Angie’s List losses continue to climb

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The losses continue to mount for Indianapolis-based Angie’s List Inc., which hopes to raise $75 million in an initial public offering.

The provider of online consumer reviews reported Monday in its latest Securities and Exchange Commission filing that the company lost $43.2 million through the first nine months of 2011, pushing total losses since 2006 to $160.6 million.

Its loss through Sept. 30 represents a 59-percent increase from the same time frame last year, when losses totaled $27.2 million.

Revenue through Sept. 30, however, grew 46 percent, to $62.6 million. And paid memberships climbed to more than 1 million, as Angie’s List increased the number of markets where it does business to 175.

The national advertising to support such growth isn’t cheap. The company spent $48 million on advertising through the first nine months of 2011, a 58-percent increase from the same period last year, the filing said.

“We have significantly increased our investment in member acquisition,” the company wrote in the filing. “If the revenue generated by new paid memberships differs significantly from our expectations, or if our membership acquisition costs or costs associated with servicing our members increase, we may not be able to recover our membership acquisition costs or generate profits from this investment.”

The company’s ability to become profitable has been a concern of market experts since Angie’s List announced its intention to go public in late August. It plans to list on the NASDAQ stock exchange under the ticker symbol ANGI.

Net proceeds from the IPO will be used to fund its advertising strategy and for general corporate purposes, the company said.

Angie's List said it plans to continue aggressively investing in national advertising to deepen its market penetration, particularly in New York City and Los Angeles. It also noted it is expanding into new categories. The company started by focusing on home improvement services, and now covers categories such as health and wellness services, and car restoration.
Its latest SEC filing does not provide a price at which company shares will be sold to raise the $75 million. No date has been set for the official offering, but the filing still indicates it will take place in 2011.

But it does give information on executive compensation. Angie’s List Chief Marketing Officer Angie Hicks earned a base salary in 2010 of $148,550, but her pay grew to nearly $4.2 million when including $3 million in stock awards and other compensation.

CEO and company co-founder Bill Oesterle earned a base salary of $254,995 last year and total compensation of $2 million when counting $1.4 million in stock awards and other compensation.

Oesterle and Hicks founded the company in Columbus, Ohio, in April 1995 as Brownstone Publishing LLC and moved it to Indianapolis in 1999. It is at 1030 E. Washington St.

Shortly before announcing its IPO in August, Angie’s List said it would spend $11.5 million to expand its four-block campus on Indianapolis’ near-east side to accommodate 500 new employees by 2015.The city of Indianapolis agreed to provide the company incentives worth about $7 million to help with the expansion.



  • Angie's List IS a scam.
    The main purposes of Angie's is to obtain consumers for Angie's to list to sell to businesses for direct marketing rather than provide useful consumer rating information. Consumers pay to access Angie's and therefore should not be converted into direct marketing solicitations. Use common sense when choosing a company. See if they have a physical bricks and mortar presence in the real world. Visit it. Does it look professional? Do the people you talk to sound like they know what they're doing or do they shy away from too many questions? Use common sense and ask friends or relatives that know more than you. Don't forget, EVERYONE is short on money these days, and scams are only on the rise because of it.
    • Former subscriber
      I am a former AL subscriber -- up until this year when I let my membership lapse. I used to be an enthusiastice subscriber, but the annual fee continued to climb and - as already mentioned -- there a other free resources. A few years ago I gave a family member in another AL city a gift subscription as a house warming present. AL's market penetration in this other large city was very limited (something I couldn't determine before hand because my subscription was for Indy only -- rather a limitation on membership. What if I wanted to find a car repair shop while on a vacation?) My relative complained loudly about AL's limitations so I canceled the gift subscription (within in a week or so of buying it); AL gave me a refund. The other posts here have contained some very interesting info about the business model, etc. Thanks for sharing.
    • Ungrateful
      I agreed to let Hicks do a Channel 8 segment at my house a few years ago as a favor to a couple acquaintances (one of whom worked for AL at the time). I took a half day off of work to let them film my house, and as a token of appreciation from AL I got...nothing. I was told afterward that they're doing those folks who agree a favor to do their marketing segments at their houses, and that people line up to do it. I was really turned off that Hicks couldn't even toss a free 1 yr membership my way as a thank you for my time and expense, since it wouldn't have cost her much (if anything). Left a bad taste in my mouth, to say the least.
    • Angie's List Recommendations = Solicitation
      I was an Angie's List member and enthusiastically recommended local entreprenuers and businesses which I patronized.

