Transforming The Face Of Indian Hospitality Sector

When did you take this decision to start OYO Rooms?

I think for me – first off thanks for having me here. I think for me I was just right out of senior high school. During that period, I had the opportunity to sort of intern with a lot of younger start-ups. I think in that period I learned how young companies can be transformational and significantly impactful to you know people around you and what you create. So I wanted to do that at one point of time. I would travel a lot to the hill stations around Delhi. So you know I spend my childhood in a place which was very coastal and had a lot of beaches and never seen hills. So for me seeing hills was like a big deal. So I would stay in lot of these smaller budget unbranded sort of properties in a bunch of these areas. After staying in a bunch of them I realized that there is so much supply available in there in one side, rather than in the other side you have a lot of consumers who want to sort of have you know the right experience, the right price and so on and so forth. Our belief was saying we will just bring both of them together. So I think the belief was saying a country which has 450 thousand travellers which is 150 thousand more than the population of the states cannot live in a country where the largest hotel chains just had seven or eight thousand rooms. And I felt there was a deeper need of having a branded network where consumers can say we had a great experience. It’s available everywhere and it’s available in the right price. So that’s how the idea struck. The reality of every entrepreneur including yourself and almost everyone is when you make up your mind that this is something that’s a big impact creating idea, you just become restless. You can’t stop before you want to start that. You just can’t stop before you get your first process to start because you are restless, right. You can imagine what that’s going to look like and it just doesn’t feel good if that’s not happening in reality. So I think that’s when right after senior high school against all odds because people would say that you know hey guys, I mean you are right out of senior high school like you might spend a couple of years doing bunch of other things. But I think because I was restless and I could not stop before I could see that impact. I jumped into the bandwagon to start the company fairly early.

When did you take first steps and identified gaps?
So I think, very early every entrepreneur starts doing everything, right. So I was the guy who was the housekeeping guy, to the engineer, to the sales guy, to everything at the business. What I realized over time is you can’t create everything yourself. Like you are not the person, while your benchmarks are really high which means that you always believed that you are the guy who can do it the best but you know one thing that you learn sooner than later is the single most important thing that you do as you build a great company is build a great team around yourselves. I think the reason why Oyo has been completely successful over the last year, year and a half of our existence is because we have recruited possible the smartest talent this country has ever seen in a start-up. Maybe equivalent to sort of the best start-ups in this country. I think it is tough because of two major reasons. One reason being you as a n entrepreneur, your benchmarks is really high and the second thing is to bring other people and sort of give then the ownership of doing things and taking decisions is generally tough because it’s something that you deeply deeply care about in every sort of execution standpoint. But I think over a period of time what I learnt was bigger ownership with stronger skillsets is sort of the core of driving the business. So the first person whom I brought on board was the guy who brought hotels for us, which was the supply side. I think what I learnt was I was very good in housekeeping the hotel, making sure I get the product right and sell this to users. But I realised that getting more hotels was really tough. Because I didn’t understand how does the process run. So the first guy who joined us was Anuj in the core team, who sort of now heads supply for us nationally. Overtime I realized that as we added more hotels, being able to control the experience in each hotel needed the skillset of a large scale operations guy. Then we hired a second guy who is our COO Abhinav who possible ran the largest factory for one of the largest consumer goods company in India. Went to HBS, used to be principle of BCG before he came back to India and started running operations for us. So he had the analytical view of a young age start-up which is going to have extremely efficient processes but also had the ability to sort of marshal a large team along with him to ensure that the quality of experiences is right in every form across the experience. I think as a couple of these recruitments happened I could see the exponential value creation of having folks like this. And after which I been spending most of my time just recruiting some really high quality folks and that continues to help us grow as the pace that we are moving.

What was the immediate need that you saw?
Great question. I think very early so just taking two steps back actually when I felt I needed to enable an online marketplace where people can come and reserve accommodations. Online was the word it started with, right. So you wanted to make sure that it was available for users to book. So I started building the web product. When I started building that I realized that It requires far more detailing that you would expect before you started creating it. So one of the question that came to our mind which sort of literally changed the way I thought about it was what’s the checkout time. I had not stayed in a lot of hotels and has not noticed the standard check out time until then and I felt If I am about to create a thought lead in this space and I don’t know what’s the standard check in time. Am I building the right business? So I think that was the time where I felt that to solve the pain points it is extremely important to feel the pain points and great companies globally have been created by entrepreneurs who had a personal pain point which then got solved at a broader scale. So I think for a couple of months I had a little bit of saving for a year and a half because I had interned at a lot of younger companies which I took and literally I would wake up every day and stay in a new bed and breakfast, serviced apartment, guesthouse, et cetera, et cetera for a period of four to five months. I think during that period of four to five months I continued building and launching various versions of our website. Where a couple of users because of referral started booking with us. During this period what we realized was most of these users would come back to us saying how can we have a more predictable, standardized experience because sometimes we have a really good experience, sometimes we have a really bad experience. How can we make sure that the bad ones can be slowly eliminated out of the experience so that we can use you over and over again? Which is where I felt the first advantage or requirement was making sure we standardized our experience and make sure that we consistently keep it over and over again. The hotel owner was making a lot of money and a lot of other hotels wanted to partner with us. So we wanted to make sure somebody could come in and bring more hotels for us. So you know, we had one person whom we wanted to make sure they can interact with users, who wanted to have directions, who wanted to make sure that if they had any problem in the room they could call us. They could call us for support and all of those things. But effectively what I thought to myself is I will be extremely successful if I keep replacing myself. If i replace myself every day I will bring in extremely smart people so that I can focus on the next big five things. Until I keep doing things that are required today I will never start creating value for what needs to be created tomorrow. So I thinks that’s sort of the way I sort of thought about what are a bunch of things that are needed to create value for.

