Angie’s List – One More Idea I Wish I Had Pursued
Have you ever watched the news of some company’s superb success and thought to yourself – I could have done that! I had that same idea years ago, why didn’t I act on it?
I had that feeling today when I heard that Angie’s list is going public. According to Bloomberg the IPO is planned to occur prior to Thanksgiving. The company will be listed on NASDAQ with symbol ANGI and will probably be priced next week.
Angie’s list is currently a web site that provides consumer reviews on various types of services – such as homeowner contractors, doctors and etc.
The company showed it’s marketing genius early on by naming the company after Angie. Who wouldn’t trust someone named Angie? They can point to a real live person who actually had the same issues that the members themselves have. Stroke of genius! Although the company is named after Angie, she did not start it alone.
It was started in 1995, when a venture capitalist named Bill Oesterle had trouble getting good contractors to work on his home. He knew Angie from when she was an intern at the firm CID Equity Partners (venture capital) – where he was a partner. He was impressed by her and hired her to start work on a service that took the idea of word of mouth recommendations from neighbors and expanded it to a paid membership service where members reviewed services and reports on those services were published.
They apparently co-founded the company in 1995, but Hicks was the main driver to get it off and running – while Oesterle served as a board member and went on with his other pursuits.
Hick’s went door to door to build a membership list and test out the idea and also was on the other end of the phone line when a member called in wanting a review of a contractor in the area.
Today, the company has more than 1.2 million paid memberships and is located on a downtown campus of 20 buildings with more than 400 employees. Angie owns 1.4% of the shares in the company. Although revenues are big, expenses are still bigger. The company is seeking an IPO to raise funds to expand marketing and membership even more.
It’s such a simple idea. I had trouble finding good contractors in 1995 to do work in my home. Why didn’t I come up with this idea and pursue it. What did Hicks and Oesterle do that I didn’t?
Here are my thoughts on reasons they are succeeding with their idea.
They had a needed service.
Who hasn’t had trouble finding a satisfactory person to do work in your home? It is difficult to get recommendations, even from your neighbors.
Entrepreneurs recognize when there is a need to fill – sometimes before the rest of us know about that need.
They had a proposed solution.
They came up with a viable solution to the problem of getting reliable recommendations.
If you can fill an unmet need better than the next guy, you have a great start on a business.
They didn’t go it alone.
Both Angie and Bill brought unique talents to their partnership. She had the drive, strategic thinking and desire to succeed. He had funding and experience to guide her.
Even Steve Jobs recognized that it takes a village to grow a business big. You can’t do everything yourself after you reach a certain level.
They had economics and business training.
According to Bloomberg, Angie served as president of the company through 1998 (Bill was on the board). While she went to get a Harvard Business School MBA, he took over as CEO and is still CEO now. She had a BA in Economy prior to that. Bill also had an Economics undergraduate degree and earned his Harvard MBA in 1992. They both had been exposed to years of classroom education in finance and business.
It helps to know what the heck you are doing!
They explored the validity of their idea.
She went door to door to ask people if they would pay for it and to build the initial list of 1000 members.
The success of your idea always goes back to checking with real live customers to see if you are really filling a need for someone willing to pay for it.
They grew the company slowly.
Angie took a year to get that initial list and they have been quietly growing as a private company for the past 15 years.
You can’t expect to make it big overnight. Even those companies that seem to do so have usually spent years building up to the point at which they burst into the public awareness.
They persisted and saw their idea through to fruition.
CBS News quotes Angie as saying
“I get questions all the time from people who have great ideas about a new business and wonder how to launch it. Even more important than the “Great Idea,” is the ability to not give up when you hit roadblocks. Whether you really have found the next great big idea or not, you’re going to get rejected. You’re going to have people hang up on you or turn their backs when you ask for help to launch it. There are some great ideas sitting on the scrap heap today that withered because the person who came up with them just couldn’t see them through. Angie’s List easily could have been one of those.
I shed a lot of tears when I first started my business in Columbus. I was a shy, 22-year-old in a new town working with just $50,000 to start a business from scratch. I forced myself to knock on doors, introduce myself to people and ask them for advice about who they’d hired, who was good, who was bad, and if they’d pay for a trustworthy service that would help make their lives as homeowners easier.”
You can’t quit when you hit roadblocks, you need to believe in what you are doing to persist through the tough times.
They got funding.
Along the way, they have sought and won multiple rounds of funding, including the latest in March 2011, according to the Indianapolis Business Journal.
“ Angie’s List raised $53.6 million in a private share offering from investors including mutual-fund company T. Rowe Price Group Inc., which tends to invest in companies that are already public. Last year, Angie’s List said it raised $25 million from investors including venture firms Battery Ventures, Saints Capital, and Wasatch Funds.”
If you are pursuing a growth business, you are going to need funding at some point to take it to the next level.
They grew the original idea.
They built a database, that Angie accessed when someone phoned in for information calling their business Columbus Neighbors. They bought a similar service in a different city, Unified Neighbors – on which they had modeled Columbus Neighbors. They slowly added new cities over time. In 1999, they jumped on the internet band wagon and set the lists up on a web site and in 2008 they expanded the types of services being reviewed.
Along the way, they have added affiliate programs to grow members, advertising and programs on the website to allow businesses that are reviewed by members to directly offer products and services to the members.
Most new businesses move beyond the original idea that caused the business to be founded. Successful businesses listen to the market place and morph their idea into one the market wants.
They defended their business.
You won’t see too much bad press out there when you google Angie’s list. At one point, after they added the ability to review doctors and dentists, some medical professionals started asking their patients not to do any reporting to the list. In response the company started listing the doctors that advised their patients not to report to Angie’s list.
Any public figure or well known company will have both proponents and opponents. Even a small company can be blasted by a viral social media attack. Believe in your company – your products and/or services and be prepared to stand up for them when needed.
Now lets talk about that missed opportunity of a McDondald’s franchise in a college town and taking that In-home Daycare business commercial!!
What keeps you from implementing your great business ideas? What other advantages do you think the founders of Angie’s list pursued?
Sources:
- http://www.papoom.com/AngiesListReview-01.htm
- http://www.billoesterle.com/
- http://www.cbsnews.com/8301-505143_162-41841751/angie-hicks-the-one-thing-a-startup-entrepreneur-should-never-do/?tag=bnetdomain
- http://www.makingittv.com/AngieHicksTheStoryofAngiesList.htm
- http://www.allbusiness.com/company-activities-management/company-structures/10597573-1.html
- http://www.bloomberg.com/news/2011-11-02/angie-s-list-seeking-as-much-as-114-3-million-in-initial-public-offering.html
- http://www.ibj.com/update-angies-list-ceo-says-ipo-possible-in-2011/PARAMS/article/26819
