Agarwal is a textbook example of the fact that there is no prerequisite for success. He does not have a college degree. He initially sold SIM cards in a small Odisha town. Unbelievable right?
Ritesh Agarwal, the young entrepreneur, became a dollar millionaire at 22 soon after completing his school education, founded the company when he was only 19 years old. Only a few years have passed but it is growing exponentially.
Agarwal hails from Bissamcuttack, a small naxal infested town south of Odisha. He is a dropout, which made him eligible for the Peter Thiel fellowship for $100,000. He was motivated to start OYO Rooms so that he could be in control of the TV remote, which wasn’t possible when he stayed with relatives when he was a child.
“You know what OYO’s abbreviated form is?
“And it was because I couldn’t have the remote control at relatives’ homes (that I thought of starting OYO Rooms). The relatives would want to watch soap operas and I wanted to watch Cartoon Network.”
Even when his company had made it big, Agarwal was the only dropout heading a team of 10-20 people from IIMs, more than 200 people from IITs, HBS and Ivy leagues.
“It’s funny, in India, I haven’t come across any dropouts who are smart and high quality. Hopefully, in the next few years, we will have more high-quality dropouts. When I go to colleges for talks, I encourage the students to drop out.”
Ritesh draws inspiration from Bill Gates and a fellow college dropout— 32-year-old Ola Cabs co-founder Bhavish Agarwal, another young success.
Agarwal, belonging to a business family, moved to Delhi in 2011 to start his entrepreneurial journey after deciding to skip engineering college entrance exams. He had also enrolled himself in University of London’s India campus for a brief period. He was 18 when he founded Oravel Stays, which was building the Indian version of home sharing portal AirBnB. Agarwal got in touch with accelerator VentureNursery, flew down to Mumbai and got seed funding of around Rs 30 lakh after a three-month programme.
The teen mastermind, stayed at over 100 bed-and-breakfast rooms while running Oravel, soon discovered that the problem for these portals was not discovery. The big problem was that these portals were not standardised. Ritesh became the first Indian to be selected for the Thiel Fellowship, where he was given $100,000 grant by early Facebook investor and PayPal co-founder Peter Thiel. This particular fellowship is awarded to entrepreneurs below 20 years of age who skip college for two years to start running their own business.
“One big learning from Thiel fellowship was think really big and create an impact, without thinking if anybody has done it before.”
He decided to pivot the model to OYO Rooms, putting most of the Thiel grant into the business.
What has helped Agarwal the most is his hands-on approach. When he walked into a meeting with venture investor Bejul Somaia in 2014, his rucksack attracted immediate attention. Curious as to what the young entrepreneur was carting around, Somaia asked him about it and was amazed to hear the answer. For a person who has left his home in Odisha as a teenager to seek his fortune, carrying all his possessions wherever he went was an obvious second nature.
“It helps me get a pulse of what customers and hotel owners want and also gives me the convenience of not maintaining a home.”
The Genius’ early hands-on experience in the hotel business gave him deep insights into what he had to do to be successful in that line.
“I like to think of OYO as a low-cost airline of hospitality, bringing the same advantages to people—accessibility, affordability and quality service.”
Ritesh is unperturbed by the ‘budget’ tag that most companies spend millions of marketing dollars on to avoid. OYO was set up in 2013 when Agarwal saw the untapped potential in small neighbourhood hotels. Focussing on nitty gritties like standard quality, good location and price, as well as customer service, have taken OYO from a single asset in Gurugram in 2013 to 8,000-plus hotels across 210 cities in four countries today.
“We have grown in tandem with the rising incomes of our customers. They prefer better living spaces”
Though the economy segment is still its largest revenue generator, and accounts for the highest growth in absolute volumes, OYO gets 15 percent of its revenues from the non-economy segment.
Every step of an OYO hotel’s process is digitised. This rakes in a high return on capital employed (ROCE) and leads to faster growth. In the meantime, OYO has also stepped out of the budget segment. It now has brands like Townhouse (premium-economy), Home (homestays), SilverKey (executive apartments), Capital O (corporate living spaces), Palette Resorts (upper-end leisure resorts) and Weddingz.in (wedding banquets).
“A mission-critical top management and employees who have a deep sense of ownership for the brand are central to OYO’s success,” who still spends most of his Sundays preparing for the Monday morning meeting “so that I can earn the respect of my management every week”.
Ritesh’s pace of personal growth has been remarkable. We’d describe him as a mature, thoughtful, open-minded, inspirational and decisive leader.
“I think the most possible outcome looks like a public offering, to unlock most shareholder value.”
For Agarwal, who believes,
“affordable is cool, and cool is affordable”, the next aspiration is to make it the world’s largest hotel chain.
We admire Ritesh Agarwal’s ability to pivot, accept change and the speed of execution in giving shape to OYO’s version 2.0. And what could bring out the 2.0 version out of you? Any idea? Obviously, the MagTapp app. Download it to find out how it helps to bring the Genius out of you!