How I Built This with Guy Raz - How I Built Resilience: Jeremy Stoppelman of Yelp

Episode Date: October 1, 2020

Yelp founder Jeremy Stoppelman says his leadership team anticipated a "nuclear winter" after the pandemic hit. But as businesses start to re-open, and ad revenues on the site creep back up, Yelp is bringing back furloughed employees and adding Covid-conscious features to its listings. These conversations are excerpts from our How I Built Resilience series, where Guy talks online with founders and entrepreneurs about how they're navigating turbulent times. Order the How I Built This book at:https://smarturl.it/HowIBuiltThisSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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how I built this. It is just out now and available everywhere, and it doesn't cost more than a few cups of coffee. And it's filled with wisdom and stories and ideas that will have you feeling inspired and fired up to take on the world. So please, if you love this show and what we do for you, do us one back and pick up How I Built This wherever books are sold. Hey, everyone, and welcome to How I Built This Resilience Edition. On these episodes, we talk with entrepreneurs and other business leaders about how they're meeting today's challenges with new strategies and ideas. And today, we're going to hear from Jeremy Stoppelman, the founder and CEO of Yelp.

We first told Jeremy's story on the podcast in the summer of last year, and you should definitely check out that episode if you haven't heard it yet. And if you've ever used Yelp, you know that it's a way for consumers to find information and reviews and all kinds of businesses. But one of the big things that people use it for is restaurants. And so that's where my conversation with Jeremy started. This industry has just been absolutely hammered, unlike any other industry, travel and leisure as well. So many people go to Yelp for restaurants. So did you anticipate that pretty quickly early on that restaurants were going to get hit or did that come as a surprise to you?

We had some sense that restaurants were going to get hit. One of our more senior product managers, Chinese person who had lots of contacts in China and was relaying all the changes that restaurants were going through in China to try and adapt. At the outset of the pandemic, it looked like this is crazy. They're doing all these things with temperature checks at the door and like delivery, you know, new delivery things and partitions.

And it just seemed so unlikely that that could be our reality. especially at that time, call it early March when we were studying this, and everything still felt normal. But it was pretty soon we could start seeing impacts in some of the cities that were hardest hit in the U.S. So, for example, Seattle. And so that obviously got us thinking about business ramifications and okay, restaurants, you know, which is a big portion of our traffic, are going to be hard hit. You know, what can we do? You know, we weren't going to try to charge restaurants, for instance, for that period where traffic was falling. And even if they were getting, getting some value, like, you know, that everyone is thrown into total chaos and, like,

there really isn't a whole lot of point to advertising, you know, as traffic is falling like that. So pulling together a bunch of different things to support the restaurant and nightlife industry at that time became a big priority. And ultimately culminated with about $32 million, you know, worth of forgiven fees and other things to support restaurants. Jeremy, your business model depends largely on advertising on businesses that advertise on the platform and businesses that depend on ads have had a difficult time because companies are cutting back on their ad spends for obvious reasons. They've got to preserve cash in many cases. And this has actually pretty dramatically affected your business, Yelp's business, right?

I mean, over the past year. That was one of the scariest things, particularly about March and April, you know, in a pandemic, especially as things are shutting down, who's buying advertising? Right. Right. So that was my great fear was, you know, is our revenue going to go towards zero? Like, maybe it's not zero, but is it going to go towards zero pretty darn quickly? So we had some very stressful, difficult conversations around like the different potentially catastrophic scenarios. What would we do? How do we survive? You know, is there a freeze? The company in Amber type strategy literally was something we were talking about, like where we just go down to the skeleton of staff.

if it's a nuclear winter type of situation. Fortunately, the world did start to restabilize, and as the panic subsided, you know, there were businesses that actually were doing even fine or good. You know, like as all of us were sheltered at home, suddenly if your toilet backed up, you're calling the plumber, it ended up being more, you know, busier. And some people started moving, you know, later in the pandemic. Some mover traffic was doing reasonably well. And so there ended up being areas of our business because we are diversions.

of thought. We're known obviously widely for restaurants, but we also have both reviews and customers in all sorts of local services categories as well. And that area of the business has been quite resilient. Contractors and so on. You know, it's interesting. I remember when you were on the podcast, you talked about two crisis moments. I remember one was when you were at X.com and you were just totally terrified that I think that PayPal was going to like crush you guys and you had sleepless nights about that. And then the other one was when you started Yelp and nobody came to the party. Like it was really, it just didn't gain any traction in the early months, many months. And you were really worried. You had a lot of anxiety about it. And you talked about that.

