Transcript for:
Summary of Lecture by Ritesh Agarwal, Founder and CEO of OYO Rooms

at the oo setting I am the least educated I am the least experienced and I am the least probably proven talent in the management team rites Agarwal founder and CEO of oo rooms his story is the stuff that Legends are made of definitely one of the biggest success stories in that travel and tourism so a company that was growing triple digit percentages year on year overnight the company lost 70% of its revenues after we did the Shar Tang episode I got two or three in the email saying that you know um oo has taken all my money they have not returned our money we not able to cope up some newspapers actually at the slightest hint that there was any challenge would actually write a new story about it as an outcome saying oo Paka is going to not exist Paul grah said that you should do things that don't scale my view is similar but probably slightly unique to our business or what I have learned over the years founder driven companies end up creating more value than only professional driven companies education and formal University should not be seen as uh the same thing when did Peter theel Fellowship happen did this happen after you started oral or before well I think I'll tell you the long [Music] story before before we Mo ahead I want to quickly thank our partners of today's episode and that is University living.com people did you know 6.4 million students go abroad each year and they face one major and expensive problem which is housing uni living isn't just another accommodation provider but it's a community- based content-led Tech enabled Global student housing managed Marketplace from sorting out your accommodation to your University fees to rental payments all the way to booking your air tickets they have everything thing from start to end it's an ultimate study abroad bu with a diverse range of options like private Apartments purpose buil student accommodation and home stays uni living caters to every students's unique needs and preferences all the properties are 100% safe and verified by University living which ensures a secured environment for students to live and study with their userfriendly platform you can find your dream accommodation in just a few clicks plus their Advanced AI tools like the cost of living calculator and study abroad buddy will help you plan your budget and will help you get personalized guidance so if this sounds interesting to you check the link in the description and get 10% off on their services hies this podcast is very special for me why because uh like I told you I started following you 7 years back when I saw you deliver a talk at I am so during that time I never thought I'll become an entrepreneur but the aspiration that I I had is if at all I become successful one day I should be able to talk like this guy so it's a very big deal and during that time I would have never thought that I would meet you in my house so thank you so much for coming means a lot no ganes first off thank you for having me here uh you may remember we first met at the sidelines of Shark Tank and I remember thinking that you have substantial amount of detail and you also mentioned that you had made case studies so after that I've been watching those case studies and is incredible the level of detail that you go into so I would actually say that you speak uh probably in a manner that now I aspire to speak as clearly as you do then the other way around but thank you for having me and thanks for the great Kan I'd love um coming back here as much as I can because the great food you're most welcome man thank you so much R you know a lot of people know you as the founder of oou and after doing two to three podcast what I realized is that the entrepreneur is known for his successful venture but he's actually a result of the learnings that he has acquired from the failed Ventures and when I did my research I found that you were selling SIM cards to earn money why were you selling SIM cards look I talked about it recently in nikkil's podcast but today I'll use this opportunity to go far deeper into this um I'm a family we are a family of four siblings I'm the youngest of the lot the Elder three are um sort of uh Asian parents dream Engineers uh two of them went to business school um got good jobs U married in time so every tick mark that you can imagine I was always little bit of the Rebel you may consider With or Without a Cause so I always wanted to try and do something new so when I was in my third or fourth grade I saw that uh there was probably the first computer that came to school and there was a lot of enthusiasm around it only students above sixth or seventh grade were allowed to use it so my life's Mission became how can I sort of get access to it sooner so I would reach out to the computer teacher who had nothing to do with me and I would say can I learn a little bit can I do something about uh helping you to do your job and eventually as life would have it I learned uh some basic programming I was able to get access to the computer lab sooner so I was constantly this kid was trying to do something new something different and you'll always find them in a classroom in a classroom there will always be those few kids who are constantly thinking I to do something different I was always that kid now I heard the word entrepreneurship for the first time when I was also still in my third or fourth grade between me and my eldest sister there's probably almost a 8 years uh or a higher age difference 8 years roughly so third or fourth grade and she had just got into a plus two to inisa lot of students students go to the plus two format of Education not the 11th and 12th grade equivalent so she goes to uh you know her plus two and then they they have an event which is an entrepreneurship event so she's back from her college and she says we have an entrepreneurship event I had never heard about this word so I go figure out the dictionary and I read about the word I remember hazily it said um you know entrepreneurs are people who solve problems and create a business around it I thought yeah this is what I want to become not because what it meant was interesting just because it was something new and then sort of came this uh perspective of SIM card right so Telecom was in its rapid growth phase in India the only Telecom service provider available maybe before the early 2000s in places like odisa was BSNL there used to be a BSNL telephone exchange people would go there receive SIM cards things like those very expensive to use I think Airtel was one of those Challenger companies which was just getting started it was a startup at that point of time which was wanting to disrupt the broader Telecom Arena by making it easy to keep get SIM cards in the hands of people or telephones in the hand of people making it cheaper for them and while making sure that the experience is of high quality so let me give some examples of what that period was like so around the time when I started selling sim cards for every month month of validity you needed to spend 200 rupees of recharge uh time so just for a validity that's when they launched a program called Airtel lifetime prepaid where they said now you have lifetime prepaid right so Z you can continue so you need to only buy talk time you don't need to buy any more validity weirdly when I started oo again I thought that the $999 program worked very well for me when I sold SIM cards so oo started at $9.99 okay what do you mean $9.99 price price of theice so if you remember back in the day when oo had started our advertisement used to get a clean comfortable room starting at $9.99 oh so airel was also selling these SIM cards at a lifetime prepaid cost of $999 correct okay then I'll give you another example you'd see a lot of little stores have the red signages of airel right red color backlit signages I used to sit on the back of little Vans and take the signages to install them on the shops who I was selling SIM cards to that inspired me to sort of when I was starting oo now when you drive around India it's impossible to miss an oo signage that inspired me to put the red oo signages on our hotels so while it may seem like it was just a 2-year summer holidays thing of SIM cards it left a lasting impact on me and my decisions over over a period um uh in my lifetime I started doing this in my sixth grade uh during summer school uh summer holidays uh because partly because there was nothing much to do and I was this Rebel who wanted to try and do everything new I could Telecom was new Telecom was exciting it was the closest that any business in a town like Raga where I come from came to having any access to technology so I thought I want to do something about it and I enjoyed every part of it and I think um I can go on probably for an hour about how experiences there have changed my life but I think if I to summarize them understanding the small business owner in India I think would not have happened if not for my airt stint because uh if you see global telecom companies they mostly distribute using their own retail stores right so you'll see AT&T stores Sprint stores and so on India is probably one of those rare markets I would say Indian companies have then gone and replicated this in Africa where the distribution is not through their own retail stores it's through the kirana shops the Telecom stores now of course internet is also adding in but still a large part of the distribution still happens through um you know General trade where kirana stores small telephone shops other ones retailing out sim cards mobile phones and so on and I think uh my uh time period of selling sim cards for airil uh taught me this how much money do you make out of it well I don't remember but what I do remember is the first time I made a 2,000 rupe uh income by selling a few SIM cards I came and gave to my mom and I said this is my first income as you know you you're naive and innocent and my mom still has it with her really she still has that 2,000 Rupees I was recently U you know we were moving houses and uh mom was moving something and in one of them she pulled out and she showed the same 2,000 Rupees that she has from back then so I think um you know uh each like the first earning is special as you can imagine uh similarly at oo our first client I've been searching her for my lifetime I still not found her uh there was this client who came in they were performing at a Gau um Event Center and this was a group of artists and they spent 70,000 Rupees to book three nights take over the full Hotel I still have the print out of that check like I took a Xerox I of course banged that check because 70,000 was very important but uh I have that framed with me the uh print out so I think the first earnings personally and for your business are always the most special but I think I think if there is one suggestion I have for anyone who wants to be in consumer business in India is please be in general trade in some form or the other whether it is selling package products Telecom doesn't matter but if you are able to appreciate the small business owner the small shop owner and how they think about the user I think um your abilities will be disproportionately higher I feel the gtia who has a little shop probably understands more about the customer than even some of our own algorithms where we send CRM notifications and so on and I think my aspiration remains that how can we replicate that by using technology so from what I make out of this is that small business owners because they are in direct contact with the customers they're able to understand the pain and interest of the customers much better as compared to the larger companies so my question is when you were the small business owner what did you know that you wish airt knew about the customers yeah I think I would just say two things right I think the small business owner has actually three superpowers in my mind which allows India as a unique Market uh where I think there have been probably five different scenarios in the last 20 years where people have said kiranas and the small businesses are dead and they've all sprung back and they've sprung back with force and Reinventing themselves I think the first Trend that the small businesses bring that you mentioned is they have deep relationships with their customers the second is that the entrepreneurial Spirit of the small shop owner in India or the small business owner in India is unparalleled they work 24/7 uh your viewers may have a lot of people whose parents uh run small shops they would probably have taken no holiday in their life yeah like they would not take any holiday because they don't want to keep their shop shut it is so popular that in the north you would say that very rarely anybody would say that nobody would say the real word the word people use is because it's so important to them that a shop should not close if a Shop is open it is open all the time so that sense of key my life life and death is linked to this one shop is an entrepreneurial Spirit right or wrong is a personal choice of the business person but I think that makes a huge like no big company can compete with that and I think the third one is a loyal set of people who are willing to work with them through thick and thin because you know every shop owner you'll find that they would have two three egom uh like loyal people who have been with them through and through across generation I think that's the third thing that makes small business owner successful what did I know that etel did not know I think first off I