As a child, I was fascinated by the world of wrestling. WWE (World Wrestling Entertainment), then WWF, was a glitzy universe populated by noble heroes and sneaky heels engaged in over-the-top battles. But even as a child, I knew that all of this was staged—the drama, the competition, the relationships, even the results were all predetermined rather than genuine.
As I grew up, I learnt that there was a word to describe this—kayfabe—“the willing suspension of disbelief that is used to create aspects such as feuds and gimmicks in a manner similar to other forms of fictional entertainment.”
It turns out that kayfabe is no longer restricted to the world of wrestling. It has entered the world of startups.
Welcome to OYO’s world of startup kayfabe.
How does it work?
A (PR) magic act in three parts
OYO Rooms, the Indian startup that has anointed itself as “the world’s third largest hotel chain”, has been in the news for a set of PR acts that closely resemble kayfabe.
Like a magic trick, this kayfabe act plays out in three parts.
First, the “pledge”, the act of the magician showing you something. In OYO’s case, this act is literally a pledge—the promise of investing hundreds of millions of dollars in new markets such as the US.
Second, the “turn”, the act of converting something ordinary into something extraordinary. With OYO, this part involves converting its market scale into an IPO “two or three years down the line” that will value the firm at an eye-popping $18 billion, a valuation no other Indian startup has touched before in public markets. According to an expert, “with every new market that Oyo enters, it will add $2-3 billion to its valuation”. The magical part here is that the blinding spotlight on scale has left both the audience and the experts completely oblivious to OYO’s questionable business model. The kindest thing that one can say about this model is that it is “as yet unproven”.
But it is the third part of this magical kayfabe that is most impressive—the jaw-dropping “prestige”. Ritesh Agarwal, OYO’s founder, is reportedly in talks to buy back OYO shares worth an eye-watering sum of $1.5 billion.
So what exactly is magical about this?
For one thing, the scale. No other Indian founder has hitherto bought back shares worth even a tenth of this figure.