How Zerodha Killed Stock Brokers ? | How Zerodha Destroyed Competition? | Business Case Study
Zerodha is not a stock broker. Now many of you will say, How is this even possible? We do our investments through Zerodha. Well that's true but reality is something else. Many of us believe Zerodha – a Stock Broking Company. As lakhs of people in India do their stock market Investments through Zerodha. But in business world, what you see is not the reality. .
Truth is something else. Now the question comes What's the truth then? Today Zerodha's valuation is 2 Billion Dollars. With 1000 Crs revenue, In 2020 Zeodha made a profit of 440 Crs. Interestingly they didn't raised any funds nor invested in marketing. Now the question arises, In startup world, after raising funds also companies fail then how Zerodha did this without funding? .
And if Zerodha is not broking company then what is Zerodha? So the story starts in 2000, when Nithin Kamath – founder of Zerodha used to do job in call centre. As his shift was of night, he used to be free during day. And this introduced him to TRADING. He used to trade during day while work during night. Till 2005, he was in loop of trading and call centre. But then he met a NRI in a gym. .
When Nitin showed him his account then the NRI asked him to handle his account also. Nitin managed his account. Then time by time his 1 client turns into 10 clients. The work was interesting but at that time something was going in market which we all hate. That was Extreme Discrimination. It's like you go in a shop with tattered clothes and ask shopkeeper How much for this shirt? .
Then shopkeeper says 500 Rs only. But if a man wearing suit and enters the shop and asks how much for this shirt? then shopkeeper says 5000 Rs only. You won't believe, in olden times this used to happen in stock market. When people used to go to broker to open Demat account, he used to say some certain brokerage. But if someone says that I want to make this much turn over then brokerage was different. That means different brokerage to different people. .
And from here Zerodha started. So during initial days, Zerodha made a brokerage calculator in excel sheet and gave to their clients. So from this clients used to understand that if they buy a stock at certain price and at other certain price sell then what brokerage they have to give to Zerodha. So Zerodha made transparency possible for their clients. Slowly slowly people started liking this transparency. But the journey was long for Zerodha. .
Between 2010-2011, during initial year Zerodha only had 1000 customers. But now the question arises, after transparency also Why people were not showing interest in stock market? And then Nithin realized nothing much is going to happen with low cost and transparency. So Zerodha shifted from Low Cost Model to Flat Free Model. If you trade or invest, invest 1000 rupees or for 1 crore rupees Zerodha will only charge 20 Rs/person. .
But then enters a competitor in market. Like Zerodha it also provided low-cost and transparency to clients. And all of a sudden Zerodha lost its edge. At that time Nithin Kamath used to write blog post, where Zerodha used to provide free finance and stock knowledge. By this Nithin realized that 90% people in the market are investors not traders. There is a lot of difference in psychology of of traders and investors. 90% people in the market are those who invest in stock market for long term. But Zerodha was only focusing on traders community. .
And then Zerodha took a step which made a huge impact on stock market industry. Zerodha turns its 20 Rs flat fee to 0 Rs. Now Zerodha only used to charge 20 Rs on intraday and Futures and Options. This one move from Zerodha not only attracted investing community but also made many stock brokers jobless. You won't believe people started calling brokers “Robbers”. Zerodha's this business strategy made a bragworthy proposition in market and investors started recommending Zerodha to others. But shockingly, after this impactful move Zerodha's growth rate was not much till 2016. .
The reason behind this was Complex Procedure. So let me tell you People don't take good decisions they take convenient decisions. I Repeat. People don't take good decisions they take convenient decisions. You will also have notice that if I give you two options Option A to go to the kitchen and cook food and eat. And Option B order from Swiggy. I guarantee 95% of you will order from Swiggy. .
Even after knowing that food is not good for health, they will still order from Swiggy. Why??? Because its a convenient decision. It's human tendency that people choose easy things. And this is why people were not showing interest in Zerodha and stock market. If you open any old stock trading platform you will become dizzy. Things were so complex that people didn't even thought about investing in stock market. And due to this Zerodha made its Kite Platform. The people who has used Kite knows that .
A person who doesn't know S of stock market can easily use this. And after launch of this platform Zerodha's growth was on next level and today their profit is 440 Crs. But if Zerodha didn't noticed this 3 things then it won't be that successful. What are those 3 things? NO 1 – CONSUMER DECISION MAKING PROCESS For every business it is important to know how their consumers take decision. And Zerodha did it perfectly. They noticed how their consumers/clients take decision on investing in stock market. .
And its important for any business to make its consumer's decision making easy and simple. And this creates bragworthy proposition. Bragworthy decision means to create that value in the market that your consumer recommends it to others. NO 3 IDEA TO EXECUTION ROADMAP The idea is not valuable if not properly executed. Many startups have amazing ideas but no execution roadmap. Due to this their idea fail. Zerodha is an example that rised without any funding. .
But many of us fail because of not getting right guidance. NO proper mentorship nor proper roadmap to execute ideas. But this things are simplified by A2Z PROGRAM. This program is for those who want to build their business with proper guidance and mentorship. A2Z Program provides training on business management, digital marketing, advanced web development, graphic designing as well as personality development. With 100% money back guarantee it also provides lifetime business support. If you have an idea or if you want to make your startup successful .
Then I highly recommend A2Z PROGRAM. Link in the description. From this link you will get all details about program. So to make your entrepreneurship journey successful check this out. And most importantly what business lessons we can learn and implement in our business? NO 1 UNDERSTAND THE HURDLES In business journey, first understand the hurdles then clear them. Because after clearing this hurdles wealth will be created. But before clearing, it is important to identify and analyze them like Zerodha. .
NO 2 BUILD AN IRREVERSIBLE CHANGE If your product can change the behavior of customers than they will never go to old products. In older times, if you had prepaid sim, to recharge it you need to go to shop, pay him and then recharge your phone. Tell me how many of you still do it? Maybe someone only go and recharge like this. Because our behavior is changed by companies like Paytm and PhonePe by making online recharge possible. .
And this change Zerodha brought in stock broking industry. I know now you would be thinking that in starting I said Zerodha is not stock broking company then what is Zerodha? Well Zerodha is change maker in the Indian Economy. If Zerodha was not there many people would not be investing in stock market. This program will only help you in building startup but selected candidates will get opportunity for 10 lakhs funding. So yes if you have an idea and you want to build you startup with proper guidance then this program is for you. .