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In this episode on women entrepreneurship of Power Conversations @ RBL Bank, catch Adwaita Nayar, CEO, Nykaa Fashion as she shares with us her journey from being a founding member of Nykaa to becoming the CEO of Nykaa Fashion, her key learnings along the way, her servant leadership style and how the Indian consumers are evolving in the digital economy.


Transcript:

Devika Garg

Hello, welcome to Power Conversations @ RBL Bank. This is a special edition series where we aim to celebrate women entrepreneurship by being in conversation with inspiring women founders who will share with us their startup journeys. In today’s episode of leading ladies We have with us Adwaita Nayar, CEO Nykaa Fashion. Nykaa needs no introduction. It is today India’s leading beauty turned lifestyle omni channel retailer, it is also one of the seven companies that turns unicorns during the pandemic. And one of the few companies that turned profitable very early on in its journey. Adwaita, Yale and Harvard Business School graduate is spearheading Nykaa’s foray into fashion, and has been one of its founding members since its inception. Welcome, Adwaita.

Adwaita Nayar

Thank you, Devika. It’s really a pleasure to be here and get to talk about the Nykaa story. Always really appreciate the opportunity.

Devika Garg

So Adwaita, let’s talk about the Nykaa story, back in 2012, you were consulting at Bain, your mom was a noted investment banker, and neither of you had any background in technology. So what made you choose an e-comm beauty retail platform as your first startup idea? What is it that you were trying to solve for? And how has this journey been for you?

Adwaita Nayar

Absolutely. So it’s always fun to kind of reminisce back to 2012. So to be honest, you know, I was working in the US recently graduated from my undergrad in the US. And mom, here you know, as you mentioned, she had a successful career in banking and investment banking for 20 years or so, and had just this incredible itch to be an entrepreneur. And I remember so vividly, back in 2012, you know, all she would talk about is I want to be an entrepreneur, and from being a family of professionals and bankers. It’s not that entrepreneurship was really in our blood, per se. But I think, you know, having led so many IPOs, she really saw, entrepreneurship and the types of brilliant businesses one could build. So I think things started with this age to be an entrepreneur, honestly, then we evaluated a whole bunch of spaces, there was not that beauty was the first idea or the instant idea. You know, there were a bunch of different ideas, including things like what what today we know as Airbnb, or things in education, but eventually we narrow down on beauty. I think beauty is a very attractive space, you know, the margins tend to be high, the products are small, so they’re actually very easy to handle and not very expensive to ship and store. And, you know, they’re dominated by a handful of, you know, maybe 15 global brands, which have very large marketing budgets, and so on, and so forth. So, Upon doing a lot of research, we realized that beauty was a very interesting space. We were very inspired by a bunch of beauty businesses in the US where we saw you know, just how profitable and how sustainable beauty retail businesses could be. And, you know, around the same time, there was so much chatter about the positive tailwinds in the ecosystem, whether it’s about e commerce or about women’s, you know, purchasing power increasing. So we felt, okay, beauty is a great space and ecommerce, women in India are very positive, you know, facing very positive tailwinds. So this could be the right space to enter. So that’s really how we did it. I think it didn’t stem from some great passion. I always say that between the two of us in our house, we barely had one or two lipsticks. Now, of course, we have many, many more. So it wasn’t some inherent passion, but more just the desire to be entrepreneurs to build sustainable businesses. And chancing upon something very interesting space.

Devika Garg

Looking at Nykaa today, people would look at its success story, they would look at it being a unicorn. It’s large valuations, the funding it attracts. But back then when you started the beauty business was a challenging business. It was largely a touch and feel business more inclined, like you mentioned towards personal care. And we had very few brands in India. Further, the digital ecosystem wasn’t what it is today. So I’m sure that with the highs that you have seen in this journey, there must have been a lot of lows as well. There must have been days that you felt challenged. And you may have felt that, Oh, I can’t go on. Did you feel like this? And if so, what were your key learnings? And would you change something today? If you were to look back? would you change anything today?

