The trouble, it appears, started last week, when someone leaked news of the takeover talks to TechCrunch. Normally, such leaks come from the target—in this case, Yelp—in the hope of driving the acquisition price higher.  (Such articles are the equivalent of "Going once, going twice..." exhortations at auctions.) 

Alas, this tactic can backfire, which is why you don't see such articles appear before EVERY deal is announced.  Sometimes, when people agree to keep negotiations confidential, they actually keep them confidential.  And, sometimes, the party that doesn't leak takes the leaks personally...and cuts off the negotiations.

A few days ago, when someone cut off the Google-Yelp negotiations, the Yelp camp quickly got to work, spinning the decision to end the talks as a Yelp decision.

This provoked an unusual response from the Google camp, in the form of an article in the New York Times suggesting that Google, not Yelp, had cut off the talks.  Today, a source familiar with Google's thinking confirmed to us that Google walked because "Google is determined not to have deals negotiated through the press."

Now, it is clearly possible that both sides are furiously negotiating through the press, but at this point in the proceedings, Google is doing it better.  Yelp looks like it overplayed its hand.  And if the deal is to go through, it's now up to Yelp to go crawling back to Google and beg forgiveness.

In the meantime, however, inquiring minds want to know, who screwed up? 

Was it Yelp's management, going behind the back of their superstar banker, George Boutros (right) of Credit Suisse?  Was it a team-screwup, in which all parties agreed to use TechCrunch to try to jack the deal price up, only to watch the tactic blow up?  Or was it George himself, who underestimated the resolve of his once- and future-client, Google, and wrecked a deal for his current client, Yelp?

(Or, alternately, did Yelp roll the leak dice wisely, believing it CAN get a lot more money if it goes public or sells to someone else—a perfectly reasonable gamble that, depending on how events unfold, could just leave Google just looking Scrooge-y and embittered?)

Inquiring minds want to know!

Google is in advanced talks to pay around $500 million for Yelp, according to a story from TechCrunch confirmed by the New York Times, which described the talks in straightforward business terms: "Google has been showing greater interest in the local business market in the United States."

But Yelp isn't just any online content startup. It wields disproportionate power over local merchants, from restaurants to auto body shops, and said merchants have repeatedly told tales of Yelp offering to let them re-arrange reviews if they took out ads — and of disappearing positive reviews in retaliation when they complained about the ethics of the situation. The San Francisco-area alt-weekly East Bay Express ran a series of articles on such practices, and the story eventually went national.

One business owner got so frustrated with Yelp users — and Yelp Inc.'s passive aggressive handling of her — that she ended up in a wrestling match with a reviewer she had flamed on email.

The company is also known for its raging, drunken, fleshy user parties, which are thrown, alternately, by the company itself and by the restaurants subject to its users' reviews.

Google has already seen its reputation as the "Don't Be Evil" internet company erode significantly, most recently after CEO Eric Schmidt said people should consider not having secrets, a story that spread widely online and in the news media. If it's going to seduce Yelp, Google should make sure its remaining friends know the company plans to reform its new toy rather than join its caddish pursuits.

(Top pics: Yelp co-founder Russel Simmons has fun with an employee at a Yelp holiday party, from this Valleywag post.)

The local reviews portal uploaded a cache of party pics to Flickr, a trove duly uncovered by Nicholas Carlson over at Silicon Alley Insider. It comes complete with the requisite provocatively posed women, mostly-naked men and naughty company icon (Santa). Those are the sort of party props that have become Yelp's PR calling card, lending the company a "let the good times roll" vibe that helps keep unpaid contributors supplying the company with free content.

In fact, this particular gathering, trampy as it may have been, looks reasonably tame compared to the debaucheries of years past; our last picture in the gallery below is a compilation distilling the positively fleshy feel of parties past (also documented here, here, here, here, here and here.)

UPDATE: It should be noted that this particular party was in San Diego; San Francisco-based Yelp will no doubt throw something similar in the Bay Area if it hasn't already (we hear it hasn't, yet, this year).

"That would be a lump of coal you're feeling, young lady, for your, uh, untoward extreme naughtiness. You're a very, uh, baaad girl."

