Back in July, I wrote a piece called “Why Yelp (…and every single retail establishment) Should Support Foursquare”.  Whitney McNamara referred to as the “post that launched 1000 VCs”, but it was really meant to open up a dialogue between an innovative little company hyperfocused on an important piece of data—when people show up to venues—and a bigger company dependent on relationships with venues. 

Apparently, Yelp misread the most.

In a direct rip off of Foursquare, they added check-in functionality.

As Wired’s John Abell puts it:

“Yelp isn’t even bothering to hide its direct aping of FourSquare with version 4.0.0 of its iPhone app, which allows you to “‘Check-in’ to businesses when you are out to tell your friends where you are.” That’s the exact same language Foursquare uses to encourage users to report their location.”

What that does is to signal to the market that if you have a good idea in local, Yelp will eat you without even so much as giving you the courtesy of reviewing you after.  The hilarious thing is that Yelp actually thinks it can beat Foursquare at its own game—and it is a game, one that founder Dennis Crowley has been thinking about for at least 8 years.  Gaming dynamics is not the core competency of Yelp, so why bother?  In the long history of bigger companies thinking they can beat out the small guy that only thinks about this one thing, the small guy just about always wins.

If I were using the Yelp API for anything important now, I’d be unplugging faster than that gooey scene in the Matrix where the tubes start popping off of Neo.  Good luck hiring anyone innovative, too.  If Yelp proves this startup unfriendly, how long before they start going after its own engineers who undoubtedly have their own side projects?  If I were thinking about a startup or participating in any kind of startup activity, like classes or an incubator, and I worked at Yelp fulltime, I’d go take a look at the assignment of IP rights in my employment contract.  Yelp just showed its true colors:  It’s not a startup anymore, and it will try to crush anyone that gets in its way—Microsoft 90’s style.  That’s not the kind of place innovators tend to like to work.

Undoubtedly, that kind of strategy will actually work against Yelp in today’s ecology.  As we learned from Fred’s post, an innovation friendly approach to working with other companies around it, like Twitter does, can actually create a reach up to 5x that of it’s core service.  Given that the people that actually pay Yelp, venues, only care about reach—by scaring off innovative partners who might want to work with the company, Yelp is doing a disservice to its long term value creation strategy for itself and its customers. 

On top of that, news broke that the company is taking $50 million from Elevation Partners—which includes a secondary offering for long-time employees as well.  That’s key, because it means that the core DNA of the company—the key folks who have been there for years and built it into what it is today, just took money off the table.  Count on that money going to a lot of mortgage down payments and moves to the suburbs—and count on the startup hunger of the little social reviews company that could to fall off the table.  Yelp missed its chance to exit at a nice valuation after six years of hard work.  With money off the table and big company bad behavior in the innovation community, look for the mass exodus soon—I’m sure the recruiters are already circling. 

I’ll admit it: Everytime I hear that familiar “Ra-ra, ah-ah ah-ah, Ra-ma ra ma-ma, Ga-ga ooh la-la”, I crank up the volume.  The outlandishly costumed fellow former Upper East Side prep schooler has garnered some serious mass appeal over the last two years.  But what can you attribute Ms. Germanotta’s success to, and moreover, what can the average tech startup learn from it?

Yes…  I’m totally writing this post, and you can’t stop me.  There will be no more stops on this trainwreck, so you’re on until the end of the line.

1) Be remarkable.  People forget what that word actually means—to Two words: bubble dress.  It’s so outlandish that you can’t help but notice.  “Is she really wearing… a bubble dress?”  You want to force your users to stop for a moment and actually take note of something you did for them.  “Was it really that easy?”  “How did they figure that out?”  You want them to turn to the next person and say “Hey, check this out.”  I think too often people add “share on Twitter” buttons to their apps without first adding something that people would actually want to share.  What is it about your service that will make people stop and notice?

2) Repeat the message as often as possible: “Pa-pa-pa-Poker Face”, “Ra-ma ra ma-ma”, “Papa-paparazzi”, “Let’s play a love game, play a love game”…   Many of Gaga’s lyrics and sounds are repeated one right after another—simple, but memorable when listened to over and over again.  Figuring out what your simple message is and repeating it across your site, your marketing copy, PR, and in business development meetings is a way to build brand awareness and clarity.  Too often, I hear from startups all the things they could possibly be instead of hearing the one simple thing they want to be, over and over again.   Your audience looks at a million brand messages a day and to cut through, you can’t be a different thing everytime someone experiences you—or worse yet, everything to everyone.  Sometimes, broken records aren’t so bad.

3) Be relentless.  Startups, like a lot of music acts, are often one hit wonders.  They make a big splash upon launch, everyone fusses over them, and then they have no follow up.  They quickly lose momentum.  On the other hand, just when one Lady Gaga song starts losing steam—BOOM—here comes another tune that you just can’t get out of your head, seemingly once every couple of months.  Startups need to do this more with both their product and their public relations strategy.  You might be the new new thing now, but what’s going to be your next hit?  A big business development deal?  A killer new feature?  Rarely are startups ever made on their launch, and neither are lasting music careers.  You can’t ever rest on your laurels in either game.  Always be raising the bar.

4) Create something bigger than just the individual.  At some point, you go from two developers in an apartment to a real company—and things take on a life of its own that is over and above the individual identities of the founders.  Lady Gaga did this by creating a persona separate from her real self.  I’m pretty sure her family still calls her Stefani, but Gaga has become larger than life.  For a startup, this happens when a company actually starts to act like a real company—getting outside board members to regularly report to, taking strategy and process seriously, maintaining consistent corporate identities.  It also means delegation of duty and responsibility, adherence of procedure.  The earlier the founders of a company act like they’ve created something bigger than themselves, the sooner they actually get there.    

5) Respect success.  Lady Gaga has clearly been influenced by Madonna, Michael Jackson, David Bowie, and others—and she seamlessly and subtlety incorporates little homages to these superstars into her performance.  On the other hand, some stars pick fights with those who have come before them or portray themselves as a replacement instead of recognizing that there’s a reason why others are successful, even if they aren’t always the most innovative.  This is something I wish more startups would do—see what’s working for other companies way more successful than you are and adopt well executed strategies used by others.  Too many times I ask a company about some feature or strategy that the industry leader has, and the startup is quick to dismiss it.  They mistake different for new and better.  It’s as if they think I won’t be interested in an investment unless they’re going to crush the leader feature by feature with a whole new approach.  If you can’t recognize greatness, and build off of it, then you’re going to be unlikely to be great on your own. 

There’s been a lot of movement lately in the “stuff I buy” area—and there has been for some time.  Starting perhaps with Amazon’s recommendation tools, we’ve got Mint.com helping us figure out where our income goes, Facebook’s attempts at Beacon, and now Blippy letting me post my purchases to my friends. 

Still, we’re not at the point where every single purchase, down to the bar of soap, what brand of razor I use, and what kind of cheese I eat, is captured.  Point of sale systems have all this data—hell, those that control the POS even share it with mass marketers like Catalina, who actually know more about what I buy than I do.  The rest of us are stuck with the “Fresh Direct - $89.53” we pull out of Mint or check out in our credit card statement online. 

So when and why does that change?  Seems to me that Square is going to do this, but will that be enough to move the industry?  This could really break open recommendations and also innovation around deals & savings, but at the same time give the user greater control.  Perhaps one day I’ll have a Catalina login where I can indicate that I purchased that wine for a party and that I don’t actually drink, so take it off my profile, just like taking things out of the Last.fm queue or Tivo. 

Who’s thinking about this?