Why Zerodha with Nithin - Episode 1

Long term investments.

Btw intraday trading stops making sense once the capital increases significantly.

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We used to do something similar long back, when we still didn’t have as much credibility as a brand. But today, we don’t really need to do this. Also this doesn’t really add any value to the customer, so no point wasting real estate on that.

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@nithin

Hi Nithin,

Let me congratulate you for your great success!

You are doing great to the customers.

However, I have the following request for you. I believe you will take it in a positive manner.

All other brokerage firms charge very excessively and at the same time they are also generating some employment (for example Relationship Managers, etc.).

I am wondering you are still a team of 850 people only who manage 20% of trades in India. Of course, you people are super humans!

You said that your customers have grown 1 lakh in 2016 to 35 lakhs in 2020, I am not sure how many folds your employee count has increased.

My humble request is to generate employment also as much as you can. You said that you are very happy to help others. Consider this also as helping others. In fact, it is a service to our Nation also. Our Government is also putting emphasis on Entrepreneurship because they can generate employment. By God’s grace (or in your own words by your Karma) now you have such an opportunity.

I do not say that you should cut your profits.

As you said you execute 5 - 7 million trades per day if you charge Rs. 1/- extra for a trade you can get around 150 crores per annum which can provide around 4000 jobs with a salary of 3 lakhs per annum. I am okay even if you charge 5/- extra per trade for this cause. Just by paying 5/- extra one is not going to become poor. Of course, 95% of the traders are here to lose only so it is not going to make any difference if you are charging 20 or 25. If you do not charge it and then it will be in the hands of the rest of the 5% profitable traders only. This 5/- does not make any difference to them as well. Of course, I understand that it will give scope to your competitors claiming that they have the lowest brokerage.

The conclusion is that now you are in a position to generate a lot of employment and please do it considering it a Service to our Nation. I pray to God to give more power to you in this cause.

Hope you will take it as a new year resolution and then the tough part is to find some work for them. :blush:

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He is doing a lot in CSR and not just for the sake of doing and within regulatory requirements but beyond that.
Can check here.

Coming to employing more just for the sake of may be bad for business, it will create more chaos and may lead to inefficiency among all, as said above he is doing more than he needs to at his individual and company level without anticipating anything in return.

Also he invested in few startups which are working to find a fix to reduce rate of deterioration of climate change.
Can check below also.

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Hi Nitin,

You will make money and will not need to raise money from an IPO. So, will Zerodha ever come up with an IPO for the bigger good. I am interested in zerodha for many reason like

a. Customer focus.
b. Creating a ecosystem to grow the market.
c. Reducing the no of losers from market by alerting customer of potential traps (penny stocks).

I believe Zerodha is like Rahul Dravid (solid player), Dhoni (visionary),Ganguly (leadership),Steve Smith (can’t think anything other than cricket) combined.

Hope you come up with an IPO, as I am sure many want to be part of your journey.

Thanks,
Keerthi

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This is a big problem for India - automation is going to kill a lot of jobs. Not just in stock broking, but almost every business/industry where low skilled jobs can/will be replaced by machines eventually. The answer to this problem isn’t to hire people just for the heck of it without any work.

Employment and Climate change are probably the biggest problems of the world today, and in India, the answer to both these problems are probably the same - Creating green jobs and outside the top 10 to 20 cities. We are attempting to do our bit through our Rainmatter Climate initiative. We will soon put out a post introducing Rainmatter Climate and the problems we are going after. I will update you here.

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Like I mentioned in the video, an IPO will mean us losing our nimbleness as a business. This is our edge today. There is another issue that in the broking business there is very little predictability in terms of future growth - we are highly corelated to how Indices perform. This unpredictability will make us a very risk stock to invest in and I don’t think I will enjoy running a company and answering investor questions, when I am myself not sure about the future.

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any thought to go into investment banking/merchant banking/prime brokerage services etc , there are inefficiency here as well .

Nah, outside our core competency. The general idea is to democratize. So we will stick to Broking, Lending against stocks (extension of broking), hopefully Asset management in the future (AMC), helping startups building niche user experiences to help grow capital market ecosystem through Rainmatter, and education/financial literacy.

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In case you are interested, Nithin discussed about the issue of employment generation around 6 months back in -

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@Prayag Thanks for pointing to this video. Happy to know that @nithin is already working in this direction.

episode 2 is coming or not?

In post production :slight_smile:

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@nithin Great Episode! Really inspired by your vision and clarity about zerodha and also of life!
It will be good if you can address one more issue.

As a trader we are keeping significant portion of our net worth in zerodha kite. So we want to know:

  1. Where does the money thats not being utilised is kept? how safe is our money?
  2. Is there any risk involved with that? You mentioned that you keep risk always in mind, but in case something unexpected happens? Is our money insured? ( I am aware that even banks provide insurance for just Rs 5 lakh, but we know that the probability of banks like SBI or HDFC going burst is significantly less)

As a trader we have to think like we are running a business and so think of all the scenarios that can destroy us and not just the losses from trading activity. So this is one aspect of my trading business that is still unanswered. Your Answer will help boost confidence!

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Can check this from Nithin.

Hi @siva, that link does not answer the question where the unutilized money is kept.

  1. Is it kept in any Zerodha pool account?
  2. Does Zerodha earn any interest on that amount?
  3. If earns interest, what does Zerodha do with that?
  4. Do you publish your Audited financial results anywhere? (of course you may not be liable as you are not a public limited company)
  5. If does not publish then is it possible for you to take initiative as it can increase transparency and boost the confidence in your customers?

BTW, thanks for providing such a platform to ask any sort of question and get the answer directly from the Zerodha itself. :smiley:

Yes, broker make float on that but due to quarterly settlements the float has reduced a lot for all brokers. Can check here about float income earned by brokers.

From this year we are limited company so even not listed we have to submit our results on MCA website, so you can get it.

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chhha gye tussi, bs yhi chis apko crowd se alag krti hai, i rely on a lot. thank you so much and keep our trust build up upon you.