Don't you wish you'd had the chance to sign this little angel, too??

Girl on far left rocking about 8x harder than everyone else in the picture.

"I can't speak for Mr. Leprechaun here, but I'm totally looking you in the eyes, lady."

Yelp photographers can literally smell the female tongue leaving the mouth.

"So many bad girls at this party, so little time to admonish them..."

Come, now, sir, you can do several buttons better than this. Several flies, even.

Ooops, we did it again, and, what do you know, at another Yelp party.

Santa presumably has his own private collection of these "girls on my lap" shots.

Everyone looks equally buzzed/sober. Nice pacing!

History teaches us what a truly wild Yelp party looks like.

Ocean Ave. Books proprietor Diane Goodman visited Yelp to try and get her private Yelp messages removed from a Yelp discussion forum. She had sent them to a reviewer named "Sean C.," calling him a "coward" and "pussy boy" over a review that called her shop a "TOTAL MESS." She quickly apologized for the messages, she has said, but was irked that they remained on Yelp's message boards (see Google's cache).

Last Friday, Oct. 30, after an unsuccessful phone call, Goodman obtained Yelp's SOMA address through the Better Business Bureau and went there to ask them to remove her messages. She found an office with no Yelp signage and with an apathetic staff:

After going over there and telling my sad story to a bunch of people sitting at a picnic table who were all talking about the parties and concerts they were about to attend that weekend, none of them offered to help me. I attempted to convey the seriousness of what was about to happen to me, but know[ing] I'm not a Yelp sponsor they only gave me blank looks and turned away.



I asked the security guard if I could go upstairs to talk to someone and she said No. She said I would have to leave now and I said OK peacefully and then she locked the security gate and I left.

Having gotten nowhere with Yelp, Goodman two days later tracked down Sean C. through some clues on his profile (being apparently quite good at finding "unlisted" addresses) and visited his house, sparking the violent confrontation. Sean C says Goodman tried to force his way in; Goodman has said she was initially invited in but that the reviewer freaked out and pushed her when she said she was visiting him about the Yelp review.

Goodman told us yesterday she visited the house to apologize — and perhaps to get Sean C. to remove her angry messages. "The real thing that upset me about the whole thing was that he made an irate message out of my emails and put them on Yelp," she said.

Yelp might have diffused the situation by offering Goodman more than blank stares and a cold shoulder during her visit. After all, the discussion thread Goodman wanted removed from Yelp's server was, in fact, eventually removed "as inappropriate." A five or ten minute conversation with a business owner (and potential advertiser) who had gone to the trouble of finding the company's address might have calmed Goodman down, and sped up a deletion that happened later anyway.

Look at the situation from Goodman's perspective: She's a bricks-and-mortar, face-to-face neighborhood merchant being pelted by faceless, nameless online entities (and one remote customer service rep on the phone), and no one will have an actual face to face conversation with her.

Goodman is also an aggressive business owner who has now been cited for battery, so Yelp has a ready-made excuse for not engaging with her. But our impression is that the company only likes getting face to face with the "local" market it purports to serve when it means collecting advertising money or guzzling free food and drink at one of its "Yelp Elite" bacchanals.

Speaking of which: We asked Yelp PR for comment on this incident two days ago and have yet to hear back.

(Pic: Yelp HQ, 2007, by evadedave on Flickr)

Ocean Ave. Books proprietor Diane Goodman acknowledges sending angry, cursing Yelp messages to reviewer "Sean C." after he posted that her store was a "TOTAL MESS." But she vehemently denies his version of subsequent events. Sean C. said in a Yelp comment thread that Goodman tried to force her way into his house and had to be taken to jail.

Goodman tells us she came in peace, after tracking down Sean via clues in his Yelp profile, like his occupation as a veterinary technician, and via some searches on Google and online white pages. She had already sent Sean a "profuse" online apology for her online "outburst, which I regret. I wanted to apologize... I got too hot to handle in the heat of the moment and I'm sorry... Also, I don't like having unresolved stuff with people in the neighborhood."

So, Goodman says, she knocked on "Sean C.'s" door and introduced herself as a neighbor. Sean made a gesture that she should come in. Then, as she started to come in, Goodman said, "I'm here about the Yelp thing."