Adwaita Nayar

Yeah, absolutely. I’m so glad you asked about the lows, because I think it’s incredibly important for entrepreneurs to talk about the lows. I think when you look at Nykaa now, success story, it’s sometimes, you know, it’s sometimes easy to sort of lean over just how insanely difficult those first two, three years were, both professionally and personally. Nykaa is no exception to any other startup, it was a total nightmare. Everything from not being able to hire not being able to build the right team. You know, so much of our founding team, I think five out of seven people left us within the first year, really struggled around hiring, you know, not able to attract the right CTO talent initially for a couple of years, had a lot of attrition. Apart from hiring, you know, our early challenges really included a lot around fundraising as well, I remember we must have pitched to over 50-60 investors and just been declined every single time. No one understood, you know why one was trying to build a online beauty business. The same sort of concerns, who’s going to buy up online had a lot of no. And then of course, the last and sort of big challenge was just getting that first set of scale was very difficult. I remember you know, now today, I think we’re in the middle of a sale, and we probably do 100- 200,000 orders. But I remember for like, you know, the first year, we barely could get to 10 orders a day. So, like just fighting every single day to stay afloat. To be able to pay our bills, we will be salaries, to be able to convince investors, naysayers at home, naysayers at friends, it was a very, very stressful and pretty scary time. I do have to give a lot of credit to my mom, I think she has all the mettle required to be an entrepreneur, she there was a stark difference in how you know, she and I would handle those early days I was I was also a lot younger, fresh out of undergrad I was very, very disturbed by the lows. I felt ,I thought I couldn’t separate the laws of the business with my own personal doors. Someone quit would take it very personally. Mom, on the other hand, your total cool-cat was able to have something terrible could be going on at work. You know, when she comes home, the TV’s on what’s cooking for dinner, having friends over. So I think having her around to keep us sort of centered, grounded, keep things in perspective was really important.

Devika Garg

Nykaa has played a very important role in shaping India’s fashion and beauty industry. By its well curated product offering and widespread reach. How has the Indian consumer evolved over the last decade? What are the trends that you have seen and you foresee? And how has this helped you build the Nykaa brand?

Adwaita Nayar

So, you know, I think two parts to your question. The first is sort of how is the consumer evolved? And then the second is how is our brand building evolved? So in terms of how the consumer has evolved, I think a couple of trends that we’ve seen, definitely there is way more willingness for people to shop online today than there was eight years ago. And I think all of us just intuitively can relate to that, right? Like today, you’re way more comfortable shopping online than you weren’t. He was when we see that very clearly day in day out with, you know, the cost of customer acquisition and how easy it is becoming press to acquire customers. Related to that. I think as people get more comfortable with online shopping, we also see women getting more comfortable with beauty in general. So we see the types of products that were being bought eight years ago, versus the sophistication of products that are being bought today, by the same consumers, you can clearly see women are evolving in terms of their beauty consumption. And we like to think we’ve had a part to play in that. So someone who was buying only kajal eight years ago is today buying all sorts of serums and eyeshadows. And, you know, hair straightner on so it is definitely a more evolved customer.

I think both Indian as a whole are evolving from a beauty consumption perspective. But like I said, I think Nykaa is also carrying them up that chain. I think one thing very interestingly, that I wouldn’t say has evolved, but it’s always really surprised me but the Indian consumer, really from the beginning since 2012 is just how confident Powerful, opinionated the Indian woman is, regardless of where she’s living, whether it’s tier one, tier two housewife, working woman banker, we have always been really kind of touched and inspired by just how powerful the modern day woman is. And we see it day in day out the way they communicate the way, the way they communicate with us, what they ask from us, what they engage with us on the kind concepts that they’re drawn to, they really do resonate with us being very forward thinking, you know, challenging the status quo kind of organization. And to be honest, when we first started, we thought, you know, I think just because we’re sitting in Bombay and have a very modern take on things, let’s not assume every Indian woman across the country does. But we was shocked and surprised that even the smallest cities, the you know, the sort of the framework, most women are thinking in is very similar. So we actually traveled a lot across India two, three years ago, to get to know our consumers better. Opening stores across the country, and really the women we met and Gawhati, the women we met in Bhubaneshwar, we’re with them, oftentimes women getting involved in terms of their perception and what they expect out of brands. So that sort of leads me to your second question, which is how has our brand marketing evolved. So I wouldn’t say it’s evolved so much, but more that from day one, we’ve been very clear that we want to be an authentic brand. And I think that is how millennials expect it to be, it is to be authentic in really two ways. One is, we want people to know that there, there are a bunch of people behind Nykaa, we like to put our faces out there. We like for, you know, our team to be known. We put them on social media, they communicate our values, they market directly so that our customers don’t just think of us as a faceless brand. Because there’s a set of women that women that they can relate to. And so we tried to be very authentic and putting ourselves out there. And I think that honestly has stayed from day one till today, and consumers still do expect it. I think another shift we’re seeing in consumers in a way adapted from a marketing perspective is consumers are way more demanding today than they were in the past. So the way that they’re demanding in a sustainability and packaging the way that they’re demanding customer experience, we definitely have to remain very engaged with them and be able to meet them on that they’re not okay with brands being silent companies being silent, if they’re talking to you, they want to be heard.

