Oyo's business model is looking a lot like WeWork's • Hacker News Board

Re: Oyo's business model is looking a lot like WeWork's

#21

Post by blntechie » Fri, Nov 15, 2019, 9:37 AM UTC

mathnmusic wrote: post #16

geodel wrote: post #13

Earlier quoted context omitted.

Softbank also invested in Flipkart $2.5B which till date is huge loss making entity. But they dumped that crap on to Walmart and made a chunk of profit. Else it would be another dent on this poor vision fund.

Actually Walmart struck gold because along with Flipkart, they got PhonePe which is currently valued around 10B $: https://dailyfintech.com/2019/11/08/walmart-hits-gold-with-i...

PhonePe has not made any money so far as well and its valuation itself is questionable. But word is Walmart is looking into hiving off PhonePe from Flipkart and reduce its stake in PhonePe when sun is shining.

Re: Oyo's business model is looking a lot like WeWork's

#22

Post by bengale » Fri, Nov 15, 2019, 9:58 AM UTC

I made the mistake of booking one of these OYO rooms in London recently. Seriously shocking they'd even try to claim it as a hotel, dingy bedsit maybe a better description. Would never book with them again.

Re: Oyo's business model is looking a lot like WeWork's

#23

Post by leoedin » Fri, Nov 15, 2019, 10:01 AM UTC

Oyo are aggressively expanding. When I was in Nepal earlier this year they had OYO branded hotels everywhere. Since then they seem to have started taking over the super-budget hotels in London. I assume it's mostly the same hotels, but they've been paid to slap an OYO sign on the front.

It's hard to see what actual additional value they bring though. They're not really a stamp of quality, and they're not generally opening new hotels, just rebranding existing ones. Booking websites are hardly a new thing - booking.com and hotels.com are pretty entrenched, and have the advantage that they index every hotel not just ones which agreed to put up the OYO sign. Maybe OYO will take a cut of the booking.com market (which from what I've heard is incredibly profitable), but by building an OYO brand with a reputation for budget low quality, they're moving in the wrong direction to do that.

Re: Oyo's business model is looking a lot like WeWork's

#24

Post by mav3rick » Fri, Nov 15, 2019, 10:17 AM UTC

ryanlol wrote: post #12

mav3rick wrote: post #3

Earlier quoted context omitted.

What's wrong with that ?

Nothing, some prudes just don’t want to stay in hotels where other people have sex. Odds are that the hourly-rate rooms would be on a different floor than the daily-rate floors for logistical reasons, which makes it even harder for me to see any problem with this. There’s significant a cultural difference here too, in the areas where Oyo primarily operates young couples need these rooms just as much as prostitutes.

So true about the young couples bit. Look up "Stay Uncle".

Re: Oyo's business model is looking a lot like WeWork's

#25

Post by technobrat » Fri, Nov 15, 2019, 10:18 AM UTC

Startups sacrificing profit on customer acquisition is understandable. But it is a huge red flag when they start losing both. https://oyo-ruined-my-anniversary.com/

Re: Oyo's business model is looking a lot like WeWork's

#26

Post by thekhatribharat » Fri, Nov 15, 2019, 10:33 AM UTC

Oyo is en route to failure, and it will be another setback in India’s startup ecosystem after the Housing.com fiasco.

The initial idea of guaranteeing basic amenities (clean bed/bath linen, WiFi, breakfast) through strict quality control and staff training was great, but they failed to deliver.

Instead of improving and growing their first product, they launched new products and entered new geographies - most likely to inflate valuation.

The founder itself has had a questionable behavior (ref: https://www.livemint.com/Companies/7CN7u5d4i3bfYgBAZLdLpM/Wi...)

Re: Oyo's business model is looking a lot like WeWork's

#27

Post by hos234 » Fri, Nov 15, 2019, 10:37 AM UTC

Traster wrote: post #6

>SoftBank Group, directly and through its Vision Fund, is heavily invested in both. This is the worst case scenario. Every company that Softbank tries to unload becomes a liability because of the association. On the topic of the actual business, I think there's a really basic question people need to ask themselves when they look at these business models: In 10 years time does the industry you're in look different? Be…

OYO is India based unlike WeWork and given what Reliance Jio pulled off and the cash they raised to do it, I feel the context is different.

Travel along an Indian highway and try to find your standard roadside motel as you would in US ala Best Western. There are no low-mid tier chains.

What OYO is promising is scale. What Best Western took 50 years to do these guys want to do in 5 or 2 idk.

It's a worthwhile bet given the Indian consumers purchasing power/quality expectations are on the rise. It's not at all a big stretch to imagine such chains existing in India 10 years from now. Someone is going to build it. You can always ask the established chains in the west and they will tell you how long they think it will take.

Now if you asked a AT&T, Comcast or Vodafone whether they could role out a 4G network with 300 million users in 3 years across India, I don't think any of them would think it possible. But Reliance Jio did it anyway.

The textbook on how fast you can scale things is being rewritten. In that context what OYO does pull off is going to be interesting to watch.

Re: Oyo's business model is looking a lot like WeWork's

#28

Post by purplex » Fri, Nov 15, 2019, 10:44 AM UTC

This went viral some times back in Indian social-media

How Oyo completely ruined my first wedding anniversary: https://oyo-ruined-my-anniversary.com/

Re: Oyo's business model is looking a lot like WeWork's

#29

Post by aptwebapps » Fri, Nov 15, 2019, 10:44 AM UTC

9nGQluzmnq3M wrote: post #11

> For its core India business for the financial year 2018, Oyo reported revenues of just $61 million and a loss of $53 million. How on earth does this translate into a $10 billion valuation? For comparison, Hyatt's market cap is $7.9B, and they made $296M profit on $1,215M in revenue in Q3 : https://s2.q4cdn.com/278413729/files/doc_financials/2019/q3/...

The valuation does not come from their operating numbers, core or otherwise. It comes from their last round of funding.

Re: Oyo's business model is looking a lot like WeWork's

#30

Post by achow » Fri, Nov 15, 2019, 11:34 AM UTC

hos234 wrote: post #27

Traster wrote: post #6

>SoftBank Group, directly and through its Vision Fund, is heavily invested in both. This is the worst case scenario. Every company that Softbank tries to unload becomes a liability because of the association. On the topic of the actual business, I think there's a really basic question people need to ask themselves when they look at these business models: In 10 years time does the industry you're in look different? Be…

OYO is India based unlike WeWork and given what Reliance Jio pulled off and the cash they raised to do it, I feel the context is different. Travel along an Indian highway and try to find your standard roadside motel as you would in US ala Best Western. There are no low-mid tier chains. What OYO is promising is scale. What Best Western took 50 years to do these guys want to do in 5 or 2 idk. It's a worthwhile bet give…

I agree to your analysis of India the underserved market as far as travel & tourism for middle class is concerned.

This would have been all good if the focus was only for that market, but the $10Billion valuation I'm sure is not because of India focus.. it is for claiming to be 2nd or 3rd largest owner of hotel rooms in the world - the problem is there.

Without solving fully by hyper focusing on one problem/segment/market, it decided to conquer the world because of $$ at disposal.