Oyo's business model is looking a lot like WeWork's

The parallels between hotel chain unicorn Oyo and office-sharing unicorn WeWork -- whose value plunged from $47 billion to "a pretty high probability of being a zero," according to a veteran investor after seeing its IPO filing -- point to their common DNA and raise similar questions. SoftBank Group, directly and through its Vision Fund, is heavily invested in both.

Three symptoms stand out: first, a questionable business model; second, Oyo's numbers, and in particular its shockingly small revenue; and third, a heady valuation propped up by a financial maneuver previously used by SoftBank family members. Oyo's original business model -- aggregating and branding small budget hotels in a highly fragmented Indian market -- made sense. Founder Ritesh Agarwal saw an opportunity to unify a hodgepodge of low-end hotels into a nationwide network with a common reservation platform, together with branding and minimum quality standards that appealed to Indian travelers wanting to lower the odds of an unappealing room.