And this sounds like even more intense, what you went through in March and April, just probably personally. I mean, planning for a nuclear winter. But in some senses, like, I wonder whether anticipating that possibility actually was in a sense probably the best way to game out what your strategy would be because in the end it didn't work out that way, but you were planning for the worst. Yeah, one of the things that I would say was beneficial of going to that awful place in our minds. I'd say at the early part of the pandemic, it's hard for people to really wrap their heads around the scope of the problem, how big the problem is, how it's going to change our lives. It just seems unbelievable. And so by forcing other executives, managers, et cetera, to start

thinking about this could be the big one, so to speak, you know, it gets you into a brain space that did shift everyone's thinking to, okay, this is a big problem. We have to take this extremely seriously. And there's going to be big changes and moves that none of us are going to like, but we have to do to ensure the survival of the business. And maybe it's my, you know, maybe I'm overreactive or I was overly paranoid, but I do feel like it created a sense of urgency within the organization that, hey, this is a very big challenge for the company. And so we need to be light on our feet. Everything's on the table.

All ideas need to be heard and vetted because this is a big problem for our business, which the damage wasn't as bad as we feared. But, you know, that was a very big, scary chapter for the company. Yeah. And of course, you had to have layoffs. I mean, you, I think layoffs, furloughs, pay cuts. I mean, you basically had to implement all of these things and other things in order to keep things afloat. Yeah, you know, that was one of the hardest personal things for me thinking about, hey, we're entering into this pandemic.

Advertising revenue is potentially evaporating. You know, if we can't sell any advertising, we can't employ all of, you know, these salespeople. And so how do we, how do we manage that and how do we do so in a way that cushions people as much as possible? How can we, you know, be empathetic and communicate clearly and be as generous as we can while still, you know, keeping the company afloat? And so you're trying to balance all of these very difficult aspects as you're making these decisions that affect people's lives. And it was brutal. It was brutal. The one thing that I feel a bit better about is as we were making these tough decisions for the company, we were able to carve out a group and say, okay, well, some of these people that are trained that have been with us for years, like maybe we can put them on pause for a few months and bring them back.

And so that was kind of the furlough decision. And we took our best guess of how long can we put these people on pause and then potentially afford to bring them back on. And so it ended up being a thousand people that we put on furlough. And we said at the outset, hey, we think our best guess is we think this is four months. And fortunately, that guess proved to be accurate. And at the end of the four months, we were able to start bringing people back. You know, the vast majority of them, I think, sometimes. something like 70, 80% of them are back working at Yelp, which is fantastic.

I mean, obviously, that they made a huge sacrifice themselves, not working for, you know, four months, and that's difficult in and of itself. But it does feel good that, hey, given this crazy natural disaster that we were able to take these people that are loyal to Yelp, you know, that have been great to Yelp and bring them back on, that feels good. Jeremy, I want to kind of switch gears for a second. can ask you about strategies, resilient strategies. I mean, you mentioned earlier that with your team, you said, hey, all ideas are on the table

and presumably not just ideas to stanch the bleeding, to stop the bleeding, but also to think of new ways to build out revenue, right? New ideas that could create new revenue streams. What are some things that you've started to do on the platform since the pandemic started that might actually redefine Yelp, you know, in the future. I mean, there's so much stuff related to obviously COVID. Business data becomes so much more important. It was already hard to corral things like, you know, the hours of a business, and consumers really value it.

And it changes, and so it's hard to keep up to date. We rely on the community as well as business owners to submit some of that stuff. But we really felt like we needed to turn it up a notch. And so we now have hours, but they're also listed with when it was last updated. So you can get a true sense of like, okay, is this fresh? Can I rely on this data? We've also done a lot of data gathering ourselves. So for lots of popular businesses all over the country, we've been scrambling with our own

personnel to try and make sure that the most important listings have the most accurate information. Also, one of the things we heard from from both business owners and consumers is, hey, I care about my safety. I want to know before I go, like, what is this business doing? And business owners that are trying to make their customers safe for saying, I want to be able to broadcast like what my approach is. Employees are wearing masks or what have you. And how do I put that out there for people to see?

