Chit Chat Stocks - Camplify Holdings (CHL) with Zippy Capital

Episode Date: January 13, 2022

Camplify Holdings (Ticker: CHL) is an online marketplace for RV renters that operates in Australia, New Zealand, the United Kingdom, and Spain. Listen as Brett and Ryan ask Zippy Capital questions about the company, its business model, and valuation. Enjoy the show! This episode is sponsored by Stream by Mosaic, the highest quality expert network library. Sign-up here:  https://streamrg.co/CCM Subscribe to 7investing with the code "CCM" and get $10 off: https://7investing.com/subscribe/aff/4/ Want updates on future shows and projects? Follow us on Twitter: https://twitter.com/chitchatmoney Interested in more of Zippy Capital's work? Follow him on Twitter here: https://twitter.com/zippy_capital?s=20 Contact us: [e-mail]  Timestamps Camplify | (3:26) Valuation | (26:40) Disclosure: Chit Chat Money hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Brett Schafer and Ryan Henderson are general partners and portfolio managers at Arch Capital. Arch Capital and its partners may hold securities discussed on this show. Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Money. This is our Thursday deep dive episode. And today we have an interview with Zippy Capital and we're talking Camplify, a pretty interesting company. It's a concept that I think a lot of people will like. It's a marketplace for RVs, which he gets into. But do you have any highlights from the interview? Yeah. And I should clarify it is called Camplify Holdings, ticker is CHL. I know it's difficult to find a company like this. It's listed in Australia. So just to hopefully help out any listeners that possibly would be interested in the company. Favorite part for me, discussing how they have a defensible position versus competitors. I think that was my favorite part because that's the big question for someone that's smaller like this,

who has kind of the runaway lead in a new and growing market, but how do they hold that position similar to a marketplace like Airbnb has over the last decade? He gave some great examples about how that would be true. We go through valuation work. We go through their unit economics, all around great episode. I came away understanding how Campify's business works. I think anyone listening will as well. All right. And before we get to the interview, we want to talk about our sponsor, Stream by Mosaic. They are an expert interview transcript library. And I think expert transcripts in general can be a useful staple in people's processes, especially for individual investors. And they have companies from all industries. So

tech, consumers, industrials, real estate. Very robust library. Yeah, exactly. And they provide 300 expert interviews each week. 70% of their experts are found exclusively on stream. And I know I've already said this, but we used to use these a lot. We have, I guess, done less so in the past just because we haven't really added that many new companies lately to our personal portfolios, but it's a very useful tool because you really do get a lot of color and commentary that most management teams might not offer up. You might get something from either employees that used to be at the company and just stuff in general that I think provides a lot of helpful insight. So go ahead and check them out at streamrg.com. That's the

best place to find them. If you sign up, you can get their 14-day free trial using promo code CCM. And yeah, feel free to check it out. Without further ado, let's get to the interview. Welcome to Chit Chat Money. On this show, host Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investing. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are also general partners at Arch Capital, and Arch Capital may have positions in the securities discussed in this podcast. Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guest is not formal advice or recommendation. Now, please enjoy this episode.

All right. Today, we are welcomed by Zippy Capital. Met him through Twitter. Brett actually range this one. So he kind of did a lot of the DMing here with Zippy. And we're talking about a name that is probably unfamiliar to most investors. I did not know what it was going in, but it's a very interesting model. So do you want to kind of start with that? What does Camplify do? And can you just explain the business? Yeah, sure. Well, first of all, thanks for having me on guys. Really appreciate it. Been listening. So it's kind of cool to get beyond as a guest, but Camplify is a two-sided marketplace facilitating peer-to-peer sharing of RVs or recreational vehicles. The easiest way to think about this business is basically it's

Airbnb for RVs. So the company was founded in 2014 and it's based in Australia. But since then, they've expanded to New Zealand, UK, and Spain, and probably more European countries coming. So, you know, I would say this company is pretty different than the ones you guys typically cover on the show. First of all, Campify is listed in Australia on ASX. It IPO pretty recently, June 2021. And it's also a micro cap. So the market cap today is $145 million Australian dollars. So that's about like $100 million USD.