      I was surprised to find that those people who had truly provided exemplary service were solicited by Angie's List (to be on the list).

      These folks are so small that they cannot afford to do that; they deserved to be recognized for their work.

      I'm no longer a member because I don't trust "pay to play".
    • Angies List
      ..is so yesterday
    • Of course, businesses pay to be on Angiesllst!
      How does Angieslist gets away with constantly stating that "Companies Don't Pay to Be on Angies List"? Their S1 filing says that they have 192,000 advertisers, i.e.ads from the companies who are "not paying" to be on AngiesList. The only reason that consumers subscribe to AngiesList is because they think/have been told by AL that the contractors listed "do not pay". Unbelievable!
    • Another Dhurm-MadeOff?
      Wow! Let's start a company, borrow $Millions, Lose $Millions, Pay Ourselves $Millions- And Then Go Public! I am glad I did not invest in Angi's hi-yield bonds last year. Someone is going to get Burned on this deal!
    • Not sure I trust their model
      While I have been a payed subscriber to angies list for the last few years, I doubt I will renew. If they are taking any money from businesses I just can't really trust their reviews. In the end trusting their reviews is what matters and I don't think I can.

      Refuse money/advertising/member fees from businesses and maybe I will re-subscribe
    • Lose money -make millions
      I am not a MBA, but I do not understand the circumstances under which a company that is losing lots of money can afford to pay the owners millions.
      Sounds like a typical Bernie Madoff/ Tim Durham financial scheme.
    • Good Luck
      GoodLuck on Craigslist!
    • misleading advertising
      here is a great review/article on the flaws with their business model and specifically why their advertising claims are bunk

    • Greed at its finest
      Some of the greatest companies that are still around today started on a shoestring budget with long-term fiscal conservatism in mind (Apple, Microsoft, Toyota to name a few). When you load up top-level management with bright, Harvard MBAs you cannot expect to find frugality in their business plan. AL is simply too top heavy in executive level compensation.
    • Politics???
      And our state and city governments are giving subsidies to this company?

      I guess if you run Mitch's election campaign everything comes easy...
    • I Like Angie's List
      I enjoy Angie's List. I've been able to find online codes to get annual subscriptions for around $15/yr. I used Angie's List for a patio, lawn mower tune up, windows, chimney sweep, furnace tune-up and a couple other projects. If you work with a company that has numerous A rated reviews and do some vetting yourself, I doubt you'll have issues. I find the reviews on Angie's List far more helpful than Yelp or other free to post sites. Angie's List does make it easier to find someone for your everyday projects.

      I will say that their ads I see on HGTV and DIY are bad. Not worthy of 4 million in compensation for their Chief Marketing Officer.
    • Backroom Deals
      Just waiting to see Mitch Daniels have the Indiana Pension funds invest in Angie's List, Enterdel, and Litebox.
    • YEP
      Yep...Pretty basic stuff
    • look again.
      I am a contractor that has used Angies list to get work.
      I can't say enough good comments about being part of this growing company.
      Yes they have had their problems but I have found the review process that Angies list uses is generally fair and reasonable.
      It costs relatively little for me to advertise with them and the leads I get pan out to quality jobs.
      The customers ability to review my service keeps me on my toes and if I do a good job for that customer I am recognised for it and that leads to more work.