He said, 'You fucking bitch,' and jumped out and grabbed me, and we were struggling and rolling down the steps together... He ran over me. We were rolling down the steps and I was fighting to get away from him.

Goodman later clarified that she never "punched" or hit Sean coming down the steps or at any other point, although she did struggle to get away when he allegedly grabbed her initially, "like a bearhug." She also said she never went to jail, and that in fact she was the one who called 911 to report the incident and was treated at San Francisco General Hospital for bruises on her lower back and flank.

Still, she acknowledges getting a ticket from the police for battery. She's been told she and Sean C. will both answer to a judge at a forthcoming court date.

Goodman said she would have set the public record straight sooner but she was working all day yesterday as a poll worker in the local election. She said she's surpised how quickly Sean C.'s tale spread online:

I don't want this guy to escalate anything. I'm not interested in revenge of any kind. I do want to put it out there what happened....If i'd known it would be like this i wouldnt have went

We still don't know Sean C.'s real name — we're not Google pros like Goodman, apparently — but are trying to track him down for a rebuttal to Goodman's rebuttal. By phone or email or something. No housecalls on this one, is what we're thinking.

UPDATE: We've found Sean's full name and are trying to get a comment from him.

Fellow Yelpers were initially skeptical about Sean C.'s claims in this Yelp comment thread until he produced apparently authentic screenshots of the owner's angry private Yelp messages to him, and until a Yelp admin weighed in to say "we're here to help Sean out in any way we can... there's no telling how this person may have unearthed Sean's place of residence, but rest assured, that information was in no way.... provided by Yelp."

Sean C. never bought anything in the store in question and has an unlisted address which he never provided to Yelp, so he's truly baffled how the owner tracked him down. But track him down she most certainly did, the reviewer said in a series of posts:

Tonight I get a knock at my front door - I open it and a woman tries to force her way in... it seriously took all my strength to get her out.... and I had to wrestle with her on my front steps... was trying to pin her down incase she had a weapon.



Finally I was able to shut the door and call 911 - the police showed up and took her away. Turns out it was the business owner! ... They took her to jail and will try to put a 72 hour psychiatric hold but they said it's up to the doctor that examines her...

Now Sean C. is trying to get a restraining order, which he said the police offered to serve while the woman is still in jail. (UPDATE: The store owner denies most of his account. See bottom of this post.)

You can find Sean C.'s original, two-star review followed by the owner's alleged private messages below, caling the reviewer a "pussy boy" and a "coward." There are surely loads of other business owners who have been sorely tempted to try and do likewise, though good sense, respect for the law and the tendency of Yelp reviewers to be anonymous and thus un-find-able tend to dissuade them.

Key to the entire Yelp enterprise is how it enables a passive-aggressive approach to customer feedback: You say anonymously — but in public, online — what you couldn't bring yourself to say directly (and perhaps more politely) to the staff when you were in the actual place of business. This provides consumers with tremendous new powers — and business owners with a frustrating new set of headaches. Maddeningly frustrating, it would seem.

UPDATE: The store owner says it was Sean C. who attacked, that she never forced open his door and that she came to his house to apologize. More here.

(Top pic: by Steve Rhodes)

Why doesn't Yelp just show how a restaurant's inflated ratings compare to its competitors' inflated ratings, thus negating the surplus of stars? VentureBeat's Kim-Mai Cutler asked, and Yelp answered: "Virtually identical ratings mean people have to dive into reviews to understand what's different, said Vince Sollitto, who heads communications for the San Francisco-based company." Translation: Confusion means more traffic means more advertising dough.

Which is too bad for hard-core Yelpers used to being pampered by gladhanding restaurateurs: Once owners figure out how easy it is to get five stars, the free drinks and food are over.

(Graphic via Yelp blog)

Now this offer, originally blogged by San Francisco PR man Jared Rivera, doesn't say you have to write a positive review on Yelp. Just any old review, of this restaurant. But if you didn't enjoy your meal, a 20 percent discount on the next one isn't going to motivate you to do anything, including writing a Yelp review. Those who do write up a review will be inclined to add extra star-age, since they'll be presenting the review directly to restaurant staff. It all adds to an easy way for the restaurant — in this case, Mel's, an unremarkable 1950s style diner — to juice their online ratings.

