UNIVERSITY INSTITUTE OF LEGAL STUDIES
CASE STUDY ON Ms. FALGUNI NAYAR AND Mr. ASHISH HEMRAJANI
SUBMITTED TO Dr. ABHA SUMITTED BY Hargun Sandhu Roll No. 195/15 Section D BCOM LLB (HONS)
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ACKNOWLEDGEMENT
I
wish
to
express
my
sincere
gratitude
to
Dr. ABHA for providing me an opportunity to do a case study on “Ms. FALGUNI NAYAR AND Mr. ASHISH HEMRAJANI” The project would not have reached its current shape without her guidance. This project has given me a clear insight on how entrepreneurs work, their qualities and their success story. Thank you
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TABLE OF CONTENTS TOPIC
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FALGUNI NAYAR
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ASHISH HEMRAJANI
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BIBLIOGRAPHY
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FALGUNI NAYAR The Woman Who Heads a 200-Crore Beauty Empire With the conspicuous presence of women in professional fields, it is clear that there is nothing a woman cannot do. Equipped with the right training, expertise, and potential, there is no mountain she cannot scale and no obstacle she cannot overcome. The success story of Falguni Nayar proves this. An alumnus of the Indian Institute of Management, Ahmedabad, Nayar started Nykaa, an e-commerce multi-brand retail store for beauty products in 2012. Nayar was the former managing director at Kotak Mahindra Capital Company, and had a stellar career there, till she decided to give that up and embark on her entrepreneurial journey . After an eight year stint with the group’s international operations in the US and UK, Falguni headed the group’s Institutional Equities division. In 2005, she took over as Managing Director of the investment banking business where she successfully spearheaded the firm to be India’s leading IPO banker and was instrumental in closing a number of successful M&As. It was during this point that Falguni’s past interactions with a number of successful entrepreneurs motivated her to pursue an entrepreneurial journey. With limited resources, she was quick to discern that beauty was an untapped market in India, and would explode soon. She drew strength from entrepreneurial giants like Ronnie Screwvala of UTV and Ajay Bijli of PVR Cinemas. Their confidence and ability to turn things in their favour inspired her, and she soon plunged into uncertain waters. Her gamble paid off. With its headquarters in Mumbai, Nykaa has progressed significantly since its inception. Now, it has around 450 brands and offers around 40,000 products on its website. The idea of Nykaa came from Nayar's experience of feeling empowered when she visited multi-brand beauty stores like Sephora. She recounts that even though she was never a regular consumer of beauty products, she would leave with hundreds of dollars' worth of products. And this, she maintains, was because the sales associates
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showed her the right way to use them. They also recommended the best beauty products for her, without any bias, a practice Nayar feels is not available in single brand stores. It was this that she wanted to bring to India. “I wanted to replicate that in India — a multi-brand retailer selling the best beauty, plus a lot of education to help customers...I wanted to stand for those women who want to be beautiful for themselves, not for men or other women. Indian women were ready for that and that's why they related to Nykaa. It was a type of empowerment.”
Falguni Nayar had made up her mind. As a stock broker and investment banker, Falguni had come in contact with many people and businesses. She had been able to size up the market, translate business plans and projections, and understand the financial projections of a project, and had even done a lot of IPOs for businesses.
But what really enticed her into starting up on her own was the drive and passion she saw in the eyes of the entrepreneur. In the nineties, entrepreneurs like Ronnie Screwvala would unveil grand plans and visions of building a studio like Disney in India. Falguni would also note the disbelief that usually greeted such plans. So, from starting homestays with an AirBnB touch to branding content, Falguni thought of different businesses where she would feel that same kind of passion and zeal, eventually zeroing in on beauty e-commerce.
Nayika to Nykaa
Nykaa.com is an e-commerce store that is focused on beauty and wellness
products. The Mumbai-based venture has an expansive catalog for customers to select from a wide range of products to suit each and every concern. A consumer wants advice while selecting beauty products. She wants to know what’s right for her skin. Multi-brand retailers like CVS & pharmacies do not provide that, while individual brand stores give advice but it is often biased.
