Digital Assignment - 2

Course: Lean Start-up Management MGT1022

Submitted By:
Shaivy Agrawal 19BCE0381
Parijat Niyogy 19BCE0696
RITESH AGARWAL (OYO Hotels and Homes)
Ritesh Agarwal is an Indian Billionaire entrepreneur. He is the founder of OYO Hotels and
Rooms. He was born in a Marwari Family in Bissam Cuttack, Odisha, India and was raised in
Titlagarh. He belongs to a family that used to run a small shop in Southern part of Odisha where
he also completed his schooling.

The zeal of entrepreneurship ran deep in his veins from an early age. At the age of 13, he started
selling SIM cards. He then graduated from school and moved to Delhi in 2011 to pursue his love
for entrepreneurship from the Indian School of Business & Finance, Delhi. However, he left
college halfway to be part of the Theil Fellowship and to start his own company. His desire to
travel the world made him realise the need for affordable hotels accompanied with decent
service in India.

The issue he realised was that even if affordable hotels exist, they compromise in some aspect or
the other like providing not so comfortable beds, damaged ACs, no breakfast or wi-fi facility or
unclean bathrooms. This gave him an idea to work on that issue and create a business out of it.
His journey from an average boy next door to a rich man wasn’t easy. He combined his love for
technology and entrepreneurship to set up the business that exists today as OYO Rooms. He
faced challenges with funding, marketing, reaching out to investors and mixed reactions from
friends, relatives and family.

He started his path of success at the tender age of 17, through the inception of “Oravel Stays”
which took inspiration from Airbnb and was affordable for people looking for decent and less
expensive hotels. But soon he realised that it wasn’t solving the problem he had discovered and
so he worked on his old model and revamped it to the newer model “OYO Rooms” which is the
acronym for “On Your Own”. This newer business provides pocket-friendly rooms with standard
facilities. His business is spread out in over thousand hotels across India. The business has
expanded all over the world and contains 23,000 hotels, 850,000 rooms and 46,000 vacation stays.
He founded this company in 2013.

Business Model and Success Mantra

OYO started off as a hotel aggregator that leased some rooms and sold them using its brand
name. Earlier it used to partner up with hotels but now it has changed its model to the franchise
model from the aggregator model. It partners with hotels and asks them to operate as a
franchise. Oyo does not construct its own hotels. Rather it renovates existing hotels that take
the Oyo franchise according to its predetermined set of standards. The unique aspect or the
USP here is its standard hospitality services. It sheds more light on user experience rather than
only hotel rooms and availability.
In 2020, during the pandemic, it took the path of an aggressive global campaign by offering free
accommodation to healthcare workers and foreigners stranded overseas. To become part of the
Oyo franchise, hotels need to meet the set standards for services, pricing, staff quality, security
etc. Its business model differs from Airbnb in the sense that Airbnb only connects travellers
with local hosts whereas, Oyo takes full responsibility for services of the hotel rooms listed.
Agarwal was able to advertise his company to a wider audience thanks to his technological
knowledge. Ritesh Agarwal also changed OYO's price structure to better suit clients on a tighter
budget. According to his estimations, the OYO crew used to change the rates for 1 million guest
rooms more than 50 million times every day.
OYO has connected all of the asset's workers on the back end. For instance, the company has a
special app that informs hotel personnel which room needs to be maintained. They recorded for
management how long the housekeeper spent cleaning the rooms and how clean the guests
thought they were.

Challenges

A few crises and conflicts that grabbed headlines also surrounded OYO. The business was
charged with deceit and fraud. Some OYO also experienced some suspicious situations.

In 2019, a hotelier from Bengaluru accused Ritesh Agarwal and six others of defrauding him by
failing to pay him what was owed. He stated that OYO was supposed to pay him 7 lakh per
month, but they haven't done it, per the complaint. OYO, however, denied all of these
accusations.

Fraud against the hospitality business was also charged. Hotel owners had complained that
although the corporation charges a 20 percent franchise fee on room revenues, it eventually gets
more money from sources that aren't initially revealed.
In the same year, an OYO hotel discovered a national shooter dead, purportedly from
electrocution. An employee of an OYO hotel in Gurgaon was charged with raping a woman in
the hotel while her husband was gone in 2018. OYO claimed to be cooperating with law
enforcement in both cases and aiding in the investigations.

OYO, a company that provides hospitality services, was significantly impacted by the
coronavirus outbreak, much like all other businesses. In his speech to OYOpreneurs, Ritesh
Agarwal stated that the revenue and occupancy decreased by approximately 50–60% in April
2020. Oyo's international partners suffered losses, and sales dropped by 75%. Because of this, its
employees had to accept a 25% salary decrease.

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NITHIN KAMATH (Zerodha)

Nithin Kamath was born to a Konkani family in Shivamogga, Karnataka, India. He comes from a
typical middle-class background. His mother was a housewife, and his father worked for a bank.
In Bangalore, Nithin Kamath completed both his college studies and his secondary education.
He earned a degree in electronics and telecommunications from the Bangalore Institute of
Technology.

