Saga of Success: Zerodha’s Nithin Kamath Shares Golden Nuggets on Profitability

Targets are okay for growth but growth at what cost? Probably the secret to success for us was that we were never in a hurry. So we built it at our pace and didn’t want to compromise on quality.

Since the launch of the Startup India initiative in 2016, more than 90,000 startups have emerged in India, out of which over 100 are unicorns. And out of this pool, only a few have managed to attain profitability. 

While companies like Zoho and Zerodha have been part of this list of profitable startups for some time now, Practo has become the newest addition. Commemorating this milestone, Practo recently invited the Founder & CEO of Zerodha, Nithin Kamath for a fireside chat with Practo Co-founder & CEO Shashank ND at Practo’s 15th Foundation Day celebrations. 

According to this report, Zerodha is slated to clock Rs 2500 cr profit in FY 2023, which is an incredible achievement, especially for a bootstrapped company. 

So what has been Zerodha’s secret mantra to success? Delving deeper into questions like this and more, here are the golden nuggets of business wisdom from the two CEOs:


As an entrepreneur, one is bombarded with information. Amid all this noise and distractions, how do you keep your head in the game?


I don’t come from a business background and didn’t prepare to become an entrepreneur reading business books. Instead, I started with a small shop in Bilekahalli, Bannerghatta road, Bengaluru as a sub-broker of a franchise of a bigger broker. So Zerodha started as an extension of what I was already doing, whereby I wanted to evolve and become an independent broker. 3 years after we started Zerodha, in 2013, I went to my first startup conference and came across this startup jargon.

To be honest, it made little sense to me, especially the concept that to do business one had to spend more money than they could earn. With almost no connection in the startup universe, I felt the best thing to do was to put my head down and do the work. 

It was only post 2013, that I started to build my network and soon realised that to do good business one needs to have some kinda moat. For us, it was– to do something that sets you apart and is very hard for others to replicate. I also realised that not having to take money externally would give us more freedom enabling us to do and say things that others would find very hard to compete with. 

Fact is, you either have to fight this game to pursue deeper pockets and raise money like everyone else, or, prioritise freedom. We decided to do the latter and be a bootstrapped startup. 


Woah! That’s a difficult route, especially because as a new company you are still building credibility and always searching for validation which often comes from comparing metrics.

So, how did you build this confidence and the culture that supports this unique moat? 


Of course, a lot of luck! I didn’t have a pedigree education and was not an ambitious or studious kid growing up. Zerodha was an extension of what I was already doing and the work excited me, not the material ambitions associated with it.

And that hasn’t changed, even today. 

In the last 13 years of our business, we’ve never set a revenue or profitability target or a target to reach a said number of customers. For us, the motivation was always the passion for the work and solving a problem. We wanted to help people do better with their money and the focus was only to ensure ways to achieve that. 

Profitability was accidental. We were lucky that when the market expanded in India, we were there at the right place at the right time with the right products and the right people. 

When we started, no one would even take a look at us and think we are a viable investment. We didn’t even know how to approach them. By 2014-15, they began to reach out to us but we were already profitable by then. Also, I had grown to understand the importance of asking the question- what to do with the money?

In the business of money, like in stock broking, we didn’t need money because we didn’t have to spend on marketing and advertising. In the last 13 years, I’ve spent around Rs.15,000 on Google Ads only! 

Maybe, if we had to amp up advertising and marketing, raising money would have been inevitable. And what we did back then, probably cannot be replicated today. If we had to start Zerodha today it’ll be impossible to do so without raising capital.


More people don’t always guarantee higher productivity and we’ve learnt that with experience. And echoing this, Zerodha built one of the top tech products with a small team of engineers. What led you to have the foresight to make such a decision so early in your journey?


The credit here goes to our CTO Kailash Nadh. One of my lucky breaks was meeting him because, before that, my philosophy was that throwing people at problems solves problems. 

But that changed over time with the realisation that more people often complicate a problem and we carried on with that. Now we have small teams, for instance, the entire product team at Zerodha is probably just 15- 20 people! 

We’ve questioned this quite a bit– Targets are okay for growth but growth at what cost? Probably the secret to success for us was that we were never in a hurry. So we built it at our pace and didn’t want to compromise on quality. 

That’s one of the reasons why our app is so clean and clutter-free because we took the time. It took us about 6 years and the version you see today is the 4th one. The original one was okay but we needed better quality so we broke it down and built it from ground zero.

While that’s been our guiding philosophy, it’s important to remember that different businesses need to follow different paths. There is no one size fits all concept here. 


Zerodha has achieved Rs. 2500 cr for profit with WFH. How?


