The Beauty Bubble That Burst: How Good Glamm’s Formula for Success Became Its Recipe for Disaster!

Remember those glossy Instagram ads promising you flawless skin and a perfect life in just one swipe of that miracle cream? Well, that’s exactly what Good Glamm Group was selling to investors—a beautiful future that, like many beauty product claims, turned out to be a bit too good to be true.

In the dazzling world of startups, the Good Glamm Group, aka the GGG, arrogantly moved onto the scene like it was walking the runway at Fashion Week. Flush with funding and armed with ambitious plans for global domination, founder Darpan Sanghvi painted a picture so pretty you could almost smell the rose-infused face mist. IPOs! International expansion! Premium segments! Profitability! The promises were as abundant as influencer codes on a product launch day.

But behind that expertly contoured facade, things weren’t quite as luminous as they appeared. In fact, if Good Glamm Group were a makeup product, it would be that foundation that looks flawless in the store lighting but turns into a cakey mess the moment you step outside. Let’s peel back the layers of this beauty disaster and see what’s really been happening beneath the CONCEALER.

From Unicorn to Uni-gone: The Dramatic Valuation Collapse!

“Good Glamm Group is becoming the BYJU’S of the commerce world.” When you’re being compared to the poster child for startup troubles, you know something’s gone seriously wrong. But the comparison is apt. Like BYJU’S, Good Glamm Group went on an acquisition spree that would make a shopaholic blush, gobbling up more than 10 companies in a record time. And like BYJU’S, they’ve discovered that collecting brands is easier than making them work together.

Just two years ago, GGG was valued at a stunning $1.2 billion—unicorn status achieved! Break out the champagne! But today? They’re reportedly looking to raise funds at a valuation of just under $120 million. If you’re reaching for your calculator, don’t bother—that’s a staggering 90% drop. The kind of discount you’d expect from a liquidation sale, not a once-promising beauty conglomerate.

Perhaps Good Glamm Group should have remembered the first rule of beauty: sometimes less is more. Instead, they seem to have subscribed to the “more is more” philosophy, means more acquisitions, more promises, more problems.

The ‘Aparichit’ of Beauty Brands…

Like the exclusive tale of movie ‘Aparichit’, Good Glamm Group indeed has two distinct personalities. There’s the public-facing GGG—the one making grand announcements about profitability and expansion—and then there’s the behind-the-scenes GGG, where the picture is about as pretty as a makeup bag after a toddler’s discovered it.

Here’s what’s actually been happening in the past year:

• Good Glamm Group has received default notices from IAN and the founders of Sirona and The Moms Co. (Nothing says “we’re thriving” quite like legal notices demanding payment.)
• Good Brands Co CEO Sukhleen Aneja has quit.
• The company is looking to put brands on sale. (Nothing screams “successful acquisition strategy” like trying to offload the companies you just bought.)
• More layoffs have been announced. (Because nothing builds team morale like wondering if you’ll have a job next week.)
• And in a truly confidence-inspiring move, major investors Accel, Prosus, and Bessemer have stepped down from Good Glamm’s board. (When your own investors don’t want their names associated with you anymore, it might be time to reconsider your life choices.)

For a company that was supposed to be creating a “content-to-commerce” revolution, Good Glamm Group has certainly generated plenty of content—mostly in the form of concerning headlines.

From Glamm to Glum: Where Did It All Go Wrong?

The beauty industry isn’t for the faint of heart. With giants like Reliance Retail’s Tira and Tata’s Zudio Beauty entering the scene, and established players like Nykaa and Mamaearth’s parent Honasa consistently performing well, the competition is as fierce as a beauty influencer defending her favorite mascara.

But competition alone doesn’t explain GGG’s spectacular tumble from grace. No, this particular beauty disaster is a unique formulation of questionable management decisions, stretched resources, and perhaps a dash too much ambition.

Former employees—including CEOs of companies acquired by Good Glamm Group—allege that management overlooked key matters of corporate governance and misled international business partners. It’s like promising a “natural, organic” product while secretly loading it with chemicals and hoping nobody reads the ingredient list- Well, they were not completely wrong, Indians are definitely not so wise!

The management is also accused of having promised investors growth projections in 2021 that would make even the most optimistic fortune teller raise an eyebrow. Spoiler alert: They failed to meet these projections.

What Happens When Centralization Becomes Centralized Chaos?

Imagine the feeling when someone reorganizes your makeup drawer without asking? That’s apparently what it felt like for the acquired brands when Good Glamm Group centralized sales, hiring, and marketing functions.

Those who formerly led product and operations at acquired brands like The Moms Co, Sirona, and Organic Harvest claim that this transition resulted in catastrophic lapses in product development and marketing budgets. The result? Poor sales and a drop in the quality of skincare products. Nothing customers love more than watching their favorite brands gradually turn into disappointing shadows of their former selves!