Devika Garg

There have been ongoing discussions around affordable fashion, sustainable fashion, the impact of beauty and fashion industry on the environment. There have been a lot of thought around what is the optimal mix between affordable fashion and high street fashion? What are your thoughts on this global discussion? And what is Nykaa strategy on this?

Adwaita Nayar

I feel like, you know, two points you’re raising that one is around inclusivity. And one is around, you know, environmental awareness and sustainability. inclusivity is something we have, again, inherently intuitively from day one, but very, very strongly about, we were always clear that we want to build businesses and brands that serve a very diverse set of women, and diversity in every sense, from you know, purchasing power, durability, to affinity for makeup, to, you know, skin type, body shape, all types of women, we want everyone to feel comfortable, whether you’re you know, 55 year old housewife, or whether you’re an 18 year old, you know, going to college in a tier one city, so very clear that we don’t want to be just a niche brand that just caters to a specific type of woman where every woman’s journey related to beauty. And we just, we’re just here to sort of enable you. So if you’re on a journey of skincare, or if you’re on a journey of you know, wearing ethnic wear to work, that’s your journey, we’re here to support you. We’re not telling you yes or no to either. So inclusivity has always been insanely important to us. And it’s now become center stage globally. But really, it’s something we felt strongly about from day one. On the environmental piece, I think it has definitely become a very relevant conversation today. A lot of research shows that, you know, Gen Z, Millennials are all looking for brands where they feel that there is attention being paid to the environment. And so we’re trying to work a lot in terms of our packaging, and in terms of just our operations to really deliver and make our customers proud in that regard. I think there’s still some work to be done there.

Devika Garg

So that that brings us to the burning question of the last few months the pandemic, how has the pandemic impacted the demand and the supply chain for Nykaa as well as profitability. has it affected?

Adwaita Nayar

Yeah, so absolutely, I think when it first hit, there was definitely a lot of, you know, back and forth within the team and did cause some amounts of anxiety because it just caused a lot of uncertainty. But I’m sort of, I feel fortunate to say that we’ve really emerged well out of the pandemic. So just I will say there are five or so trends that we’ve noticed during the pandemic. So the first is that, you know, the growth has been incredibly strong. So, I do think that there are two conflicting trends currently, during COVID. The first just people out, people who would otherwise be offline shoppers are coming online. So as an e commerce player, we’re definitely benefiting from that. And the conflicting trend to that, of course, is that people are spending less. However, I think for Nykaa, and Nykaa Fashion, the former trend is really what’s powering us. So both businesses fashion and beauty have shown tremendous growth, I think fashion is grown 6x from before the pandemic to now. And beauty has gone an incremental 20x. So growth has been strong. I think, you know, more anecdotally, a couple of trends we’re seeing is there’s a premiumization trend, people are spending more online. So if you know they used to buy five items, now they’re buying six items in a cart, if they used to spend on, you know, slightly cheaper products and are spending on slightly more expensive. I think it’s related to you know, the conflicting trends I spoke about earlier. We’re also seeing category shifts trends. So Mark, makeup has definitely gone down, skincare has gone up, festive wear has gone down bridal wear has gone down casual wear leggings lingerie has gone up. So those are sort of just hardcore business trends, I think. I think the pandemic also forced us to be really innovative in our supply chain. And, you know, we it, we had said, we have 75 stores, but the pandemic forced us to think about how do we integrate the inventory of our stores and our online businesses. So now we service a lot of our online orders using our store inventory. So that I think sometimes a crisis forces you to be very nimble, and improve your business. So that was a positive trend.

Devika Garg

You spoke about your offline stores Adwaita, you know, you started as an e commerce player, but of late, we see a large focus on opening of physical stores, you have 75 of them across India today. So is it very important in India to have a physical presence in order to drive growth? And if so what is your, strategy, long term strategy on this?

