No-frills oper­a­tor

RITESH AGAR­WAL | FOUNDER & GROUP CHIEF EX­EC­U­TIVE OF­FI­CER | OYO Agar­wal tells Ajay Modi how he digs south In­dian food and why he still stands be­hind the re­cep­tion desk of OYO prop­er­ties to check in guests

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RITESH AGAR­WAL tells Ajay Modi how he digs south In­dian food and why he still stands at the re­cep­tion desk of OYO prop­er­ties to check in peo­ple

There could not have been a bet­ter time for a lunch with Ritesh Agar­wal, founder and group chief ex­ec­u­tive of­fi­cer for bud­get hospi­tal­ity start-up OYO. Agar­wal, one of the youngest en­trepreneurs in the coun­try, turned 25 last month. The SoftBank-funded com­pany emerged a uni­corn, val­ued at $5 bil­lion, just two months be­fore Agar­wal cel­e­brated his 25th birth­day. Around the time of his birth­day, OYO an­nounced the hir­ing of for­mer In­digo Air­lines pres­i­dent Aditya Ghosh as chief ex­ec­u­tive for In­dia and South Asia.

Agar­wal, a veg­e­tar­ian, is fond of south In­dian cui­sine and had sug­gested Dak­shin, a restau­rant in Sher­a­ton, New Delhi, for the lunch. He told me later on that he is emo­tion­ally at­tached to this par­tic­u­lar ho­tel be­cause way back in in 2012 it was in the lobby of this ho­tel that his an­gel in­vestors, Shra­van Shroff and Ravi Ki­ran, had agreed to sup­port his idea.

Dressed for­mally in a white shirt and blue trousers, Agar­wal is just in time for the meet­ing. We choose to sit at a cor­ner ta­ble in the restau­rant, al­most empty when we start. We de­cide to or­der a veg­e­tar­ian south In­dian thali. “The last three months have been event­ful,” says Agar­wal, try­ing the banana mini dosa and sabu­dana dosa served with tamarind and co­conut chut­ney be­fore the main course ar­rives. He talks about Udupi in Karnataka, which, ac­cord­ing to an­cient scripts, is the dosa's birth­place. “You get the most amaz­ing south In­dian food there.”

Agar­wal’s love for south In­dian food is quite strik­ing. He has idlis and dosas for break­fast al­most ev­ery day. “I feel it is bet­ter to have cer­tainty. I have no re­gret that I have not tried other stuff in Delhi.” He mostly eats home-cooked break­fast at his Gu­ru­gram res­i­dence and some­times at an out­let of the Naivedyam Restau­rants chain lo­cated close to his of­fice. He prefers south In­dian fare also when he is trav­el­ling. “Sa­gar Ratna has re­ally stan­dard­ised the south In­dian high­way eat­ing ex­pe­ri­ence. You take any high­way from Delhi and you get that,” he adds.

Agar­wal, who hails from Odisha, al­ways wanted to do some­thing of his own. His fa­ther used to run a gro­cery shop and would have hap­pily let him join the fam­ily busi­ness. But he used to feel chal­lenged by his eldest sis­ter who was ex­cep­tional in stud­ies. “I was not bad my­self and at times stood first dur­ing my school days.” Af­ter com­plet­ing his sec­ondary ed­u­ca­tion from a con­vent school, Agar­wal landed in Kota (Ra­jasthan) for his higher sec­ondary in sci­ence and then sit for his en­gi­neer­ing en­trance ex­ams. “By the time the ex­ams came I was clear I wanted to build Oravel (that ater on be­came the hold­ing com­pany for the OYO brand). I sat for a bunch of en­trance ex­ams. But I was clear that even if I went to univer­sity, my mind would grav­i­tate to­wards do­ing some­thing new and I would not be a great stu­dent.”

The main course is served: There is a choice of veg­eta­bles along with rasam, ap­pam, parotta and curd. I no­tice many more guests have started troop­ing in.

“My mom makes mini idlis in­cred­i­bly well. In most cities, I know at least three places that serve south In­dian food,” he says, adding that he has found such a restau­rant even in Shang­hai. China to­day is OYO’s big­gest mar­ket with a net­work of over 180,000 rooms which makes it one of the top five play­ers there.

Agar­wal says when he came to Delhi from Kota, he joined an un­der­grad­u­ate busi­ness school at the in­sis­tence of his par­ents. Af­ter three days of col­lege, he de­cided to take a day off to think about Oravel (which is now the hold­ing com­pany of OYO). One day turned into sev­eral days and he never went back to col­lege. “Be­fore my an­gel in­vestors agreed to in­vest in Oravel, they wanted a con­fir­ma­tion from my par­ents that I won’t be forced to go back to the col­lege.” Agar­wal’s fa­ther came to Delhi and re­luc­tantly agreed.