Good Glamm Group is also alleged to have sidelined key members of the product and marketing teams from these acquired companies. Because who needs people who understand the brands and their customers, right? This brilliant strategy led to brand dilution and pushed many brands further away from profitability. It’s almost as if institutional knowledge and brand consistency matter in the beauty industry. Who knew?

The Omnichannel Omnishambles!

In early 2021, Good Glamm Group was earning 80% of its revenue from online channels. But then they caught the omnichannel bug—that irresistible urge to see your products on actual physical shelves that seems to afflict every D2C brand eventually.

What followed was a cash bonfire of epic proportions. GGG went for premium retail spaces—because nothing says “fiscally responsible” like overpaying for prime real estate—and also paid retail outlets extra for preferred shelf placement. These visibility charges ate into GGG’s retail margins, which were already thinner than a budget concealer.

At one point, the company was running discounting offers such as products for just ₹1 (with fulfillment charges of ₹99), a strategy about as sustainable as using wet wipes to remove waterproof mascara. Plus, each retail space required dedicated manpower like beauty experts, further adding to costs.

By mid-2023, reality had crashed the party. Good Glamm Group took the call to shut the majority of its brand-owned outlets and cut off supply to non-performing third-party outlets. In fact, they stopped distributing products to the bottom 30%-40% of stores and only stocked their performing outlets. This extreme omnichannel diet resulted in a demand mismatch and damaged the brand’s reputation considerably.

The resulting cash crunch—after burning through millions—pushed the startup under a pile of vendor dues. Many stockists and distributors reportedly gave up on Good Glamm Group, further damaging retail sales. As per sources, the group is currently selling around one-tenth of what it was selling a year ago. That’s not a decline; that’s a free fall.

The Board: Asleep at the Beauty Counter?

One has to wonder what the board was doing while all this was happening. Were they not aware of the payment obligations in India when they approved plans for investing in the US market? Were they sleeping at the wheel in the name of corporate governance?

The board has taken at least one step now with the resignation of three directors. Though the reasons are currently unknown, it’s hardly a vote of confidence in the company’s future. It’s like watching the judges walk out in the middle of a beauty pageant—not a great sign for the contestants.

The Journey From Content-to-Commerce TO Content-to-Calamity.

Besides acquiring a host of brands, GGG also looked to create a content-to-commerce platform through acquisitions such as Vidooly, Bulbul, ScoopWhoop, Tweak India, Ms Malini, Winkl, and popXO. Some key leaders associated with these companies have claimed that GGG hasn’t been compliant with the terms of their acquisition deals. Because nothing says “trustworthy business partner” like not honoring your agreements.

While the parent company hasn’t filed its FY24 financials, sources claim the company’s topline or GMV grew to around ₹900 crore in FY24, with losses at around ₹600 crore. That’s a loss margin that would make even the most seasoned venture capitalists wince.

To add to the exodus, founders of acquired companies have already left Good Glamm Group, and many of those leading central functions have also quit. Last year, Priyanka Gill—in charge of the media business—quit, followed by the resignation of the CEO of the beauty business, Sukhleen Aneja. Chief business officer Bhavesh Singhal and CPTO Deep Gantara are reportedly on their way out as well.

It’s like watching the final scene of a disaster movie where everyone’s running for the exits. Except in this case, the disaster is a beauty company, and instead of a tsunami, it’s a wave of bad business decisions washing everything away.

When India Funds America’s Dreams

While GGG raised close to $30 million from existing investors in January 2024, this was just a drop in the bucket given its operational scale, employee base, and product development needs. Remarkably, the company was using a lot of this infusion to fuel its foray into international markets. Because when your house is on fire, the logical next step is to buy a vacation home abroad, right?

CEO Sanghvi claimed the company invested ₹250 crore (around $30 million) for a global push with Wyn Beauty—and this is even before the brand expands and scales up in the US. Many of those associated with the Indian D2C brands acquired by Good Glamm Group claim that the company has ignored key issues and growth challenges for these brands while prioritizing the US launch.

There’s also discontent because the acquisitions have been leveraged by GGG in signing deals with stars like tennis icon Serena Williams in the US. But on the ground, the reality is starkly different. Brands have been starved of growth capital, sources say, and there’s fear that these brands will die a slow death. It’s like watching a parent neglect their existing children while dreaming of adopting a celebrity baby!

The Cash Crunch Crisis!

Besides this international misadventure, the GGG management has reportedly told employees about a severe cash crunch and hurdles in fundraising. According to management, the company is looking to offload acquired brands including Sirona, Organic Harvest, and The Moms Co.

Even if GGG raises funds, it’s not clear whether it will continue to retain some of the brands it acquired. Sources say the company has been in the market for the past year looking for a buyer for its acquired brands, reportedly holding talks with Nykaa, Mamaearth, Mensa Brands, and even Purplle to sell either one or multiple brands.

In a move that perfectly captures the circular nature of this beauty disaster, Sanghvi has apparently gone back to the original founders of the acquired brands to sell their companies back to them. Sirona’s founders—Deep Bajaj and Mohit Bajaj—have recently announced the completion of buying back their brand from GGG for an estimated ₹150 crore. Incidentally, Good Glamm Group acquired Sirona for ₹450 crore ($51 million). That’s a 67% discount—steeper than even the most desperate end-of-season sale.

