Ritesh Agarwal Curated
Founder and CEO, OYO Rooms
CURATED BY : +44 others
You call yourselves as “Urban Innovators”. What do you mean by it?
How does the Oyo Rooms' success look like today?
Did you have any discrepancies about your career choices and how did you deal with it, to become an entrepreneur?
As an entrepreneur, what according to you helps in scaling up your business?
What were some of the challenges that you faced during your early years? What learnings did you have from it as an entrepreneur?
How did your parents react when you wanted to quit college to become an entrepreneur?
You were 18 when you started. How did you hire people older to you?
What problems did Oyo Rooms want to address when it started?
What has been your battery down moment?
You are not an intermediary between a customer and a hotelier but a partner. Can you please explain?
What advice do you want to give to aspiring entrepreneurs?
Do you think in this tech-savy era any small and large business has an opportunity to thrive?
How should an aspiring entrepreneur handle failure?
What is your recruitment strategy?
Unlike at 9 to 5 job, how does a daily life of an entrepreneur run?
Should one pursue their passion for entrepreneurship if there is potentially no great revenue inflow?
Being an entrepreneur, is it fun or too much of pressure that might break you down sometimes?
What does Oyo stand for?
Does Oyo only cater to budget travel or your intent is to expand and cater every pocket size?
What should a consumer expect from Oyo Rooms?
How did you come across the problem, which triggered to the idea of Oyo Rooms?
What was your turning point? From being nothing to initially to even launch and execute a business is big deal. Tell us about it.
What kind of resistance did you have to face while trying to change this industry?
Are you just burning cash through this extensive engineering of standardising hotels or is there profitability to this business model?
Why are you not looking at hotel owners yourself and investing in properties for long term benefits?
While India and China remain your biggest markets but how do you see the graph moving ahead particularly with respect to your US foray?
You are right. India and China are two of our biggest and home markets. In fact, China is bigger than India for us in terms of room count. We have over 500,000 rooms in China and more than 270,000 rooms in India. In addition to these two markets, the US is our third home market and it is the fastest scale-up for us in any market globally, with over 100 hotels in a short span of time. The US has the potential to be a large market in the future. Indonesia had a stagnant growth but has taken off in a big way. We have over 21,000 keys in Indonesia. I think as we go forward, China, India, the US and Indonesia will continue to be our biggest markets. The focus in Europe continues to be on vacation homes while we are catering to the growing demand for quality, affordable accommodations in the Middle East.
Talking of innovation, when you say you will be the world’s largest hotel company, how does the innovation look to you from the top?
While one is in the process of coming up with a truly innovative solution, it is essential to keep an open mind. One should accept failure, and be willing to learn, unlearn and relearn again. We have always believed that an overnight success story is backed by at least five years of dedicated hard work and perseverance. At OYO, we have been able to instil innovation throughout the company by inculcating the ability to make sure that the company and mission come first. This is not just true for the management but also for all OYOpreneurs.
How have you deployed technology both on the supply and demand side?
Technology has always been a key differentiator for OYO. As an intersection of real estate, hospitality and technology, OYO has over 20 technological products that power various business verticals. At present, OYO offers multiple app-based solutions both for its customers, employees and asset partners including our Property Manager app for managing all daily functions of the property and Owner App for asset owners to have complete visibility of his business. Then there is OYO AGMs (key contacts for guests and hoteliers in a certain geographical area) that use Krypton for auditing OYO hotels. Our AI-based algorithms help the chain in predicting the most suited properties at the best location at the correct price for its customers. Also, our integration with AI-based bots has enabled property owners to assist customers.
Having scaled significantly both as a business and an entrepreneur, any thoughts on giving back to society?
There are causes that are dear to me personally including encouraging entrepreneurship, improving livelihoods as well as helping humanitarian rescue and relief efforts. I am only 25 now and have a long way to go personally but I am considering a few ideas that will help me make a meaningful contribution. You will soon hear about this. From an organisational perspective, we formalised a concrete CSR program called OYO Reach that assists in several causes including installing rainwater-harvesting systems in water-deficient cities, harnessing technology and resources towards cultivating a culture of sustainability, focus on skill development, and economic opportunity creation in the cities where we operate and help to boost the local tourism.
What are your marriage plans since you are probably among the most eligible bachelors of India Inc.?
My mom is surely worried that the fact that I don’t have a college degree will impact my chances of finding a bride.
What was OYO's strategy behind cutting down one-third of its workforce?
How OYO is guaranteeing its growth for this year ?
How is OYO affected in China due to this pandemic?
What are your views on the current pandemic?
How companies like SoftBank affects OYO's overall decision making?
What were your parents side of your success story?
What piece of advice would you like to give to the current engineers?
What is OYO's social mission ?
What is OYO now and what are the future plans?
How was the initial period of getting the company started?
What did you learn while being with Peter Thiel?
What basics OYO believes in ?
How did you overcome the tough times at OYO?
What was OYO's early hiring philosophy?
What was a big part of your individual learning?
What measures you took while scaling up the company?
What measures you took for maintaining the consumers?
How was your childhood like?
How did you come up with the idea of building a company like OYO?
How did you approached the next step after Oravle?
How did Theil fellowship helped you build the company?
How did Theil fellowship helped you build the company?
How did you build the first OYO hotel?
How did you maintained the standards of an OYO room?
What did you learned today by building this company?
How much did OYO grow in a such a short span?
How India is different from other countries?
What is your vision for the company?
What is your vision for the company?
Do you think there are lot of brands in the OYO portfolio?
How are you maintaining the connection with consumers ?
How do you maintain the quality that OYO is known for?
How location plays a major part in the functioning?
What are your views on the recent buybacks and IPO?
What is the target shareholding you're looking ,for yourself?
What is your focus for now?
What is your focus for now?
How OYO is expanding its coverage?
How is OYO growing at this fast pace?
How is OYO growing at this fast pace?
How are you able to conquer China as most companies struggle to do so?
How many employees OYO has right now in China?
How is US as a marketplace for OYO?
Why Airbnb is considered as an investor instead of competitor or semi-competitor?
Will the core belief of OYO which is making rooms economical will remain the same?
What are your views on SoftBank vision fund?
How are you able to work so hard for this company?
How are ensuring that you don't over stretch the supply in the long run?
What are your views on OTAs ?
What is OYOs business model?
How the OYO's model has changed over the years?
How do you compete with the locals?
What are your views on Britain as a marketplace ?
What are your views on Accord as a competition ?
Do you have a separate PMS in China?
What do you think the big venture capitalists see in Ritesh Agarwal?
What are your views on Masayoshi son and his vision fund?
What change had come in India in the recent years?
What change you wish to have in India ?
Where would we be in the next 5 years according to you?
What is working under you like?
How do you deal with media?
How important is it for you to outreach or to have a narrative to the world?
Whats your advice for the entrepreneurs to be like you?
What are your views on the Indian Budget ?
How's current political condition is helping OYO?
What are your views on your biggest competitors in India ?
