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Comment by betterlabs | Hacker News Reader

Yelp is an awesome service, but I am surprised to see that they are still not profitable. Considering an annual revenue run rate of approx. $70m, I am wondering what costs them $70m a year to run the site - with most online businesses salaries and marketing are the biggest expenses and considering Yelp's amazing organic rankings, I doubt they are buying a lot of traffic. Any idea what the other big costs are? Sales teams, perhaps?

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3 offices (SF, NYC, Phoenix), approaching 1000 employees, servers, marketing costs, etc. — gets expensive.

Well they seem to be sacrificing ad space for user experience. They only have 1 ad on each page, unlike other sites that have multiple.

Probably paying people to go out and try places to review. Organic traffic (and ad revenue) comes from having content, so it's a good investment.

I doubt they would pay people to review, unless it's a well kept secret. What they do have are Community Managers. They are located in each major city prompting Yelp, providing support for the yelpers in that city and so on. They probably spend a lot on their sales team as well.

I highly doubt Yelp pays people to review...anymore. They did when they first launched (they've admitted to this), but with their brand recognition now, paying people to review would be a giant waste of money. That being said, they haven't reached profitability yet, so who knows, maybe they are making this bad decision.

People are addicting to writing reviews -- some have as many as 3000, with "Elite" being the only reward.

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