think I owe a lot to etel and people like Ajay Puri Manoj kohi who are a used to be CEO of AEL udisa at that point of time he did very well at AEL I think recently um um you know has retired from metal and Manoj of course came to work at soft Bank later uh so uh uh I think uh I have learned so much from them so I owee a lot of what I have learned to my SIM card selling days but I think uh if I have to share about one or two things that I think AEL did not know uh the first is I think AEL had a particular focus on a set of shop owners their particular Focus was any shop owner which was an electrical um or anything to do with some form of electronics or technology they could be better distributors uh or sales companies whereas I focused almost significantly on the kirana shops because I saw that kirana shops had significant frequency of usage in Telecom giving the SIM card is actually the easiest part of the job the real job is the arpu which is making sure that they can have regular recharges yeah and I thought that if we were able to focus a lot more on kirana stores we'll be able to make a bigger difference I don't know if etel knew it or not but I think in my town I was a lot more focused on this segment the second is uh more than money um emotional validation mattered more to my Retail Partners and I'll give some secondary example of it so AEL would always have what is called a trade scheme it's a very popular word in general trade so it would say that if you sell five SIM cards you would get this much as a bonus if you sell 20 you get this as a bonus I replaced one of those from cash cash to kind okay so instead of getting cash at five SIM cards you would receive a dinner with your wife at the only hotel that Rara had now that only Hotel was actually a two star hotel but you know I think for our town it was the only fstar hotel to be honest and I sent letters to all their houses saying there is this dinner option what it led to is this becoming a family discussion where the husband or the wife of whoever is running the shop would ask the uh other partner saying by when are you going to be able to sell these five SIM cards because you might as well go to this dinner so I think these little things made a difference which I think uh maybe uh a knew but I think more than that at least I was able to be creative enough to say I will come up with ideas that matters to my store owners and their families and be able to work with them to make them successful and this also saves cost this saves cost of course because a dinner is a much more cheaper kind option to give to somebody rather than giving them cash I I I think so and you can also of course negotiate with the restaurant owner to get a better deal at volumes but it's also something that people can flaunt right like exactly out of 300 restaurant own store owners the five went to the restaurant would say you know like I was called to go to the restaurant to be able to have dinner because I had had a great outcome so I think um you know people appreciation is as or more important U than monies uh but I think uh that's one of the things that you can never have enough of or give enough of uh even in a you know in any other uh business setting also so I think that's one thing that is one is is one that I reflect on myself saying how can I do more of it myself as well this is so interesting man do you mind if I give you an exercise no I I don't let's do it okay soes here's a exercise okay looks like an ITC works this is uh this is actually my friend's father's company it's called Dal Samaran and they sell one of the best Dal makes in Delhi amazing okay and all the Bollywood actors also have it nice now if you were the owner of this company yeah and you go to a Kira store what are three or four questions that you would ask to gain customer insights oh good have a look at this first I I I would love to yes it's good it says a companion every Nan and Roy deserves yeah yeah this is very interesting so what are the questions I would ask a store owner and then I'll give you some insights that I have by looking at this okay the first bit I would often ask is saying that uh what kind of a shop owner am I going to I would ID like to go to a shop owner who has at least some kind of demand because this fits two or three TGs right it fits the standard grocery TG if you're going to have you probably are equivalent that you want to try and sort of say that this is probably the M premium version of Dal that I have which you don't need to cook second TG that is uh Direct direct L connected to this is the young Millennials no time to cook um uh done uh a lot of uh food ordering someday I want to feel like I want to cook it's not really cooking but uh well uh anything that um you know feels like cooking works so is there a store where Millennials often come it may have nothing to do with food but I'd still want to display it there and the third and I think this is an important one is anything Boutique or gouret uh where I feel like um I could position this product um as being relevant high quality or something interesting like you also called out that a lot of Bollywood actors uh use this product it just tells you that you know this has influence in sort of the um higher strata in the society and hence can it um impact the a lot of other audiences to purchase so that's the first question I'd asked that do you have one of these three segments of users do you have Millennials as in do you have or college students like do you have um you know SIM card sales do you have book anything SIM cards maybe more electronic types of course the groceries are much simpler one and the uh third is of course anything that has influence like a boutique shop which could be anything like one of the d2c uh U you know or a bunch of d2c products if they're there in your retail store for example I used to live in vatika in GGO and right outside of that there was a little convenience store and the convenience store mostly stocked uh products which were made by small businesses but were made for the premium segment much like this one a okay like you know they had uh rice which was uh grown by farmers and then was packaged by a small d2c company and it's like a I used to always call it as d2c only convenience store where there were only d2c new age uh brands that I could find okay but anyway long story short I think this is the first question I'd ask the second is I think if you think about it uh in terms of the price segment this is 250 rupees it's not uh cheap by any uh uh magnitude so it's important that the customers that are coming have a salary of anywhere upwards of 6 lakh rupees okay because below 5 to six lakh rupees I think a lot of people are going to look at it say that this looks lovely but uh should I spend it maybe they'll also spend a few times but they're not going to be my regular users and I'm a big believer of lifetime value so I would ask that how many customers in the shop come I'll not ask 5 to six lak rupees because shop owner wouldn't know this but I would rather ask more like what kind of people come if they say businessmen uh or they say that they are U you know uh people who work in government jobs or there are people who like any direction where I feel like there's some level of affluence that exists then I would possibly like to focus a lot more and the third and this is a very important one there is a very important concept called in store placement in store placement yeah when you come to a shop there are three or four places where the customer will Almost 100% times see what's going on right so right above the shopkeeper's head You' see that often there will be a rack rack full of stuff and there will be very nicely few things stacked in the area where the shopkeeper themselves is sitting that's very important because whatever consumer sees there is more often than not what the customers are wanting to buy so I would like to see whether the shop has a good instore placement place because if it has the kind of demand SE of uh users that I want if it has the affluence of customers I want then all my job is to put a proposition of my product at a place where every customer can see and ask yes summer right so I think these are the three things I would do uh to be able to gain insights uh before I come in but I'll tell you one Insight from my side uh summeran as you know is in usbekistan that's right no usbekistan I think yes okay um lot of uh Invaders to India came from usbekistan but that's besides the story usbekistan is less than I'm in the travel business I was giving all kind of knowledge about retail business which I'm not in I was doing this like ages ago uh but coming back I thinkistan is less than a 3-hour flight and is an incredibly beautiful country I have never been there but I just met someone who's lived in usbekistan for 2 years and told me about some incredible historical stories about samand and usbekistan and I feel like it's a story that uh viewers should study at some point of time what I would do is use those stories also to sell this product to talk about how uh Indian ancient history and food and Delicacies that we have has an ancient collection connection uh to some of these countries probably they named it uh with that context as well so I would probably try and use that storytelling also very interesting we should we should show this to scho he'll be very happy R you know now that you mentioned that in store placement is important I still so vividly remember that every time we went inside the grocery store there are two places that I look one is like you pointed out right above the head of the shopkeeper and the other is the glass because you go inside somebody's buying something the first thing you do is look down and the moment you look down there you have a bunch of chocolate chocolates and some chocolates are very interesting in fact um some of the best chocolates that I've discovered are chocolates that I could find on that glass table glass absolutely right and that is so interesting do you know any other spots that we should focus on when it comes to instore placement no I think the glass is absolutely the best think of it very you know what's amazing is that um like I was telling you the spirit of Entrepreneurship among Indian small store owners is so incredible that this is the exact same thing that you will see in modern retail like a modern retail store that before you are at the checkout counter there would be a bunch of50 that you can just pick up at the end that you can pick up the same is true for the small shop owner where they have figured that so they are just tall enough to see what's happening inside the glass so a lot of chocolate companies insist they would pay money to the store owner to say and that's why you myself and every one of us our favorite memory of being a child is when we go to the kirana store parents go buy all the boring things rice Dal and so on and we looking inside that thing thinking cholate so I think this is very thoughtful effort that our store owners have done much before uh probably organized retail figured it out this is so interesting now that I'm wondering what all do small business owners know and I think you are the best person to tell me this in the context of oo because you went from being a small business owner to now running a billion dollar company so when you made that journey and now that you at the top what are the most important insights that you got by talking to your hotel owners which you would otherwise not have got by just looking at data yeah look I think I want to take a step back and share that I have a fundamental thesis which is that between competing with a small business owner and partnering with a small business owner always better to partner them and many people will disagree with me okay but this is just my opinion I believe that the small business owners have uh various things like I mentioned which are unique to themselves and is their unique strength whether it is knowledge of the customer ability to work exceptionally hard for their business being able to get um you know a significant amount of new insights So to that extent oo is also sort of built on the uh Partnership of substantial amount of small businesses we don't own almost any hotels on our balance sheet all the hotels that we partner with are owned by other small businesses who just happen to now support the oo brand bring the oo standards in their hotel put the oo technology and get increase in their business through us on the other hand 40% of my customers in fact the largest segment of my customers are actually small and medium business owners or small medium business employees so it's just business like my company that I've built is built on the back of such Partnerships that we've built over the many years in fact I'm coming here from Kolkata and at Kolkata yesterday I spent almost 80% of my day meeting our hotel owners and our some of our customers so my perspective is that fundamentally over the last many years of my own Journey from being a small business owner to um a large business if you can call it that uh with you know uh many hundreds of millions of dollars of Revenue is that fundamentally we have we have evolved to a place where we have appreciated that we are a large business doing business only or majority with small business owners and hence we have to think imagine and behave as much as we can as an organized small business owner so I'll take some specific examples in this the first and the foremost is making sure that you have ears to the ground same way as