      I have confidence that Angies list will continue to grow and get better.
    • Another Tom Martino?
      Tom Martino in Colorado and Angie's List sound like the same sort of outfits. Essentially it involves pay for play. Contractors pay to be on Angie's List and garner a recommendation without a thorough vetting. The same thing blew up in Tom Martino's face recently and he's been forced to file for bankruptcy. When that happened a lot of ugly info surfaced about how business was being conducted. Angie's List sounds very much the same.
    • Ciao Angie
      As a contractor - I refuse to be on Angies List for two reasons. 1. The consumers using Angies List are some of the worst consumers to have as customers. 2. I would not want to be compared to their joke list of contractors. Let face it - Angie's done soon after she can spend no more. That ship is sinking.
      I have used a contractor from her list and he left me hanging with a substandard installation. I had to pay a membership fee to complain to ANGIE LIST. I avoid companies now who are on this LIST. I replaced the substandard installation and paid to have it reinstalled. BOO Angie List!
    • Yep
      Sounds like another great idea, like LITEBOX!
    • You gotta read this to understand the real estate deal
      Here's a shocker...$4.6MM is being given by the city to buy property which is being held by the real estate company owned by...wait for it...Bill Oesterle.

      Check it out: http://www.ibj.com/city-will-give-angies-list-46-million-for-real-estate/PARAMS/article/28944
      • Outlived
        Angie's List has already outlived its usefulness. Too many free alternatives! Sounds like Nero continues to fiddle as Rome burns.
        • Utility Sale Money Going To Political Ally
          Is Angies List spending $11 million on real estate or is the city giving them the money from the fund to buy abandoned properties?
        • See Oesterle as the problem
          Honestly...who makes $2,000,000/yr when you've lost $43,000,000 in the first 9 months of the year? It's funny to watch him: dump the wife, buy a big house, buy the Greek church next to it, buy some cars.

          Maybe if the investors looked at Angie's List to check the "work" of its leaders, they would've been aware of their shoddy workmanship and know better than to invest with these people only interested in enhancing their pocketbooks.

          Let me guess..if you ask Bill and Angie about the loses, they would try and claim it would've been worse if not for their presence. Call me crazy, but if you aren't smart enough to pay the contractor the entire amount AFTER the work is done rather than before(Angie), then you probably aren't suited for the Chief Marketing position.

        • Dan is right
          Dan is right the business model is flawed. THere are ways around subscription internet - there are also ways to make money (craigslist). Also i am afraid the contractor is a right too - angies list is novel on a local basis but we all see the contractor doing the work, and this company making money. I know that is how things work but it still leaves a bad taste in my mouth.
          • too expensive
            I've wanted to use Angie's List but the prices they charge are way too high. I don't know, seeing her on various local news channels makes me want to barf. She acts like she is an expert on everything, where anyone can use Google and get the same information.
            • Irresponsible management
              The fact is that they spend money like a late 90s .com. Ask about the lavish trip several years back that involved chartering a jet and taking several dozen employees to New Orleans for three days. A million here, a million there. Pretty soon, you're talking real money.
            • You want to know the real problem?
              The real problem is the business model...As a contractor here in Indy, I can confirm first hand that they try to blackmail all of us to "advertise" on their site. Is this a company to advertise real people's opinions of our work, or just a way to push guys like me into "advertising?" If you ask me, this is the real reason for their downfall..I'd be glad to let my work speak for itself, but I'm not glad to have to pay for someone to see my name.
            • Flawed Business Model
              Angie's List has missed the mark. They suffer from a typical Midwest viewpoint of business. Simply to be paid for services rendered. It is hard to gravitate to a free model but that is exactly what they need to do. I know their mindset and held the same viewpoint as an Internet Founder and CEO in the boom days of the late 90's and I suffered the consequences. With the advent of social media Angie's List should be booming, achieving a high viral coefficient instead it is scrambling to raise cash for a failed online subscription model that has yet to succeed anywhere on the Internet. You simply can't advertise enough to make it work. Viral adoption is the key to success in any Internet venture today. With Angie's name recognition and User base they could convert to free, gain widespread adoption and realize there are tons of ways to make money around the User base while providing a great service . --Dan
            • Sad, but
              It's just not a model that works well in a world with google and yelp and social sharing.
            • Salary
              Wow. What suckers are funding this $160 million loss? What investor can look at this horribly losing company, and decide to buy their stock? This is crazy. Angie can hemorrhage money and still make over $4 million in compensation. Must be nice.
            • Cause and Effect
              Part of the problem might be the troubles with the company's Web page. No customers, no business. Doesn't matter how much you advertise.

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            1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

            2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

            3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

            4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

            5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim