Download Cmr Zerodha
Analisa Wisdom
IN 2013, STANFORD UNIVERSITY students Baiju Bhatt and Vlad Tenev came together to build a mobile stock trading app, Robinhood, which proved to be an instant hit among retail investors in the U.S. In an industry plagued with high transaction and broking charges, Robinhood created a niche for itself since its commercial launch in 2015. But the saga did not make for a happy reading.The company, which raised $5.6 billion from private investors prior to the IPO, is floundering. From its public issue price of $38 a share in July 2021, the stock is down 90% from its high of $85 and 73% from its IPO price to $10.39 (January 27, 2023).For an app that has notched up 22.9 million users with 12.2 million monthly active users, the meltdown has its reasons.","page-url":"\/story\/0a7060d8-1563-4e4c-ae78-f2ebfa1d1aa1\/element\/4621bf4b-c957-4a4e-9d49-0ec736d043ba","type":"text","family-id":"3f041192-97f3-49f4-992d-2027c0422f60","title":"","id":"4621bf4b-c957-4a4e-9d49-0ec736d043ba","metadata":[],"subtype":null,"text":"IN 2013, STANFORD UNIVERSITY students Baiju Bhatt and Vlad Tenev came together to build a mobile stock trading app, Robinhood, which proved to be an instant hit among retail investors in the U.S. In an industry plagued with high transaction and broking charges, Robinhood created a niche for itself since its commercial launch in 2015. But the saga did not make for a happy reading.The company, which raised $5.6 billion from private investors prior to the IPO, is floundering. From its public issue price of $38 a share in July 2021, the stock is down 90% from its high of $85 and 73% from its IPO price to $10.39 (January 27, 2023).For an app that has notched up 22.9 million users with 12.2 million monthly active users, the meltdown has its reasons."},"description":"","amp-html":"The pandemic-fuelled boom in retail trading is fizzling out. Further, Robinhood\u2019s revenue stream from cryptos is in question. Not just that \u2014 it is blowing away money. In 2021, the brokerage firm incurred a $862 million loss on a net revenue of $978 million in the nine months of 2022.The deep red is on the back of unbridled operating expenses of $1.3 billion. Neither a FAANG challenger nor a Salesforce in the making, yet the company spent half a billion ($529 million) on technology and development, and general and administrative expenses cost it another $728 million. Irony is that these numbers come amid a layoff of 31% of Robinhood\u2019s workforce (now at 2,400). Though Tenev took the blame by stating, \u201cthis is on me\u201d in August 2022, the turn of events was expected from a firm whose ambitions were given wings by hungry VCs, including the likes of Andreessen Horowitz, DST Global, New Enterprise Associates, and Tim Draper.Back home, the Bengaluru-based Kamath brothers, Nithin and Nikhil, have done something similar by leveraging tech to disrupt the broking industry with their no-frills app, Zerodha.But the difference between the two is how the brothers have built their business. Robinhood\u2019s free commission compromised the interest of its clients as the U.S. Securities Exchange Commission revealed that the company sold order flow to the market maker that gave it the best rebate rather than the one that offered the best price for its clients. The Kamath brothers, on the other hand, have avoided all the pitfalls made by Robinhood in its quest for supremacy.","page-url":"\/story\/0a7060d8-1563-4e4c-ae78-f2ebfa1d1aa1\/element\/1ca5a578-6555-4778-8331-fe77771eefc6","type":"text","family-id":"c41201e3-4174-473c-a5f0-58da79124dbd","title":"","id":"1ca5a578-6555-4778-8331-fe77771eefc6","metadata":[],"subtype":null,"text":"The pandemic-fuelled boom in retail trading is fizzling out. Further, Robinhood\u2019s revenue stream from cryptos is in question. Not just that \u2014 it is blowing away money. In 2021, the brokerage firm incurred a $862 million loss on a net revenue of $978 million in the nine months of 2022.The deep red is on the back of unbridled operating expenses of $1.3 billion. Neither a FAANG challenger nor a Salesforce in the making, yet the company spent half a billion ($529 million) on technology and development, and general and administrative expenses cost it another $728 million. Irony is that these numbers come amid a layoff of 31% of Robinhood\u2019s workforce (now at 2,400). Though Tenev took the blame by stating, \u201cthis is on me\u201d in August 2022, the turn of events was expected from a firm whose ambitions were given wings by hungry VCs, including the likes of Andreessen Horowitz, DST Global, New Enterprise Associates, and Tim Draper.Back home, the Bengaluru-based Kamath brothers, Nithin and Nikhil, have done something similar by leveraging tech to disrupt the broking industry with their no-frills app, Zerodha.But the difference between the two is how the brothers have built their business. Robinhood\u2019s free commission compromised the interest of its