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Will Facebook put Angie’s List out of business with handyman offering?

Angie's List
Angie's List
The services site Angie’s List, which grew its topline to $315-million last year, has been a persistent money loser.

Remember Evite? The widely reviled service used to be the way you told people about a birthday or a baby shower. Except the email you got didn’t tell you much about the event and the landing page it directed you to was notoriously slow and stuffed with ads.

So it was no surprise that when Facebook decided to enter the space it instantly became magnitudes bigger than Evite. Today, Facebook is how most of us find out about events. Evite? It remains popular with people who have Lycos-hosted email addresses.

This week, Facebook announced a partnership with Pro.com that will allow users of the social media giant’s Messenger service to get quotes on home services such as repairing a toilet, cutting down a tree, or clear coating a deck or porch.

Will the service work? It is by no means a slam dunk. In entering the home services via the web space, Facebook is wading into the rarest of scenarios; while tech prides itself on creating outcomes that benefit everyone, increased competition in this market actually seems to be creating a worse result for consumers.

One of Facebook’s advantages is platform fatigue. Instead of going to one site for music and another for articles and still another for instant messaging, you instead stay within the comfort of Facebook’s walled garden where you are spending most of your time anyway. And never mind about those recurrent privacy concerns, there are a friggin’ billion people here.

Facebook’s challenge is authenticity; the home service directory space is riddled with ratings systems that can be gamed and often produce unsatisfactory results for their users. Creating an offering that earns the trust of consumers won’t be easy, even for Facebook.

The Facebook deal is an unambiguous win for Pro.com, which counts Amazon CEO Jeff Bezos, Andreessen Horowitz and Seattle-based Madrona Venture Group as investors, and probably bad for competitors such as Porch.com and Angie’s List.

Angie’s List, which was co-founded in 1995 by Angie Hicks is best known for its homespun TV ads. The site claimed to have more than 70,000 subscribers in 2013. But the now Nasdaq-listed company, while growing its topline to $315-million last year, has been a persistent money loser. Some say the problem is one of credibility with consumers.

“[Angie’s List] makes a big point to say they’re consumer-driven, when in fact 70% of their revenue comes from advertising,” says Jeff Blyskal, a senior editor for Consumer Reports. “It’s not advertising Coca Cola, it’s advertising from the companies they rate. Blyskal says the fact that companies can pay to appear higher in search results means consumers aren’t getting the best result.

“If you’re looking for contractor, you’re only going to look at first page or two. That skews the ratings,” adds Blyskal. “It’s about who advertises. I don’t think they’re being straight with the public on that.” .

The reality is that this has become an increasingly crowded space. Aside from Facebook’s deal with Pro.com, there’s Seattle-based Porch.com, which has partnered with Lowe’s and has grown from just 25 employees when it launched two years ago to more than 400 today. And there’s Amazon Home Services, which launched in March.

Can someone figure out a profitable model that works for delivering home services via the web? One contractor thinks all the competition is creating a generation of home owners who has unrealistic expectations about the price of services because unscrupulous operators are luring them with a unrealistic low ball prices.

“I refuse to bid,” says Jeff Dupont, the owner of Sound Painting Solutions in Seattle. “I’m third generation. I’ve been in business a long time. If I paint walls, I got to touch them. Dry wall is going to take twice as much paint, for instance. For me, that’s why I have a hard time bidding like that. It’s just not meant to be.”

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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