Angie’s List Looks to Grow Home Services Marketplace in New Tech Era

Xconomy Indiana — 

When Angie’s List got its start 21 years ago, it was anything but a tech company. Back then the consumer ratings service was exactly what its name implied: a hard-copy list of home contractors who were recommended by their customers. It didn’t even have a website until 1999, and the first iteration was nothing more than a digital version of the list.

Today the Indianapolis-based firm is utilizing technology to power and promote an online software platform that CEO Scott Durchslag calls “the first dedicated, purpose-built home services marketplace” designed to do much more than facilitate offline transactions.

“I believe that technology is going to be what enables us to sustainably differentiate ourselves,” said Durchslag (pictured), who led tech initiatives at Best Buy, Expedia, and Skype before joining Angie’s List last fall. “It will enable us to scalably accomplish our mission, which is to relentlessly elevate the home services experience.”

There’s plenty of room to grow. Fewer than 1 percent of transactions in the $400 billion home services industry now occur online, he said. Compare that to 25 percent in consumer electronics and 55 percent in travel. Under his watch, Angie’s List is working to systematically identify the obstacles to online market penetration and break them down: the goal is to have real-time booking and online payments, of which Angie’s List will get a percentage.

The company broke down a major barrier of its own last month, eliminating the $20-a-year paywall that previously prevented 85 percent of its 11 million monthly unique visitors from accessing service-provider reviews and rankings in its 250 U.S. markets. Free membership also unlocked the company’s online marketplace, in which providers can offer specific services at set prices, and members can buy them online.

Angie’s List (NASDAQ: ANGI) picked up 700,000 new members within a month of taking down the paywall, the firm said. “The response was extraordinary,” Durchslag said.

The company, which went public in 2011 and reported its first full year of profitability in February, also introduced two premium membership tiers with additional benefits layered on. For about $25 a year, silver members get fair-price and service-quality guarantees. For about $100 a year, gold members get help with conflict resolution if a problem arises. Work-in-progress offerings include a Bluebook home-repair pricing guide (for silver members), an emergency-service line (gold), and a handyman helpline (gold).

“What we really tried to do—and we did lot of research and testing on it with consumers—was to say, ‘What would you value the most? What would make the biggest difference?’” Durchslag said. “These are the things that people said they would be very willing to pay for. … There’s a whole value chain—from search and match down to hiring, down to even some elements of fulfillment and after-care.”

Indiana entrepreneur Jim Brown and two partners saw similar potential when they launched tech startup Haven in 2014. Haven provided free home-management software that offered DIY advice and allowed homeowners to connect with reputable service providers at the press of a button. It attracted more than $1 million in venture capital but failed to gain traction and ceased operations in 2015.

Brown believes the concept still has merit, and he said Angie’s List has both the cash and market position to accomplish what his and other startups have attempted. With more than 3.7 million members and 55,000 service providers in its network, he said, Angie’s List already has the scale others are struggling to achieve.

“If anyone is in the position to do it, it’s them,” Brown said.

Angie’s List faces competition from the likes of Facebook, Google, Houzz, Porch, Handy, and HomeAdvisor, which is owned by IAC, the New York-based Internet giant. (IAC made an offer to acquire Angie’s List for $512 million in late 2015, but it was rejected.) The company currently has about 2,000 employees and a market capitalization of $590 million.

Enhancing the company’s user analytics technology also … Next Page »

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