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“I saw the need for a multi-brand retail format that gives unbiased advice to consumers, being able to guide them on the right products for their beauty and health concerns,” says Falguni.
“Nykaa is derived from the Hindi word Nayika – an actress – a person of beauty. Our symbol signifies the transformation of the pupa to the butterfly. A young girl too goes through similar transformation. The butterfly represents freedom, movement, energy and grace,” explains Falguni, the reason behind choosing the name.
With the e-commerce store, Nykaa makes available a wide catalogue of beauty products at the doorsteps of millions of Indians. The store has been created with a lot of advice and concern-based selection for products. “We offer consumer demand-led products in a wide assortment addressing various needs of the modern woman. Our vision is to build brand loyalty and win customer trust and be India’s premier beauty and wellness destination.”
Gopal Srinivasan, Chairman, TVS Capital Funds Limited, felt that Falguni was a great entrepreneur with a sense of vision. “I wouldn’t hold her investment banking background for or against her. What I would say is that she is a very driven and balanced entrepreneur, who has the ability to attract the high-level talent of matured seasoned players and young and vibrant people,” he says.
The first order of business for Falguni was setting up a team, and her early employees were entrepreneurs themselves. “Entrepreneurs have a lot of courage; I like that about them – the courage to create something new,” she says. Also, keeping in mind that it was e-commerce, Falguni first hired a COO, a CTO and a Chief Content Officer. E-commerce grows on three pillars - marketplace, logistics, and payments. With over 40,000 SKUs, Nykaa today boasts of stocking every shade of lipstick there is. The idea to ensure that everything was stocked on the website started with the kind of company that they wanted to create.
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The website initially received several messages from irate customers. But Nayar considered them, and used them while curating her catalogue. Soon, it created a loyal customer base, as people kept coming back for their favourite brands. Now, every morning, Nayar goes through the data on human behaviour and buying trends, and by merely looking at customer carts, she can understand their profession and their preference. Here’s what Nykaa's Falguni Nayar learnt on her bumpy ride to success: Gain your customer’s trust
“Besides curating a great product offering, we strongly focus on building customer trust. We make sure that we always deliver on our promises and work very hard to offer genuine products. This has allowed us to launch our Nykaa private label collection because the customer knows that our products are high-performing and well- priced.” Focus on building a community
“Just by observing the industry as a consumer, I realised that education is an important part of selling premium beauty. A consumer is more likely to buy something if they have understood its benefits, ingredients etc. So from the beginning, Nykaa decided to focus on delivering this information through creative content. We went against popular belief and put content all over the site to build value for the customer. It’s something that helped in the long run because now we know we can keep a customer engaged even if they visit our site multiple times before purchasing anything.” Be smart about your money
“I believe that the amount of spends, whether on marketing or business building should be in line with the size of the market. A lot of Indian start-ups tend to spend much more than what it justifies. For example, Uber created a new market by using new technologies. They succeeded because they could judge the underlying demand and need for their product. Many start-ups don’t do that; they create great products
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however their marketing spends commensurate with that cost of business development and that’s too high compared to the market size." Remember, you’re not the first one facing this problem
“[During tough situations] I look very hard for comparisons, case studies and go deep into reading and researching that subject. I also discuss my thoughts with the colleagues and mentors whose views I trust. Based on those inputs, I make the right decision.” At present, the 300-crore-plus empire employs 430 people and is eyeing a ₹350 crore turnover by the end of 2018. Unfazed with all the success, Nayar says, “This is just the beginning of a journey, we reached some distance and there are still miles to go.” Managing both her personal and professional lives with great success, Nayar maintains that women are as equipped in handling business as their male counterparts. The mother of two says, “Women should come out of this mindset that if they handle the business, it will affect their personal and professional life. I believe if a woman with strong determination and will power aims to do something, she will definitely achieve it.” The online retail giant started its own label in 2016, and things look only brighter. Falguni Nayar's journey may seem very inspiring, but she has a word of caution for all budding entrepreneurs. “Being an entrepreneur is not an easy job. An entrepreneur is like a roller coaster. If he/she is stronger from inside, he/she can enjoy it,” she says.
