Angie's List

History

William S. Oesterle and Angie Hicks founded Angie's List in 1995. The idea resulted from Hicks's search for a reliable construction contractor in suburban Columbus, Ohio, on behalf of Oesterle, a venture capitalist who was Hicks's boss. Hicks moved to Columbus to join Oesterle in creating Columbus Neighbors, a call-in service and publication with reviews of local home and lawn care services. The name and concept were based on Unified Neighbors in Indianapolis, Indiana. Hicks went door-to-door, signing up consumers as members and collecting ratings of local contractors.

After Hicks recruited over 1,000 members in Columbus within one year, she turned to Oesterle to raise money from investors to develop the business. In 1996, the company bought Unified Neighbors from its creator and moved the company's headquarters to Indianapolis.

By 1999, the database of local services and reviews was moved to the Internet. In the following years, the customer base and business relationships grew throughout the United States, while expanding coverage to include additional services, such as health care and auto care.

In 2013, Angie's List had over 70,000 subscribers. In August 2015, it reported 3.2 million paid members.

Ratings methodology

Angie's List members grade 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. 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.

Criticism

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.

Litigation

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." On October 7, 2008, the plaintiffs dismissed the complaint against the two members. Summary judgment was later granted in favor of all defendants.

In 2014, Angie's List Inc. paid $2.8 million to settle a lawsuit alleging that it automatically renewed members at a higher rate than they were led to believe.

In August 2016, Angie’s List has agreed to settle three lawsuits for a payment of $1,400,000. The class action lawsuits focused on Angie’s List’s acceptance of advertising payments from service providers, and whether those payments affect service providers’ letter-grade ratings, reviews, and place in search-result rankings. Angie’s List denies plaintiffs’ claims, but disclosed that revenue from service providers can affect the order of search-result rankings of the service provider under certain settings. Moore vs. AngiesList.

Financial information

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. In November 2010, Saints Capital led an additional funding of $2.5 million.

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.

Shares have remained below $13 since March 2014. Before 2015, the company has been dependent on capital infusions from investors to stay afloat. Angie's List had its first profitable year since founding in 1995 in 2015.

In 2013, investors worried that the company had been in business for more than 18 years, yet never had shown an annual profit, and that valuations of the company were unrealistic based on the actual revenue the company produces. But by 2015 growth estimates indicate a significant earnings-per-share growth, with a long-term growth rate at 19%. Combine this with stock estimates rising in 2015 by 13.3%, some Securities research firms such as Zacks Investment Research indicated ANGI is well-positioned for future earnings growth.