He took over his father's trading account when he was 17 years old. From January 1997 until
January 2004, he also worked as a Proprietary Trader. He furthermore worked a part-time job at
a call centre to increase his trading cash. He would work in the phone centre at night and trade
during the day. From January 2001 to June 2004, he was employed by Senior Telesales Executive,
a business that specialises in call centres.

He traded equities and made a sizable profit, but the market meltdown in 2001 and 2002 caused
him to lose everything. He eventually received a check to manage his finances from an overseas
HNI. He eventually became a sub-broker for Reliance Money and made a fortune by bringing in
high-profile clients. Nevertheless, during the 2008–2009 global financial crisis' second market
fall, they lost a sizable sum of money once more. He chose to become a broker after trading
full-time for more than ten years because he felt the moment had come to offer stockbroking
services that he had never encountered in his ten years of trading.

When he originally considered creating Zerodha, he believed that digitalization and an online
platform with a user-friendly interface were urgent needs. Nitin Kamath further noted that the
high brokerage fees applied to the transactions are the main deterrent for the younger
generation to begin trading. His goal was to establish himself as a cutting-edge online broker
who put customers before profits.

The Sanskrit term Rodha, which denotes obstructions, is the root of the word zerodha.
Zerodha's name translates to "No Obstructions." As a result, the founder wanted to offer a
low-fee trading platform. To contribute to the ecosystem of the capital markets, he sought out
younger, more tech savvy clients. He claimed that he preferred a platform that was more like
Google in terms of usability than a one that was more like Yahoo. Together with his younger
brother Nikhil, he founded Zerodha when they saw the need to alter the system.

The Secret Formula of Zerodha’s Success

There is no short cut to success, and that is a fact. Nithin Kamath made the decision to offer his
clients services that were both cost- and technology-effective when he started this cheap
brokerage agency. He noticed that there is a significant gap between the commissions
demanded by competing brokerage firms and the sums that the clients actually receive.
Additionally, because of the outdated technology in use, Nithin saw a need to develop a smart
platform that makes it easy for users to conduct online trading. The notion of charging a low
commission struck him while he considered offering services at a low cost.

Nithin wished to draw in more youthful clients, who frequently shun trading because of high
commission fees. He founded his business with this goal in mind, and it has since grown to be
the largest discount brokerage. He thinks the day when India will have a strong economy is not
far off if we do not rely too heavily on foreign capital and invest in our own businesses.
Surprisingly, the company spent very little on marketing or advertising for itself. They don't air
any commercials. According to the founder, "word of mouth is your true marketing." As a result,
Zerodha was able to acquire a sizable customer base for a very cheap operating cost. It's
interesting to note that at his stockbroking firm, trading is free as long as shares are held for
more than a day. They generate revenue by levying a fixed fee of Rs. 20 for trading in futures,
options, and intraday contracts.

The company introduced a number of items to broaden its market and address some issues it
was having in order to remain competitive. An overview of what each product offers is given
below:
1. Console: This is a main dashboard of a customer's Zerodha account that offers detailed
reports and visuals to generate more creative ideas.
2. Kite: It is a modern trading and investment platform that makes use of cutting-edge
technology. Trading and conducting business on the stock market is made easier for the
customer.
3. Kite Connect API: This is primarily targeted at startups and independent traders to help
them create cutting-edge trading and investment platforms. Retail traders can automate
their trading by using algorithms.
4. ​Sentinel: It is a tool that lets you make market notifications. Based on price, trade
quantity, and open interest, the alerts can be tailored. The intriguing feature of this
product is that using Sentinel does not require you to be a Zerodha customer.
5. Z Connect: This is a blog platform for Zerodha's stocks, trading, and investment. On this
site, they offer articles and information, and readers are free to comment and ask
questions.
6. Varsity: One of the difficulties this company encountered was that it lacked the ability to
offer research services to its clients, who occasionally lacked knowledge on what to
acquire and when to sell. To combat this, they develop Varsity, which offers a huge
selection of stock market lessons on the go.
7. Coin: It offers commission-free mutual fund purchases that are sent right to the
customer's Demat account.
8. Rainmatter: This incubator offers a small interest in the exchange as well as finance and
mentoring to start-up businesses in the capital markets.

Challenges
Despite its enormous popularity and large customer base, Zerodha nevertheless had to deal with
the following difficulties:
1. The first thing to note is that Zerodha does not offer stock advising services or any
market-related calls that would allow its consumers to make buy and sell decisions.
2. They also suffered from a dearth of insightful advice reports and analyses of one's
trading and investment activity, whether they were delivered weekly or quarterly.
Research reports are offered by the majority of the large full-service brokers.
3. The greatest problems for Zerodha include ineffective customer care and a lack of timely
customer service due to the company's primarily online business model and absence of
offline support facilities.
4. Technical issues, such as the app being unavailable for a short while or charting issues,
were previously reported, which was essentially because of the high market traffic
situations.

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