The Inspiring Story of Kamath Brothers and Zerodha
From earning a meager ₹ 8,000 per month to achieving ₹ 2,049 crores in annual profit, the story of the Kamath brothers and how they built Zerodha is a true inspiration for everyone.
In FY22, Zerodha emerged as the second most profitable unicorn in India, surpassing many other unicorns by doing approximately five times more profit. With just around 1900 employees, Zerodha has accomplished over ₹2,000 crores in yearly profit, while other unicorns with 10K employees are still struggling with losses.
Want to know about the first most profitable startup of India, Read Here
The Kamath brothers, Nithin and Nikhil, chose profitability over growth, and it paid off significantly.
But the journey wasn’t easy at the beginning. Nithin, a below-average student, had been introduced to trading by his Marwadi friends. Like most of us, he began trading with the hope of becoming rich.
Pro-level college bunking :)
However, the 2001–02 market crash wiped out all his money (₹5 lakhs), and he was forced to drop out of college and work nights at a call center for ₹8K/month.
Nithin was determined to rise again and traded stocks during the day while building his trading portfolio with hard work. It was in 2005, while working out at the gym, that he met an NRI who was impressed with Nithin’s trading portfolio and asked him to manage his funds. Nithin received his first client at the gym when the NRI cut him a cheque for ₹25 lakhs, and he quit his job. The NRI then referred Nithin to his friends, and his client base grew from one to forty. Nithin managed his clients’ funds under Kamath Associates.
On the other hand, Nikhil, who dropped out of school after the 10th grade, began working at a call center for ₹8K/month and moved out at the age of 17 to live with his girlfriend.
It takes guts to move out at an age when you can’t even vote!
When he turned 18, his father became his client and gave him his own savings to manage.
That is such a cool thing :)
Later he convinced his boss to let him handle his funds too. In the last year of his job, Nikhil didn’t go to work but still received a full salary because he managed the entire team’s money.
In 2004, Nikhil quit his job and started Kamath Associates with Nithin. By 2009, the brothers had made some money through trading stocks and managing client funds. With a decade of experience, enough insights, and funds, they started Zerodha, which aimed to solve two problems:
- Stockbrokers charged a high percentage fee: Zerodha solved this with a flat ₹20 fee for all trades.
- Discrepancy in the trading of funds and hidden charges: Zerodha solved this by showing all the hidden charges.
Discount brokerage plus transparency on actual costs involved in trading became Zerodha’s USP. Even their name was unique and memorable.
However, the initial days of Zerodha were not without their challenges. The first 1000 clients for Zerodha came through what we call “jugaad” — they had no money for marketing, so they did it through various chat groups on Yahoo Messenger, and cold calls and visits were their biggest weapons.
In 2011, the Economic Times published a news report about the discount broking industry, mentioning Zerodha, which helped increase Zerodha’s client flow from 100 customers/month to 400/month. But they were not done yet.
Sitting in the airport lounge, Nithin had a light-bulb moment. Why not reduce equity delivery fees from ₹ 20 to ₹0?
Because Zerodha had no investors, there was no need for a board meeting to approve this move.
Zerodha implemented a “Zero brokerage fee” model the next day.
The result:
Till 2015, they had 70K accounts.
Next year, they had 700K accounts.
And now, they have 1 Crore+ accounts!
Zerodha did ₹4934 crores in revenue in 2022, with a profit of ₹2094 crores.
Outstanding!
But this massive growth wouldn’t have been possible without their employees.
Zerodha takes care of its employees at different levels.
90% of the employees work from home. Their founder even gives incentives for staying fit.
How cool is that :)
For the Kamath brothers, it’s not just about building a successful business, but also about giving back to the community. They have been actively involved in supporting various social causes, including education and mental health.
In 2017, they launched “Rainmatter,” an incubator for startups working on technology-based solutions for capital markets. The incubator provides funding, mentorship, and support to promising startups. In addition, Zerodha has also launched various educational initiatives, including “Varsity,” an online platform that provides free courses on investing and trading.
The Kamath brothers’ story is not just inspiring, but it also highlights the importance of staying focused on profitability and delivering value to customers. They did not focus on raising funds or scaling quickly but rather on building a sustainable and profitable business model. As Nithin Kamath once said in an interview
“Profit is sanity, revenue is vanity.”
Lessons we can learn from the Kamath brothers:
- Bootstrapping makes you humble and teaches you the value of money.
- One failure does not define you. It’s what you do after that matters.
- Take care of your team and they will take care of your company.
Nikhil and Nithin, who actually look like models, are two of the most thriving businessmen India has ever seen :)
We need more examples such as these.
If you are a investor or trader in Stock Market, you should definately give Zerodha a try: Invest and trade with Kite by Zerodha, India’s largest retail stockbroker. Open an account now. Here
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