USD. So obviously, just before I get into more of the details, based on those two facts, it's going to be a volatile stock and that definitely comes with risks. So definitely do your own due diligence on this one. How I'm thinking about Campify is I'm basically treating it like a venture type investment. In the US, these type of companies, they did $8 million Australian dollars revenue in 2021. I mean, these would probably be in the private markets for much longer than they are in Australia. And so for me, it's an exciting opportunity for us public market investors to get a chance to invest in such a high growth company. And so they basically put up over 100% revenue growth the past few years. But aside from just

the growth. There's a lot of characteristics of the company that I'm looking for kind of in a micro-cap investment. And I'm sure we'll get into the details of the business, the economics, but for me, the thesis is basically this is they have a really highly reviewed product in a space, RV rentals, that's traditionally had very low customer satisfaction, availability is bad, hours are bad. It's just customer service isn't great in this space. So they're kind of offering a very cost effective and high quality alternative to that. The CEO is the founder, which I always like to see. He owns 14% of shares. He's the second largest shareholder. So definitely have a lot of alignment there. The addressable market for this is huge. We'll get into that. They have

very favorable unit economics and the product scales really well. Like I said, over a hundred percent growth, three-year CAGR, and they can clearly expand in different geographies pretty quickly. So, um, that's kind of a quick overview, uh, of, of capifying kind of what I think the, the investment thesis is for this Australian company. Okay. And I have a, we have a few more questions. We'll get into the business itself, but what's the ticker for anyone that may be interested? Yeah, I probably should have, should have mentioned that ticker CHL. Uh, so, um, chl.ax uh sometimes uh that that'll be the ticker yeah microcaps are hard to find so i thought i'd point that out and i think before we get into unit economics people are envisioning it like airbnb

and just as like a two-sided marketplace on the internet exactly like that how can you go through how a customer would come to them and then how a supplier of rvs would come to them and what the relationship is with Campify? Yeah. So that's why I love the Airbnb comparison because it's pretty similar, right? So if you're a RV owner, you paid a lot for a expensive asset, right? We're not using all the time, obviously. In fact, in Australia, the average RV owner only uses their vehicle for about 41 days in the year. So for the vast majority of the year, kind of sitting in your driveway just you know collecting dust right so if you're an owner and you want to kind of monetize this very expensive asset and that's sitting around most of the time

you would go to uh you would leverage a platform like campify to monetize your asset and rent it out to people looking for an rv vacation or camping trip right um so that's kind of the mindset from the owner standpoint. From the renter standpoint, these are people looking to have an RV holiday, right? They maybe can't afford an RV on their own because they are quite expensive. Or maybe they just want to try it for a few days or a week, right? They want to see what that RV, that van life is about. So you would go on the platform and you can kind of select, your times, locations, pick up, have it towed to you. So there's, it makes it easy for you to go on a RV trip without kind of owning an RV. And the CEO, Justin Hale says, you know, his idea for the

company was basically, you know, his wife told him, Hey, she never went on a kind of an RV vacation. And so they were walking around the neighborhood and like, just saw so many RVs just sitting in the driveway and you know despite the fact not owning an rv themselves they were you know he was thinking hey maybe uh you know wouldn't it be smart for these owners to rent out their vehicles so people like us could go on a you know rv holiday right so uh and it's very core it's connecting um kind of uh these owners that look into uh rent out and monetize their asset that sits around and RV renters that cannot afford to own an RV or don't want to own that because there is a lot of storage and maintenance costs associated with that. So in general, the RV,

I guess, rental marketplace is actually quite supply constrained. So it can be really hard to find a suitable RV kind of in your traditional RV rental marketplace. So that's where Campify really solves a problem um connecting the two parties and so it's kind of a win-win for everyone okay and when so that leads us into the unit economics and how the business actually works when people spend money on campify's platform how does it flow through to the actual company and how do they make money off of that um so i would say uh they they earn revenue it's kind of like a typical marketplace right they take a take rate off of the transaction volume on the platform uh very similar to like your at c's and your airbnbs right uh so in this case uh campify

makes uh charges a 15 fee to the renter a different fee to the owner which depends on uh different factors and then they also offer kind of premium memberships which gives you different perks like marketing services uh elevate insurance reduce commissions and things like that So the first revenue stream would be these fees, these booking fees. And the second one would be memberships. And the third one would be kind of like, I basically call them like ancillary services. Like they have an online store for RV accessories, for example, right? They also sell GPS tracking subscriptions.

