The most interesting thing about Zerodha is that it made its disruption strategy a part of its own name.
Much like the story of Caesar burning his ships to cut off any path of retreat, Zerodha made a bold and irreversible commitment to its customers by embedding the word "zero" into its identity—a clear promise of no brokerage on equity investments.
They bound themselves to that promise with no way to turn back.
And they've never had to.
The story of India's second largest stockbroker and pioneering fintech company has been told and retold many times.
Everyone knows that it was founded in 2010 by brothers Nithin and Nikhil Kamath in Bangalore to make stock trading and investing more accessible, affordable, and transparent for retail investors in India.
Everyone knows how Zerodha chose the long, difficult path. The company was built without any venture capital and by relying entirely on its own resources. We've all heard the story about their legendary tech team—just over 30 engineers, most of whom aren't from elite institutions or well-known colleges.
And everyone knows that in the latest financial year, Zerodha had revenues of Rs 8,320 crore and a net profit of Rs 4,700 crore, representing a profit margin of over 56%.
Everyone knows the story, yet it's told over and over—because it still feels almost unbelievable that something like this could actually happen.
Even after 15 years, we're still getting used to Zerodha.
In any two-sided market dominated by incumbents charging commissions or a cut of each transaction, the proven way to break through is to enter with zero commission and a simple, flat fee. Meesho did it to Flipkart and Amazon. Rapido and Namma Yatri did it to Ola and Uber. A few companies are trying to take a similar approach with Swiggy and Zomato.
Zerodha did it before all of them. In an episode of First Principles, one of The Ken's podcasts, Nithin Kamath, Zerodha's co-founder and CEO, explained how the company exploded.
"In December 2015, we went to zero brokerage for equity investing, because until then, we were charging commissions. But we stopped charging in 2015, mainly because by then our ambitions had grown. We were like, we need to go attract the larger audience and not just the smaller active trading audience.
And with Kite [Zerodha's trading app], we were very confident that the larger investing audience would like our product as well. So we zero brokerage, and then Aadhaar happened, and account openings, which were physical account opening forms, became online, and then the business took off completely. So like I said, there has been a lot of 'right place, right time'."
Of course, timing and opportunities aligned for Zerodha, but they had also been there for a long time. Startups and VCs didn't really try to challenge them, largely because they underestimated how big and fast-growing the market actually was. It wasn't until around 2020 that people started to grasp just how powerful this market had become. That's when every fintech company started launching brokerage businesses, but by then, Zerodha was already deeply established and nearly impossible to dislodge.
Today, Zerodha has gone beyond just a brokerage platform. It launched its own mutual fund business, focusing on transparent, simple index funds. And Rainmatter, Zerodha's fintech incubator and investment arm, backs startups focused on financial and investment technology.
But all of that was before AI.
Even when you factor in the hype and optimism, AI feels like a natural fit for brokerage, especially trading. In theory, the use cases are clear—analyse vast amounts of historical data to inform investment decisions. The dataset would be focused but rich, and the possible actions are straightforward: buy, sell, or hold.
If any space seems especially ripe for disruption by AI, it's the brokerage world.
Several are trying. Nearly every fintech startup out there is claiming to use AI to do research, analysis, trading, portfolio management, or rebalancing. Some are going even further, and building AI agents that monitor the stock market to take trading decisions away from humans to machines.
And yet, as we've seen, AI still hasn't been deployed in stockbroking in the real world.
One of the reasons why AI startups find this much harder to do is because unlike writing an essay, big financial decisions require trust.
Zerodha knows this better than most. That's why the company is keen to see how talented students across India can develop new ways to challenge Zerodha—while also earning and maintaining the company's trust.
Teams shortlisted in The Ken's case-build competition who choose Zerodha as their company of choice will gain access to senior company leaders at every stage. They'll receive valuable insights, have their assumptions challenged, and be guided toward stronger strategies.
