How To Quit Your Job At 49, Make $6 Billion, and Live Life On Your Own.
Falguni Nayar has become India's richest self-made woman thanks to her fast-growing fashion and beauty store. KKR's Henry Kravis has given her a lot of money.
If you want to start your own business, Falguni Nayar, the richest Indian female entrepreneur, has some advice for you: "Let the spotlight of your life be on you."
That resonates with her own journey to making the $11 billion (market cap) company Nykaa, which is based on the Sanskrit word "Nayaka," which means someone who's in the spotlight.
It took Nayar 19 years to become an investment banker at India's best-known Kotak Mahindra Bank and make money. At her job, Uday Kotak, the well-known billionaire founder of her company, was her boss for two decades. She worked closely with India's business elite. As managing director of its subsidiary, Kotak Investment Banking, she held the hands of dozens of Indian entrepreneurs, including now billionaire Harsh Mariwala of Marico and PVR Cinemas owner Ajay Bijli. She helped them take their businesses public, and she was a big part of that process as well.
Then, one year before her 50th birthday, she left her job to start her own business.
"You have to be in charge of your own life," says Nayar, who started the beauty and fashion store Nykaa in Mumbai in 2012. She and her husband, Sanjay Nayar, the India CEO of the U.S. private equity company KKR, put in $2 million in the first few years of the company. Their group at the Indian Institute of Management in Ahmedabad was very well-known and they were all together.
One of her first supporters was Henry Kravis, the billionaire co-founder of KKR. In Nayar's words: "From the start, he was a big fan." "He told me to start my own business." He wanted to be a part of the first round of fundraising, but I didn't want to let anyone from outside the country invest in the company at the time. In the end, Kravis bought a stake in the company from another investor who was selling. His Kravis Investment Partners LLC owns a 1.1% stake in the company.
Quite a good trip so far. 4,000 brands are sold by Nykaa, which has 102 stores in 45 cities across India. The company first made money in the fiscal year ending March 2021. Nykaa went public eight months later. It was one of the few start-ups to make money before the IPO, making it one of the rare ones. In November, the company went public with a $13 billion IPO that was sold 82 times over. With her husband and 31-year-old twins Anchit and Adwaita running Nykaa's online and fashion businesses, Nayar is still worth $5.9 billion. Even though the stock has gone down since then, Nayar is still worth $5.9 billion.
Nayar was born and raised in Mumbai, and he now lives there. After moving from Karachi as a teenager during the partition of India and Pakistan by British colonizers, her father became a Sanskrit teacher in Mumbai. He later helped start a ball-bearings business with two other people.
Several years later, Nayar says that she and her younger brother were both asked to help with the business.
"He would expect us to help out, even if it meant packing a lot of things," she says. "My father was different. He would treat me and my brother the same." Because I saw him taking risks, I always thought I could do the same.
He always asked her to pick stocks and look at the price to earnings ratios of publicly traded companies, even when she was in high school, even though she didn't know how to do that. So, after that, she went to Mumbai and studied business at Sydenham College, then got a post-graduate diploma in management at IIM, Ahmedabad.
Her first job, when she was 22, was as a management consultant at the accounting firm A.F. Ferguson, where she worked until she was 30. Finally, she moved to Kotak Investment Banking, where she worked in institutional equities and investment banking, setting up operations in the United States and the United Kingdom for Kotak.
Her twins went to Columbia and Yale in the U.S. in 2008 and 2012, when the seeds for her business were being grown. They helped her figure out what products were best for her, instead of trying to sell her things she didn't need.
She thought India was ready for a Sephora, and that it was time for one. Around this time, she was also ready to start her own business. From 2009 to 2011, she thought about ideas for nursing home management and long-term, luxurious home stays. Then, in 2011, she decided to focus on beauty and cosmetics.
But she soon realized that she'd have to start from scratch to make the online beauty market in India. Because Nayar didn't have any experience in beauty, tech or retail, she took on the job even though she didn't know how to do it well. When she started her business, she said that she would find a wide range of Indian beauty products for people who didn't have access to international brands. But the first few months were hard. When she worked out of her dad's office in an industrial area, she kept a close eye on costs.
Nykaa's orders grew quickly in the first few months, but the back-end wasn't strong enough to handle the volume. After three chief technology officers left in the first four years, there was no one else to help keep things going.
It helped her get a foot in the door because of her connections in the investment world, but she still had to work to get money for the project. When Nykaa first started, a lot of rich people bought shares in the company. These people include Hong Kong's billionaire commodities trader Harry Banga and the son of Indian billionaire Harsh Mariwala, Rishabh Mariwala. Big investors like TPG, Fidelity, and the UK's Steadview Capital Management also own a lot of the company.
The first time Nayar switched from banking to the world of beauty, she started an online cosmetics business that had "aisles" of international brands like Bobbi Brown and Charlotte Tilbury. Two years later, she opened the first Nykaa store in Delhi, and it was a big hit.
The next year, she started making her own cosmetics brands for things like highlighters, foundations, nail polish, and so on. She worked with Indian manufacturers and sometimes sold the Nykaa brands for less than the foreign imports.
Her clothing business, Nykaa Fashion, began in 2018. Today, Nykaa also sells men's grooming products (like beard oil and cologne) and home decor, and it has a business that sells to other stores. A lot of people say that Nykaa keeps itself relevant by adding new brands all the time.
It sounds like Nayar says that "We are working with brands to make luxury more accessible to Indian customers." "We want to give people the power to choose."
Cost-conscious people might want to buy Estee Lauder's mini lipsticks and 7 milliliter advanced night serum packs through Nykaa instead of the standard 20 milliliter packs. Try and buy is very important to us, and we want brands to invest in the Indian youth, she says.
As of December 31, 2021, there were almost one billion visits to Nykaa's websites and mobile apps for beauty and fashion. That's up 78 percent from the same time last year. It also processed more than 23 million orders in that time, which is up 80%.
Consumption is back to normal, says Nayar. He says that even during the pandemic, sales of products like lipstick were down. But eye, skin, and hair care products did well. "We are stepping up our efforts to get new customers."
Sales rose 65 percent in the first nine months of fiscal 2022 to $377 million, but profits dropped 23 percent to $4.5 million because more money was spent on marketing, which ate into profits.
Nayar says that both of its main markets – beauty and fashion – are set to grow in the coming years. A lot of people paid attention to fashion during the pandemic, says Nayar. During the time that physical stores were closed, a lot of fashion in India moved to the web. Nykaa gained a lot from people buying clothes online.
There are many different types of clothing available at Nykaa Fashion, from shoes to loungewear and western clothes. There are also many new brands, like Scandinavian brand NA-KD, known for its tops or Masaba for Nykd, which is made with Indian celebrity designer Masaba Gupta's sleepwear.
In Nayar's words: "Fashion is even bigger business than beauty," he says. If we get even a small part of the market, it will be a bigger business.
There are some experts who say that it's more difficult to get into this market than other places, though.
It's hard to make money in the fashion business, says Arvind Singhal, the chairman and managing director of a consulting firm in the Indian city of Gurgaon. People like Myntra and big companies like Tata and Reliance are already in the game. Fab India, for example, is an unlisted fashion company that doesn't even have to be looked at by investors every three months.
It's Nayar's job to use the $85 million he got from the IPO to open new warehouses and stores. He's looking a long way ahead, though. We are building a business for the long term, says Nayar. Nykaa will be ten in April, and the company is excited because it feels like it is coming of age.