Adwaita Nayar

Yeah, so we thought long and hard about offline stores before we enter. So we really started our offline push in 2015, in a big way. And back then, again, 100 questions about why would you offline, like return on capital so much worse, a lot of naysayers. Again, I think, in the moment, we felt like it was the right thing to do for multiple reasons. But now looking back, I you know, in retrospect, it’s very clear that it was absolutely the right decision, was strategically very important, and I decrypted kind of main reasons for that. So the first is that look, competition was entering India from a beauty perspective. And often, you know, they had a physical offline strategy. And so us being the beauty leaders, we didn’t want to give away the offline piece of it. So you know, one was as a competitive strategic response, we wanted to make sure that great, we dominate online, but we better dominate offline, we can’t let someone else take that space from us. So one was a competitive response that I think we very quickly executed to that vision. So today, it’s 75 stores, we are the largest beauty retailer offline, in addition to online. The second reason why I think offline is so important is there is a simple, you know, the simple maths of it is that only 5% of India’s beauty market is online, organized beauty market is online. So that means 95% of the market is still offline, it is just too big a pie to not actually put your finger into it. So we dont think of our stores as just brand building, we actually think of them as a huge revenue driver, and they do contribute very significantly to our overall revenues. So, you know, I think if you want to be synonymous with beauty in the country, you can’t just be playing in a 5% of the market, you have to be some some amount of presence in that 95%. So even though COVID has hit and it did hit our stores, we are pretty much going ahead with our physical store strategy. Over the next couple years, we will continue opening stores we will probably get 150 stores or so. So that continues to be our focus. And lastly, the stores from a strategic perspective. You know, on our website, we have a whole bunch of very premium brands, whether that’s a Bobby Brown or Dior or a Mac or a Jo Jo Malone, a lot of these brands do exceptionally well offline. So, you know, for those brands our offline stores actually become what sometimes even the majority of the business were able to give to the brand.

Devika Garg

Right? Since this is a leading ladies series, it would be remiss of us if we don’t talk about women leadership, what is your leadership style Adwaita?

Adwaita Nayar

So, um, you know, I thought long and hard about, I’ve always cared a lot about leadership culture. I actually went into my MBA in between at Harvard. And really, at Harvard, I met a couple of professors who really inspired me in terms of leadership. So there are a couple of statements that I always go by. So, you know, to be honest, I always found it hard to imagine that I would spend my career sort of selling products and to products that I don’t necessarily use so much. And I thought, you know, what can really motivate me about this role. And at HBS, Mr. Professor, who actually told me that management is the most noble profession there is, because you get to influence the lives of the people who work for you, they give you 10 to 15 hours of their day, that’s more time that they give to, then they get to anyone in their family, and their overall sense of well being motivation, and general, you know, happiness and fulfillment really comes from so much of what you do as a leader, and how you guide them in the workplace. So, you know, that has been really a pillar in terms of how I think about leadership, I do think my first and foremost responsibility is to my team. And you know, really helping, helping them feel fulfilled. And so with that, I personally follow a form of servant leadership, where you are here to serve your team, you are here to shy away from the limelight, but give your limelight to your team to help them succeed, to unlock them to take the criticism away from them that I’m showing. And so that’s something I bring to the table every day. And and frankly, it gives me a ton of purpose. And you know, when I oriented myself to this form of leadership was when I finally really, really started enjoying my time at Nykaa. I do think it’s a, it’s a really great privilege and pleasure that I have at this age to be able to lead very large teams. And, you know, thinking of it more as me serving my large team is, is something I get really excited and motivated by.

Devika Garg

Great to know. So Adwaita, your mom is one of India’s leading ladies of the corporate world, what is the one piece of advice that she has given you that you hold dear? What is the one piece of advice that you would like to give to budding women entrepreneurs who are about to embark on their startup journey?

