We have heard of success stories and how someone went from rags to riches in a matter of a few years but what a lot of us seem to forget is that to reach a melting point, an iron rod has to be heated for a long time. That is perseverance. For this, we are bringing to you the story of the Kamath brother, founders of Zerodha.

Before we talk about the founders themselves, a brief about what Zerodha is –

Zerodha is an Indian financial services company that offers retail brokerage, trading, mutual funds and bonds. Currently, it is India’s largest brokerage firm in India, breaking the barrier created by long-standing companies like Motilal Oswal.

Nikhil Kamath and Nithin Kamath. It’s the middle of August 2010 and the brothers have created something that will take the Indian market by storm. They have founded Zerodha, headquartered in Bangalore. Nithin Kamath was reminiscing his times working at a call centre and trading during the morning hours. To get to this point he along with his brother had learnt the trade at a very early age.

Nithin had made Reliance Money a fair bit of money by being a sub-broker and in the process had introduced some big clients to them. After losing money in two market crashes in 2001-02 and 2008-09, he decided that he had had enough and needed to change the landscape. And change the landscape of the trading world, he did, in a grand manner.

Here is a timeline showing the events that show the company’s path to becoming a giant:

It’s 2021, and the company which is already a unicorn is now worth $2 billion. And this happened within a year!

Here are some takeaways from an interview with the co-founder Nikhil Kamath:

Do not buy just because everybody else is buying

Don’t fall prey to sentiments. Do not buy just because everybody else is buying, Do not buy because someone else has made money on a certain company. Always buy based on your own inherent opinion of the sector and research on the stock. 

Not diversifying enough 

The second thing I often find in Indian investors is we do not diversify enough. Not just across asset classes but even between companies. Diversification is extremely important. And I would recommend people to build a more balanced portfolio, it might not outperform everything else in the short run. But over the long run, considering how cyclical different sectors are, having that balance in diversification really helps.

Not hedging the portfolio

Third, this is a bit nuanced, something that I like to do is having a bit of hedging in every portfolio. It does not have to be a natural hedge on the same sector or same company you are going long in. For example, let’s say the commodity cycle is turning and steel prices are going down, but steel companies valuations have skyrocketed. If you want to be long pharma, take a little bit of short in steel. Try to play that relative strength and weakness among different sectors, rather than just vanilla on what you like.

Some more interesting facts about Zerodha:

• The customer base of Zerodha is 28 lakhs.
• They account for 15% of India’s retail trading volume.
• They control about 19% of India’s stock brokerage industry.

The brothers see no end to this and they will not stop at this. They weathered many market crashes and they will weather many more. This story of one of India’s many amazing unicorns is inspirational and many of India’s youth will look to take the path that they took. But with this comes many risks and many sacrifices must be made.

If you don’t bet, you cannot win.

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