Nikhil Kamath - Meet India’s Youngest New Billionaire

Legacy of Monsters An Apple original series. The world is on fire. I decided to do something about it on November 17th. This place. It's not ours. Believe me. The most massive event of the year arrives. If you come with me, you'll know everything. I promise.

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Legacy of monsters streaming November 17th only on Apple TV plus.

Hold music. You want to avoid it and so do your customers. So say goodbye to holdmusic and hello to faster, smarter support with Salesforce. Make service more personal and agents more productive using built in trusted AI. Then watch costs and wait times drop and satisfaction soar. Support customers in a whole new way with Service GPT. Learn how@salesforce.com ServiceGPT what is going on, everyone? Casey Adams here. Welcome back to the Rise of the Young podcast. On today's episode, I sat down with Nikhil Kamath. Nikhil Kamath is India's youngest new billionaire. He is the 34 year old Zerodha co founder and a chess champion who dropped out of school at the age of 14. That was the starting move in a sequence of events that would eventually earn him billionaire status as part of India's answer to trading platform Robinhood. On this podcast, we talked about his journey on why he started Zerodha, what led to the burst of growth during the pandemic, and how everyone started flocking to his trading platform. So before we get into it, I just want to say it was such a pleasure having him on the show. Please make sure you check out Nikhil on Instagram, Twitter or wherever you can find him. And enjoy today's podcast with the one and only Nikhil Kamath. Foreign what is going on, everyone? Casey Adams here. Welcome back to the Rise of the Young podcast. Today I am joined by Nikhil Kamath, the founder of True Beacon and also Zerodha. Thank you so much for coming on.

Thank you, Casey. Thank you for having me.

So it's been said that you've created the Robin Hood of India, Is that correct? That's what I've been hearing lot.

Well, I would say we are similar in some ways, but the way regulation works in the two countries is very different. So we don't operate in the same way that they do. Also, I think we predate them by about five years. We've been around for about 11 years now.

Very cool, man. And your story is fascinating, man. So you dropped out of high school at 14 and you're playing chess. How. How did. How did that happen? And what caused you to drop out and to pursue chess?

Yeah, so chess started fairly early for Me when I was about five or six growing up and I kept playing more chess and around 14 I decided to quit school. Not in isolation because of chess, but also maybe a part of. But I think I was very inclined towards getting on the journey of, you know, starting to work, be a professional startup business. I was very eager and I started at a very early age so I would. In fact I had a business selling used mobile phones at about the same time that was a trigger to kind of like stop the formal education. Going to business where you are very cool.

And how did you go from chess to starting Zerodha? And what made you decide that you wanted to build a platform for not only retail traders, but to pursue something that is just such a big opportunity.

So started trading the stock markets early. So stock markets give you, they offer you this big privilege that you do not need a graduation, you don't need to be a college grad, you don't need too much information going in if you want to flirt with the idea of buying and selling a company. I started trading early at about age 17. I got a full time job in a call center at about the same time. So I was doing the both in parallel and trading when I began had its ups and downs. There were many cycles. You do lose money a few number of times before you know, you get any kind of proficiency as a trader. So trading started at 1734 today. So it's been 17 years of trading. But when began. Yeah, when we began trading in India, the incumbent brokers of the time were very inefficient. They were very fee heavy, not very transparent and just too many inefficiencies for a retail trader to trade full time and be able to make a living out of it. So we decided to. At some point trading led to managing money for third party. And then at some point we decided that to actually scale in this business, we would need to be a broker ourselves. So that began the journey of broki in about 2009, so about 11 years ago.

Wow. And I know that last year you guys had some exponential growth with the pandemic. How have you guys been able to sustain the growth and how have you as the founder, you know, like how have you changed over the past year and what were some of the difficulties that you had to withstand to grow at such a rapid pace?

Well, I think Casey, in all fairness, we've been one of the few industries which did okay during the pandemic. Unlike America and many western countries, India went into a complete lockdown very early.

Yep.

As early as March last year, everything was shut. By everything, I mean, you couldn't go to office, there were no grocery stores.

Wow.

Just the bare essentials were open. As a result of that, we kind of got out of the pandemic situation early.

Too.

