Angie's List: Angie Hicks (2016)

If you ever try to get people to buy something, by you know going door to door. You know that this can be demoralizing, it can be utterly exhausting, but this is exactly how Angie Hicks first tried to get her business off the ground back in 1995. And back then she was lucky to get like

Two takers a day. But of course, over the years, Angie's list grew to millions of members and hundreds of millions of dollars in revenue. And the company's story has changed a little bit since we first ran this episode back in 2016, so we'll update you at the end, but for now. Enjoy. People started calling you, and you are the only person manning the phones? Literally in like a hundred square foot office space. Like we didn't have a phone system, we had a phone. And so when we needed a second line, we got a second phone.

So there I I do remember times where I'd be like sitting on the floor in the office, literally like toggling between two physical phones with no hold button. From NPR, it's how I built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. Guy Raz and on today's show how Angie's List grew from that one hundred square foot office. to a massive home services referral brand.

So in the summer of Nightin Nighty Five. Angie Hicks had just graduated from college in Indiana, which is where she's from. And like a lot of college graduates, she was looking for a job. Now, the previous summer she interned at a small venture capital firm in Indianapolis. And her boss there was a man named Bill Osterley. Bill was just a few years older than Angie, but He already had a lot of business experience, and he became kind of a mentor to her.

So they kept in touch, and with Ang job hunting after college, Bill was giving her advice about where to apply, who was hiring, that kind of thing. And you know, it was back in the day where you would literally send your resume and cover letter by mail. So I sent out numerous letters and resumes And then Bill calls me up one day and says, Hey Angie, I have an idea. And at that point he had moved to Columbus, Ohio. He said, Like, why don't you move to Columbus and we can start a business. I'll raise a little bit of money from, you know, friends and enough to to get you through the first year But I want you to commit for a year.

So so what'd you think? It was a little out of the blue and and you know, and I would never have defined myself As an entrepreneur. A lot of times when I thought of classical entrepreneurs, I was like, hey, they're risk takers, they're big idea thinkers. And I was like, Okay, I don't fit that. So I just wrung my hands about that decision and talked to my parents about it and they were like, Well, you know, you know Bill well, you know, he's not gonna lead you astray And then I talked to my grandfather, uh, and he was incredibly conservative. I mean, lived through the depression, just you know, like to pay cash for everything.

And you know, and he looked at me without even hesitating and was like Well you sh you should do it, Angie. I mean what's the difference between being twenty two and looking for a job and being twenty three and and looking for a job Yeah, I was like Hm. So

Literally like Loaded up all of my worldly possessions and my Ford Escort and off I went. So at that point did Bill actually have a business in mind or was he just like, Hey, come to Columbus and and we'll figure it out. We had a couple ideas. But then uh

landed on what became Angie's list when Bill was trying to renovate his house in Columbus. It was the second house he'd own. He his house in Indianapolis was also a fixer upper. But in Indianapolis he was introduced to a little business called Unified Neighbors that had been around since the early seventies, which was basically a list of who was good and who wasn't in the city for home improvement. And so when he moved to Columbus, he just kind of assumed there was something like that in every city. And and there wasn't. And so he's like we're gonna try to start our own. So okay, so this is like uh like ninety five? That's right.

So you get to Columbus, uh and what did you do there? Like how did you start? So we we started just talking to people that we knew. So you know the first stop on my my tour was to Bill's next door neighbor. Um Patty Bowman. W what did you say? What was your pitch? And it was like, you know, like hey, we're starting this business, you know, and and explain what we were gonna do. We're gonna help people find, you know, the best contractors in town. And Patty had lived in her house, lived in in her neighborhood for her entire life. You know, if someone uh did not need what we were selling, it was probably Patty. But Patty loved the entrepreneurial spirit of it. So she looked at me and she was like, This is great. I'm gonna take two memberships. One for me

And one for my son. And I was very thankful because Patty immediately ran and gave me a list of every service provider she'd ever used. Uh and she also gave me her church directory. And she told me that I had to call everybody on her church directory and tell them that she said they should buy a membership. And how much was a membership at that time? Nineteen dollars. So nineteen. For the year. And that bought you We were a magazine and a call in service. So during the day you call in and you could ask me for the name of a plumber or an electrician and then the uh in the evening I would go out door to door and also ask for reviews. So you you did everything. You you wrote I did everything. I I assembled the ma I wrote the magazine. Like magazine is a very um

Generous term for what brochure ish. More like a little like you know, neighborhood newsletter. So how did you how did you get more subscribers? So I w I literally for the first three or four months I basically went door to door every day. What was that like? Uh you know, remember I'm an introvert. Yeah.

