The cost-cutting moves announced yesterday by Indianapolis-based Angie’s List are the latest setback for a company whose ambitious growth plans lately have been tempered by job cuts.
The consumer-rating service laid off 90 employees this week, reducing its work force to 350. The decision came just three months after announcing an aggressive expansion that included significant investments in its near-east-side neighborhood and plans to double its headcount within five years.
CEO Bill Oesterle said the staff reductions will slow, but not deter, the growth plans. He now hopes to achieve the goal in five years rather than three.
“We have a big cash reserve on the balance sheet and we want to preserve that,” Oesterle said this morning. “We’re not going to wait until we’re out of cash. This is not an environment you can raise any money in.”
Nevertheless, Angie’s List raised $60 million in venture capital last year, including a $35 million infusion in April from Massachusetts-based Battery Ventures, a venture-capital firm that now holds a minority stake in the company.
The company has been on an employment roller coaster for years. In October 2005, Angie’s List had a staff of about 135, then ramped up to more than 375 by November 2007, when it eliminated 38 positions following a sweeping internal assessment. In October, it announced plans to add 400 workers in the next three to five years.
The majority of the latest round of cuts came from within the data-acquisition and processing departments.
Oesterle acknowledged that finding the proper balance has been a tough task.
“It’s always a difficult calibration managing headcounts specifically to growth targets,” he said. “It’s easy to fall into a trap, and sometimes you’re not as disciplined when you’re growing.”
Local business consultant Clare Coxey concurred.
“People get really eager about growth,” he said. “They get caught up in their enthusiasm, and the reality is, it just isn’t there, and then the economy changes.”
Angie’s List posted revenue last year of $35 million, up substantially from $25 million in 2007. It has more than 600,000 subscribers in 124 major cities. As part of its growth plans, the company is preparing to launch service in Toronto and London, and is testing health care ratings on doctors, facilities and insurers in its markets.
Bruce Kidd, a senior vice president at locally based Walker Information and a former director of small business and entrepreneurship at the Indiana Economic Development Corp., said Angie’s List’s growth plans are well-intended.
“They just got hit in the nose like a lot of companies did by this economy,” he said.
Kidd also assumed the job cuts could have been driven by Battery Ventures, since many venture-capital firms are trying to shore up their portfolios in light of the turbulent economy.
Oesterle, however, said the management team alone made the decision to downsize.