It’s a busy time of year for us at Spaceship. We’re in the final quarter, we’re prepping for some exciting new features, and we’ve bought some new stocks. On that note, let’s get into the latest changes to our Spaceship Voyager portfolios.
Bought: Chewy
In the Spaceship Universe Portfolio
Chewy is an American e-commerce brand that deals in pet food, toys and other supplies.
And it’s pretty popular, with more than 20 million active customers.
What’s interesting though is that those customers include pet parents and veterinarians, creating an entire pet ecosystem. Chewy is valued as though an e-commerce company, but it’s more than that. It has digitised veterinary services, working with vets to provide telehealth for pets and online prescription services.
Imagine not visiting the doctor or having annual medical checkups? According to Chewy, one-third of pet parents do not take their pet to the vet or don't do so regularly, constraining the size of the pet market. Chewy is out to solve this pet healthcare problem.
And that brings us to another point we like about Chewy. Its Autoship service means it has created recurring revenue, while also driving retention with customers. Autoship accounts for more than 70% of sales, making Chewy more like a subscription business than e-commerce.
On top of that, the company has scale. Serious scale. It had about 42% market share, at the beginning of 2021, bringing it close to Amazon, which is a feat unto itself.
Beyond that, it’s just a fun brand. The company is famous for sending out pet portraits (see above), sending more than 1,000 a week, which helps create loyal customers and virality on social media.
Bought: Pinduoduo
In the Spaceship Universe Portfolio
Pinduoduo is a tech platform based out of China that connects farmers and distributors with consumers in an innovative way, by enabling ‘group shopping’ at discounted prices.
Users can share product information on social channels, form a shopping team, and get a lower price for their purchase due to the bulk buying. Pinduoduo has pioneered a consumer-to-merchant model. Consumers band together, helping merchants understand demand levels so they know what to produce, saving costs for everyone and passing them on. Pinduoduo’s biggest opportunity is in online grocery as it cuts out middlemen and retailers by connecting farmers directly to consumers.
Pinduoduo is big! It had more than 788 million users in 2020, which means it surpassed Alibaba, despite being about 16 years younger. And because of its group shopping experience, users attract other users. And that means the cost of acquiring users is low.
One risk we see with Pinduoduo is that it relies heavily on Tencent’s WeChat (a social platform) for traffic and growth, as users go to WeChat to form shopping teams. But it’s worth noting that Tencent is a shareholder in Pinduoduo.
But all up, we like Pinduoduo’s leading position, so it was a buy for us.
Bought: Matterport
In the Spaceship Universe Portfolio
Matterport is a spatial data company with a focus on digitising and indexing the built world.
Say what? Matterport takes 2D images and makes them 3D. This means anyone can use its cameras or even Matterport’s app on an iPhone and create a digital twin of a space, which can then be used to “design, build, operate, promote and understand” the space.
Take real estate, as an example. A realtor can create a virtual 3D tour of a space, which gives a potential buyer the opportunity to really visualise the space. The realtors can also track where customers stop and ‘linger’ virtually. (It’s usually the kitchen!)
What makes Matterport interesting to us, though, is that there’s a lot of verticals that Matterport can touch — real estate, yes, but also insurance, repairs, builders, and so on. Matterport is building a database of indoor buildings, as a digital twin of the real world has interesting optionality in terms of augmented reality and design.
With less than 0.1% of buildings having been digitised, there’s a lot of opportunity; the company sees its total addressable market at US $240 billion.
Bought: Adore Beauty
In the Spaceship Universe Portfolio
Many of you will know Adore Beauty, as it was one of Australia’s first beauty retailers to sell exclusively online. It has a great story, too. The company was founded by Kate Morris in early 2000, when Kate was just 21; she started it out of her Melbourne garage.
The company is famous for sending out a free Tim Tam with each order. It sounds like a small thing, but I’ve ordered from Adore Beauty just for the free shipping and free Tim Tam.
We like Adore Beauty because of its content-led marketing strategy. Adore Beauty is not just e-commerce, it’s a digital media business helping customers make informed decisions about beauty products. Additionally, its podcast is a great source of traffic, having been downloaded more than 2 million times. There’s also a huge sense of loyalty among its customers, thanks in part to its new loyalty scheme that has more than 50,000 customers.
Despite having 650,000 active customers, Australian beauty and personal care online adoption lags the UK and US, which means Adore Beauty still has potential to grow.
Bought: Nitro Software
In the Spaceship Universe Portfolio
Nitro Software is a good one for this new work-from-home digital world we live in, as it helps its users edit, convert, create and eSign PDF files.
And it’s another Melbourne-based brand, born in 2005 with a team of three.
We like Nitro as it services more than 13,000 business customers, including some of the world’s biggest companies, from GE to ExxonMobil, Blue Origin to Toyota.
There’s also plenty to like about the growing digitalisation trend; many companies still rely on paper signatures, but there’s a shift towards electronic signatures that Nitro can be a part of. Of course, there’s some competition in that space thanks to DocuSign and Adobe, but we still believe Nitro Software is a good Aussie buy for us.
Bought: Datadog
In the Spaceship Earth Portfolio
Datadog is a cloud monitoring and analytics platform, beloved by developers, IT operations teams, and so on. They benefit from the cloud migration trend and are typically called in when customers start the cloud transition and hit pain points.
Furthermore, the company is shifting from cloud monitoring into many other services. Security is an interesting opportunity for them.
It’s also another company with a slew of big name brands as customers — including Samsung, 21st Century Fox, Peloton, and Amazon-owned Whole Foods.
We believe Datadog contributes to Goal 9 (Industry, Innovation, and Infrastructure) of the UN Sustainable Development Goal agenda, thanks to its contributions to communications and security. They help shift workloads to the cloud, among other things.
Bought: Illumina
In the Spaceship Earth Portfolio
Illumina is a developer, manufacturer, and marketer of life science tools, which covers things such as genome sequencing.
The company is also playing a key role in fighting COVID-19, as its technology is powering scientists and researchers in more than 10,000 labs across 115 countries.
We believe Illumina contributes to Goal 3 (Good Health and Well-Being) of the UN Sustainable Development agenda. They strive to remove barriers to genomics, including through their iHope Network which provides whole genome sequencing to underserved families.
Illumina has a real stronghold in a way, with more than 90% of the world’s sequencing data being generated using their instruments, which is just one reason we like the company.
The Spaceship Universe Portfolio invests in Chewy, Pinduoduo, Matterport, Adore Beauty, and Nitro Software at the time of writing.
The Spaceship Earth Portfolio invests in Datadog and Illumina at the time of writing.
Important! We’re sharing with you our thoughts on the companies in which Spaceship Voyager invests for your informational purposes only. We think it’s important (and interesting!) to let you know what’s happening with Spaceship Voyager’s investments. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator or guarantee of future performance.