It was probably one of the most miserable experiences of my life. Were you miserable because you just weren't gaining any traction? Like you'd go door to door people would just like like buzz off or something. Yeah, I mean like think about door to door in the n mid nineties. Like I I now I like to look back on it and call it a character building experience, you know. Yeah, it was hard. And there was a moment in the fall and and you know, it's like you think about like I was twenty two and I kinda realized that this is my life. I'm like, this is my career. I certainly didn't need to go to college to do what I was doing. Uh Did you know anybody in Columbus?

Uh Bill and his wife. So you were just like A on your own, in a totally transplant. Yeah. Just working all the time. Yes. Going door to door. Yes. As an introvert.

Yes. You were Totally miserable. I was. So I call Bill up one day and I and and I appreciate the fact that he realized that I was upset. So he suggests that we meet like at the little bakery down the street. And so we get there and you know, as soon as I sit down, I just start crying. And like I don't even get anything out. And he just starts talking and he's just like selling me on why we were it was gonna be great and you know and he talked for probably, you know, thirty minutes and everyone in the bakery are looking at us like what is wrong with those two? And and and he likes to tell the story that like at the end

All I could muster to say was that I was not gonna quit. So so what happened after that conversation? Did did you just go back out on the streets and and start selling door to door? I mean like I I tell people all the time like I used to measure success by one or two memberships a day. Like if I sold two memberships in a day, it was a banner day. Wow. So you know, so we fast forward a little bit and we're like, okay This is probably not the marketing plan that's going to work. So then we're like, Okay, we're gonna have to market. And I read like I mean you didn't raise insane amounts of money, it was like fifty thousand dollars. We raised fifty thousand dollars, yeah.

And so, you know, w where can we market that we can do it in an economical way that we won't burn through fifty thousand dollars really fast? Uh, so we w we locked out. I mean, Columbus, Ohio has or at that time had these little weekly newspapers and so Uh so we put an ad in the back of the weekly newspaper and it was, you know, neighborhood by neighborhood. And uh So it was this little two by three ad that said, Tired of lousy service, so were we. So we decided to do something about it.

And the phone started ringing. And people started calling you and and you are the only person manning the phones. I literally in like a hundred square foot office space that the people in the other offices around me thought my parents rented for me to do my homework in. I had a card table. We didn't have a phone system. We had a phone. And so when we needed a second line, we got a second phone. So there I I do remember times where I'd be like sitting on the floor in the office, literally like toggling between two physical phones with no hold button. And and what are people like your subscribers would just call up during the day and they would say, Hey, I need a plumber or like a roofer and you would say, Yeah, yeah, I've got all these options for you. Yeah, and it's like or if I didn't have an answer and the list was thin, I would go figure it out. I mean I remember one time

Um, you know, this woman called and she was new in town and wanted to s to s sign her daughter up for ballet lessons. And so uh Um so I was like, hang on Luckily I remembered'cause I had signed up all the members that I had a member who was a part of the Columbus ballet. So I call her up and I was like, Hey, I've got someone on needs help finding ballet lessons. So you know, we w I would just kind of try to make as You were you were like a human However I could. You were a human Google. Yes. You were the like the person like when you type it into Google, you were the person on the other side answering that question.

Yeah. And what was the company Call, by the way, at the time. Oh, sure. It was called Columbus Neighbors. So, you know, kind of just a a simple knock off of the unified neighbor's name.

And you know, we debated names. Uh one of the guys that was involved in companies on the board, you know, he was like, Let's call it the list and you know, like That's a pretty good name, by the way. That is a pretty good name. Yeah. Uh, maybe harder to copyright, but yeah. Yeah. Um And then Bill throws in he's like, Well we could just name it Angie's list since

Angie's who you talk to and it does make a good story and you know No matter what happens, I can always relate back to you know, Angie was the first one that answered the phones. So you know Probably not knowing what I was getting into. Like that was the decision we made.