They're also acting as a middleman between RV manufacturers and buyers, They're just kind of facilitating the actual sale of these vehicles. So I would say that the third segment is just these different services that make it easy to be an owner on the platform, I would say, but they're monetizing that. So the booking fee, the membership, and these other ancillary services combined, their take rate is quite high. They made a 26% take rate in fiscal 21. And so when you compare that to some of these marketplace companies, that is a very healthy rate. And I think the membership really is something that definitely helps that. And one note on the memberships, you're allowed to lease your RV on the platform for up to 45 days, but past that point, you have to get a membership.

So about a third of the RVs by my latest, one of the latest reports, about a third of the RVs on the platform are covered by membership. So that's kind of a way for them to protect their, build a moat, right, and make sure that their RV owners are loyal to the platform because, like I said, it is a pretty supply constrained market. And so retaining and attracting those owners are pretty important. um you asked about the unit economics um kind of prepare like a typical like an example just to to make it easy for people to understand so on the cost side uh in the prospectus they said that it costs about a hundred dollars to acquire an owner um an rv owner to you know that's kind of their marketing expense to get an rv listed on the platform right so a hundred dollars they said the uh the customer acquisition cost for hire or renter is about ten dollars so the

kind of cost for like the customer is like 110 dollars right on the on the revenue side uh the typical booking is well north of a thousand bucks but for my example i'll just say typical book is a thousand uh it's actually increasing it's higher than that uh their take rate's about 26 percent right so that's 260 right there um their gross margin for this this segment is is 85 percent uh give or take so if you think about it from that standpoint you do the math the contribution margin from a booking is basically around you know 225 but the customer acquisition cost is 110 right uh and that's just one booking so in one booking they're making 225 the margin with a 2x payback on the marketing expense. But once you get an owner on it,

they're not just going to lease it out once. They want more business. So about half of the owners actually say they've earned more than $5,000. And like I said, a third of the owners have that premium membership where the average RV owner on that premium membership earns close to uh, $10,000 a year. So you put that together, it's pretty attractive. Um, just from a lifetime value to a customer acquisition cost standpoint, that's a kind of a popular metric among, you know, these types of marketplace companies. And I would say, uh, you know, that's, I always say it's close to best in class from a, uh, unit economic standpoint. How many they're called hirers right i think that's what i heard you say how many hirers are on the platform

um i gotta look that one up uh yeah i think the aussies use different terminology terminology than we do because you know for us it's like renters but all their filings and disclosures say hires uh here we go cumulative hires they're up to 70 000 in fy uh 21. okay so and that's 171 kegger in the last four years so pretty pretty high growth there right and they have started from a small base it's still a very new company and that was the next question they estimate that they're only at one percent or less of the rv market share in its home country australia and i'm assuming in all the other countries it's a lot less as well what sort of addressable market do you think they are going after and how do they get to say i mean is it a clear path to getting

