Highlighting the impact of coworking company WeWork’s issues on the industry and ecosystem, OYO founder and CEO Ritesh Agarwal said it was WeWork that changed the “atmosphere”. “There was before WeWork and then there was after WeWork… Before WeWork, all our decisions were emblematic. Later it seemed easy to blame us for everything we decided,” Agarwal told the Financial Times. WeWork’s troubles began with its failed IPO last year and the $900 million loss it suffered over six months, as well as questions being raised about its corporate governance practices.
Market pundits and critics alike have often compared WeWork to SoftBank-backed OYO led by Masayoshi Son who pushed his portfolio founders to grow fast at all costs without focusing too much on profitability and their dubious valuation. Also, a comparison was drawn between the two founders – Adam Neumann and Agarwal. “The combination of Masayoshi Son and a hungry young child was an explosive combination. They were both guilty,” the Financial Times quoted the local head of an international investment firm as commenting on OYO.
From $47 billion, WeWork collapsed to near bankruptcy before Softbank offered a $9.5 billion bailout in October, including a $3 billion takeover bid. dollars worth of WeWork stock. OYO’s valuation doubled from around $5 billion to $10 billion after Agarwal decided to buy back almost all of the shares of its early investors – Lightspeed and Sequoia. Agarwal said the takeover was not due to SoftBank’s push. “It was my idea . . . As CEO, I never sell the shares,” he said. He justified the valuation jump by comparing OYO to Netflix, Uber and Peloton, the American entertainment company. equipment that was valued at 4.5 to 5 times its revenue last year when it went public. “We had revenues between $2.7 billion and $2.9 billion, from so the assessment verifies,” Agarwal said.
OYO reportedly laid off around 600 employees in China and around 1,200 in India while exiting 200 cities as part of a restructuring exercise in January this year. Additionally, according to a Bloomberg report, the company had laid off 5,000 employees in the United States, India and China. Agarwal recently said in a video message to employees that the company has sent a “significant number” of employees to the United States and other markets on furlough and furlough for two to three months due to the impact. of Covid-19 on business. His income has also dropped by around 50-60%, according to Agarwal. The company has also been accused by industry associations such as the FHRAI of unfair trade practices, including destroying competitive pricing by abusing its dominant market position. OYO competes with smaller players FabHotels and Treebo in the budget hotel segment.