So when you ran these ads and you started to see more subscribers How long does it take before you you start thinking? This is actually working. This is actually generating some cash for this business. Yeah, so we uh we ended up signing up a thousand members in the first year. And so we're like, hmm this could be w this could be a go at it. So then we started thinking like maybe we should go and see if we can acquire unified neighbors. In Indianapolis. Right. Right. So uh we ended up accomplishing it about a year after we started in Columbus. So then, you know, I kind of wake up one day in July of nineteen ninety six and I've got you know, two offices, so I had to start advertising to hire some some help. Uh and

You know I'm twenty two. I don't know how to hire anyone. So I placed a little ad in our newsletter to hire people. And I had this one woman that came in, her name is Maggie. And I hadn't interviewed anyone before, so I'm like asking questions like Oh, this is great, blah blah, you know, and I'm like So we finish up the interview and I'm like I'll get back to you in a few days and I I just remember her she looked me in the eye and she's like If you're gonna hire me, you need my phone number.

Ha ha And I was like I was just like That's exactly right. So the next day I hired Maggie And You know, Maggie is now this year celebrating her twentieth anniversary at Angie's list.

So in those You must have just been working like a maniac. Yeah. Because you had to deal with billing, writing the magazine, getting new subscribers. Expanding to Indianapolis. Don't forget I was selling advertising too. Selling advertising, li like did you

Did you move to Indianapolis when you when you guys acquired uh Unified Neighbors? No, I d no, I actually I just drove back and forth. So I spent half my week in Columbus and half in Indianapolis. H how long is that drive, by the way? Three hours. So w w like were you sleeping like four hours a night? It was it was it was a lot. I mean, you you can find yourself, you can just work, work, work. There's a lot of time in the day and you can work a lot of hours. And I tell people all the time, I'm like, you know, in retrospect, I couldn't have picked a better time in my life to do something like that. You know, I was like

No family. You know, I mean it's like you're at a point in your life where you're kind of Gear to do that. It's funny though because you are so different from almost every entrepreneur that we've interviewed and that You were not

incredibly optimistic about the success of this company early on. You were Kind of thinking about maybe packing it in, you were not a natural hustler. But you were doing all of these things. Yeah, I mean I think I think'cause you know, in retrospect when you think about kinda like what makes an entrepreneur an entrepreneur

Like honestly, I think a lot of times it comes down to perseverance. Yeah. And I think a lot of times people can have the big idea and they can have, you know, kind of that initial kind of fall in love and with their idea for starting something, but um they don't ride it through the hard part. And they give it up. Yeah. So while I might not have had the big idea and while I might not have been the big risk taker

I had perseverance. And you know, I think that's That is my entrepreneurial trait. In just a moment, how Angie Hicks almost got downsized out of her own company. Stay with us, I'm Guy Raz, and you're listening to How I Built This from NPR.

It's how I built this from NPR. I'm Guy Raz. So about three years in, Angie's list had expanded from two markets to four markets. And so they decided to build a bigger management team. Bill Osterley came to work as the full time CEO. And as far as Angie, she says the crazy years had really started to take a toll. I was super burnt out. And so, you know, Bill's like, Hey Angie, I know you've thought periodically about business school. Why don't why don't you think more seriously about it? You know

Not prepared to do that. Hadn't taken the G Mat, hadn't done anything, but yeah, basically decided in September that I would apply that fall. Wait, uh h here's what I'm getting. So you you're applying for business school in the fall of ninety eight, like three years after you launched this company, which is now really gaining traction and and looks like it's going to Become something. I mean Like, I guess you could argue that those three years were kinda like your business school, right? Like why did you feel like

You wanted to go to business school. You know, for me, if I hadn't kind of taken that time, I probably wouldn't have stayed. You know, g you kinda need perspective. How did I learn to be a manager because I was forced to be a manager? You know, like I'd gone through an acquisition, I'd raise capital, but did I really understand everything that I was going through? Um, probably not. And so it was a great time for me to step away and kind of gain perspective.