Considering you being so young, what is the average age of an employee at OYO?
How the company made profit on the balance sheet?
How much OYO is dependent on tech?
What are your views on your small town roots?
What are your views on the current education system?
How difficult was it to build the company in china?
What are your views on Japan as a marketplace?
What's fun at the OYO workplace?
What's fun at the OYO workplace?
What did you learned after entering the market ?
How did you collaborate with the locals in different countries?
Do you support new entrepreneurs?
How can young entrepreneur reach to you?
How did you acquired your early customers?
What are your thoughts on the backlash you are facing from hotel owners in India?
In the last few years, on an annual basis, Oyo has had 99 percent annual asset retention which means 99 percent of asset owners who join our family stay with the family one year later. And one percent of them leave themselves or we ask them to leave because we have a 3C programme. Under the 3C programme, we decide whether an asset is good enough or not. So, first, this is a matter of credibility; our organisation is built with our underlying asset owners by data rather than just verbal perspectives. Oyo has constantly pre-empted how we can continuously get better for our asset owners. A few months back, we launched the Oyo Open programme by means of which we respond and listen to the feedback of asset owners and understand what needs to be improved. There are lots of very interesting videos, blogs, etc. that the asset owners have written about how they believe Oyo is increasingly becoming a stronger value proposition for them. We have enabled to disburse over Rs 100 crore in capex as well as interior design amounts for these assets to get better revenue pie. Majority of the people who are communicating about the situations are folks who are not Oyo Hotel owners. some of them are actually asset owners who belong to some other brands and their intent is to try and create a price-fixing at a neighbourhood level, saying that at a neighbourhood level let Oyo also increase the price. Oyo was built with a principle of lowest prices and the ideal rating of the product we want to bring for our customers. So, we will never agree to price-fixing and let the 25 percent price increase that some of them would like from us. We would like to deliver best prices at the right quality.
Another important subject that people are talking about today is IPO. Everybody is talking about doing an IPO in the next 2-3 years at least that is what people talk about. Do you have IPO on your mind?
No, that is the simple answer. We have a very good balance sheet, close to $2 billion. On top of that the business as you imagine is not very expensive to be able to build. So, with that combination our primary focus is to focus on fundamentals. As I always say, our business is little bit like milking the cow. Come to your job every day, do the same thing we did yesterday - sign hotels, renovate hotels to look good, provide good quality service at the right price point, get the occupancy and hence get the margin and do the same thing every day but little bit better than yesterday. I feel once we are able to do it for reasonable amount of time we will consider what is the right time for a potential offering. However, at this point of time our focus is just on the ground execution. This is not just me, if you speak to any of our management they would say the same thing.
You bought back some of the shares. Why did you do so?
Some of your readers might have known about my story, majority not. I grew up in the southern half of Odisha on the Odisha-Andhra Pradesh border and right from the very early days my belief or aspirations were very limited. My family wanted me to go work at an engineering company. Oyo gave me the first opportunity of working for a company which is going to become a big impact, let alone the ownership. As I am so excited about it, because I want to serve and be a part of this mission for the next many years, what a lot of people perceive is a big risk, I actually feel it is fairly straight forward. That is if I am so confident about the value of the company, I should not try to make minor adjustments. Either we create big value or on the other hand I should be confident to get to those results. That is what inspired me to consider speaking to people. I am happy that we received support of some financial institutions to be able to make the financing and recently the Competition Commission also in-principle approved my investment in the company along with some secondary purchases.
How did you grow so quickly?
Less than a year ago, we were mainly in India and starting to make a mark in China. We were the fourth- or fifth-largest hotel operator in the world. Almost every day we add 70 to 80 hotels. We will open close to 100,000 rooms in the next 30 days. At the end of June, we had 50 properties in 35 U.S. cities. Now we are close to 200 properties. We were building the business in India, but we were creating a product that we could transport. We redo interiors much faster and more intelligently than other companies. We operate more efficiently through measures like a housekeeping app that incentivizes cleaning a room quickly and getting a high customer rating. We change our prices worldwide about 60 million times daily, maximizing revenue per room based on demand. Three years back we were growing at 60%. This year it will be 300% or more. In Tier 2, 3, and 4 cities in China, you can’t miss the OYO hotel sign. When you drive around Jakarta or London—and, increasingly, Dallas, Houston, or Las Vegas—it’s hard to miss the sign.
What’s the business model?
Everything is optimized for occupancy and repeat customers. Generally, occupancy goes from 30% to 40% before OYO to 60% to 80% after. We have a 99% owner-retention rate. In India we spend roughly $500 to renovate a room. In China’s smaller cities, it’s $500; in the bigger cities, it’s $750. In the U.S., it’s $1,000. We recoup our money in approximately six months on average, globally. Before we design interiors, we predict what kind of design, for the lowest capital expenditure, will give us the best returns. For instance, we found that portraits of Marilyn Monroe increased revPAR [revenue per available room] of a property by 10% to 11% on average. Consumers classify hotels like this as “boutique.” It began when one of our hotels in Wichita Falls, Texas, saw revPAR improve by 25% after we put Marilyn Monroe portraits on the walls. Then we started copy-pasting this. In India over 50% of our hotels are full service—that means you can order room service. Imagine doing that at a price point of $25 per night. Outside India we don’t have full-service hotels for that price. When a guest checks in to a full-service hotel, the lobby staff knows that the guest ordered pizza to the room on a previous visit and will proactively ask if the guest wants a pizza. If a receptionist sells additional services, he earns an incentive. Our OYO training institutes groom employees. We’ve created 300,000 jobs in housekeeping, front desk, maintenance, and so on.
How did you become an entrepreneur?
grew up in Rayagada in Orissa state in eastern India. Few people have even heard of it. Roughly 70% of the people there live below the poverty line. When I was 13, I started reselling SIM cards because big companies didn’t want to sell in that small town. My father ran a grocery store. We were four siblings. I’m the youngest. The older three are engineers, and two have MBAs. I’m a college dropout. My parents thought they had three respectable children, and I was the black sheep. They rued, “Isko ghas katnewala kam milega” [“He will get a grass cutter’s job”].
You travel around India and to China and the U.S. each month. Does that leave time for a personal life?
The only constant in my life besides OYO is Lisa, my dog. She’s a Lhasa apso. The only reason I shop is to buy accessories for Lisa. My parents still don’t understand what I do. They can spot two OYO hotels from the balcony of their house, so they don’t worry so much. They now think I have a reasonable job because they send me pocket money, and I don’t ask for more.
What book do you recommend to others and why?
