Some business failures teach more lessons than most successes ever will. Ritesh Agarwal learned this at age 19 when his first business, Oravel Stays, struggled to find a foothold in the Indian hospitality market. The year was 2012, and an ambitious youngster from a town in Odisha had big dreams but no real direction. Though his first venture could not give travellers what they wanted, it taught him just what that was. That boy today is running OYO, one of the largest hotel chains in the world, worth billions of dollars. But the road from Oravel to OYO was built on the ruins of a failed first attempt.
The Boy From Bissam Cuttack Who Dreamed Big
Ritesh Agarwal was born on November 16, 1993, in Bissam Cuttack, a small town in the district of Rayagada, Odisha, India, and was brought up in a lower-middle-class family. Ritesh was never accustomed to the life of luxury or an easy way out. He witnessed the struggles of the common man as his parents managed a small shop in Rayagada, and money was always a little too short for their liking. However, despite all the hardships and lack of convenience, his family believed that education was the key to a better life.
At 17, Ritesh left his home and went to Delhi to study in 2011. His parents saw a future for him at a prestigious university, followed by a stable job. But Ritesh thought differently. He got admission at the Indian School of Business and Finance in Delhi, but he only attended the classes for two days and then dropped out. His parents were shocked. Relatives thought he was throwing away his life. However, what Ritesh had seen during his trip across India was so disturbing that he couldn’t accept their opinion.
The Problem That Would Not Go Away
Ritesh spent almost the entire 2011 and 2012 travelling to various places in northern India. He went on a very tight budget and had no choice but to look for cheap places to stay rather than luxurious hotels. What he saw shocked him. These budget places were filthy, had old furniture, did not provide clean sheets, and some did not even have functioning bathrooms. The only way to know if a place was good or bad was by actually checking in there.
Everything changed in one night in Delhi. Ritesh booked a cheap room online. However, when he arrived at the place, it was terrible. The room was dirty, the bed had some kind of stain on it, and the bathroom tap was broken. He felt cheated and frustrated. Although it was the worst moment, it was also the moment of his life that was lying on that dirty bed, an idea came to his mind. What if there were a website that provided easy access to safe, clean, and affordable rooms for travellers? How could you be so sure of what you were booking if you were a traveller on a tight budget?
In 2011, Ritesh started a company named Oravel Stays, inspired by the name “Oravel Travels.” His vision was simple: to create a website like Airbnb for India’s budget accommodation market. The website would list bed-and-breakfasts, small guesthouses, and homestays. Travellers could search for, compare, and book these places online. Ritesh was convinced that he had found the perfect solution to a very real problem faced by millions of Indians.
When Dreams Meet Reality: Oravel’s Struggle
Ritesh got his first major opportunity in 2012. He sent an application to Venture Nursery, an accelerator program, which contributed to youth startups. From hundreds of applications, the idea of Ritesh was chosen. Venture Nursery awarded him Rs 30 lakh as seed funding. It was a very high amount for a 19-year-old small-town guy. Ritesh was ecstatic. He took this money to develop the Oravel website and get some people on board with him. By the beginning of 2013, Oravel.com was up and running with over 3,500 properties listed throughout India.
This startup was a go at first. The website was operational and allowed people to search for different low-budget accommodations. Some travellers started using the services of Oravel to find places to stay. But shortly after, Ritesh found out that the situation was far from good. Booking numbers were not at the level he had anticipated. The site saw fewer visitors, and while users came to the site, they were not booking the rooms. Month after month, the figures kept disappointing.
To get to the root of the issue, Ritesh took the plunge and went deep as the problem was inside his own company. Here is something that most founders would never think of doing – he stayed at over 100 different budget accommodations listed on his platform for more than three months. Each night he checked into a different new place. In addition, he was carrying everything he needed in a backpack because he was unaware of where he would be sleeping that night. And this revelation pointed him to the brutal fact that the problem was far bigger than he had anticipated.
