How I Built This with Guy Raz - Angie's List: Angie Hicks

Episode Date: November 28, 2016

In 1996, Angie Hicks spent hours reading contractor reviews to members over the phone. Today, the online review and referral service, Angie's List, is publicly traded on the New York Stock Exchange. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

This podcast is brought to you by Squarespace. I talk to entrepreneurs all the time who are looking for a way to upgrade their digital footprint. Well, whether you're just starting out or you're scaling your business, Squarespace is the easiest way to build a great website that stands out. It's an all-in-one website platform that gives you everything you need to claim your domain, showcase your products, and get paid. Anyone can use Squarespace's cutting-edge design tools to build an online presence that truly reflects what makes your business special.

There are templates, intuitive drag-and-drop editing, and even an AI-enhanced website builder. Then, Squarespace's built-in analytics tools help you make smarter business decisions. Review website traffic, learn where to focus engagement, and track revenue all in one place. Looking to grow your business, Squarespace even offers fast, easy business financing

through Squarespace capital. Go to Squarespace.com slash built for a free trial. And when you're ready to launch, use offer code built to save 10% off your first purchase of a website or domain. Loans issued by Celtic Bank and serviced by Stripe, all loans subject to credit approval. This show is in partnership with Airbnb. This past summer, I took my family to Vienna, and it was incredible. We spent our days wandering the old streets, stopping for coffee and pastries, visiting museums, and just soaking up the history of one of the most beautiful cities in the world. And one of the things that made the trip so special was the home we booked on Airbnb.

It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. your place with all of its personal touches and its amazing location could make someone else's vacation even better. Your home might be worth more than you think. Find out how much at Airbnb.ca.ca.com. Hey, everyone, it's Guy here. Just a quick note to tell you that this episode is about Angie's List. They are a financial supporter of NPR. But we thought the story of how the company

came to be was so interesting that we wanted to be. We wanted to do that we wanted to do. to tell it to you. So here it is. People started calling you and you are the only person manning the phones. I 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 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. I'm Guy Raz, and on today's show, Angie Hicks and the story of building Angie's List

and how it went from that 100-square-foot office in Columbus, Ohio, to a company that brings in 350 million a year. So in the summer of 1995, 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 Osterly. 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 Angie 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 get you through the first year. But I want you to commit for a year. So what did you think? It was a little out of the blue. 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're like, well, you know, you know, Bill, well, you know, he's not going to lead you astray. And then I talked to my grandfather, and he was incredibly conservative. I mean, lived through the Depression, just, you know, like to pay him. cash for everything. And he looked at me without even hesitating and was like, well, you should, you should do it, Angie. I mean, what's the difference between being 22 and looking for a job and being 23 and looking for a job? And I was like, huh. 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 we'll figure it out? We had a couple ideas. But then landed on what became Angie's list when Bill was trying to renovate his house in Columbus. It was the second house he'd owned. 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 70s, 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. Yeah. And there wasn't. And so he's like, we're going to try to start our own.

So, okay, so this is like 95. That's right. So you get to Columbus. What did you do there? Like, how did you start? So we started just talking to people that we knew. So, you know, the first stop on my tour was to Bill's next door neighbor. Patty Bowman. What did you say? What was your pitch? And it was like, you know, like, hey, we're starting this business, you know, and explain what we were going to do. we're going to help people find, you know, the best contractors in town. And Patty had lived in her house, lived in her neighborhood for entire life. You know, if someone 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 going to 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. 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? $19. So $19 for the year. For the year. And that bought you we were a magazine and a call-in service. So during the day, you'd call in and you could ask me for the name of a plumber or an electrician, and then in the evening, I would go out door to door and also ask for

reviews. So you, you did everything. I did everything. I assembled the, I wrote the magazine. Like, magazine is a very generous term for what it was. It was like a brochure-ish? More like a little, like, you know, neighborhood newsletter. So how did you, how did you get more subscribers? So I literally, for the first three or four months, I basically went door to door every day. What was that like? 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 and people would just say, like, buzz off or something? Yeah, I mean, like, think about door to door in the mid-90s. Like, 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, you know, it's like you think about it. Like I was 22 and I kind of 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. Did you know anybody in Columbus? Bill and his wife. So you were just like on your own in the Mississippi? 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 called Bill up one day. And I appreciate the fact that he realized that I was up.

set. 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 going to be great. And, you know, and he talked for probably, you know, 30 minutes. And everyone in the bakery are looking at us like, what is wrong with those two? And, and he likes to tell the story that, like, at the end, all I could muster to say was that I was not going to quit. So what happened after that conversation? Did you just go back out on the streets and start selling door to door?

Yeah. I mean, I tell people all the time, I'm 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 going to have to market. And I read, like, I mean, you didn't raise insane amounts of money. It was like $50,000 to start.