my hotel owners are speaking to their customers and their suppliers all the time I'm speaking to my hotel owners all the time probably in a month 10 to 15 days I'm on the ground meeting my hotel Hotel owners or homeowners around the world I was in Europe until day before yesterday meeting our homeowners there uh every day I was having morning evening sessions with homeowners then I came to Kolkata yesterday again events with our hotel owners today I'm here at Bombay and before I leave I'd probably meet a few at the airport um before I take my flight again I want to go a little deeper about what I do in these sessions so if there is a business person who's listening to it or is there if there is someone who's trying to build a business with a community of small businesses around them they can consider it as a benefit the first one recommendation You' be given by very smart people is don't bring a lot of customers in a room together because they may each get to know about each other's Deals they may try and sort of bring some negative spirit in the room I believe bad idea you should get as many of your customers in a room as possible they all genuinely not just feed off each other's energies and enthusiasm they learn from each other and they see that well if this person is willing to partner with a company maybe I should do as well so you have to recognize that there is 10% risk that there are negative sentiments but there's a 90% positive sentiment opportunity so really investing in bringing people together is in my view a great thing and I invest as much as I can in bringing our partners together we've also learned it over the years the second is I try address both the good and the challenges upfront so I would come and make a small 10-minute update about the business and typically every quarter we send an NPS survey NPS stands for net promoter score where every Hotel owner sends an update about did they get more Revenue with oo did they think our service was good did they think we help them on delivering great better customer service um and things like these right so I know at a hotel owner level because I read this uh comments before I go there I know exactly what are the top three or four issues and three or four things are owners lovers for so I would address both the good and the tough ones upfront so that way if there is someone who has an emotional happiness or uh unhappiness about any specific matter you discussed that up front and you're sharing about what is the Journey of the company in the future and you go back and update what you committed last time and the progress on the scene and the third we go through each individual person in the room everybody introduces themselves of course to the extend that the room is less than 30 people if the room is probably 100 people then you can only do show off hands and questions uh and more often than not in a country like India our hotel owners are quite a few so it's bigger rooms uh in Europe Etc it's smaller rooms of 30 people or 40 people that that uh we have so to that extent we go through everyone in the room people share their views about what they like what they don't like their recommendations suggestions and so on now we may not be able to execute on all of them but you know almost always I am told by um our patrons we call them our small business partners that it is rare for a company to come here and listen and make the difference so 3 years back in 2019 you may remember that there was a lot of uh there was some news about hotel owners being unhappy with oo uh and and so on I think uh I have learned that criticism can be of course a lot of noise and very little signals but you should keep your ears open so when I saw the criticism I thought that my job is to go listen to our partners and when I listen to them I recognized that this is a great opportunity and probably I had just stopped doing this which I was doing pre 2019 when I was a small business owner and I stopped doing this as a big business so I that's when I thought that I would evolve from being um a small business that became large to being an organized small business in terms of mindset you know this is what reminds me of what Brian chesy once said I was watching this talk where he was delivering a talk to college students along with the founder of LinkedIn he mentioned one thing and that stuck with me he said do things that don't scale and what he meant by that is that I think this came from Paul Graham when they were building Airbnb Paul Graham said that you should do things that don't scale as in don't build a company that's going to go on to become a billion dollar company just build a company that can serve 100 customers in a way that they would remember and and tell other people yeah so what Brian chesy did is he literally went to every homeowner's house spoke to every guest in fact one of the founders actually acted as a photographer because they understood that homeowners are not able to click good pictures even though they had a great house and that is how they able to that is how they were able to catch hold of those 100 customers who then went and told other people about it across the world because of which Airbnb was able to solve its cold start problem but if you ask any so-called season entrepreneur who does not have his yours to the ground he would tell you that just roll out incentives for both customers as well as homeowners and they'll just come flocking in and on the outside it looks like a sustainable way to grow considering the fact that you have a billion dollars in your bank but what these people did was actually sustainable but came at zero cost which is so interesting so you're saying that you should do things that don't scale one of that is having your yours to the ground which is as you scale it is important to communicate with the customers and you also mentioned The NPS mechanism to measure where where the customer is happy where the customer is not happy so that you have a clear breakup of what exactly is the small business owner or the partner unhappy about so that you can accumulate them together understand what is the issue and then solve them yeah look I think first off I think um we of course uh incredibly um inspired by Brian and his team at Airbnb Airbnb is also a shareholder at Toyo oh uh so uh I think every time I have met Brian I've come back being even more inspired and and and we've enjoyed working with Airbnb as a partner and I've listened to this uh one to uh you know getting getting your U you know act right up front I think my view of the same thing or my view is similar but probably slightly unique to our business or what I have learned over the years it is that I often ask myself that it is a proven fact that founder driven companies end up creating more value than only professional driven companies it's a proven fact it's uh there's enough case studies to talk about it so what can a Founder bring uniquely that others can't bring and let me try and sort of contextualize it at the oo setting at the oo setting I am the least educated I am the least experienced and I am the least probably uh proven talent in the management team right there are probably um four people who worked at McKenzie and did really well there two people who went to Harvard Business School uh and various others right very competent folks and when I look at them I feel like you know they know and their ability to execute is so good that you know I have a lot to learn from them so I ask myself that what can I bring uniquely to the table which can help our company expand and be even more successful so I think being able to bring unique context is one thing that makes uh brings this difference second which is what I do with this client meetings uh around the world second thing that I can bring is high quality product building I think uh that's an important part where uh because I'm so close to my own customers my ability to help create the product experiences that we feel could make sense like a simple part of it is that if you flip open the oo app the time taken from the homepage to the time your booking is done is probably the fastest amount any other hotel app you push two buttons and your booking is done it may seem like such an easy thing to do but the behind the scenes is you have to have live inventory and hence your post device has to be actively used in 100% of your 11,000 hotels in India second you have to make sure that the check-in experiences are healthy and in order to make sure that how do you ensure that the front office manager is well trained to ensure the experience is good quality third how do you convince a hotel owner to accept a paid hotel reservation because you can't have two buttons If the payment friction is there in the middle fourth how do you enable ability to see uh live inventory across channels that's why we have to become the single franchisor of the individual Hotel wherein the hotel distributes to oo and oo distributes on its own app but it also distributes using booking.com Expedia Airbnb and many other websites as well so that way we see all the bookings coming into the hotel and hence are able to truly give visibility of the live inventory and then if there is those you know one year back higher percentage but now in that 1% range where the customer doesn't get the best experience how do you respond to it all of this effort goes in to make just those two steps happen right so my perspective is product uh design and development is the second area that I think uh an entrepreneur can bring unique value on the table and the third is of course being able to set Clarity with the company's goals I think I call myself Chief Clarity officer which is if you speak to any colleague or team member who's considering leaving a company among the top three reasons I have often found a reason which is I don't have Clarity of what I'm doing or what I should do to be successful and I try to make sure that I can help provide Clarity to our people about the work they should uh do to be able to make sure the company and themselves are successful uh in the long term but I think that's true for most entrepreneurs not in that order of course but those are the three things I would say rsh you mentioned something very important about Clarity and communication and I'll tell you a challenge that I'm facing right now and one of my friends aayush wadwa he has solved it in perhaps the most brilliant way possible so you look at this team right this is ala team okay they are shooting this entire episode in fact they've been shooting all my episodes now what I found very fascinating about aush is that even aush Inn is equally obsessed equally particular about the Perfection of the work and more importantly he also has the same soft skills as aush and I often tell him that when I speak to your team I almost feel like I'm talking to you so how is it that your team is a reflection of who you are and what he tells me is that uh it just happened by chance and I know that it hasn't happened by chance so in my organization in my organization also when I try to do this with 4 to eight people it was quite good because eventually what I started to notice is that the person who had just come in 6 months back that person started to find more flaws in his own work because I'm obsessed with being self-critical as in if you can just look at your work and and say that you know there are 100 things that are wrong with it then what you essentially do is you decrease the probability of someone else pointing it at you right so self-critical is one such value that I try to I could say per at down to the person who has just come into the organization but I'll tell you the other agencies that I've dealt with the problem is that when you shake hands with a Founder that founder is an amazing guy he's brilliant customer obsessed he focuses on value for money and so on and so forth but the person who's actually handling my account that person is not the founder he is this person an employee or an intern who's just come into the organization 6 months before now my organization is only 8 to 15 people strong but that organization is 70 to 100 people strong and over there what I see is a big mismatch between the values of the founder and the values of the employee now when it comes to an organization of just 70 people when it becomes so difficult and so far away how do you manage to keep this communication Clarity and value system intact especially when you scale so fast yeah I will first begin by saying that we are not absolutely successful in this we are better than where we were 2 years back but I think next two years will become better than where we are today but let me give a very interesting anecdote to it you meet a newly wedded couple you will find that they have distinct perspectives you meet them 10 years later you will find both have become little bit like each other almost invariably right yeah so I think one way of this happening where the founders value and the their way of thinking goes to the Last Mile and the other way around also is just time is the more time if people are able to spend with each other they appreciate how each other think they think similarly their ability to uh make a difference is similar so I think I'm sure uh the intern or The Last Mile person aa's team would probably have been there for at least a few months so I think every time they get exposed to each other the energy gets transferred right so that's in my view the first one that is just time helps to make this happen and it's even more accentuated is because if you think