A 24-Year-Old Built a $5B Hotel Startup in Five Years | Hacker News Reader

A 24-Year-Old Built a $5B Hotel Startup in Five Years

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95 pointsdhruvarora01387 comments

As a customer, I find OYO hotels to be very bad. There are hotels that I otherwise would not even have gone to (since low end hotels in India are appallingly filthy), but the OYO label lends them greater credibility.

I avoid OYO when I can.

A general thumb rule I follow for booking hotels in India is : if you are staying with family, go for hotels priced around or more than 40-50% of the price of the top end chain hotels in that city. For example, in Delhi, try not to book any hotel priced below Rs. 3500 per night. Chances are high that it may be cockroach-infested and grimy. Many of these now have the dreaded OYO label attached to them.

TripAdvisor ratings are very indicative and the portal usually shows prices from various booking sites. Then I call the hotel directly and 90% of time I get a better price and a room of choice guaranteed right them which is not at all possible over booking sites where you get a room type and get assigned one when you check-in. Definitely direct booking when the property is on AirBnb - in this case almost always owners themselves ask me to book directly with them and bypass AirBnb.

You are bang on about the cost threshold.

Pro-tip: for real hotel locations use Google Maps in satellite mode. Esp. useful in hill stations and beaches - you'll avoid hotels that claim to have a view but forget to mention it's the bus-stand view.

How much can you get off by calling hotels? Maybe 10-20% off Expedia prices?

Yatra, Booking, and Agoda are what I usually check. Yes, around 10-25% I’d say and usually the discussed price (over phone) is final i.e no additional taxes unlike on portals where after you go for checkout tax will be extra, sometimes other myriad of fees.

On rare occasions I have been actually told to book from booking sites as they won’t be able to offer better prices :-)

As a counterpoint, I've been happy with Oyo hotels. I've stayed in Oyo hotels in Kerala, Gujarat, Delhi, Mumbai and Bihar and of them were decent. The only trouble I've had on one occasion was locating the hotel.

>>Chances are high that it may be cockroach-infested and grimy.

Also there are likely other things going in the hotel, where you don't want your family to stay at the same time.

Basically 'Hotel Decent' kind of ones they show in the move 'Jab We Met'.

>As a customer, I find OYO hotels to be very bad. There are hotels that I otherwise would not even have gone to (since low end hotels in India are appallingly filthy), but the OYO label lends them greater credibility.

If that was the case, then everyone would use them only one time, and never again. And they would tell all their friends, who would never even try it once. And the whole POYO enterprise would have gone bankrupt within a year of its founding.

But that's not what happened, so I tend to believe that OYO recommendtions are in fact reliable, except in rare cases.

It's a franchise system.

Franchises are wonderful when you are in expansion phase--especially if you have a nicely banked war chest (which this company does because of the VC backing).

The test of a franchise is when it is in stable or contraction phase.

That's when you find out if it's a business or a pyramid scheme.

As an anecdote, this happened at an Oyo hotel: https://www.youtube.com/watch?v=myhubCtp-DI

TL;DW: Western woman was trapped in the room by hotel employees threatening sexual assault.

I first heard about OYO through a friend who shared this livemint article:

https://www.livemint.com/Companies/7CN7u5d4i3bfYgBAZLdLpM/Wi...

The article paints a terrible picture of a guy who has embraced the - fake it, till you make it mantra. Lied about Thiel scholarship, best selling books and even screwing his partners.

OYO has made convenient finding hotels and making confirmed reservations in hotels in small town india. Also since all payments are billed by OYO and not the hotel, the hotel cannot fleece you like charging more for a foreign national. They also have a convenient functional app.

And his surname is not Patels. :-) The Patel clan own a lot of the Mom and Pop hotels in the US.

Is there a reason why? I knew someone growing up whose family owned a motel in our hometown and her family name was Patel too.

This submission talks about it: https://news.ycombinator.com/item?id=17915049

Which state?

I'm so tired of seeing articles like this. WHO CARES? Nothing about this story is repeatable. It deludes the masses in terms of real prospects of starting a business. The headline alone is just clickbait. It's completely unfair, as it robs desperate people of a reality check. I wish I could downvote this.