Adwaita Nayar

so I’ve, I’ve often been asked this question, I have an answer. I love this event that she’s given me, you know, since we started working together eight years ago, which is, you know, stop trying to be perfect, you cannot be the best at everything at any given point in your time in your life, and be okay with being average, she actually tells me be okay with being average. And she says that as your life gets more complicated, I recently got married a year or so ago, you move cities. You know, as you start having a family and such, she says that you simply cannot be the best, you cannot be the best at work and in your relationship and with your family. So just be okay, you know, which, and it took me a long time to internalize that because i think you know, when you’re in school, and in college, you’re so used to being a perfectionist, being a really star performer. But having your mom someone you really respect and admire, literally Adwaita day in day out, yeah, be average, like you don’t want every presentation, you don’t need to gosh, station, you don’t need to be the perfect wife, you don’t need to blow out every birthday, you don’t need to do everything perfectly, because you’re gonna burn yourself out, has been really, really encouraging to me. And I’ve seen it with her. I mean, she has, you know, in some points in her career at Kotak, she was totally disconnected from school work, because she just had to focus on on her work. But then there were other times they were applying to colleges in the US, where I noticed that she totally put her work on the back burner to make sure that we got into the right schools and helped us. And I don’t hold those times against, where she wasn’t present. Because I think net net, you know, you look at your parents contribution more holistically. So I think as I’m growing up, I’m realizing that that’s one piece of advice I hold very early. So I think from my own personal experience, I don’t know if it would be super, super helpful to everyone. But something that’s been very helpful to me is you really need to toughen up and to have thick skin to be an entrepreneur. I think I struggled a lot with being very sensitive. And you know, I mentioned that a lot of the lows of nature really used to weigh on me and that I think comes from the fact that I am sensitive and I’m a very empathetic person. But I think again, that doesn’t really work in entrepreneurship beyond the point the lows are so low, and so many If you don’t have thick skin, if you can’t take what people say, one through one ear and out the other, if you can’t maintain some amount of work life balance, I think you don’t make it in the long run. So working really hard on just becoming thicker skin, creating nice and firm divide between work and life is probably a good way to make sure that you’re able to engage in the long run, right? Because I want to be involved in it for many, many years to come. But if you do get burnt out, that’s not going to be possible. So really toughening up, I think having a strong mind being able to control it is

Devika Garg

That’s good advice. So Nykaa has gone from being a beauty retailer to an omni channel to now a lifestyle retailer. Recently, you have launched at athleisure lingerie sleepwear brand called Nyyked. What next for Nykaa?

Adwaita Nayar

Yeah, so I think, as righlty pointed out, when we started the business with beauty, and we were always clear that within beauty, we would do online, offline and private labels, which we executed nicely from 2012 to 2015 -16. And then in 2018, you know, again, my mother Falguni, being a, you know, a very good visionary sort of said that, let’s take on fashion, because you know, we are our ambition is sort of shifted from being just a beauty retailer to being a lifestyle retailer. And so fashion is going to have a complete life of its own. And it’s going to be an incredibly vague, you know, success story, I hope, a couple years from now. And so again, in fashion, we have the online, you know, fashion app, you can download the app Nykaa fashion, and it’ll also have offline stores. We’re actually opening our first store for Nykaa fashion in Delhi later this month. And then we will have our own personal brands Nyyked being one of them naked I’m very excited about I think there’s so much potential in there to do something very exciting and very fresh in the lingerie, sleep and athleisure space. And in terms of what’s next. I think it’s hard for me to reveal but I will say that you will see one more pillar of Nykaa coming up so along with beauty fashion, I think, you know if, if we’re, if we’re able to kind of succeed on that vision, there probably be a third pillar that will come soon.

Devika Garg

We are sure that would be equally successful and popular Adwaita. But before you go, we would like to hear from you. What are your favorites and your top picks on Nykaa?

Adwaita Nayar

So I’ll tell you both beauty and fashion. In beauty, I actually would I like to use so I like the Nykaa. You know the Nykaa brand itself for hand creams really nice fragrance hand creams. I love Jo Malone from a fragrance perspective. I like you know, the Maybelline colossal Kajal that’s pretty much a standard. I love that your mascara. I love Nykaa nail paints, so as someone who used no beauty, I now have a lot of beauty products and I do really enjoy it. And then on the fashion side, I would really encourage whoever’s listening to please check out Nyka Nykked and try out the lingerie and try out the sleepwear, the sleepwear is incredibly soft.

I’m also a big fan of brands like for Forever New, Only, Vero Moda. On the Indian wear side, we brought some amazing niche emerging brands like Jaipur, Amerali , Aancho, which I really been enjoying. It was just for casual, fun, light festive wear.

Devika Garg

Great wishing you and then the entire team at Nykaa all the very best. Thank you so much for being in conversation with us today.

Adwaita Nayar

Thank you so much for having me.

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