Looking beyond the profitability numbers - why Nithin Kamath and Zerodha can say things that most entrepreneurs wont
Zerodha is in the news again and rightly so for its insane profitability metrics (5000 Cr Revenue at 40% net profit margin). LinkedIn is full of people raving about how Zerodha vs “pathetic loss making startups”. I’ll thankfully save you another such post.
My point is rather trying to explain why Nithin Kamath and Zerodha are different from other startups in ways beyond just profitability metrics.
How does Zerodha actively promote free financial education via its superb initiative called Varsity when most “ed-tech” startups are actively trying to monetize and raise money based on the same theme?
Why do posts coming from Nithin Kamath or Kartik Rangappa sound so authentic vis-a-vis most other new age entrepreneurs?
If you follow Nithin Kamath on LinkedIn or Twitter, you will find his posts to be insanely meaningful and something to always help us learn from or reflect on. He says a LOT of things that are real and grounded and is very different from the posts that most entrepreneurs/startup founders posts which have an excessive amount of false positivity and almost always have an agenda or a narrative that they want to build - it may be just to garner eyeballs, build some rhetoric, build some PR and so on - it is appears to have a bit of an agenda always ends up being politically correct.
But Nithin Kamath’s posts hit different - his takes sound real, he is optimistic but does not have an hidden agenda in them. When he has an agenda - he’s usually quite open about it. Many a times, he takes a moral stance as well - something that is rare in founders and entrepreneurs.
Towards the end of this blog, I’ll put forward a simple truth behind why his posts are so authentic and different.
I’ll put a few of his posts below for perspective:
While Twitter, YouTube and even Instagram is full of people raving about successful trading strategies, he says not even 1% of active traders make more money than FDs. We would of course think we’re in that top 1% :)
He is literally stating a truth that should ideally make a people trade/churn a lot lesser which would in turn make his entity earn lesser revenues - who does that?
While most success stories are all justified (on skill and planning and so on), he cites luck and being at the right place at the right time as a key reason for their success and therefore overrates excessive planning.
Optimism and appreciation where its due
The bane of influencers and content generators is that the quality of their content keeps going down as they have the need to post more and more to get that validation and dopamine hit - he states this truth so openly.
Employee (especially tech) salary expectations is common problem in the startup world - he states that tech slowdown is actually good for a more sustainable hiring ecosystem - a truth that most people would agree to but behind closed doors (to avoid negative signalling)
Again - he says something (Read the last line) which should ideally make a dent in his company’s revenues
MOST fin-tech start-ups think that lending is their stepping stone towards profitability/viability - he puts this caution to this trend and cites the dangers that excessive retail leverage plays in the system.
In a world where shady influencers and telegram groups and even TV ads tell you that you can make a lot of money in the markets (And you get tons of “success stories” about how XYZ held Infy from 1995 to 2022) - the reality is that the odds of outperforming the market consistently is difficult - a psychological bias that I too struggle to accept since I cant resist the sexy world of buying and selling stocks
Youtube Influencers, Ranveer Singh and so many other celebs must be put on trial for peddling super risky assets like crypto to a large and gullible audience. A few even peddled a “guaranteed 15% return” Crypto backed “FDs”!!
Tech IPOs at crazy valuations - I dont need to elaborate here
This is from near the delta wave of Covid back in Apr-May’22. There are some sober times when trading and markets need to take a moral backseat - unfortunately, for many in the world of capitalism, its just another phase.
How can he post so much of what most other startups founders will rarely, if ever, post?
The answer is simple - Zerodha doesnt have any VC or investor or another fiduciary overlord to answer to. It does not need to build a narrative all the time. It does not need to project dreamy numbers and dreamy scenarios to ramp up its valuation to give its investors dream exits. This also helps the company stay laser focussed on what matters most - focus on building something that consumers love
One can be far more straightforward and post uncomfortable truths and even post on topics that show their moral duty to the people that their business touches.
PS - This is not a sponsored post (although I hope someone pays me Rs. 100 for some sneaky ad one day though)
PPS - I have mad respect for entrepreneurs for what they achieve - its a super difficult and high pressure journey.