It's been an impressive first day on Wall Street for consumer-review site Angie's List.
Shares closed Thursday at $16.26, which is a 25 percent increase from its initial public offering price of $13 a share. The IPO raised a total of $114 million for the company, which was founded in 1995 and is a three-time Inc. 500 honoree.
Angie's List is something of an anomaly in today's consumer Internet market, in that it offers access to consumer reviews—and the ability to contribute reviews of local businesses, mechanics, and contractors—at a membership-only level, given the apparent reluctance of most consumers to pay for user-generated content.
It's also the first Inc. 500 company to take the IPO dive since this year's public-offering by Carbonite in August, which came just before this fall's wild market instability.
Despite that Angie's List had revenue of $62.6 million, it also lost $43.2 million in the first nine months of this year. With net losses since inception, the company had in September a defecit of $160.6 million. Although some investors are skeptical, a company's lack of profitability upon IPO isn't so unusual among online firms going public this year; user-review competitor Yelp annouced this week it would file for an IPO of its own, and investors still are hot on Groupon stock that generated a $700 million IPO.
That would be Angie Hicks, founder of Angie's List, a publisher of ratings and reviews of service providers. The Indianapolis-based company is a three-time Inc. 500 honoree. It landed at No. 1,100 on the 2009 Inc. 5000, with revenue of more than $34 million and some 750,000 paying customers.
I had a friend who was having trouble finding a roofer. It occurred to me that there had to be a better way for consumers like him to network and share information on service providers. I figured people would pay if I could take the work out of it for them.
I started going door to door in 1995 to sell subscriptions to a magazine and call-in service, in which people would submit reviews of the work someone had done for them. Our website went up in 1999. By 2006, we were operating in 30 markets. Now, we're in 124.
We've always been positioned as a premium product. We need to have a lot of integrity behind our reviews. People pay up to $60 a year because they trust that we will provide reliable information.
We now cover more than 500 categories of services. People go to Angie's List rather than the phone book. We've become part of everyday life.
We grew 35 percent last year—despite the recession. I think it's because people didn't stop spending as much as they shifted how they spent. People wanted to stretch their dollars, so they invested in more research beforehand.
We are seeing more competitors spring up, like Yelp. But when people ask me who our biggest competitor is, I tell them it's when you go ask your neighbor for a referral, instead of coming to Angie's List.