Ritesh Agarwal, the founder and CEO of OYO Rooms, a network of budget hotels and accommodation options, is a textbook example of lack of formal education being no prerequisite for big success. A few years ago, he used to sell SIM cards in a small town in Odisha. Today, one of the world’s biggest investors, Masayoshi Son of Softbank, wants to partner with him to help OYO Rooms with its foray into China.
Agarwal, the 23-year-old entrepreneur, who became a dollar millionaire at 22 soon after completing his school education, has drawn effusive praise from Son. “I would really like to introduce this company to all of you. The founder, as of today, is only 24 years old. He founded the company when he was only 19 years old. Only four years have passed but it is growing exponentially,” Son said at the Tokyo-headquartered strategic holding company’s 38th annual general meeting on Wednesday.
Agarwal comes from Bissamcuttack, a small town south of Odisha, a region known to teem with Naxalite activity. He is a dropout, which made him eligible for the Peter Thiel fellowship for $100,000. He was motivated to start OYO Rooms so that he could be in control of the TV remote, which wasn’t possible when he stayed with relatives when he was a child.
“You know what OYO’s abbreviated form is? ‘OnYour Own’,” Agarwal said in an interview to ET in 2015. “And it was because I couldn’t have the remote control at relatives’ homes (that I thought of starting OYO Rooms). The relatives would want to watch soap operas and I wanted to watch Cartoon Network.”
Even when his company had made it big, Agarwal was the only dropout heading a team of 10-20 people from IIMs, more than 200 people from IITs, HBS and Ivy leagues. “It’s funny, in India, I haven’t come across any dropouts who are smart and high quality. Hopefully, in the next few years, we will have more high-quality dropouts. When I go to colleges for talks, I encourage the students to drop out,” he said. Agarwal draws inspiration from Bill Gates — a fellow college dropout—and 32-year-old Ola Cabs co-founder Bhavish Agarwal, another young success.
At his company’s 38th annual general meeting, Son of Softbank which has invested in OYO through its $93-billion Vision Fund, was speaking in Japanese that was translated for viewers.“It is the biggest player in the hotels business,” he said talking of OYO Rooms. “It owns about 100,000 rooms. It is also growing exponentially. I think, on a per-month basis, the number of rooms, or net growth, is going to continue to grow at the pace of more than 10,000. It is a next-generation hotel chain using the internet service.” The comments come at a time when OYO has launched services in China, making it a rare instance of an Indian consumer technology company setting up operations in the world’s second-largest economy.
Agarwal, hailing from a business family, moved to Delhi in 2011 to start his entrepreneurial journey after deciding to skip engineering college entrance exams. He had also briefly enrolled in University of London’s India campus. It was when he was 18 that he founded Oravel Stays, which was building the Indian version of home sharing portal AirBnB. Agarwal got in touch with accelerator VentureNursery, flew down to Mumbai and got seed funding of around Rs 30 lakh after a three-month programme.
Agarwal, who stayed at over 100 bed-and-breakfast rooms while running Oravel, soon discovered that the problem for these portals was not discovery. “The big problem was that these portals are not standardised,” Agarwal told ET in 2015. It was around the same time that Agarwal became the first Indian to be chosen for Thiel Fellowship, where he was given $100,000 grant by early Facebook investor and PayPal co-founder Peter Thiel. The fellowship is given to entrepreneurs below 20 years of age who skip college for two years to start running their own business.
“One big learning from Thiel fellowship was think really big and create an impact, without thinking if anybody has done it before,” said Agarwal, who decided to pivot the model to OYO Rooms, putting most of the Thiel grant into the business.
What has helped Agarwal the most is his hands-on approach. When he walked into a meeting with venture investor Bejul Somaia in 2014, his rucksack attracted immediate attention. Curious as to what the young entrepreneur was carting around, Somaia asked him about it and was amazed to hear the answer. For Agarwal, who left home in Odisha as a teenager to seek his fortune, carrying all his possessions wherever he went was second nature. And later, as OYO Rooms chief, checking into a new room every night was also business. “It helps me get a pulse of what customers and hotel owners want and also gives me the convenience of not maintaining a home,” he said.
Agarwal’s early hands-on experience in the hotel business gave him deep insights into what he had to do to be successful in that line. “Initially, when we were running just one hotel in Gurgaon, I used to handle housekeeping, sales, CEO duties, etc. I would literally wear the OYO Rooms uniform for housekeeping and would show the room to customers. Sometimes, couples would tell me, “Abe nikal ja room se, hume kuch karna hai (Get out! We want to do something). I would be like, ‘Okay sir, sorry about that’. I was usually nice to people, so yes, I got tips too. One time, a family asked me to babysit. And thankfully, the child was quiet with me. The family was so happy that they gave me Rs 50. I have also been offered by people to work at their homes,” he told ET in an interview.