Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Well, it's sort of like hitting your finger with a hammer.
Speaker 2: We've all done that. It really hurts. And I'm just
Speaker 2: pointing this out because we did see shares of Angie
Speaker 2: dropping thirty five percent last Wednesday following its latest earnings release,
Speaker 2: after the online portal for home improvement reported first quarter
Speaker 2: revenue that missed expectations. They also plan to stop issuing
Speaker 2: quarterly guidance, and outliner outlined a major strategic pivot to
Speaker 2: refocus on AI. I do want to be fair. Though
Speaker 2: the stock did bounce back the following two days after
Speaker 2: the earning share price drop, getting about twenty one percent
Speaker 2: in that bounce back. Stock is down though another twelve
Speaker 2: percent in today's session. It's about a two hundred and
Speaker 2: seven million dollar market cap stock. It is down tim
Speaker 2: about sixty percent year to date.
Speaker 1: After that intro, I'm gonna.
Speaker 2: Let you, yeah, Jeff, if you want to come in,
Speaker 2: we do welcome you back. We like talking to you.
Speaker 2: We think it's an interesting platform, tells us a lot
Speaker 2: of small business owners, talks to us about the consumer
Speaker 2: and about kind of the home market, and then so
Speaker 2: much more. Jeffkip is the CEO of Angie. He joins
Speaker 2: us from Gohaset, Massachusetts. You guys have a lot going on, Jeff,
Speaker 2: since we talked with you in mid February, got changes
Speaker 2: to your CFO and COO that happened in March and April.
Speaker 2: What's what happened that you guys said? We got to
Speaker 2: do something different.
Speaker 3: So we have been working on the same technologies at
Speaker 3: Home Advisor for over twenty years from the Angie's List
Speaker 3: and handy businesses a little less, but we've had three
Speaker 3: old platforms we've been working on. The older your technology gets,
Speaker 3: the more code is layered on top of other code
Speaker 3: slows you down, makes innovation harder, and we have been
Speaker 3: plotting a path to a new platform, but we have
Speaker 3: just decided now's the time we needed to move quicker.
Speaker 3: The big catalysts are what I would call the biggest
Speaker 3: changes in technology and a generation, which we really saw
Speaker 3: February when you saw things like open Claw claud Opus
Speaker 3: zero point six released. And now our engineers are able
Speaker 3: to move a lot faster and the capabilities we have
Speaker 3: are a lot greater, and it's time for us to
Speaker 3: stop fighting the old platform and kind of move into
Speaker 3: the present, if you will.
Speaker 1: So what does that look like? Not just from you know,
Speaker 1: this is a two sided market, So what does it
Speaker 1: look like from the provider and the home services professional standpoint,
Speaker 1: but also from the customer standpoint?
Speaker 3: So if you think about the homeowner customer, I think
Speaker 3: we are going to be able to have a more nuanced,
Speaker 3: more natural language conversation with the homeowner. Homeowners are not
Speaker 3: natural experts at describing their problems that they need pros
Speaker 3: to work on, and we're going to be able to
Speaker 3: ask better questions, upload photos, and get to a better
Speaker 3: identification of the details that need work, give the homeowner
Speaker 3: better estimates. So we'll be going there over the course
Speaker 3: of the next year. The first stage of our new
Speaker 3: platform is to put the homeowner experience into place over
Speaker 3: the course of this year.
Speaker 4: On the pro side, we're going to.
Speaker 3: Build a set of tools for the pro We refer
Speaker 3: to it in our release and our letter as the
Speaker 3: Angie Pro Chief Revenue Officer. Pros are very good at
Speaker 3: doing work. They're not always good at calling the homeowner
Speaker 3: right away. They're not always good at making sure there's
Speaker 3: a sales trained technician or a salesperson at the appointment
Speaker 3: they're not always good at following up. They're juggling a
Speaker 3: lot of balls in the air. We believe that agents
Speaker 3: really change the game for pros. You can already see
Speaker 3: it out there. There's startups out there doing pieces of this.
Speaker 3: We believe we can build a toolkit to make sure
Speaker 3: that our pros win jobs at a much higher rate,
Speaker 3: gets more value from the platform. And then if our
Speaker 3: pros are winning, the homeowners are getting more value from
Speaker 3: the platform too because their jobs are getting done well
Speaker 3: by our pros.
Speaker 1: So what are the changes that happen internally at Angie
Speaker 1: to facilitate something like this, and what can investors understand
Speaker 1: about how this changes margins, what it looks like for
Speaker 1: the business, and where they actually see differences.
Speaker 3: So internally, we need to change the way our teams
Speaker 3: work and the way they code.
Speaker 4: What Cloude Opus.
Speaker 3: Four point six did, and you can read about all
Speaker 3: over the place, is that now you can not only
Speaker 3: write code, but you can write more code and you
Speaker 3: can check code using AI. Now you still have to
Speaker 3: have engineers who understand systems, understand the business, and understand
Speaker 3: the ultimate product. They also need to understand how to
Speaker 3: test and spot issues in the code. But there's really
Speaker 3: a game changer there that it's going to allow our organization.