Lot people find this usedful.

- They are solving problem differently

- 24 year old scaled a company to $5 billion value

And of course you can downvote.

you can only downvote with enough karma/rep/whatever it is here

Plus, you can't downvote submissions at all, even if you have the 500 karma necessary to downvote comments. The only thing you can do is to flag it.

or ignore and move on to the next article.

All of the current major brands inspect hotels frequently. I don’t see anything different Oyo is doing, other than being in a country where people are just starting to be able to afford midscale hotels with some quality control.

Oyo's trick seems to be that they're not building hotels themselves (which is obviously slow and very expensive), but they're applying branding & quality control to existing unbranded hotels and taking a hefty cut in exchange for distribution.

There are plenty of budget hotel chains in India (Treebo, Ginger, Lemon Tree, Fab, etc), some of which have been around for 15+ years, so obviously Oyo has done something right to leapfrog all of them.

That's called franchising and I wouldn't call it a trick since many brands, especially restaurant and hotels, have been doing it for a long time.

>- They are solving problem differently

So like thousands of businesses do?

>- 24 year old scaled a company to $5 billion value

And that makes it useful because? It shows that another few out of billions of 20-something might also be able to do it? We already knew that from Zuckerberg.

You can't downvote submissions, only flag them. Downvoting is reserved for comments.

Well, come on, all you have to do is raise a billion from Sequoia and you too can be the Uber of <something>.

The funny, or disturbing, thing about this is the baby boomer generation actually believes this shit. Not sure if it's because they grew up trusting the media or what.

They don't see all the smoke and mirrors associated with "success" now days.

"To learn the hotel business from the ground up, he spent a year cleaning rooms at one of them"

That quote for instance, is a nice way of spinning the fact that he had to get a job cleaning hotel rooms

He could have probably chosen dozens of low wage jobs though

He did choose one - cleaning rooms.

What are the odds between the two options. One, he took a low wage job at a young age because that's what everyone but the rich have to do, and then spun it as a story about how he always had a vision and it makes a good story. Two is that he actually made a plan to be running an international hotel company and made calculated choices to do so, without any of the benefit of experience to inform him of what those steps would be?

Broad sweeping generalizations about how stupid baby boomers are tend, by and large, to be just as true as broad sweeping generalizations about how stupid millennials are.

I guess I can understand why gen Xers are trying to build rockets to get off of this rock. No place for them in the system.

People were building rockets and actually going to the moon long before Gen X.

No one talks about us but we exist: generation y.

I thought Gen Y was renamed to Millennials as time went on. So they're one and the same. Wikipedia seems to agree: https://en.wikipedia.org/wiki/Millennials

Shhh! The last thing we need is some geezer or some kid shitposting on Twitter about how we ruined some damned thing with all of our amazeballs drug-fueled raves and dial-up BBSes.

They talked about you during the Bitcoin boom.

And then they stopped going to the moon for 45 years and counting.

Yes, they do. They also tend to be just as true as broad sweeping generalizations about how corrupt politicians are, and how wet water is.

Can confirm. I feel like every time a 10 year old develops a best selling ios app my parents tell me and then ask why I’m not a millionaire yet.

Same as stories of Bill Gates and Mark Zuckerberg being college dropouts.

Factually correct, but hardly a recipe for success for the 99% of population.

I think you need to add a bunch of 9s to that. Mark and Zuck are literally one in a billion.

> Mark and Zuck are literally one in a billion.

This is pretty unlikely, given the current US population of ~350,000,000.

The global economy being what it is, was a pre-requisite to Gates and Zuckerberg producing their immense fortunes. They could be considerable billionaires within just the US economy. They'd be hard pressed to produce $65b-$150b type fortunes without the other ~77% of the global economy and its mutually beneficial interaction with the US economy. We're very clearly not dealing with only the US population as a base to their fortunes.

There are ten people worth $50 billion or more. It's a close enough estimate to say that the Gates / Zuckerberg type outcome is one in a billion.