5% market share in all these markets? Yeah, I think that's the beauty of this, right? You don't need to capture that much market share to make this a viable thing down the road. And so in Australia, there's 750,000, give or take, registered RVs. But like I said, not all of them are being available to rent. A lot of them, people don't want to rent it out. They say, I don't, that's fine. Not everyone wants to lease their, let strangers ride their vehicle right so uh you know 750 in australia they have less than 7 000 in total on the platform so forget about all their other markets that's like just still under uh one percent if uh in australia but uh i think i mentioned they they have operation in new zealand uh they're in the

uk they're in spain uh they're looking to expand more uh globally so uh honestly the addressable market is quite large uh when i looked at it just from a you know rv annual rv expenditure standpoint uh the eu australia and new zealand combined was close to 40 billion dollars in kind of annual rv expenditures uh this company did or 38 billion australian dollars this company did eight and a half australian dollars revenue in 21 2021 so i mean i think it's pretty it's pretty early at this point. But the beauty is they don't really need to capture too much market share to continue their growth trajectory, if that makes sense. Right. And is this one of those where similar to Airbnb when more, and I guess I have to use an investor term here, more liquidity comes on each year to

the marketplace? Do you think the business will get better and better for customers over time? I know it's not really like sort of a network effect, but kind of not. Do you think that will help improve the business and maybe keep revenue growing at a high rate for the next decade or however long? No, actually, I think you hit it on the head. There definitely are network effects. When you're logging into the platform and you type in the city you want to visit and there's no RVs listed, you're going to turn off the platform, right? So the beauty is in Australia, they have 1% of the RVs on their platform, less than 1%, right? But they're already by far the biggest player in the country so out of all the peer-to-peer networks they they have the most

rvs listed and that definitely is a big advantage um early on you know they spent a lot of time like going to these rv trade shows they spent a lot of time really trying to understand the consumer from rv owner standpoint right because the ceo knew like this is a supply constrained marketplace So let me focus on getting owners on the platform with the RVs. And I don't really need to work that much on the demand generation because there's such an imbalance where supply is so low. So that's how they approached it. And I mean, even when you think about the traditional like RV rental players in Australia, you know, the biggest one has a fleet of less than fifteen hundred. so like it's not a lot of options right and they're also limited by hours like the retail locations only you know operate for you know so long they're only in certain

places within the country so um so yeah there's definitely a network effect in play uh and i think it's it's mostly just having you know as much liquidity like you mentioned on the platform and and they've gotten there in australia and the other markets they're obviously working toward that liquidity but you know so they're the clear number one do you you mentioned the ceo do you know like what his background was uh like i don't know did he have a career before campify i'm kind of curious who he is yeah so he had a career before campify he um he actually they came up with the idea he came up with the idea at a kind of one of those you know startup weekends right you guys are you know in washington you're seattle microsoft i'm sure you

guys have seen those kind of tech startup weekends where uh like you basically get together come up with an idea and try to you know uh put together a business plan and see if you can commercialize it so that's actually how the company was founded but uh yeah i mean he's he's worked kind of um see here he's worked at different technology companies throughout his career so it's his first company that he's founded uh but he's relatively young and you know when i was doing due diligence in the company. He did a lot of podcasts early in the company's history. And you can tell he's very entrepreneurial

and really lets his team kind of contribute to the growth of the company. And in my email interactions with him, he's pretty, you can tell he's thinking about the business very intelligently. So yeah, first time founder, but i don't really think that's kind of a knock on him he's you know he's definitely got that entrepreneurial spirit what uh if you can disclose what did you ask him when you emailed him

i mean you know most mostly about um how he's thinking about expansion right some some other uh more technical questions uh on the financials um uh but uh yeah he's he's really he's got a very good business uh mindset in my opinion uh and kind of being a asx listed micro cap you have to you're also function as investor relations right so when when i reached out to investor relations like it's not like some you know some ir person got back to me it was like the ceo responding right so that is one cool thing about these um smaller companies especially in australia because they're used to kind of like a a retail investor base um uh contacting them and communicating with them so um so yeah that is that is kind of cool that

the ceo's uh so accessible another question so you mentioned that expansion uh and right now i don't have they made any moves into european countries or the u.s i guess uh what do you think is the opportunity there and then what do you think is the like logical next place to go yeah so um in their fiscal 19 they they launched in the uk um in fiscal 20 they went to new zealand and then in 21 they started in spain so uh the australian domestic market is actually quite large uh in terms of rv vacations uh people are sure i like to get outdoors and and explore and have fun uh so it's actually quite quite a large domestic business um uk makes a lot of sense uh english speaking right also pretty pretty uh pretty big

