Living without barriers

“People gamble with a lot of things — their career, their education, their relationships. If you gamble in the markets, at least you don’t have to wait for years to know you made a mistake. You know at the end of the same day,” says Nithin Kamath to a roomful of professional stock traders in Chennai. The 33-year old founder of India’s hottest new online trading platform — Zerodha — is quite a risk-taker himself.

Introduced to stock trading by a Marwari friend, Nithin plunged headlong into the high-adrenaline world of futures trading in his late teens. Managing money for NRIs and being a sub-broker with Reliance Money convinced him that there was a great business idea lurking in stock broking — a flat brokerage structure for active traders. He promptly quit his job, turned entrepreneur and set up Zerodha (the word means ‘without barriers’), an online platform for professional traders.

The career choice was unusual. “I come from a typical middle-class background where going to IIT/IIM and then landing a job with a multinational, counts as a serious career,” he says grinning. The choice of business was brave too. In August 2010, when Zerodha flagged off, markets were listless, trading activity was negligible and some of the biggest names in stock broking were struggling to turn a profit.

But Zerodha’s online-only model, tech-based trading tools and flat brokerage (₹20 for any trade) proved popular with investors and the firm managed to add clients at a furious pace. Today, Zerodha is among the larger brokers on the NSE, routing ₹4,000-4,500 crore of daily turnover; it has 45,000 clients on its roster. With the firm turning in a ₹13.5 crore profit last year and looking to double that this year, Zerodha has added a few zeros to the Kamaths’ net worth. So, how has Nithin spent and invested his newfound wealth?

A lightweight Felt bike and an 1,800 cc Suzuki Intruder were among his first purchases. Gadgets don’t excite him much, but Nithin’s eyes light up when I ask him about cars. He drives an Audi A6 and would love a Porsche. Though having test-driven it several times, he hasn’t bought one yet.

“Given the condition of Bangalore roads I haven’t had the heart to buy it. The only reason I bought the Audi was that you could adjust the suspension system to suit road conditions.”

He’s always had a thing for cars, buying his first one at age 18 in 2000, a Tata Sierra. Though he wasn’t quite wealthy then, his trading profits earned him ‘40 grand a week’, ‘big money for a student in those days’. When he went bust in 2001, he had to sell the car.

Nithin’s other passion, apart from Zerodha, is to keep fighting fit. He, with a friend, runs the Fitness Fight Club in Bangalore where expats and investment bankers sign up to spar with a kick-boxer flown in from Bangkok, a Krav Maga specialist from Brazil and fighters from New Zealand. Keeping fit enough to ‘play basketball with 20-year olds’ Nithin thinks, gives him an edge in business. “I can go for three days without sleep and do business on Sundays; the other guy can’t,” he says, in all seriousness.

Not really into art or wine, Nithin prefers to invest in whisky. “I love whisky. I have a really good collection of single malts. I didn’t buy them as an investment. I own about 420 bottles and love to just look at the unopened ones. ”

Investment or not, he’s made good returns on his collection. “If you put a value to it, I reckon it’s up 200-300 per cent over the last five to six years. The rupee’s depreciated from 45 to 62 over this period. And the cool thing about alcohol is that the government always hikes the duty on it by 10 per cent or so every year. That’s assured appreciation for you!”

So, how does he acquire them? Through a broker? “No, I mostly pick them up when I travel. I’m not one of those people who spend a million or so on a bottle. I keep to ₹50,000-₹1 lakh range. There’s also a good secondary market if you want to sell them; plenty of liquidity,” he quips, lapsing into market-speak.

He prefers whisky over wine because it is low-maintenance. “They don’t lose value because you stored them wrong.”

What about his long-term investments? Being in the equity business, the money is mostly parked in stocks. But his trading portfolio is quite distinct from his ‘investing’ one. “I keep all my long-term stocks in an offline broking account. If I bring them online, I’ll not be able to resist the temptation to do short-term trades on them. Now, if I want to buy or sell the shares, I have to drive all the way to my broker’s office, 12 km away. Good sense often prevails during the drive,” he laughs.

So, between futures trading, fighting and guzzling whisky, is there anything at all that the young entrepreneur finds too risky? “Investing in property,” is his prompt reply. “Real estate is an industry where you can easily get taken for a ride. You need to know exactly what you are buying. I lost a lot of money doing it before and won’t do it again.”

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