about it especially in India uh and some other geographies also people end up spending more time with their co-workers than their families yeah so if the wife and the husband are have some qualities of each other then you should imagine that in 10 years or 5 years that will be the same among colleagues but there are ways to Short Circuit it so that this should happen by itself over a period of time but there are ways to Short Circuit it in my view the ways to Short Circuit it is exceptional amount of effort in the founder and the management to directly engage with the last mile second now there can there can be many scalable ways of doing it can you write a letter every month to them can you have a um uh all hands with the teams very often can you have smaller group forums where you show up and uh speak can there be all hands at a organization level that people are going in and having conversations with uh can you have surveys the same way as you have owner surveys to be able to hear people's uh feedback and commentary so in my view there are lots of these ways in which we can create such outcomes um but I believe that um long story short every entrepreneur will find their way of enabling it there is no singular set in stone process by which you can reach and communicate to your last mile you have to be authentic about it it has to have truly you characteristic in it because if there is no truly you way of reaching out to your people then your people will never really appreciate uh the value system that you come with right so I think authentic ex um you know uh efforts to be able to make sure that how you think reaches out to people is valuable I do it by making sure that the same way as I meet our hotel owners right after that I'd have a small session with only my team members again we go across everyone in the room each one shares their views their perspectives um and so on and I do it in other ways also right like I'm on every single um uh teams group uh most teams group so there is almost no team member in the company who's not in a teams or a WhatsApp group with me a which means that there is no employee who doesn't have my phone number wow right so I try to make sure that I can be as accessible as possible uh and I try to ensure that um you know I start a conversation for the first time because I always say this one important thing that's one of our value systems is when in doubt ask more often than not I feel like uh people just don't ask and then you know if you don't know then you will act in a way that you deem right versus what you think is right for the company that is so interesting you me mentioned about again do things that don't scale which is give your number to every single employee in the organization even if it's a 10,000 people organization absolutely that is so interesting you mentioned something about value system and what did you say you said if you don't know ask so do you have like five to six values that have written down and then you you do you put in conscious efforts into making sure that that is known to every single employe in the organization yeah so what we've done is we've we have four key values but there are 20 rep manifestations of those values which we have written down and shared with our colleagues so the I'll share the manifestation examples and then I'll talk about the first four right um I'm trying to use Millennial words being a millennial myself right so but I but but I'll we'll get there so I think one is when in doubt ask the second is uh Mission um uh is greater than team is greater than me um which is a important one for us the third one is over communication is better than under commmunication and then we have one uh click below that also the one click below that is meeting is better than calling is greater than messaging is greater than emailing because we feel like if you're just across the table the ability to solve a problem is so much more easier yeah versus an email versus an email like email is the like the absolute last right like if if nothing else works but at the same time with our clients we actually say that everything plus email oh because we want to make sure there's a record and you know you've done the right thing and and and so on right so there various manifestations that we have but the four value system is the first one and not in this order is respect which means that in our company right there's a front office manager who's working for the company and there's a data scientist working for the company they couldn't be more different in their backgrounds their view of the world and so on but our data scientist is speaking to the front office manager to understand what data labels would they need access of and what data do they have access of so which uh they can compute and create better impacts and the other way around where if the front office manager uses two systems and the data is not flowing properly then they would sometimes call the data scientist and say that you know I need help and can you uh get these three data points which the customer is giving Auto compute it and give me a result that I can use for my everyday uh decision making and life if they don't have respect with each other the ability to uh go further is very limited so I think respect is one second is trust I think we are in a business where we work with so many small businesses like in 2019 there was some temporary hamper in a trust our business got hurt the trust is getting better the business is getting better it's deeply linked um the third is bias for Action we actually have a little bracket before that which we call accountable bias for Action which means that um you know you have bias for action but you take responsibility for whatever uh outcomes that comes with and the last is ownership which is uh sort of uh when things go wrong we don't say that that person got it wrong or this person got it wrong and the simple perspective is if you are a leader you take responsibility which means that if there is troubles um uh like for example our company had losses fi 2019 uh and 2020 which was significant you know I it because uh my business plan and my strategy due to which that outcome came and I think there are multiple places we could have done better internally but I think I as a leader I'm responsible for it so I think that's a pretty uh simple perspective that I and all of our colleagues and leaders sort of uh pursue with themselves uh but not just being responsible being responsible means that you will not just own the challenge but also own fixing it or solving it because in a lot of big companies what happens is if somebody makes a mistake their leader has to step aside at Oo we built a culture where we say that if your team made a mistake you don't just uh take ownership for it you will fix it the reason why we we've done this is because in a lot of larger organizations senior leaders never talk about problems because they feel if I talk about this problem I will be asked to step aside oh okay because somebody else will have to come fix it but if I know that the company will actually sort of tell me that mistake done but you will take the ownership and fix it and here is the time frame for you to fix it the ability for them to be able to uh bring up the best challenges or the biggest challenges for the company is far higher but I think these are the four things that uh we typically have uh kept as key um value systems for us you mentioned something about 2019 and you know after we did the Shar Tang episode I got two or three lengthy emails saying that you know um oou has taken all my money they have not returned our money we not able to cope up and when I actually went back to study the story I realized that the media is also covered it to a large extent so and then I also had a conversation with nithan and he gave me an elaborate story of what exactly happened and the position you were put in so could you throw some light on that because it has not because I think every business owner who's going through something if they understand the larger context and the position of the company they'll be able to understand their position in the context better because when there is no information the only thing that know is oh maybe we've been looted right so what happened in 2019 what happened after 2019 during the covid and how did you overcome that challenge yeah no look I think it's an important part of our experience because often when they see a business which is oo is now 10 years old they think that the last 10 years have all been of Glory growth and success right that's never really the case you are uh put to test with almost a situation where you can't even um like people would almost around you write you off so until 2018 we were predominantly an India oriented business in 2019 we started scaling globally but also within India very substantially from 2019 early through 2020 March which is uh sort of the 15 months period we reflected by the end of 2019 that we probably had grown quicker than we should have in terms of our plan and how do you deter mind whether you have grown quicker than you should have is that you're not able to sort of keep up with supporting where your owners are seeking help for your customers are seeking help for and things like those so I think we started sort of uh getting to a place where we um uh what should we say uh consolidated our business to sort of say that now we're not going to grow we're going to focus on consolidating our business so what did we do as an outcome we said we'll reduce the number of cities we are in we'll be in as many cities that we feel we can serve very well we said that we will not do certain kind of contracts which are not commercially attractive for our company or commercially sustainable for us as an outcome um and things like those by the time we were consolidating life had different plans because in March 2020 Co hit so a company that was growing triple digit percentages year on year overnight the company lost 70% of its revenues from what existed right so not only did you not grow what you were left left with was also down by 70% so most people understandably wrote this uh uh story of saying that why oo is most certainly going to wind up during the covid period and it was so um uh eloquent that some newspapers actually at the slightest hint that there was any challenge would actually write a new story about it as an outcome saying oop Paka is going to not exist after this next month I think um uh the two or three contexts behind it is what what did we do during the co period to be able to survive and come out and just not the story of oo but the story of the broader travel industry I think the first one is we used to have two business models we used to have a business model where we used to uh franchise our hotels and where we used to have a business model where we used to have minimum guarantees we got out of the business model of minimum guarantees we don't uh we don't exist in that business model anymore uh and the reason reason why we feel it made sense for us is we felt if the hotel is owned by someone and managed by the same person it is just right that both's incentives are the most aligned when higher Revenue both make more and lower Revenue both make less if you make it in a manner where higher Revenue uh one makes more and lower Revenue one makes less by Design uh it doesn't lead to best outcomes for our customers for our company and to our hotel owners so this is the one change we made and naturally that led to some of our hotel owners not feeling very good about uh this impact of having their uh Hotel uh contract be changed now within that our company has uh endeavored to work with as many Hotel owners as we can to be able to make sure that we give them some little benefit or the other to bring them into the new business model and by and large we have succeeded but out of probably 11,000 hotels we still have probably 30 40 owners where we have not been able to achieve it but we are continuously working with them to try and make sure that we get them across the line Second big change we had to do is focus on fewer markets we had grown globally right like to Europe China southeast Asia us Latin America during Co we prioritized Europe and Southeast Asia markets now of course you started growing in us as well but some markets such as China have deprioritized from uh such period of time and I think the last but not the least is that being able to make sure that you conserve Capital to be able to see through because covid wave one finished we thought that the world was recovering and as life would have it co Wave 2 came which was far more intense far more hurtful to travel companies by the time wave two ended New Year got celebrated wave three came which was not as bad as Wave 2 but it was still there so I think to get through three sustained waves I think being able to make sure we raised more Capital was also critical so that's why we raised also substantial amount of capital during Co to see through some may argue that we raised more Capital than we needed but I'm happy we did it and we actually repaid some of that Capital recently because we had that cash the company's now cash flow generating and we're happy to uh scale it up again so from our perspective we are actively looking to make sure that any individual person uh who may have had any challenge with us we would like to make sure that we sit across the table and help them in some way even in situations where we feel like contractually uh it is um uh not required the only reason why those 30 