Many industries which were allowed to operate during the pandemic was stockbroking. And like in the west and like in other peer geographies, everything that is online, I think has done well. Everything. When people had time to sit at home, open trading accounts, try to build for themselves an ancillary income, in a way, I think helped the industry overall. Not just us, our competitors, not just in India, but across the world. I think everybody in the fintech space did reasonably well during the pandemic.

Absolutely. What have you guys seen with the youth? Because I'm 20 years old, right. And I know that there's this whole thing in America, and I'm sure you've heard it. It's like the Robin H. And they. And you saw the thing with GameStop and all these companies. Just how can. How is it different in India? Is there a lot of young or millennials or younger groups of people getting involved with Zerodha? And what's your thoughts on that?

Luckily for us, I think we have a regulator, like you have the sez, we have the sebi, and these guys have kind of like stepped in and been fairly proactive. So something like a GameStop is possible if there is a certain amount of leverage for a novice trader to utilize. They've curtailed the leverage available in India to a large extent. So I think they've done their job. Normally, regulators don't do this right across the world. When something goes wrong, they come by and fix it. But these guys have made an exception. They've been preemptive about the whole thing and they've created an environment where it would be tough for a stock like GameStop to be operated in one way or another.

Very cool. So just for context too, so you and your brother started Zerodha, is that right? How has it been building a company and not only becoming a billionaire, but doing that alongside your brother? What has that been like?

It's been great, honestly. I think we've always been very close and I think we have skill sets which are complementary to each other. I think Nitin is amazing at people product having a vision and really inspiring people to do better. And I tend to focus more towards stuff related to investment, risk management, stock market kind of thing. So it has worked for us and we spend a lot of time both at work and outside of work, we play a lot of sport together. It's fun, I think, you know, to have somebody in life who you can depend on in the ups and downs, vice versa. I think it's great.

Very cool. What does like your day to day look like nowadays and how do you balance that out with your brother and your team?

Well, typical day is getting up at about 7:30 in the morning. I start work at about 8. In between 8, 8:15, the markets open shortly after. Markets go on till about 3:30pm so I'm fairly occupied at that time. And then we have a lot of meetings and zoom calls and you know, like just off to, you know, grow the business one way or another. And the day typically ends with a workout if I can, you know, like. Yeah, muster the courage and motivation to actually end the gym, which happens a couple of times a week. And after that, you know, you watch some TV or read a book and go to bed. Weekends are a lot more interesting. Weekends are when I try and catch up with friends, go out for a drink or play a sport. So weekends add a little bit of excitement to otherwise a very routine cycle.

Yeah, very cool, man. I know you talk about this concept of redefining what a billionaire is and what does it mean to you to be a billionaire and how do you want to redefine that?

Well, it doesn't really mean that much, I think outside of titles and terms. I think if you have capital at hand, it makes you braver as an entrepreneur. You can go out and, you know, try new things, take advantage of more opportunities. I think that's the most significant change now we've tried. Like if you were to talk about different economic models that we have witnessed in our history. We have great issues with income inequality and wealth disparity in the world we live in today. But we did try socialism and different forms of that and communism and all of these have not worked. Capitalism in its current structure might not be apt. For what the world needs today. You would need, say, a certain amount of benevolence on the people who have benefited from capitalism to make the society succeed together. But I think I'll give you an example between America and India. You guys have health disparity issues, so do we. But I think ours are a bit more stark today. But you guys have wealth taxes and inheritance taxes, which kind of like narrows that gap. I think a case should be made for India as a country to introduce stuff like that. Personally, I believe inherited wealth should be taxed at a higher rate than Income is today because income tax, tax, beyond a certain point, kind of does not aid entrepreneurship, which the country really. But very simply, I think access to capital just gives you the confidence to go out and try new stuff. That is the main change that it brings.

I love that too. And I think, like myself, right, you read all these stories of billionaire, billionaire, and myself as a young individual, I think redefining what that means is important because it's the title, it's the thing. But people behind that title have such a story and there's so much knowledge and there's so much to provide to the world. And I think too, just hearing your story of, you know, dropping out of school at 14 and you hear this, this not only success story, but you're able to see the journey which obviously led to your success today. But what, what does your success mean to you today?

