While WeWork was witnessing a meltdown, SoftBank founder Masayoshi Son had been working through and analysing the prospects of one of his favourite companies – a startup from India, called Oyo.
At his Tokyo headquarters, the billionaire had huddled with lieutenants from the startup and his own SoftBank group to brainstorm strategy. Son had actually figured out that Oyo had the potential to disrupt both the traditional hotel business or short term rental apparel.
Experts say that one bullet point that had scribbled on the floor, that had caught Son’s eye was a target of 1 million rooms within a year. Surprisingly, Son had gotten everyone sign off on the goals right on the whiteboard, as per Bloomberg.
As of now, the Oyo unit that has around 7.500 rooms, which is less than 1 percent of the whiteboard target. Turns out that Son’s aspirations have turned out to be an example of dramatic overreach. This is at a time when his Son’s reputation was being already battered by troubles at WeWork and Uber Technologies Inc.
This shortfall, however, was not reported before, and it signals more trouble ahead for SoftBank and one of its highly touted investments. This reveals a fundamental flaw in SoftBank’s investment strategy. This would be by pumping billions into startups and also pushing them towards outsized growth, often affects and undermines promising businesses.
It’s not a secret that Oyo has had a chaotic rush to expand into Japan. Reports said that Oyo had infuriated potential partners, alienated workers, and also jeopardised its reputation with local customers.
Times have been really troublesome for Oyo, and that have been pronounced as Son faced questions about Oyo during his earnings briefing in Tokyo last week. He had admitted there that there have been some conflict with hotel owners, and that Oyo is a wonderful company.
Founded by Ritesh Agarwal, Oyo has drawn particular attention in the SoftBank’s portfolio of startups as its portfolio is similar to WeWork. Both the companies are striving to change the traditional real estate business with technology.
A New York-based investor that said once that Oyo is a WeWork in the making. As of now, the last thing that Son needs is another big mistake. His intention is to raise capital for a successor his $100 billion Vision Fund. However, potential backers have already been spooked by WeWork and Uber, as Son had admitted last week.