Nikhil Kamath is a name that everyone in the start-up industry and the finance industry is aware of. He is the man who defied the fact that one needs to pursue institutional education to grow big. He not only made a living but also introduces means for others to make a living at the convenience of an app.
Share market is one of the very trending topics from 2020. In March 2020, we all witnessed an all-time low in the market and there was a Bloodbath with the start of the pandemic. If you have a brokerage account for trading, it is very likely that you have a Zerodha account. Let’s dive into the story of the co-founder of Zerodha – Nikhil Kamath.
Dropping out of school
He was born in a middle-class family and was average at studying. He bounced around cities because his dad worked at a bank before settling down in Bangalore when he was 9. He absolutely hated school. He was agitated with one fact at school that, “Nobody told you ‘why’ you should do something, you just ‘had’ to do it.”
His school life was not really easy as his parents were often called to school for complaints. Ultimately Nikhil Kamath dropped out of the school.
He always had a vision for entrepreneurship and this was reflected in his early age. He started a business with his friend Tejpal–they bought & sold used phones. But like any other Indian household, it’s often said that getting a degree and certificates is more important. His mother thought he had already given up on school, so she flushed the phones down the toilet! But Nikhil Kamath happened to be very good at chess so he also embarked on a two-year chess career, playing at both a national and international level. “Chess teaches you how to work under a structure in a system, but yet try and be creative within that system”.
Entry into the Markets & Zerodha Ideation
He began trading stocks when he was introduced to the markets by his friends at just 17. He started trading in penny stocks. He had accumulated quite a bit of money by the time he finished his engineering degree from the Bangalore Institute of Technology. He then lost it all – Rs 5 lakh – between 2001 and 2002 when the markets crashed. Undeterred by these instances, he began working at a call center during the night while he traded stocks in the day to build up his trading capital.
He has always been realistic, and in an interview with CNBC he mentioned,
“Nobody was going to hire me without a college degree, so I had to do something that didn’t require one.”
This is how he got engaged in trading. In his initial years of trading in spite of the huge loss, Nikhil Kamath realized the huge potential that the stock market has to offer. He also believes that if someone is a good trader, they can buy a larger amount and if one continues to make money they can scale and scale and scale. When traded wisely the markets have unimaginable potentials of making money. This idea attracted him and stuck in his head. Also, the fact that a job in trading doesn’t require any minimum qualification was a plus for someone who was just not interested in institutional education. Anybody can study the financial markets, information is flooded online and there are many books about different systems and methodologies of trading and investing. So, anyone could leverage it and become a good trader by their selves.
What is Zerodha?
Zerodha is a mastermind of the Kamath Brothers. Nikhil’s elder brother Nithin is a founder of Zerodha. The Bengaluru-based online discount brokerage firm, Zerodha’s aim has been to make trading barrier-free since it was founded in 2010 by the Kamath brothers. Hence the name Zerodha; comes from the words ‘zero’ and ‘rodha’, the latter Sanskrit for obstructions.
The platform sees two to three million trades every day which makes it the largest retail brokerage firm across the world. It adds 50,000 to 75,000 accounts every month. Zerodha brought many firsts in India’s broking industry when it entered the market in 2010. It is India’s first ‘discount brokerage’ firm.
A discount broker is different from a full-service broker in that it does not offer research services to its client, such as buy or sell recommendations. The cost saves by not having a full-fledged research team, it passes on to customers via a low brokerage.
Zerodha applied a flat fee of Rs 20 for every trade, irrespective of its size with no brokerage fee, which was deemed as quite disruptive by experts at that time in the market. Compared to that, other brokerages used to typically charge a percentage of the traded amount.
Nikhil Kamath’s startup kicked off with a team of five people, which has now gone up to an employee count of nearly 1,300 today. Zerodha is competing with big players like HDFC and ICICI is indeed a daunting task that the genius was able to cope up.