TitleCo-founder & Chief Marketing Officer
CompanyAngie's List
Most would-be entrepreneurs realize their startup dream after finishing their MBA. But for Angie Hicks, the founder of Angie’s List, the road to successful entrepreneurship began well before she headed to HBS.
In 1995, Hicks arrived in Columbus, Ohio looking for a reliable construction contractor for her boss William Oesterle. Hicks was a 22-year old college graduate, an economics major from DePauw University, who had grown up in Fort Wayne, Indiana. Oesterle, a venture investor and a fellow HBS alum (MBA 1992) was remodeling an old house in Columbus and he was looking for a reputable contractor. He grew frustrated by the dearth of a dependable rating service such as Unified Neighbors, an effective such resource in Indianapolis where he used to live. He decided to start a similar business in Columbus and recruited Hicks to run it. She and Oesterle co-founded Columbus Neighbors and Hicks went door to door to sign up customers for a paid subscription service that rated local contractors. Her initial efforts were met with distressing indifference.
“I’m very shy,” Hicks said in an Inc. magazine interview. “Going door to door was my worst nightmare. Having to start a conversation and then having someone tell me `No’ was devastating.”
Hicks refused to quit. “Sometimes ignorance is bliss,” she said. “Everything was new and I didn’t know what to expect. Starting a business that young, you really have nothing to lose.”
After a tough first year, the business began to jell. The work was daunting because it was off-line and Hicks had to manually keep and update all the lists of recommended contractors, current members and prospective members by hand. Yet membership grew to 1500 and in the spring of 1996, Hicks fittingly changed the company’s name to Angie’s List. She and Oesterle decided to buy Unified Neighbors, which had 5000 members, and move the new merged company’s headquarters to Indianapolis. They steadily built what Hicks called a “homeowners grapevine” of reliable tradespeople covering hundreds of categories, from plumbers to roofers to exterminators, and created a membership model that they spread into an increasing number of geographies.
As a startup venture, being able to get its customers exactly what they wanted was crucial for the company’s survival. Focused on what she calls “high cost of failure transactions” Hicks understood that for customers, home improvement projects can feel like a crisis. When the hot water heater is leaking all over the floor, the home owner has to deal with it quickly but really doesn’t want to.
“Our goal is to help them get that handled as quickly and easily as possible so they can get on with their lives,” Hicks said.
In 1999, Angieslist.com went live, a move that catapulted the company to new heights and Hicks decided it was time to earn an MBA in order to better help guide a growing business. After running the company herself for its early years, she asked Oesterle to take over as CEO in 1999 as she made plans to head to Harvard. Five years after she graduated, Angie’s List had become a highly visible company operating in 25 cities, with 91 employees and 172,000 members.
When Oesterle took over as CEO, the company was becoming a real business, simultaneously opening in four new markets and in need of more veteran leadership. Over time, Angie’s List instituted a basic business model that charged members a nominal annual fee that provided access to the list, either by phone or online. Businesses are rated with a school-like grading system of A-F based on a variety of criteria including punctuality, professionalism, price, quality and overall performance. Though the ratings system has caused some controversy over the years, the continued growth of the company bespeaks its effectiveness. A company getting a low grade gets every chance to respond by filing a report giving its take on what happened. Angie’s List even sends out complaint-resolution specialists to offer help to a contractor.
In 2011, Angie’s List went public, raising $114 million, and today, the company has $80 million in revenues, more than 2000 employees, along with 3 million members in more than 200 cities. The service now includes health care professionals, pet care and even offers a special subscriber list for buying and selling classic cars.
Given competitors such as Yelp, which is a free service, the decision to charge a membership fee, was a risky bet for Angie’s List. But Hicks felt it underscored the value of the product.
“We take a very journalistic stance toward our reviews, which are never anonymous,” she said. “Members do pay for the expense of maintaining quality information, but in the grand scheme of things, it’s pretty small—almost like an insurance policy.”
Building a company such as Angie’s List is a daunting task and like any entrepreneur, Hicks has experienced the proverbial roller coaster ride. In a recent interview with an Indiana tech writer, Hicks recalled the effort to raise venture capital for the startup. One firm in particular left an indelible mark.
“They said they love us and signed the term sheet, and then they said `we need to move the headquarters to Boston’ and we told them `no thank you,’” Hicks recounted. The firm apparently didn’t think the nascent company could find enough smart people in Indianapolis to build the business, a notion that infuriated Hicks, a lifelong Hoosier and staunch supporter of the Indianapolis business scene.
“My advice (on venture capital) is to go raise it when you don’t need it,” Hicks said, “and be very picky who you take money from because they are going to end up helping to drive your business.”
Not many founders are as quick to turn over the controls to someone, even a co-founder, as Hicks did with Oesterle. But such wisdom, knowing your own strengths and weaknesses, is often the difference between a startup’s success or failure. Hicks counsels young entrepreneurs to “make sure you are building a team that shores up your weaknesses. It depends so much on the people, the culture of the company, and those things should be at the top of the list when people are laying out a business plan.”
Hicks also counsels startups to embrace “really great advisors.” She suggests over-investing in the best lawyers—“a bad contract that holds you back for a decade is not worth the cost-savings” – and emphasizes the need to develop “your personal brand” while growing a strong network.