Ritesh Agarwal: Interview with founder of Peter Thiel-backed Oyo

Oyo CEO Ritesh
Agarwal
Oyo

• Ritesh Agarwal is the 24-year-old founder of Oyo, a
  fast-growing Indian startup that partners with budget hotels,
  revamps them, then offers out their rooms to travellers via its
  app.
• He is one of the few Asians to participate in the Thiel
  Fellowship, a programme for entrepreneurs set up by Facebook
  investor Peter Thiel.
• He has also raised more than $400 million in venture
  capital funding from backers including Japanese conglomerate
  SoftBank.
• In an interview with Business Insider, Agarwal laid out
  his journey from growing up in India to founding a global
  startup.

 

Indian entrepreneur Ritesh Agarwal may have netted millions of
dollars in venture capital funding at the tender age of 24, but
his mother still worries about him.

“She believes, ‘If there’s no college degree on your biodata
[résumé], how do we get you married?” I try to allay her concerns
once in a while,” Agarwal told Business Insider over the phone.

Agarwal has bucked several Indian stereotypes of success. The
youngest of four siblings, he grew up on the Orissa-Andhra
Pradesh border in eastern India. He began to deviate from his
family’s expectations when he moved to Delhi and dropped out of
college after just three days to pursue his dream of becoming an
entrepreneur.

“As I grew up, I was born and brought up with a view of, if you
can get an engineering degree, getting a job is remarkably easy
and that’s the ambition you should have,” Agarwal said. “I had
three other siblings, and I was the youngest of the lot. So I
guess being the black sheep was ok.”

At the age of 19, Agarwal was
selected to join the Thiel Fellowship, a two-year
entrepreneurial accelerator set up by PayPal cofounder and
Facebook investor Peter Thiel.

A condition of the fellowship is that participants drop out of
college. In return, they are given $100,000 in funding and access
to Silicon Valley’s brightest minds. Agarwal says he was already
a Thiel fan, having watched Wallace Langham’s portrayal of the
investor in “The Social Network,” the fictionalised film account
of Facebook’s origin story.

Peter
Thiel.

Neilson
Barnard/Getty

Two years later, Agarwal had
netted $100 million from investors including SoftBank for his
startup Oyo, a network of budget hotel rooms. His earlier funding
round of $25 million was the biggest tranche of cash a Thiel
Fellow had ever received.

Agarwal won the SoftBank funding before the Japanese conglomerate
announced its Vision Fund, a $92 billion vehicle for investing in
long-term tech companies. Since then, SoftBank has added Uber and
WeWork to its portfolio. Masayoshi Son, SoftBank’s CEO, has
talked up the promise of Oyo,
praising its exponential growth and describing it as a
“next-generation company.”

Masayoshi
Son.

AP

One of the benefits of being part of the SoftBank portfolio is
the ability to rub shoulders with some of the most high-profile
entrepreneurs in the world.
Previous media reports have said that Son instructs his
founders to treat each other like family, regularly meets them in
person, and holds dinners so they can all meet each other.

Agarwal, who refers to Son by his Japanese title “Son-san”, said
being part of the cohort was as valuable as the money and advice.

“It’s not just sharing that feedback,” he said. “It’s about
working with us, and the broader family of the Vision Fund, which
has top companies in every segment worldwide, to help us gain
knowledge, and how to share our proprietary knowledge… that’s
the group you become part of.”

Agarwal points to Didi Chuxing cofounder Cheng Wei, WeWork CEO
Adam Neumann, and another entrepreneur from an as-yet-unnamed
portfolio startup as particularly useful members of the cohort.

Didi Chuxing is a Chinese conglomerate whose business comprises
ride-hailing, artificial intelligence, and driverless cars.
WeWork is the buzzy property startup that turns drab office
spaces into bright, “community-oriented” workspaces.

“Didi, the entrepreneur at the helm has created such a great
platform for people across China, I’m learning from [him] how
they executed at great scale, and how they operate at a great
scale in China, it’s very inspirational for us,” Agarwal said.

“I think WeWork has of course executed very meaningfully and Adam
[Neumann] is one of those entrepreneurs who has understood
physical operations… he’s a clear hero in terms of how you
create a large physical business across so many cities.”

At times, Agarwal sounds quite WeWork-ish when talking about the
mission of Oyo, which has just expanded to the UK
as its first European market outside of Asia.

An Oyo Townhouse in
Paddington.
Oyo

“As a responsible consumer brand, we have not just built for the
short term, but build for longer-term relationships,” he said.

The way Oyo works is by partnering up with smaller hotels,
turning them into franchisees, and giving them a makeover. That
hotel is brought up to a standardised level of decor and service,
and its rooms are offered through Oyo’s app for travellers on a
budget. The promise for consumers is better quality budget rooms.
For hotel owners, it’s an increase in bookings, and a chance to
hand over some of the admin.

Oyo says it has more than 8,000 employees across Asia, including
in India, China, and Malaysia. Agarwal would not
disclose the company’s financial performance, but SoftBank
highlighted the company’s fast growth
in a June investor presentation, saying that the company had
increased the number of its hotel rooms in India alone 96-fold.
Oyo says its app has been downloaded more than 14 million times.

Agarwal admits to some “good and bad days” from Oyo’s earlier,
fast-growing chapter. But, he said, the company is now thriving
in markets where it originally had difficulties, such as
Malaysia.

“We hope to do that in every country we operate in, believing in
that as a home market, rather than just one more market,” he
said. “That’s our thesis, to operate in a few places and make
them home, rather than operate in many places and not have
significant ownership.”