So I u I ended up o applying to two schools, so I applied to to uh Kellogg and to Harvard. I I ended up gett not getting into Kellogg, I got into Harvard. Wha what was that like? Was it was it weird going there? It was weird. And I'm like you know, and I was uh you know, I'd lived in Indiana or Ohio my entire life You know, and it was it was one of those things where I was like I was

so flattered to actually have just gotten into business school. I grew up, you know, I'm I was a middle class kid. I mean, my dad was a UPS driver, my mom was a bank teller. I was the first in our immediate family to go to college. So for me it was kind of like wow, this is kind of a neat experience and I'm gonna take it for what it's worth. Um But maybe I had a different perspective than a lot of folks going as well. When you were at business school and you would like run these models of

how businesses ran or how to be a leader. Were you like were there times where you thought, Wait, that's not how it works in the real world because I've been there. Yeah. Yeah. I mean it was fascinating to watch. You where you'd have these conversations of the company used to cut twenty percent from its you know from its bottom line, you know, here's the alternative and people are people are like well we should just cut twenty percent of the staff and I look at'em like Have you fired someone before? Have you have you actually done that?

That's really hard to do. And you know, yes, sometimes you have to do it and sometimes that's the right decision, but Let's make sure we really understand the context of what that means. So while you were there, were you Involved with Angie's lift? Well, I was actually I was still keeping the books. And was it your intention to go back?

Well that was interesting. So Bill and I, you know, had this a arrangement that like, hey, you should go and explore what there is to offer. You know, like we're here, but you should go see what what there is. So I did interview, um, and I realized like sometimes you don't realize what you have until you kind of look around. Yeah. So I decided I was gonna go back. Um by that point, um, Bill had hired a chief operating officer who had conservatively modeled the business in such a way that after I had agreed to come back, Bill had to call me and say Um

We may not be able to afford you. Wait, what? Yeah. Well why was that? Because you had an MBA at that point? No, he was just like he was literally like we we now have too much overhead. And I was like, you know, Bill, are you just being you or is this serious? And and he was just like no Angie like this is what this is what the model says and I'm like you know what? I'm coming back Click, I hung up.

I don't I don't think I would have said that to Bill. I would've been like, Bill, screw you. You were like, I co-founded this company, Bill. Exactly, needless to say, you know, the guy that ran the model was incredibly conservative on it. So we were all fine, but it was uh it was a funny moment. So so when you got back, what was your uh what was the title they gave you? So uh so the chief operating officer position was filled, so I just decided to be the chief marketing officer. This is gonna be a hard question for you to answer, but it's just my observation that you must be

A person with almost No ego. Right, am I right? Yeah, I mean that's exactly right. I mean I I joke around like you know, I got on I don't worry about titles, I worry about getting stuff done, you know. There's too much stuff to worry about to worry about little things like that.

And maybe that's you know, I I often remind myself, you know,'cause people will ask me as they come into the business, like what's it like to work here? I'm like, I'm like the last person to ask. Like I tell people at orientation, I'm like, I am really shy. If you see me in the diner, you need to come talk to me. Okay. Okay, so you come back to the company, uh after business school This is the early two thousands, right?

Yeah. So we uh So at that point we started opening markets on a more frequent basis. We were opening one or two a year. And by the way. When did you go from being a a newsletter, like a physical newsletter to being

An online company. Um So we put our first website up in Probably early two thousand or nineteen ninety nine. It was round there. And basically literally we hired two college kids to build our website.

And it was just a basic, like, you know, marketing informational website. Uh, you know, had email, you couldn't check the list online. It was just for marketing. Uh, and Bill asked, So how's that website working one day? And we realized it was like, you know, half of our sign ups were coming in over this little website. And so we were like, Hmm. I guess we should actually build a website. So, you know, it was like yeah. It's probably more interesting to read the reviews than to have Angie read the reviews to you. Because people were getting people were either getting the mailing or they were just calling up the number. Right.

Right. And what's interesting about Uh about taking this online is that Like the business model, right? It's is based on Basically building a community of trust.

