Vineeta Singh – I am feeling a lot of pressure right now given that Ashwin has put me between drinks and yourselves. It’s not a very nice place to be and of course the added pressure of being somebody who’s coming from Mumbai and trying to give startup gyaan to a bunch of Bangalore folks. Trust me, it’s a lot easier to give startup gyaan to 12 Sony cameras than to a bunch of Bangalore folks.
And of course the quiz just before this, I totally flunked that one. Not just the 3, 2, 2 questions, but even the rest of them. So I’m feeling so much pressure that when I was going to the washroom, my team thought I was gonna run away out of panic attacks, so they’ll follow me all the way. But I’m here, so I’ll do what I do best, but just talk about my own story about how far we’ve come.
It’s hard for me to quantify stuff in terms of how we’re gonna grow this because I always think of SUGAR as my baby for the next two, three decades. So all my thinking around what I’m doing with the business, with the team, with the brand, with every single product is always like two decades thinking because there’s a fundamental thesis on which this business is based, and that is that young women are very, very different from how their moms or the previous generations thought and that big transition is what led to this. So in fact, we didn’t start off as SUGAR
We launched this company about 10 years back as a beauty subscription business and unlike today, we didn’t have clarity then that subscription is going to be a disaster and it’s not going to scale and it was quite the disaster. But I’m happy that I met Shivani who was a Fab bag customer back then.
But the good thing that came out of it, you know, when you’ve graduated from a good B school, you have this pressure to create something which is extremely differentiated and sometimes you build a model which is so complex out of the stake of just being different that it turns to be too complex for the consumers as well. And that’s what happened with our subscription based company and it was hard for us to scale, but the good thing was that there were 200,000 women who had signed up and these young women, all in the 20 to 30 age group, a lot of them in Metros were at the heart of our pivot, and that’s how SUGAR was born.
So, as somebody was just asking, did you always know that you’re gonna give up a job offer and start a cosmetics company? No, but I always knew that if I see a big lifestyle shift, which I was seeing for young women, I will build a business around it and building something for Women by Women has always been a passion project and that’s how SUGAR came around.
So the big shifts that were happening, of course, were, and now they seem a lot more obvious, but in 2014, 15, we were just beginning to see that younger women were going to college, they were working. So they had a very different lifestyle in terms of stepping out, a lot more going by local trains, spending their entire day outside. So naturally that meant that the kind of brands and the kind of products they identified with were very different from the legacy brands that the previous generations were using.
The second big shift was that these women wanted to control their destiny. They made choices in terms of what they wanted to put on them, what they wanted to put inside them, and very decisive choices because these women were finally in control of their destiny which unfortunately a lot of women in our prior generation weren’t.
And one of the big shifts that we saw was that when we started SUGAR, less than 10% of the e-commerce shoppers were women. Whereas today that number is 43%, and we’ve seen that entire shift happen in the last seven years, and it was hard to predict back then that this would happen. But you could get a sense by just observing consumers and seeing the way they were behaving, especially these younger women.
The good thing about women, unlike men as somebody was asking about, why don’t you have men’s makeup? The good thing about women is that they talk, they love to talk, and so they would share about what they loved. They were this happy sharing group of customers who would just, like if you give them a form and there’s an optional box that says that in case you wanna say something, they’ll still stay.
Even if they’re saying something like, “Oh, I love SUGAR so much that, during my delivery I was wearing lipstick and it was on until I had my baby.” You know, something that a lot of men would not wanna talk about, but a lot of women just come out there and share. And that’s what I love about them.
And the other shift was that they were inspired. Social media made role models out of real women. The fact that entrepreneurs can be considered to be popular figures that people want to talk to. Somebody was telling me that she profiles entrepreneurs over celebrities and that was quite a compliment for all of us.