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AN INTERVIEW WITH FALGUNI NAYAR Tell us a little yourself
I grew up in south Mumbai. As a young girl I was always interested in reading about price-earning multiples in The Economic Times. Capital markets, finance and investments were of huge interest to me, and the first time I applied lipstick was on my wedding day! I was very focused on studying and doing well at school and college. After graduating I went to Indian Institute of Management, Ahmedabad, and after graduating I decided to join consulting. Somehow the idea of giving advice to CEOs of companies sounded like a really cool thing to do but within a couple of years I realized that I wanted to be more of a doer, meeting business targets and so I moved to Kotak Mahindra Capital Bank. How did the idea for Nykaa.com come about?
Working in an investment bank it always fascinated me to see entrepreneurs raise funds through IPOs and create tangible value. This inspired me to embark on my own business journey. On a visit to New York I happened to walk into a Sephora store. I was dazzled by the great variety, quality, choice and advice and came away with a basket of beauty products. I realized that the Indian beauty market wasn’t large not because of a lack of demand but because of a lack of availability of choice, quality and variety. That sowed the seed for Nykaa. In early January 2012 I put in my papers to the surprise of my colleagues and friends who had no idea I had been toying with the thought for a while.
In the world of e-commerce, what are the top 3 things an entrepreneur should keep in mind?
The three things an entrepreneur should always keep in mind are:
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1) Don’t underestimate the power of technology, both positive and negative! 2) The digital revolution will change the way people consume products, services and are influenced. 3) A solid e-commerce business has to be backed by a solid physical delivery system. Nykaa focuses on beauty products, in the future do you plan to expand products/ services?
For now Nykaa is focused on selling beauty products in a comprehensive way. Nykaa is all about holistic, long term sustainable beauty, hence we have a robust wellness offering as well. We already offer services thanks to our expert portal that features 30 of the country’s leading makeup, skin, hair, personal care and wellness experts who offer advice to Nykaa customers. Many of our regular shoppers are in the age group of 20-35 years, and are working women and/or young mothers, so we may offer specific products/services to suit their unique needs at a future date.
When other e-commerce sites offer a range of healthcare, beauty, clothing and other products, how does Nykaa gain an advantage with focusing on beauty care?
The way the e-commerce market has evolved in India, there are two or three large horizontal players, but when you look around, industry verticals are popular in home furnishings/furniture, beauty, eyewear, healthcare, and maternity and baby needs. There are enough studies and industry statistics to indicate that verticals always enjoy greater customer loyalty because they offer greater variety, better choice, advice, fulfillment and therefore, a superior shopping experience.
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What is your average work-day like?
I always begin my day with a brisk walk on Carmichael Road, Mumbai followed by a healthy breakfast of oats. My work day starts at 9.30 and before I know it, it’s already 7.30 in the evening! I tend to revisit my IPad after dinner at about 10.30. Nykaa has grown so fast and so quickly that if I were to return to my IPad in the middle of the night, I end up keeping a tab on the orders pouring in. It’s exciting to see Nykaa literally grow in front of my eyes!
What or from whom do you draw your inspiration from?
The Poem Ithaca by Constantine Cavafy never ceases to inspire me. It compares Ulysses’ legendary journey to the journey every person makes through his or her life and suggests that everyone is looking for their own Ithaca, their personal supreme goal. However, in the end, it is not the goal but the journey that matters, because this journey makes us wise and gives us priceless riches; experience, knowledge and maturity. Ultimately we shouldn’t judge a journey by the value of the destination because whatever the destination, the journey would have been an interesting, enriching one.
