‘We were lucky that we had scaled up before the lockdown,’ says Nithin Kamath.
After building the country’s largest and most-profitable pure-play brokerage, Nithin Kamath, founder and CEO of Zerodha has to stave off pressure from investors who want a piece of the company. In an interview to Samie Modak, he explains why he doesn’t want to take PE money and why Zerodha is not being aggressive when it comes to acquiring new clients. Edited excerpts:
Did the broking industry anticipate last year’s big boom?
When the lockdown first hit, in our internal meetings we discussed the need to spend the year as a monk and that we need to be frugal. Then the tap just opened up. I don’t think anyone could have predicted what happened last year. Everyone caught off guard.
We were lucky that we had scaled up before the lockdown. Other folks, who had to scale up, couldn’t do it during the lockdown as procuring servers, getting lease lines up took extremely long. Eventually, everyone figured a way out. There were not too many bad moments wherein a broker was down for multiple days. Some large brokers were down for a day or two but it potentially could have been a lot worse. Last year, the industry added 50 million demat accounts. How much market share did Zerodha grab? Yes. These are non-unique accounts. We added about three million plus, which could be 10-12 per cent of the (unique) market share.
Isn’t that quite less ?
As an ideology we don’t offer any cashback or free stuff. The business of trading is a serious business and cashback isn’t something that should lure people into trading or investing. If we had to let go of our account opening fees or offered some cashback, we potentially could have grabbed a much bigger market share. But the crowd, which is not serious, brings in a lot of burden in terms of compliance and support. And at the end of the day may not even add anything meaningful in terms of revenues.
Comments
Post a Comment