Qype rejects acquisition path, replaces CEO and goes for growth

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We’ve been wondering what direction Qype would take recently after rumours that it was in potential acquisition talks with various parties, one of which may have been Nokia, although nothing was ever confirmed. What we do know is that there has been an internal “debate” about whether to enter into a strategic partnership (usually code for acquisition) or whether to double down on becoming the go-to local reviews site in Europe. It’s already in a commanding position in Germany and markets like the UK have been good to Qype. And so far it’s held it’s own against Yelp on this side of the pond.

But today it’s become clear that this “exit or grow” debate had reached an impasse. We knew from sources that CEO Stephen Taylor, a former Yahoo! Europe head, favoured a partnership/acquisition. But Founder and Chairman Stephan Uhrenbacher, who remains Qype’s largest private shareholder, favoured the go for growth / home run approach. One VC source told us this had been the source of some tension. Whatever the case last Friday Taylor departed, for shores we know not where (likely a break but we’re checking). He had been at Qype for one and half years.

Uhrenbacher tells me that Taylor left on “extremely good terms” and we are “going to see a very big partnership very soon due to Steven’s work”. But Qype has moved quickly to install a new CEO, namely Ian Brotherston, a former executive of France-based video site, DailyMotion.

Brotherston will now “accelerate stuff” at Qype, especialy the mobile and mobile web product. Formerly of BT and AOL, he joins after being EVP of International Strategy at DailyMotion since mid last year. (Initially he had a three month stint as “interim” CEO from April 2009, after a bloodletting at the increasingly bizarre Daily Motion. Cedric Tournay, from Doctissimo, a European medical website, took over as CEO).

Confused? You will be.

In other words, these are quite big tectonic plates that are being shifted around here on the European tech scene.

But back to Qype. What is abundantly clear is that they realised they missed the Foursquare boat. Check-ins are now the must-have feature for any mobile local product and however you do them, your users must have access to some kind of location-based check-in.

Uhrenbacher tells me he came off his Chairmanship pedestal in the last few months and got back on board fully to take charge of reshaping the Qype product.

It’s in part this recent intense concentration on the product has made Uhrenbacher convinced of the value of check-ins and the ability to ping your social graph. “We didn’t want to have to rely on Foursquare to do check-ins” he tell me, but Qype will not be a social network like Facebook. Rather, that they want to allow users to share recommendations about venues socially.

Uhrenbacher did hint that some kind of acquisition talks had taken place. “The story with any talks of exits is that really noone in this space does not, at some point, have strategic partnership discussions. But we have always said at this point in time that there are so many things left to do that it doesn’t make sense to go down that path.”

Tellingly he told me “anyone who has a big stake in Qype doesn’t feel like it’s the right time to exit.”

Perhaps what concentrated his mind is the blistering success of Qype in Germany. In large part because it has a small telesales operation, the renewal rate among venues is now at 80 to 95%. “So if you get 100 or more people on telesales then we could substantially increase this,” says Uhrenbacher. That’s not typical tech company talk, who avoid telesales like the plague, but it’s clearly a path to profitability.

Product-wise Qype is now working on a “if you liked this bar in this city, you’ll like this bar in that city” recommendations features and a new Blackberry app next week. An iPad-App is “planned”.

Uhrenbacher says they could add check-in’s to 4sq or Facebook “where it make sense” but that “in 6 months time check-ins will be commoditised by Facebook.”

As for its on-going battle with Yelp in Europe… Yelp has been live for 18 months in the UK, but Qype claims it is still growing faster there. “We don’t see any reason why we should be afraid of Yelp, but they are a great company,” says Uhrenbacher.

For the record, Qype was funded in July 2005 and launched in March 2006, while Yelp started in July 2004. But the two have followed different strategies, with Yelp launching city by city, while Qype did it more organically. That has lead to advantages on both sides. Qype is stronger in places like Birmingham, a 2nd-tier city in the UK, than Yelp, which remains concentrated on London in the UK and Paris in France.

Qype has had £8 million in funding from various investors including Advent Venture Partners, Partech International and Wellington Partners.

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