clients as the U.S. Securities Exchange Commission revealed that the company sold order flow to the market maker that gave it the best rebate rather than the one that offered the best price for its clients. The Kamath brothers, on the other hand, have avoided all the pitfalls made by Robinhood in its quest for supremacy.","description":"","amp-html":"","image-metadata":"width":1908,"height":2379,"mime-type":"image\/jpeg","file-size":663589,"file-name":"Zerodha 4.jpg","page-url":"\/story\/0a7060d8-1563-4e4c-ae78-f2ebfa1d1aa1\/element\/cd9f1ac4-d88a-4d63-b9f7-8c5e4e61ab88","type":"image","family-id":"fc75ed2b-3e3a-474c-ae7e-48512569facb","image-attribution":"","title":"","id":"cd9f1ac4-d88a-4d63-b9f7-8c5e4e61ab88","hyperlink":null,"image-s3-key":"fortuneindia\/2023-02\/9d30c923-8716-48dc-bb1e-48e6ee192d97\/Zerodha_4.jpg","metadata":[],"subtype":null,"description":"","amp-html":"Bootstrapped from Day Zero, Zerodha has not only outsmarted traditional brick and mortar broking firms, but is also way ahead of other online rivals, Upstox and Groww. What makes it stand out is its financial performance \u2014 raking in profits of \u20b92,094 crore on a revenue of \u20b94,964 crore in FY22 (See: Neighbour\u2019s envy, owner\u2019s pride).Having beaten bank-backed brokerages, including ICICI Securities, Kotak Securities and HDFC Securities, Zerodha is a case study of how new-age consumer tech businesses can be built profitably instead of the burn-your-way-to-growth VC model. Not surprising Nithin, too, had VCs reaching out to him for a tango. \u201cI have spoken to almost all VCs, but hearing our philosophy around raising capital and running the business, the conversation never reached valuation talks,\u201d says the 43-year-old, whose father was a branch manager at Canara Bank and mother a music teacher.The \u201cphilosophy\u201d in some sense is the invisible moat around Zerodha, whose founders, including 36-year-old younger brother Nikhil, have been valued at \u20b914,130 crore in the Fortune India-Waterfield Advisors 2022 ranking of dollar billionaires.","page-url":"\/story\/0a7060d8-1563-4e4c-ae78-f2ebfa1d1aa1\/element\/73358594-ad60-4bd4-aa51-ed5760bcaee6","type":"text","family-id":"c0c9074d-aeb1-41dc-84d5-003fe2014892","title":"","id":"73358594-ad60-4bd4-aa51-ed5760bcaee6","metadata":[],"subtype":null,"text":"Bootstrapped from Day Zero, Zerodha has not only outsmarted traditional brick and mortar broking firms, but is also way ahead of other online rivals, Upstox and Groww. What makes it stand out is its financial performance \u2014 raking in profits of \u20b92,094 crore on a revenue of \u20b94,964 crore in FY22 (See: Neighbour\u2019s envy, owner\u2019s pride).Having beaten bank-backed brokerages, including ICICI Securities, Kotak Securities and HDFC Securities, Zerodha is a case study of how new-age consumer tech businesses can be built profitably instead of the burn-your-way-to-growth VC model. Not surprising Nithin, too, had VCs reaching out to him for a tango. \u201cI have spoken to almost all VCs, but hearing our philosophy around raising capital and running the business, the conversation never reached valuation talks,\u201d says the 43-year-old, whose father was a branch manager at Canara Bank and mother a music teacher.The \u201cphilosophy\u201d in some sense is the invisible moat around Zerodha, whose founders, including 36-year-old younger brother Nikhil, have been valued at \u20b914,130 crore in the Fortune India-Waterfield Advisors 2022 ranking of dollar billionaires.","description":"","amp-html":"Playing It StraightA combination of English and Sanskrit words \u201czero\u201d and \u201crodha\u201d (obstruction),\u201d Zerodha began 12 years ago by offering equity trades both for traders and investors at \u20b920 per trade, becoming the country\u2019s first discount broker. Down the line, they made delivery trades free and limited \u20b920 to only equity and F&O trades.In doing so, between FY11 and FY12, Zerodha\u2019s customer base grew from 1,500 to 110,000. But the twin effect of Jio\u2019s aggressive data plans and Aadhaar-enabled verification proved to be a turning point from 2016. Physical forms paved the way for seamless onboarding of customers. The effect was visible when in just one year (FY17), new customer additions stood at 170,000 \u2014 more than what Zerodha had cumulatively added since its inception. Since then, there has been no looking back, with the brokerage seeing a 10x jump from 1 million in 2019 to 10.2 million users as of September 2022.Nithin, who initially started out as a franchisee of Reliance Money, is cognisant of the fact that the fortunes of his business are intricately linked to market sentiment. \u201cIf you map the mid-cap index and our customer addition graph, it is very clear that when there is a market frenzy, there are more sign-ups,\u201d he admits.Hence, in a business where sentiments can change overnight, the only way to keep growing profitably is to keep costs under control.As a rule, the firm stayed away from two big cash guzzlers \u2014 especially for start-ups \u2014 advertising and marketing spend, besides aggressive hiring.Nithin knows the game well when he says: \u201cOne can stop marketing costs at any point of time but not your human cost. You can\u2019t be just hiring and firing. So, we\u2019ve been very conscious of that aspect.