A Conversation with Angie Hicks

Angie Hicks is like the grand dame of what I’ve come to call “social directories” or yellow pages with ratings and reviews. I’m embarrassed to say that I had never spoken to anyone at Angie’s List despite talking about them in the context of user-generated content on directory sites for some time.

Finally, on Friday, I spoke to Angie and I learned many things I didn’t know about the site and its history. Started in Columbus, OH, Angie’s List has been around for a little over a decade and now employs 250 people. Angie started the business with door to door canvassing to solicit members and local business recommendations. The business now runs a network of websites, publishes a magazine (with original content) and offers a telephone-based service.

The company will also mediate disputes between members and contractors.

Angie’s List was inspired by a small organization in the Midwest called Unified Neighbors, which offered a local business referral service. Angie’s List bought the business a couple of years later.

It also is a membership organization — that part I knew — and charges about $5 per month in subscriber fees. That solves the business model challenges to a large degree, although the company does have advertising — only for “A” or “B” rated businesses and they must offer a discount.

Angie told me the membership has very little churn despite the abundance of free competitors out there. She said they did well, for example, “head to head” in Seattle against Judys Book and in LA against InsiderPages. Both are newer markets for Angie’s List.

Angie’s List sees itself as the “premium brand” in a now very competitive arena. It seeks to differentiate with quality and service. For example, Angie told me that every single member review is itself reviewed to ensure that it’s authentic. And the “mediation” service is unique.

Even though many of these things are on their site I questioned her about whether they were sufficiently obvious to enable people to see justification for the membership fees. She said they’ve gone to a free year introductory offer to get people into and using the site so that they’ll be motivated from experience to join.

It’s remarkable in a way, and perhaps only a function of the fact that they’ve been doing it this way for a long time, that Angie’s List can charge membership fees. There are very few, if any, sites that could come along today and succeed with a subscription model. It puts Angie in rarefied company with the Wall Street Journal, Zagat and Consumer Reports.

3 Responses to “A Conversation with Angie Hicks”

  1. langoustine Says:

    About a year ago, I read somewhere that AngiesList has 12,000 paying subscribers in the Chicago area. I didn’t believe it then, and still don’t.

    They launched in the Bay Area 18 months ago, and gave away “free memberships”, as they did in other cities as part of their expansion. My one year free membership to the SF site expired four months ago, and I accessed the site just now. They have never tried to get any money from me.

    It’s possible, I suppose, that some people in less web 2.0 saturated places than the Bay Area might pony up the $60/year, but I doubt it. And nobody who previously had access to AngiesList for free will now elect to pay.

    Interestingly, if you Google “AngiesList”, you will find all kinds of nice, but naive folks in the Heartland who have bought into the whole cutesie “Angie” storyline, and think it’s great. Dig a bit deeper and you will find horror stories from contractors who (say they) have been extorted by AngiesList, and the serious venture capital behind them.

    Finally, our research into the San Jose AngiesList showed that the list can easily be gamed by unscrupulous contractors–as of today, a San Jose company called AAA Air Conditioning has 74 “reviews”, whereas every other air conditioning contractor has only one or two. If you look at the dates of AAA’s reviews, you wlll see that they come in clumps of ten or more reviews, all posted on the same day. It’s simply not credible that ten customers of AAA simultaneously decided to log onto AngiesList and post a glowing comment, independently of each other.

    (2) The AngiesList ‘rating’ of a company ofen bears no relation to the actual reviews of that company. We found companies on the San Jose list that had three “bad” reviews from clearly unhappy customers (out of total four reviews)–“missed appointment”, “would not hire again”, etc. AngiesList still gave them five stars! Not surprisngly, those companies have a “coupon”. They are paying AngiesList to ignore all the negative user feeback, and AngiesList will gladly do so – for a fee!

    They have definitely did some traction in the midwest, but for how long? As you point out elsewhere, review fatigue is now beginning to set in. And how do you (continue to) charge $60 for a bunch of dubious reviews that everyone else from Insider Pages to City Search to Yellow Pages now gives away for free?

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    […] Angie’s List has advertising but is mostly a subscription model. (Here’s my previous post about the […]

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