New Investors, Same Problems?

Sources claim the company is raising between ₹150 crore ($17 million) and ₹250 crore ($28 mn) in an equity funding round at a post money valuation of up to ₹1,000 crore ($120 million). The round is likely to be led by Gujarat-based debt provider and investment broker Veloce Fintech and is conditional on GGG bringing in other investors.

If this happens, Veloce would invest up to ₹85 crore and become the lead shareholder. The incoming investor group would reportedly have a 70% stake in the company, with existing CCPS holders forced to dilute their equity to 10%. Founder Darpan Sanghvi would hold 15% of the company after this deal, with the rest allocated to ESOPs.

The investors are also likely to compel Good Glamm Group to forgo interest payments to venture debt investors and other creditors. It’s like asking your credit card company if you can just skip the interest payments—bold move, let’s see how it plays out.

A new round at a heavily discounted valuation paves the way for serious problems with the business. At the very least, it shows that the company doesn’t have the revenue growth to attract investors at its previous valuation. A lot of the fundraise will go towards settling due payables and bank working capital lines, meaning Good Glamm Group wouldn’t entirely be free from its debt obligations even with its next fundraise—unless it’s a significantly large round.

Sources added that the investment is also conditional on the founders and promoters taking the company to EBITDA breakeven in India within 6 months. That’s a tall order for a company that’s currently selling just one-tenth of what it was a year ago. It’s like asking someone who’s never run before to complete a marathon in six months—technically possible, but highly unlikely.

Lessons from a Beauty Blunder

The Good Glamm Group saga can be studied as a cautionary tale for the startup world, particularly for companies with an insatiable appetite for acquisitions. In the heady days of 2020 and 2021, when venture capital flowed like expensive serum from a cracked bottle, Good Glamm Group went on a shopping spree that would make a billionaire blush.

But as any beauty enthusiast knows, more products don’t necessarily mean better results. Sometimes, they just create a cluttered mess.

Good Glamm Group wanted to build a house of brands, but without a solid foundation, the walls are now coming down faster than an influencer’s credibility after a failed product launch. The company’s strategy seems to have been “acquire first, ask questions later”—a strategy that’s proving about as effective as applying lipstick before foundation.

The beauty industry is notoriously fickle, with consumer loyalty harder to maintain than a perfect cat-eye on a humid day. Building trust takes time, consistency, and quality—three things that seem to have been in short supply at Good Glamm Group.

The Foundation of Failure.

When we look at what went wrong with Good Glamm Group, a few key factors stand out:

1. Acquisition Addiction: The Good Glamm Group went on an acquisition spree, like byju’s, without a clear integration strategy. It’s like buying a dozen skincare products without knowing how they’ll work together—you might end up with a reaction you didn’t expect.
2. Centralization Catastrophe: By centralizing key functions and cornering the expertise of the acquired brands’ teams, Good Glamm Group mis-interpreted the very value they had paid for. It’s akin to buying an expensive brush set only to use your fingers for application anyway!
3. Omnichannel Overreach: The company’s aggressive push into offline retail with a lack of a sustainable strategy led to a cash burn that would make even the most extravagant beauty shoppers feel frugal by comparison.
4. International Distraction: While the Indian operations were struggling, management’s focus on US expansion diverted crucial resources and attention. It’s like spending money on a luxury face mask while your rent is overdue!
5. Product Dilution: As mentioned above, sources claim the group tweaked product formulations for several SKUs, leading to a drop in quality and bad reviews. In beauty, as in life, cutting corners rarely leads to success.
6. Leadership Exodus: The exit of key personnel created a brain drain that left the company without the expertise needed to navigate its bumps. We all know that when the captain leaves the ship, it hardly have a smooth sailing ahead!
7. The last, but not the least, Financial Mismanagement: The accumulation of hefty debt, along with unfulfilled acquisition payments, created a financial quicksand that’s proving difficult to escape.

Good Glamm To Bad Fame- The Uncertain Future of GGG

For Good Glamm Group, the road ahead looks about as smooth as skin after a bad reaction to a new product!

If they receive the reported funding at the dramatically reduced valuation, they’ll at least live to fight another day. But with most of that money earmarked for debt repayment and with the daunting task of reaching EBITDA breakeven in six months, the challenges remain substantial.

The company that once dreamed of an IPO and international glory is now fighting for survival. The content-to-commerce model that they used failed to deliver the promised, flawless, beautiful results, leaving them with a bunch of struggling brands and a mountain of debt.

There could yet be hope. Beauty, after all, is an industry built on transformation and reinvention. With the right leadership, strategy, and a healthy dose of humility, Good Glamm Group might yet turn things around. But it would require acknowledging past mistakes, returning to basics, and focusing on what matters: creating quality products that customers actually want, at prices they’re willing to pay.