{ "docId": "019f6b8f-6de4-728d-80b2-6fa6336c58c3", "docSlug": "jarvis-tcs-capital-yelp-open-letter-to-yelp-board-of-directors-may-2023", "documentTitle": "TCS Capital Yelp Open Letter to Yelp Board of Directors May 2023", "authorId": "tcs-capital-yelp-open-letter-to-yelp-board-of-directors-may-2023", "authorName": null, "documentKindSlug": "pitchdeck", "documentKindLabel": "Pitch deck", "sourceTypeSlug": "vc_research", "sourceTypeLabel": "VC research", "presentationDate": "2023-05-01 00:00:00", "orientation": null, "aspectRatio": null, "pageNumber": 2, "pageCount": 4, "prevPage": 1, "nextPage": 3, "slideType": "pain_points", "function": "frame_problem", "density": "overcrowded", "nDataPoints": 10, "notes": "This is a text-heavy slide from an activist investor presentation (likely an open letter or deck).", "elementsJson": null, "metadataConfidence": 0.9, "imagePath": null, "slideHref": "/slides/019f6b8f-6de4-728d-80b2-6fa6336c58c3/2", "deckHref": "/decks/019f6b8f-6de4-728d-80b2-6fa6336c58c3", "deckJsonHref": "/decks/019f6b8f-6de4-728d-80b2-6fa6336c58c3.json", "deckAnchorHref": "/decks/019f6b8f-6de4-728d-80b2-6fa6336c58c3#slide-2", "components": [ { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.85 }, "kind": "paragraph", "text": "Another troubling aspect of Yelp's story is that Wall Street appears to have given up on its narrative. During the Company's first quarter earnings call earlier this month, only two sell-side analysts asked questions...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "06e7eb1d-6396-4bfa-9129-def57ed23025", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.09, "w": 0.9, "x": 0.05, "y": 0.64 }, "kind": "paragraph", "text": "Amidst these insider stock sales have come allegations of insider trading and suspicously timed stock sales by members of the C-suite... Yelp has been forced to pay over $40 million to settle securities class action lawsuits...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "57cc1d27-3dc0-46fa-a6b4-2832eeaf0b64", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.75 }, "kind": "paragraph", "text": "Accordingly, we believe Mr. Stoppelman and his entrenched Board lack the incentive and skills to drive significant stock appreciation... we believe that unaffiliated stockholders urgently deserve strategic action that would lead to a sale of the Company...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "69043cd8-7533-4714-ae02-04a061e3a48a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.9, "x": 0.05, "y": 0.11 }, "kind": "paragraph", "text": "Well capitalized companies with consistently high revenue growth and profitability rarely, if ever, trade as low as 4.8x EBITDA and 8.5x cash earnings.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "74268bfb-6002-46da-a402-8f5d131670de", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.9, "x": 0.05, "y": 0.42 }, "kind": "paragraph", "text": "And why would Mr. Stoppelman want to remain at Yelp for so many years as his own stock languishes? This is easy to understand when viewed through the lens of his unconscionable compensation packages. He has received $41 million over the last five years...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a675a163-0b06-48d8-aafb-4e421a8b6879", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.9, "x": 0.05, "y": 0.25 }, "kind": "paragraph", "text": "We believe that Yelp's main obstacle to improved share price performance is Company CEO and co-founder, Jeremy Stoppelman. Despite the stock's poor performance, Mr. Stoppelman has remained CEO of the Company for nearly 20 years.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b066fd89-fcfe-41a6-b750-8055ed7c328e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.9, "x": 0.05, "y": 0.56 }, "kind": "paragraph", "text": "To add further insult to injury, our research indicates that Yelp insiders have collectively sold nearly $120 million of stock since 2018 and none have purchased shares during that same period.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c376e684-c7e2-42e2-ada4-386c896698db", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.02 }, "kind": "paragraph", "text": "segment - home services - has reported 20-25% annual revenue growth rates over the last four quarters. Moreover, the Company generates significant free cash flow - even though it is not maximizing profitability - and has a pristine balance sheet with nearly $300 million of net cash.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "de381384-b1c2-4f60-ace2-d96f4df1f34f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.16 }, "kind": "paragraph", "text": "So what's wrong with Yelp? We believe that Yelp's tragic stock performance is attributable to several factors: 1) the complacency of its co-founder and longstanding CEO; 2) the laxity of its puppet Board; 3) the outrageously high stock-based compensation...", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e8618b7b-76aa-413c-a721-5eb88e3c2fa8", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [ { "name": "Problem-Agitate-Solve (PAS)", "slug": "problem-agitate-solve-pas", "agent": "Storyteller", "layer": "slide", "matchId": "32600870-52fe-40fd-b99e-5e81dc580385", "evidence": "The slide identifies several problems with Yelp's current situation, including poor stock performance and complacency of the CEO and Board.", "confidence": 0.7 }, { "name": "Villain slide", "slug": "villain-slide", "agent": null, "layer": "slide", "matchId": "0a1a3afc-ec69-47d4-bef9-5e1d566bd904", "evidence": "The slide presents a critical view of Yelp's CEO and Board, highlighting their poor stock performance and potential insider trading.", "confidence": 0.8 } ], "frameworks": [], "arcBeats": [ { "to": 2, "from": 2, "beatId": "3146dbbe-dcb7-4be6-9b0e-f8999c685e49", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Problem & Complication", "beatSlug": "consultants-gambit-problem-complication", "evidence": "The second slide presents pain points.", "position": 0, "confidence": 0.8, "parentBeatName": "Complication", "parentBeatSlug": "complication" } ], "loops": [ { "to": 4, "from": 2, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "fdf83fc3-5d7a-4cda-bd7d-8555d5d5a1e9", "evidence": "The document implies that inaction will have negative consequences.", "position": 0, "objective": "to highlight the consequences of inaction", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.6, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }