A first-time CEO's first big decision crashed the company and almost got him fired — but he bounced back to buy his biggest rival and grow his company to $1 billion (ANGI)
- In October, 2017, Chris Terrill – CEO of the newly formed public company ANGI Homeservices – stood in front of his employees convinced that a third of them hated him.
- He had spent years vilifying and weakening his biggest rival Angie's List in TV ads until it was so weak, he could swoop in and buy it.
- It was a bittersweet moment for Terrill because his first big decision as CEO crashed the company and almost got him fired.
- His career shows that if you make decisions based on data, rather than on ego or fear, you can overcome almost anything.
Chris Terrill – CEO of the newly-formed public company ANGI Homeservices – stood in front of his employees on a day in the October of 2017 in a town hall meeting, convinced that a third of them hated his guts.
"Look, you have no reason to trust me. I should have come in here in a Darth Vader suit, because I’m sure that’s how you feel about me," he said.
It was a bittersweet triumph for Terrill, who until recently had been CEO of home improvement marketplace HomeAdvisor. Terrill himself had joined four years prior, taking his first-ever CEO role at a time when the company was still known as ServiceMagic.
The town hall meeting was the first time Terrill had faced all of his employees after HomeAdvisor had purchased its biggest competitor, Angie's List. The acquisition came about after years of HomeAdvisor TV ads that vilified Angie's List, helping to weaken it to the point where Terrill could swoop in and buy it.
And now he was trying to convince his new employees to trust and believe in him. "It was weird," he said of that first meeting. "I assume they had pictures of me to throw darts at me."
The acquisition itself was unusual, too. It was an all-equity deal valued at $500 million in which the smaller company, HomeAdvisor, bought the bigger, publicly-traded Angie's List — a deal that placed Terrill as CEO of the combined entity, now dubbed ANGI Homeservices, with his one-time rival, Angie's List founder and namesake Angie Hicks, now working under him as chief customer officer.
The outcome of that deal: Terrill instantly became the CEO of a publicly-traded company. And suddenly, Terrill was managing a team that was about a third larger than it was before the acquisition.
All of this was a far cry from where Terill found himself in 2012, shortly after he joined the company, when he made a strategy decision that immediately crashed the company's revenues...and had him on the hot seat, in fear of being fired, for almost a year.
Terrill's career story shows that if you truly do your homework, make decisions based on data rather than on ego or fear, and stand by your data-driven decision, you can overcome almost anything.
From marketing guy to first-time CEO
Terrill had made a name for himself in the marketing world, stemming from his days at IAC's Match.com followed by a short stint at Blockbuster and Nutrisystem. He was only at Blockbuster a year, but it taught him a valuable lesson: if you wait too long to change, you can never recover.
At Nutrisystem, he met product and technical whiz Brandon Ridenour, and they became close friends.
The two were searching for their next gig together when his old employer, IAC, called him. IAC was looking for a new CEO for its wholly-owned contractor marketplace, called ServiceMagic.
Terrill is a rabid DIY-er who has remodeled eight houses, and the son of a contractor, as he told Business Insider. He and Ridenour researched the company, liked its prospects, and decided to join up.
He was now a CEO, for the first time ever.
IAC’s billionaire founder Barry Diller actually prefers first time executives who grew up within the IAC organization, as Terrill did at Match.
“If you hire people at senior positions, you are a failure," Diller once said. "I have always believed to hire people, bring people into your organization who are young, and who are inexperienced for the job that you give them.”
Diller believes that floundering forces people to grow, and if they swim instead of sink, they will succeed.
Floundering has commenced
IAC had bought ServiceMagic from its founders in 2004. When IAC leadership talked to Terrill for the job in 2011, they “didn’t sugar coat things” for him, he recalls.
The company wasn’t growing, and Terrill would be on the hook to fix it.
The execs from whom Terrill would inherit the job, including the then-CEO and founders, were "very honest" about the problems. "They said, we’re not very good at product marketing," he said.
With Terrill on board, the previous CEO stayed on to run sales and international expansion.