Zero to One by Peter Thiel - Peter Thiel is someone I look up to. The book has played an important role in shaping my approach towards life, both from a business and personal perspective. It successfully encapsulates the strategy behind running and sustaining a business, which is the most important thing to learn for an entrepreneur. It’s an inspiring and thought-provoking read that teaches you how to think like a leader. Chocolates on the Pillow Aren’t Enough: Reinventing the Customer Experience by Jonathan Tisch - this book by Jonathan Tisch, the chairman and CEO of Loews Hotels & Co. and one of the most respected leaders in travel and hospitality in the U.S., is a quintessential read for anyone working at a consumer-facing business. Elon Musk: How the Billionaire CEO of SpaceX and Tesla is Shaping our Future by Ashlee Vance - I admire Elon Musk’s risk-taking and innovative mindset a lot. One key takeaway for me was how critical risk-taking is when it comes to building a transformative enterprise that is ahead of its time. His passion to ensure a bright future for humanity is tremendously inspiring.
What do you do to alleviate stress?
Speaking to customers about their OYO experience makes me feel great about the kind of impact we are creating across the globe. Hearing the feedback from them - the positives and the areas where we can improve - is a significant part of our learning process and excites me the most. I truly believe that work is life and life is work. It is symbiotic.
What was your childhood aspiration?
I always wanted to do something new and interesting, something different from the norm. I started with selling SIM cards while exploring unique areas and opportunities like being a pilot. I ended up being an entrepreneur and absolutely cannot complain about it.
Who is the person you most admire within the industry?
Peter Thiel is someone that I look up to. The mentorship I received from the Thiel Fellowship and the quality of ideas I was exposed to were on par with the best business schools, but the icing on the cake was that I got a chance to learn everything while actually pursuing my dream. Another individual who inspires me is Bill Gates - what he achieved with Microsoft is incredible, but what I admire the most is that he knew the right time to leave and share his wealth with real people in the world and impact their lives.
How do you want to be remembered as a leader in your company?
As a leader, you have the most important job to do, lead the vision, drive the business, motivate your team and sustain. Your business is your brainchild. You have to nurture it. That’s why I call myself the chief clarity offer at OYO and want to be remembered in the same way.
What is your proudest professional achievement?
Success is always measured based on the impact that we have created. Since the inception of OYO Hotels and Homes, our focus has always been on creating affordable, high-quality living spaces for travelers and a conducive business environment with sustainable returns for our asset owners. During this journey, we have created over 300,000 direct and indirect jobs across India, the U.S., South Asia and China while training young hospitality enthusiasts. We see a huge opportunity in front of us of building a global brand that is truly from India. Our foray into international geographies is a testament to the hard work and perseverance, every leader and OYOpreneur (employee) has put into building OYO Hotels and Homes as the world’s fastest-growing chain of hotels that is currently present across 800-plus cities in 80 countries.
What's your morning routine?
I prefer starting my day early and going through the emails and WhatsApp messages received from different teams from across geographies - India, the U.S., China, Europe. This helps me in keeping up with the teams and assisting them with strategic decision making and effective time management throughout the day. I regularly do yoga early in the morning for physical wellnes
What’s the most interesting thing about you that we wouldn’t learn from your resume alone?
I like learning new languages as it helps me understand the local nuances of geography. Currently, I can communicate in English, Chinese, Hindi, Telugu, Haryanvi and Marwari (the local language of the community I belong to). With OYO’s global expansion, I am truly looking forward to expanding my horizon with respect to learning new languages.
Describe the setting where you do most of your work.
You can find me working out of the OYO offices in India (Gurgaon), Shanghai, Beijing and the U.S. In the middle of the office, working with my passionate and mission-driven OYOpreneurs towards making a difference. I sincerely enjoy working together with all my colleagues as a part of a single-directional plan. We are ardent believers in putting our heads down and executing.
It has been a while since the OYO-Airbnb deal has been announced. How has the collaboration shaped up? What opportunities did it create for OYO?
We are happy to have Airbnb as an investor and our partner. Airbnb’s strong global footprints and access to local communities open up new opportunities for OYO Hotels & Homes to strengthen and grow. Thousands of OYO’s vacation homes across the globe can now be listed on Airbnb.
How has FY19 been in terms of numbers? Were you able to notch revenues (India) of over Rs 1,400 crore as estimated? What is your revenue target for FY20?
Our financial results for FY2018-19 are yet to be filed with the Registrar of Companies. However, CY2019 has been promising. We are happy to share the company has seen a 4.4 times year-on-year growth in revenue in June 2019 (vs June 2018), with over 1 million rooms under management across hotels and homes globally and over 270,000 rooms in India alone. We also had a stellar 2018 in India with more than 1,72,000 fully controlled and leased keys as at December 2018 with realised value run-rate of $1.2 billion.
By when are you eyeing profitability?
We are not profitable at a group level as we have been investing in technology, talent and hotel infrastructure improvements in our buildings. The losses as a percentage of NRV (net realised value) have been on a steady and significant declining curve.
Could you shed some light on your overseas IPO plans?
We are focused on our mission of making #LivingTheGoodLife a reality for over 3.2 billion middle-income people around the world. That is our focus in the foreseeable future. We don’t have any further comments.
How much cash are you burning now? Which are the most cash-heavy markets in your kitty?
I would like to clarify that unlike e-commerce businesses, we do not spend a lot on customer acquisition. Our investments are mainly in three areas — capex, talent acquisition and technology.
You bought back shares worth $2 billion from Lightspeed and Sequoia? What led you to this move? How much has your stake in OYO increased to post this buyback?
The company’s strong growth, improved margins, superior improvements in customer experience gave me the confidence to take this decision. The $2-billion primary and secondary management investment round is spearheaded by me with support from financial partners, subject to regulatory and shareholder approval. The capital will be utilised to maintain our strong market position in India and China, strengthen our footprint in southeast Asia, Middle East, growing our business in Europe and the US while creating a niche for our vacation homes business globally.
You seem to be on an international expansion spree. Which other countries are you looking to enter further in the near future? Any plans to raise further funds to propel your foreign foray?
Currently, we have over 23,000 hotels and 125,000 vacation homes across 800 cities in 80 countries globally. There are many countries which are still on the drawing board and we are evaluating the business potential. At the moment, we are continuing to grow our footprints in SEA, ME, Europe and the USA. We have a healthy and strong balance sheet and are committed to continue making forward-looking investments. We have nothing further to announce at the moment.
Since you started, what are the three things about India that have changed positively? Tell us something about India that needs to change, but hasn’t?
Among the three things that I feel have changed very positively is the hunger of young Indians. That has changed disproportionately. A few years back a lot of young Indians used to say they need this job or I need to do this better. Recently, I was at one of our call centres and I was speaking to our young Oyopreneurs. I asked, ‘What do you aspire to do in the next ten years?’ One of them said, ‘Ritesh, the company that you’ve built — I want to build a company a little bit bigger than that!’ So, the aspirations and hunger of young Indians are world-class and they aspire to be number one in the world. The second thing that I feel is very good, specifically about young India, is that they understand the western world, but at the same time, are genuinely proud of being Indians and of their Indian heritage. There is an Indian dream that young India has, which is not the same as the dream a young American would have. And, the third thing which is very fascinating to me is how technology and the Internet has really changed our lives. I feel India has done really well on these three fronts. The one thing that I would like to change further is fundamentally the ability to continue to question the system of education and the way it has been run for many years. When I dropped out of university I was asked questions. But in the Thiel fellowship, one of the things we sign in the contract is that we would never let the university interfere with education. Education is important, but it may come from anywhere, rather than the formal education system. I feel that the formal education system is great but it should provide avenues and formats to learn in a manner which is not just unidirectional.