40 situations have not been resolved is because we've agreed on a certain solution with hundreds of other owners we don't want those owners to feel like they got the bottom end of the stick if the 30 to 40 owners get a benefit that is far greater than uh many of the others U realized over a period of time can you explain what exactly is this minimum guarantee model that you were working on no we are not working on it anymore no we you were working yes so I think when we used to enter new cities right uh in various locations across the nation uh the first two hotels for them to convince to join our network was harder so we used to tell them that this is a certain amount of Revenue you would always receive from oo no matter what because we were quite confident about our ability to add business but that was even at the peak available to only 9% 8 to 9% of our hotel owners because that that is those many new cities that you can be at right but those 8 to 9% was also by number quite significant close to a th000 so I think due to which it required uh such amount of deliberations with each one of the hotel owners during the covid time period so this was like for example if I were to put it in the form of a story it's like if I've got 16 rooms then you would make sure that you give me the rent for at least five of those rooms all throughout the month regardless of whether those five rooms were occupied or they were not occupied is that correct uh I think it would be that if I have 16 rooms five of my rooms will get occupied in some form or the other okay and if they are not occupied then the company would pay you the rent for it okay and during Co you had to switch you told them that now we can no longer give you this guarantee no so this changes we started actually uh some hotels we started which were new cities that we were shutting down from pre-o itself from December 2019 but even in the cities that we were in in those cities also we started switching later now the cities where we switched even before covid or even early start of covid there were multiple reasons for it some were due to business model somewhere due to certain contractual obligations that us and our hotel owners had there were various reasons of it but the net outcome of this was that we entirely moved away from this business model and moved to a singular business model partly because Simplicity is very critical in times like these so for example if you have four kinds of business model then you have to have four kinds of reconciliation systems four kinds of account payable teams four types of account receivable teams four kind of contractual management teams the s simp your organization became for future contracts life became as much simpler as well very interesting now I want to take you back to the oo story okay after selling SIM cards you came to Mumbai right uh no after selling SIM cards I went to Kota okay and from there you came to Mumbai I never I I'll tell you my first story of coming to Mumbai okay so I came to Mumbai first time um I think in 20 11 2011 I think I was still in high school okay I was in Kota and uh first time I came uh in a train uh to bandra terminus that's where the train uh dropped me and I had like almost no money uh so I stayed at a place opposite to the raway station which said it name was a hotel but it was not a hotel like it was a bedroom with no roof and so on but anyway on the way back I didn't have a train ticket because it was last minute travel uh so I had the general ticket somebody in the station told me yeah I will get you a sleeper ticket pay me 100 rupees I thought this is the best deal in my life I paid him 100 rupees he gave me a ticket the ticket looked and felt exactly like a sleeper ticket but it was not a sleeper ticket okay then what was it it was just a print out okay lost the money I lost the money I went back to the general bogie stood there and got to the other side okay so I have had quite incredible experiences of coming to Mumbai but look Mumbai is an incredible City but if you have less than 2,000 Rupees in your pocket it was not an easy City to come live in 10 15 years back correct um I've even once stayed at a shop which at 9 night doubled itself into becoming a nightly Hotel like they'll just put the mattress on the floor and and you can stay there if you like you stayed over there uh not first time but one of the times okay so how did how was oo born then it was called oravel back then right it was called oral back then so I'll I'll tell you the long story short I grew up in rayara in urisa after my 10th grade I went to Kota Rajasthan for my engineering training like many others uh go I realized very quickly that uh while education was interesting but the primary intent for me to come far away from home was because I wanted to try and do different things I interned for little little companies socialia campaign things like those whatever income I would make I would use that to travel I absolutely love travel so I would take like buses from Anand vhar isbt which is one of the key bus stations for Delhi and go to somewhere in utarak Himachal and that's sort of picked my interest in sort of traveling as much as I could actually that's how I met my then girlfriend and now wife who I've dated now dated for probably 11 years before we married wow because she was in utak back then um but but long story short I think I traveled at with any little money I had and every time I traveled I saw this little guest houses little hotels and I thought what if I could sell them online uh because they were unavailable so my concept was unavailable PR brought online that was a very simple perspective and I started actually with a Blog where I write a blog about these are the five places that are unheard of in dadun which you should check out um and I would have like U you know Shaheen B in it a few other which is of shine B is of course very expensive but they're also very lowcost places that I would find and similarly in Manali similarly in various other places and go there in like one of these buses where the driver has to stand up to turn the steering wheel right like these are not the automated buses uh um uh but I enjoyed traveling so that's how it started started as a hobby to begin with translated into business where I where we could let people sort of book um you know these places online um in terms of construct did it for so anyway so until 12th grade 11th and 12th grade I was doing this internships and so on after 12th grade there's six months between school and uh college right that's when I thought I was you know KN enough to start a company of my own so I started a business which was oral back then did it for a few months realized that just the online booking service was not good enough because these small businesses required a lot more handholding in this period I stayed uh every day at a different guest house or a different Hotel um and that's when I sort of thought that uh maybe one of the people I'm meeting maybe I should pitch them to become their single provider of their entire premises like the single distribution partner distribution brand franchising upgradation of the property and so on so that's how I met um Rajesh yadav G who was our first oo Hotel owner and you know uh uh life has never been the same again of [Music] course when did Peter theel Fellowship happen did this happened after you started oravel or before after I started oral and after I had started the first oo Hotel uh we didn't call it oo then we called it I think I had started calling it oo it was called oravel ins come oo as a two-sided name uh around itself yes okay and then you went to theal Fellowship yes how did you apply what did you write in that form because from what I read there were only seven people who got selected away from us and you were one of them well I think I'll tell you the long story uh because you said deeper is better how did I get to know about Peter thel in the first place so I I like watching movies like many other Indians so I saved up pocket money when you sort of go and eat somewhere you take two more Auto rides the pocket money anyway very little so I'll go towards this movie in Delhi so that was my plan I went to watch this movie called The Social Network in which Peter thel not himself but somebody who acts as Peter theel Stars so I see that this guy is someone who does seem like would be willing to take a bet on a you know 12th grader like me uh so next time I went to the cyber cafe these are the days where cyber cafe used to exist for internet 10 Rupees per hour you get access to the internet so I went and searched about Peter theal this was a time when theal Fellowship was actually quite quite controversial in the US because a lot of uh students from Harvard had dropped out to become a the fellow and then there was a big debate between Howard Dean and Peter theel over the years so the news popped up so I said you get rupes you got to give no equity and he supports you to build a business so I thought interesting so I started looking at the application very interesting questions and that so I I applied purely because of questions for example um what is the one contrarian thing that you believe in contrarian means what contrarian means that what you believe in but everybody in the society disagrees with or what the entire Society agrees with but you disagree with like education is a scam well I think education in my view fundamentally um is exceptionally valuable I'll tell you in our theal fellowship the contract starts by saying it's a popular saying by an author we never let University interfere with education H right so education I believe the foundation believes the the foundation believes and I think generally at large the community agrees that it is exceptionally important but education and formal University should not be seen as uh the same thing yeah University is just a way of Education you can get education from there you can get education from the growth school you can get education from um watching some of the Shak Tang episodes you can get education by being on the ground there are many ways of pursuing education um I also don't uh believe that formal education or university is a bad thing I think University is quite valuable but I feel um the format of University education the way it has been imparted over uh many years or decades that needs to be challenged and questioned um uh and I think once challenged I think it will improve for the better only true right so a lot of my colleagues went to Great universities and I have colleagues who went to night school also who directly report to me um and they've all done very well in their careers and and and lives so uh you could have somebody who went to the best school in the world and somebody went to a night school uh right and both are doing equally well uh in terms of their success and and the and the impact they're making so in my view fundamentally uh education and its education is exceptionally important format of Education uh is many uh education policies and systems need to be questioned I'm happy that there's a new education policy that have come and if you read it it's incredible I think it's probably one of the most modern education policies around the world it'll take time to get implemented but I think it's a very thoughtful effort um and I think it's not I'm not saying this just for the Indian education system uh where the new education policy is highly impactful but I also say this for the US education system which I think people say of course invests a lot in research um has a format of major and minor education but I think um ability to sort of uh bring more critical thinking ability to sort of uh bring more real life impact I think there's a lot of opportunity even in the US education system but I think that's sort of what um is is a is a conversation around the theal fellowship I would say was it the contrarian answer that you wrote no I did not so I'll tell you what I wrote I think two things the first bit was that uh a lot of people believe that young people cannot disrupt the hospitality sector because a sector where experience Etc counts I said I believe that experience counts but my experience of being a front office manager being in my own hotels for a long time uh at least allows me or qualifies me to be able to make a difference and hence I can build a long-term successful Enterprise in the field of hospitality um and the second thing that I also wrote about is that entrepreneurs have to be fundamentally contrarian because if you believe that a certain business is going to be successful as it is then the whole world also believes it right like if that was not the case uh then it was not probably uh the opportunity that an individual entrepreneur would have to go build a new business so I'm sure that when bhavish started Ola electric people said bad idea when the pend started zato people said it's a bad idea but because they were contrarians in the first place they were able to create uh healthy Enterprises and when they became successful I think and people became their users they said well this makes sense so my sense is and that's probably been our own U at least that's been my experience as well so my perspective is that um these are two things I wrote and I think I was a you know n 18 19 year old um uh and I remember after I became a fellow so first off the reason why I was so excited about it so I wrote the application forgot it luck plays a huge role my my friend so I think the application was going to end 31st December I forgot and slept next morning I