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Tech leaders claim mixed emotions about Angie's List sale

May 2, 2017

Indiana tech leaders had mostly bittersweet reactions to Monday's announcement of the $505 million sale of Angie's List to New York-based IAC, which plans to combine the business with HomeAdvisor and create a Colorado-based public company called ANGI Homservices Inc.

There are positive and negative implications with any exit, observers said, from wealth creation to layoffs. But the Angie's List exit is somewhat special because of its deep involvement in the local tech community and the fact that it's the only publicly traded technology company in Indiana.

Angie's List, which has about 1,500 employees in Indianapolis, will continue to operate independently of HomeAdvisor, which has a sales force of about 150 people here. CEO Chris Terrill, who will be CEO of the new company when the deal closes late this year, suggested there would be job cuts to eliminate redudancies but said he wants to be as "sensitive" as possible with current employees. He also noted that HomeAdvisor ultimately plans to double its workforce here.

The companies—which have a combined $822 million in annual revenue—said they expect to realize $100 million to $250 million of "annualized synergies" by the end of 2018, raising the specter of deep cost-cutting. However, Terrill told IBJ that employment levels are yet to be determined.

Some tech leaders are wondering if the acquisition will spur more job creation, which has happened with ExactTarget in the years following its $2.5 billion sale to Salesforce—or if jobs will erode, which happened following acquisitions of firms such as Apparatus and Aprimo.

Here's a sampling of commentary about the deal, from text messages and phone interviews with current and former Indiana tech execs.

The good

— John McDonald, CEO of ClearObject

"There are always good and bad things that come from these acquisitions. The good things are, strong parent companies in most cases that have the ability to pour resources and effort beyond the local company's ability to invest. It raises the profile of Indiana again as a generator of good companies and good talent, and it will create a whole new set of headlines with Indianapolis in the middle of it. It will likely create financial winners ... which will allow us to create some more angel investors, some more seed capital."

— John Qualls, president of Eleven Fifty Academy 

"I'm always proud when a Hoosier-grown company is acquired because it affirms they have created something of value the market recognizes. The best outcomes are when the sale enriches the largest pool of Hoosiers who remain here and plow their money and talent back into the local and regional community. I hope this sale will also continue to fill the trend of keeping and growing the company here, in Indiana."

— Susan Marshall, CEO of Torchlite

"I think it's great if they stay in Indy and continue to invest in the people that live and work here. I'm sure a lot of specifics still need to be worked out, but it would be a shame if they didn't work hard to retain many of the talented people that work there today.

"I don't see it as losing unless they don't continue to hire and invest in our community. The Salesforce acquisition of ET spawned a whole new generation of companies and investors and that was a good thing."

— Scott Jones, former CEO of ChaCha

"An excellent exit for [Angie's List], given the circumstances. A miracle actually. A really good thing they changed their fee structure. [Angie's List] was extremely slow to react to market conditions."

The bad

— McDonald

"The bad part about it is, once again, you've got another company whose headquarters is no longer here, and the decisions aren't totally necessarily driven by people locally. That has an effect in philanthropy. That has an effect in general promotion of the technology community with dollars and resources for investment. It usually means some job loses, not necessarily in the technical space, but in the administrative space."

— Qualls

"Areas of concern is to see the reverse—shrinking the local footprint and investment. Believe I saw [the city] is pulling back on incentives at Genesys [which bought Interactive Intelligence Group in 2016] for missing growth metrics. Former Apparatus location had 10 percent [reduction in force]. Etc."

— Jones

"Indy shouldn't count on the company operating as status quo. This transaction implies massive changes to those employees. (And the new CEO certainly seems to be signaling that with his choice of words.)

"Amazon will ultimately own that space, so the leadership will need to be bold and be lightning quick in the market. They need to invest, but IAC won't invest enough. So, Amazon will ultimately eat their collective lunch.

"So, yeah, it's a minor miracle for Angie's List stockholders who could have been facing a continuing slide in share value over time. Not so sure about this exit benefiting employees or Hoosiers, generally."

Current state of Indiana tech 

— Marshall

"Indy is in an interesting spot from a tech perspective. We've now had three major exits (ExactTarget, Interactive Intelligence Group and now Angie's List) - and only a handful of scaling companies to replace them. A new crop of startups like Torchlite are exciting... and need to start to fill some of those gaps quickly."

— Qualls

"I feel we are at an interesting place in tech in Indiana. We are either poised to burst into a new tier nationally or settle into a plateau that will require time for the next round of winning players to grow and emerge. Regardless, I believe strong, selfless leadership across many orgs on the state will be required to guide us successfully through this opportunity."

— McDonald

"Once again, we're left with precious few numbers of companies like Mobi and ClearObject that are now the largest Indiana-based tech companies. And it's not because we grew, but it's because the other ones got picked off. And I'm not so sure that's good, honestly. ... I'm happy that we're in that position, but I'm not so sure what that says about the sustainability of our tech economy in Indiana because the well is kind of dry.

"We've gathered a ton of righteous headlines and press related to the vibrancy of our technical community and the attractiveness for young people to stay here and move here. And it's not as if companies like Appirio and others have pulled up stakes and departed, they're continuing to add talent and resources, which is what's driving the great scene. ... They're doubling down on Indianapolis and doing more because of what they discovered to be the case in Indianapolis.

"But the bad thing is, if you look at the next exit, what's the next exit? That's a problem. Mobi's 300 employees now, so how many years before Mobi has 1,600 employees? It's not next year. It'll be a few years off. How many years before ClearObject has 1,000 employees? I can guarantee you it won't be next year. So it'll take several years before we refill the well with companies that are that impactful. That's the major problem with the announcement—there's nothing right behind them. There are not three or four companies right behind them poised over the next one or two years for a similar-sized exit."

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