This sort of red-carpet treatment is baked into Yelp's business model; the San Francisco company regularly invites its favored users to "Yelp Elite" events where they are wined and dined at a restaurant's expense. A flood of positive reviews often follows.

Some restaurants have also taken to targeting heavy users of foursquare, an iPhone application that lets you "check-in" to a particular location. Become enough of a regular, and foursquare will crown you "mayor" of that spot. The app is only five months old, but already the owner of Lure and Chinatown Brasserie in downtown New York is buttering up Lure "mayor" Scott Kidder with off-the-menu dishes. "Beyond bullshit" was how Eater.com co-founder Lockhart Steele reacted to this VIP treatment on Twitter. (Disclaimer: Kidder handles my paychecks; Steele used to oversee Gawker.com.)

Of course, restaurants have always kowtowed to opinion shapers. Esquire critic John Mariani is among those known for accepting free meals from restaurants that end up in his magazine; even critics who pay their own way can benefit from lavish chef attention when they do not visit anonymously. But old-school favor trading was at least subtle, visible mainly to media critics and industry insiders — the proverbial making of the sausage was no more in the diner's face than the literal.

Catering to the large and growing corps of Web VIPs is, by necessity, a more explicit affair. This transparency can be unappetizing, especially when it looks desperate, as on the receipt above. But it does send a useful signal to diners about the priorities of the people from whom they buy food and service. And at a time when diners increasingly do want to know how their sausage is made, they might as well also learn something about the manufacture of restaurant buzz. Of both the organic and synthetic sort.

[via Michael Bauer, San Francisco Chronicle]

(Top pic: A Yelp Elite event in San Francisco, via Yelp on Flickr)

One furious blogger promised to yank her contributions to the user-review site, adding:

I'm not willing to contribute to padding the wallets of anyone who thinks nothing of pairing innuendo with sexual assault.

Yelp promptly apologized, and tried to recall the newsletter and replace it with a tamer one. But it couldn't keep the fuss from spreading to Twitter and various weblogs (including TechCrunch).

For all the fist-shaking, the ad is basically some silly humor put in a terribly inappropriate — and, we're guessing, unintended — context. If some critics are ascribing the crudest of intentions to the site, well, perhaps that's the price it must pay for throwing such notorious parties.

Which tech industry notables are on the list, and what's the catch with these supposed Silicon Valley catches?

Arjun Gupta, a venture capitalist best known for being accused of beating his former wife. A restraining order filed in the case was due to expire next Sunday.

Christian Oestlien, a Google product manager with his own startup. Makes his own wine, practices "Brazilian jiujitsu," and occasionally deejays. Which means he just doesn't have time for you, ladies.

Robert Pazornik, the Yale-educated former CEO of LicketyShip, a package-delivery startup. Oh yeah, I said it: a package-delivery startup. Extremely hot and given to wearing tight T-shirts, but unemployed since May, according to his LinkedIn profile.

Jason Pressman, managing director, Shasta Ventures. We haven't heard anything salacious about Pressman (if you have, do tell), but the Gazette says this "avid scuba diver" "enjoys planning bachelor parties."

Jeremy Stoppelman, the seriously hunky Yelp cofounder. Nothing bad about this one, except the continued mystery of why he's single. Rumored to have shared at least one ladyfriend with famous Web 2.0 playboy Kevin Rose, the founder of Digg (not at the same time, dirty minds). When we asked Stoppelman about said companion at a party, he greeted the question with stony silence. Which was kind of dashing, really!

There's one techie on the Nob Hill list whom we're leaving off. Why? He's a bachelor, but of the confirmed sort, and we didn't want to get anyone's hopes up. Sorry, ladies. In San Francisco's tech industry, except for the above five, they really are all taken or gay!

Speaking of taken, a tipster noticed that filthy rich YouTube founder Steve Chen dropped off the list this year. Does this mean he's secretly gotten hitched?

The days where I had a little dollop of gel are gone. I'm using quarter of a bottle at a time and I'm not proud of it. And I know that I need help!