We raised $50,000, yeah. And so, you know, where can we market that we can do it in an economical way that we won't burn through $50,000 really fast? So we locked out. I mean, Columbus, Ohio has at that time had these little weekly newspapers. And so we put an ad in the back of the weekly newspaper, and it was, you know, neighborhood by neighborhood. And 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 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 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 what?

People like your subscribers are just call up? 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 when the list was thin, I would go figure it out. I mean, I remember one time, you know, this woman called and she was new in town and wanted to sign her daughter up for ballet lessons. And so I was like, hang on. Luckily, I remembered, because 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 some. someone needs help finding ballet lessons. So, you know, I would just kind of try to make as a match. 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 the other side who was answering that question. Yeah. And what was the company called, by the way, at that time?

Oh, sure. It was called Columbus Neighbors. So, you know, kind of just a simple knockoff of the unified neighbor's name. and, you know, we debated names. 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. That is pretty good name.

Maybe harder to copyright, but yeah. Yeah. 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 could 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 start thinking, this is actually working? This is actually generating some cash for this business.

Yeah, so we ended up signing up 1,000 members in the first year. And so we're like, hmm, 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 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 1996 and I've got, you know, two offices. So I had to start advertising to hire some help.

And, you know, I'm 22. I don't know how to hire anyone. And 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 just remember she looked me in the eye and she's like, if you're going to hire me, you need my phone number. 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 20th anniversary. at Angie's list. So in those early years, 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. Like, did you move to Indianapolis when you guys acquired Unified Neighbors? No, I did. No, actually, I just drove back and forth. I spent half my week in Columbus and half in Indianapolis. How long is that drive, by the way?

Three hours. So, like, were you sleeping like four hours a night? It was, it was a lot. I mean, 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, like in retrospect, I couldn't have picked a better time in my life to do something like that. You know, it was like, no family. You know what I mean?

I was like you're at a point in your life where you're kind of geared 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 because in retrospect, when you think about kind of like what makes an entrepreneur and 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 they don't write 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 Austerly came to work as the full-time CEO. And as far as Angie, she says the crazy hours and the hard work of the early 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, I was not prepared to do that. Hadn't taken the GMAT, hadn't done anything, but, you know, basically decided in September that I would apply that fall. Wait, here's what I don't get. So you, you're applying for business school in the fall of 98, like three years after you launched this company, which is now really gaining traction and looks like it's going to become something. I mean, like, I guess you could argue that those three years were kind of 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. Huh. You know, you kind of need perspective. How did I learn to be a manager because I was forced to be a manager? You know, like I had gone through an acquisition. I'd raise capital. But did I really understand everything that I was going through? Probably not.

And so it was a great time for me to step away and kind of gain perspective. So I ended up applying to two schools. So I applied to Kellogg and to Harvard. I ended up not getting into Kellogg. I got into Harvard. What was that like? Was it weird going there? It was weird.

And I was, you know, I had lived in Indiana or Ohio my entire life. You know, and 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 was a middle class kid. 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 going to take it for what it's worth. But maybe I had a different perspective than a lot of folks going as well. When you were at business school and you would run these models of how businesses ran or how to be a leader, were you, like, were the 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 where you'd have these conversations of the company needs to cut 20% from its, you know, from its bottom line. You know, here's the alternativeism. People are like, well, we should just cut 20% of the staff. And I look at him like, have you fired someone before? Have you actually done that? Because that's really hard to do. And, you know, yes, sometimes you have to do it. And 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 list? 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 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 there is. So I did interview. And I realized, like, Sometimes you don't realize what you have until you kind of look around. Yeah. So I decided I was going to go back. By that point, 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, 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 now. have too much overhead. And I was like, you know, Bill, are you just being you or is this serious? And he was just like, no, Angie. Like, this is what the model says. And I'm like, you know what? I'm coming back. Click. I hung up. Yeah, I don't think I would have said that to Bill. I would have 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 a funny moment. So when you got back, what was your, what was the title they gave you? So the chief operating officer position was filled, so I just decided to be the chief marketing officer. This is going to 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 joke around. I don't, 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 often remind myself, you know, because 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 after business school. This is the early 2000s, right? Yeah. So we, so at that point, we start. 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 newsletter, like a physical newsletter, to being an online company? So we put our first website up in probably early 2000 or 1999. It was around

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, you know, had email. You couldn't check the list online. It was just for marketing. And Bill asked, so how's that website working one day? And we realized it was like, you know, half of our signups 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 taking this online is that like the business model, right, is based on basically building a community of trust. And you kind of did this before the Airbnbs and the Uber's and the, you know, or the sharing economy kind of took off, right? So at the beginning, were people skeptical of this? Yeah, I mean, it was interesting. I think there was actually even an article written, gosh, just probably

10 or 12 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 was the crux of the article. And it was like, there was something special about the service. And 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 a sense of belonging and obligation that became a culture of the service. 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 going to 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 that proved incredibly powerful. But why do you think people were willing to write these reviews that, you know, essentially 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, you know, 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.

and if it goes wrong, it could potentially ruin your largest asset, your house. Yeah. And there's bad information. And, you know, like there's not a great way. I mean, because a lot of these companies are small companies. So how do I find out whether, you know, X, Y, Z plumbing is any good? There's lots of places to get information, but people are willing to pay for quality information. So as you guys started to expand, did you go out and raise money?

