Dirty sheets
Not everyone is happy with the Oyo experience. Payal Gupta, a recent guest, was disappointed by her stay at a property near Delhi Airport, which she said felt like a house that had been hurriedly converted into a hotel. The sheets were dirty and the bathroom was cramped. "It isn't enough to have Oyo-branded shampoo and moisturizer," she said.
Gutgutia, the RedSeer analyst, said the company will need a steady stream of capital and an army of people on the ground to maintain standards. "Sustaining a high-quality experience could be a real challenge," he said.
Indian startups have been on a tear recently, with more than a dozen worth now more than $1 billion, according to researcher CB Insights. Walmart last month paid $16 billion for a majority stake in Flipkart, an online retailer founded in 2007.
The funding announced yesterday by Oyo values the business at $5 billion, according to a person familiar with the deal who asked not to be identified. That makes the startup India's second most-valuable, after One97 Communications, owner of Paytm, a digital payments company with financial backing from Warren Buffett's Berkshire Hathaway Inc.
A college dropout in a country where university pedigree is obsessed over, Agarwal has become an unlikely business star, with frequent appearances on televised award shows and a cover story last year in Forbes India.
Agarwal says he never stayed at a hotel until he was picked to represent his school at a trivia competition held in a town a few hours away from home when he was 12. He got the idea for Oyo a few years later, while traveling India on a shoestring budget and lodging at some truly horrible guest houses. It wasn't enough to aggregate hotels on a website, you also had to repair them, he realized. To learn the hotel business from the ground up, he spent a year cleaning rooms at one of them.
In 2013, he got a $100,000 fellowship from Peter Thiel, the PayPal co-founder who subsidizes students who drop out to start their own companies. The big break came in 2015, when he got $100 million in venture funding from investors including Silicon Valley's Sequoia Capital and Japan's SoftBank Group Corp.
In November, Agarwal brought the business to China, starting with a single listing in the industrial city of Shenzen. Now, less than a year later, travelers in the world's most populous country can choose from more than 1,000 Oyo-branded hotels and 87,000 rooms in over 170 Chinese cities.
For Agarwal, though, there's still a small hitch. He says his mother keeps nagging him to take a break from the business and go back to college. "But why let university interfere with my education?" he said with a laugh.