Ritesh Agarwal

Kept our eyes and ears close to the ground”

At 19, Ritesh Agarwal disrupted India’s hospitality industry when he founded OYO in 2013, an aggregator for budget hotels. Gurugram-based OYO has seen nothing short of a meteoric rise, becoming the fourth-most valued unicorn in the country. Despite dropping out of college as a teenager, Agarwal rose to become the world’s second youngest self-made billionaire, after American reality TV personality and make-up mogul Kylie Jenner. The SoftBank-backed firm has a network of 1.58-lakh hotels across 35 countries, including India, the U.S. and the U.K. OYO, which is planning a public listing over the next few months, plans to raise about $1.5 billion at a valuation of $14-16 billion.

The Idea!

What drove the inception of OYO was our intention to create a thriving economy for small hotels and holiday homes, so that they could earn substantially more. We also wanted to provide the Indian middle-income consumer with trustworthy, affordable, convenient, easy to book experiences. This was both a challenge and a huge opportunity for us, and we had conviction in our ability to find a solution. It was this conviction that fuelled the idea further.

The challenge and complexity in the idea made it even more exciting. How do you go to a market that is so fragmented and then solve the problem? But the initial team and the platform’s first hotel owner [from Gurugram] were very confident about the business.

Being the first-of-its-kind platform in this space, we had to face some very unique challenges. For e.g., convincing small hotel owners to adopt dynamic pricing, which was unheard of then, showing them the value of better visual representation of their properties, and educating hotel staff on the importance of providing better service for better ratings. These three factors were key drivers for the business to grow initially.

Early Struggle

When I was starting the business I had this strong feeling of ‘now or never.’ I had the hunger to keep going, which is why a lot of the teething troubles in the initial days didn’t bother me so much. But when you are starting a company the challenges can come from anywhere. For example, setting up the founding team was the biggest challenge. Mostly founders recruit friends from their university or past colleagues as the founding team, but I didn’t go to a university nor did I work in a typical corporate set-up. This was the biggest obstacle, and I had no choice but to recruit top-rank professionals from the industry, which in retrospect, turned out to be my best decision. In fact, it actually turned out to be a boon. The other challenge was to convince our distribution partners that we are in this business for the long term.

Make Or Break Moment

Getting the right team was my biggest challenge. Looking back, the make or break moment for OYO was when we brought on board a couple of key people, who had a big impact on our growth metrics. This was at a stage where we had cash in the bank, but growth was flat. We had two-three hotels on the platform. Investors were asking us how we planned to grow. At that time, we were just focused on surviving, and growth was not our priority.

In 2014, we hired Abhinav Sinha, [currently global chief operating officer at OYO Hotels & Homes, and partner, OYO U.S.A.]. He played a very important role in growing the business, and then got a few more good people who have all played a vital role in our journey. We went from two-three hotels to 100 under the service of OYO within just two-three months. That was a make or break moment for us, which also taught me that a few good people can change the direction of your company.

The Business Model

First is the fundamental understanding of your product-market fit. Next is technology and talent. If we had not invested in technology at the right time our ability to grow would have been limited.

The next big criteria is listening. Over time, I have learnt that the biggest value that an entrepreneur can bring to the table is by keeping their eyes and ears close to the ground. Whenever our company is facing any challenge my learning is: go back to customers and partners [hotel owners], and they will tell you what to do. Covid-19 was the biggest example of that. All the decisions that we took and how we reacted after the pandemic were based on feedback and suggestions from hotel owners and customers. I have tried to inculcate this practice into our culture. Now, every week we have an owner town hall where all hotel owners join to ask the good, bad and ugly questions. It is a platform for them to talk about their issues and concerns. Next, build good talent and lastly whenever you get an opportunity—take it. Be it acquiring talent, good investors or opening new segments.