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Summary:

My search for a top-notch ramen joint returned quality recommendations from both Twitter (as to the restaurant) and Foursquare (as to actual menu items), all in near-real time. Which made me wonder if services like Yelp have a future in our increasingly always-connected world.

Om’s note: I wrote this long before the rumors about Google buying Yelp for $500 million started flying around. In my post from today that breaks down the Yelp-Google deal, I explain why it is a good move for Yelpers to take the money and run. I also say that it is a good move for Google in the short term. Over the long term, value of Yelp is limited.

The cold and damp December weather has taken hold here in San Francisco. It’s the kind of weather that forces you to stay indoors and hang out with friends — and find comfort in warm food. I typically don’t eat out thanks to some diet restrictions, but occasionally it’s good to break the rules. Like earlier this week, on the 8th birthday of GigaOM.

My friends and I settled on piping hot ramen noodles, but couldn’t agree on where to get them. In light of a conversation Liz and I had just had about how much she likes the tips she gets via online networks like Foursquare, I asked my Twitter followers to weigh in. The answers came back fast and furious, most of them pointing us to Katana-ya.

Once there, I turned on Foursquare to log my whereabouts (aka “check in”) with the service and, as expected, found some great tips on what to order. And while the soup I ended up with hasn’t done my salt intake any good, it sure lived up to my Foursquare-induced expectations.

Like Liz, I once would have turned to Yelp in order to make such a decision. My Twitter + Foursquare experience, by comparison, was simpler and more importantly, “friendlier” because it involved people in my social graph (it’s important, for the sake of our virtual relationships, to keep the fidelity of their messages high). And it all happened in near-real time.

This near-real-time interaction — and its outcome — makes me wonder if older services such as Yelp have a future. The growing popularity of smartphones such as the iPhone and BlackBerry are already impacting our usage behavior, making access to information more portable.

More importantly, virtually omnipresent wireless connectivity is impacting how we seek and consume information — and boosting interest in (if not mainstream adoption of) real-time social environments such as Foursquare and Twitter. When a service is assigned a time value, its DNA undergoes a mutation.

Indeed, in this new, always-connected world, spontaneity is going to be a defining feature of successful applications, and Yelp doesn’t have it. Yelp is a great place for leaving reviews and always will be, but like many web services of yore, it was crafted with a fixed connection in mind.

I wonder how many companies will find themselves on the sidelines as this shift towards a more dynamic, interactive and immersive Internet picks up steam.

This article also appeared on BusinessWeek.com.

  1. Couldn’t agree more. The main reason Twitter + Foursquare trumps Yelp is simplicity. I don’t have the time nor the patience (unlike the “Elite”) to review every restaurant I visit. It’s either 140 characters or Zero characters worth my time :)

    BTW, it’d be nice if the Om network had Facebook and / or Twitter connect for commenting purposes. And, someday, hopefully a LinkedIn login as well :) Just a thought.

    Mario

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  2. All true. However, a good (and have to be good) update to Yelp! iPhone app could tip the balance a bit. Currently Yelp! iPhone app already has tip feature (but not well designed). If they can work out some check in/out and more real-time interaction, Yelp! can still live for a while.

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  3. I totally agree with you. I find myself using Twitter + Foursquare to get around and “check in” to most NYC spots. I would go a step further and say that – Twitter should either buy Foursquare or at least go into a joint venture. It would be a fantastic team-up.

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  4. Good points, but most people do not have the extended, connected, urbane, realtime social graph that you do, so in the near and medium term as far as mass market products are concerned, aggregator services that already have critical mass like Yelp have a secure place. When the shift that you describe shows signs of life, Yelp should already be prepared and positioned to add the social graph. In the end, it’s a battle to provide the best user experience including the success and accuracy of recommendations. Let’s take a seat and who will deliver on this promise.