The Painful Truth About Oravel’s Failure
The problem that had been causing the months of different accommodations became apparent to Ritesh. It was no longer just a matter of how to find cheap stays. That problem, however, turned out to be the lack of any standards in the budget hotels sector in India at all. A property might have reasonably good and clean rooms, whereas its neighbour could be the exact opposite. No one could be sure of any property. And each time Oravel came with a new listing, whether it was a visit or another visit, the quality seemed to fluctuate.
Ritesh also realised very soon that leaving it to Oravel Stays alone was only half the solution to the problem. It had been aiding travellers to locate places, but it was not in a position to ensure that those places were good. This was the crux of his business model that was wrong. Basically, he was just an aggregator, middleman, or facilitator who linked travel with properties. Yet, he had no control over the quality of those properties. He could not compel a hotelier to comply with standards.
It was the period around the beginning of 2013 that Oravel Stays found itself in a deep pit of trouble. Although the startup had attracted several users, it was still far from being profitable. The investing community was not bidding for more money to be put into the business. The owners of hotels were not seeing much gain from being on the platform’s list. Complaints of bad experiences were still being raised by travellers.
The Fellowship That Changed Everything for Oravel
In 2013, Ritesh read about the Thiel Fellowship. The program was launched by Peter Thiel, the co-founder of PayPal, and the first investor in Facebook. Every year, the fellowship gives away $100,000 to 20 young people under the age of 20 from anywhere in the world. But there was a condition: you had to quit college to accept the money. The reason behind this was to give young entrepreneurs the freedom to work full-time on their ideas without the burden of traditional education.
Since Ritesh had already dropped out of college, he decided to apply. He had barely any hope of winning. Not a single person from Asia had won the Thiel Fellowship before 2013. The program was dominated by Americans. Then he was called to the telephone, totally unexpected, and informed that he had reached the top 40. A status update helped him get to the US with his idea. Ritesh did not believe what he was hearing. In April 2013, he took a three-week trip to California of three weeks with an invitation. He was at Silicon Valley, Stanford University and Mountain View for 15 days, and he met VCs, successful entrepreneurs and the Thiel Fellowship team. He even gave a talk at TechCrunch Disrupt, one of the largest tech conferences, held in New York.
From Failure To A Fresh Start
In May 2013, Ritesh Agarwal became the first Indian and the first Asian resident to win the Thiel Fellowship. Out of thousands of people who applied worldwide, he was one of only 20 winners. The news spread like wildfire all over India. Bissam Cuttack’s 19-year-old suddenly became the talk of the whole country. He got $100,000 in funding and the support of technology giants like Elon Musk and Sean Parker.
It was only a matter of time before Ritesh faced the real challenge. Winning the fellowship gave him money and support, but it also made him realise that Oravel Stays as it was would not work. While he was in Silicon Valley, Peter Thiel taught him one thing: think from first principles. Don’t just emulate what others are doing. Comprehend the problem profoundly and come up with a solution that really functions.
Ritesh decided to come clean with himself, and what he truly understood was that staying at 100+ budget hotels had taught him a lot. The insight was crystal clear: travellers are not just looking for budget hotels. They want budget hotels they can trust. They want to be sure that if they book a room for Rs 999, then they will get a clean bed, a working bathroom, a TV, and basic toiletries. Every single time. Without surprises. That was the real need.
The Birth of OYO: Learning from Oravel Failure
In May 2013, he took a courageous step. Instead of fixing Oravel Stays, he decided not to do it at all. Starting anew with a different model, he renamed his company OYO Rooms. OYO meant “On Your Own.” The premise was to empower travellers with the confidence to take a trip by themselves without having to fret about where to stay. However, OYO was not going to be merely an aggregator. To the hotel owners, it was going to be a partner.