But that has happened thanks to social media because you can look up to real people. And again, younger women preferred authenticity. They wanted to connect more with real role models than again, their previous generations who only had access to televisions and thus celebrities and, TV, film stars were the only role models. So our role models were shifting. So these were the three, four big shifts that actually got us to start thinking about whether these lifestyle shifts will result in changes in what categories
One of the categories which was most underpenetrated was cosmetics where we were consuming one eighth of the product that somebody outside of India would consume and that led us to think although the gross percentages hadn’t started coming up by then, that led us to think that this is one of these industries that in the next decade we’ll see a big shift.
And as on date, 65% of the women are under the age of 35, and which is why I’m very confident that what we’ve seen so far in the last 10 years is just scratching the surface. The next two decades are gonna belong to these young women and brands and companies that build businesses around serving them as customers, around employing them are gonna get the biggest leverage because I do believe that women are probably the most underutilized asset that this country has.
So coming back to SUGAR. So we then started thinking about, okay, what are the products that these women want? And we started talking to thousands of these consumers and of course there were clear use cases that they wanted products that last them so long that at nine o’clock at night when they come back, their makeup is still on.
It was very hard to explain all this to venture capitalists back then because there was no cool category called D2C back then. Most VCs were men, so they didn’t understand why there would be a difference between lipstick that lasted for three hours versus seven to eight hours. So honestly, fundraising back in 2014-2015 was very, very hard.
But the good thing that happened out of that was that we were forced as a company to obsess a lot more with our consumers and keep thinking about how to sustain from the revenue that we got from our consumers which actually makes you create the best products that are right for them. And that’s what we did early on.
So we wanted to create products that lasted them. Made them unstoppable because as somebody just told me for women, makeup was one of those things that gave them self confidence. It made them feel great about themselves. It made them feel unstoppable. And so we were a part of this journey of them just owning themselves and owning their identity and makeup was a form of self-expression.
So which also meant that these products had to be right for them including for women with the deepest and the warmest of skin tones, and you would not believe seven years back the most mainstream brands wouldn’t create products for women that had my skin tone and definitely not anybody who had skin tones that were deeper, right?
Because again, when you look at a very small consumer base and you speak to them, you realize what their specific problems are. But when you look at market level data, you realize that, okay, now 60% of our business is coming from this region in the country where the skin tone is this and this region so there is a cyclical thing where like women with lighter skin tones wear more makeup because there are lighter products for them. The women with deeper skin tones feel conscious because when they wear makeup. People say it’s odd, and then they never touch makeup again and so on.
So we started seeing these emotional journeys that women were going through. So we also realized that we had to create products that worked for women with a wider range of skin tones. And then social media made access to global trends much easier. So things, products that made global trends accessible, but again in a way that suited our own Indian aesthetics.
So we started on this mission that we wanted to create young Indian Women’s favorite beauty brand. Now, today I’ve got a tip that I should add young men also to this, but we’ll think about that at the next stage, and that’s how you know our first step was really to obsess with these young women.
As a company we realized that if you don’t obsess with a specific consumer early on in your journey, then you get too distracted into, and right now, probably easier because there’s a lot of funding going into these younger companies.
But when we started off, we had very limited resources. And when you have limited resources, the best way to utilize them is to really focus and obsess. Obsessive compulsive disorder over the very small set of consumers and then once your product market is accomplished there, then try to expand beyond that.
And, competitors, like the standard thing that I’ve seen most of even my investing companies at Shark Tank is that they get tempted that, you know, let’s get R&D ke liye someone as somebody who’s working at a large company, because they’ll come in and they’ll really help us launch 20 products in a go.
Our product development head is somebody who joined us as a customer care associate nine years ago, and she continues to drive it because it is not really about what a Lakme or a L’Oreal is doing, but it’s really about where your consumer is going and how close you can get to the consumer to get that right, because the moment you get somebody who comes in from a competitor, the first set of things that they say to challenge you through on them is, “No, this can’t be done.”