We did. That was one of the things that Bill having a venture capital background was incredibly valuable for us. Because usually, you know, 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. 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 going to 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, then it became a race to open markets. So in about 18 months, we opened 100 markets. What were some of the mistakes that you made while you were in that sort of period of expansion? So, you know, we waited a number of years before we opened Chicago because 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. just took off like crazy. Why did most companies start on the coast? It's because that's where the population is. And then they move into the Midwest. We did the absolute opposite there. And clearly that strategy worked. How many members, by the way, do you have today?

We have over three million paid members. We cover every, just about every city. Do you, like when you see an incredibly positive review and also an incredibly negative review, like how do you know which one to believe? What I often find when I look at reviews, you know, one, it's really important to actually read the context of the reviews. And, you know, I learned this early on no matter how great you are as a company you're going to 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 part of that is like, hey, you know, they might make a mistake. And you really want to know how they're going to handle it when the chips are down. Like, what's going to 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 on the flip side, years ago, I mean, gosh, early on in the business, we allowed companies to start responding to reviews. You know, because 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 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 want to 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 it's when they're angry.

No one likes negative feedback. I always suggest they go get a cup of coffee, come back, think about it before they write something. Because what they say can be more powerful than 10 reviews might ever be. Do you 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 going to like ruin me. She can ruin me. Right.

And I'm just like, I'm like, hey, my reviews are way the same. as everyone else's. But yes, a lot of times my husband is the one that's home when we have work done, and Hicks is not my married name. 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. They're like, holy crap, it's Angie. That's Angie Hicks of Angie's list. She's still the chief marketing officer at the company she co-founded. And despite her best efforts to avoid the spotlight, She says she can't go to grocery stores or really anywhere without someone asking her for advice on finding a contractor. I'm getting some bathroom prowling done.

This is a true story in Washington, D.C. Just off the top of your head. Off the top of your head. Do you happen to know a good bathroom tiler? Hey, thanks for listening to the show this week. If you want to find out more or listen to previous episodes, you can go to how I built this.npr.org. You can also write to us at hibt at npr.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 music composed by Rumteen Arablewe. Thanks also to Neva Grant, Sanaz Meshkampur, and Jeff Rogers. I'm Guy Raz, and you're listening to How I Built This from NPR. Thanks for sticking around because we are now at the part of the show where we get to tell your stories about the things that you're building. And this one came about when Brett Johnson noticed a trend. Back in 2011 and 2012, I think it was, there was a big cayenne pepper craze that kind of swept across the country. Well, maybe it wasn't a craze, but apparently a lot of people were touting the health benefits of cayenne pepper.

And, you know, we kind of had this idea, well, what if we could integrate cayenne pepper into a throat lozenge? Cyan pepper into a throat lozenge, something they call fire drops. You put it in your mouth, and it takes about 15 to 20 seconds for the actual cayenne to really hit you. And you kind of feel it in the back of your throat, you feel this kind of soothing effect. effect of the spice of the cayenne pepper. I know this may not sound very soothing, but Brett says that the heat from the pepper actually feels really great on your throat. Yeah, we actually have a lot of customers who are singers and actors.

They really like the fire drop because they feel it soothes their vocal cords and helps them kind of heal after a night of performance. Brett says that for now, most of the people who are buying fire drops have colds or sore throats. And that means that three years in, the company still has a small problem. We're a seasonal business. And summertime is a slow time for colds and sore throats. And so it becomes a challenge to figure out how to manage cash flow properly.

Despite that challenge, Brett says the company is just starting to break even. We still have full-time jobs in addition to this because it's kind of a growing operation right now. The goal is to obviously take it full-time someday, but it's a growing operation for now. If you want to tell us the story of the company or the movement that you are building, go to build.n.npr.org. that's build with a d.npr.org. And thanks. Before we go, just a quick tip to let you know about another NPR podcast you should check out.

It's called Bullseye with Jesse Thorne. It's your guide to what's good in pop culture. Every week, Jesse interviews, people like Cameron Esposito, Rashida Jones, Felicity Huffman, and many others. About their work and their lives, you can find your favorite new TV shows, books, movies, and music, and gain new insights into the things you already love. Find Bullseye now on the NPR One app. npr.org slash podcasts.