The OYO model was a game-changer in India. OYO, instead of just listing hotels on a portal, would close deals with hotel owners. Ritesh initiated his work with one hotel in Gurgaon. Making sure that everything was top-notch was his priority. Then, for the first time, three rooms were listed at Rs 999 per night. The hotel, which was at just 20% capacity, suddenly saw its occupancy rate shoot up to 90%. The travellers were thrilled with what they got. They also spread the word quickly as more travellers booked the OYO rooms and more hotel owners were willing to join the OYO network.
OYO had contracts with a dozen hotels by the time 2013 came to an end. In 2014, OYO was the room provider in more than 100 hotels throughout the cities. After that, the company extended its wings at a meteoric speed. OYO had spread to over 100 cities across India by 2015. In 2016, OYO managed to raise $100 million in capital and was valued at over $400 million. Also, the expansion didn’t stop there. The company went beyond India and by the year 2018, it was in countries such as China, Malaysia, Nepal, the UK, and the USA. OYO is a global hospitality behemoth now. OYO, as of 2024, is present in 35+ countries and has 43000+ properties and over 1 million rooms under its belt.
Lessons From A Failed First Venture
The story of Ritesh Agarwal is filled with implicit lessons. The primary one is definitely not giving up after the first failure, but actually understanding when the real beginning of comprehension is. Ritesh failed with Oravel Stays because he didn’t grasp the problem he was meant to solve. However, that failure led him to investigate thoroughly; he stayed in over 100 hotels and found out what the real problem was. Without Oravel’s failure, there wouldn’t be OYO.
Secondly, it is the performance that counts more than the concepts. The concept of connecting travellers with budget hotels was nothing new. A few other companies were also working on similar ideas. Nevertheless, what set OYO apart was its implementation. What Ritesh did was to cooperate with the hotels and also ensure the quality himself. Although this is trickier to perform, it generates much more value.
Third, everything can flip with the help of mentorship. The Thiel Fellowship introduced him to people who were the makers of billion-dollar companies. Their guidance helped him avoid the mistakes that are typical mistakes and also to think more strategically. The young entrepreneurs should look for mentors who will not only challenge their way of thinking but also support them in making those tough decisions.
From Failure To Fortune
For Ritesh Agarwal, 2012 and 2013 are the most defining years of his life. Yes, Oravel Stays failed. Yes, he faced rejection and doubt. Yes, people thought he was crazy for dropping out of college. But in those struggles lay the makings of an entrepreneur that he is. The failure of Oravel gave birth to the success of OYO. Today, according to the Hurun India Rich List 2024, Ritesh is valued at over Rs 16,000 crores. The story of Ritesh Agarwal is not the story of overnight success. It is a story of learning from failure, adapting quickly, and never giving up on solving real problems.
FAQs
Q: Why did Oravel Stays fail?
A: Basically, Oravel Stays failed because the site only matched travellers with low-budget hotels without assuring them of quality standards, so travellers couldn’t trust the places they would book.
Q: When was OYO Rooms founded by Ritesh Agarwal?
A: OYO Rooms was founded in May 2013 by Ritesh Agarwal, shortly after he won the Thiel Fellowship and realised the business model of Oravel wasn’t working.
Q: What is the Thiel Fellowship?
A: The Thiel Fellowship, founded by PayPal co-founder Peter Thiel, gives 20 young people under age 20 $100,000 to drop out of college and work on their business ideas full-time.
Q: How much is OYO worth today?
A: Parent company PRISM is valued at roughly $3.79 billion and operates over 43,000 properties across more than 35 countries worldwide as of 2024.
Q: What did Ritesh learn by staying at 100+ hotels?
A: The foundation of the business model of OYO was that Ritesh learned budget hotels in India lacked consistency and standards, and travellers needed nothing more than trust, not just cheap prices.
If you want to know more about Ritesh Agarwal, then follow him on social media platforms like Instagram, LinkedIn, Xand Facebookand also explore his company websiteand official company Instagramand Facebookhandles to understand his journey and work.
If you want to know about OYO, his big successful business after Oracle, then read his success story here.
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