Something remarkable is happening at Angie’s List. The team at Angie’s List announced that it would remove the paywall for home services provider reviews — data that was previously available only to paying members — and simultaneously replaced the company’s entire underlying technology platform.
Scott DurchslagCEO, Angie's List
Replacing the company’s entire underlying technology platform not only leapfrogs the company ahead 10 years to a modern service-oriented architecture that enables continuous deployment with multiple product upgrades per day, but it had to be rolled out across each of Angie’s List’s 253 paid markets, its three million members, and its 1.2 million service providers. And it was done inside of six months.
Durchslag, an e-commerce and tech turnaround veteran who orchestrated wins for Skype, Expedia and Best Buy, says, “That’s record speed. I don’t know anybody else who’s done that at this scale in that short amount of time. Usually it takes twice that much time if not more, and then dropping the paywall so quickly thereafter? Who changes the business model of a company in the full glare of public and media scrutiny? It’s extremely unusual to drive so much change so quickly across both the business and technology dimensions simultaneously.”
And apparently investors agree because also remarkably, when the Angie’s List leadership team announced at the public company’s Investor Day that it was introducing what could be perceived as risky changes, the stock price actually rose. Investors must have believed Durchslag when he said that, “the far greater risk would be not to make these changes.”
It’s a fundamental departure from where the company began in 1995 as a paid subscription service for consumer reviews of local businesses. “We intend to compete and win using our innovation and technology as a key basis for sustainable competitive advantage,” says Durchslag.
If the company does it right, Angie’s List will come out on top in the “winner takes most” race to earn the trust and loyalty of customers as the $400 billion home services industry shifts to the online, on-demand economic model popularized by brands like Uber, GrubHub and Airbnb.
Looking at other on-demand marketplaces, the top two brands typically control nearly two-thirds or more of the market share. Examples include:
- Rideshare – Uber and Lyft control approx. 83 percent market share
- Restaurant Reservations – OpenTable and Yelp control approx. 70 percent market share
- Travel Bookings – Expedia and Priceline control approx. 63 percent market share
- Homeshare – Airbnb and HomeAway control approx. 59 percent market share
Currently, Angie’s List has over three million paid members, but once its paywall is down the company will be gaining access to 30 million households, which are conducting online home services research, as potential new customers. Since Angie’s List has the highest brand awareness among all competitors in the space, Durchslag expects the upside of bringing down the paywall and executing well on his three-phase turnaround plan should double the company’s annual revenue by 2020.
According to a 2015 McKinsey survey, only 0.7 percent of the $400 billion home services market is currently spent online, which explains why other major tech brands like Google and Amazon are rushing to enter the market along with companies like IAC’s HomeAdvisor and Thumbtack. Google is so eager to capture market share that Google Capital invested $100 million in Thumbtack in addition to launching its own home services business.
What sets Angie’s List apart from these new, well-funded competitors, explained Durchslag, is that nobody else offers a robust, end-to-end customer experience that takes place entirely on a single platform. In the future, Angie’s List also plans to provide cloud-based services to its service providers to manage invoicing and payments, marketing, and other aspects of their customer relationship management.
“Nobody else is out there doing what we are doing,” Durchslag said. “HomeAdvisor, Thumbtack, Google and Amazon, they are just giving you the first layer of what we provide as part of a complete marketplace.
“They [competitors] are all just doing search and match, but the whole value chain includes providing the content, recruiting employees, doing the fulfilment, processing the payments, and more. Truth be told, these search and match, lead generation-only competitors don’t care what happens once the service provider enters the home. They have no sense of what it’s like to develop a relationship with a service provider that depends on us to run his business, and on consumers to keep returning for another good home services experience after they lived with the previous work done by the pro.”
It helps that Angie’s List has six times as many of the top quality service providers in the country as its nearest competitor, and three times the number of reviews on those top quality service providers. Leveraging those advantages will help to create a three-dimensional on-demand platform that offers what Durchslag calls a far superior experience for both consumers and service providers.
“Think about it,” he said. “Who besides Angie’s List could be trusted to create the definitive home services catalog for e-commerce?”
With 20 years of experience in building (perhaps pioneering) an industry now full of fierce competitors, Angie’s List is benefitting from its longevity and seasoned workforce.
Angie’s List, which currently employs nearly 2,000 in Indianapolis, is expected to hire at least another 200 people to execute on the three-phases, primarily in technology, product, sales and digital marketing.
Durchslag says he’s seeking skilled developers, both cloud first and mobile first, to join the team that just executed this remarkable feat. They should be highly iterative and excited about diving into a face-paced, entrepreneurial team and going head-to-head with some of the biggest brands on the planet. “There is no better place in the Midwest to learn and practice real continuous delivery at the scale of >100 million visits per year.”
Mike Langellier also contributed to this story.
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