Indian founder Falguni Nayar launched an ecommerce company at 49 and became a multi-billionaire at 58. She thinks more women should bet their family capital on startups
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In 2012, investment banker Nayar noticed an under-addressed market in India: beauty. She founded e-commerce platform Nykaa just in time to harness the nation’s broadband revolution and, in November, became a billionaire seven times over when the now-profitable company IPOed with a valuation of $13 billion. We sit down with the first Indian woman to take a unicorn public.
This edited Q&A has been condensed for space and clarity.
A beautiful beginning
What inspired you to start Nykaa?
Nayar: I was a longtime investment banker, and I took a lot of companies public in India.¹ I met a lot of entrepreneurs, and I saw their passion and belief in their ideas. That really inspired me to set up a business of my own, against a popular belief [about the viability of beauty e-commerce] at the time.
Beauty was extremely successful in the West and in Asia. In India, I didn’t see that. I believed there would be demand for beauty, but it was a nascent industry.
Why had the category not taken off in India?
India did not have department stores. There were reasons why physical retail was difficult to do in as geographically diverse a country as India. Beauty is a long-tail industry in the sense that there are lots of products, which means a retailer would have to stock a lot of products to give consumers a real choice. Go to Sephora or Ulta—there’s so much choice. That was hard to provide in a diverse country like India on a mass scale in physical retail. In e-commerce, we kept all the inventory in one or two warehouses in the beginning. We could service the whole of the country from those warehouses.
We entered the market in 2012. By 2015, there was a broadband revolution in the country, and broadband became available very cheap. We benefited from that, and we were at the forefront of a category others had ignored.
When we started, I knew some aspects of the business, but I didn’t know beauty, I didn’t know retail. And I gave myself a chance.Falguni Nayar
What did it take to change the beauty habits of Indian consumers?
In India, the beauty consumer used five products—including kajal [a traditional form of eyeliner] and lipstick—and that’s it. I would travel all over the world and see so many products, like eye creams or primers. The Indian consumer didn’t know what primer was. So Nykaa did a lot of education. We used social media as a platform to educate our customers. We created blogs and community platforms. That helped us get customers excited about the industry. We realized that authenticity and trust in the fact that products are safe and high-quality and branded is important.
In phase two, we started going global in search of great brands. We brought some of the best global brands into India² by educating them on the potential of the Indian market. We won the K-beauty [Korean skin care] brands like the Face Shop and then brands like Huda Beauty or Charlotte Tilbury. With social media networks, all consumers are global, and we brought global products and trends to the consumer.
In the public eye
What lessons did you take from the IPOs you worked on as a banker to help navigate your own?³
Communication, working with investors, and transparency in reporting. Explaining the business model in a very transparent manner is important so that the financial results are not mumbo jumbo. You don’t want to lean on any one stakeholder, be it investor-centric, only employee-centric, or consumer-centric. You have to balance all stakeholders.
Your share price has fallen since the initial excitement around the IPO.⁴ Why do you think that is?
The beauty industry does have some seasonality. [Q4] is the best quarter because it’s very festive—it has Indian festivals and Christmas and New Year’s. And in COVID times, consumption of certain types of products like lipsticks has gone down. But some categories have done very well, like skin and hair.
How would you sell the future of the company to investors?
We’ve been a business-to-consumer company; now we’re entering the B2B space where we sell to retailers. Three years ago, we introduced fashion, and we’ve seen huge growth.⁵ And within fashion, we are expanding into wider categories like men’s and kids. Within beauty, we’re expanding to further men’s categories.
On an international perspective, we are making small, small baby steps. We now have offices in London that will start with import and export. We do believe there are many interesting markets—we’ve already entered Mauritius and many small markets—but the Middle East and Europe are the most promising.
What are the opportunities and challenges in fashion vs. beauty?
Beauty is a bigger business for us at the moment. But if we fast-forward five years, I think fashion will grow very fast. The fashion industry in India is five times the size of beauty. And the customer is much the same.
We’ve built a platform that focuses on bringing fashion-forward styles to customers rather than trying to bring them a piece at the lowest possible price. Some of the Indian industry, because there are a large number of consumers who are price sensitive, has a tendency to only focus on price to get to scale. We felt that there was a need to create a platform that was a little more premium. We want to be a lifestyle retailer.