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    1. Howard,

      I disagree with you on “how size of social graph” matters. Liz wrote about this earlier this week (I linked to her post) where I got the idea in the first place and she points out that the fidelity of the network (social graph) is what matters and not the sheer size. I didn’t want to repeat that.

      I think the point is that the tools of discovery are going to change over next few years. Hope that clarifies my position.

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      1. Om, we agree on key points: discovery tools are shifting toward “people-close-to-me-right-now curation”, no doubt about it, and that quality matters much more than quantity. I did not mean to suggest that a large number of people in your net trumps quality/closeness. (See how I tried to avoid saying ‘size matters’? :-))

        On the other hand, too small a number does matter.

        In the real world, today, I believe that a huge majority of people will hear only deafening silence about recommendations once they veer off of their geographical home turf, where they already know a lot of what there is to discover. This would be Yelp’s battle to lose. If they are not already thinking deeply about how to answer this challenge by intergrating the intimacy element, then yes, RIP, ciao, bye bye, been nice to know ya.

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      2. Om,
        As a person with a smaller less connected social graph, I found the same twitter/facebook query (i.e. where can I find X in Y) failing too many times.

        Thats what yelp rocked at. If you do not have a large or great (as in people who know things) social graph, Yelp will still tell you whats hot and happening. And the obvious matter of being in a new place.

        I think twitter will not replace yelp, but foursquare definitely can. It has too much good data. And in the end thats all that matters.

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    2. Replying to your second comment, I think if you think of the world in “just here and now” then you are right.

      However, if you are willing to peer into the future, how long do you think something changes. Jerome brings up a good point: if you veer off the home turf, then Yelp becomes good for tourism. Its current use case that revolved around being a local social network changes and so does its entire business model.

      I think what we are seeing is the new way of doing these kind of things. What is not to say, Facebook can’t develop such an engine inside its four walls and well be more effective.

      Further thoughts?

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      1. I agree with you 100% on that! I’m just saying that the direction, speed and shape of these changes is very much up for grabs for reasons already stated. Who can argue with that? ;-)

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  5. I don’t agree Twitter and Foursquare = Yelp’s death (yet).

    I think they still answer different needs. (It may change, however).

    I use Yelp a lot but in other cities when I don’t know where to eat in the area I’m in. It’s a much more efficient and quick way to decide.

    In my city, Montreal, I use Foursquare to check in and mostly discover places and what to order from worth of mouth. Sometimes, Foursquare tips can be useful, but very rarely.

    So, my opinion is Yelp is more like a guide for tourism/travel and Foursquare/Twitter are more about hanging out with friends.

    Maybe if I had tens of thousands of followers I would completely agree with you because then, I would never eat or go out alone in any city and there sure would be people to tell me to best places to go.

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    1. Jerome,

      Please read my response above to Howard regarding the size of the social graph.

      On the timing — death is a slow process and from the way when I try and look into the future, the decline has started for Yelp. In my analysis of the Google-Yelp deal rumor, I pretty much point that out. I hope you get a chance to read that. I think it would address some of your questions.

      On the travel/tourism aspect, sure that sounds like a reasonable development and an interesting observation.

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      1. Om, I read your post on the Google-Yelp rumor and I see what you mean.

        I also agree on your point to Howard about the coming disruptions in discovery. We’ve just seen the tip of the iceberg in that area.

        On the other hand, Yelp could have some social graph elements coming up it sleeve… But, if they are bought by Google, they’ll probably die a slow death anyway. ;)

        In any case, reading your follow-up comments, I think you’re probably right after all.

        One thing is sure is that both Yelp and Foursquare have to evolve to eventually pick the winner. Foursquare is missing good classification and contextual search. Yelp lacks in social discovery. Foursquare’s tips are cool, but it’s hard to quickly discover the best places just by doing a local search. Better ratings aggregation would help, I think. I believe social recommendations from people you trust are better.

