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Mining gold from Chicagoans' word of mouth

January 5, 2007
Angie Hicks is bringing the Internet social network revolution HOME -- with Angie's List. Social networks aren't a new concept, but trying to quantify the value we wring out of them is. A social network can be as small as a family or as large as a nation, according to Wikipedia, the online collaborative encyclopedia. A strong social network can contribute knowledge and insight to better solve problems and help make us collectively and individually more successful.

In the case of Angie's List, Hicks has figured out a way to make money out of the collective intelligence of neighborhoods: word of mouth referrals.

Hicks was 24 in 1995 when she decided to knock door-to-door in her Columbus, Ohio, neighborhood selling subscriptions to her call-in, home-service rating business.

Her first customer bought two subscriptions, and "Angie's List" was begun.

"I knocked on a neighbor's door," the energetic and friendly Hicks said recently in an interview, "and she said 'This sounds great. I'll get two memberships -- one for myself and one for my son. How many members do you have?' I told her, 'Now we have three.' And then she gave me a list of all of her friends to call."

Last year, Angie's List employed 200 writers, data specialists and technologists, rang up $14 million in revenue, and won the loyalty of 500,000 members who live in 83 cities. This year with $6 million in funding from Silicon Valley-based venture capital firm BV Capital and a successful expansion to the West Coast and Bay Area under her belt, she's planning to hit 100 cities and expand overseas.

In addition, the company soon intends to have a system in place where people can share data across lists. This is especially useful for people who own properties in a number of states and for those assisting elderly parents or other family members who live in different states.

New photo uploading capability on the Angie's List Web site allows members to share photos of shoddy or excellent work.

Angie's List opened its Chicago chapter in 1999, and Hicks credits Chicago with being the company's first urban breakthrough. Chicago remains one of its strongest chapters to date with 33,662 members accessing the services of 12,692 companies. Those companies that receive the highest user ratings are allowed to offer discounts.

But Angie's List claims the real service the firm provides is details about contractors that consumers "won't find in the phone book."

Members file 15,000 reports each month assigning a quality grade of "A" through "F."

But how does the list thwart sub-networks of collaborators who would stack the deck pro or con regarding a specific vendors?

"You can only report on any given company every 6 months or so," Hicks says. "We have people who review all the reports as they go in. If suddenly we have five, six or seven reports on XYZ plumbing, they ask, 'Is that normal?'"

Today, members rate 250 services vs. the original 150, and grade everything from antiques to massage therapy to veterinarians. They've even started grading real estate agents and day care centers. Hicks admits she will have to draw the line somewhere.

"I don't know that we will ever rate attorneys," she says laughing.