Terrill spent months researching the problem. The data clearly showed that they needed to change both the company's name and its business model.
The company was relying on Google search and ads to find customers. So customers that had used the service didn’t recognize the name, or even understand that they had used it to find their contractor.
Just as bad, the company wasn't creating repeat customers.
The research also showed the company needed to focus on expanding its most lucrative market, home repairs.
He market tested new names, and the winner was HomeAdvisor. And so, in October 2012, the product teams relaunched the company's website with the new name.
That change immediately crashed the company.
Nine months on the hot seat
The new HomeAdvisor site was invisible to Google for four days, denying the company its chief source of customers.
“There were 10 million [internet] pages that needed to be indexed. You disappear from Google when you do that," he said.
Terrill expected to lose maybe $5 million from the pain of rebranding. Ultimately, "we lost about $20 million,” he said.
He'd been CEO for about a year, and believed he "was probably really close to getting fired," he admits.
For nine months, the company suffered while revenues slowly but surely clawed their way back to what it was.
Terrill was on the hot seat the whole time, and recalls constantly being questioned by execs at IAC: "Did I take this thing that was pretty good and just completely destroy it? Or was it going to be okay?"
He spent his time pleading his case, encouraging IAC, his managers, employees, and even Diller himself to stick with it. If they wanted growth, that meant a new name and a more focused business model.
Diller asked Terrill, “Chris, do you believe in this?” and when the Terrill showed him the data and stood firm, Diller backed Terrill. That support clearly helped save his hide.
So Terrill proceeded with phase two of his plan: running TV ads.
“I’ve been doing TV for a long time. I thought this was a great TV brand,” he said. Terrill blasted low-cost ads on cable shows with audiences most likely to need home repair.
The ads not only told homeowners about HomeAdvisor, they took shots at HomeAdvisor’s better-known rival Angie’s List. The commercials pointed out that HomeAdvisor was free for homeowners to peruse and find a contractor, while at the time, Angie's List made you pay for a membership.
And the ads worked. Customer growth picked up pace.
After nine painful months, HomeAdvisor was back to its pre-name-change days and it kept growing, faster than ever. "All the research we did on the name and business model started to pay off,” Terrill recalled.
From villain to boss
By 2015, three years after he changed the company’s name and was almost fired, HomeAdvisor had annual revenues of $297 million, the company says, and had signed up 102,000 service professionals to its network. It was expanding internationally, too.
Angie's List, only slightly bigger at the time at $344 million in revenue, didn't want to be swallowed by the enemy.
But by 2017, after four quarters of shrinking revenue, and a share price still languishing well below $10, Angie’s List was ready to take the offer.
Both HomeAdvisor and Angie's List also had a bigger enemy to worry about: Amazon, which had entered their market in 2015.
In September, 2017, the two companies merged, and Terrill found himself instantly running a public company, one-third bigger, filled with employees who spent years despising him and his ads.
So in a series of town hall meetings, he stood in front of those Angie's List employees and said: "I don’t blame you. You guys had a great brand and we were tiny," he recalls. He told them about his plans for future growth, and asked them to stay and help him execute on that vision.
A year later, the move looks like a good one.
The combined company has hit $255 million in revenue in its first quarter of 2018, which puts it on track to book $1 billion in revenue for the year. This compared to HomeAdvisor's $151 million in revenue in the same period, before the merger. However, the joint company also swung to a $10.8 million loss for the quarter — compared to operating income of $1.4 million for HomeAdvisor alone in the year-ago quarter. The loss was due mostly to stock compensation costs due to the merger, the company said.
Still, investors are hopeful again, too. The stock is up 174% since the merger, priced at over $16 per share, giving it a $1 billion valuation. That compares to the $5.88 that Angie's List was trading on April 21, before the merger was announced.
It all happened because when a big change was needed, Terrill stuck to his guns and his research and convinced everyone not to panic, but to stay the course.
Upsetting the apple cart like that "was a really, really risky move,” Terrill admits. "Thankfully, I was given the latitude and time to come back."
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Sunday, July 08, 2018
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