Since the news of its massive layoffs, OYO is probably the most covered company in China’s press, more than Alibaba, Tencent or even Baidu.

Last two weeks, at least five journalists from top media outlets reached out to Momentum Works asking if we knew some of the behind-the-scene stories, as they were developing investigative stories about OYO.

Some of the articles have been drawing parallels between OYO and ofo, which is undergoing a painful death now. This is not because of their similar names obviously.

The similarities, in summary, are: 

  1. Fast fundraising – quick to penetrate into many cities;
  2. Super aggressive expansion – very KPI driven;
  3. Heavy on local operations;
  4. Became unmanageable with a lot of fake data/fraud on the ground

However, there are stark differences between the two:

  1. OYO is running on its own – it does not have any strong direct competition, unlike ofo, whose competition against MoBike dominated its days;
  2. Which means OYO has time if they wanted to, while ofo didn’t have a choice;
  3. OYO is a foreign company, inherently making its China journey difficult – you might want to recall the Groupon journey in China back in 2011;
  4. OYO has solid backing from Softbank, while ofo had conflicting strategic shareholders Alibaba & Didi, both holding veto rights;
  5. OYO is dealing with a very complicated landscape in hospitality in China, while ofo was much simpler in operations;

Localisation 

OYO tried to localise – not only by hiring a whole lineup of CXOs with excellent resumes, but also by adopting a Chinese name for its founder Ritesh Agarwal, a practice many Western bosses in China (and especially Hong Kong) endear.

Never mind that the Chinese name chosen, 李泰熙 (Li Taixi, in a way transliteration of Ritesh), actually sounds more Korean (이태희 or Lee Tae Hui) to average people in China.

Alas, successfully localisation goes much beyond the surface. It is giving the management on the ground enough trust and decision making power to respond to the market realities, fast.

In that way, the young OYO team still has much to learn. Just like many young Chinese internet giants still have tonnes to figure out when they venture out of China.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].