Evolving and iterating your product for new markets: Abhinav Sinha maps the path to PMF

Summary

OYO's global expansion is a masterclass in taking initial success and propelling it to new heights. Its story underscores the importance of building on strengths, adapting to local needs, and maintaining a relentless focus on key metrics. In part two of the OYO story, COO Abhinav Sinha will delve into the challenges and strategies of achieving product-market fit (PMF) as a rapidly scaling company.

The road to product-market fit (PMF) is a winding one, paved with big and small adjustments. Even for a company that has achieved superscaler status in one market. In other words, a business with the capacity to record explosive growth can only translate that growth across local and global markets through a period of evolving and iterating its product to fit into each new geography. OYO’s Abhinav Sinha knows the best way to do this is by narrowing your business’s focus down to a few key metrics. 

Since 2017, he has helped take the hospitality company from India into Europe, the US, Middle East and Southeast Asia. What worked for OYO was bringing specificity to its existing products to suit each market, which in turn drove up revenue for hotel operators and convinced users to book easily and repetitively. 

Knowing your market and key metrics

Superscalers should begin with recognising that every market may not be worth their attention. For instance, OYO entered large markets, particularly ones with a high number of fragmented and independent players. Because these players operated without sophisticated tools, the company had an opportunity to help them gain a competitive edge.  

While a market may have the right attributes for your product to be a viable one, there are challenges to assuming that your PMF will work across markets, observes Abhinav.

"It is key to go into a new market with the humility and understanding that PMF will need adjustment"- Abhinav

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And not jump in with the assumption that you have PMF working well in one market and therefore it will work well in another.” 
In OYO’s case, the key segments they needed to cater to for PMF were clear from the get-go — hotel owners and customers. For hotel owners, two metrics would be most important. They wanted to see revenue uplift and ease of operations. On the customer side, Abhinav says the company needed to achieve better reviews, higher repeat rates, and deliver a direct channel — the app — through which customers could make bookings.

With the exception of Southeast Asia, where OYO’s products were to a large extent styled after its India offerings, each new market where the business stepped in called for many tweaks and faster iterations.

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Adjusting capabilities for specific markets
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In the Indian market, there are certain nuances that drive network-wide revenue capabilities. Pricing, demand curve and dynamic pricing can run on the same stack pan-India. Additionally, whether a city is a leisure market or business hub affects demand, and, at the cluster level, the presence of a temple or other site may do so.

But in Western markets such as the US and UK, OYO found it had to go one level deeper. The location of every hotel — whether it is off a large highway, at a critical intersection or next to a stadium — played a major role. This meant that while content, online travel agency (OTA) relationships and direct demand could run centrally, the company had to add asset-level revenue management — that is, get inputs from hotel owners every two weeks. “We created a hotel-level specificity for the local market there. This is a classic example of product-market fit, because if you don’t do that, your product won’t succeed in these markets.”

The good news is businesses may not need to rebuild everything from scratch. They need to figure out how to cut and dice their capabilities — choose which part of the stack works across the network and what to add for a new market.

The hunt for PMF can also shape a company’s organisational structure. OYO could work with a leaner structure in the West as patrons were willing to raise tickets online and wait six hours for resolution, but in India it had to invest in and maintain heavy on-ground operations. 

While leaner operations cost less, it was still challenging to have different organisational structures within the same organisation. 

"The magic is to be flexible in your capabilities, and your organisational structure" - Abhinav

Identifying North Star metrics and iterating for success
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Abhinav suggests that businesses identify key metrics which will guide their people and capabilities on a day-to-day basis. While a company may rank its North Star metrics based on priority, it should not focus on more than five to six in total. In OYO’s case, customer satisfaction is among the top metrics for product-market fit in almost all of its markets. But the way it goes about proving the metric changes with each market – for instance, it targets engaging customers through its direct channel for up to 90% sales in the Indian market, 60% in Southeast Asia and 30% in the US. 

Companies can add to existing metrics but ideally only after the core ones have been met, Abhinav advises. OYO has prioritised generating more room revenue, and although it can also seek to boost food and beverage revenue, it would be counterproductive to do this before it has succeeded in adding value to room revenues. 

An important step in the product roadmap should be deciding which core teams will be involved in PMF iterations. OYO chose to include the customer product team in PMF decisions but not the merchant product team (which handles the OS used by hotel owners). This was because the latter team’s stack translated well and only needed minor adjustments in other geographies. 

Senior leaders have to spend time in new markets, Abhinav stresses. This builds trust among the local sales and operations teams, and helps them understand how to think about PMF. As an offline to online business, this was especially critical for OYO.

Abhinav also cautions that rapid iterations do more harm than good. The local market, and importantly the local team, may not be able to absorb iterations as fast as the product team can churn them out. So companies should determine the pace, say, an iteration every three months rather than every week.
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Building resilience into a superscaler

Abhinav remembers making a mistake early on in OYO’s US journey. He had hired a diverse team of experts in the US, only to discover that 95% of the fragmented hotel owners were Gujaratis. During pitch calls, they would direct nearly all questions to Abhinav rather than the American team. He decided to stay off the first call so that the local expert could pitch and grow. Soon, OYO added Indian or Gujarati-speaking candidates to the team. This underlines the importance of spending time learning in the local market and using those lessons to build a strong core team. 

Businesses sometimes believe that since their product and business are great in one market, all they need is a franchisee to build this business in a new market. In Abhinav’s experience,

“Most superscaler businesses have actually been built by people with a founder’s mentality jumping in and building new markets” - Abhinav

Usually, he says, these people come from the core team.

From the outset, it is important to acknowledge the uniqueness of each market, he underlines. “To really make the business fly in a new country, trust the local team when they say our business is different.” This also makes for resilient businesses, ones that can resist shocks such as Covid-19 and funding winters. “Learn as much as possible about what is different, and communicate what you think is relevant.” Trust, Abhinav adds, is often the foundation of resilience and super scale.