What is Ritesh Agarwal’s leadership style? How do you create Oyopreneurs? How do you work with a bunch of talented people and leaders?
More often than not, when you start your business, there are two kinds of people that you end up recruiting. Either the ones that you have worked with earlier or the ones that you went to university with. Unfortunately, I had never worked in a professional organisation before and I did not go to a university. So the only friends I could have invited were my high school friends, who were not as excited about this opportunity. So I had no choice but to bring high quality, top-notch professionals. I call myself the Chief Clarity Officer (CCO). So my job is to say what is the direction and what are the things we are not going to do. After that, I’m not the best technology guy. I’m not the best finance guy. I’m not the best sales guy, so on and so forth. What I’m good at is telling people what not to do and then bringing the best people to do the job. So in the last six years, I have brought in probably 16 key leaders who have directly reported to me. Now 15 are with the company. The 16th person is also with the company, but has now become my boss. So he’s on the board now. Till now all 16 are with the company. All of these are highly trained professionals coming from very successful backgrounds.
Are there any expectations you have from the Budget as an entrepreneur and as a key player in the hospitality sector?
I’m sure the government is looking into it. This is one of the most important Budgets, especially since we are at such a critical juncture before the big dream and aspiration of getting to be a $5=trillion economy that our country aspires to be. I think there are a couple of things I would like to talk about. The first one is, as you can see, in our country the domain of startups is one of the places where there are more and more foreign direct investments (FDI). There are more and more infrastructure investments that companies like OYO and other companies have done. Secondly, as our country grows, infrastructure investments will be the single biggest factor for long-term success. These are things that people don’t appreciate in a natural manner.
I know that you’ve set a 2023 target for OYO becoming the largest hospitality chain. But tell us what we should expect from OYO in 2020?
The year 2019 was very important for our company. We started in 2019 by being primarily an India-based company with over 95 per cent of our revenues coming from this part of the world, and with close to 2,00,000 rooms under our belt. We start 2020 with million-plus rooms under our management. Now we are one of the largest hotel companies in the world, hosting hundreds of thousands of customers every day at OYO Hotels and Homes in more than 80 countries across the world. So when I look back at 2019, I feel very thankful that I was able to create this big impact, create the opportunity to serve so many customers, asset owners and to ensure that more than 90 per cent of our revenues in our mature market still comes from repeat customers and via word of mouth publicity, rather than from only new customers. I will break down my answer into parts. The first is for our customers, then for our asset partners and then our team and then, society at large. Customers are at the heart of every decision. We genuinely feel that our customers need three things — better services, better locations and better prices. If we get these three things consistently right, we will create value for our customers. The second is for our asset partners. We are actively working with our OYO open programme to ensure that we can bring back the trust of that small percentage of asset partners who’ve had problems in the past. We want to ensure that all our asset partners continue to appreciate, love and believe in the OYO mission.
How important is the China market for you?
Clearly, India and China are our biggest markets across the world. Of course, Europe and the United States are our fastest-growing markets. China is one of the most important markets for OYO. I think we are one of the leading hotel chains in China, hosting hundreds of thousands of customers every day. We believe that the middle-income Chinese customer has an aspiration of a better lifestyle, better experiences, but without hurting their pockets. And this is what we’ve been bringing to our Chinese customers, which will continue this year too
You’re a product of the Internet-led consumer economy — entrepreneurial, asset-light and experience-heavy. Why did you buy hotel assets in Vegas?
OYO manages roughly 46,000 properties worldwide. So these are one or two in scale. OYO continues to remain 100 per cent asset-light — meaning even in these assets, OYO’s contribution to the dollar share in the final acquisition is probably less than five per cent. The primary investments came from third-party partners. For example, in the Vegas asset, we had a couple of shareholders, a couple of debt providers and so on, who brought the asset to OYO in the process. We are very small capital providers.
And how does that fit into the overall plan of OYO Hotels and Rooms?
The primary intention for OYO in these assets is economic. If we look at the total fees OYO will earn as the business and revenue partner in these assets for the next 20 years, it will be so much more than the capital investment.
You took on a huge debt and you bought back your shares. Tell us a little bit about that.
I have always believed in playing a really long game. So I was provided multiple opportunities to do a potential secondary transaction over the last few years saying, ‘Ritesh, why don’t you sell some shares of yours?’ I have never sold a single share of mine at OYO no matter what, primarily because my focus has been to do the right thing and be a partner and an investor in my company for a very long time. This was the time when I had the opportunity and I could gather the resources to be able to get the capital to be able to invest in OYO for a very long term and my view is that I am so committed and excited about the upside and the opportunity for OYO
And what message do you have for other entrepreneurs?
Speaking of a message ... it is just that fundamentally, I don’t expect it to be the case with every entrepreneur. I understand and appreciate that this is unique, but at the same time what I do share is that every entrepreneur thinks about their business in a very long-term scenario. This just feels like something that is very straightforward.
Are you over-leveraging the OYO brand?
I think the one thing that should be aptly clear here is that our core business is hotels and homes. These are the two areas where we continue deploying a significant amount of our time, capital and resources. So this is the first important clarification. Now, how does OYO fundamentally think about any business it should be in? We think about it as a combination of things — does it fundamentally follow the four capabilities that are unique to OYO? First is the ability to use technology effectively. To be able to predict at what location and at what price we should be able to get into assets. That is supply acquisition. The second is a renovation, or the ability to renovate assets ‘quick and good’. The third is operating those assets with the highest efficiency while earning the appreciation of customers. And the fourth is distribution/yield management. That is how you bring enough consumers into the asset. Now that being said, at this point in time, there is a massive opportunity just in our hotels and homes business. So we are going to be very focused on these two areas.
Who does Ritesh Agarwal look up to?
Among the few people I look up to is Elon Musk. He’s really been one of those entrepreneurs who has put all his capital behind the business and has built such an incredible company. Bill Gates is someone I am personally very inspired by given how he has built that business and also given back to society. In India, someone like Uday Kotak, who has built a fantastic business in such a short period, and has made Kotak a powerhouse of Indian banking and economy.
What went wrong with Oyo? There have been job losses, allegations that Aditya Ghosh is on his way out and about fake inventory, among other things.
I want to address each of these issues separately. Specific to restructuring, we have operated with a fairly straightforward perspective. We build business with a long term view, reflect upon what went right, and what did not go right. Whenever we do something right, we keep doubling down. Whenever there is something, which can be improved, we reflect and ensure we make improvements. As a part of this process, Oyo did see that as we had grown rapidly in 2019, we had presence in over 80 countries, revenue grew multi-fold, margins improved. This is good news, but it was time to reflect upon what could be improved. In a few specific organisations (inside Oyo) it was important to resize the organisation to continue to grow rapidly. Organisations tend to delay change, or do the same thing repeatedly over a long period of time. We believe that it is good for Oyo and its team members for this to happen one time. This is a one-time exercise and most of it has been completed, and the remaining will happen over the next couple of weeks.