And everything seems impossible until you do it right. So the first reaction we would always get from formulators was that you cannot, um, you know, if you put a liquid on the lips, it’s expected by a consumer to be a gloss. It shouldn’t be something that settles to Matt. And we launched India’s first long lasting Matt lipstick which was in a liquid format and it was that the consumer dissonance was something that everybody thought would be unacceptable, but the fact that it would stay put for eight hours set of five products we launched back in 2015, 16, and they still give us 40% of our business.
Because Hero products, once you discover them, they will continue to grow exponentially for you because you’ve obsessed in absolutely getting them right. And that was the first few things that we did.
Second was, of course like Sherry had mentioned, I think we created this process of, so firstly, of course, before D two C became cool, we figured that having SUGAR Cosmetics app and SUGAR cosmetics.com, you know, people thought that, oh, why would somebody download a single brand app?
But we made it lucrative now, by adding a lot of content, by being able to figure out what products would work better for you using AR filters, etc. And we got more than a million downloads within the first 12 months of launching our app because we just made it something that was fun and easy to use and that became like our experiment zone. So we look at our D two C channel primarily from the perspective of giving us a million opportunities to fail, because like he said, you try a hundred things, five work, 95 don’t work. You can have, what most large FMCG companies do is they ask consumers, what do you want?
But many times the consumer doesn’t know what she wants or if she says she wants something and then you give her that thing, she’s gonna say, she’s not gonna buy it. Right? So the real proof of the pudding is in them spending their hard earned money and women will spend their hard on money only when they’re very convinced that they like a product.
So our entire D2C channel became like an entire opportunity for us to fail a million times, keep iterating, and we figured out a process that we could do this so cheaply and so fast on our D2C channel and then that’s how we pick out the hero product and then send it across to the other channels.
But that’s where we do all our experimentation and the one that I feel most strongly about. The good thing that’s come out of this entire D2C wave that has hit the country is the amount of capital and I’m super grateful for it because I remember being asked in back in 2014, 15 that you are in a category where there’s L’Oreal, there’s P&G, and there’s Unilever.
How the hell are you gonna build a business and I remember being asked that, you know, to in fact that back then it wasn’t even called a brand or D2C business. It was called a private label. They used to say that you’re launching a private label which would take 50 crores just to get started, and who’s gonna give you 50 crores, right?
Of course, it’s a different story than the next few years D2C became cool and we as a company managed to raise more than a hundred crores, but it seemed unthinkable to try competing against these large FMCG giants and nobody could have predicted in every category, what happens is to that story of us, they ignore you.
Then they try to stop you, and then they eventually join you. I think in every category before the numbers start showing. You see those? And if you don’t act then, then you’ll be too late to the party because by the time the numbers come in, there will be 20 other companies that wanna jump into the trend. And that’s what’s currently happening.
So this is what I want to talk about because I know there are like a million D2C brands that are launching. So if you go to Amazon today and you see a Vitamin C serum. If you go to Amazon and search for vitamin C serum, there will be 3000 searches, right? And this screenshot, I don’t know anything against these brands, this random page, but this is from the seventh page, right?
So this is probably brand, product brand 392, 393 because each page has about 60 products on it, right? This is what in India, what happens is that the moment there is money going into a category, a million people jump in and if you don’t have a reason for existence, if you don’t have a clear reason why you should be the right person to build the brand.
Don’t do it, because now what everybody realizes is that it’s very hard because to sell a product for 500 rupees, you have to spend 1500 rupees because you don’t have a clear purpose of existence and which is why I think one of the biggest investments we did early on was to start thinking about a brand.
Not like, okay, brand building is a hundred crores add mein daalo, 200 crores but the small things, it’s very important that the sequence before you get to growth or scaling or putting money behind performance marketing and ads, it’s very important to have conviction that you have solid product market fit, your consumers love you for a very, very specific reason that only you can deliver.
Because brands mean trust, they mean consistency and they need to have a purpose of existence. If you don’t have that, then you need to first address that before spending millions of dollars of VC money into performance marketing and it’s really simple to build a brand early on unless you need it to grow like a hundred on your simple things matter, customer experience, how your products is being delivered, how much time, what is the entire experience like?