So, Casey, often in life, I think when a certain company does well, and by virtue of that company having done well, the individuals associated with it tend to do well. On a monetary level, I think people incorrectly attribute it to hard work and intelligence and somebody with abilities which are spectacular. Most often the case is it's just people who, by coincidence, were at the start of a big cycle, a big up cycle. In that particular industry, there will always be millions of people who are more hard working, more intelligent, and, you know, more innately naturally gifted than the people who have gotten lucky today. So I think to pay heed to that and not forget that and know that, you know, you've gotten the little distance that you have in life by virtue of where you were at what period of time and the people you were associated with and who were working with you. I think these things make a company succeed. Too often that entire focus shifts on one or two or three people, which is probably incorrect.

I love that man. And going back to Zerodha, how have you been able to build the team? What have been some of the, I would say, practices you've used to build culture and to scale your team that an entrepreneur could use today if they are on the cutting edge of a booming industry and they're going through rapid growth.

Yes. I would, in fact give more credit on the whole team building aspect. People at work who have done a much better job than me at that. I think Lithon has been great at inculcating a culture and he kind of inspires all the people who we have working with us today.

Very cool.

But I think we got very lucky because the first 10 people, when we started as a company, we didn't go out and hire them professionally. They were friends we knew from childhood and neighbors and the likes of that. And we all being as close to each other as we were, we became very cohesive as a unit and very, very transparent with each other. And luckily, I think that has permeated into the new layers when new people came and joined us. So I guess we got really lucky with that.

Yeah. Very cool, man. What does the entrepreneur scene look like in India? Are there a lot of young hustler entrepreneurs that are starting revolutionary businesses today? And how are you planning on supporting that? Or how do you want to be involved for the next generation of entrepreneurs in India?

Yeah. So, Casey, where I am right now is a city called Bangalore, which is in the south of India. This place is incredible. It's very vibrant. Every second street you probably go into has like a bunch of startups and entrepreneurs of different kinds of. We have a venture capital arm which goes out and supports new companies which are. I think support is kind of like pushing the word too much because we are trying to benefit from getting equity in these companies as well. But we participate in the ecosystem wherever we see a cycle or a sector, which we think will trend up over the next decade. But this place is incredibly vibrant right now. I think we must have, I wouldn't be surprised, like, over a dozen unicorns in Bangalore itself.

Very cool.

A lot of them scaling to, you know, like, levels which are much, much bigger than, you know, just being very cool.

What type of industries do you see emerging the most out there? And when you say these unicorns, like, do they all have a common theme or what industries do they tend to be in?

Well, the flavor of the season here right now are SaaS companies. I think a lot of small and medium enterprises are growing in India. They're mushrooming. And these SaaS companies are well placed to take advantage of that. So that's one company which is one sector which is really cool today. Manufacturing, I think by virtue of all the geopolitical tension around China and the rest of the world, has opened a big opportunity for India. We have ample labor which is available at very competitive prices and skilled labor at that. So disrupt to disrupt the supply chain and the whole manufacturing process, which would probably be China's laws, could easily be India's gains. So that could be another sector for today. So we ourselves, we just started a new company in asset management.

True beacon. Correct.

So I think that industry is ripe for disruption. Not just in India, even in the west, like in America, if you were to go to a hedge fund and give them money, you typically pay 220. And there are middlemen and distributors and private banks which kind of rip people off with high fees. The idea of a true Beacon was to eliminate all of that and make the hedge fund industry very transparent. We're trying to create a bridge for ultra HNIs and billionaires across the world. You could be in Nigeria, in South Korea or in India. And your holding companies can very often benefit from making a connection in these geographies which are far away from you and it would typically be very hard for you to. So through krubeacon, we are trying to connect these people while being an asset management company or a hedge fund, which is very efficient by not having standing fees. And we only charge people on performance. If we don't perform, we don't charge our 10% carry.

I love that. And that's, I'm sure that's a motivating factor for you guys to succeed because then you obviously gain the upside. When you say connect people internally through True Beacon, can you go deeper on that? Do you mean where like bringing, you know, these successful investors are coming to put money into True Beacon and you're able to help connect the people that are getting involved to create new opportunities, Is that right?

Yeah, yeah. So what happens is True Beacon first and foremost allows for people to get India public market, large cap exposure. So they get to participate in the India story while being so efficient that we cut off the fees they would typically have to pay by about 80, 90%. Secondly, we only cater to the ultra H and I audience, typically billionaires across the world. We have a filtering mechanism where we carefully pick who's allowed to invest into Beacon. Hundred of these investors. We try to build a platform for them where we will sit with them, figure out what the holding companies do and what benefit we can create for them by introducing them to somebody in another network in another geography. So say, for example, we have a cement maker in India and an oil refinery in Nigeria. Both of them are clients of the asset management company, but they've never really been introduced or never thought of working with each other. You want to build that bridge of true Beacon.

