Story of Nykaa’s Nayika: How Falguni Nayar Built a $13 Billion Startup in India

In today’s video, we cover the story of Nykaa’s nayika – how Falguni Nayar built a profitable $13 billion startup in India.

00:00 Introduction
00:52 A rewarding experience at Kotak and learnings from Uday Kotak
03:13 An itch to start up before 50
04:36 Birth of Nykaa
05:58 Building from scratch and early challenges
08:00 3 C’s of Nykaa - Curation, Content and Convenience
10:26 From sustainable growth to IPO

A rewarding experience at Kotak and learnings from Uday Kotak: When Falguni Nayar joined Kotak Mahindra – it was just an NBFC. She was responsible for setting up their investment banking arm – Kotak Mahindra Capital. However, when Falguni decided to follow her husband to London, Uday Kotak didn’t want to lose one of his best employees – so he asked her to set up Kotak Mahindra’s London office from scratch and when her husband moved to New York, she followed him to the US and also established Kotak Mahindra’s New York office as well. This experience gave her an experience for a lifetime.

An itch to start up before 50: While working at Kotak, Falguni had the opportunity to work with entrepreneurs like Ronnie Screwvala – who went on to build a media and entertainment empire when the sector was in its nascent stages, which Falguni helped him take public in 2005. She also helped take PVR Cinema to IPO – a company built by Ajay Bijli, which was responsible for building India’s first multiplex cinemas. These experiences had a profound impact on her and she decided that she wanted to plunge into the world of entrepreneurship before she was 50.

Birth of Nykaa: After toying with a couple of business ideas, Falguni ended up starting in India’s beauty market which was ripe for disruption. For a large majority of India’s female population, that’s kajal and lipstick was all there was when it came to beauty, and a major reason for this was the lack of education around these products. She had a hunch that if she could somehow introduce these women to this new world of beauty, if she could educate them on these products and how to use them, then her idea would be successful. And so, in April of 2012, Nykaa was born.

Building from scratch and early challenges: When she started building Nykaa – things didn’t go easy for her. In the first three years of building Nykaa, she had lost three CTOs consecutively. On the operations side, the company was struggling to fulfil 10 orders per day, and getting them delivered on time was a pipe dream. Angry customers were calling at all hours, demanding an explanation for why their products hadn’t shown up yet. Needless to say, things were stressful at Nykaa, and the startup’s team of 7 quickly became a team of two. Falguni and her daughter would stay up until 3 AM some nights, packing boxes in between customer support calls - but these nights were important. Falguni and her daughter spent time in the trenches, they suffered, they lost sleep building the company, and so as it slowly grew.

3 C’s of Nykaa - Curation, Content and Convenience: She was able to use these challenging experiences to shape the startup’s guiding principles, the three Cs of Nykaa: Curation, Content, and Convenience. Curation came in the form of partnerships: Falguni approached as many brands as she could, offering to sell their products in India, and this is how Nykaa became a one-stop shop for cosmetics. Coming to the next C, Content, well this is the education aspect of Nykaa’s business that Falguni was envisioning from Day 1. Over the years, the company created countless tutorials, blogs, and pieces of social media content to educate prospective Indian customers on beauty. And then finally, we’ve got Convenience, she did everything she could to ensure that Nykaa’s customer experience was top-notch, from exploring the platform and choosing items to buy, to checkout, to the delivery process, Falguni wanted the customer journey to be frictionless, and she wanted to make beauty products available offline, too.

From sustainable growth to IPO: These three Cs have enabled Nykaa to grow their revenues by 80X in the last six years ($4 million in FY15 to $336 million in FY21), and while they were never profitable, at least not until the financial year of 2021, their burn rate was significantly lower than most of India’s other prominent e-commerce startups. She didn’t want to sacrifice equity to grow quickly if she could grow sustainably, and so that’s what she did. She was planning the startup’s IPO as early as 2017, and as we all know today, looking back, this initial public offering was arguably the most successful in Indian history.

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