uh addressable market new zealand is pretty obvious because they're neighbors uh and then spain was kind of one where okay it's different language could they you know that's kind of be going to be interesting to see how they work there, but also very, very healthy kind of RV culture and market there. But overall, in terms of expansion, I think Europe is definitely the place where they're going to be growing. They have an operations center in Portugal. So out of there, I'm pretty sure they can serve the EU market, EU and UK market pretty well. but uh from what i see you know you want to look for uh countries where uh there probably is a supply and demand imbalance right there's not a big maybe rv rental traditional player in there

maybe there's not a well-developed peer-to-peer uh competitors in there because like you mentioned brad like the network effect is important if it's starting from zero it's a little bit difficult right so um i think they'll be smart about selecting which markets to go into in the in the eu um and then a little bit closer to their home they're they're actually uh announced an acquisition uh of the number one uh and two brands in new zealand so after that closes they'll be the number one peer-to-peer player in new zealand which is pretty good too because they australia new zealand have a lot of cross tourism and it's it's a very it makes total sense uh there so So, yeah, definitely very early days for them and a bright future ahead.

Okay. And this is something people are probably thinking of because I'm thinking it impacted it in some way, but how has the pandemic impacted their business, either positively or negatively? Yeah. You know, it's, well, first of all, their business results were fantastic last year. Um, and just thinking from a 2019 to 2020 standpoint, they grew their top line, you know, 127% CAGR and their take rate significantly went up a few percent each year. Right. So I think it would be unfair to say that they were like, uh, I mean, they definitely benefited from the pandemic in a way, uh, you know, people couldn't leave Australia. i don't know if you guys familiar but i'll show i had a pretty strict lockdown um if you follow tennis like you know what's going on with novak jokovic jokovic and um it's uh i think domestic

tourism definitely i think got a boost from that because you want to be outside rving uh camping is a very safe way to spend your holiday uh and so similar to us right rv sales were going pretty crazy during the pandemic so in one way you could argue they were a covid beneficiary on the flip side though the international tourism like went to zero in australia so in terms of total tourism expenditures the international portion is about a third of their overall kind of tourism industry so a third of that business just went away and so in that way they definitely got hurt um uh so i mean it's hard to say in my opinion i think their business results are pretty strong but i mean i always just kind of wonder like okay if australia was open if there

was no pandemic like could they have even scaled and grown even faster in their domestic market and we just don't know so i think the the stock if you look at the stock chart it's definitely taken off since it's IPO'd and it's correlated with the reopening of Australia because people, investors are anticipating a massive pent up demand from not only Australians, but also opening of a travel bubble with New Zealand and then maybe even more international arrivals outside of just New Zealand. All right. I think that's all the questions we have for the first half we're gonna have a quick ad break and then we got more on the back half this episode is brought to you by la quinta by windham here you are miles from home and ready

to start your vacation good thing you're staying at la quinta by windham they have free high-speed wi-fi to stream all your favorite movies and in the morning get fresh waffles with their free bright side breakfast or squeeze in a workout at their fitness center either way you're ready to conquer the day. Tonight, La Quinta. Tomorrow, you triumph. Book your stay at LQ.com. This episode is brought to you by KPMG. As a business leader, how can you innovate, build trust, and move forward in a digital era? KPMG can help by bringing together the right talent and technologies, generating insights that spark opportunities. To explore they're thinking, visit reed.kpmg.us slash opportunities. Okay, welcome back in. Next,

we kind of wanted to touch on the valuation. So we covered the business a lot in the first half of the show. And I think it's pretty easy to grasp, I guess, the model. But the stock trades at a sales multiple of around 18, if I'm not mistaken. So I guess with that multiple, What do you think needs to happen to make this a good investment over the long term? Yeah, I mean, from a valuation standpoint, I don't think anyone can say this is a cheap stock, right? 18 times trailing sales. But on a forward basis, I mean, they're expecting to more than double their revenues. So, you know, on a forward basis, the sales multiple is about nine times, which makes it definitely more palatable,