Very cool.

Investment banks and old school merchant banks are meant to do this job, but they've kind of like, you know, done a horrible job of connecting people. They're very offline as a business. They work in silos. One relationship manager will not, will not, you know, kind of introduce his clientele for the fear of losing them. So we want to like democratize that for that particular community, build a platform for them and then see what can come out of the connections.

That's very cool, man. I love that. Just being a connector and, you know, that's. That's something I love to do. You know, having this podcast for three years and having so many great people on, like yourself, it allowed me to make some cool connections. And, you know, if they end up doing business and have a deal, amazing. But if you were to look back when you were 20 years old, what would your advice be to your younger version of yourself and why?

Yeah, I mean, I think it would be don't take life, your professional life so seriously. I think there is a life beyond making money, making a company succeed. I think you truly feel complete. I think this realization happens with time. I don't know your situation in life, if you have a family, if you have dependence, but I think outside of providing for them, outside of financial gains in life, you need to have the other facets of life working at some level for you to be truly fulfilled or, you know, have a semblance of contentment. I think I realized that too, like, too late in life. I did not focus on my interpersonal relationships, my friendships for a long, long time. If I could go back in time, I would definitely correct that.

I love that. That's very good advice. And like I said, I'm 20 years old right now. I actually just moved to Los Angeles back in October. I grew up on the east coast in a small town in Virginia, so I love hearing that. When you look back and can give yourself advice, that's super cool to hear. Just moving to the forward, what are you most excited about with? You have everything at True Beacon and Zerodha, you have so many moving parts. What are you truly excited about? What wakes you up every day and how. How do you stay motivated throughout these times?

Yeah, so the market is a great motivator. I always tell this to people. The one great thing about a job in the stock markets is every day is different. It's not repetitive at all. Nobody can predict what will happen tomorrow, day after tomorrow, or even in the next hour. So you wake up every day wondering what might happen that day. And I think that is fairly exhilarating. And it drags you into work. So that kind of keeps me, like, you know, really motivated on a very organic level. And another thing I really like, I think, is meeting new people. I love traveling. Too bad the pandemic has kind of, you know, like, really closed down the world in so many ways, you know, so Many people have Zoom meetings, and I have done hundreds of them. But to sit in a room with four people you've never met before, I think how much you learn about each other.

Absolutely.

It's very hard to replicate that on a video call.

Absolutely. I was telling my buddy and I were actually, we're gonna go to Dubai in March. We've never been there before. And it's something that we're excited about because, you know, we've. We've always wanted to go there. So getting back to traveling is something that we're pumped about. So I want to ask you, Nikhil, bitcoin, what are your thoughts on it? Where do you see it going, and what's just your overall thoughts on cryptocurrency as a whole?

Well, I get why there is so much distrust on the American dollar, which is the predominant currency of the world today. Most of our global assets are backed by that. I think the dollar was on a fair path up until the 1970s when it was on the gold standard and it was backed by something. I think Nixon removed that in 1971. And ever since, the dollar has not been backed by anything. It is up to the Federal Reserve to print how much they like. But like any other asset class, if there is more supply than there is demand of a certain commodity, the value has to depreciate. But for vested interest across the world, even in India and China for that matter, if our currency were to appreciate, we would become less relevant as an exporter of services to America. I think 80s to 2000s, America printed about half a trillion dollars a year. 2000 to 2019, they printed a trillion. I think 2020 has been ridiculous. They printed four, five trillion dollars. And after supplying so much more of the commodity, the fact that the price of the commodity has not depreciated is worrying. And everybody has to hedge that worry, that risk with something or the other. It could be gold, it could be bitcoins, it could be any other asset which is managed and has a finite number in existence. So for that reason, more than all else, I like the case that is being made for bitcoins. But my worry on the flip side is, you know, it takes one drastic event, one particular day. If somebody were to get their hands on a nuclear warhead or something like that by bitcoins, and something were to go wrong, I think that would be the end of bitcoin. And at some level, at a very subliminal level, bitcoin takes away power from government and central banks and elected politicians across the world. Bitcoin has had a great run recently, and those guys have not had a win. At some point, they'll come back and, you know, they'll want to win totally.

