Masayoshi Son’s investment woes worsen with Oyo layoffs

The layoffs at Indian hospitality startup Oyo are troubling, coming just months after the near collapse of US-based WeWork, a high-profile investment that has cost Masayoshi Son’s SoftBank US$4.6 billion in write-offs. After expanding rapidly in China and India, Oyo is restructuring its operations to pursue more sustainable growth. 

Illustration by Tech in Asia, from photo by Softbank

The development comes as the SoftBank CEO races to come up with cash. Some investors in the Japanese conglomerate’s US$100 billion Vision Fund receive interest payments of about 7% annually. While Son’s successful investments in US tech firm Nvidia and Indian ecommerce player Flipkart helped make those payments, some investors are concerned about his riskier bets following the WeWork fiasco.   

Once valued by SoftBank at US$47 billion, the office-sharing startup struggled to sell shares in an initial public offering last year at a reported valuation of US$10 billion. WeWork’s woes prompted a pivot at SoftBank, pushing it to focus on profitability instead of chasing reckless growth. 

Saving grace

At the time, Son’s investments in India, including Oyo and cab aggregator Ola, were seen as a saving grace. Now, Oyo is faltering as well.    

Photo credit: OYO

The hotel startup has asked some 600 of its employees in China and about 1,200 staff in India to leave, Bloomberg reported. Oyo is restructuring its operations and trimming redundancy in both markets, the report said, citing sources who asked not to be named.

“This has not been an easy decision for us,” Oyo founder Ritesh Agarwal told employees on January 13 in an internal email seen by Tech in Asia. 

“We sometimes went ahead of ourselves and pressure-tested our organization at multiple levels. This year, we are taking steps to address this,” Agarwal added. 

Photo credit: Eloise Ambursley

Bigger than WeWork?

While the jury is still out on Oyo, SoftBank stakeholders are right to be concerned. 

“Oyo is a much bigger shitshow than WeWork,” says Amir Anvarzadeh, a Singapore-based senior markets strategist at Asymmetric Advisors. “In the case of Oyo, the business strategy itself has failed.”

‘No cash crunch’

Strategic objectives