Investment banker Falguni Nayar launched beauty and fashion ecommerce platform Nykaa from her father’s office when she was 49. Almost a decade later, after her IPO was oversubscribed nearly 82.5 times, India’s richest self-made woman billionaire says she is only getting started.
The Nykaa headquarters on the fourth floor of Cynergy IT Park in Mumbai’s Prabhadevi is packed with vivacious faces on a Thursday morning. I walk in and check my watch—it is only 9.30 am. While the collaborative open spaces, glass walls, stand-sit desks are all textbook ‘startup office’, there is something that stands out. A majority of Nykaa’s staffers are young women, dressed up to the nines with flawless make-up, shirts tucked into A-line skirts or high-waisted pants to go with high heels. Leading the pack is investment banker-turned-entrepreneur and now India’s second self-made billionaire Falguni Nayar.
The click-clack of the high heels echoes, as these young faces walk, rather, bolt past each other, with cups of coffee. The entire floor is oozing with energy, thanks to the Pink Friday Sale. The IPO buzz is also inevitably in the air. For someone who has been working from home for the past year-and-a-half, watching these heads buried into laptops on their desks and hearing the constant chatter came as a breath of fresh air.
As I walk into Nayar’s cabin, her eyes are fixed on the laptop screen as she monitors Nykaa’s statistics. She greets me and then her eyes go back to the screen, even for the minute I take to settle down. I am immediately reminded of what her son Anchit, chairman and CEO of beauty ecommerce, told me a day earlier, “FN [Nayar] is extremely hardworking and barely sleeps. She sends emails at 4 am.”
The pattern follows throughout our 45-minute conversation; it is almost as if her eyes are craving to get back to work. Clearly, Nykaa [meaning ‘heroine’ in Sanskrit] is her passion and the enthusiastic workforce is proof that she leads by example.
Nayar then turns the screen toward me and says, “See, I am just looking at the funnel chart, where we track unique customer visits. It is an art to convert them to paying customers… it is not a simple button that you press, and customers aa jaate hai (people will come to you).” The upper funnel includes customers who visit the website, but may or may not have an intention to buy; the middle funnel includes repeat visitors, but not paying customers; the bottom is where they may have added to the cart, but are waiting for an opportunity to buy. “Since day one, I have been looking at the statistics,” she says, adding that it is something she picked up as an investment banker. “That is the secret sauce.”
Nayar, 58, has been the talk of town since the company’s blockbuster initial public offering (IPO) on November 10. The ₹5,352-crore IPO of Nayar’s FSN E-Commerce Ventures Ltd was oversubscribed nearly 82.5 times. On the same day, the company’s market capitalisation touched the ₹1 lakh crore mark. Nayar, who owns 52.56 percent stake in the company, became India’s richest self-made woman billionaire, with a net worth of $7.03billion (₹52,794 crore) as of November 26, according to the Bloomberg Billionaires Index.
Modest to a fault despite the blockbluster listing, Nayar says there has been no high point in her career. “I do not think I have one,” she says. Not even the IPO? Nayar admits it is a “big milestone”. “During our roadshow, we met some global investors who are called ‘Champions of Investing’ and run big tech funds. They gave attention to our business model, understood it, asked some tough questions and told us that we have something unique and built the right business. That gave me a lot of satisfaction. So, if you consider that a high point…”
It was around 2009 that Nayar, then managing director at Kotak Mahindra Capital, started considering a second innings as an entrepreneur. By 2011, she had a couple of ideas, one of them was being a multi-brand retailer in the beauty segment. She was 49 when quit her job in March 2012 and launched Nykaa.
On April 1, Nayar started working on Nykaa and by April 21, she registered her company FSN E-Commerce Ventures Private Ltd. By May 1, she had three employees. She started out of her father’s small office—which could seat 10-15 people—at Vasan Udyog Bhavan in Lower Parel, Mumbai. Nykaa’s website went live on October 1. “I often joke,” says Nayar, “that it was like taking a bride to the mandap when she was not ready. The website was fully operational by January 2013.”
It was around the same time that her daughter Adwaita started helping at Nykaa. “After I graduated, I spent some time with mom in India, helping her decide what the wireframes would look like from my bedroom. But like a good Indian mother, she said you should go work in the US for a bit,” recalls Adwaita. In a couple of months, she quit her job at Bain & Company as an associated consultant, and came back to Nykaa.
Adwaita admits the early days were challenging. “Our founding team quit within a year of launch. The website would keep crashing. Our CTOs kept quitting. We had no enterprise resource planning (ERP) system in place, which meant that the minute we hit 100 orders, the whole system crumbled. Mom and I would be at the warehouse packing boxes,” she recalls. Once they started investing in marketing, by August 2013, around Raksha Bandhan, demand picked up. They started getting 60-65 orders a day. When Nykaa participated in the second edition of the Google Online Shopping Festival in December that year, that number shot up to approximately 1,000 orders a day.
“Back then, I was so young… I realised entrepreneurship is so hard and such a roller-coaster—there are so many highs and lows. Particularly the lows… it was hard for me to be thick-skinned,” says Adwaita, who spent about two-and-a-half years at Nykaa before pursuing her MBA at Harvard Business School. Two years later, in 2017, she rejoined Nykaa as head of retail business.
Such a long journey
Nayar was one of the few ‘professional entrepreneurs’ at Kotak, as she took up roles that included setting up offices in new locations, including New York and London. “At Kotak, we were encouraged to do new things. The bank was fairly small then, so a bunch of us got to take up entrepreneurial roles, where the path of how you have to do things is not well laid out… you have learn to find innovative solutions,” she says.
It helped Nayar understand that return on equity and long-term sustainability of the business matter, which is what she tried to implement at Nykaa. “As an investment banker, I have seen companies go up and down. Only companies that create long-term sustainable value for shareholders, customers and everyone in the ecosystem survive and thrive.”
The investment banker in her was aware that raising capital immediately would lead to questions such as: ‘Why do you think you will get this margin?’ and ‘How will you acquire customers at this cost?’ “I did not want to be questioned on assumptions. I chose to make it [the business model] work and only then raise capital,” she says.
Some of Nykaa’s early investors included Smita Parekh, wife of HDFC Ltd Chairman Deepak Parekh; corporate lawyer Zia Mody of AZB; Hong Kong-based billionaire Harindarpal Banga of Caravel Group and Sharrp Ventures, which manages the Mariwala Family Office.
Rishabh Mariwala, managing partner at Sharrp Ventures, says, “Nykaa had shown some traction on the marketplace vertical. Its focus on being conscious about costs and keeping burn under control were apparent. The bet, however, was on Falguni. She had stepped aside from a very successful career as a banker to fulfil an entrepreneurial dream and create a legacy.”
He strongly believes that Nayar is a risk-taker. “Without taking reasonably high risk, it is impossible to build the business that she has. It is not merely about diving into high risk initiatives. It is about making a proper assessment, experimenting, and having a risk mitigation plan,” he explains. Some of Nayar’s biggest bets have been on people. Her initial top management comprised members who were not from the beauty and personal care industry, “Sometimes you have to give people a chance. I bet on myself and everyone,” says Nayar.
Read the full article on Forbes India here
https://www.sharrpventures.com/events/sharrp-ventures-in-one-of-the-early-investors-in-nykaa/