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Book Excerpt: How Ritesh Agarwal launched OYO

An excerpt from Harsh Pamnani's book 'Booming Brands - Volume 2', published on March 15, 2020. It covers 11 'Made in India' brands: PolicyBazaar, Zoomcar, Super 30, OYO, BigBasket, Quikr, Epigamia, Josh Talks, Hidesign, ShareChat, and Portea.

Business can be considered to be in his genes as his community is known for its skills in business. Ritesh was born and brought up in a middle-class Marwari family in Bissamcuttack, a small town in Rayagada district in the state of Odisha. Since childhood, he was different. With a natural curiosity to learn, he began software programming at the early age of 8! Initially, he wanted to become an aircraft pilot, but his focus changed when he heard the word 'entrepreneur' from his elder sister, who had gone to an entrepreneurship festival.

Booming Brands front cover
Booming Brands front cover

Out of curiosity, he opened a dictionary and found the meaning of the word entrepreneur as someone who solves a problem and creates a business along with it. After that, every time teachers used to ask students what they want to be when they grow up, Ritesh’s answer would be unique – an entrepreneur. He was so enthusiastic and driven that at the age of 13, he started selling SIM cards and FMCG products. Being a brilliant student, by the time Ritesh was in class X, his parents decided to send him to Kota for the preparation of the IIT entrance (exam).

In 2009, he started attending Bansal Tutorials in Kota. As he was away from his home, he had a lot of time to do just about anything he wanted. So, he did something that no other student would do, by writing the book 'The Encyclopedia of Indian Engineering Colleges'. This book turned out to become a massive hit on Flipkart then. Soon, Kota and preparation for IIT entrance bored him, and he started travelling to Delhi to attend entrepreneurship events. As he couldn't afford the registration costs, he would often just sneak in. These events gave him a glimpse of bigger ambitions.

Booming Brands back cover
Booming Brands back cover

Considering students spend time on IIT entrance preparation, his school in Kota was not strict on attendance, so Ritesh started working for entrepreneurs in Delhi and went back to Kota only to give exams. As Kota is very far from his hometown, Ritesh’s parents were not aware for a long time about Ritesh’s travels and shift in focus. Fortunately, he scored well enough in school exams to make his family feel good.

After class XII, Ritesh moved to Delhi and took admission in a college, from where he dropped out after 3 days to start a business. It was difficult for him to convince his parents, but he was aware that as an entrepreneur, he would need to convince many people during the journey, and convincing his parents was just a start. He told them that many students take a one-year gap between school and college to prepare for competitive exams, and on similar lines, he also wants to take a gap, not to study, but to work on his business idea. He assured his parents, if things don't work, he will join the college back. With his perseverance, Ritesh made things work for him, and there has been no looking back since then.

Birth of the brand name – OYO

During all his frequent travelling from Kota to Delhi, Ritesh had realised that there was a massive gap between demand and supply of budget hotels. To make small hotels, bed-and-breakfasts, and inns more accessible to budget travellers, he launched Oravel Stays. He made a list of many properties for this, but unfortunately, very few bookings came, and the repeat rate was very low. When he inquired, he found that the customers were not happy with the experience at those hotels. To understand the pain points and expectations of the travellers, he decided to travel for 3 months and stay at various small hotels, lodges, and similar options.

In a period of 3 to 4 months, he stayed in more than 100 bed and breakfasts, guest houses, and small hotels across the country. During this period, he noticed numerous problems, including ramshackle buildings, missing signage, leaky washrooms, torn mattresses, stained floors, sputtering air-conditioning, non-acceptance of credit cards, rude staff, and so on. Through this experience, he realised that the real problem was not the availability of the hotels, but the predictability of the experience.

Meanwhile, Ritesh applied for the prestigious Thiel Fellowship - a fellowship created by legendary entrepreneur - Peter Thiel. Through this fellowship, the Thiel Foundation awards $100,000 to 20 people under the age of 20 who have dropped out of college. Furthermore, the foundation provides resources to establish a start-up and mentorship from the foundation's network of tech entrepreneurs, investors, and scientists (this includes the likes of Facebook founder Mark Zuckerberg, Google founder Larry Page, Tesla founder Elon Musk and Peter Thiel).

Because of his ideas on transforming the hospitality industry on a global level, Ritesh became the first Indian resident to receive this fellowship. His experience as a Thiel Fellow in Silicon Valley was pivotal in imparting the understanding of the start-up ecosystem. Being directly mentored by Peter Thiel was an invaluable experience for him. After coming back to India, Ritesh used the money received from the fellowship to improve upon the idea of Oravel. In the year 2013, he started OYO, a hospitality chain, with the belief that everyone deserves a beautifully designed, chic, and comfortable living space, and a better life. There are many important business lessons that could be learned from the evolution of the brand – OYO Hotels and Homes.

(The book has been published by TV18 Broadcast.)