especially when you compare to more mature businesses like an Airbnb or an Etsy that are growing at much slower rates. So yeah, I mean, there's no other ways about it. It's an expensive company by traditional measures. But I mean, this company could go 120% growth, 200, 250, 300, and your multiples really start going down, right? So it's tough to say. I don't like to think about it just from a revenue multiple standpoint uh they have healthy gross margins uh i mentioned kind of just the the uh main business the marketplace business is an 85 gross margin business right now when they do the van sales it kind of muddies things because they're making a small percent on you know uh just facilitating that so you know the gross margin gets dragged

down and yeah and then on the membership side uh they kind of got not in trouble but uh margins were a little bit lower than probably what they wanted as insurance rates rose. But I know they've priced for that. So at the core of it, you could probably long-term, once it scales, think it's 75% plus gross margin profile. So what's the price? What's the multiple you're willing to pay on a company that's growing over 100% at 75% gross margins? Once they scale, what does that look like maybe 25% EBITDA margins are probably higher. So I think it's just so early. I mentioned earlier, I'm thinking about like a VC type investment. And to me, for what will make this a good investment is continued growth. That top line just needs to keep growing. Everything that

leverage from an SG&A standpoint starts to really show when you go to that top line. And what's going to fuel that top line growth is because it's supply constrained, right, the market's supply constrained, it's going to be RV growth. They need to keep adding RVs in the system consistently, not only in Australia, but every single market. So before they announced the acquisition, I thought, okay, like, that's like literally I have to keep marketing and getting spending marketing and going to the roadshows and getting new owners. But they could also do it through acquisition. and the multiples they paid to get uh the business in new zealand were pretty attractive and so perhaps there's companies that can't make it and they can be the acquire um but yeah rv growth needs to be there they got to expand uh continue to expand in the eu

i think this only really gets interesting from an investment standpoint uh especially as american right if if this is a global story right so like i don't think anyone's gonna be excited if it's It's just constraining to Australia and New Zealand. I'm sure the domestic investors there would be, but I don't think it's that exciting for us. But the good thing is, I mean, they're definitely on their way to a global kind of mindset. Like I said, they're in the EU.

And then, you know, in the annual meeting, like the word global just was said so many times. So it's a company, I think, with global ambitions. And we'll just have to see how they execute in the EU. Um, and then last, I think they need to stabilize their cash flows, right? Like they can't be burning cash. Uh, they need to, uh, kind of maintain a long runway without having to dilute shareholders. Uh, and so, uh, they did raise, they did, uh, do an offering to, to make the acquisition. I think the market kind of was okay with it. Um, but yeah, they're definitely, uh,

to stabilize their cash flows uh it's funny how this business works is when you make a booking you're actually placing a deposit when you make the booking right so it's it's probably going to happen where they consistently have like negative working uh capital because they're getting money in from the deposits faster than the money's going out so um i could see a scenario where a few years now where like they're not quite there from uh you know operating our ebitda or net income uh positive but they are kind of not burning cash so um yeah for but in summary i kind of rambled on like they just need to keep growing that's that's going to solve everything the uh how are they do they have any debt on the balance sheet you mentioned that they did an equity race that

kind of their number one financing source yeah no debt i mean they took some a small covid uh kind of loan in the uk but that's paid off so no debt okay all right and that leads us into competitors you talked about a bit of this us stuff like that i think the key question here is why are they going to win in their current markets and then can they compete with the main competition in the U S if I asked more of a future question, but could they compete with the main competition in the U S which is outdoorsy? Yeah, I guess I'll answer the second part of the question first. Um, I don't know if they can compete with them in the U S, but what I do know is outdoorsy could not compete with them in Australia. So outdoorsy, um,