So I think one of things that I have deeply believed in is sort of saying you should always work towards replacing yourself. Because if you replace yourself you can be thinking about the next big things instead of doing what’s required today. So as we recruit people I always think to myself what are the four things that are taking my bandwidth every day and let’s recruit amazing four people who can do those four things better than me. So that I can spend time on the next five big things that the company needs because as a young company there’s just so much to do every day. That you want to make sure that you are spending your time only on the big items and for everything else you recruit people who are smarter than you, who are specialist or generalist to do those.

What are the four areas you wanted to replace yourself?

So four people, one person to bring more hotels, one person to bring – ensure consistency of quality of experience. One person to ensure that the product was moving in the right direction and one person to ensure that the engineering was doing well. I was a sales guy and I think finance, design, et cetera were all external support. So I think demand was something that, you know one the things that we believed as a company is as a leader you always need to do one thing that is equally or more important as a parallel on the board. Which make sure that people around yourselves see that you are operationally involved in doing what’s required in the company and you continue to earn respect of people working along you. Maybe overtime you don’t need to do all of those things, because you also have strategic value creation stuff but I think at least in the early to mid-level of the company it’s import to make sure everyone has a very very large operational ownership. So that you can all work together shoulder to shoulder.

How did you refill the gaps?

I think one the things that I, you know I think in four of those it was serendipity. It was mostly sort of you know meeting people one after the other by means of mutual connections and son on. But I think in four of these places, if you know this is the reality about a start-up that if you are to sort of ask the mantra of recruiting the great talent, there is no mantra. And for me specifically it was even tougher. I did not have an alumni of my college. I did not have potential colleagues which I had worked with. And hence one of the things that I did was sort of said you know what I am going to put all my effort, time and aggression to execute really well and a lot of people around myself will get attracted to sort of work together with me, to create the value that I am trying to create. So the first guy actually wrote to me after getting to know about what I was doing from someone and he said hey I want to become a part of the company and I said look you background just looks really slick, right. Like you went to IIT’s, you are doing a really good consulting job I mean I really like what I am talking to you but I can’t afford you. He said doesn’t really matter. I just want to come and work for you. I am anyway thinking about quitting my job so If that makes sense for you I will quit in reality. So I think that was the first one. The second one was a mutual friend who sort of really really respected and liked what I was doing and Abhinav had just moved in to India from LA and was potentially thinking of starting his company. Which is when he told him, hey you re entrepreneurial and you thinking about building a mass market problem. I think if that is the case there’s one guy you should definitely meet. And I hung out of Abhinav and I think that was possible the best four days I spent with a potential colleague that I could work with. So I think across this process, I have basically said there are going to be many ways all the way from potential person to person connect to recruiters, to LinkedIn, to a bunch of ways by means of which you will meet people. But I think there’s going to be two things that are going to be extremely important that you look at that. First this is does that person buy and want to do exactly what you want to create and does he see the same thing. And second thing is for that to happen Is that person willing to sort of run it as his own company, instead of being just one more executive because one more executive is not what a start-up is. I mean If you want to build a company that is like Silicon Valley, which is extremely high quality and so on, you have to embrace the culture of hard working, big, strategic but also very very fast moving Silicon Valley companies and hence you want to have a talent that is equal or better than them. So I think these were two things that I deeply cared about and I think has been super helpful for us.

How do you make sure you always keep organizational structure as per the needs?