I don’t think most people know that 5 years back we were 1100 people on the team. And even today, there are 1100 people on that team. This means we have grown 20x in our business with the same number of people. It shows that the scale of a team does not necessarily determine growth for a company. 

Most of these people are working here for at least 4-5 years, which also shows that they’ve chosen to stay with us. That is because there is a sense of trust, especially when putting WFH options. And we can accomplish this because we are doing and bettering the same things and not trying out new ventures. Doing the latter with WFH can be a challenge. 

Also, by letting them WFH, that is to work from their hometowns, mostly tier 2 and 3 cities and towns, we are helping contribute to those economies as well. We have sent some 600 families back home. They are earning the same salary in towns and cities where the cost of living is lesser and while this means there’s more money for them, it also means they are directly contributing to the growth of those small cities and towns. So in a way, we are trying to solve the problem of the concentration of wealth as mentioned before. 


Capital indeed empowers you to try and do new things and by becoming profitable that empowerment is truly valuable. But with all of that, how do you build a discipline of what to do and what not to do?


We’ve been operating from a rented office for a long time because we believe owning more things just complicates life. We believe that we can operate the best when we focus on our core competencies and the rest is noise. 

So we partner and collaborate with any adjacencies instead of trying to build something similar from scratch. We focus on what we do best. And that’s how we started Rainmatter, the fintech incubator in 2016.

On the point of profitability, well, money can be tempting but our core outlook is different. So the zeroes adding to profitability didn’t change much for us from a business and culture outlook.

Money in the bank is a lot of freedom but that freedom is only there when you don’t want to spend a lot of money!


That’s quite a wisdom-packed quote! Any mistakes that helped you figure it out? How did you build this level of discipline?


The period between 2001-2005, was one of the toughest times in my career. I was working in a call centre and had borrowed a lot of money to trade the market and blew up. I can always look back and say that it was a learning moment for me and that’s not wrong but, I think the biggest contribution to my outlook has been my guru, our CTO who is just a phenomenal personality. His outlook on money and the way he builds products and looks at life, slowly over time rubbed over me. 

That helped me recognise and compartmentalise 3 key focus areas for us–

  1. helping Indians do better with their money, 
  2. supporting healthcare startups and, 
  3. a foundation that helps for-profits and nonprofits working on climate change and livelihood. 


You mentioned that one of the healthy factors for Zerodha was a low attrition rate. How do you build that kind of culture? 


Like money, people’s skill sets compound over time.  So, I would rather focus on keeping people in the team rather than hiring externally. Also, I think it takes around 2 years for someone to get an overall context of the company they are working in.

In our tech team, only two people have left us to date and both of them did so for personal reasons, not to join other companies. And this is not because we paid more than others but because we did 3 right things:

1. hiring people who are passionate about the problem we are trying to solve

2. not focus on pedigree education but hire entry-level and invest in their growth

3. set correct expectations and never oversell a target at any level. 

Till today, we never claimed that Zerodha is solving some life-changing problem that’ll change the world. We’re simply helping people do better with their money. 


Beyond Zerodha, on an economic level, what do you think is going right for India and how can we be better?


We have a lot of rights. With the largest population of 20-30-year-olds in India, we have companies chasing high talent from India. Plus, India is one of the few countries with a 6-7% GDP group which is good. 

But there is a concern about employment because while you want a country to grow, it needs to do so inclusively. Currently, the growth and wealth are concentrated within metro cities only. What you see in Bangalore is not the entire India.

So the bigger problem to solve is how to put more money in the hands of more people because then the country grows truly inclusively. 

Nithin’s unique and contrarian view of the business and the startup universe has led the company to success and has inspired many more. Focused on their journey to remedy the income inequality and financial empowerment of India, Zerodha has come a long way as depicted in this conversation. And this is encapsulated in the core of the company’s culture, one that prioritises quality over quantity and growing on one’s own terms.


Practo is on a mission to make quality healthcare affordable and accessible for over a billion+ Indians. India’s leading integrated healthcare company it connects the entire healthcare ecosystem together – including patients, doctors, surgeons, clinics, hospitals, pharmacies, and diagnostics – to generate exceptional value and service for all, especially the end consumers.

As technology becomes an integral part of healthcare, Practo has also become an essential enabler in helping doctors understand the nuances of managing and securely storing all health data. Practo encrypts all data with 256-bit encryption, uses HIPAA-compliant data centers, and is one of the few healthcare companies to be ISO 27001 certified. Practo is present in 20+ countries, helping over 30 crore patients, by connecting them with 1 lakh+ verified doctor partners.

Recommended Articles