Why was this restructuring required? Why were those employees hired in the first place, and why do they need to go now?
We have always acquired high-quality talent. This is the first time a major restructuring is happening at Oyo. We had two-three important learnings. The first one is sustainable growth. For the first time we realised that there are specific suburban clusters we should invest more in, and there are clusters we need to invest less in. The restructuring was a result of that realisation. Second, how do we build stronger customer trust? There were teams focusing on servicing and our partners were field based. We are centralising our teams. Third, as Oyo has grown in multiple parts of the world, we believe that now we have sufficient technology and infrastructure to centralise roles to build shared services. Three of these have two perspectives in common. The first one: the organisation grew as a large global company. And with scale, we learnt about some of these potential areas where we had gotten a little ahead of ourselves, and had to restructure.
So, will you do more hiring, and in which areas?
The new hiring will be more focussed on engineering, design, software and data science, in the future. But, in the new future we would like to stabilise the organisation, and get to the outcome and plan of 2020.
How do you plan to stabilise the organisation? There are so many aspects to consider: cultural, governance, unit economics and more.
On the culture side, Oyo has gotten here because of its team members. I have personally visited clusters and done townhalls, and explained our plans. On the supply side, we have brought in 100 hotels in the month of January that had either left us or were asked to leave for various reasons. In China, we have ensured that we have brought in 8,500 rooms in that context. We are able to bring back our partners. In the US, in the fourth week of January we signed more rooms than we have ever signed. We are able to see that people are understanding this. But, a good company is not built on a month or two months of success. This has to be a consistent effort.
What about gross margins?
We are seeing an increase in gross margins, because of better site selection, and are making sure that our contracts are very seamless with our partners, so that we can make our fare share. Our gross margins have trended between 15–25 percent. We will announce our financials shortly, where you will see our revenue and EBITDA.
Will it be better than last year?
Markets where we are in our first year of launch are our cost markets because you have to hire the team and properties, and from the second year onwards the EBITDA keeps improving. On a year-on-year basis the mature markets will continue to improve.
How do you manage better governance at Oyo?
Oyo brought in an independent director on board, Betsy Atkins. Betsy has been an investor in Yahoo, Ebay, and has been on the boards of some of the most successful American companies, like Volvo, Nasdaq, and Baja Corporation. Gerry Lopez joins us on the board as well. Gerry was the CEO of ‘Extended Stay America’, an extended stay hotel brand in the US.
Speaking of the board, is Aditya Ghosh moving on, as some news reports suggest?
Aditya is a fantastic leader, and we have worked together for a full year. He has been extremely valuable to the organisation at various levels, which involves his consistent presumption of safety and security, his ability to bring new age revenue management systems, and various other efforts. Due to this, we believe that Aditya’s value to Oyo can be further expanded from India to becoming a global organisation support. Aditya is not supporting Oyo passively, but he is supporting Oyo actively. He joined our board meeting just a couple of weeks ago
But reports suggest that Aditya doesn’t come to office.
Oyo has six offices in Gurgaon. Aditya comes to one of the offices, so the ex-employee who commented must be talking about their office.
How important is governance for you? This is a question that is being raised on all SoftBank companies, including Oyo.
For me and my team, governance is an absolute must. There are three important parts to it. The first one is, and we have always taken market leadership in that, in bringing in independent directors. Second: ensuring that the founder doesn’t sell shares. I have never sold a single share of mine in the company. I have rather invested more capital in the company. Third: making sure that a large amount of decisions are board driven in the company. It is important to have a management, which is broad-based. If you see Oyo beyond Ritesh, there is a strong team of leaders who know their organisations and can drive the results.
Oyo has been written off multiple times, and now it is being compared to WeWork.
Our company has grown with a great amount of attention around itself. Every time this has happened, we have only become better with it. It is very easy to say, “he says, she says” and claim that these allegations are true or untrue. We make sure we over communicate, like we are doing here. But, instead of getting bogged down, we take the learnings from those and try to improve. Because no company is perfect. Oyo is not perfect, no company is. We want to make sure we make Oyo a better company every day.
Is Oyo here to stay?
We have created a lot of value. In India, if you wanted to stay in a good quality hotel in Mumbai for less than Rs 2,000, it was almost impossible to do before Oyo came. If you wanted to stay at a place, which is of good quality, at the right price point in South East Asia, if you wanted a room in Europe for 100 EUR a night, these are all services that consumers really appreciate. Oyo served 40 million families last year, and that’s growing as we speak.
There are allegations that there is fake inventory on Oyo. What are you doing about that?
We are subject to significant amounts of audit as an organisation. Oyo continuously audits, not just specific operation metrics, but also financial metrics, by world class organisations. Customer experience is very important for Oyo. 99.5 percent of our customers have a seamless experience with Oyo. But, 0.5 percent is a very bad statistics, and we are working upon that. We will build check-in as a delight, and that will be communicated to hotels on our Oyo app. We are experimenting with that feature with a smaller group of customers right now.
Do you have pressure from SoftBank to become a profitable organisation?
Oyo is a management-driven company. The management drives the company with board oversight. Oyo had submitted the business plan to the board of directors some time back. Our board’s opinion is that we consistently deliver and that we shouldn’t get distracted. There is no change that our company has seen in the last few months, depending on what has happened.
Businesses say we can turn profitable whenever we want but scale comes first. I am sure this is the case with OYO as well. How does OYO’s profitability path look like?
Profitability is something that is very much on our radar. We are profitable at a building-level. We have been investing in technology, talent and hotel infrastructure upgradation. On a Y-o-Y basis, we have seen that not just our buildings are operating profitably at the building level but our EBITDA has also improved by 50 per cent (on a Y-o-Y basis). We are thinking long term and are operating with a clear path of operating efficiency. The losses as a percentage of Net Realised Value have been on a steady and significant declining curve. This year, the company has seen a 4.4x Y-o-Y growth in revenue in June 2019 (versus June 2018), with 1 million rooms under management across hotels and homes; with over 200,000 rooms in India.
Do you think, because of the growth so far and vision ahead, your business model is invincible now, much like what companies like Nokia or Kodak or Yahoo perhaps also thought?
From my perspective, as an entrepreneur, one is wired to take risks. You, of course, need to be smart and take calculated risks, and then do all you can to make it worth the risk. At OYO, we certainly don’t rest on our laurels. For us, it is still Day 0 and we have a long way to go. There is always room for improvement in experience and it can be achieved if one listens to the customers carefully. We place our bets on technology and innovation. While we are the first hotel chain to develop in-house technology platform and operating systems, including a suite of over 20 apps for managing all aspects of operations, we are always on the look-out for identifying and adapting to the next big thing. Case in point – IoT switches or evaluating greater use of AI as well as VR or AR for audits and hotel transformation.