        Thinking about it, adoption of both Yelp and Foursquare is not too high in Montreal. I found Yelp to be pretty useless here as a local but Foursquare, not so much. With more data, I found Yelp quite useful in major cities in the US but Foursquare wasn’t that popular yet at that time… Because of this, you probably know better! :)

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        1. Thanks Jerome,

          I think FSQ (or any other service like theirs) will need to reach scale and some sort of a tipping point but it is not clear which one. I think this is the first inning of what will be a 12-inning game and it would be lot longer things get cleared up.

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    2. I’ve been using Aardvark more than Yelp when travelling (score 1 for social and near-real-time, I guess). But I agree that Foursquare, in Montreal, still doesn’t have scale where it becomes truly valuable. It’s still just a silly geekgame at this point. Not enough iPhones on the street yet, I think.

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  6. +1 to Howard’s statement

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      • 1 to my response to Howard.
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      1. Did you really just award a +1 to your own comment?

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  7. “I wonder how many companies will find themselves on the sidelines as this shift towards a more dynamic, interactive and immersive Internet picks up steam.”

    Om, I think the question to ask should be the usage scalability measured against realtime issue. It seems when you look at how your users do things that makes the most sense to their lifestyle and disposition, then you see where a service feature set fits within that scale. Im in dev on a more traditional social net that based on the target user makes a lot of sense to how they do things and interact with their peers. So Yelp may find its niche shrinking and the sell off may be warranted but someone will more than likely find value in that service process no matter what happens to the developer.

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  8. Om, only in Silicon Valley could a post like this have been written. No disrespect (and you know I mean it), but the world outside the real-timesian bubble still has a lot going for it, Yelp included. Death’s a slow process, as you said, so I could say anything A + B = Z RIP, and chances are it is true. Doesn’t mean it is logical.

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    1. Rafat …No disrespect taken.

      You are right: this is only in Silicon Valley type of post, because some one would dare to think about what are the implications of the various technology trends and what it might mean for the future.

      Five years ago when I was sitting down with one of the guys who had the original idea for Yelp (not current co-founders and not the early backer), he also met the same kind of resistance about how it wouldn’t work.

      You have have made no counter-argument to argue against my thesis. Jerome and Howard asked specific questions and I have answered those. If you read those response and the post, then you know what I am talking about is a larger, web trend.

      You might like to dismiss this as a “Real timeseian bubble” but the reality is that the information consumption patterns are changing. Sure there are those who are on the leading edge of this change, but that doesn’t mean it won’t happen at large.

      And to be very clear, Twitter + FourSquare are mere tools, representing a trend that is more powerful.

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  9. Normally I find Om’s perceptions pretty refreshing but this one makes me feel like your an investor in Foursquare and you want to nudge the crowd. The biggest problem Foursquare has is the mad, rampant competition that is just now beginning to take steam. Let’s see Gowalla, 4sq, Going, Rally.. lots more to come and we haven’t even gotten into retail brand specific checkin game apps, I can’t wait to get the Olive Garden one where I get free breadsticks just for checking in.

    By this time next year 4sq will have a dozen or more competitors all in one big game for check-in attention mayhem- and the question is how long will the checkin game last? I think its foolish to think that this can unseat Yelp’s considerable and sizeable data set.

    Right now the checkin game is a fad at best, its purely new, very silicon and wizbang but its not state wide mass adoption, to make the speculation that it could = Yelp’s demise is pretty lame.

    Google is after the data and where the data will be next. They want as many infrastructure players out there. They can turn on a 4sq concept over night and still feed it to twitter/facebook even. They can combine their places/web experience with Yelps data set and be even more robust to the consumer. Yelp should take the deal and joy the growth.

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    1. Dan

      First of all thanks for your nice words, but as to your question about being in an investor in FourSquare .. not true and not even close to the mark.

      In case of Twitter/FSQ — they are signposts to the future which as you say might include dozens of FSQ competitors. Is FSQ the perfect service — not sure, but it is going to be a service like theirs which is eventually going to “catch fire” like Yelp itself did a few years ago. I hope you can take a minute to read my previous responses to others and hopefully that gives you better context.