woke up and I remember waking up so sad saying could apply then I figured that applications were closing Pacific time so there were a few hours left so I applied um or even not I think just they just probably kept the applications open but I think I was happy that I could apply then after I applied then there were interviews happening product head at Twitter was interviewing you a product manager at Facebook was interviewing you for some somebody who's a just a 12th grader to get to meet these people such a big deal it doesn't matter I just want to have the opportunity to uh pursue this uh interviews and getting to meet people then one day I get this letter saying you're among the top 40 candidates come to the US and the top 20 get selected top come to the US yeah okay so I said free flight to the US they gave you the flight ticket also they gave me a flight ticket and a Visa letter but I had didn't have even a passport right like I had not been in a flight passport concept but I was so excited like I had no interest like I had zero confidence that I become a theal fellow but my only hope was that I make this free trip to the usport because if you don't have a passport don't have a vter ID nothing I was just 18 El because National just ended when I started or around the time to IDE is not there so my mother like I I I think only a mom can put in the effort that she put to get the passport but I didn't tell her it was because of dropping out if she knew she would never make it okay so I only told there is some person who generous enough to come let me go to the US to travel once so she said perfect like no child of mine nobody in our family has ever gone to like us so it's a like family in sense she like she was just so happy about it there was no other um uh Asian resident who had been a theal fellow until the year where um uh you know I became a fellow so um to that extent I also didn't have much expectation but anyway long story I think I spoke at the at nik's podcast also about how the Visa process happened so I'll not bore you with details I got the Visa went to the US but then when I met these 40 other people know 39 other people I found there people like me they have same enthusiasm of growth they have same insecurity of failure of their startup they have same um history that everybody thinks they're a rebel come from different walks of life some of them were very wealthy some of them uh not so much uh but Sim very similar people so to that that extent then I felt that up I will put in the effort to come in top 20 the program sort of incentivizes or brings in people purely on the back of their enthusiasm as well as their commitment to their ideas to what they want to build because at that point of time nobody really knows what they're going to build eventually right um and of course I think some of the other startups have done really well so for example just one class before us was this person called Dylan field uh Dylan is um you know uh the founder of figma figma is a very popular app so we used to do some potluck dinners where we used to discuss saying that you know do you really think that people will go from having a native Adobe product to using online service of figma uh and of course they've done really well over the years um then I think two classes ahead of us was uh the founder of ethereum um which is of course a very popular cryptocurrency over the years but more than that I think uh they've built a service which is probably one of the most um well-run Services uh on on blockchain over the years so I think fundamentally uh this kind of cohorts of talent sort of inspire you even more that you can do even better um yourself over the years uh and the the fellowship changed my life to the extent that it really allowed me to think big where I saw Founders uh who were having no resources much like me but we're willing to think that they want to build businesses are the biggest in the world so it really taught me that if you had big ideas and ability to execute them uh Capital eventually you will be able to race uh which was not the feeling I had before I went to the fellowship wow you mentioned something about the filtration mechanism which was so successful that it was able to pick the founder of figma and the founder of ethereum when everybody else would have called them crazy so my question is how did they filter apart from this application process what question did those guys ask you to measure two things your commitment towards ideas and your enthusiasm because both these attributes are things that you cannot measure over an interview right so if the system has been so successful there is some method to this madness right so what is this method no so this is a very important part I think at least in my interviews uh perseverance was a very critical part of uh effort because um the foundation wants to uh so Foundation doesn't mandate not going back to college so so um there are cases where students have dropped out of let's say MIT uh come to the program and after 2 years gone back to University to complet it so for two years you have to stop out of college but if you do really well you may not need to go back to college right that's the thesis effectively and the program wants to bring in Founders uh or or fellows who fundamentally at least this is my opinion of it who fundamentally want to sort of make uh long-term difference and in the face of Crisis and challenges would actually uh not give up would come back stronger So to that extent my view is that um uh you know um the the program really uh the questions that I would get asked is that when was the last time you felt like you were going to fail and I said well it was two weeks back when my landlord threw me out of my basati uh right so I think what uh made for me this logical sense I think for them probably they were sort of looking at it and looking at perseverance um with with with those situations I think the second thing that I also found quite um uh interesting in the questions that I received um is the ability to be open-minded about ideas so for example I got this question saying well you're doing something like this in India but we encourage fellows or we believe that fellows can do really well in the Bay Area because we have a lot of introductions and people we know here that if you find an interesting idea here would you build it here in the Bay Area I said look I very focused on solving a problem I want to give this a fair shot I will put in all the effort I have to make this successful due to which I'd like to come back during Fellowship only back to India to build this but hey if that doesn't work you should know that I'm most thankful to have access to the theel community so I will come back and ask help for it so I think openness to idea while having commitment to yours is sort of what I think they may have taken away but I have not um uh spoken to some of them for a long time who interviewed me one of them I've spoken to uh his name was AEL he was I think a product manager at Facebook if I'm not wrong um and and I spoke to him because we had some issue on our on our Facebook account two years after we started and I could reach out to him send our trade marks and get access to our page back so uh uh but I think I haven't I haven't spoken to aille in years this reminds me I should call him as a followup but the interviewers were fantastic but I think the point that you mentioned right these are attributes that I believe fundamentally a lot of early stage VCS don't invest in because when the companies are so early the idea the early starting project are dime or dozen what matters is whether the individual you're backing is that individual the person you want to partner with in the very long term because this this is an idea stage with business right like very little or no revenues So to that extent you're not really investing in a business you're investing in the individual and as a fellow that's what they're doing they're betting on individuals regardless of businesses they pursue like there are multiple fellows who have like changed five businesses over the years uh and and continue to do something else um um there is uh uh one person um uh you know his name is D Delian Delian used to build his own startup I think it was called nigh inle then he left that went to work for kosla aventures but now runs a aeronautic startup which just raised over $100 million uh build uh building manufacturing capabilities in space right so it doesn't matter what's the uh startup you went into because the fellowship places significant effort on the individual they're backing rather than the business that they're backing in terms of context how do they do that what what is the program like so the program is um you know interesting to the extent where it is deeply connected and not very deeply connected okay uh or or uh deeply connected to the extent that when you start the program you write a letter to your 2year younger self right so you can open only open that letter two years later oh okay right so you write a letter as if you're writing to yourself today from 2 years later and you write what are a few things sorry it's the reverse you're writing to your to your future self okay and you write here are the things that if you did I would be very proud right so that two years later you open that letter and see whether you've been able to progress and get to such outcomes or not so it places significant effort on goal setting tangible goals that can bring in an impact okay second uh there is a active tracking of it so every month you send in an update to be able to sort of um uh see uh what kind of tangible outcomes you are able to uh receive in terms of uh uh improvements uh third there's a theal community app where there's a entire uh group of people in the Bay Area who are friends of Peter thel and and the community who engage fourth is Peter theel himself spends time with you uh he had breakfast with me he he had just written 0 to one so um I have a hand signed copy of his and uh showing his dreams he wrote for your journey from zero to a million rooms and I like we had particularly 20 rooms at that point of time in know so it was a long way back but but I think he saw something in me because I couldn't believe that I would do it but I thought you know he's writing it so I can't say no so I accepted that uh but I think a few few of these things are how you're deeply connected but there are few things you're not connected at all you um possibly have um like they don't mandate you to sort of build one kind of business you can build any business you want uh they uh do not not U mandate you to sort of build it in a certain place you can build it in you know California New York like Maddie is one of our uh Cal fellow she was in fashion so she went to New York and and she built her startup there uh I came back to India because my heart was here uh so I think it didn't matter which location you were in so it was a combination of being highly accountable but so I think they were the first ones which really architected work from anywhere in some form uh is at least in my life uh I I would think and what was the syllabus like did they teach you market research supply chain finance and what did they teach you so the fellowship is basically that we give you access to exceptionally smart people okay your job is to go get as much as you can so what would your day look like so my day would look like that I come back and build my company but every week I would take a couple of hours I would reach out to somebody who was building a business in travel and I would reach out to them and say that how can I build connect ity with third party suppliers I would reach out to somebody who was a lawyer in the theal community and ask how should I deal with the implications of legalities of what I'm pursuing U so basically the context was that it is more a self-taught program rather than that of um an education program uh which where you have to sort of have a syllabus uh have questions and answers there's nothing like that that exists it's a it's a the the program believes that you're probably the brightest 20 people that they have selected so if they have to tell you what you should learn then they probably have not done it right so they believe that it's your job to find out uh what are the right things but there's a lot of uh programs that are built for uh within the fellows So within the fellows we would have sessions where each one of us would share what we doing we would have potluck dinners which is a concept I learned when I was in the US for the first time we would go to is it called Seven Flags or Six Flags one of these which is a uh par uh in in in the in the US so I think you'd find we lived in a hacker house together I I was there for 6 months okay so uh you know being around other fellows helped so I think it's a lot more of um you figure out what works for you uh rather than that of it's a education program it's less an education program it's more a incubation program so basically you're telling me that Peter theel basically put 40 smart kids in a room gave them access to 20 get selected out of the 40 eventually okay 20 Smart kidss in room gave them a place to stay gave them money and gave them access that's it and they all learned by themselves yes and also of course uh he tracked the results every month uh with with a team that so if there are if there is such a big diversity if there is so much diversity in the cohort how can you set kpis to track uh everybody that's the whole point is you have a two-year goal