As an individual, what thought process you go through during testing times such as hotel partners agitation, associations questioning the company’s intent, police case etc.?
That’s a very interesting question. When you scale up your business there will invariably be small groups of vested interests unwilling to see the new ground reality. If you see the history of entrepreneurship in India and elsewhere globally, there are many examples of entrepreneurs navigating their way through these challenges. We will not bow down to the unreasonable demands of vested interest groups, a majority of which are owners running competing properties, instigating and intimidating independent hotel owners associated with OYO, and creating false public uproar or arguing against transparent pricing and quality standards introduced by OYO that can fundamentally improve customer experience.
So how do you look at addressing these problems?
At OYO, we often refer to this as an occupational hazard, that one has to work with keeping in mind the larger picture – 18,000+ hotel owners in India alone choosing OYO and growing with OYO. This year alone, we have had over 642 hotel owners, with hotel sales over Rs 1 crore each, a stark increase from their earnings before becoming a part of OYO. So my personal thought process is to treat the issues based on their merit. The OYO Partner Engagement Network (OPEN) is a great example of us spending our energies on identifying ways and initiatives that can add value to an OYO hotel owner’s experience. I don’t let needless speculation deter me or my team from pursuing our mission.
Culturally, the business has to be flexible according to every new market it enters. How do you ensure that at OYO?
Our teams across the international geographies have observed local nuances with respect to the hotel industry in each of the countries we are present in. These observations help us in highly localizing and personalizing the experience for our guests. For instance, in the Philippines, most hotel rooms also keep a copy of the Bible in the drawer/on the table in the rooms for guests. In Indonesia, most hotel rooms have the Qibla sign also known as Arah Kiblat in the local language Bahasa. As Malaysia hosts a lot of Indian tourists, the hotels provide information on the nearest Indian/South Indian restaurants.
Do you think you have got everything right at OYO so far? Did you ever compromise on growth for anything?
Nobody or no company in this world can say they have got everything right and it has been a perfect journey. In 2015, there was a time when we had a lot of complaints regarding our customer service. We took the hard decision of stopping growth for four months, no matter what our shareholders said. And I feel it was one of the best things we did. We focused on identifying key problem areas and finding solutions that are scalable. Today, as we scale across 800 cities and 80 countries worldwide, we adopt a problem-solving approach, identify the opportunity in the middle of every potential difficulty and cultivate cross-functional synergies to surmount obstacles.
1. The whole idea of a tech startup disrupting the hospitality sector – how did it come about? Were there any early signs that there is a great business model which strengthened your resolve?
While I was travelling across India on a shoestring budget and had to lodge in some of the not so great guest houses, I realized that I was looking at the wrong end of the rope. The problem wasn’t the lack of availability of budget hospitality options; it was that the majority of unbranded hotels lacked the minimum baseline standards of quality and service delivery. This meant that the solution wasn’t merely aggregating hotels on a website; it was to consolidate and upgrade the fragmented segment and ensure the delivery of predictable, standardized and affordable stay experiences for travellers across price points. I wanted to fix this problem by using technology and talent. That’s how OYO was launched in 2013, with the promise of delivering predictable, affordable, anytime-available stay experiences for travelers – a 100% ‘Made-in-India’ business model and the first-of-its-kind worldwide. Unlike a booking platform or a hotel room aggregator or an online travel aggregator, OYO Hotels & Homes is a chain of leased and franchised hotels just like all the other hotel chains world over including the Taj, Oberoi, Marriott etc. Today, OYO Hotels & Homes is South Asia’s largest, China’s second largest, world’s sixth largest and fastest-growing hotel chain of leased and franchised hotels, homes & living spaces. I would like to state that OYO is not a room aggregatorOYO is not an online travel agency. OYO is not a certification company. OYO is not a marketplace. OYO is a hotel chain. OYO’s mission is to upgrade all forms of real estate and thereby provide quality living spaces to travelers around the world. OYO today host guests from around the world in over 20,000 franchised and leased hotels and over 700,000 rooms, and more than 45,000-holiday homes, adding over 70,000 rooms every month, globally. With the @Leisure Group joining the chain, OYO today has footprints in more than 800 cities across 85 countries including UK, US, India, China, Malaysia, Nepal, the UK, UAE, Indonesia, Saudi Arabia, the Philippines and more recently Japan. Every night almost 450,000 heads rest on a pillow in an OYO, a testament to the impact we are creating globally.
We’d like you to please share your thoughts on the lifecycle of data. Data – collection, filtering, processing, maintaining quality, drawing insights, privacy etc. What kind of best practices do you have?
The way we look at it is that business and data privacy must go hand in hand. It’s not about choosing one over the other. Companies in India have realized the growing importance of data privacy and the evolving regulatory environment around it. Things can only get better as greater clarity emerges on the regulatory front. Incidentally, I am also the Chairman of the CII National Committee on e-commerce and the committee comprising 70+ members from across the spectrum shared some important suggestions wrt data privacy, localisation, etc with a view towards ensuring we are able to encourage innovation and industry while establishing the necessary safeguards when it comes to all things technology. From a customer standpoint, data science and analytics help us improve the guest experience at every step. Through AI and machine learning, we look at multiple metrics from time of the day, weather, location to local events in order to be able to learn more about what kind of a room a customer prefers, and what are the search results the customer is most likely to appreciate. Data science and machine learning help us understand guest behaviour – both preferences and implicit behaviour, how they interact with our search results and app and the interactions they carry out while staying at our hotels. For eg, if you prefer a certain kind of hotel and amenities, relevant hotels matching previous preferences will appear on top of the search results.
3. Data tells a certain story. At times it may go against the common wisdom. How do you galvanize resources and act? Especially, if there’s resistance.
At OYO Hotels, I call myself the chief clarity officer. Which means that my job is to share what to do and advise on what not to do. More important is, what not to do than what to do. So setting out the principles which enable everybody to decide how they can run their jobs. I always keep myself in the customer’s shoes and ask if it will add value to their experience. That makes it very easy for people to focus, and that focus has the means of creating value for customers and asset owners alike. At the core of it, we have to be solving a problem in a sustainable and scalable manner.
4. Funding – your advice to young entrepreneurs. Especially on seeking Patient Capital.
While you are in the process of coming up with a truly innovative solution, it is essential to keep an open mind. One should accept failure, and be willing to learn, unlearn and relearn again. I have always believed that an overnight success story is backed by at least five years of dedicated hard work and perseverance. Often, it is not the most complex solution, but the most creative one that can help solve a problem. The importance of innovation cannot be overstated. For any business and start-ups, in particular, it is vital to inculcate the spirit of curiosity and lateral thinking to succeed in the long run. At times, we tend to get carried away by what we think are good ideas, but in reality, they may not serve the customer’s purpose in any way. It is crucial that we understand the customers’ requirements and direct our efforts towards providing the best possible solution to their requirements.