There are ~44 people worth $20 billion or more (one in 168 million people). 22 of those people come from the US (one in 15 million). Almost no matter how you cut it, these types of outcomes are extraordinarily rare.

> There are ~44 people worth $20 billion or more (one in 168 million people). 22 of those people come from the US (one in 15 million).

This strongly suggests that those 22 people got their wealth more from their location in the US (eleven times the world rate!) than their personal qualities. (More accurately, that without the wealth attributable purely to being located in the US, 20 of those people would not have crossed the $20 billion threshold. But since I see at https://en.wikipedia.org/wiki/List_of_Americans_by_net_worth that the 15th richest person in the US has more than $38 billion, the wealth attributable to location would in fact appear to be the majority of the wealth.)

On the pretty reasonable assumption that this also applies to Bill Gates and Mark Zuckerberg, their correct comparison pool would be the US population, and they are not at the one in a billion level.

On a more fundamental level, we can easily calculate the odds of 350,000,000 people having a certain number of 1e-9 people among them. As I make it, the odds of 0 one-in-a-billion individuals in a population of 350,000,000 are 70.47% (0.999999999^350000000). The odds of exactly one such individual are 24.66% (0.999999999^349999999 × 0.000000001 × 350000000). So from first principles the odds of a population the size of the US having two or more one-in-a-billion individuals along any given dimension are less than 5%. (And a third one, like Jeff Bezos, would eat up another 4.32% of the probability space.)

It's not realistic to call these people "literally one in a billion". They aren't.

Why do you think the article is aspirational? It is Bloomberg: the point of the article is to tell people about the business and the fundraising. Both are newsworthy and useful for the target audience (investors, not you). It is like buying a Toyota and then complaining because it isn't a Ferrari.

It's never about being a better person, helping other people or making the world a better place. It's always about how much money you make which defines your success.

There's approximately 50,000 children mining minerals in unsafe underground conditions instead of going to school. If you want a harder problem to solve than making 5M, then solve that.

Thank you. An article about how a lottery winner picked the right numbers is about as instructional and repeatable.

You can distinguish skill from luck by whether you can lose on purpose.

You cannot lose the lottery on purpose, but I’m sure this guy could have failed on purpose.

Sure, luck is involved, but the existence of several successful serial entrepreneurs is a heavy counterpoint.

you can lose roulette on purpose

therefore, roulette is based on skill

luck may be involved, but the existence of several successful roulette players is a heavy counterpoint

You cannot lose roulette on purpose.

... and additionally no successful roulette players exist (if we exclude the casino), or - if they exist - they are more rare than unicorns.

Bet everything on a single number ten times.

Many of today’s successful entrepreneurs would not have taken the leap if it weren’t for the mythology generated by the example of previously successful entrepreneurs.

This is a key driver of innovation and allows the startup method to spread. You're right that desperate people need a reality check, but competent, ambitious people also need a roadmap.

And many more have collapsed on the way side. Beware survivorship bias.

The survival rate of startups is very low. Only a tiny fraction go on to be successful, and an even smaller portion go on to be unicorns.

Not all startups are tech startups, and not all startups are necessarily worth the opportunity cost.

The people who made a killing were investors. I think That’s where the risk reward math makes more sense, from a purely monetary perspective of course.

Yes, of course. But my point is that stories of success aren’t necessarily harmful and in some ways are important.

Many more died along the way.

> Nothing about this story is repeatable.

What do you want? A cut and paste ready business plan that will make you a billionaire?

Of course there is plenty here that is repeatable: Keep your eyes open for opportunities, when you spot one work really hard at it and do not give up until you have exhausted every option. These ingredients are also present in just about every other success story.

The fact that you do not see anything of value here is the heart of the problem, you could ask any entrepreneur out there that was ever moderately or more than moderately successful what made it work for them and you are likely going to hear a mix of very few elements:

- a good idea

- some luck

- good old elbow grease

- perseverance

- connections

You may have to weigh them differently on a case-by-case basis but that is a pretty good starting point.

Not taking sides, but I think you're presenting a false dichotomy. I think the point of the OP was "This is like hitting the lottery and encouraging everyone to buy numbers".

