Nithin Kamath Interview: At the End of the Day, You Bet on Founders
Zerodha founder and chief executive Nithin Kamath talks about how the philosophy of a company is what sets it apart and makes it special. Edited excerpts
At what stage should a start-up start thinking about its culture?
The culture is something a business has to start figuring out from day one. And you can't do something just because Zerodha does it. In some other company, the founder would not inherently be wired the same way. I think every company needs to have a culture which kind of fits into their scheme of things.
The thing is, every company has its own culture, right? You can't say which is right, which is wrong. Whatever's working for you is right. Now, so as far as the culture at Zerodha goes, it really starts from the top management. For example, we care about health. So hopefully that percolates to the rest of the team.
What are some things that define Zerodha’s culture?
Everyone at Zerodha has spent some time with us. At least among the top 100, we haven't really had too many [people] leave us. The way to keep working so long at a company is if you're given some kind of space, some kind of freedom. That's also cultural.
The philosophy with which we work at Zerodha is very different from the philosophy at other start-ups. That is what makes us special. The day you compromise on the philosophy, the culture suffers.
We are probably the only company in India that has gotten to 1.5 crore customers without a single ad. Why have we stuck to that? Or why don't we have an IPO [initial public offering]? Or why does Kailash [Nadh, Zerodha chief technological officer] take it so easy when it comes to hiring for tech?
Even before Covid-19, there were around 1,100 people on the team. Today we are at 1,200–1,250 on the team when the business has grown 10 times. There's a culture which is the core philosophy of Zerodha.
You have seen just a 10% growth in number of employees when business has grown 10 times.
That's how our margins are so high as a business, right? We didn't hire just because times were good. So, now that suddenly times are bad doesn't mean we'll have to fire. It's worked out well for us.
How does the founder, or the founder’s role, evolve over the life cycle of a start-up?
At Zerodha, I spend most of my time trying to ensure that the culture doesn't get compromised if tomorrow I'm not there. Just making sure that there are 10–15 people in the business who understand the philosophy with which we work and the decision-making framework. Most of my time is spent on that.
My role has had to change as and when the business evolved. For the first seven years, I used to spend a lot of my time with journalists trying to get a feature of Zerodha out there. That's reduced to a fraction of what I was doing earlier. One has to evolve over time.
What helped you retain talent despite poaching in the tech sector during the funding boom of 2020-22?
We consciously promoted from within the organisation. So, there's hardly any churn in the upper management. Every single person we hire for any managerial role is from within. They've grown from within, answering support tickets and taking customer calls.
The company has also done good to them in terms of the wealth created through Esops [employee stock ownership plan]. Usually people who come for money, go for money.
But how many of those people report to you?
I don't really have anyone reporting to me. It's a very flat organisational structure, at least in the top team of 100 people. There's no reporting.
Usually, people leave from organisations if they don't get a certain raise in designation. But in our case, once you reach the level of those 50–100 people, there's no designation. So those issues are not created.
In terms of salary, we make sure that it is more than the industry norm. But we have also been in a bull market over the last 15 years or so. I don't know if we just got lucky or all of these things would hold true in a bear market as well. Only time will tell.
Do you think the focus on profitability and corporate governance will remain during the next bull run in the private market?
I don't think a bull market in private markets is coming anytime soon. People have to build a business for making profits. I think profitability as a focus will continue to remain except for things like quick commerce where competition is heating up. And as for corporate governance, I think India has to do a lot in terms of improving it both in public and private companies.
After the corporate governance lapses of the past few years, have you taken any measure in start-ups where you are an investor?
At the end of the day, you're betting on the person. You're betting on the founders of the company. And if you get that judgment wrong, then having a bunch of checks and balances as corporate governance is not going to help.
We spend a lot of time deciding if you should back the founder or not. But apart from that, not really, in terms of corporate governance. We don't take board seats in start-ups we invest in.