partners ($5 million, Q4 2005), and Benchmark Capital ($10 million, Q4 2006). The company has now raised a total of $31 million. Revenues are rumored to be sub $10 million/year.

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Palo Alto-based Genie Town launches this morning. They’re trying to crack the local services nut - a huge market, but one that a lot of the big guys are eyeing, too.

The company says they are addressing the long tail of local services. The GenieTown site allows local service providers (plumbers, dentists, whatever) to put up a web presence. Users looking for providers can find them, based on their location and user rating.

The site competes on one end with services like (gulp) Google Local, Yahoo Local, Yelp and of course the Yellow Pages (both online and off). All of those services are great places to find local service providers.

Eventually GenieTown says they’ll integrate more closely with service providers to coordinate calendars and booking systems. At that point they’ll run into another group of competitors, including recently funded Liberysy.

If they are going to be successful in both carving out a niche and avoiding all those competitors, they’ll need to quickly get a lot of those service providers to start using their service. To concentrate their efforts they are rolling out the Bay Area only for now - service providers and users from anywhere can use the service, but the company will only market locally. They’ll grow from there.

And GenieTown is also trying to engage with users on more than just making introductions. The smartest part of the service, in my opinion, is a Q&A area that will do very will with search engine optimization.

The company has raised $2 million in a first round of funding from a number of angel investors, including Stanford professors Hassan Chafi (also the CEO) and Kunle Olukotun.

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The dream of free municipal WiFi refuses to die. Meraki Networks is picking up the ball that Google and Earthlink dropped, expanding its free WiFi network to cover all of San Francisco. The service will be ad-supported (ads appear in your toolbar when you are browsing through a Meraki WiFi router), and the build-out will be paid for out of a $20 million series B round the startup just raised from Sequoia Capital, DAG Ventures, Northgate Capital and other existing investors. This round is on top of $5 million Meraki raised last February from Sequoia and (ironically) Google and former Google employees.

Meanwhile, Google’s once-vaunted WiFi initiatives have dwindled down to providing free WiFi only in Mountain View, CA (where Google is headquartered). And Google’s biggest WiFi champion, Chris Sacca, is now gone. Google’s WiFi effort in San Francisco is all but dead, mostly because its partner, Earthlink, decided to get out of the municipal WiFi business.

So why does Meraki (and its new investors) think it can succeed where Google failed? Well, for one thing, it is already providing free WiFi to 40,000 people across two square miles of San Francisco. (With about 500 WiFi repeaters supporting them). It is simply expanding that program (to about 10,000 or 15,000 repeaters). Second, free municipal WiFi is not Meraki’s only business model (more on that below). It is using San Francisco basically as a giant demo for other cities. But, third and most important, its mesh technology is a cheaper way to blanket a city in wireless broadband than through standalone WiFi hotspots.

Meraki’s WiFi routers connect to each other through a mesh network, meaning that many can share a single broadband connection. They are cheap, can be placed outdoors on rooftops and balconies, and can even be solar-powered. The company expects that it will only cost a few million dollars to cover all of San Francisco, compared to the $14 to $17 million estimated for the Earthlink/Google plan. “There is a pretty drastic cost advantage,” says CEO Sanjit Biswas. “Our network will come in at the low, single-digit millions,” he predicts. Meraki will even offer residents free repeaters to amplify the WiFi signal inside their homes, and shoulder the entire cost itself rather than ask for public funds. All the routers will also be on private property, not public property, and thus avoid the politics of involving the city government.

Whether or not Meraki can prove that local ads will bring in enough money to cover its costs, though, is a different question. Meraki will show single-line text ads from Google that are localized as well as contextual ads from Yelp. Even Meraki CEO Biswas is not sure there is a big enough inventory of local ads to support an ad-driven model, but he sees the San Francisco deployment more as a showcase and as a test bed. “It helps us to have a live testbed with thousands of users,” he says, adding almost casually: “It would be cool to figure out an ad model.”

He is not being glib. Meraki’s real business opportunity is overseas with telecom companies in emerging countries like India and Brazil, who desperately want a cheap way to spread broadband and charge for it. Meraki makes a little bit of margin on its hardware (routers go from $49 to $199 each), but the real money is in managing large networks in partnership with telecom companies, where Meraki takes a 20 percent cut of the access fees they charge. The free WiFi in San Francisco might help build some buzz, but it is not going to spread anywhere else—unless those local ads start bringing in some real cash.

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Recommendation based social network Trusted Opinion has raised $1.3 million Series A, although the investors are not being disclosed (we did ask).

Palo Alto based Trusted Opinion offers community based product ratings and recommendations in a social networking setting. The focus is on friends recommending things to friends, such as movies and DVD’s.

The company added support for Netflix queuing in July, allowing members to port recommendations into Netflix.

Trusted Opinion has dumped the awful logo Michael noted in February, and with a some-what better new look has grown to 350,000 registered members and is adding 3,000 new members a day.

Trusted Opinion’s service overlaps with a number of other social networks and other startups including Yelp and Flixster.

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We just got word from Judy’s Book founder and CEO Andy Sacks that the Seattle startup will be shutting down operations, and most of the staff of twelve was let go today. The company had raised a total of $10.5 million over two rounds of financing.

Judy’s Book started off as a community driven review site for local businesses, but changed it’s focus in 2006 when the original model looked to be failing. The company de-focused on local reviews, and went more towards the shopping angle and local deals.

The assets of the company are being sold, and Sacks says the company is in discussions with a few interested parties.

Other players in the local review space have fallen in the last year, too. Intuit shut down Zipingo last summer, and Insider Pages sold for little more than the capital it originally raised to CitySearch.

Yelp is still standing and reportedly doing well, although fierce competition from Yahoo and Google as well as younger startups is looming. We sadly put Judy’s Book into the TechCrunch Deadpool.

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It seems like every time you turn around there’s another site out there trying to help you rate this, that, or the other thing. There’s Rapleaf (people), StreetAdvisor (neighborhood), YourStreet (neighborhood), SodaRatings (soda), and the list goes on (we wrote about Urbanspoon yesterday). Now there’s a new one in private beta, GarageSeek, for rating mechanic’s garages in your area.

With GarageSeek users will be able to share their experiences with mechanics and rate them on several different metrics. When live, the site will provide a potentially very useful service, the ability to check reviews and avoid hiring a shoddy mechanic. However, while a complete database of real reviews is useful, a lot of review verticals don’t offer a real reason to contribute when they start and fragment reviews across multiple domain names users may not care to remember.

Yelp largely solved the chicken and egg problem that comes with user review services, even if they allegedly paid users for reviews to start. They raised over $16 million and generated traction on the service through having a system seeded with content, rewarding top users with over-the-top parties, and focusing on a service that a wide variety of people use frequently, restaurants. The other large people-driven review site, Insiderpages, had the advantage of $9 million in financing and starting back in 2004. Despite this, Insiderpages went through a slew of layoff and eventually sold off to CitySearch for $13 million.

Yelp is already in the auto repair category, and is poised to expose their audience to other review verticals as well. They’ve already moved into non-geographical service reviews such as media outlets. The one question these review verticals need to ask themselves is “Can niche vertical review sites survive up against one general review site, Yelp or otherwise”? My feeling is no.

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