A few words of advice ?
I believe you should commit yourself if you want to work. Of course a work-life balance is very important but learning to compartmentalize your time is the best way to be effective. This is especially true for working women and mothers. Find the right balance in life is the key to success.
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AHSHISH HEMRAJANI A pessimist says the glass is half empty, an optimist says it is half full. An ‘
entrepreneur looks at the empty section and adds some scotch either to enjoy the journey or be too drunk to bother.”
This journey of Ashish Hemrajani started in the year 1999 when he went for a trip to South Africa. During that time he was working for J. Walter Thompson, an advertising firm, after completing his masters in business administration. This trip changed his life and an idea struck him, while he was sitting under a tree and listening to radio promoting rugby tickets. He came back, quit his job and decided to start his own company. At the age of 24, he launched his first ever internet venture; “Bigtree Entertainment Pvt. Ltd.” with its head office being his bedroom. Soon after the co founders Parikshit Dar who took over Technology and Rajesh Balpande who took over Finance joined him they approached investors. Back in the day, it wasn’t as easy as it is now, to get investors and with internet and technology not that prevalent it was even more difficult to present your proposal. They got their first investor (JP Morgan- Chase Capital Partners) in their kitty by sending their proposal through “FAX” And not just any proposal but a ONE-PAGE fax stating just the business model and with that they were convinced and agreed to fund them with INR 2.5 crores. A less known fact is that they ran their business under the brand name ‘GoForTicketing’ which later they rebranded to ‘IndiaTicketing’ in 2002, before finally being called ‘BookMyShow’. Now it was not an easy task to sell tickets online during that time because of no credit card, debit card and net banking penetration, poor broadband connectivity and lack of e-ticketing software in theaters and single screens and with 21 other competitors in the market it became even more difficult. They literally bought tickets
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in bulk and sold tickets to customers by sending 100s of people to deliver tickets on motor bikes. With all the difficulties also they were doing a good business and accounted for 150 employees. The Dot Com industry was booming as well. So Chase, their capital partner sold off their stake to Rupert Murdoch’s News Corp. Then the unthinkable happened in 2002, the Dot Com market crashed and their downfall started!
RISE
In 2002, the Dot Com market got busted and everyone in the industry, big or small faced the heat. It was even worse for the ones who were new and one of them was our BigTree Entertainment. As rightly said by Warren Buffet; when the tide pulls back, you know who’s been skinny dipping. Their business went down to an all time low. All the investors pulled their hands back. They had to cut down on many employees salaries. They shut down all the offices along with their operations and only focused on the major cities of Mumbai & Delhi. Their team strength literally shrunk from 150 to 6. They had to tighten their business and its costs. The business was back to its basics with no investors from 2002 to 2006. There were times when they had no idea where the next meal will come from or how will they pay the salaries. This fall made them realize a lot of things. It made them see things very differently. There were only two options left for Ashish Hemrajani now; either to shut the business down and go with the jobs that were being offered to him by the headhunters or keep hope in the business, invest all his savings and start all over again. Ashish Hemrajani’s confidence was not completely lost and he decided to stick with the business only to do things a little differently and mind you smartly as well. Having decided that, they moved forwarded to build the business again and went back to fix every broken piece and soon things started turning in their favor. After the Dot Com Tsunami was gone, the market completely changed in India with
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better Internet, credit cards & debit cards facilities and infrastructure was also improvised. Between 2002 and 2004, the number of multiplexes across India also grew largely. With desperation to get back on their feet, they became software solutions providers that sold automated ticketing software to these multiplexes. With the downfall they learned a very important lesson that anything given for free has no value, so now they started charging for the same. The softwares that they earlier offered for free, they now charged for the same. They also started running call centers for all their clients and ticketing back offices and were getting paid on a cost plus model. This got humongous response. Knowingly or unknowingly, they now had a business model in place. With the sudden rise in the business the worth of the company also increased from a close to nil to a 24.1 crore valuation by 2007.