5. Managing phenomenal growth. Your success has now acquired legendary status but behind all this glamour there must be a definitive strategy which works perfectly. As organizations grow in size, how do you manage scale and yet retain its soul?
The biggest differentiating attribute is OYO’s technology driven approach to building efficiency in the hospitality space with its full-stack fulfilment led model. We are investing heavily on strengthening our capabilities both in the form of technology, talent and network, while creating an ecosystem of efficiency through which we are able to deliver higher yields for our asset owners. We have invested thousands of crores in capex, appointed hundreds of GMs to oversee operations and customer experience, created job opportunities for over 100,000 people in India alone and set up 26+ OYO Skill institutes for hospitality enthusiasts. On an average, over 75% of hotel owners associated with OYO Hotels has seen an increase of 20-30% in occupancy, a 2.5X jump in RevPar and significant jump in profit, for every asset operating as an OYO branded building. Also, currently 1 out of 6 asset owners has more than 1 asset with OYO – this is a testimony to the confidence of our asset owner community on the brand. The churn rate we see is less than 1% on an average annually which is by far the highest retention rate in the hospitality industry. In the last five years, we have seen a 4.3X Y-O-Y growth with realised value run-rate of $ 1.8 billion (annualised). We have made this possible by investing in four key competencies in the last five years:
6. Compliance & Regulatory – your views. What kind of a regulatory environment would you want for Digital India – please can you share your specific thoughts.
What we are currently witnessing in terms of the startup ecosystem in India is phenomenal. The country is right at the cusp of a seismic offline to online shift, especially in tier two and three markets. There is a tremendous young demographic with a potential to impact and transform these opportunities. We have young people who are looking to build their own products and companies than just aiming for job-security. India is a great place for budding entrepreneurs. The market size is enormous; significant problems waiting to be solved. The start-up environment here is exciting and transformational. Our Government is committed to supporting the start-up ecosystem through funding, regulatory and logistical assistance. There are incubators, venture capital firms, and even mentors who dedicate their time and resources to help aspiring entrepreneurs reach their goals. At the same time, we should further aim to build a concrete foundation for the youth by making them self-sufficient. Schools should look at providing students with opportunities to identify real-life problems, provide them with vocational training to expand their horizons. Encouraging them to think out-of-the-box, supporting innovative ideas and solutions through formal funding or recognition platforms are just a few ways to create an entrepreneurial culture from an early stage in education. Being fearless opens unexplored horizons, and that’s what students should learn at a first stage.
7. What’s passion? Can it be developed or is it an in-born quality? How do young entrepreneurs manage to remain in a constant state of energetic living 24/7/365? Is there anything at all called a work-life balance?
Having a passionate team and being surrounded by individuals who embrace your passion as theirs is extremely important when it comes to building a company that sustains itself for years to come. I believe it is essential to develop and sustain a mission-driven organization where the passion and interest of employees stay intact as the company grows and diversifies. I am an ardent believer that the culture of an organization is the foundation for the success of the company. It is crucial that you create an ecosystem where the employee’s passion, innovation, and perseverance find a home and take them ahead on the career trajectory. It’s sacrosanct that both the employees and company grow at the same pace and touch greater heights. At OYO, what I have observed is that our employees who we call OYOpreneurs therefore, predominantly millennials, don’t just want to work for two square meals a day, but wish to be self-starters and trendsetters. They want the freedom to execute and seek the trust of the organization in their judgment.
8. You are an inspiration to millions of people – who has been your inspiration and why?
The Thiel Fellowship is a school of learning like no other. I was the first resident Asian to be selected and graduate from the Theil Fellowship and was mentored by Peter Theil himself along with other visionaries. I learnt so much from spending time with a number of US-based start-ups, famed Silicon Valley entrepreneurs, investors, thinkers and visionaries. The mentorship I received and the quality of ideas I was exposed to were easily at par with the best business schools. I got to learn everything while actually pursuing my dream. Learning by doing, that’s what Peter Thiel wanted each of us to focus on. Building and scaling a disruptive start-up, while simultaneously pursuing the fellowship program, were two intertwined journeys that were also life-defining experiences for me. Some of my biggest learnings were – ● Start small, nail it and then make it big ● Be humble, be focused and have grit ● Focus on your organisation’s culture, recruit only the best ● Look for details and keep the big picture in sight ● Stay agile, but always remember your mission ● Set processes early on, challenge the status quo ● Work with investors you respect ● Gun for a great product, everything else will follow The most important learning however was understanding how to think big and scale a business, and the importance of believing in my ability to create an impact. As entrepreneurs, we are wired to take risks, we are eternal optimists and I learned how to channelise this in the right direction.
9. Your leadership mantra and big bets for the future.
I learn something new from my teams every day, and their conviction, hard work, and innovative thinking help me in enhancing my own skills and achieving the business goals. Every day we are tirelessly working towards changing the way people stay away from home by creating beautiful living spaces. Each one of us at OYO profoundly understands the value of hard work and that there’s no shortcut or substitute to it. We are believers in the power of passion, perseverance, and conviction. For me success is elusive, and it’s crucial to keep setting benchmarks in whatever you are doing. It is not the end of the road once you achieve your goal. I like to keep challenging myself. Once the goal is achieved, the next step isn’t to stop but to aim higher. In the line of hospitality, looking at the positive feedback from customers as well as the happiness of the employees and asset owners is what gives me the most satisfaction. Also, I aim to keep innovating for my customers. Learning to unlearn and learn again is my mantra of success. Looking back over the last 5+ years, I believe our passion, perseverance, and grit helped us pivot to where we are today. We have now emerged as South Asia’s largest, China’s second largest, world’s sixth largest and fastest-growing hotel chain with over 20,000 properties having 700,000 rooms across 24 countries, and there is a lot more to achieve. I am confident that we’ll be the largest hotel chain in the world by 2023.
10. Hypothetically speaking, if there’s one area that you want to make a massive difference – from a CSR standpoint.
I am happy to share that we have recently launched OYO Reach which is our CSR programme for promoting sustainable tourism. The programme has commenced from Shimla where 83% of OYO hotels in the hill station have been equipped with rainwater harvesting systems. Implementation of this technique will lead to enormous savings of 81,000 litres of water approx. in the hill station. We have also recently donated essential supplies as a company to those affected by Cyclone Fani in Odisha. Through OYO Reach – our CSR assistance program, we are aiming to provide necessary technical and financial assistance to OYO partners and stakeholders across the nation, in a wide variety of projects and activities. We will also be focusing on skill development, economic opportunity creation along with sustainable tourism.
Tell us about the journey of OYO.
I launched Oravel—a listings platform for hotels in the budget segment—in 2012 after strategizing for about 6 months. In 2013, this became OYO, offering standardized accommodation. OYO created and prescribed standards, ensured property transformation to meet those standards, and then marketed the accommodations to customers under a unified brand umbrella. I still remember how skeptical the first few hotel partners in New Delhi/NCR were when I pitched the model to them. The nascency of the concept worried them. Once we had established the proof of concept in Gurgaon they warmed up to it and we expanded to other major cities in 2015. And today we are in more than 200 cities in India, Nepal, and Malaysia.