entered the Australian market a few years ago. And last time I checked their platform, they had like, uh, 300, three or 400 RVs in total in the whole country, uh, to rent in Australia. So I mean, Campify is like 10 to 15 times bigger than they are, um, in Australia. So, um, yeah, not sure if, you know, how well it would go if Campify entered the U S but I know outdoorsy couldn't make it work, uh, in Australia. I mean, they're still there, but not, not relevant in my opinion uh but i mean the the competition for this company comes in two forms and we kind of touched on it right the first one is your traditional rv rental companies uh the biggest ones in the australian market are apollo tourism and tourism holdings uh tourism tourism holdings

actually based in new zealand but they i mean they just don't have enough rvs like they they Those two companies have less than 3,000 RVs to rent combined. Campify has more than double that. If you look at some of the customer reviews for the traditional rental RV companies, they're hampered by availability, hours, pricing, and the reviews are not very favorable. Whereas most of the reviews for Campify are quite high on the platform. And then if you, you know, look at things like Trustpilot, it's like a 4.6. So pretty, pretty highly reviewed product.

What's interesting with the traditional companies is that the Campify's two largest competitors are actually planning to merge. So Apollo Tourism and Tourism Holdings are actually have a merger planned. uh so um that kind of shows you like they need scale on their own to really compete and as part of that uh uh tourism holdings are spinning off their their peer-to-peer uh sites so they had a few peer-to-peer sites that competed uh with campify that now campify is buying at a very good uh very good price um to make things even more weird uh apollo tourism is actually campify's largest shareholder so like basically their management was super smart a few years ago they said okay listen i don't want to get airbnb'd right like i can't have a peer-to-peer site or

platform destroy my business and they were really smart really proactive and visionary to make this a big investment in campify so um i think moving forward it i don't think the traditional rv rental companies are really going to be campify's competition uh in fact uh with tourism holdings like they're already talking about um having tourism holdings manage some of the uh do some servicing and kind of do managed services for rv owners on campify where like they would take care of uh getting customers servicing the vehicles delivering the vehicles and the owner just pays a higher take rate to basically do nothing right so um that's the first one competition the second form is other like other peer-to-peer marketplaces like outdoors that you mentioned uh there's a

couple in australia there's a lot in in the eu but uh ultimately it's just about how many listings you have and and though in australia none of them really have that scale um in terms of number of listings to compete with Campify. So that's what it looks like from a competition standpoint. I think when you think about, okay, what's the moat for this company? I think premium memberships can provide a moat where you got to be exclusive to Campify. I think the company's consumer focus and focus on RV owners where they're doing things to make it easy for RV owners. They have extra services like gps trackers right they're facilitating van sales uh early in their history they helped clarify some of the tax laws in australia around kind of renting out your your

rv so um i just think if they maintain that customer or consumer focus especially with the with the owners like they'll they'll continue to gain that loyalty um and trust and so ultimately like you got to have the the owners on the on the site and so um they've already had a you know obviously have a head start uh on the number of listings and i think that network effect will continue as long as they can uh retain and attract those rv owners i find it funny that apollo's management team just basically like left their pride at the door and said if we lose we're least going to own campify um i have a question have you ever used a product like this whether it's outdoorsy or uh i guess turo is kind of similar uh i've used airbnb a lot um but uh

i'm not really into rv myself and so i'm not the right consumer um but uh yeah i mean i've used kind of peer-to-peer uh sites and uh as long as you do like good vetting of the host and or the owners like i feel like we work obviously there's a risk uh of bad actors being on the platform uh and so uh campify and a lot of this competition to offer things like you know roadside assistance 24 hour hotline to make it easy um so yeah okay uh what are some of the key metrics that you're looking at to kind of track campify uh as as these years go on um yeah so number of rvs on the platform they have to continue to to grow that um the web traffic is one uh percent repeat customers um you know what how much the business is coming from repeat that's

really important to me uh and obviously like your financial metrics right like gross gross transaction volume take rate revenues but yeah okay and we've gotten you know we talked very positively about campify there's always a negative you know negative aspect to any investment what is one big risk to campify's investment that you think and maybe a little fun one do you think this is a target for airbnb to potentially acquire yeah that's interesting um biggest risk I think is the repeat rate, like frequency of use. Uh, right now they're getting a little over 20% of their bookings from VP customers. Um, so they're definitely going to have to, uh, bring that up. Uh, otherwise they're just continue to not have leverage on their marketing expenses.