Af­ter Agar­wal ar­rived in Delhi, he stayed in small bed and break­fast ac­com­mo­da­tions for more than three months. “I saw that most ho­tel chains fo­cus on as­sets with hun­dred rooms or more. But 95 per cent of the world’s as­sets are less than hun­dred rooms and no such ho­tel had a chain. There could have been two rea­sons: Ei­ther it does not work or no­body tried. I felt I must take it up even if the chances of suc­cess are lim­ited,” says Agar­wal.

At the age of 18, Agar­wal made his first pitch to a ho­tel owner, Su­nil Bawa, in Gu­ru­gram. “I felt like a guy with five years ex­pe­ri­ence do­ing the pitch. But the owner on the other side prob­a­bly didn’t feel the same. I had pro­posed that if we make money we will share, if there is loss, I will bear it. He said it does not look like you can pay for a loss.” How­ever, Bawa com­pli­mented Agar­wal for his sin­cer­ity and agreed.

Agar­wal says the hospi­tal­ity busi­ness needs to have a per­fect equi­lib­rium of lo­ca­tion, qual­ity and price. “This 20-room as­set had a good lo­ca­tion. We in­vested some cap­i­tal to up­grade the ho­tel from my sav­ings and the owner’s sav­ings. I be­came the front of­fice man­ager while be­ing the trainer for more front of­fice guys and other staff.” The ho­tel’s tar­iff was re­duced from ~2,000 to ~999 and the oc­cu­pancy surged from 20 per cent to over 85 per cent, com­pen­sat­ing for the price drop. “A lot of peo­ple think the idea of pric­ing it at ~999 was taken from Ginger ho­tels. But that was not the case.” Agar­wal had ear­lier sold Air­tel’s sim cards that of­fered life-time va­lid­ity for a price of ~999 and de­cided to use the same price point for the first OYO as­set.

The next big de­vel­op­ment in Agar­wal’s life came in the form of the Thiel Fel­low­ship, which awards $100,000 to young dropouts, aged 22 years or less, to build new things. In 2013, Agar­wal was the first In­dian to get the fel­low­ship. “I had mul­ti­ple in­ter­views dur­ing which I was get­ting calls from re­ally suc­cess­ful peo­ple from all over. I got to in­ter­act with so many of them. Then one day I got a mail that I was one of the short­listed 40 can­di­dates who will be flown to the US. I felt that could be the first and the last chance for me to visit the US,” he says.

Agar­wal got se­lected and spent a year in the Bay Area, while the one OYO prop­erty that time was run by his col­league Anuj Te­j­pal. It was dur­ing this stay that he turned veg­e­tar­ian. He says he had two key learn­ings from that one year: First, think­ing big is very im­por­tant. Sec­ond, while in­no­va­tion is ab­so­lutely fine, one should not shy away from just re­design­ing an in­dus­try's problems. He re­turned to In­dia in 2014. Upon his re­turn, Agar­wal got an in­vest­ment of ~400 mil­lion from Light­speed Ven­ture Partners and started ex­pand­ing in Gu­ru­gram and then in other parts of the na­tional cap­i­tal re­gion be­fore go­ing to other cities. The in­fu­sion of $100 mil­lion from Ja­pan’s SoftBank in 2015, now OYO’s big­gest share­holder and in­vestor, was led by Nikesh Arora. “Be­fore we fi­nalised, we had the op­por­tu­nity to meet Masayoshi Son in Tokyo. I still re­mem­ber the dis­cus­sion. His abil­ity to un­der­stand our busi­ness at such depth even be­fore our meet­ing blew me away. He ex­plained to us the po­ten­tial mis­takes that we could make,” re­calls Agar­wal.

He cred­its OYO’s China en­try to Masayoshi Son, whose fund ac­counts for a bulk of the $1 bil­lion raised by the start-up in Septem­ber. “SoftBank’s abil­ity to sup­port an en­tre­pre­neur think big is truly unique. For ex­am­ple, China is a po­ten­tial that had al­ways ex­cited me. But there was never that con­fi­dence of go­ing there. Son san said if I be­lieved in it I must go and try. That gave me the con­fi­dence and to­day we have 180,000 keys in China,” says Agar­wal as he fin­ishes the payasam. In In­dia, the start-up has more than 143,000 rooms. Be­sides In­dia and China, OYO has a pres­ence in five coun­tries in­clud­ing the UAE and the UK.

Agar­wal says he makes sure he vis­its his par­ents in Odisha ev­ery Di­wali. “My mom con­vinces my fa­ther to send pocket money to me even now. She keeps on telling him that if I were in a univer­sity now he would have been pay­ing for my ed­u­ca­tion. So he must do it any­way.” Be­ing at the front desk early in his ca­reer gave Agar­wal key in­sights about cus­tomers; he still as­sumes the role of a re­cep­tion­ist when he has the time. “I go to an OYO and check in peo­ple at the re­cep­tion for the whole day. It is a very holy ex­pe­ri­ence for me. When the cus­tomer wants a quick check-in I scram­ble to do it fast.”

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