And You kind of did this before the Air B and Bs and the the Ubers and the you know, these or the or the the sharing economy kinda took off. Right. So At the beginning were people

skeptical of of this? Yeah, I mean it was interesting. I I think there was actually even an article written gosh, it was probably ten or twelve years ago about the fact that you know there was a fascination as to why consumers were willing to share their opinions with us. They're like they're paying you for information that they are giving you. Right. Yeah. I mean that I mean that was the crux of the of the article. And it was like there was something special about the service. And I at first I thought it was like oh it's Columbus because I know all the members or oh it's Indianapolis, but There's almost there's there is a sense of belonging and obligation that became a culture of the service. And it and that and it and it replicated itself in city after city. And you know, one of the values we had was the fact that we started when we did. I mean we started pre internet days.

In many ways when we looked at who we were gonna mimic For our business model, we looked at journalists. You know, like every story has a source, right? Yeah. It didn't even occur to us That we should allow people to review anonymously. And and that and that proved incredibly powerful.

But but why why do you think people were were willing to write these reviews that You know, essentially they they're paying for. Because if they didn't then the next person wouldn't. And if you think about the kind of decisions they're making around your home, I mean these uh you know, I I I call these like the high cost of failure decisions, right? I mean it's a time when you probably know the least about what you're buying. You're spending a lot of money.

Um, and if it goes wrong, it could potentially ruin your largest asset. Your house. Yeah. And there's bad information in you know, like there's not a great way. I mean,'cause a lot of these companies are small companies, so how do I find out whether, you know, XYZ plumbing is any good? Um There's lots of places to get information, but people are willing to pay for quality information.

So a as you guys started to expand, did you did you go out uh and raise money? We did. You know, and I th you know, that was one of the things that Yeah. Bill having a venture capital background, um Was incredibly valuable for us. Uh,'cause usually you know our our raising money came around, you know, wanting to grow the marketing spend.

Okay, so what you're saying is you didn't need money to manufacture a product. Y you were primarily spending money on marketing. We needed it to market, because effectively I mean, you know, it's a recurring revenue business. We were acquiring members who were gonna stick around for a long time. But we had to upfront the marketing to acquire them. So once we were able to scale to national marketing. Um, then it became a race to open markets. So in about eighteen months we opened a hundred markets. What were some of the mistakes that you made? While you were

in that in that sort of period of expansion. So, you know, um We waited a number of years before we opened Chicago. 'cause we were really uneasy about the cost of expanding into a city that big.

And you know, what we realized when we opened there was you know, it just took off like crazy. Why did most companies start on the coasts? It's because there's that's where the population is. Um, you know, and then they move into the Midwest. We did the absolute opposite there. And clearly that strategy uh worked. Uh how many members, by the way, do you have today? Uh we have um over three million paid members.

We cover every ever just about every city. Do you um Like when you see a An incredibly positive review. And also an incredibly negative review. Like w how do you know which one to believe?

What I often find when I look at reviews, um, you know, one, it's really important to actually read the context of the reviews and you know I I and I learned this early on. No matter how great you are as a company, you're gonna get complaints. And I honestly believe you learn more when you can see a company that has a couple of complaints here and there than you do about a company that has all glowing reviews. You know, and a part of that is like hey, you know They might make a mistake and you really want to know how they're gonna handle it when the chips are down.

Like what's gonna happen if that You know what? The countertop was the wrong length. And now they have to redo it. Because that's what you as a consumer fear, right? You fear when the job doesn't go well. And you know, and on the flip side, you know, years ago, I mean gosh, early on in the business, we allowed companies to start responding to reviews. Uh you know,'cause they were like, Hey, it's not you know, I totally understand that the consumer gets to give their opinion, but don't we get us a a chance to say our side of the story. Yeah. And so we introduced that, which proved to be incredibly valuable to the consumer.

Because you do wanna know how they're going to respond, right? But I do spend a lot of time talking to service companies and kind of encouraging them not to Respond on first response because usually that's when they're angry. No one likes negative feedback. I always suggest they go to get a cup of coffee, come back, think about it before they write something because what they say can be more powerful than ten reviews might ever be. Do uh do like when you have to get something fixed in your house Do the contractors who show up? Are they freaking out? Like are they super nervous?