What made you put so much faith in what you set out to do?
It was a combination of insights from my own travel experiences and a deep desire to do something meaningful. The hotel industry in India, especially in the budget segment, was weak and I identified an opportunity to do something to fulfil that market need. When I first set out to realize my dream, I was trying to create an Indianised version of a listings site—an Airbnb for budget hotels and bed-and-breakfasts that didn’t have access to strong marketing channels. The objective was to make these properties discoverable and give customers access to budget-friendly, clean accommodations. The business model has pivoted since then, and we have moved on from being just a listing platform to the largest hospitality company in the country, bringing good quality and affordable living spaces and experiences to over a billion people.
Ambitious targets or achievable targets—which are more effective?
Early in 2015, just before our expansion phase, around 50 of us were gathered in a room. We decided to initiate a project in New Delhi to set the expansion playbook and tone across the country. I went around asking my colleagues what they thought would be an ideal number of properties that we should partner with each month and bring under our OYO brand. The answers that came back were 5, 10, and 15, based on our previous achievements. We finally set an ambitious target of 100 properties and overachieved with 110 properties in the first month. Now I always tell my team to set ambitious targets. We wouldn’t be here if we hadn’t.
What determines the success of a new venture?
The leadership team is the backbone of a startup. Having the right leaders and partners makes all the difference because how an idea is executed matters more than the idea itself. Having a core group that the founder can rely on, be confident of, and shape a vision with is the single most important determinant for success.
What are the most crucial attributes for a founder in the early stages of a startup. What about as the company matures?
A founder should be willing to be hands-on during the execution, especially in the early days of a startup. It’s important to know how things work, ground up. I used to multitask as the call center executive, housekeeper, and ops auditor amongst other roles. As the startup scales, the founder should be able to do a skills assessment and identify and partner with the right leaders to support him and take over specific responsibilities. His role then is to have clarity about where he is headed and the direction the company needs to take for the long term. As OYO grew, I knew I had to partner with strong leaders to head operations, growth, and finance. They act as sounding boards and able partners to execute the mission. Their insights on finance and operations are especially valuable in supporting my role as the founder and CEO.
What in your view is an “entrepreneurial mindset”?
For me, it is about having a passion for solving a big problem and leaving a huge impact. Once you have that, everything else falls into place. You take ownership, build conviction, and build capabilities to transfer that belief to investors, employees, and customers. You must be willing to stretch out of your comfort zone, take risks, and be emotional (in a good way) about your venture and the stakeholders involved.
What are the three most important skills for a founder?
Patience, perseverance, and conviction. An ability to stay the course, collaborate and steer diverse stakeholders towards a common goal. You must have a long-term mission and be willing to work really really hard to get there.
Any regrets about not finishing college?
I have no regrets about not completing my college education. My partners in the leadership team complement and supplement my capabilities. I am inspired and guided by what Mark Twain said: “Never let college interfere with your education.”
How challenging is it to get a “Theil Fellowship”, wherein you decided to drop out of college to build your business?
Can you talk about one experience which has proved to be insightful for you?
In 2016, for 5-6 months, we just said that it’s okay to not add assets, to not grow revenues... until we get our consumer experience benchmarked to the highest level, that’s the wrong long-term investment to make. Those were big learnings—your biggest investor, decision maker and designer is the customer. Even today, we are not at our best. But every year our promise is we are going to continue to learn and be the best in comparison to anything else.
How do you monitor the distribution of Oyo properties?
Every asset goes from an average of 20-25 percent occupancy to 70-80 percent occupancy within 45 to 90 days of joining the chain. This is where we have invested all our capital in the last four years. We have not invested so much on discounting or owner subsidies and so on. We did that when we had to compete in 2015 but since 2015-end, we only focussed on competency investments.
What are the most consistent features of hotel industry?
In our industry, new age technologies are going to keep disrupting what the current norm looks like. But there are three things that will not change—customers will still expect good locations, good price, and good quality. We think if we can get these three basics consistently better than anyone else, we will do a decent job. There will, of course, be many small journeys in this one mid-term journey, but all of them are worth it.
Did you always dream of making it big one day?
Which entrepreneurs were your inspiration?
What was the turning point of your life as a struggler?
What is Thiel Fellowship all about?
What are three things that you have learned as an entrepreneur?
OYO expands international presence, enters Sri Lanka
Hospitality firm OYO has entered Sri Lanka as part of its expansion plan in South Asian market, sources said Thursday. Currently, the company has presence in seven countries including India, China, Indonesia, Malaysia, Nepal, the UK and UAE. “The company launched operations in Colombo, Sri Lanka, earlier last month with over 10 properties,” sources aware of the development said.
How did OYO Rooms come into being?
As a student I travelled extensively across the country on a shoestring budget. That’s when I realized that there is a serious dearth of budget but high quality hotels in India. As a traveller, I am spending hard-earned money but I don’t even know whether I will get something as basic as a clean bed and linen, or hot water in the bathroom. Things like Wi-Fi were completely out of question if I was making a budget trip. This was a huge contrast from the experience that expensive hotels provide – where guests always know that the basic amenities will be of a certain standard that they can rely on. My personal experiences led to the idea that if the same standardized experience can be offered at a pocket-friendly price, travellers will never hesitate to book and stay in a budget room. This idea led to the birth of OYO Rooms in 2013.
What is the USP of OYO Rooms, what makes it stand out?
OYO Rooms offers standardized high-quality rooms from Rs. 999 onwards, and all of our rooms are equipped with the basic amenities that one expects in a good hotel such as a clean and comfortable bed, air-conditioning, clean attached bathroom, TV, WiFi, and complimentary breakfast. We are completely redefining the meaning of a budget hotel by offering a fantastic stay experience at down to earth prices.
What advice would you give to the young and budding entrepreneurs out there?
There is no right age or time for you to start your own enterprise or to chase your dreams – the best time is now! If you have an idea that you genuinely believe in, and if you think you will find as many takers for your idea as you need to build a business, my advice is to go for it. Do not let thoughts like “I am too young” or “I don’t have any experience” come in your way. I have always believed the right time is when you are under the shower & you can’t stop thinking of an idea. Also, do not fear failures – they are a stepping stone to success. Lastly, if you don’t risk something, you don’t deserve a reward.
OYO to buy back Rs 50 crore worth shares from existing, past employees in January
OYO Rooms has said Friday that it would buy ESOPs from 250 of current and former employees worth nearly Rs 50 crore (in the first round) in January 2019. The buy back program would be carried out through a secondary acquisition programme led by one of the company’s existing investors, OYO said in a statement. The ESOP liquidity programme is expected to be worth nearly $150 – $200 million over the coming few years, company said. Earlier this month, company’s founder Ritesh Agarwal said that he is aiming to turn the hotel chain into the world’s largest by 2023 as it expands into newer countries in the Middle East, South East Asia and Europe.
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