Most people don't win the lottery, so don't ever expect this to happen to you, no matter how hard you try. Again, my interpretation, not opinion.

That is true. But if you don't try you will never win. For the lottery to have winners some people would have to play the lottery. Hence the 'luck' factor (often under-rated or people pretend it is all skill).

don't forget:

- safety net in the form of a wealthy family

- business model based on rent-seeking

The first one there is way more common than people think. The funny thing is that people will deny it vehemently.

When I got my first "real" job, I wondered how my coworkers, making less than me, were justifying their BMWs and Lexuses. Then I found out that they aren't dumb, they just have 10 million dollar trust funds and having a job is a pre-condition their grandparents set.

Never underestimate the value of being able to forego VC and/or a salary. Allows bigger risks and upside, which combined with survivorship bias makes successful founders look like someone to emulate.

The thing about the ability to take bigger risks is that it isn't very often noticed or acknowledged by the risk taker since it doesn't seem that apparent that there was a safety net that allowed the risk-taking. The risk taker feels that they would have done it anyway, whether or not that is true.

Oyo's CEO was indeed "wealthy": so much so that he'd get a a whopping $4 in pocket money every month when in school. Better off than the average family in Orissa, sure, but not exactly trust fund territory.

https://www.livemint.com/Companies/7CN7u5d4i3bfYgBAZLdLpM/Wi...

> Keep your eyes open for opportunities, when you spot one work really hard at it and do not give up until you have exhausted every option. These ingredients are also present in just about every other success story.

Also in very many failure stories—far more than the number of success stories.

So I'm going to draw a quick parallel here since I think that's the best way to explain my line of thought.

Consider someone who plays a lot of fighting games professionally. They might start off with a 20-30% WR, but as they become more skilled they might reach 40, 50, 60% and so forth. If you lose a match the only thing you're out of is a little bit of time.

To draw a comparison to startups: What is the percent of startups that are successful? 5%? 10%? If we consider how much money and time you might lose by investing into a startup I would argue that many people may only get one or two shots at it. However if you manage to be moderately successful with your first shot, you have a lot more wriggle room to grow as an entrepreneur.

The heart of what I'm getting at is that I really think luck and timing is how people first find success. Which while it's nice to believe that anyone could make a successful startup the cost of failure is immense. Survivorship bias means we only see the people that are successful, especially because their successes beget more successes and more publicity. Someone earlier brought up the counterpoint that 'there are entrepreneurs that have had multiple successes therefore luck can't be involved' and my only thought was that 'maybe those early successes or safety nets allows for the dampening of bad luck'.

> ... we only see the people that are successful...

Try this http://autopsy.io/

> It's completely unfair, as it robs desperate people of a reality check.

How is writing an article unfair? How exactly does it rob anyone of anything? What possible reality check is given by not having this article?

Every single business is unique and everyone's situation is different. There's no shortcut other than just doing it, and there's always plenty to learn from every story, including this one. Failure is part of the game, and I'd much rather have people be inspired to attempt it, and have a few succeed, than nobody try at all.

I think the point is that it’s like writing articles lauding winners of 9-digit lotteries. The odds are not dissimilar, and it does no favors to people who are put under the impression that it’s a wise course to pursue.

Building a business is absolutely not like winning a lottery. There is no instant win.

The vast majority is hard work on executing a plan, so that you're even in the correct place to take advantage of a lucky opportunity that comes along. Even the lottery requires you to actually buy a ticket at some point. Luck is a part of everyone's lives, but nothing happens without action.

And how do you know what's a wise course for anyone else? There are stories of success and failures everywhere. Learn from them all, and do what you want.

Building a business is absolutely not like winning a lottery. There is no instant win.

I didn’t say that, and that’s not what we’re talking about. We’re talking about s 24 year old and a $5 billion dollar business. That would make his company one of 227 active unicorns in the world, which frankly makes the lottery comparison incredibly apt.

If your only comparison is that it is rare in terms of odds, then that is even more of a reason to write about attaining such success since it is so difficult to achieve.