      On the Google-Yelp deal, you and I are in agreement: Yelp should take the deal. It might be good for Google too in the near term. IN the long term, well, I think things are going to change. If not in 2010, then the year later or next. That is the nature of technology. I am sure we will be arguing about this (or something else) if we are both around to see the change.

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  10. I agree with all of the comments. ;-)

    To add to the mix, services like Aardvark help mitigate the size of the social graph, since self-anointed experts will be willing to help complete strangers, in near-real-time.

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  11. Om,

    what your post misses is the 2/3 of yelp’s reviews that are not restaurants. Do people “check in” with dentists? Or child sleep consultants? Foursquare serves a need for sure but it is the minorty of the need yelp serves and doesn’t apply to the majority of yelp’s addressable market.

    Yelp may very well be more like craigslist, here and relevant forever.

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    1. I disagree — the biggest use case of Yelp is still restaurant reviews and people around it. How many people review a dentist and how many people actually use Yelp to get a dentist. I have not seen any data around the usage thus far. THe only report Is e from them is http://bit.ly/sVv5E which talks about businesses, and doesn’t break it down into specific kinds.

      That said, I take your point that today things like FSQ type services don’t do that, but what is to stop another one popping up around the idea of local businesses. My view is that the change is here. In two years, perhaps we can revisit this post :-)

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      1. Om,
        Yelp gives you the number of reviews in each category in each city. In SF, there is 4K restaurant reviews, 3K medical/dental reviews, 2K health and beauty reviews etc etc.

        That said, I find that the reviews on yelp look quite suspect. If you look at the review distribtution for most of the reviewers, the 5 stars and 4 stars dominate. Strange, since humans tend to share their complaints more often than their compliments.

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  12. [...] My first thought after I heard that Google was buying Yelp for half-a-billion dollars. Love how Google has gone from forcing change to buying agents of change who maybe struggling with change themselves. [...]

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  13. I have one friend who posts ridiculous comments about being the mayor of some place in Foursquare. I have 6 friends on Yelp. My last 3 food and retail discoveries (cheap foot masssage) were through Yelp. With Yelp, I can filter by price and rating and narrow down instantly on what I need. I don’t even have the foggiest idea how to do this in Foursquare. You go to the Yelp homepage and instantly you have valuable content (similar to google’s approach). You go to Foursquare and you have to register and build up a social graph. Also, Foursquare’s competition isn’t Yelp – it’s Facebook. They own the social graph.

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  14. [...] Gigaom (Om Malik) is saying that Yelp would be fools to bypass this buyout as their time in the local business space [...]

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  15. [...] the rise of Twitter+Foursquare mean the end of Yelp?  (GigaOM, [...]

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  16. Om,

    refreshing thinking. Glad at least one blog is not going into a frenzy over Google’s salvado of announcements and possible aquisitions, but focusing on the long term market drivers. Quite a remarkable discussion too.

    It does indeed seem that services like Foursquare and Aardvark that build on scoial platforms Twitter and Facebook will be the disruptive innovators of tomorrow.

    What do you see as the main driver for this? Higher quality results (realtime, trusted/social)? Reducing complexity – Twitter & Facebook as starting points?

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  17. Simplicity does not (necessarily) a killer app make. The key differentiator with Yelp that was alluded to in the comments below is that in some cases 140 characters may be enough, but only as a headline. I strongly believe there remains sufficient demand for more in-depth coverage of a given location (be it restaurant, dentist or any other service provider). Particularly for some of those services, people want more than a headline, they want a review. Which means that, despite the evolving shorthand that SMS and Twitter have encouraged, 140 characters still isn’t enough. Frankly, like Om, I think Facebook has the potential dominate in this space, since they have the users, the social fabric between users, and the geoloc underpinings. If they can execute it the right way, I think they could easily dominate. Yelp has a dedicated following, but I’d be curious to know the #’s of contributors vs. the # of casual readers who just browse for a review and leave without ever adding content. In that way, Yelp is like Twitter – the top ~5% contribute ~95% of the content.