So, you know, we have a whole section now dedicated to COVID-19 safety where businesses can publish the things that they're doing. The future iteration of it that we're working on is actually allowing consumers also to provide some feedback on like, yes, I'm seeing this. And so really make sure. that it's reliable, robust information. There's also things that are probably here to stay that are new for us. Like, you know, virtual appointments. I mean, healthcare has been transformed by video appointments. I've seen a doctor recently over video. And that was a great experience.

So we are realizing that there's certain services that we can experience at home that are local services, but you don't actually need to meet in person. And that's great. It's a time saver. It's convenience, et cetera. Yeah, I noticed that also you, there's a new feature where black owned businesses can identify as black owned. And that's really actually brought a lot of support to black owned businesses in the wake of the demonstrations against racial injustice. Do you, do you anticipate sort of more initiatives like that coming out of this? I mean, I'm assuming that that was unanticipated, but that seems like it's been pretty successful. Yeah, yeah. It has been a successful initiative very well received, you know, in the wake of George Floyd's murder and the

subsequent social unrest. We launched into action, both internally at Yelp to understand, you know, what's going on, how do our black employees feel, how's their work experience, but then also externally, what can we do to support, you know, black community members and black business owners? And one of the things that we heard loud and clear was, hey, if I'm a black business owner and I want to tell people that I'm there and I want to be searchable and found as a black business owner, we should provide that. We also pulled together of the businesses that identified, we pulled together collections, we're able to promote those throughout the site and app. We also just promoted, you know, being able to search

across black owned businesses. And we actually saw a rise in searches for these businesses subsequently. So it's been a really great success story. And more recently, we also did that for Latinx businesses. And it's great. You know, it's a great way to support communities that want to be seen and heard and deserve our support. And so we're really proud of that work. When we come back in just a moment, we'll talk about one of the features of Yelp that gets a lot of negative reviews, the negative review. Stay with us. I'm Guy Raz and you're listening to How I Built This Resilience Edition from NPR. Hey, welcome back to how I built this Resilience Edition. If you spend any time on Yelp, you've probably had that confusing experience where you see a really

negative and cutting review followed by a really positive one. And there have been a lot of questions about how Yelp reviews actually work. And if anyone is gaming the system. So I put some of those questions to Jeremy Stoppelman. So Yelp has, as you know, is long-faced accusations of pay-to-play, where essentially, you know, you charge to keep up good reviews or high listings. Can you address that? Is that something that Yelp does? Can businesses pay to get better reviews? views placed higher? What's your response to that? The answer is, of course, absolutely not. That's never been the case. And in fact, you can prove it to yourself. Look at any one of our advertisers and see if you find negative reviews. Chances are you will because everyone gets the occasional

negative review. And so if there was a delete negative review button that you could pay for, presumably people would be using it. But, yeah, I would say Yelp has been the canary and the coal mine on this misinformation issue, you know, when it comes to sort of accusation, you know, that get spread through social media. This is something that, you know, we've been dealing with for a decade. Obviously, there's lots of business owners out there. And when some of them don't like their, you know, what they see on their Yelp page, they come up with theories or reasons why, you know, the Yelp rating doesn't mean anything to them, why it doesn't matter. And I can kind of understand that. You have this rating out there that you can't control, which is by design, and you get frustrated with it. And so the natural thing is to say, oh, well, I think it's pay to play or I heard it's paid. You know, this friend of mine, you know, this friend of mine. told me, and so it's kind of this rumor mill thing that gets started, spread on social media, propagated, repeated, unfortunately, in the media, and then is seen to be, well, it must be true because where there's smoke, there's fire. But it turns out, you know, courts have looked at it.

FTC has looked at it. We've been tested in every which way an orifice possible at this point. And the reality is we don't. Yeah. We try to be a fair referee and create a level playing field. And I think we do a good job of that, which is why we get the criticism. Because it turns out, you know, if you let your guard down, like some of our competitors, Google, for instance, doesn't take as harsh a stance on, you know, allowing people to solicit reviews or fake reviews or what have you. Like ratings tend to be more positive. And business owners love that, but guess what? That's not great for your pocketbook as a consumer. And so we're trying to strike the right balance between business owners and consumers.

