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Social Networking Series: Angie’s List

Angie’s List (NASDAQ:ANGI) is used by consumer to rate services such as doctors, plumbers, and more. The company currently has a marked cap of $1.2 billion dollars and has no earnings. 

When deciding to invest in a company there are a couple of things you should consider, here they are:

1. Is the idea easily replicated

2. Is the product a fad

3. Is there a lot of companies that do the same thing (satisfy the same need)

4. Is there low barriers to entry

In my opinion, this industry has low barriers to entry. The issues with this is when it comes to evaluating internet and tech companies, this problem does not really exist. Consider Google, there are a number of other search engines but Google is king because it is programed into our head to use Google if we want to know something.  Angie’s List works the same way, once people get into the habit of using it, other companies can offer the same services but people will keep going back to Angie’s List.

So is Angie’s List gold, not so fast! Remember Ask Jeeves, the search engine everyone used in grade school. It was not able to compete with Google.  So is Angie’s List the Google of reviews , or is it the next Ask Jeeves.  I would usually ask for your input but I don’t think anyone can answer this question. This is why investing is sometimes about luck.