They're like, Oh my God, Angie is gonna s like ruin me. She can ruin me. Right. And I'm just like I'm like, Hey, my reviews aren't weight the same as everyone else's and but yes, um you know, a lot of times my husband is the one that's home when we have work done and Um Hicks is not my married, so uh so that helps until they kind of look around the room and start seeing, you know, kind of pictures and stuff and they were like, Oh wait, hmm They're like, Holy crap, it's Angie Angie Hicks, co-founder of Angie's List. The company now offers free membership and last year it merged with one of its chief competitors, Home Advisor. So Angie's new title? Chief Customer Officer at Angie Home Services. And by the way, despite her best efforts to avoid the spotlight,

Angie says she can't go to grocery stores or really anywhere without someone asking her advice about finding a contract. I am getting some bathroom piling done. This is true story in Washington DC. Just off the top of your head. Do you think that's the top of your head to know a good bathroom piler? Hey, thanks so much for sticking around because it's time now for how you built that. And today we're gonna update a story we ran just over a year ago. And that story came to us from Joel Kreitz Hi guy. Joel is from Cleveland, he's a huge Cleveland sports fan. And a few years ago, he was at an Indians game with his 16 year old son, Kobe. It was a beautiful summer night of baseball, and Joel was loving it.

But Kobe? He just wasn't into the the action of the game. He didn't really care about the outcome, you know, wasn't into the standings. Wow. Yeah, he just said This is boring, let's go. And I said something to the effect of No, I paid to be here tonight, you're gonna sit there and like it. Okay, many of us have been in a similar situation. This is no fun for Kobe, it's no fun for Joel. So in that moment, Joel suggested Again.

He turned to Kobe and he said, hey why don't we try to predict what the next batter is gonna do. Strike out, hit a homer, walk, whatever. And whoever predicts correctly wins. And he said, Fine and within the very next at bat We were laughing and high fiving and I thought I had just struck gold. And so after that, every time Joel went to see baseball, he'd play the game with his other kids as well, and he started to tell his friends about it, especially friends with kids, and he realized that a lot of fans were already doing the same thing. People have told me, Oh, I play this with my grandpa where we predict the bats and we use

You know, this and that to keep track of the score. And people in the bullpen who are bored when they're watching a game, they'll do some version of it. So about a year later, he wondered whether he might turn this idea into a smartphone app. An app that you could play at home or in the stadium against other fans who were all watching the live game in real time. but he needed to set up a way of scoring how many points for a predicted strike or a home run or a double play. Well, fortunately, in his day job Show.

is an accountant. I quickly got out my spreadsheet and started downloading statistics to figure out what should the different predictions for an at bat be worth based on their statistical likelihood. So there's ground out worth two points. Strikeout is three points. Single. Four points. Anyway, Joel eventually hired a developer to build out a smartphone app. And after some tinkering, he put it out into the world. I literally printed off flyers and I stood outside of our local stadium just asking people to play. And that's how I got it off the ground, uh, initially. So so Joel, can I just raise one one thing because I'm a huge baseball fan and and and I take my boys to a lot of games. And there's something beautiful and magical about being

in a stadium or an arena and just watching the game and and having our devices off. I don't know, I just Joel, I feel like I feel like you've surrendered. You've said, Nope, this is the reality and I'm just gonna I'm just gonna go with it. I in some ways I have, but in the times we live in, I mean the baseball Average age of a viewer nowadays has gone from age fifty three to fifty-seven in the past decade, so you gotta find the way to reach the kids and this is this is what I've come up with. Joel's app is call microfantasy and so far he's licensed it to a few college level baseball teams, and he's made about ten thousand dollars from that. But since we last spoke with him, he started to develop the app for other sports like tennis and basketball, and he may even pitch the app to his own Cleveland Cavaliers.

If you want to find out more about the Microfantasy app or hear previous episodes, head to our podcast page, how I builtthis dot npr.org, and of course, if you want to tell us your story, go to build.npr.org. And thanks so much for listening to the show this week. You can subscribe at Apple Podcasts or wherever you get your podcasts, and while you're there, please do give us a review. You can also write to us at hibtnpr.org, and if you want to send a tweet, it's at How I Built This. Our show is produced this week by Casey Herman with original music composed by RemT. team Arabui. Thanks also to Noor Kutsi, Neva Grant, San Az Meshkintour, and Jeff Rogers. Our intern is JC Howard. I'm Guy Raz and you've been listening to How I Built This? From NPR.

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