    Great discussion!

    Michael

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  18. Google would be making a big mistake if they do buy Yelp, they would throwing their money away. Yelp has a highly maniputlative business model, where ‘elites’ are paid or smoozed to go ‘make up’ reviews. Often times, the businesses they review say these aren’t real reviews, mostly made up. If Yelp and Yelp reviewers had the balls, they would be asked to post the time/date and copy of their sales receipts along with the reviews to verify that their experience was indeed legitimate and every reviewer has their real picture posted…that would make it worthy and reliable (key reason why Om and most of us rely on our personal networks and not anonymous posters who are incented to post a ton of reviews). There have been many stories in newspapers last couple of years that talked about the manipulation Yelp sales team does to force businesses to buy expensive $500/month subscriptions (which by the way have zero value) to get ‘good reviews’ and hide the bad reviews on their listing. All in all it has highly questionable business ethics without regard for real small business owners and service providers. Google probably doesn’t want to stain their image with such sentiment and angst in the market.

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    1. +1;

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  19. I think the ball is definitely in Yelp’s court, but having said that, it’s not everyone who can use Twitter effectively to get real-time feedback on local stuff. I, for one, am no Twitter magnet, and doubt that a plea for advice on where to get my late-night ramen fix would get much traction.

    So until I hit 100K+ followers on Twitter, Yelp suits me just fine :)

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    1. Om, I completely disagree with your post. I understand that things may be moving to a more socially-connected web experience with people I know and trust in the real world, but the utility of applications like Four Square just doesn’t exist for non-techies or people with smaller, less social networks. That’s why Yelp and Craigslist are so useful — it connects us with other people who are connected.

      After logging in to Four Square for the first time to see what all the fuss was about, I learned that I had only 2 friends on it, even with over 1,000 Facebook/Gmail contacts/Twitter friends. I might as well email my friends. Other complaints I have about it — I don’t want to have to work to be rewarded for information (it seems like I have to post in order to find anything), I want it all at my fingertips, like it’s displayed in Yelp. It also doesn’t have a Blackberry app.

      Yelp is a much more practical, established entity with more reliable information.

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  20. As a native San Franciscan who has lived in Seattle, London, and Madison, WI, the following passage cracked me up:

    “The cold and damp December weather has taken hold here in San Francisco. It’s the kind of weather that forces you to stay indoors and hang out with friends…”

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  21. This experience you described reminded me of Aardvark. I think that would be better suited than twitter+foursquare.

    I still see real value in Yelp that you can’t find in twitter+foursquare. Just from an anecdotal perspective, I don’t trust my social network as reliable, unbiased sources of recommendations. This describes life BEFORE Yelp. But Yelp scoring (with a good amount of reviews) almost always has been accurate for me (3 stars restaurants being mediocre and 5 star being good).

    I wonder if instead of Twitter+Foursquare, if you had just used the Yelp mobile app if you would’ve had just a good experience (and even faster since you’re not waiting for responses). Yelp mobile is one of my most used apps.

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  22. OM = Mac. But rest of 80% needs Yelp.

    I put “pizza mountain view, ca” in 4square & got nothing but got enough listing in Yelp!

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  23. This app already exists. Its called buzzd. I challenge the commenters here to detail how the buzzd app does not offer exactly what is being described in this post: http://bit.ly/2NeBsw

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    1. Bizzd is worse than useless.

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  24. [...] whether Google will indeed be the central organizing force here is far from certain. As Om Malik and others point out, Google + Yelp could get shoved aside by Twitter + foursquare (the location-based social [...]

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  25. [...] Twitter + Foursquare = Yelp R.I.P? Om’s note: I wrote this long before the rumors about Google buying Yelp for $500 million started flying around. [...] [...]

