{"id":329738,"date":"2022-08-16T20:01:20","date_gmt":"2022-08-16T14:31:20","guid":{"rendered":"https:\/\/zerodha.com\/z-connect\/?p=329738"},"modified":"2024-02-02T13:42:05","modified_gmt":"2024-02-02T08:12:05","slug":"12-years-of-zerodha","status":"publish","type":"post","link":"https:\/\/zerodha.com\/z-connect\/general\/12-years-of-zerodha","title":{"rendered":"12 years of Zerodha"},"content":{"rendered":"

Hindi:\u00a0\u0907\u0938 \u092a\u094b\u0938\u094d\u091f \u0915\u094b \u0939\u093f\u0902\u0926\u0940 \u092e\u0947\u0902 \u092a\u095d\u0928\u0947 \u0915\u0947 \u0932\u093f\u090f \u092f\u0939\u093e\u0901 \u0915\u094d\u0932\u093f\u0915 \u0915\u0930\u0947\u0902\u0964<\/a>
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\nHappy Independence Day,<\/span><\/p>\n

We just turned 12 years old on August 15th. Thanks to your support and the market action, we have grown spectacularly over the last two years, from twenty lakh customers to over one crore customers without ever spending on marketing or advertising. Not spending on user acquisition is probably why Zerodha is a resilient and sustainable business. Thank you once again.\u00a0<\/span><\/p>\n

I want to use this opportunity to answer some common queries and concerns. I will also update you on the developments in terms of our products and services.\u00a0<\/span><\/p>\n

Broking industry update<\/h2>\n

While the last two years have been phenomenal, we are seeing a plateau in trading activity and a 40% drop in new user addition since the market topped earlier this year. This isn\u2019t just with the Indian broking industry, but globally. We are unlikely to have the same activity as last year, unless we maybe hit all-time highs and are in another bull market.\u00a0<\/span><\/p>\n

The regulatory reforms in the industry are now at full throttle. While almost all of the changes are for the good of the industry and participants in the long run, they can disrupt brokerage businesses in the short term. Not just changes affecting revenue models, but drastic operational changes. Inability to quickly adapt to regulatory changes is probably the biggest risk for the brokerage industry, apart from the risk of markets going lower. As Zerodha, we are confident of our position to handle such regulatory changes.<\/span><\/p>\n

Having interacted with brokerage firms from across the globe, I do not doubt that our capital markets, thanks to SEBI, are by far the best regulated and the safest for retail investors in terms of intermediary risk.\u00a0<\/span><\/p>\n

Account safety<\/h2>\n

Since we don\u2019t charge any brokerage for equity delivery trades, usually, the question I get asked is if the business is profitable and sustainable. This is an important question to ask when dealing with any platform that you trust with your savings and investments.\u00a0<\/span><\/p>\n

When we started in 2010, we first started building the business for very active traders who pay us Rs 20 per executed order. Only in 2015 did we reduce our equity delivery charges to Rs 0 to attract investors. Today, we have not only the largest group of active retail investors in India, but also active traders. Traders who pay fees and, in turn, help keep investments for free. While many of our newer competitors started with free investments, they have now started charging for it. We intend to keep it free unless regulatory changes reduce the active trading activity.\u00a0<\/span><\/p>\n

We have been extremely frugal in how we operate. This, combined with not spending on marketing and advertising, has meant that we are now amongst the most profitable new-age businesses in India. We have over thirteen years of runway. That is, we have sufficient capital to continue running our business for 13 years, even if our revenue went to zero. Our networth as a percentage of total customer funds is now more than 25%, which must be amongst the highest globally. We have been a zero-debt business from the start. Everyone on our team also hold significant stock options and is invested in the business doing well, which can only happen if you as a customer are happy with us.\u00a0<\/span><\/p>\n

The new SEBI regulations have also significantly reduced the risk in the ecosystem, from capping all leverages to ensuring the broker has more skin in the game as the business grows. Some of these regulations are also why I think our markets were less volatile, and the stock prices fell lesser than the larger developed markets between March and June this year, the first time I have seen such behaviour.\u00a0<\/span><\/p>\n

There has been some noise about the account compromises at Zerodha. I want to reiterate what I recently <\/span>shared on social media<\/span><\/a>.\u00a0<\/span><\/p>\n