Angie's List

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Angie's List, Inc.
TypePublic
Traded asNASDAQANGI
Foundation dateApril 26, 1996
HeadquartersIndianapolis, Indiana
Founder(s)William S. Oesterle, Angie Hicks
Key peopleJohn W. Biddinger, Chairman
William S. Oesterle, CEO
Angie Hicks, CMO
IndustryWebsite
Products1. Advertising (70% of revenue) 2. Membership access to crowd sourced review of local businesses (30% of revenue)
Revenue$88 mil
Employees1,000
Websitewww.angieslist.com
[1][2][3]
 
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Angie's List, Inc.
TypePublic
Traded asNASDAQANGI
Foundation dateApril 26, 1996
HeadquartersIndianapolis, Indiana
Founder(s)William S. Oesterle, Angie Hicks
Key peopleJohn W. Biddinger, Chairman
William S. Oesterle, CEO
Angie Hicks, CMO
IndustryWebsite
Products1. Advertising (70% of revenue) 2. Membership access to crowd sourced review of local businesses (30% of revenue)
Revenue$88 mil
Employees1,000
Websitewww.angieslist.com
[1][2][3]

Angie's List is a US-based website containing crowd-sourced reviews of local businesses, with access sold on a subscription basis.

Angie's list generally contains local service enterprises such as plumbers and dentists. The founders of Angie's List argue that reviews presented by paid members, are more reliable than reviews posted on other websites such as Yelp because "Companies can't pay to be on Angie's List. Reviews come from real people like you, not anonymous users."[4]

According to the Oct 2013 Quarterly Report [5] Angie's list currently has 2,378,867 paid members with membership, with revenue of $17 million and advertising revenue of 48.4 million, and a quarterly net loss of $13 million.

History[edit]

Formerly headquartered in Columbus, Ohio, Angie's List was co-founded by William S. Oesterle and Angie Hicks in 1995. It was inspired by Hicks' search for a reliable contractor in suburban Columbus on behalf of Oesterle, a venture capitalist and her former supervisor. She relocated to Columbus to join him in creating Angie's List, which started as a call-in service and publication for reviews about home and lawn care. Hicks went door-to-door, signing up members and collecting ratings on local contractors. For a year, it was called "Columbus Neighbors", the name and idea being patterned after the Indianapolis, Indiana-based community publication, Unified Neighbors.[6] After solely recruiting more than 1,000 members in Columbus within one year, Hicks turned to Oesterle to raise money from investors in order to develop the business at a steady pace.[7]

In 1996, Angie's List purchased Unified Neighbors, from creator Bill Corbin and relocated its headquarters to Indianapolis. By 1999, the database of local services and reviews was moved to the internet. During the ensuing years, their customer base and business relationships grew throughout North America, while also expanding to include additional service industries such as health care and auto care.[8]

Since then, growth has been rapid. Angie's List now has expanded to cover most of the United States, and the current number of members is over 2 million. Yet despite this growth in membership, Angie's List has never had a profitable year.[citation needed]

Ratings methodology[edit]

Angie's List grades companies using a report-card-style scale, which ranges from A to F; these ratings are based on the following criteria: price, quality, responsiveness, punctuality and professionalism.[2] Each company has its own page, which is composed of a description of its business along with the customer reviews. The aggregate grade is drawn from the combined reviews and grades given to the businesses from the consumers.

Corporate affairs and culture[edit]

Angie's List is reputed to have a unique company culture, in that it encourages a laid-back yet innovative atmosphere. Communication is extremely open between management and staff, and ideas are encouraged from all employees, regardless of their positions.[9] Angie's List was named one of the Best Places to Work in Indiana in 2007 and 2008 by the Indiana Chamber of Commerce. The rankings for the list are based on the feedback of randomly selected employees at eligible Indiana businesses.[10][11]

Angie's List was also a finalist for the Nation's Healthiest Employers of 2010. They have had a comprehensive employee wellness program for over 5 years, which includes about 30 different programs and events throughout the year. Employees are offered health, life and dental insurance, as well as access to the fitness programs and the on-site fitness center. They are encouraged to participate in various events created to foster a team environment and boost company spirit.[12]

Criticism[edit]

Angie's List has been criticized for the fundamental contradiction between its claimed philosophy ("Companies can't pay to be on Angie's List") and the conflict of interest caused by reliance on advertising revenue for 70% of cash flow. [13] Answering a complaint from a user, David Segal found that when subscribers post a negative review of a company to Angie's List, a staff member discusses it with them in an attempt to rectify the situation. If the company is one that advertises with Angie's List, the negative review will be removed and then the customer must give an A or B grade. The company's effort to keep advertisers happy reveals their conflict of interest.[14]