2021 was a breakthrough year for women-led businesses. In the U.S., the market debuts of companies Bumble and 23andMe made founders Whitney Wolfe Herd and Anne Wojcicki billionaires. Nykaa’s IPO made you the most successful female self-made billionaire in India. Why do you think women are achieving these milestones now?
It’s like a wave. When the waves form first in the sea, you don’t see a big impact. And by the time they reach the shore, you see a big impact, right? What I achieved in 2021 was culmination of the determination I had in 2012 to say, “I want to do this, and I want to bet the family capital on a business.” Women don’t want to bet the family capital on business. Men are always starting new businesses and taking the availability of family capital for granted, whereas women don’t want to impose.
You started Nykaa at age 49.⁶ How did coming in with that life experience affect your approach?
I was not afraid to be different. When I started the business, people said, “Why beauty? If you want to do e-commerce, you should do electronics or fashion.” But I wanted to do beauty. I stuck to it. Then people said, “Oh, you’re raising such a small amount of money.”⁷ They thought the business was not valuable because I wasn’t raising billions of dollars from global investors. But I did what was right from a business perspective at every step of the way. That confidence came from many years of having operated in a business environment, especially in a very regulated industry, like banking, and stockbroking, where I knew that there are no shortcuts. You have to do things right.
We were at the forefront of a category others had ignored.Falguni Nayar
Do you think Nykaa’s IPO has helped the world recognize the potential of the Indian tech market? ⁸
Absolutely. Technology platforms in India are some of the best in the world. Within one or two years of business, I knew that if I wanted to survive and compete with Amazon, my tech platform needed to be as good as Amazon and Flipkart. Otherwise, there was no hope of survival. No one was going to give us a discount. No one was going to say, “Oh, yeah, from Nykaa we will accept a much poorer quality service.”
A lot of domestic platforms are even better because they come from an Indian perspective. We have a lot of tech talent in the country, which is able to build those platforms in a very cost-effective way. We’ve always had a very attractive market because of our population and rising incomes.
What advice would you give to entrepreneurs in India?
You can be a generalist who can learn anything rather than being a specialist and boxing yourself in. When I started Nykaa I knew some aspects of the business, like sales, marketing, and legal, but I didn’t know technology. I did not know retail, I did not know beauty. And I gave myself a chance.
What are the challenges for female entrepreneurs in India?
Women need to not feel guilty if they want to dream for themselves. The name Nykaa means “actress.” Our message to our customers was, Let the spotlight of your life be on you. For too long, women have been the support system of their family. They feel that if they want to lead their life, there may be disruptions, or they may not be able to sustain it. And I think that fear must go. It’s a generational shift that can be achieved—it’s not a quick fix in two or three years.
Between the lines
(1) Bank on it: During her 18 years at Kotak Mahindra Bank, Nayar served as managing director of the investment bank and director of the institutional equities division.
(2) The beauty bunch: Nykaa sells beauty products from 2,644 brands, including 15 of its own.
(3) The IPO whisperer: Among the companies Nayar took public in her banking days: real estate business DLF, Tech Mahindra, and the bank IDFC.
(4) Change in NYKAA stock price since Nov. 10, 2021, close (first day of public trading): –21.8% (Source: Bloomberg, Jan. 24, 2022; calculated on USD value)
(5) In fashion: Nykaa Fashion customers placed 2.4 million orders totaling 6,655.7 million rupees (or about $89.4 million) in fiscal year 2021.
(6) Family values: Starting the company later in life meant Nayar had more family experience to draw on: Her husband, Sanjay, is the chairman of KKR India, while her daughter Adwaita leads Nykaa Fashion and her son Anchit heads beauty e-commerce.
(7) A pretty pile: Nykaa raised 5,777.38 million rupees (or $77 million) from investors between its 2012 founding and 2021 market debut.
(8) Maturing market: Indian companies raised more than $15.4 billion from IPOs in 2021, including the exits of fintech company Paytm and food-delivery startup Zomato.
A version of this article appears in the February/March issue of Fortune with the headline, “The Conversation: Falguni Nayar.”