I think as an organization at the pace which we are growing, every size month it changes. So we call it something that’s called organization 1.O, 2.O and now we are creating the organization 3.O. The basic is making sure that it’s flat. It’s tough because as an organization you are large but at the same time you are going to keep it flat because the real reason why you are growing and you’re being so successful is because everyone works together to sort of solve for the same common problem. To build that which is flat structure it’s important to make sure everyone as an organization is aligned to the long term vision. Once that’s there, you can sort of always keep creating formats and structures to enable that to solve. As a part of creating structures, so one the things that we deeply care about is over communication. You always have an option as a larger organization to sort of work in your cellos, right. But it’s important to make sure that you keep that away, do the hard thing of taking your team along and making them a part of your company culture of making sure that over communication is in the DNA of the company instead of just being one more thing in the company. So I think that is something that we have deeply cared about and that is being one of the reasons why irrespective of having recruited you know, leadership execution folks, geographic heads, mid-level folks and all of those things. We still have an organization which works flawlessly in the form of making sure that the folks right at the entry level can work with the CEO, but at the same time most of the time we are spending time on strategic and long term value creation. So I think it’s generally tough but it’s important to make sure if over communication is solved for and you have great leaders in the company, where people like Ritesh, of course with the ability to make decisions like me exists in every geography and process I think it just becomes way more easier.

How do you know it’s time to expand?
I think it’s mostly being just entering a completely different scenario, right. I think going from one hotel to forty hotels, so for the first time we were starting to have multi hotels. So the organization needed to be a little different. From going from one city to twenty cities was multi geography. So it was important to have geographic teams around yourself and with that geography turned out a lot of process oriented folks that you wanted to have. When that happened we realized that from thirty to 117 geographies will need a massive scale. For that scale to come you need to build a great technology team. As you reach 117 geographies you are at a significial scale and you saw you had problems like those of process, six sigma’s’, long term ability to sort of ensure unit economics. I think that’s when we have now started bringing people who are very strategic in nature. Who can sort of take long term issues and sort of run with it for the next two to three years. So I think more often than not it’s been stage shifts for the company that have been symptoms for us to potentially bring in a completely different organization to sort of create the value. Because one thing that we believe is if you are trying to create possibly the world’s largest hotel network here from India at Oyo. It’s like the people whom we have around ourselves are never going to be enough to create that. You are always going to need better, smarter more people around yourself. Those people are going to come and push in various directions. Maybe some of those are going to be good for you and some of those are going to be fictional but net net both of these things are going to take you to take to potentially being the world’s largest hotel network, which is a lot of potential problem solution and impact that you will solve around yourselves. And that’s what we are all here for isn’t it. So I think just keeping that focus in mind enables us to sort of always keep thinking it, broadening our vision around the kind of people that you want to bring around yourselves.

What was the challenge that made you think to go geographical decisions?

So we were just operating in NCR based Gurgaon before this. When we felt that you know a lot of consumers here are having great experience and everyone wants us to sort of have a hotel in Bangalore. We felt it makes a lot of sense to have a couple of hotels there. So we went to Bangalore and felt we will recruit someone in there to potentially create and manage the hotels there. And we saw that when you are operating in multiple geographies, every day you need to take a different decision. All the way from saying Bangalore your signage needs to have a Kannad language along with the name, down to sort of saying the size of properties are different, the ability to standardise them are different, the vendors are different, et cetera, et cetera. Because the challenges that we saw in that city I felt to myself that if I continue solving just what’s happening in Bangalore, I am never going to be able to launch Mumbai. Because every city that we operate in, while some of the metrics are going to be similar but there are a lot of other decisions which are going to be incremental but those are going to come every day. And you want to make sure that you have leaders similar to your ability to make big decisions in those places to make sure that you can launch so many more important cities at the same time which is went we sort of started searching for somebody who can come in and head Bangalore for us and after that it just became a trend that before we launched a city we used to hire the head for that city make sure that they are culturally inclined with us by working in the central offices for a while and then they go to the city and continue operating from there.

One advice to upcoming entrepreneurs

I think of course every journey is different in terms of the value creation they are going to do. Every product/business are completely different idea but one thing that remains consistent as just in terms of the background of what we just spoke about is it’s extremely important to create the right people around yourself in the company. If you have the right people around yourself who are all inclined to solve a problem and are going to work together to do that, even if that one product or that one website or that one business doesn’t turnout you can do anything. So reality is you know I mean, don’t respect idea or the website or the product a lot, I mean of course product is extremely important, the idea is very important, website is very important but the most important thing is the team that you create around yourself. If you do that really well everything else sort of falls in line.

Ritesh Agarwal- Founder, OYO Rooms
ABOUT THE SPEAKER
Ritesh Agarwal- Founder, OYO Rooms - Ritesh Agarwal, OYO Rooms - Transforming The Face Of Indian Hospitality Sector - Ritesh started his entrepreneurial journey when he was 17 years old. He dropped out of college and launched his first start‐up Oravel Stays Pvt. Ltd. in the year 2012. Oravel was designed as a platform to enable listing and booking of budget accommodation. Being an avid traveler, he soon realized that the budget hospitality sector lacked predictability. Therefore, he pivoted Oravel to OYO Rooms in 2013 with the key proposition of offering affordable and standardized accommodation.
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