Transcript from the discussion Nikhil Kamath had with Naganand Doraswamy during BHIVE Investech launch.

• Naganand asked Nikhil what he thought about where he is today and did he ever expect to be here. He said, “Not at all. We started trying to build a platform that we needed as traders. Everything that has happened since then has been very organic. We had the privilege of starting in 2009-2010 when very little money was available for innovation in the fintech industry. So, we got very lucky with the timing and everything has been fairly organic henceforth.” 

• Nikhil commented on the market and its size in India by saying, “So, it’s still a really small market. Sure, it has scaled in the last 10 years but when you look at equity in India, out of the 130-crore people we have, about 5% of India files income tax, maybe 2% pays it, and equity exposure in India is still about 2%. So, only 2% of our country has either direct or indirect exposure to equity markets. That number in the west, in America for example, is about 90%. So, the room to grow is tremendous, there is a lot of potential. With a burgeoning middle class in India, a lot more people need to come under the financial inclusion wing, and I think going forward at some point in my lifetime hopefully we see that exponential participation in the equity market.”

• When Nikhil was asked by Naganand about how he was trying to educate his users about the risks, he replied, “I think education is foremost. Unfortunately, in India, we spend 15 years putting a kid through school and college teaching him how to make money or making him able enough to get a job. We spend very little time training these people on how to manage money better. So, it has to start at a much lower level, middle school kids should be taught about financial products, they should be taught about theory and ideology around investing. I think that will be beneficial for the country overall and go a long way towards achieving that big ambition of a five trillion-dollar economy.”

• Nikhil said that he was trying to work with the school systems to educate kids about financing from an early age. “We’re trying with the school systems. We wrote a series of books called ‘Rupee Tales’, which focuses on the 8–11-year-old age group and we’re in dialogue constantly with the government to try and implement this much earlier. But for adults, we have something called ‘Varsity’, which is a great platform to learn about all kinds of financial products, financial theories, investing systems, which is available freely for anybody who would like to access it.”

• Nikhil also commented on the corporate culture when he was asked how he built the culture at his company and his recommendation to entrepreneurs. He said, “To a large extent, we got very lucky. The first 10 people who joined us happened to be friends who we know from before we started the company. There was always this level of transparency from the very beginning because it was a bunch of friends working together. Luckily for us, as the company has scaled, that culture has permeated in the newer layers of the company. It was not planned, there was no structure around it, but I think when somebody starts a company, the culture you embody at the very beginning with the first 10 or 20 people becomes very important because most often that is what will, in turn, give a cultural type of guideline to the new people that join.” 

• When Naganand asked Nikhil why he started True Beacon and what he was trying to achieve from True Beacon, he replied, “True Beacon caters to a different type of clientele. Zerodha is apt for investors who want to invest on their own. True Beacon is trying to fix the problem of leakages in the ultra HNI community. So, each time you took your money and gave it to an asset manager, who in turn bought and sold equity for you, that entire system has long been riddled with fees and middlemen and distributors and inefficiencies of many kinds. So, with True Beacon, we are trying to eliminate all of that. Be a more transparent asset manager because like you were alluding to earlier when all these new people come into the market, not everybody should be investing on their own and that vacuum will get created for people who need ethical, transparent, reasonable asset managers to manage their money for them. We’re trying to place True Beacon in that category.”

• Naganand also asked him what core technology he was trying to build through True Beacon. Nikhil commented, “True Beacon is a very niche platform. Its target audience is minuscule. Each person that is onboarded on the platform goes through our own set of filters. We need to know he’s the right kind of client. So, technology does not play as big a part in that particular company, in acquiring clients or servicing clients, but it is more implemented in execution, research, analytics, investment, around the investment cycle.” 

• When Naganand asked whether Zerodha prefers funding themselves or raising capital in the market, Nikhil had a very interesting answer. He said, ”It depends on what industry you are in. If you are into an e-commerce platform and you have to reach millions of people across the country to grow organically might be difficult. In an e-commerce play, you would need to raise funding. Our market is 2% of the country, so it is quite a niche. Broad-based marketing be it by the virtue of online campaigns, TV ads and old school print media cater to the broad media, not to the niche market. So the old school marketing does not work for us, hence we did not raise capital. We always believed that if we develop a better product people will come, word of mouth will catch up very quickly. So for our industry, it worked. But if you are an e-commerce player, or taxi aggregator, or food delivery servicer, your market audience is quite large, then it makes sense to raise capital."

• Nikhil Kamath had the following  opinion about financial policies in India. "It requires a change from time to time, but I think the government is cognizant of what is required, and in many ways, they are walking in the right direction. If I was the government of India, I would much rather keep your savings under financial instruments and equity which I could track and tax easily versus buying gold with your money, or real estate, or other asset class. The benefit lies on both sides. It will help both the government and market participants to make regulations easier. By easier I meant more lenient, changes in terms of rationalization in taxes, reducing the red tape and compliance requirements. Many of these can significantly boost that 2 to 20 percent curve. But I think SEBI more than the government is right on the bark, they are doing what is needed at the right time at least for the past couple of years. ", said Nikhil.

• Rapid Fire round

Nikhil Five years ago to today, what's the difference: 

Grey hair and became a little bit slower

Biggest realization during the covid lockdown:

Work isn't everything, you have to focus on the interpersonal relationships in your life more.

Ease of working with your brother on a scale of 1 to 10:

I think 10, we get along quite a bit.

If there is one thing that keeps you awake at night, what is that:

The market, they are very expensive in my opinion, they keep me awake.

• Talking about the future strategies of building Zerodha, Nikhil said, "Everything in fintech when it comes down to it is the business of credibility. We are transparently allowing people to buy a share and sell a share. I think if we keep on the track we are in right now we will build more credibility we have upon this point. In terms of new things, we are putting many new products, we probably put one every month. These are not significant changes, these are tiny things that make the experience a lot better. So often when it comes to platforms, be it bank or broker, doing less is doing more. Our constant attempt is to remove the clutter, make the process much more simple. We will get furthermore along with that. 

• TAKE ON GAMESTOP: I think it's sad to know about retail, I think it's like 50 bucks today. 9 out of 10 people who bought based on that news ended up losing money and the institutions made money even though with all this nonsense with tech billionaires talking about it, kind of unnecessarily promoting it, I think caused more harm to retail than it did well.