Update on IAC (+ Vimeo)
Original Post: Yet Another IAC Writeup
So the Angi’s bull case is that fixed pricing (aka, “pre-pricing”, aka “Angi Services”), by alleviating friction on each side of the network, should help convert service requests into transactions: service providers would rather be paid for confirmed jobs than play jump ball for leads that may not convert; homeowners would rather book jobs at transparent, upfront prices than submit requests and sort through a bombardment of return calls.
As part of this effort, Angi’s appointed Oisin Hanrahan, former Chief Product Officer, as CEO in March. This makes sense as Hanrahan founded Handy, the predecessor company off which ANGI’s fixed priced initiative is based, and fixed pricing, which modularizes service jobs into shoppable SKUs, is an ambitious early-stage initiative that will require the bolder product-oriented vision of a founder. Angi’s is also undergoing an organizational and re-branding change. Rather than run 3 product teams and 3 sales teams under 3 different names (Handy, HomeAdvisor, and Angie’s List), ANGI is building depth in service categories – plumbing, electrical, general handywork, etc. – under a single brand, Angi’s. The re-branding will mean a ~$40mn EBITDA hit from losses in keyword efficiency but makes long-term sense as consumers care about the availability and quality of a particular service, not the brand of the aggregator they buy the service from. To get to a place where homeowners can pull services off a digital shelf, Angi’s will have to do what Amazon does for products or Fiverr does for freelancers, breaking jobs out by category, adding lots of depth and liquidity to cover variations within each category.
Two years since launch, Angi Services now covers around 200 projects, ~10% of the $500bn market for home services. There are valid concerns that fixed pricing can’t extend much beyond that as the uncertainty inherent in a complex $5,000+ project dissuades homeowners and service providers from agreeing on an upfront price. But I think this is a problem that gets solved with data and experience. ANGI’s is (finally) taking control of payments, which not only generates another gross profit stream but yields more precise data on what homeowners are paying for various jobs. ANGI will carry the data and experience from a disjointed set of simpler jobs into incrementally more complex ones. With enough plumbing, countertop replacements, and faucet repairs, they might reliably price a $7,000 kitchen remodel, for instance. Just as Carvana de-risked the process of buying a $20,000 car online with annotated high res 360 degree photos and test drives on customer premises, ANGI might provide satisfaction guarantees or display benchmark prices on similarly complex kitchen remodels (or whatever) in the neighborhood, and make it easier to say yes to large projects with attractive financing terms. On the other side, Angi’s might compensate service providers for certain cost overruns while funneling more jobs to SPs with a history of working within set price and time constraints, much as a general contractor will assign more jobs to reliable subcontractors.