Uh, so, uh, more repeats. Good. Um, I did, I just think from a consumer behavior standpoint, I don't know how often folks will be using Campify, like, like Airbnb, for example, right? hotel occasions are pretty common right like just business travel even personal travel like it's a pretty high frequency usage in my opinion rvs i don't know like max one a few times a year that you're going these type of vacations again i'm not the target consumer i'm just trying to think through like what the max frequency would be and i don't know but all i do know i what i do know is it's lower than something like airbnb right so that's that's something to watch out for um i think like airbnb in their s1 they said they got like 70 percent of bookings from repeat

customers so campify is at 20 uh obviously airbnb has been around much longer and they've had years to build that up but um yeah that the frequency of use is definitely something to watch out for uh for campify uh hopefully they can get uh continue to build that up over time um as the as the as people get used to uh renting on the platform yeah the only not that you asked me for my take but i mean i would think that airbnb could maybe lump it into like their experiences segment because i know they're trying to push that yeah but it'll be a bit different because experiences like during the day this would be probably part of the bookings because you're taking it for an overnight for weeks at a time or a week probably at a time so i think that they

could really want they get either way they can launch it as a product oh yeah yeah i didn't even answer your question like on the airbnb acquisition but yeah i mean it could be a target i just think like i mean you can rent an rv on airbnb no problem i don't know if you can take it anywhere but there are like camper van stays and things like that um i just think that you're gonna have to focus a lot of time on the on the consumer insights and consumer behavior and recruiting these rv owners and it's kind of a sideshow for a company like airbnb airbnb where they're addressing the market with you know disrupting hotels in my opinion so big it's like why mess around you know with with the rv space but right you know when companies stop growing they all they

do all sorts of things that we can't predict so perhaps one day when they're you know more mature and stop growing uh they they might go into this space um but yeah i just think it's very niche niche space that requires a lot of it's not like i think the learning curve is pretty high to to get entrenched into the rv industry and rv culture um where i just don't think someone like airbnb would mess around with it at this moment what would have to happen for you to sell campify or is it kind of like you're just writing it out to say since you mentioned it's kind of a v-seat style that yeah i haven't thought about that too much like if it goes to zero i'm okay with that right just based on how i've sized it um but obviously i'm hoping this is a home run

a multi-bagger uh as they say but uh i think any slowdown in the listings of rvs is a kind of a red flag um inability to expand into uh new countries right so they entered spain recently right if they if they have to exit one of these countries the the whole thesis kind of falls apart where like in my opinion this is a a platform that should be able to easily scale regardless of um you know language barriers or things like that obviously they they've invested in local employees and local staff, but it should be a very scalable platform, similar to how Airbnb has gone global, right? So I think those are the two, I guess, red flags to me is slowing RV listings and kind of exiting a market just because they couldn't make it.

So. Right. And they haven't exited a market. That's a potential. No, no, they haven't. Yeah. Okay. They haven't exited. Yep. Perfect. Okay. I think that's all our questions. You have any more, Brett? all right well that's going to do it uh where can listeners find you if they want to hear more from you yeah so i'm on twitter at a zippy dash or underscore capital so zippy underscore capital and then um if anyone's on microcap club i'm also the same username zippy underscore capital so that's where you can find me nice microcap club exciting yeah this is my write-up for the Yeah, this was, I wrote this one up for them. So it's kind of, yeah, community of investors there. So if you guys, you know, any listeners haven't checked that out, definitely encourage you guys to take a look.

All right. Well, I think that's going to do it. Appreciate everyone listening. I want to remind you that we are not financial advisors. Brett and I are not financial advisors. Anything we say or discuss here on Chit Chat Money is not formal advice or recommendation. nation. We are, however, general partners at Arch Capital, so clients may have positions in the securities discussed in this podcast. Thank you all for listening. We'll see you next time.