Dropout. That’s often the first thing people say about Ritesh. Perhaps his parents should have seen it coming when he sold SIM cards at 13.
But he’s now a 22-year-old startup millionaire.
Just a kilometer from the 17th-century Taj Mahal is a neat little room.
It has spotless bed linen, a clean washroom, wifi, a flatscreen TV, an air-conditioner, and even warm lighting. Once you walk back from the white marble monument to love, built by an emperor in memory of his queen, you enter this comfy nook for the night.
You are in an OYO room in the historic Indian city of Agra, paying just US$14 for it.
And Ritesh Agarwal would have it no other way.
The man who has stayed at numerous budget hotels himself – and juggled roles as housekeeper, call centre guy, and startup founder – wants you to think OYO(short for “on your own”) every time you step out of home.
“We are offering 65,000 rooms through our partners and plan to grow deeper in all key business and leisure cities, tripling our inventory by December 2016,” says Ritesh, whose face is a curious combination of boyish and grave.
Three years ago, he started off with a single Gurgaon hotel. It had 14 rooms, and OYO took over 11 of those.
It is today India’s largest branded network of budget hotels – the startup calls it largest “across all categories” – with 5,500 properties in over 170 cities. It’s like Uber for budget hotel rooms.
Ritesh is a Marwari, an Indian community known to have entrepreneurship in its bones. His father used to run a small business in the Odisha town where he grew up, but now works for a company. His mother is a homemaker.
At 18, Ritesh was looking to replicate an Airbnb-like business.
Along with a co-founder who later departed, he launched Oravel Stays in 2012, which aggregated budget hotels and put them online. By that time, many travel agents were also getting online.
“I could see why travellers would not trust reviews and listings on a website to book in some other part of the country,” he says. The real problem was not discoverability, but the lack of predictability and standardisation.
This is what he decided to change with OYO by partnering with these cheap hotels and visibly transforming the rooms. He was 19.
To the Indian budget traveler, used to dirty washrooms, broken taps, soiled bed linen, and no AC, the amenities OYO brings (it also includes branded toiletries) are a dream come true.
“Going to college opens doors for learning in a structured fashion,” he says. Only, it wasn’t his cup of tea.
He did enroll for the University of London’s International Programme provided by the Indian School of Business and Finance, Delhi – “to keep my parents happy.” But most of his time went into attending entrepreneurship events and traveling to research his business idea.
“In my case, I was sure of my career path since I was young – I only wanted to become an entrepreneur.” So he dropped out at 17.
His education came from something else: the Thiel fellowship for under-20 entrepreneurs. It was started by PayPal founder Peter Thiel for young businesspeople. Ritesh calls it “the best thing that could have happened to me.”
Networks can shape your personal and professional persona, and he got to experience that first-hand. “I received a support grant of US$100,000 and access to some of the brightest folks in Silicon Valley.”
Who would have thought that rooms in cheap, random hotels that no one would cast a second glance at could be mined for gold?
Consulting firm HVS estimates that 1.8 million Indian rooms are in “unbranded” hotels, compared with 112,000 in “branded” ones. Only about 2 percent of them are online.
That is what OYO is cracking.
Ask Ritesh about rivals, and he has an interesting answer: “We have so much competition and, at the same time, no competition!”
“Chain hotels, OTAs [online travel agents], tour operators, and of course another aggregator can be considered competition. What we focus on instead is the opportunity – any person staying out of home is a potential customer.”
What about homestay, a sector that is being eyed by the likes ofStayzilla, WudStay, and Airbnb? Ritesh wouldn’t bet on it. He believes cultural nuances, safety, and regulation issues in India are bound to pose challenges.
The startup, which now offers premium rooms too, would rather focus on leisure stays and pilgrimages.
VentureNursery and Lightspeed were among the first investors to see the spark in Ritesh. OYO has since picked up big bucks from Sequoia and Softbank, among others, notching up US$130.6 million in total funding.
Now, now. No legend is complete without controversy.
From his parting with Oravel co-founder Manish Sinha to whether his book Indian Engineering Colleges was really a bestseller, your impression of Ritesh might vary with what you read about him. As per Flipkart, the book went into 4th edition.
A critic, in a LinkedIn post, had lashed out as recently as last month calling OYO’s numbers exaggerated and its business model “a Ponzi scheme.”
Ritesh, in a mail to his employees, responded to the allegation, calling it “just preposterous.”
I will leave you with a line from that mail to ponder upon. Writes the young founder: “[…] I am yet to hear of an entrepreneur who can claim to have succeeded without making mistakes.”
Many say it has the potential to be the next Indian unicorn.