Competition is a major concern. Competitors such as Yelp[15] offer similar reviews, with a much larger database, for free, causing concern for the future of ANGI's paid membership model. Angie's List reviews for home services are liable to be hundreds of miles away, and not local as advertised.[16]

Investors worry that the company has been in business for more than 18 years, yet never has shown an annual profit, and that valuations of the company are unrealistic based on the actual revenue the company produces.[17]

There have also been complaints that the stock has been excessively diluted by gifts of stock to business insiders, so that if the company ever did show a profit, little if any would accrue to outside investors/ stockholders.[citation needed]

Litigation[edit]

According to the Washington Post, in March 2007 SCS Contracting Group sued Angie's List and two members for libel because of negative reviews of the company. One of the sued members remarked, "if [contractors are] able to sue, then the value of Angie's List depreciates.... People aren't going to be willing to submit reviews if they could be threatened with a lawsuit."[18] On 7 October 2008, the plaintiffs dismissed the complaint against the two members. Summary judgment was later granted in favor of all defendants.[19]

Financial information[edit]

Angie's List estimated that its annual revenue in 2008 was $58 million, generated primarily through advertising in its newsletter and membership fees.[20]

Membership fees are based on volume of service providers at a given location. For example, Angie's List reported the following annual membership fees as of 4 December 2009:

In 2010, Angie's List raised a total of $25 million in capital from investors. In September 2010, Wasatch Funds and Battery Ventures invested $22 million.[21] In November 2010, Saints Capital led an additional funding of $2.5 million.[22]

On November 17, 2011, Angie's List began trading on the NASDAQ exchange under the ticker symbol ANGI. It priced 8.8M shares at $13 and opened for trading at $18, a 33% premium.[23]

References[edit]

  1. ^ "accessIndiana". Indiana Secretary of State. Retrieved 2006-11-07. 
  2. ^ a b Schein, Amy. "Brownstone Publishing, LLC". Hoovers.com. Hoovers. Retrieved 2007-01-30. 
  3. ^ Duros, Sally (2007-01-05). "Mining gold from Chicagoans' word of mouth". Chicago Sun Times. Archived from the original on 9 February 2007. Retrieved 2007-01-29. 
  4. ^ "Angie's List Website". Quotation found on main page. Retrieved 2013-10-29. 
  5. ^ http://investor.angieslist.com/releasedetail.cfm?ReleaseID=799542
  6. ^ The Story with Dick Gordon
  7. ^ Evans, Teri (2010-10-06). "No Free Stuff Here: At Angie's List, Members Pay". Wall Street Journal. Retrieved 2011-08-02. 
  8. ^ "Inner City 100.". CNN Money. 2011-05-18. Retrieved 2011-07-29. 
  9. ^ "Angie's List Overview". Glass Door. 2011. Retrieved 2011-08-15. 
  10. ^ "Best Places to Work in Indiana Named". Inside Indiana Business. 2007-02-26. Retrieved 2011-07-29. 
  11. ^ "Best Places to Work in Indiana Named". Inside Indiana Business. 2008-02-25. Retrieved 2011-07-29. 
  12. ^ "Angie's List: Fitness for Life". Healthiest Employers. 2010. Retrieved 2011-07-29. 
  13. ^ David, Traynor (2013-09-10). "Ain't it Time to Say Goodbye to Angie's List". Forbes. Retrieved 2013-10-30. 
  14. ^ David Segal, "A Complaint Registered, Then Expunged," New York Times (Dec. 21, 2013), p. BU3.
  15. ^ http://www.yelp.com Yelp Website
  16. ^ Berr, Jonathan (2013-10-07). "Angie's List Doesnt Rate Well Shareholders". Investopedia. Retrieved 2013-10-30. 
  17. ^ http://seekingalpha.com/article/1776412-angies-list-worth-9-based-on-expected-lifetime-member-value-in-2015
  18. ^ Kelly, John (March 13, 2007). "Homeowner's Web Gripe Draws Contractor Lawsuit". Washington Post 
  19. ^ "Stephen C. Sieber v. Brownstone Publishing Co.". October 2010. 
  20. ^ Murphy, Tom (2007-01-20). "Angie's to-do list: doctors; Service ratings firm explores expansion into health care". Indiana Business Journal. Retrieved 2007-02-01. 
  21. ^ Merino, Faith (21 September 2010). "Angie's List strikes big with $22M". VatorNews. 
  22. ^ Merino, Faith (11 November 2010). "Angie's List raises $2.5M adding to $22.5M". VatorNews. 
  23. ^ "Angie's List gains 25% in IPO". CNN. 2011-11-17. 

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