I thought Yelp was foolish to walk away from $550 million, but it may have also turned down $700 million from Redmond. According to BusinessWeek:
Stoppelman and his crew believe they’ve only begun to tap the potential of local online advertising. Their desire to keep control is strong enough that Yelp recently turned down a $550 million acquisition offer from Google (GOOG) and a bid north of $700 million from Microsoft (MSFT), according to two people involved in the negotiations. “Yelp has the chance to become one of the great Internet brands,” says Stoppelman. “That for me is the chance of a lifetime.”
$700M — Yikes. Yes, Yelp is becoming a big Internet brand but success in the local ad market is far from certain. That said, the company will be doubling its sales force in the near term, which is part of what the Elevation money is being used for.
There are in fact threats to Yelp: Google and potentially Facebook (though not Gowalla and Foursquare). However, the site has been able to establish itself among consumers as a primary resource and destination for reviews and it has been aggressive in mobile as well.
What do you think? Do you think Yelp has a shot at being one of the Internet’s “great brands” (and presumably a successful IPO) or do you think Yelp and its board are being greedy and have become “drunk with ambition”?
(Thanks to David Mihm for pointing me to the BizWeek story.)