Zerodha Co-founder Nithin Kamath's philosophy

Who are philosophers? People tend to think of spiritual leaders as philosophers. I won't deny that. Gour Gopal Das and V K Shivani are one of my favorites. But there are a few more people from whom I learned a way of life. Nithin Kamath , Naval Ravikant , Ankur Warikoo , and Mark Minervini are from diverse backgrounds. For the last 1 year, they had changed my way of thinking. I consider all of them philosophers.

Nithin Kamath is Zerodha's co-founder and one of my favorite people whom I admire a lot. I went through most of his interviews and his LinkedIn posts. Here are some thoughts I liked about it.

Gambling is better than the stock market :

If you don't have any knowledge of the stock market but still you want to be wealthy through the stock market, then gambling has a better chance to achieve it. Let's assume you earn five crore prize money in the lottery; you won't spend it in the lottery again. But if you earn five crores in the stock market luckily, then you will again invest that money (or even more) in stock money to earn more. In that process, you will lose it all.

Money is useless after a certain point in time:

There is no end to luxury. You might want air conditioning today, then BMW next year, and the list goes on. After a certain point in time, you will realize that money does not have any end. But the problem is you can only realize it when you have enough money.

My thoughts: This point has shaken my belief system. I am more convinced than ever that I need something more than money. Whatever I have is enough. I will go for building wealth, but my motivation won't come through money.

The problem of Capitalism:

He is a believer in capitalism. But he knows the constraints of it as well. Unless and until rich people donate their wealth to the poor the difference between these two sections will be bigger. So, he donates his wealth to charity. Global warming is a big problem that he believes needs a solution immediately. Some of the impacts of global warming are irreversible. The problem with this work is, it is difficult to know whether the funding given is effective or not. It takes 10-15 years' time to understand whether the wealth has worked or not. Other philanthropy works are easy to figure out whether worked or not.

Trading mindset:

It is easy to be a trader when you have some side income other than trading. When you are completely reliant on trading, you will create immense pressure to earn profits. That will bring down your chance to be a better trader. The more stoic you are, your chance to be good in the stock market will increase. His brother Nikhil Kamath is a better trader than him, as he is more pessimistic in nature. Nithin is optimistic in nature. Currently, Nithin doesn't do any trading as it doesn't make sense to spend time on a similar task. Now, Nikhil takes care of the trading part.

The startup ecosystem in India:

It is good that numerous startups are doing good in India. As valuations are mostly tied to revenue, there is an urge to make revenues instead of profit. Unless and until those startups earn, the government doesn't earn any tax. As most of the companies are incorporated outside India, when those organizations become profitable the tax will go outside.

He raised his concerns about higher valuations for new-age companies. He thinks if Price to Earning (PE) is a classic tool to value a company and doesn't make sense now, then those companies should make it clear about the new tools they are using to evaluate their company.

Zerodha's philosophy:

Zerodha always tries to protect customer benefits. It shows a warning (that you can lose money) when an investor tries to buy a penny stock. Zerodha tries to educate people through the Zerodha varsity app. Zerodha is a Fintech business because of its CTO Kailash Nadh . He gives most of the success of Zerodha to Kailash Nadh. All the technology used by Zerodha is Free and Open Source (FOSS). Zerodha doesn't have any targets for its employees. Nikhil knows how uncertain the stock market is. Zerodha's profit comes through the stock market. So, it doesn't make sense to have targets.

My thoughts: Zerodha Versity is an excellent app for a beginner to earn in the stock market.

When Zerodha will go public?

There is no chance that Zerodha will go public or raise capital. Most companies raise capital for gaining customers. Customer accusation cost (CAC) is zero for Zerodha. In fact, customers pay first and then use Zerodha services. Zerodha doesn't do any active marketing. How does a broking industry does marketing? You must trap a retail investor so that you can earn big money through the stock market. But it is not the case. Earning money through the stock market is not easy. This is the reason Zerodha doesn't do any marketing (to protect retail investors). As Zerodha doesn't have these costs, they don't want to be aggressive in building more. When there is no external investor, it is easy to take decisions. It takes a few days only to implement zero brokerage decisions for Zerodha. It is difficult and time-consuming to take decisions when external investors are present.

Favorite Books:

Stock Market Wizard by Jack D Schwager

Sapiens by Yuval Noah Harari

There are a lot of points that I missed. I would have misunderstood a few points. Please share your thoughts on this. It would help me to learn more.