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  26. I think another aspect of this is the cost of data plans for smart phones. I don’t have one, and don’t see one in the near future. Without one, I still get value from Yelp (and the likes) and normal web access, even if just wifi in a coffee shop.

    I think one aspect, beyond a particular persons social net, or particular sites/applications, is that there probably is another digital divide developing in the cellular sector similar to the broadband/dialup sector. You cannot rule out ‘the old’ just because there is something new when for many there is a prohibitive cost to having the new.

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  27. Yelp! could be the monster. Twitter is stupid, Twitter is gonna digg itself into obscurity in 5 years (http://bit.ly/1FR2NZ). I have 150 friends on Facebook if I asked where to have a taco I would have 6 or so recommendations over the next 36 hours, worthless. If I started twittering today and asked the same question, no one would answer me.

    Yelp! if managed correctly could be the biggest, most complete and national (international?) yellow pages. I would also roll it up with Angie’s List or Service Magic. Coupled with Google’s existing local business database and mapping technology . . . Google FTW! Soon enough local/small businesses will need to pay Google/Yelp!, to raise their business profile above the fray.

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  28. Your belief, “Over the long term, value of Yelp is limited.” is false.

    In truth, you have no idea what kind of revenue Google shall derive from Yelp as a platform mostly because you do not know what Google executives plan to do with Yelp.

    Easily, Google could merge Yelp with Jaiku, also owned by Google and thus add Twitter-like functionality to Yelp. Quitely, Google execs have been sitting on Zingku, which Google execs could morph into a near real-time Yelp.

    Any analysis that does not include Google’s social media acquisitions like Dodgeball, Zingku and Jaiku, advertising acquisitions like Doubleclick and AdMob, as well as mobile phone initiatives like Android, the upcoming Nexus One Google Phone, and Latitude, simply amounts to farting in the wind.

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  29. [...] I am almost embarrassed to admit it, but I can remember when I thought data bases were cool. We used to buy them (and then pay more for updates). But along came tools that made a fixed thing like a data base seem old hat. For example, Wikipedia provided a different sort of model that enabled an evolving and more nuanced flow of information (rather than a fixed set of data). Yelp was part of this generation — allowing you to add your ratings for restaurants that you tried them out. It is cool, but it is not a conversation. Now it seems that the combination of twitter and foursquare are making yelp seem … well, as old fashioned as a data base. Om Malik explains why. [...]

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  30. [...] Malik is not so bullish, arguing that the local review space will rapidly move real-time through services like Foursquare, Loopt and [...]

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  31. i devoted an entire blog post to answering your article because it struck me how utterly disconnected from reality most of the tech community is. yes, as mentioned already, only people in silicon valley could possibly think what you write in this article.

    http://miaskiewicz.com/silicon-valley-bubble-world

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  32. [...] Om pointed out in a recent post, the combination of Twitter reviews (from friends and other trusted sources) and Foursquare tips [...]

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  33. [...] the Blackberry version of their service. Gowalla and Foursquare are vying for user attention at the same time competing with local search web service Yelp has started to encroach on their turf with its new mobile [...]

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  34. @Ramon: I would prefer a joint venture of Gowalla and FourSquare instead to achieve a higher efficiency… Especially among “non nerdy” people.

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  35. [...] GigaOM's theory that this is somehow an admission by Yelp that they have somehow been circumnavigated by [...]

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  36. [...] someone who is an unabashed fan of Foursquare and what it represents, I have to admit my usage of the service has been waning. The early thrill of checking in at [...]

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  37. [...] has added Foursquare-style check-ins in an attempt to keep pace with the location-based service, Om has noted before how the combination of real-time reviews — whether on Twitter or elsewhere –and the [...]

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  38. [...] is that going to happen? Crowley says that check-ins give it a lot of interesting data and that in turn allows them to tell people on their social network interesting things, including tips, locations and [...]

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