Speaker 4: To move much quicker.
Speaker 3: One piece of what we're doing is we were midstream
Speaker 3: on building our homeowner experience afresh. We're now writing some
Speaker 3: of that with AI. But we're going to rebuild our
Speaker 3: entire pro back end much faster using AI, so effectively,
Speaker 3: our teams are going to move to AI first coding.
Speaker 3: So we're going through a really material transition with our
Speaker 3: product technology, UX and data teams to make sure that
Speaker 3: we can do this effectively. But we think it's going
Speaker 3: to double our speed to market.
Speaker 1: You know, if some analysts are out with different views,
Speaker 1: I'm just going to read from Benchmark's note. They say
Speaker 1: we have no idea how much this is going to
Speaker 1: cost and over what timeframe we should expect to return
Speaker 1: on investment. What would you say to Benchmark?
Speaker 3: So Dan is a great guy, very very smart guy.
Speaker 3: I think that we are going to fund it effectively internally.
Speaker 3: In other words, we're not going to add headcount. We
Speaker 3: are probably going to add some token and AI software costs,
Speaker 3: but not massive, So.
Speaker 4: We're going to fund it internally. I think what we're
Speaker 4: really talking about is.
Speaker 3: Opportunity costs where the reason we decided to pull our
Speaker 3: guidance is instead of working away at our old platform
Speaker 3: to optimize revenue and deliver product changes that deliver revenue,
Speaker 3: which ultimately are hard to do on the old code,
Speaker 3: we are going to go fast forward to the new
Speaker 3: platform and be able to develop from there. We've estimated
Speaker 3: it's going to take us a year or so to
Speaker 3: get to the new platform, and in that time we're
Speaker 3: also going to start building our first pro agents, which
Speaker 3: we don't plan to monetize. We plan for it to
Speaker 3: improve the experience of our pros and maybe ultimately will
Speaker 3: monetize it if they want to use it for other
Speaker 3: leads from other platforms. But effectively, what we said is
Speaker 3: we're not going to talk to you about where our
Speaker 3: revenue is going for a year. We gave some very
Speaker 3: rough directional comments and so that's really going to be
Speaker 3: the cast.
Speaker 2: Hey, one of the things well, and also in that
Speaker 2: note from Benchmark that we also got, Jeff, he said,
Speaker 2: but b U, given the out of the blue nature
Speaker 2: of the new game plan, we suspect investors are simply
Speaker 2: going to assume that Angie's core business model just is
Speaker 2: not working. The strategy could work out, but a lot
Speaker 2: of questions have to be answered for investors to get
Speaker 2: even remotely comfortable. Is that the case that the core
Speaker 2: business model was not working? And I bring up to
Speaker 2: the decline in revenue fifty six percent drop in network
Speaker 2: revenue related to the implementation of Homeowner Choice last year
Speaker 2: as a practice of letting homeowners on the platform select
Speaker 2: which professionals they match with. Was it a strategy mistake?
Speaker 2: And was the is the core busines is not working?
Speaker 2: Because is this just a case that creative Yeah, the.
Speaker 4: Core business is working quite well. Fundamentally.
Speaker 3: If you look at Angie over the last few years,
Speaker 3: we've gone from one point five billion to roughly a
Speaker 3: billion in revenue in the last few years. Most of
Speaker 3: that is giving up less profitable and lower quality revenue.
Speaker 3: So we've actually made a decision to move off what
Speaker 3: you might have termed an inflated model, bring it down
Speaker 3: so that the quality of the experience is much better
Speaker 3: for the homeowner and for the pro You can see
Speaker 3: that our NPS has moved thirty points over three years.
Speaker 3: That is a cataclysmic change in the world of NPS.
Speaker 3: Our pro churt has come down thirty percent. We see
Speaker 3: that our win rate for pros has moved directionally about
Speaker 3: the same amount in terms of improvement, so we've dramatically
Speaker 3: changed the experience. We had a bit of an over
Speaker 3: built revenue base, but we've pivoted and we still have
Speaker 3: the strongest brand, the best acquisition machine, and the largest
Speaker 3: pro network of anybody in our space.
Speaker 4: And we are spinning the flywheel as we go through this.
Speaker 2: Jeff, real quickly, twenty seconds. How long is this going
Speaker 2: to take to kind of play have an impact? Positively?
Speaker 2: Much more positively? Real quickly.
Speaker 4: We think we need a year.
Speaker 3: To get our new platform in place and build out
Speaker 3: the first set of agents, but we think we should
Speaker 3: start seeing good moves by the end of this year
Speaker 3: and start accelerating our revenue in twenty twenty seven.
Speaker 2: Well, we look forward to continue the conversation with you
Speaker 2: as you guys evolve. Jeff Kip here's the CEO of Angie,
Speaker 2: joining us right here on Bloomberg Business Week. Deli