Winning an Olympic gold medal is similarly difficult but I'm sure you wouldn't say that it's just a lottery and not worth writing about.

Hardly. There have been over five thousand Olympic gold medals won, which is a hell of a lot more than the numbers we’re talking about with unicorns. When you realistically whittle unicorns down to those started by very young people and built rapidly from essentially nothing it’s even more stark.

Even putting aside the degree to which a gold medal relies on recognition of both measuresble inborn talent and acquired expertise, it’s not very similar. We’re not talking about success being difficult to achieve, so much as a certain scale and type of success being impossible to predict, possessing exceedingly low odds, and being largely random within the pool of “people trying.” If we”re being honest that describes lotteries and this story, and not Olympic gold.

We're going in circles and the pedantic comparisons don't help.

If you think it's pure luck, then that means building (this) business is no different than winning the lottery - which you specifically said wasn't the comparison before.

If it's not all luck, then that means success takes difficult work and odds only further show the challenge in getting to this scale, in which case it's perfectly fine to write about.

So which is it?

"a certain scale and type of success being impossible to predict, possessing exceedingly low odds, and being largely random within the pool of “people trying.”"

Ok...? This isn't relevant, it just shows thats its difficult to get there (with some luck required).

I have no love for this guy, neither the company. I interviewed with them (including him iirc) when Oyo was really a "startup" and have known stories of him being a scum employer and CEO from friends, but how does him starting a business and turning it into one of billions valuation is more of a winning a lottery than let's say Fb, Flipkart, Ola, Uber, Dropbox, and oh hell AirBnb etc? And if that's the case then pretty much every successful startup out there is a lottery luck story.

Luck is huge factor in starting a company and making it click but that's universal and nothing unique in this case. It was the case with Gates and Jobs and Ambani but luck was not everything in their cases and neither it is here.

Nothing is Repeatable? You could repeat everything he's doing somewhere else like Africa or South America and call it YOY. The better question is: what can you learn from other people's successes and failures?

I saw three things I didn't know, off the top of my head:

1) India/China have a demand for budget travel that's clean because apparently there wasn't enough supply? 2) There is still apparently global demand because they're expanding. So, you could go copy what they're doing somewhere else. 3) His success started with a booking app?

As for the title, sure, but it's just a copy of the article title which is pretty SOP on HN.

He found a niche in the market with demand that lacked supply and filled the gap. Go find a niche.

Another story glorifying a sociopath!

Article on Oyo founder (Ritesh) from 2015 - https://www.livemint.com/Companies/7CN7u5d4i3bfYgBAZLdLpM/Wi...

Imagine if we lived in a society where these stories were about housing startups, not hotel startups. Food production startups instead of food packaging startups. Public infrastructure projects instead of scooter renting apps. Actual creation of wealth and value added to the economy instead of endless insipid rent-seeking, shuffling value around from middleman to middleman until one of them figures out a more efficient way to extract.

Some people look at societal improvements as byproducts of increased wealth generation. In other words, me getting rich is good for the world, presuming I am not cheating/robbing someone else in the process. Although, apparently that's an optional ethical boundary for some.

Ah, so trickle-down economics then.

Wealth generation is not wealth distribution. It is entirely possible for you to become very, very rich thru wealth distribution resulting from processes that retard wealth generation or reduce wealth globally.

Actually generating wealth is hard, it's so much easier to inject yourself into existing transactions and take a cut instead.

I disagree. Just because someone got rich doesn’t mean they created value for society. It’s just means that they were able to capture some meaningful % of the money that flows around and take some for themselves. It also ignores the massive externalities of the destruction of the natural world. Yes, an oil tycoon can get rich, but only at the expense of an externality we all pay for (pollution, climate change) that is not factored into the price of the product they sell.

This is the central fallacy of capitalism and is the “greed is good” methodology. Greed is not good. Good is good. Helping people is good. Valuing people’s lives is good.

I read a great definition of evil: anything that values systems over people.

People and their well-being is the most important value in the world. Not money. Not wealth. Not shareholder value. You can create enormous shareholder value and still ruin people’s lives. That’s called evil.

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