A lot of questions also about negative reviews. Some people, you know, saying, look, they're a tool for people who want to hurt businesses for one reason. or another, why isn't there a mechanism to hold reviewers accountable to say, hey, you know, because I can point to thousands of examples. You've heard them of restaurants getting pummeled by people who don't like them because of a political stance they took, for example. The red hen restaurant that didn't serve Sarah Huckabee Sanders got pummeled by people who gave it one-star reviews. Is there a mechanism that could be created to hold reviewers accountable so they can't manipulate the reviews like that? Well, I think we're talking about

Two different things there. They're sort of like Yelp becoming a bit of a political or other review sites becoming a bit of a political platform when there's some sort of political scandal associated with the business or other scandal. And that we have a separate mechanism for dealing with. We can put up an alert on the page and we actually pull down the content that's unrelated to the actual business. We do, you know, try to point to what's happening in the media so people have the context of what's going on with this business. But even if somebody were to like write a review about the restaurant, just a negative review that's, just made up because they don't like the business owner. I mean, isn't there, is there a way to hold that reviewer accountable or at least make sure that their identity is clear to maybe to

prevent that? Are there ways to prevent that? Or is it just something? We do, we do have very aggressive mechanisms that try to create a level playing field. And I guess stepping back for a second, it's important to remember that 80% of the reviews on Yelp are three stars and no. So there is a, you know, and I get it. Like I, as a business owner, you know, I also get negative feedback, whether through the media or other places, like, I'm not immune to it. It stings. You remember it for years. Like, I'm bitter about many stories of the years.

I could name the reporters. But you have to, you know, you have to remind yourself, it's the big picture that counts. No one's going to have a perfect record. And it turns out, actually, the occasional negative just shows that you are a real person, that things go wrong. Or there's also crazy customers that does exist. But Yelp has a mechanism where 25% on average of reviews are not shown on the businesses page. And we are by far the most aggressive of any review site out there. And the reason why we do that is, well, there are a few.

But one is obviously business owners try to game the system. It does happen all the time, whether it's writing fake reviews for themselves, emailing their uncle, saying, review me, what have you. But then also for consumers, you know, sometimes there might be a malicious, you know, could be a competitor that's driving by on your page and writing a negative review, or it could just be, you know, a random person that Yelp can't trust for one reason or another. And so we set aside 25% of the content on Yelp, which is unprecedented.

It hurts the site, like from a business standpoint, because we have less content, business owners that have reviews. You know, it's better for business, frankly. But we do that because we truly care about making sure that Yelp is a useful service that is a service that consumers can rely on, which means there is going to be negative content. And they're not going to look at that one review and say, oh, I'm not buying this business. Do you look at that one negative review and say, that's it, I'm done? No, I don't. You look at the overall picture. But, you know, we're living in a time with so much

misinformation and disinformation. It's hard to know it with someone on Twitter's a Russian bot or coming, you know, like some kind of troll farm in Eastern Europe or Ukraine. It's just impossible to know. And it's the same with sort of anonymous reviews. I guess I wonder whether there are mechanisms. Are there ways to, if we assume that let's say 10% or 5% of people who are doing this are just trolls, is there technology to root them out? Definitely in the case of bots, malicious spam, things like that. Yeah, absolutely.

That's part of the 25% that we take off of the page. is, you know, we are using software algorithms to identify suspicious patterns and, you know, things that we don't want to show consumers. So we do take it absolutely seriously. I mean, I think in your earlier comment, there was maybe an insinuation that, you know, is there a way to prove that the person transacted? And there is this like false, I would call it very false belief that if you prove that someone transacted, then that review is therefore trustworthy. But all you have to do is, like, read one of the 20 stories on Amazon about how people still easily gain. that system because like, oh, you could send the product to someone, reimburse them for buying it,

and then they write a fake review for you, and now consumers are misled. So it's very easy, even in a transactional system. If the incentives are there, because ultimately, like, people want to sell more product or, you know, like, there's still very, there's a lot of money in gaining the system. And so it's a tool, but it's not a golden bullet by any means. And there's plenty of examples where the site, I personally can't rely, I don't rely at all on Amazon reviews, because I don't think they take the system very seriously. I think they use it as a way to just sell stuff. But, you know, personally, I go to wirecutter, which is the vision of the New York Times for all my consumer product purchases. All right. I'm going to ask us one last question for Trong Kim's coming from