COMEBACK
They started approaching fresh investors and finally luck favored them in March 2007 when Network 18 invested INR 14.5 crores in their business giving them a 60% stake in their business. Now the boss was back in business and found it the perfect time to launch the ticketing business again which gave birth to a never ending “BookMyShow.com” (A name suggested by an intern developer), but only this time they were more prepared, cautious & organized. They kept ACs at 24 degrees, the alternate bulbs off, reused papers, pens, pins, etc. and saved money in every way possible. BookMyShow quickly gained momentum and was literally everywhere. They in fact played it so well that the global financial crises didn’t affect them much. As a matter of fact, they hired some great talent during the global financial crisis. And from here onward there was no stopping to the success of BookMyShow. Having started pretty early in the start-up cycle, Hemrajani has a life and a weekend that he thoroughly enjoys. His philosophy is: Monday mornings should be as happy as Friday evenings. And, it shows in the variety of stuff that he does.
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Recently Bookmyshow.com signed a five-year deal worth Rs.1,000 crore with PVR Ltd to sell the latter’s tickets online (BookMyShow was previously managing PVR’s ticketing system but was not selling its tickets on the BookMyShow site). Hemrajani says the biggest gain from this deal is for the end consumer. “All I own is your user experience. The user owns us. I am giving that extra experience in one place,” he says. The deal adds 89 PVR cinemas (including Cinemax India Ltd) with over 380 screens to BookMyShow’s existing tie-up with over 1,500 screens. About 85% of their sales comes from movie tickets, says Hemrajani, but 45% of the revenue comes from other properties like the Indian Premier League (IPL), Formula One Indian Grand Prix, music events like NH7 in Pune, at blueFROG, among others. He believes there will be some equitable distribution of revenue in the future —“it will settle down at 50-50%”. His focus now will be on spreading into smaller towns since most of the current business comes from the top 4 metros. “The growth from class 2-3 towns is phenomenal, not because of the Internet on computers, but because of the mobile phone. BookMyShow does 26% of its transactions on mobile — the highest in the country.
Hemrajani spends his Saturdays sailing, taking off from the Mumbai Harbour near Gateway of India to Mandwa. He developed a passion for sailing after travelling to New Zealand as part of the Beachheads programme. A member of the Royal Bombay Yacht Club, Bombay Sailing Association and Colaba Sailing Club, between October and April, he has been sailing every Saturday and Sunday for the last decade or so. “There are no boundaries here unlike other sports,” he says. “The ocean is your boundary. If you want to race to Dubai you can; you will not win though. The rules are used to disadvantage opponents not advantage yourself. The elements of nature are not in your control; one mistake is catastrophe as the boat can capsize. On water, you are screaming. The moment you come to land, everybody’s friends. Sailors know how to dissolve their egos as soon as they step out of the water.”
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Sundays are reserved for his three-and-a-half-year-old son, Zahan. “We wake up late and go to the beach with this little picnic basket. I swim with him in the waters. We play, hang out with the fishermen and are back home by 1 in time for lunch,” he says. Hemrajani’s heart and soul are in Juhu. Born and brought up there, he studied there, now lives there and has a office nearby. There is something about Juhu, the fresh air and the beach that he can’t live without. “When I walk down the street, everybody from the cobbler to the security guard to the shop owner knows me,” says Hemrajani.
A SHORT INTERVIEW WITH ASHISH HEMRAJANI You have been on this journey for 16 years now and you have taken several knocks during the dot-com bust and recession, what is the secret to success?
We are just persistent. We are persistent like a woodpecker that keeps chipping away and eventually the tree falls. Having a belief in yourself, being persistent, and coming to work every day and thinking about how to do something better -- all great companies across the world have done the same thing. Look at GE, Coke, McDonalds, Dunkin Donuts, Berkshire Hathaway, Tata and Birla; they all have this in common. If we had packed our bags and gone away during the dotcom bubble, we would not have been where we are today. We were wiped out in 2002 during the dotcom bust, we were on the road, but we persisted.