\u201d","page-url":"\/story\/0a7060d8-1563-4e4c-ae78-f2ebfa1d1aa1\/element\/a4313a50-1bea-446f-9296-f748446a63c5","type":"text","family-id":"a28fa86a-acaf-40bf-9eee-8ba9141ed65a","title":"","id":"a4313a50-1bea-446f-9296-f748446a63c5","metadata":[],"subtype":null,"text":"Playing It StraightA combination of English and Sanskrit words \u201czero\u201d and \u201crodha\u201d (obstruction),\u201d Zerodha began 12 years ago by offering equity trades both for traders and investors at \u20b920 per trade, becoming the country\u2019s first discount broker. Down the line, they made delivery trades free and limited \u20b920 to only equity and F&O trades.In doing so, between FY11 and FY12, Zerodha\u2019s customer base grew from 1,500 to 110,000. But the twin effect of Jio\u2019s aggressive data plans and Aadhaar-enabled verification proved to be a turning point from 2016. Physical forms paved the way for seamless onboarding of customers. The effect was visible when in just one year (FY17), new customer additions stood at 170,000 \u2014 more than what Zerodha had cumulatively added since its inception. Since then, there has been no looking back, with the brokerage seeing a 10x jump from 1 million in 2019 to 10.2 million users as of September 2022.Nithin, who initially started out as a franchisee of Reliance Money, is cognisant of the fact that the fortunes of his business are intricately linked to market sentiment. \u201cIf you map the mid-cap index and our customer addition graph, it is very clear that when there is a market frenzy, there are more sign-ups,\u201d he admits.Hence, in a business where sentiments can change overnight, the only way to keep growing profitably is to keep costs under control.As a rule, the firm stayed away from two big cash guzzlers \u2014 especially for start-ups \u2014 advertising and marketing spend, besides aggressive hiring.Nithin knows the game well when he says: \u201cOne can stop marketing costs at any point of time but not your human cost. You can\u2019t be just hiring and firing. So, we\u2019ve been very conscious of that aspect.\u201d","description":"","amp-html":"","image-metadata":"width":1908,"height":1728,"mime-type":"image\/jpeg","file-size":270621,"file-name":"Zerodha 2.jpg","page-url":"\/story\/0a7060d8-1563-4e4c-ae78-f2ebfa1d1aa1\/element\/670b8249-c879-4c99-af16-7926b332e6fb","type":"image","family-id":"bd82a054-c260-459e-889b-7a8f3f051ae7","image-attribution":"","title":"","id":"670b8249-c879-4c99-af16-7926b332e6fb","hyperlink":null,"image-s3-key":"fortuneindia\/2023-02\/e60eae6b-a9ca-4ca4-a496-c5ee5ea91302\/Zerodha_2.jpg","metadata":[],"subtype":null,"description":"","amp-html":"For instance, take the case of Upstox, which claims to have crossed 10 million customers in June. The Mumbai-based company became a Unicorn last November when it raised $25 million in a Series C round led by Tiger Global at a valuation of $3.5 billion. While financials for FY22 are not available, a five-time jump in business promotion expenses to \u20b9113 crore saw losses widen 89% to \u20b972 crore even as revenue nearly tripled to \u20b9429 crore in FY21. One of the big costs was advertising and marketing as the firm tied for cricketing events with the ICC, BCCI and Tamil Nadu Premier League. \u201cWe have a plan of getting profitable in the next two years. We can speed that up or we can slow that down. It\u2019s just a matter of how much you also want us to scale up,\u201d one of its three co-founders Shrini Viswanath was quoted as saying. But given the start-up\u2019s ambitious plans of adding 20-30 million users by FY23, and 100 million in 5 years, the road to profitability is far from easy.Similarly, in October 2021, Bengaluru-based Groww raised $251 million as part of its Series E round led by IconiQ Growth and other investors, including Tiger Global, almost tripling its valuation to $3 billion in a little over six months. The company, which claims to have over 20 million users on its platform, has around 2 million users on its stock investment platform, Next Billion Technologies, which was launched in July 2021. Though Next Billion clocked revenues of \u20b940 crore in FY21 and turned profitable with \u20b92.73 crore, the parent entity, Billionbrains Garage Ventures, posted losses of \u20b9107 crore on a consolidated revenue of \u20b952 crore.Nikhil, who primarily spends time on treasury and risk management at Zerodha, points out that while they take competition seriously, the writing on the wall is clear. \u201cToday you have a new entrant, tomorrow there might be another. However, to be honest, if you earn \u20b920 on a transaction but spend \u20b910K to acquire a client, it\u2019s a tough business model as you may need to monetise the transaction by selling some other product, which may not be in the interest of the user,\u201d says Nikhil.","page-url":"\/story\/0a7060d8-1563-4e4c-ae78-f2ebfa1d1aa1\/element\/fe0ae113-a648-4e90-8054-8b2659038a3a","type":"text","family-id":"af09dc8a-1e22-474f-a9ed-0dee0dac169c","title":"","id":"fe0ae113-a648-4e90-8054-8b2659038a3a","metadata":[],"subtype":null,"text":"For instance, take the case of Upstox, which claims to have crossed 10 million customers in June. The Mumbai-based company became a Unicorn last November when it raised $25 million in a Series C round led by Tiger Global at a valuation of $3.5 billion. While financials for FY22 are not available, a five-time jump in business promotion expenses to \u20b9113 crore saw losses widen 89% to \u20b972 crore even as revenue nearly tripled to \u20b9429 crore in FY21. One of the big costs was advertising and marketing as the firm tied for cricketing events with the ICC, BCCI and Tamil Nadu Premier League. \u201cWe have a plan of getting profitable in the next two years. We can speed that up or we can slow that down. It\u2019s just a matter of how much you also want us to scale up,\u201d one of its three co-founders Shrini Viswanath was quoted as saying. But given the start-up\u2019s ambitious plans of adding 20-30 million users by FY23, and 100 million in 5 years, the road to profitability is far from easy.Similarly, in October 2021, Bengaluru-based Groww raised $251 million as part of its Series E round led by IconiQ Growth and other investors, including Tiger Global, almost tripling its valuation to $3 billion in a little over six months. The company, which claims to have over 20 million users on its platform, has around 2 million users on its stock investment platform, Next Billion Technologies, which was launched in July 2021. Though Next Billion clocked revenues of \u20b940 crore in FY21 and turned profitable with \u20b92.73 crore, the parent entity, Billionbrains Garage Ventures, posted losses of \u20b9107 crore on a consolidated revenue of \u20b952 crore.Nikhil, who primarily spends time on treasury and risk management at Zerodha, points out that while they take competition seriously, the writing on the wall is clear. \u201cToday you have a new entrant, tomorrow there might be another. However, to be honest, if you earn \u20b920 on a transaction but spend \u20b910K to acquire a client, it\u2019s a tough business model as you may need to monetise the transaction by selling some other product, which may not be in the interest of the user,\u201d says Nikhil.","description":"","amp-html":"Zerodha, though, has not been burning cash to acquire customers either. In fact, the sign-up fee of \u20b9200 that it charges per customer while on-boarding partly contributes to its overall revenue. \u201cWe make money on customer acquisition unlike competition which is losing money. So, it\u2019s almost like a negative customer acquisition cost (CAC),\u201d says Nithin.That\u2019s a big deal.Krishnan ASV, analyst at HDFC Securities, mentions that despite being a capital-light business, high customer acquisition costs incurred by fintech brokers have resulted in losses. He, however, expects these costs to decline once the industry matures and operating leverage drives profitability.The reason behind Zerodha\u2019s success, besides the first-mover advantage, is that it adhered to a philosophy of not chasing growth at any cost. \u201cWe never started a year saying we need to get to these many users. That\u2019s also a reason why we didn\u2019t go for external funding. Because once you raise money, you are obligated to run the business in a certain way which, in turn, will make it hard for you to acquire customers without having to spend,\u201d says Nithin.In fact, while most businesses talk of customer-centricity, walking the talk in a digital era \u2014 where data can reveal more about a customer \u2014 is tough. Zerodha chose not to bombard customers with offers and updates. In fact, the company moved its sales team \u2014 that would call back customers who signed up but didn\u2019t finish onboarding \u2014 to a support role. The move paid off as it didn\u2019t make any difference to the onboarding rates.In keeping with that ethos, Zerodha has also not been pushing its margin funding business, which is currently a separate entity. \u201cMargin funding is a very lucrative business and can easily make up for 25% of revenues for large broking firms. But it\u2019s really a horrible product for customers as you are just enabling their greed,\u201d says Nithin. The company is now offering the services as a counter to any potential outflow of assets under management. \u201cWe don\u2019t want our customers moving out to another player to just pledge their securities for a loan,\u201d he adds.","page-url":"\/story\/0a7060d8-1563-4e4c-ae7