that you wrote for yourself oh so that's your own kpi that you set for you set for yourself wow and nobody wants to set an ambition which is Little 2 years later no especially when you're 19 year old true you want to win the world so when you came back from Peter theel Fellowship yes how did your approach towards oravel change look I think by that time there two things that had happened one was this um the second is um I had also met um uh various other investors in the barrier I think my perspective of the of life was that I was building both oravel and oo on the sides my perspective was I wanted to build both my heart was an oo I enjoyed building oo but oral is what everybody thought told me was a good business because it was more asset light um and for the lack of a better context arrival was more like air uh like Airbnb or eBay and oo was a lot more like Amazon or a more full stack sort of an approach uh but so just for more clarity oravel is basically asset light model where you're just the aggregator and OU is where you wanted to actually have control over the entire experience of the customer where you would in simple words you would own the hotel and control the customer experience is that correct yeah we we would't technically own the hotel but we would own the experience yes so we would put our brand outside we would do quality check before the customer comes in we would put our technology at the reception things like that okay okay now uh to that extent like most people wouldn't know that mared Hilton probably don't own any of their hotels inore right so uh and that's that's true for us also as a brand uh but I think coming back to the construct um uh in terms of um uh my approach to the business change I think that uh what I learned is an entrepreneur should pursue where they believe they can build a great business rather than where conventional wisdom says that they should pursue a business and mostly reminding myself of the answer I wrote during the the fellowship that entrepreneurs have to be by Design contrarian that is entrepreneurs by Design have to believe in something that the society around them initially is circumspect about whether they can make uh those ideas can be successful or Not So to that extent I think uh you know uh I I I'm not bothered about uh people sort of doubting new ideas that I come up with I feel like well that's what I do uh for a living some of them fail too to be honest but to that extent I think uh I believe that it really made me focus on oo as a singular business that I was going to go pursue and uh that's the time I decided to sort of pause out on arrival um it was a tough time because um you know a lot of people like a few interns were working with me and couple of people who had chosen to work with us to whom I'm most thankful uh left the company saying that well uh we don't believe in the idea of Oo we believe in the idea of oril so um it was a tough time but I think uh by then I had learned to believe in myself and and um uh listen to all ideas but then um you know uh make a well- reasoned argument why you believe that you would like to pursue uh a business strategy guys do you understand the business model of marri mar doesn't own any of the hotels do you want me to elaborate on that I didn't know that okay so I'll give you quick context and this is also for the viewers Mar does not own all the hotels so when you go to a marot hotel it's not owned by marot no that's okay that's okay so Mar doesn't own all the hotels so when you technically go to a Marriot you are yes technically going to a marot but practically it's not owned by the marot group so what marot instead does is they give them the brand of Marriot and they control the experience of everything but the ownership of the hotel so marot owns close to 1% of the entire properties that they have all across the world and what they help these Hotel owners out with is the expertise that they've gained over the due course of time which is how many amenities should you have what kind of training should your staff have how much staff you should have what should be the what should be the ratios of the staff that you have what kind of quality checks should you have what price should you set at what time and so on and so forth so what you do as a Marriot Hotel owner is simply give your hotel and let Mar technically run that entire hotel for you eventually you make money out of it and then you give out a 5 to 15% share to marot that is how Marriot works that is how Hilton works because it helps them stay asset light at the same time it helps them control the customer experience otherwise you will just have two extreme business models the first business model will be where marott owns all the hotels in that case they'll have to put in a lot of capex they'll have to borrow a lot so if something like covid happens then they are gone so at the same time they'll be able to scale very very slowly it will take 200 years to build a brand that is as big as marott whereas when it comes to the other model which is completely asset light the customer experience is not so much in control of the company so the marot model right now which is the oo model is exactly the center where you reap the benefits of both scale as well as quality now is it clear to you guys okay and what's interesting is that that not just maritan Hilton if you look at back home in India whether it is Taj whether it is lemon tree they are all also growing their business models even though Taj does own few of their hotels including the iconic one in Bombay Mumbai um uh but at the same time I think at the Gateway but I think that said the majority of the new growth is coming by management contracts which is effectively not owning the hotel so you came back and then you built this model which is the oo model that's right and then you scaled it yes okay so when did you raise money first so uh I first raised an angel investment okay uh of 30 lakh rupees okay uh which was um call it 6 months before the theal fellowship and then I raised the First Institutional round was from light speed uh which was probably a year after the fellowship yeah okay and what did you do when you first raised money not before theal Fellowship but after theal Fellowship oh I how much money did you raise by the way so I'll tell you this so I raised four CR rupees four cres four cres that was our first round okay First Institutional round second round that way um I had two guest houses then and um for First 5 months I did nothing with it the four cors was in the bank okay it earned a fixed deposit and our company used to make break even plus cash okay and life was good there is a uh joke and I it's just a joke that my company was profitable until the venture capitalist came but but let me let me uh come back to the more serious topic look for the first few months we were doing nothing we were just trying to make sure that the three hotels that we were running was doing well and we were adding probably one hotel a month that much we could grow just by the income we were getting from the previous hotels and what do you do with that you bring in a development person you bring a quality assurance person you bring in somebody who takes care or you spend some money in terms of being able to have a customer service call center also so these are the few things that we invested initially in terms of uh expenditure uh for the company and you know for the first few months it did not lose money because you were able to immediately get returns from the hotel coming by but after a few months when we saw that the results were good we said that we will now start opening 15 to 20 hotels a month that sort of became the new uh after you validated the model after we felt like we validated the model P hotel 15 hotels we reached so the tech was done the quality check mechanism was built and then you knew that this way you could make a profitable business both for the hotel owners as well as for okay right and then uh we call it the Playbook that when we felt that the Playbook was there which is how many meetings so how will I meet the owner how many meetings to close a deal what percentage should accept the proposal that we make what should be the sign to live process what kind of transformation will happen trans upgradation of the property what kind of training will happen for the hotel staff once the hotel Comes live what kind of time it will take for the occupancy to grow what kind of quality checks will happen this entire process also by time was sort of initial plan was built that's when we said we will start opening 20 per month okay right for that we needed to forward invest we had to hire more people we had to put more technology put more services Etc in place it's called capacity building to create that kind of capacity we needed to invest so that's sort of the first time we started sort of losing money in the first place which we um you know uh did for quite a few years of course recently that's changed and now we are generating cash but uh I think uh that went on for quite a few years and if you were to place yourself in the segment of the hotel industry back when you started which segment were you at so let's first Define the slabs and then see where oo was back then so what are the slabs that we have in the hotel industry yeah look there is no conventional slab but I will try and sort of make a slab I think there is a 1,000 to 3,000 bracket okay which I think is economy there's a 3,000 to 5,000 which is sort of midscale uh 5,000 to let's say 7 or 8,000 is upper midscale and again these are not the conventional terms the conventional terms are far more Tighter and far broader but I'm making it simpler for people to recognize and understand so I'm making my own so uh anyone from the hospitality industry should recognize that I know that our uh uh learnings are different but this is just the simpler version okay and let's call it 8 to 9,000 or higher is sort of the more luxury equivalent segment this is a very Loosely put structure now uh within this oo predominantly initially played in this 1,000 to 3,000 segment okay and even today's primarily Focus there but today we do have brands in the 3 to 5 and 5 to8 uh K segment as well so basically this is India 2 and India 3 uh you could say that yes okay I like defining it differently but how would you define it economy midscale okay sorry I'm just I was just pulling your life that's okay okay so here you brought out a very important aspect which is first validate and then scale and this is something that R I have not been able to see with a lot of companies where and I don't want to take names but then I've met a lot of people who do not validate their idea but they simply just want to scale they just look at standard kpis like users engagement uh monthly AC users daily active users and they just try and focus on the metric so much that they lose out on the purpose of the app itself which is utility they lose out on the purpose of the product itself which is solving people's problems yeah and um Even in our case also you know we were just speaking about this sponsors poing more money on Instagram than YouTube because it gives them quick numbers yeah of number of views number of Impressions because a re will obviously get 100K views within an hour but when it comes to YouTube video in some cases in most cases in fact it takes a day or two to get 100K views in Instagram you'll get 1 million views in 5 days whereas with YouTube it takes about a month sometimes 3 months to get 1 million views but the window of the sponsor and the window of the marketing team is only one month and that is because they fundamentally do not understand how the platform works and right now as we speak while you mentioned first validate and then scale there are companies out there which are doing this with their marketing where they're just scaling and scaling and then they're hoping that they'll get their idea validated after at a certain point in time so that is something that is that is very important that I'm taking away because I've always been in this dilemma that we should scale very fast or we should scale very slow okay and here's where nckl often tells me that you know take my money and scale take my money and scale and I often believe that if I do not have a system to scale what am I going to scale so if I just want to work more then I'll just work more why do I need to pump in cash and then work more right so this is something that I find very interesting so this is an important one I want to take a pause and just go second layer deeper in this I think uh the first bit is why do founders do it I think you have to recognize that um if you're working in any form personal professional any of those uh shortterm uh success does give one a high and it is very easy to get so excited about that that everything else fall behind and I wouldn't say that I have not been sometimes bitten by that I've also been bitten by it right like many others but I think it's the tough times which teach you that keeping sustainable outcomes which works for the customer and the partners and yourself combined is what you know you need to find before you scale rapidly the reason why investors say that you know take my money and scale people often misunderstand that the investors don't care about uh getting the product Market fit investors deeply care about it it just that they believe that the founders such as you're doing will be pragmatic and thoughtful enough that they will not put good money behind bad oh okay so you're saying that that's an indication