When Russ Simmons and I left PayPal in 2003, I went off to business school, and Russ went and traveled the world. We rejoined in the summer of 2004 at an Internet incubator founded by Max Levchin, one of the two founders of PayPal. The goal was to come up with some new consumer Internet idea, and one area that seemed unsolved was finding a place online where you could look up a local business and get an accurate portrayal. We saw all this money being spent on the Yellow Pages offline and felt that it hadn't really made the jump online yet.
That same summer, I got sick with the flu and needed to find a doctor. And the only sites that existed were really rudimentary—you could only look up the doctor's name, maybe where he went to school, nothing beyond that. That was really frustrating. So Russ and I started obsessing over social networking and reviews—maybe those two things fit together? Out of a lunch conversation, we thought the best way to find local recommendations is to ask friends. How can we capture that, bring it online, and make it a useful tool where you can actually search by word of mouth?
That led to the first version of the site, which came out in October 2004. Primarily, it was focused on asking friends for recommendations. The idea of online word of mouth got a very positive response, but the actual mechanism of the site proved to be painful, noisy, spammy. People didn't like it that much. The person looking for a business wasn't always promised a response from their friends—and those friends were often annoyed by questions to which they didn't have answers.
But there was a small feature buried deep in the site called "Write a Review," where you could share your own unsolicited opinion. And despite the fact that the feature was hard to find, we saw quite a bit of interest in that section from a number of our early users. People got addicted to it. It was pretty obvious to us, from looking at the data, that people wanted to write their own reviews.
We tried to quickly recenter the site on sharing your reviews and got a relaunch up by February 2005. There was a night-and-day difference in the response—people showed up, thought it was fun, got addicted. That year, was our big year. We didn't have a lot of money, only $1 million in seed financing. We focused on marketing and making the site useful just in San Francisco. We thought that pattern of expansion might be the right one from looking at Craigslist, which started in the Bay Area and then expanded from city to city.
It helped that the name itself, Yelp, is quite memorable. I wish I could claim credit for it. The name I wanted in the beginning was pretty terrible: Yocal. I thought it was a neat play on "local" and "yokel," but we couldn't get the domain, which is probably for the best. So we were struggling with a name, only a month away from launch, and a guy in the incubator was poking around online and saw that "Yelp.com" was short, memorable—and only $5,000 to purchase from a domain-name squatter. When Russ and I heard it, we were a little negative, like, "I dunno, it's kind of like the noise a dog makes when it's kicked." But then another guy around the incubator, Scott Banister, when he heard it, he just lit up. "I'm buying this for you right now! I'm putting in my credit card!" We were like, Okay, we'll think about it. And sure enough, the next day, we asked for it.