YouTube. Trong asks, what tools do you have for businesses to fight back against fake reviews or reviews that they think are, were planted by a competitor or something like that? We do have flagging. So if you log into your business owner dashboard, Biz.Yelp.com. You can go in there and mark a review as suspicious or give us some context around it. We do have a human staff as well in addition to all the algorithms and whatnot that will take a look. The reviews also you can respond. And that's one of the most powerful tools I think out there because think about yourself as a customer. If you see a negative review, you might read that and say, oh, that's weird. But then if you see a very thoughtful reply from the business owner,

a personal, like empathetic, hey, I'm sorry it went this way. You know, when you came into my restaurant, please, you know, ask for me by name. I want to, you know, stop by and thank you for your business. It's like that type of communication can completely neutralize a situation that was bad, or even if you aren't familiar with that particular customer, just treating it seriously showing that you care, I think goes a long way for that next customer that's going to look at your business page. And I look at those all the time. I love when business owners respond to reviews. I think it's really great. I want to ask you about to put your entrepreneurs head on because we have a lot of people watching who are entrepreneurs who've got small businesses and are really looking for ideas.

We mentioned that when you launched Yelp, it didn't get a whole lot of traction. And it was really, I mean, I think you described it as like this dark period. You were worried you were just like driving your team off a cliff. I think that those are the words you used. Right. Right now it's a pretty dark period for a lot of businesses. What advice do you have for people who might feel like they're leading their teams off a cliff right now? I mean, what would you say to them? I mean, in crisis, the number one thing I think is staying calm and just one foot in front of the other.

You know, there was an important lesson I remember from my PayPal days. We were up late. You know, I was with the team and we had like a bad code push and the site wouldn't come back up. So PayPal was basically down, initially down on purpose. But we couldn't get the site back up. And it was like stretching on hours and hours. And we had this very senior database administrator who had kind of battle hardened. He had seen it all.

And I was literally in a panic. I'm like, oh, my God. Oh, my God. What are we going to do? Like, I was in full on panic mode. And the guy was just so calm and collected and like, no nonsense. And we're going to try this. And we're going to try that.

And that was an important lesson for me. No matter how crazy things get, like there is zero benefit to being in panic mode. And the absolute best thing you can do is try. try to calm yourself down, take a moment, think about things, and figure out what is one thing you can do right now? And I was leaning on that very much so, you know, in March April. Jeremy, last question for you, when we're done with this pandemic, hopefully, and we can return to something that is normal, it's going to be different, but normal. What do you want to take with you from this time, what that you've learned about yourself as a leader, that you

will take with you into the future and apply to how you operate as a leader? I think communication is a key. You know, I don't think there is enough communication that I could do at Yelp right now. I just think there's a lot of anxiety. There's a lot of uncertainty both because of the business, but even more so, you know, in our society and politics, obviously. And so the more that you can project that sort of calm, confidence, you know, we're going to get through this one foot in front of the other.

Here's the actions that we're taking. Here's what we know right now. I think the better people feel. the more people can say focus, you know, on our shared mission. And so that's, that's probably my best takeaway is like, you've never done enough communication within your organization. So keep reminding people what they're up to, why they're doing it, and that you're there to support them. Jeremy Stappelman, founder and CEO of Yelp, thank you so much for joining us. Thank you. That's an excerpt for my conversation with Jeremy Stoppelman, the founder and CEO of Yelp. To see our full interview, you can go to Facebook.com. slash How I Built This. And if you want to see all of our past live interviews, you can find

This episode was produced by J.C. Howard with help from Candice Lim, Will Mitchell, Bruce Grant, Matt Adams, El Manion, Gianna Capadona, John Isabella, Julia Carney, Neva Grant, and Jeff Rogers. Our intern is Farah Safari. Thanks for listening. Stay safe and I'll see you in a few days. I'm Guy Raz and you've been listening to How I Built This.