We obsessed about that early on. Consistency in messaging, packaging. We are obsessed about having a distinctive visual identity, a clear name that you can’t get wrong. You know these small decisions. If you don’t spend precious months working on some of these small decisions, you’re gonna go on through Crores trying to exponentially grow a product that doesn’t even have a product.
I feel that’s one of those trying to do brand building on steroids is one of the easiest ways to create a brand, which ends up becoming a discounted brand. So if your brand is something that people are only buying when it’s discounted and you are feeling that pressure that today Amazon wants a discount, and then tomorrow I ask for the same one, and then you’re giving it to all of them and there’s no consumer who’s buying you at full price.
I think that’s an opportunity to go back and think about it. The way we look at brand building is we are not gonna be matching discounts for, we’ll have price parity across all our channels. We will have a product that has so much demand that the consumer’s ready to pay full price for it, and then she can buy it anywhere. It doesn’t matter. She doesn’t have to buy it on D2C.
D2C is great because it lets us experiment, so we will have some unique launches, which we only do there. She can buy it at D2C, she can buy it on Nykaa, she can buy it in retail. In fact, 60% of our business now actually does come from retail because we’ve held this belief that a great brand creates pull and it does small things that get consumers to come fighting for it rather than having to sell all the time. I feel that, you know, these are things that require time and effort, but they end up saving you crores. So I feel this is one of those things that we did very early on, not get pressured into giving deep discounts. Obsessing about the experience, obsessing about the packaging, obsessing about creating an entire visual identity in our stores.
You know Amrita, who handles retail marketing, goes to every single store to see small things like logo light on hai, visual identity kaisa hai. Retail is detailed, but brand building is also detailed, and that’s something we learned the hard way. So don’t consider brand building to be a hundred crore exercise. It is just a heart and soul and precious time and effort exercise more than anything else.
And then of course, the thing that I’m most proud about.
I feel that, you know, as a company, our greatest superpower is our team, because I feel that our, you know, we have more than 2000 women who work at SUGAR and every single one of them very closely mirrors our consumer in terms of her aspiration, her ambition to be unstoppable, in terms of her of course passion for the product, passion for the category, passion for just the overall advancement of women.
And that’s something that’s so hard to replicate because it is not easy to create a culture that really lets women be who they want to be because it’s, you know, the traditional ways where women have to be a certain alpha way in order to succeed or to get promoted, or they need to network over a boys club, which they don’t have time for because they have families to get back to in the evening.
As an organization, we put in a lot of effort because we realize that culture’s not something that you write in a document, but it’s something that people see happening and I feel that given the fact that in the last two years we’ve seen women participation in workforce going on from 25% to less than 20%. It’s even more important for companies to create role models, to create role models out of women who are going through that tough phase of figuring out how they wanna be women in business managing their…of course, in India, women still do one more domestic chores than men. When you think about all these numbers you become more sensitive to the challenges that they’re dealing with.
So there’s an effort that goes into creating a workplace which makes sense for women. At SUGAR I think that’s one of those things that I’m most proud of not just because it helps us in business. It does, right? Because this is our consumer and they’re able to create the most innovative products because they can relate to the consumer. But also fundamentally I feel that there is a statistic that 10% more participation of women in the workforce can have a $700 billion GDP impact. So if we wanna get anywhere close to the 5 trillion dollar dream that we have, this is one of the smallest things. So if nothing else there, as Pawan said, Oh, this is my karma.
And of course, during most investor pitches we get asked – what is your moat? It’s one of those extremely stressful questions because no answer is ever right to the extent that one of the times I was telling Kaushik that I’m just gonna say I’m a goat, and that’s my moat which is a very bad joke.
We feel our number one moat definitely over a period of time is brand because that’s the only thing that you just can’t replicate and that’s the only thing that allows you to have a similar product price at three times what say, does and still the consumers are ready to pay that premium for it.
