Yelp announced this week that it has entered into an agreement to acquire AI-powered lead management and customer communications platform, Hatch. The $300 million acquisition will buttress Yelp’s functionality and appeal to SMBs and continue its trend towards operationally-oriented SMB SaaS.

Before going into those outcomes and implications, what is Hatch? In short, the company streamlines and automates the art of lead management for local service-based businesses. Specializing in home services, it helps SMBs convert leads into paying customers in automated and AI-driven ways.

This flavor of AI-driven lead cultivation is hot right now, as it’s a segment of the broader AI movement that has tangible, real-world outcomes. Moreover, as we discussed this week with Thryv CEO Joe Walsh, it checks all the right boxes in terms of alleviating tangible pain points for SMBs. This is what they want.

One of the biggest reasons that this value proposition resonates with SMBs is that it gives them back the most valuable resource of all: time. They’re famously time-starved and tech-challenged, so the last thing they want to do is spend time managing marketing software. They just want it done for them.

“Hatch is solving challenging lead management and communication pain points for services businesses, and we’ve been impressed by the innovative AI technology and traction they’ve built,” Yelp CEO Jeremy Stoppelman told Localogy Insider. “I believe that by bringing our companies together, we will be able to help service providers operate and grow more efficiently.”

Thryv’s Joe Walsh on Taking a Measured, Practical Approach to AI for SMBs

Steady Path

Expanding from Stoppelman’s point, what will this do for Yelp, and why did it pay $300 million for it? Part of that question is answered above in the stickiness that AI-driven automation has with home services – a massive local commerce vertical. In that light, Hatch will help Yelp inherit some of that stickiness.

But more importantly, this broadens Yelp’s services and suite of SMB Saas products. Stepping back for historical context, Yelp has been on a steady path over the past 15 years to expand from an SMB marketing and customer acquisition platform to a SaaS platform that supports SMB operations.

In other words, it’s not just about helping SMBs get new customers by boosting their visibility, but also keeping those customers. And the latter includes operational tools that help SMBs run their businesses – everything from reservation systems to CRM to this week’s update in integrated lead management.

Another driver goes beyond lead management to Hatch’s broader customer communications functions. It can automate outreach, revive past customers, and send seasonal offers. Altogether, it’s a powerful tool that can generate revenue while SMBs are sleeping or out on a job. And that’s the SMB holy grail.

Meanwhile, the deal will close in February, subject to regulatory approvals and closing conditions. The $300 million purchase price will be split between $270 million in cash and $30 million in employee retention. Hatch sees ~$25 million in ARR, which has grown about 70 percent year-over-year.

“The acquisition of Hatch is an important step forward in Yelp’s AI transformation,” said Stoppelman, “accelerating our strategy to bring powerful new AI tools to local businesses.”