What does it take to build such a team?
There is ‘zero ego’ at BookMyShow. There is no pressure. We come into work feeling it's our own. Interest free student loans are given to all employees if they want to study further. Our office boys are put through college. We enrolled one of our office boys, Roopesh, in a night college. He has to leave office everyday by 5:30 pm. All of us sink and rise in the same ship. When the global financial crisis happened in 2008, everyone took 30% cut. There was a vote in the company and the result was that 90% agreed to take a cut for 6 months. It's about being honest and
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straightforward. You should not just fluff and bluff and take things for granted. I come to work like everybody else. I have absolutely no shame in what I do. Sometimes at events where we partner, I am helping our volunteers to usher people in and in checking tickets. That's the kind of joy that we have in the product that we have built. The offices that we have today, the fancy coffee machines that we have, our investors, our advisors, and all the publicity that we get in the media are all secondary. The ultimate joy is when our customer is able to have an excellent experience because of the platform, and that is the last mile in everything that we do. If that is the case there is no shame in ushering people at our events. The margins are just metrics, it doesn't matter to us. As long as Monday mornings are as exciting for me as Friday evenings, I will continue to do this.
What have the tough times taught you?
My biggest learning has been that good times and bad times do not last, and both will pass really quickly. Anything free in life is not valued, never give anything for free, charge always, even if it’s one rupee.
Make sure there is a culture of Monday mornings being as exciting for everybody as Friday evenings. Do not fear the competition and any environment for that matter and do not complain about the environment. Everybody complains about the environment. If it is hot, then remove your shirt and go for a swim; there is an opportunity in that. Is it too cold? Go, have a scotch or coffee. The environment is not in your control, focus on what you can do.
What is your advice to entrepreneurs?
Stop behaving like investors who are thinking about investments and exits. Your obligation as an entrepreneur is to build a great product that will continue to make end users happy and satisfied. That is your only obligation, rest will follow. I see many entrepreneurs are now worried about valuations and exits, if you take care of customers, all of that will happen.
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What are the books you have read and who are the leaders you look up to?
On the consumer side, one of my favourite books is ‘Nuts!’ This is the story of Southwest Airlines. The other book that I thoroughly enjoyed reading is Steve Jobs’s biography. He has been a huge inspiration in my life. I have been a consumer of every possible product of Apple. Another book that I have completely enjoyed is ‘Delivering Happiness’ by Zappos CEO. The book that I am currently reading and I bought copies for my office is ‘The Hard Thing about the Hard Things’.
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BIBLIOGRAPHY Websites
https://www.vagabomb.com/Meet-Falguni-Nayar-the-Founder-of-Nykaa-andthe-Woman-Who-Brought-Online-Makeup-Shopping-to-India/
https://yourstory.com/2014/05/nykaa-falguni-nayar/
http://elle.in/elle-mentors/falguni-nayar-nykaa-founder-entrepreneur/
https://yourstory.com/2017/02/nykaa-gunning-for-ipo-in-2018/
https://www.outlookbusiness.com/specials/women-of-worth_2015/fashion banker-2036
https://sheroes.com/articles/meet-the-sheroes-falguni-nayar/MTA1Nw==
http://www.yosuccess.com/success-stories/bookmyshow/
http://hankervisionary.com/a-journey-to-the-multi-million-dollar-company-thestory-of-bookmyshow/
https://blog.basicseduventures.com/2018/01/20/success-story-started-chaicigarettes/
https://www.theweek.in/theweek/cover/ashish-hemrajani-bookmyshow.html
https://www.livemint.com/Leisure/b8efJNyVeVeAj8WvWzrR6J/AshishHemrajani--The-original-ticket-master.html
https://yourstory.com/2014/06/bookmyshow-ashish-hemrajani/