The other thing which we think is our second biggest moat because see the problem when moat says that they can never be something which money can buy. Because in India, you know, whenever there is, there is always a gold rush for every category. Like there’ll be a gold rush for everything, right? There was a gold rush for FinTech and then edutech, right?
I don’t know what it’s gonna be this year, maybe crypto but when that gold rush happens, money comes in very quickly because obviously India with its 130 crore people, numbers are always there, right? So money will always come in quickly.
So your moat which is the long-term sustainable advantage that you have will never be anything that money can buy and one of the biggest things that we’ve been able to build at SUGAR has been our community. Because to build an authentic community where people wanna spend time, people wanna learn and that takes effort because over many, many years, you have to keep giving them the right content.
So just like a product, if you create the right kind of content that the consumer wants to engage with, that really educates her and that makes her feel like she wants to watch it over and over. You spend much lesser in promoting that content because the content is powerful enough to go viral.
And over a period of time we realized that having authentic in-house…we don’t have an agency for influencer marketing, we don’t have an agency for content, we don’t have an agency for any of the stuff that we do and we do very big numbers. So we are the fastest growing brand, both on YouTube and Instagram – 2 million followers on Instagram, 500,000 on YouTube. We get more than 4 billion impressions a year, and we’re more than 10 times the number of views on YouTube. They’re the second biggest brand, and by far, the faster growing brand on Instagram. A lot of this is competitive advantage, but this does not come with money.
This only comes with authentically creating every single day content that the consumer wants to spend time watching and that’s where the engagement numbers come in. That’s where the community gets built, and that’s one of those things that not a single player can wake up one day and say that, okay, can I do it in a year? Because when you try putting a lot of money behind content to grow your community, what happens is that, the whole marginal utility…eventually, you’ll start paying like per impressions you start paying 20 bucks, which doesn’t make sense for any business. Everybody has to build a community or everybody has to be great at content.
But figure out what is critical to your brand. For a makeup brand in India, because it’s still a nascent beauty market, education is very core to buying because it was happening for many years in stores where women were being taught how to wear makeup and then being sold makeup. Now that entire piece of education is shifting online.So it is so core to our category that that’s why we obsess about educating our consumer. We wanna be the best educator for all there.
So figure out, again, for your business, what is that one thing where you can create a moat and something that helps you build your brand, which does not, cannot be bought by money.
It could be different things. For instance, some of those companies that do milk delivery for them, it’s their entire infra delivery, right? Nobody can come in overnight to replicate it because you have to create those small last mile logistics pains that you can’t always do with money.
So I don’t know what it is for your category, but it’s very important to figure that out.
Once you do all the brand building, the growth always comes. We’re doing about INR 45 crores of monthly sales at the moment we are in now in Color cosmetics category, the third largest brand with about 6% market shares.
So to all those who said it’s hard to compete with the Unilevers, the P&Gs, and the L’Oreals, I think L’Oreal Paris is like exiting its India makeup business but we are here to stay. So it happens, but I think it took us patience. It’s taken 10 years and it’s probably gonna take like two more decades to build our business, which is 10 times less size. But we are patient because we realized that a lot of times you don’t realize in your entire journey, I’m sure you are at some point struggling with something. Somebody said, I have a thousand users, how do I get to a million? A lot of it is not a linear or a direct exponential curve which is what it looks like because that’s what we talk about and everybody talks about the last 3-4 years, our journey because that looks fantastic, exponential, right? But before that, that entire flat-faced experiments with FAB BAGS failing – all of that, nobody really talks about. And I feel that you are probably somewhere on that journey.
So enjoy all the failures, learn from them, bounce back. Be patient but because you never know, what the next big thing will be. But don’t keep switching businesses if you think that you’re onto something. There’s a core trend, like this big trend that we believe strongly in women beginning to control their destiny.
That’s something that you identify with. Hang on to it and commit to it for two, three decades because that’s how you become unstoppable. Thank you.