IIM Ahmedabad hosted Rahul Chaudhary, Founder, Treebo, India’s third largest hotel chain, as part of the ‘How to Start a Start-up 2.0’ series. The theme of the eighth installment of the series was franchisee-based entrepreneurship.
An IIM Ahmedabad alumnus, Chaudhary started his career working at McKinsey & Company and Myntra before starting Treebo along with Sidharth Gupta and Kadam Jeet Jain. Speaking about the fledgling start-up culture when he graduated, Chaudhary said that start-ups were not popular among students back then, with the first start-up fair attracting merely 15 start-ups and 13 students showing up.
Chaudhary talked about the various challenges they faced while starting up and deciding to enter the budget hospitality industry. He talked about how, while choosing the business, the founders decided to ask themselves which field would not change in the next 20 years. They found that in the context of travel, people exhibited a simple consumer behaviour — demanding clean hotel rooms and an anxiety-free experience. The second problem his team faced was selling this idea of a middle-class consumer. Chaudhary also spoke on the importance of having the right team. “There needs to be problem-founder fit just like the product-market fit,” he said.
He then went on to talk about why he picked the travel sector. At the time of starting up, Chaudhary and his co-founders noticed that there was immense growth in the markets that Treebo planned to operate in. Within tourism, which was then a $40 billion market, railways were never an option. The budget segment, however, accounted for 0.84 million out of the total of 1.2 million rooms, which he felt was a very large market. The point that sealed the deal for him, however, was that this industry was independent of consumer behaviour: “People always stayed in hotels.”
Speaking about the the execution stage in his start-up, Chaudhary said that curation is the most important stage — finding the right set of people to ensure that a minimum bar on quality is ensured.
While talking about the economics of the model and why they haven’t gone the ‘OYO’ route, Chaudhary said that the OYO model was still a little unsophisticated, with the last mile in third-party hands.
The talk ended with a Q&A session.