OYO’s Ritesh Agarwal pens letter to employees about firings; the startup’s 2020 growth plan
YourStory has acquired a copy of the email written to the Gurugram-based unicorn’s employees, where Founder and Group CEO, Ritesh Agarwal has explained the ongoing activities at the startup and has laid out its plans for 2020.
It hasn’t been the best start to the new decade for the Gurugram-based unicorn, OYO. In these two weeks, the startup has grabbed the media attention for various reasons - mass firings, IT raids at its Gurugram office, and vendor fallouts.
Several sources have claimed that the firings have been across different functions and roles across the unicorn’s India and China offices. Many also add that the layoffs began on Monday morning. However, an official statement by the company has refuted the IT raid claims and said that it was a routine check by the department officials.
So far, the startup has not commented on any of the layoffs or allegations. However, Ritesh Agarwal, Founder and Group CEO, OYO, on Monday wrote an email to his employees explaining the recent firings in the company, and charting out the startup’s 2020 plans.
In the email, assessed by YourStory, Ritesh candidly wrote, “I have no hesitation in admitting that growing at the pace at which OYO has in the past few years, we sometimes went ahead of ourselves and pressure-tested our organisation at multiple levels. This year, we are taking steps to address this.”
OYO elevates Aditya Ghosh to the board, Rohit Kapoor new CEO for India, South Asia business
Speaking specifically about the recent media reports on OYO, Ritesh said:
Recent article in the press about OYO
Given our bold dreams and humble beginnings, OYO has always been written about. Recently, there have been a few questionable claims in a publication, and today, I want you to hear about them from me. The said article described a behaviour that would violate our code of conduct.
We take all the allegations very seriously and are looking into each and every one. We, of course, continue to be subject to regular external audits and have reached a stage as a company where we are making significant investments in compliance, training, and governance that ensure operational consistency and accountability. We are - and will always be - committed to growing OYO the right way.
I also want to call out all OYOpreneurs who wrote to me after reading the article to say that, no matter how harsh the words may be, as part of this organisation, they have a very different view on things informed by their experiences in the company. I was humbled to see that we all share the same conviction about what we do every day. Without going into ‘why’, we would rather focus on ‘what’ has been said and come out stronger together.
OYO founder Ritesh Agarwal to buy back stake worth $1.5B in the hospitality unicorn, gets CCI approval
Edited excerpts of the email which has been shared with YourStory:
It’s been almost two weeks since the New Year started. As we enter 2020 together, I’m writing to update you on our strategy which OYO leaders agreed upon when we came together for the 2019 Global Leadership Meet in December. We had a single-point agenda – to plan on how OYO will continue to drive its success in 2020 and beyond.
2019 - a year of significant growth and learning
But before I come to that, let me take a step back and spend a few moments on the year went by. I would also like to ask for your patience as you go through this detailed, but critical note. As a young, six-year-old startup, OYO has naturally and actively evolved as an organisation. We are proud of the hard work, dedication, and passion of every OYOpreneur who has helped us achieve our goals so far.
The company has today become one of the world's leading hotel chains, serving millions of guests across the world including in India, China, the US, Europe, SEA, ME, Japan, and more. We increased our y-o-y revenue 3X, and moved to one million-plus rooms across the globe by the end of 2019.
OYO was rated by brandZ, as one of the most valuable new brands in India. We strengthened our leadership by adding some of the best talents in the industry as key CXOs and VPs across the organisation. We established a strong base for the vacation homes business through our first major acquisition.
But, of course, a journey like this is never easy. As a young company that has experienced significant growth, 2019 gave us an opportunity to reflect on our journey and introspect. We realised that we continue to deliver positive impact and enable millions of middle-income travellers and city dwellers to experience #LivingTheGoodLife.
I have no hesitation in admitting that, growing at the pace at which OYO has in the past few years, we sometimes went ahead of ourselves and pressure-tested our organisation at multiple levels. This year, we are taking steps to address this.
