Thursday, April 24, 2014
Angie's List Proves Time And Time Again That Success Has Nothing To Do With Having A Sustainable Business Model
After nearly two decades in business, the only thing certain about the performance of Indianapolis-based Angie's List is its consistent losses year after year. When the company went public a couple of years ago, it basically had no other choice than to look for suckers in the public sector to continue operations since its private investors one after another over the years became convinced it could never turn a profit and unloaded their investment. Yesterday, the company's management reported yet another quarterly loss. How did the market react? Its stock price jumped over 12% in after-hours trading. Apparently, the expert investors on Wall Street playing with other people's money were impressed that, while the company continues its perfect losing streak, its losses were less than the so-called experts had anticipated. Its losses this quarter were $3.8 million compared to $7.9 million a year ago. At the same time, the company's marketing costs of acquiring each new paid membership soared from $72 to $82, but it relies on the advertising by businesses that its consumer members are supposedly rating for three-quarters of its revenues. On the brighter side, the company's co-founders, Bill Oesterle and Angie Hicks, and the corporate insiders have become multi-millionaires from their investments in the company, even if the company has never once made a profit. Something is seriously wrong with this picture. If someone can explain to me how the folks that are running this company are operating a business any differently than convicted Ponzi schemer Tim Durham, please share with me.