How was is crypto adoption happening in India? Based on what you can see, it is.

Yeah, it is. Especially in the last, I would say month, two months. See a lot more people talking about crypto here, a lot more people buying into crypto. That, to me, is more of worry than a positive sign, because I think when the guy on the road, on the street, the retail guy, starts buying into an asset class, it's generally too late for that asset class. And where it sits today, the amount it has rallied should worry everybody who's invested in it too. I would, in fact, you know, if I were worried about all that I mentioned earlier, I would be probably wiser, you know, stacking like physical gold in a vault somewhere versus buying a bitcoin just because gold still has a real use case in the world, in industry, there is a real cost mining and getting the gold out, and there is a finite amount of gold in the world.

I like that. Absolutely. Looking back on chess and playing the game of chess, how have you been able to use some of the strategies that you'd use in chess in your business or even personal life?

Yes, chess, surprisingly, I think a lot of people associate being intelligent or being SM to being a better chess player. Chess has very little to do with intelligence. Chess is about memory. It's about knowing every opening out there. It's knowing middle game theory and end games and being able to recall games that have been played historically and remember who did what and why they did what, and being able to implement that in your game when you're playing. So there are a bunch of basic rules like, you know, try and control the center. You develop your pieces quickly, you castle as quickly as you can, you don't have passpoint and so on and so forth. I think those same rules apply very closely to the world of investing. You know, you don't leverage, you diversify your portfolio, you trade with stop losses. And like they say in poker, if you're on tilt, you kind of walk away from investing for, you know, a certain amount of time.

Yeah.

I think after following all of these rules, what differentiates one trader and one chess player from another is how you can be creative atop all of these rules. So in terms of how cardinal, how important it is for one to follow these rules to succeed, I think there are many similarities between chess, investor, bot trader, or even in life for that Matter.

I love it. I'd love to talk about your philanthropic initiatives and how you plan on giving back. I know this is something very important to you, but what does that look like in the future in your life when it comes to philanthropy?

Yeah, I think we've been lucky that we've made a little bit of money in our lives so far. And most of the philanthropic CSR and all of our effort in the recent past has been around climate change. So we have a great team at work. It's headed by a guy called Samir who's exceptionally good at sourcing real opportunities around climate change, which can have a substantial, substantial impact on the problem. I think it's one of those problems which will not work in isolation, like nobody can solve it. Everybody has to do their bit. But early days, we've just started down that path and I think we ourselves will need some time to figure out where that goes.

Got it. Last thing before we wrap up here. Nikhil. I really do appreciate the time just moving into this new year, but also, if you were to leave today's audience with one piece of advice along their entrepreneurial journey, what would that be and why?

Well, I think, okay, it would be two things. I think the pandemic has taught us how uncertain many things in life are. I think to have a little bit of your money as an entrepreneur at any stage in life, maybe 20% of your net worth in a fixed income, totally risk free, liquid asset class is very important. I think that's true for everybody. In different geographies you would buy a different product, but everybody needs that in times of chaos. I think you need to be able to go reach in there and tide over the terrible times. The second thing I would say is often we fixate upon a problem in industry that we would like to solve, but it might be just as important to find the problem you want to fix as it is important to find the sector in which you want to find that problem. You never want to be swimming against the tide and to pick the sector or pick an industry which is growing or is set to grow at a significant pace over the next decade, I think it's fairly important.

I love that. Well, Nikhil, I just want to say thank you so much for coming on today's podcast. It really means a lot. Where is the best place that everyone listening can follow you or stay in touch with you?

Well, I think Instagram is good. I have a handle called N I K H I L K A M A T H C I O.

Love it. I'LL link it down below so people can just click the link as well. Awesome. Well, Nicole, thank you so much for coming on. I really appreciate it.

Super. Thank you, Casey. That was fun.

Legacy of Monsters. An Apple Original series. The world is on fire. I decided to do something about it. On November 17th. This place. It's not ours. Believe me, the most massive event of the year arrives. If you come with me, you'll know everything. I promise.

Oh, my God.

Go, go, go.

Monarch. Legacy of Monsters. Streaming November 17th only on Apple TV. Plus.