2020 roadmap and priorities
This is where the learnings from the Global Leadership Meet 2019 will help all of us. We had a productive two-day session with over 100 OYO leaders from across the world. We have a clear roadmap to continue driving OYO’s success this year and beyond.
As we enter 2020, we are taking steps to optimise and strengthen our business. We have heard what our guests, asset owners, and colleagues have to say, and are fully committed to delivering by focussing on the following strategic objectives:
Sustainable Growth: Balance the speed of our growth with our operational capabilities, to ensure our growth is sustainable. We have built world-class capabilities since we started, and in 2020, we are forming a Global Capabilities Team for each core function that will dramatically shorten the learning curve of every OYO market through knowledge sharing, and drive consistent strategy and execution across our brands, teams, and locations.
Operational and Customer Excellence: Leverage technology and data insights along with our culture of service to simplify operations and drive consistent, high-quality execution, drive uniform adoption of our tech products across different geographies. This also makes our guests’, hotel partners’, and our lives easier and efficient, and move 90 percent of hotels from OYO to >7/10 rating through network planning, technology-enabled tools, and targeted investments.
Profitability: Increase efficiency while focussing on core businesses and rationalising growth avenues, focus on profitable locations and buildings and avoid growth that dilutes our margins, and further reduce operating costs.
Training and Governance: Enable OYOpreneurs with the right tools to drive productivity, consistency, and governance while building a high-performing and employee-first work culture.
Our people commitment
As a result of the above, and you saw it in my recent email, I recently reorganised OYO's CXO leadership to focus and commit to delivering these strategic objectives. Over the past few months, we also successfully transitioned many of our colleagues into more meaningful roles within OYO by providing mentorship, training, and tools to be successful.
We have also streamlined the organisation by driving synergies across our business lines, and removing duplication of efforts in some of our everyday manual processes. I fully trust the new leadership in India to take OYO down this road as a culture.
One of the implications of the new strategic objectives for 2020 is that, like the leadership team, we will reorganise more teams across businesses and functions.
And this means that, unfortunately, some roles at OYO will become redundant as we further drive tech-enabled synergy, enhanced efficiency, and remove duplication of effort across businesses or geographies. As a result, we are asking some of our impacted colleagues to move to a new career outside of OYO.
This has not been an easy decision for us. We are doing everything we can to ensure that our outgoing colleagues receive as much assistance and support as possible, through this transition.
Every OYOpreneur is important to OYO and ensuring their well-being, both during and after their tenure, is our number one priority. I want to thank them for their efforts and apologise for the impact this is causing. One is an OYOpreneur forever, and we will always be grateful for your efforts.
As an organisation, we stand strong with our people – not just with those who are impacted but, also with those who will remain an integral part of OYO beyond today.
[The Turning Point] From an aggregator to becoming the world’s third-largest hotel chain - OYO's journey
Living our values
Change can be hard. It requires tough choices and it demands bold actions. In the Global Leadership Meet recently we have together committed to four key values that are a natural extension of our cultural tenets. These values are building trust, being respectful, and being resilient, at all times. I urge everyone to embrace these values and live them on an everyday basis, as will I.
Thanks for all that you do at OYO, and thanks for standing by our organisation that all of you continue to build with hard work, honesty, and long-term efforts.
Currently valued at $10 billion, OYO has moved to a lease and ‘Marriott’ like model, and has opened several verticals. OYO has expanded to over 800 cities in over 80 countries since it moved to a lease-and-brand model. The company claims to have hosted over 50 million guests so far.
Recently, OYO was featured in a Harvard case study and has been riding several other highs. “But after the WeWork debacle, investors now have started getting wary of models that are far from profitability. There is a strong push by the investors for profitability. And currently, OYO is far from it. So, investors have been pushing the company to cut its costs in every way possible,” said a source in the know-how.
(Edited by Suman Singh)