It’s not surprising that on multiple occasions the young Indian entrepreneur, Ritesh Agarwal has been compared (and has reveled in that) to a “Young and Brash” Mark Zuckerberg.
“Young and Brash” is a term coined by Oyo’s Ritesh Agarwal himself for Facebook founder Mark Zuckerberg. During an interview in 2015, he praised the movie ‘The Social Network’, fascinated with Mark Zuckerberg’s story.
Ritesh Agarwal sees Mark Zuckerberg as a key source of inspiration. He once said in an interview, “He (Zuckerberg) being young and brash. I mean brash is not politically correct, but I think what’s life without being a little brash.”
Mark Zuckerberg-inspired ‘brash’ approach is what Ritesh has taken in a number of his recent dealings.
Indeed, brash is the ‘not politically correct’ approach that Ritesh has taken in a number of his recent dealings. And while the young and upcoming tycoon may have been ridiculed by a number of savants and media houses (we included), it certainly hasn’t damaged his business reputation or Oyo’s investor appeal.
Watch: Ritesh Agarwal on Mark Zuckerberg and The Social Network:
A KPMG business analyst, Ankur Nigam once explained, “Anyone who’s tried to think differently and attempted creating large enterprises has faced the bad press. Mark Zuckerberg, Elon Musk, Steve Jobs, Bill Gates—so I think he’s in august company.”
Success and Stature
Backpacking through India, a young college dropout untapped the opportunity of transforming the unorganized clusters of neighbourhood lodges and inns into the country’s largest budget hotel chain.
Furthermore, he managed to get one of Zuckerberg’s early backers Peter Thiel (Co-founder, Paypal) onboard winning the Thiel Fellowship’s grant of $100,000. Ritesh relaunched the less than perfect Oravel as Oyo Rooms in 2013. Six years down the line, with over 125,000 rooms across the country, Oyo has become a behemoth in the industry.
Ritesh pioneered the concept of technology-driven, efficient, and standardized budget accommodation in India. In less than a decade, Oyo has grown massively both in terms of popularity among customers and credibility in the world’s startup arena.
Ritesh is Quickly Becoming Who He Aspires To Be
With just Rs. 30 Lakh pinned in as his first wallet funding from VentureNursery, Ritesh’s Oravel Stays took flight in 2012 and since then he has successfully brought in investors willing to nurture his venture. However, that rise has been synonymous with controversies.
Watch: Ritesh Agarwal on being shameless is key for building a great business.
Similarly, Mark Zuckerberg has been subject to constant scrutiny and criticism. Facebook is constantly at odds with one or another government-backed enforcement agencies. Privacy advocates, lawmakers, shareholders, and even its own co-founders are less than forgiving when talking about Zuckerberg. The Facebook CEO is today the most hated man in Silicon Valley.
One gets an eerily similar sense of self-obsession from Ritesh Agarwal – belief in his own rigid idea of the venture’s perfectness. Just like Mark Zuckerberg, Ritesh Agarwal too comes across as apathetic and ‘not politically correct’ in several issues regarding Oyo’s practices and policies.
The Controversies at Hand
Entrepreneurial life has never been controversy-free for Ritesh Agarwal. Several media and freelance investigations have exposed his secrets and lies. From unethical business dealings at Oravel Stays that were exposed in 2015 to his false claims about the success of his 2011 book, The Encyclopedia of Indian Engineering Colleges.
Furthermore, there was his ugly fallout with a former co-founder, his courtroom battle with Zo Rooms over data theft, illegal poaching from rivals Treebo and FabHotels and also continued protests by hotel owner associations and unions across India accusing Oyo of monopolizing and using manipulative business tactics.
Nevertheless, Ritesh Agarwal keeps attracting controversies as if it’s a nutrient that keeps him in the game.
The Crust and the Core of Oyo’s Problems
Undoubtedly, as the CEO of India’s most popular unicorn that casts a shadow on the rest of the hotel industry and has $ 1.7 Billion of investor money exhausted in ruthless expansion, Ritesh Agarwal is a man with growing power and also the appetite for it.
With a loss of Rs. 2,384 Crore in FY 19, Ritesh and Oyo’s IPO dreams are pretty far away.
In fact, that’s what makes him both the crust and core of the problems Oyo is evaluating this financial year. While Ritesh and Oyo now have their eyes on the ambitious target of becoming as $13 billion business by 2020, the IPO dreams are pretty far away. SEBI strictly demands three-years of pre-tax operating profit consistency for a company before an IPO.
Watch: Is Oyo IPO on the cards?
For the financial year ended in March 2019, Oyo witnessed a total loss of Rs 2,384 Crore, which is six times greater than in 2018. While the employee-related expenses crossed the mark of Rs. 1500 Crore, operating expenses also jumped five-fold to Rs. 6131 Crore.
Oyo is not Facebook after all
Oyo’s recent expansion plans also haven’t yielded the desired results. Oyo Rooms’ tier 2 and tier 3 cities business also turned out to be a failed revenue model. However, Ritesh is still bullish and eyeing overseas expansion as a way to make Oyo profitable.
The super investors’ trio of SoftBank Vision Fund, Sequoia Capital and Lightspeed Venture Partners that backs Oyo further strengthened Ritesh Agarwal’s brash plans for domination with a capital infusion of $800 million in 2018. Now, Oyo is expanding rapidly and capturing markets ruthlessly from China to Japan and also the Americas.
However, experts are still skeptical about Oyo’s upward trajectory. Moreover, we have seen recently that market valuation is not an accurate identifier of the potential of a startup. Several dynamic startups gather immense hype and substantial capital but are left bare naked with vulnerabilities clear in the public eye when they hit IPO.
While Ritesh is targeting a $ 13 Billion valuation by 2020, experts are skeptical about Oyo’s upward trajectory.
It’s still early days in business for India’s version of Mark Zuckerberg. Ritesh Agarwal has a lot of problems to solve, and a long way to go.