of good faith that's an indication of good faith the investor thinks that you know whether you want the money or not they offering you because they believe in you that you will only use it where you deem the best returns can come so it's very important like sometimes what happens is when entrepreneurs listen to their investors saying CH let's grow and invest they think that the investor acknowledges and recognizes that we have not fixed our product Market fit and they're absolutely comfortable with it that's almost never the case okay and I'm sorry I mean I'm an entrepreneur my job is like I don't see this as camps so I'm just trying to help entrepreneurs in this perspective that look at the end of the day no investor can force you to spend money right until you are the CEO you are responsible for making sure the company's resources are best used so when in 2019 we grew quicker than we should have I take accountability for it in the same way if I'm investing much more measured today than how quick I should be investing I take accountability for it right and that's very important for entrepreneur and cosos to appreciate as my experience you know this is the reason why I admire nikil so much you know he's told me so many times that day also I was sitting at his house and he was telling me that why don't you just scale very fast and and then I gave him a very long reasoning I was thinking that this guy has built something so big and I am telling him as to why am I not scaling but he was so respectful about it he said yeah I know what you're doing you just keep going at it so but then you know I also would like to point out because he's a Founder no he's a founder and he's a Founder who's gone through exactly the same movie you're going through corre he didn't race Capital right like he he built the business by himself and what an incredible business he's built credit to him and Nathan for building what they've built but you know not every body is like him because I've also met investors who just tell me that you know what I can make your business grow by 10x in 10 months and you are a fool they said this very diplomatically but then I got what they were saying you are a fool that at this level with the foundation that you have you're not scaling very fast and what they also tell me is that if you don't move fast enough somebody will just come and kill you or they'll just walk all over you and this is where I also wanted to ask what uh nithan wanted me to ask q and I asked him what is the most fascinating thing that you found about Rees and he told me that you should ask rates whether he succeeded like a lot of players were trying to compete in the same space as you but you are incredibly successful and other people I wouldn't call them failures but they're not as successful as you now there could be two reasons for that number one because you had access to a lot of capital you simply outpaced them because of capital or was there something else and from what you you are telling me I know for a fact that there is much more than just Capital yeah look I think first of I don't think that we are more successful or others are less I believe that everybody in our industry is equally successful but you are a market leader right we are a little ahead yes you're too modest no no but he I think um I think we have a we have a we have a broad market and uh I respect all the other companies in the space we speak to each other often and and I learn from them all the time and I'm sure they take away some learnings from our company as well I hope so but coming back to this perspective of what has allowed oo to gain the uh scale over the years if I were to say I think uh there quite a few things and I will sort of take you through each one of them the first one is that fundamentally we were always comfortable with going beyond the top five cities we've always been a over 100 City player we went to 100 cities like even in our fourth year fourth or fifth year itself um and uh one of our colleagues kav of course drove a lot lot of this effort of scaling our Enterprise nationally so from my perspective uh the reason why it helped us is when competition came they often came to the top 10 or 15 cities and when they came now it's debatable they would say that we start the burn first and we say that they started the burn first but you know he says she says but really whenever but the burn happened that's a fact right but the burn happened only in 15 cities we kept making margins from the next 85 cities oh and a lot of people ignored that most people thought that when we are burning money in top 15 we are also burning money in next 85 what are you saying so we were making lots of money in the next 85 okay and spending that on on top 15 and our competitors had to invest far more money for far lower scale or lesser scale to get to the market share this is so interesting R because yesterday I was speaking to the Mishu team and they told me the exact same thing which is when all the other e-commerce players were obsessed with tier one cities they went to tier 2 and tier three and they are profitable now do you know that of course they profitable at that skill and that is because of one small Insight which is while the entire world was obsessed with tier one they went after tier two and tier three which is so which is so did you learn this because you experimented quickly you learned the valuable lessons quickly and then you applied them or is it because so two ways right I think one is it is first principles but I will tell you that I give more credit to a very interesting learning I had in China I I used to read about China and businesses there so this is the time around the time when Uber was starting to grow in China uh competing with DD most people thought that DD was spending as much money as Uber competing with them DD was in 90% cities that Uber was not there wow right they were in the same CI as Uber and they had 10x more cities so they're making a ton of money in all the other cities and in the 10% cities they were willing to spend as much as Uber and that allowed them to gain Market leadership what's the second thing I'll give you a few uh of them uh the second one is we focus substantially on um very few people know this oo did not have a mobile app for 2 years after we opened the company oh then how are you operating we had most bookings through call center people used to call our call center and make a booking wow right we're a traditional Hotel company so our technology is predominantly the merchant technology because we thought of ourselves we owning The Experience no and customers wanted so much they willing to call the call center and make a booking so we launched our mobile product and when we saw competition was coming we thought that distribution can be a great competitive advantage so we launched this one friend recommends their friend uh and transactions come and we spend almost no money on ATL marketing we spend most of our marketing on this ATL marketing is uh above the line Bally television Holdings things like those so that sort of gave us massive distribution once distribution came like you know it was much harder for anyone else to uh uh disrupt us of course competition everybody was building their own business and they have built good businesses also um the third one is the perspective around um what I feel is high quality management leadership I think management leadership is one of those things that you mentioned earlier which doesn't scale but is exceptionally valuable I think a great quality leadership Great Value systems um they would make the do the right thing no matter what and I think as a perspective that has allowed them uh allowed all of us to sort of come out through all the highs and lows because when the tough times come our people say that we're going to stay along with you we're not going to um not be here and the last and I think probably I I can go on about so many tactics that we that we went through um the I would say but the fourth one is that the function of the industry also the function of the industry is such that if a few Hotel owners like you the word gets around very quickly and if a few Hotel don't like you that word also gets around very quickly so because we were able to get reason reable amount of Hotel owners like our first hotel owner Rajesh yadav G he got our first hotel he told his friend yoyo my business gone up in English when he would call us yoyo Not O say since when I have joined yoyo my business gone up so many of his friends came and then they brought their other friends to the extent that today we have CrossCountry recommendations people in Tamil Nadu recommend us owners in Malaysia people in Malaysia introduce us to owners in Vietnam people in Vietnam introduce us to owners in us like it's incredible like people in Gujarat introduce us to owners in the US and the other way around us owners introduce us to owners in Gujarat so we find like incredible cross threads over the years that have come by but I think long story short all of these efforts led to results which brought more Capital so you can see Capital as the input or Capital as the output you will find very large companies or very large capital infus many companies have seen in India or globally who eventually actually don't exist and you will see companies with far lesser Capital being Market leaders later so I think uh it's uh in my view capital is more an outcome rather than the input um is is is is my sense which is basically Alibaba versus eBay summed up in one line absolutely so I think uh the same is true for Alibaba a lot of people say that Alibaba won against the competition because they got more Capital but real it is Alibaba also competed with eBay and Amazon when they had far more money than that of alib Baba did but I think at the end of the day they executed very well they got a lot of capital and then sort of they were the people who had access to Capital so I think and the same can be told about if you look at the large leading business um houses in India um their success people say is because their access to Capital but their access of capital is there because they have built great companies it's a little bit of cause causality sort of uh effect that I think is at play there uh but I think um quite a few people um uh would say that probably uh I got lucky I partly agree with it uh but I'll tell you how I got lucky I think I feel like I got lucky that um I was in uh Delhi and Kota and interning at a time when India was getting access to internet uh and internet businesses um so and similar opportunities will be available for every one of the entrepreneurs my only suggestion is that uh there will be knock on the door once or twice of great opportunities take it with both hands because lot of times people feel like when the opportunity comes the debate and think so much about it that the opportunity goes away and it never comes back so and I'll give examples of those right the theal fellowship I didn't need to pursue it because I knew there were no other you know non us fellows non Asia resident fellows are not there but I said I'll give it a try that is not the only Fellowship I applied for I applied for maybe seven other fellowships because when I learned about the fellowship I appli right um in terms of capital race when lighted was investing they took almost they and the other investor came maybe a quarter of our company right quarter of your company around that okay for four cres it's unheard of in today's day in life even then it was not the case right but I was very focused on saying that I have to make this company successful if I have good quality Partners they can uh help me Elevate the quality of uh thinking challenges and opportunities and if it means that I have to give this ownership I'd give it right so um and and I was very cognizant that I'm probably not as qualified as the other person who has come out of 15 years of work experience that I can negotiate lack of experience I'll compens it by paying more ownership right opportunities opportunities will be good and bad at the same time I always feel feel whether the opportunity is good or bad is relative from my friend is itad it does it make your life better than what it is today if it's better then you pursue it it may not be absolutely fine it may mean that you're giving more to the other person but on an average if it is making more sense for you and them you pursue it you will get to better days also someday makes a lot of sense and which again brings us to the first St that you said having your ears to the ground yes only then you'll be able to spot opportunities and then you'll be able to move ahead this has been fantastic R thank you so much for your time this is time up I hate I I just hate to end this podcast because you have your you have a flight to catch but then if given a chance I would go on for another 2 hours because I have another 20 Questions left I'm not even done with half of it sorry about that but look I enjoyed this I enjoyed this I often um am in discussions where uh my ability to respond is probably only for 10 seconds or 20 or 30 seconds this is one where I can keep going and you don't pause me at all you let me go and I think it's a good thing but it is quite new for me so thank you thank you so much that is because you've given me a wealth of wisdom I could actually make notes and I'll actually send it to you pleas because this is this is pretty amazing thank you thank you so much R thank you so much for your time it really means a lot thanks for having me [Music]