Why Zerodha is a successful Startup in the Share Market: Zerodha Success Story
Zerodha is by far one of the most fascinating business case study in the Indian startup ecosystem.
In just 10 years, Zerodha went from 0 to 1 billion dollars in valuation. On one side, while tech companies are on a cash drain, they are encouraging a million dollar losses, Zerodha has been elegantly profitable with the profit of more than 400 crores.
And here’s why it is mind blowing...
All of this was done with zero funding and zero marketing. That means Zerodha went from 0 to 1 billion dollars in valuation with zero marketing and zero funding.
The question is, in this noising world, where companies are pouring millions of dollar just to survive in the market, how is it possible that Zerodha has achieved something so incredible with zero funding and zero marketing.
The answer to this question comes from one of the most legendary entrepreneurs in the Indian startup ecosystem who goes by the name Kunal Shah.
In 2016, Kunal Shah deliberated an ink talk where he proposed a very interesting theory which more or less explains the root cause of success of some of the biggest startup in the world.
How a Startup Become Successful?
According to Kunal Shah, "in this world there are terms of system which have a term of inefficiencies and hurdles which often prevent ordinary people like you and me from moving into a more efficient system but we human beings once we find an efficient system, we have this innate ability to move on from where we never ever come back."
As a result, if an entrepreneur is able to build up a startup in such a way that can fix these inefficiencies and is able to help ordinary people overcome the hurdles, he or she will be able to build the startup which bring about a revolution and their startup will be such a revolution that it will bring about irreversible fundamental change in behaviour of the consumers, and once this is done, that startup will gain three massive superpowers which will boost that startup to another level altogether.
These 3 superpowers are...
- High consumer tolerance
- Unique brand proposition which will result in the word of mouth
- It will cause irreversible shift
A very simple example is WhatsApp, if you see, all of us are using WhatsApp, but none of us are using WhatsApp because of an advertisement.
If you look at WhatsApp as a system, back then before WhatsApp, even to send the local text, we used to think twice because one message used to cost us 1 rupee, and even to make a normal call, we used to think twice because of loss of balance.
But when the WhatsApp arrived, WhatsApp took off all these hurdles, and today texting become completely effortless.
That’s the reason why you receive Good Morning text daily.
And if you look at calls, even making an international call does not look like a big deal today. And you can not even imagine going back to your texting days.
So if you see, there are three major superpowers that WhatsApp gained as a startup which boosted WhatsApp to another level altogether.
1. Unique brand proposition which resulted in word of mouth as an WhatsApp give you something that you have never seen before, as a result of which customers screening at each other to use WhatsApp. Because of which WhatsApp is able to go from 0 to 400 million uses in less than 5 years, and today WhatsApp have more than 2 billion users.
2. We cannot even imagine going back to our old texting days, as a result of which there is an irreversible change in our behavior.
We have developed very high tolerance towards WhatsApp where even if they make a big mistake; we are extremely tolerant towards it, and we will still keep using the service.
So this is how by fixing the inefficiencies of the texting system the founders of WhatsApp were able to claim their pot of gold, because of which they were able to create massive wealth; eventually sold WhatsApp for 19 billion dollars to Facebook.
And the founder of Zerodha, Nikhil Kamath, did exactly the same.
Why Zerodha is Good?
Before Zerodha, Nikhil Kamath observed that there were three major hurdles that troubling the existing investors and also preventing the common people of India from investing into the stocks market.
These 3 hurdles were...
1) Lack of knowledge and awareness: as we all know in India, we make more life decisions best on myths and emotions rather than knowledge and strategy.
2) Exorbitant brokerage fees: As the conventional brokerage forms for charging percentage commission, all the amount of investment that in investing was made which result into exorbitant brokerage fees
3) Complex Process: The entire process of investment was very TDS and very complex for common man to understand
And that is the reason why they came up with three unique solutions which turns Zerodha into a billion dollar company.
The first solution they came out with was to tackle the lack of knowledge and awareness as a result of which to educate Indian population, they came out with something called Zerodha Varsity, which is an extensive collection of stock market and financial lessons where anybody can go and understand how the market function eventually to gain enough knowledge to make a strategic investment and after learning from here, any newbies can make their confident investment, as a result of which Zerodha started commanding the loyalty of newbies.
The second solution they came out with was to discount the brokerage fees to such a large extent that it literally result it into revolution, like I said before, most forms charging a percentage commission, as an if you are making investment of few lakhs, you would have to paid tens of thousands of just brokerage and guess what Zerodha turn this into a super efficient and super affordable system. Where in, they charge 20 rupees or 0.03% which even is less for all intraday trades and guess what they charge 0 fees for all equity and direct mutual fund investments.
Third and most importantly, in all to resolve the TDS and complex process of investment they used the internet and came out with the beautiful website and a very simple user interface for your mobile application using which any common man can get familiar with the entire process of investment without any hassles and 100% transparency. Zerodha margin calculator is also very popular.
And if you are also a newbie in the world of investment, you can make your Zerodha account today and jump start your investment journey.
That is how, by fixing these three problems, the founders of Zerodha claim their pot of gold, as a result of which today Zerodha is a billion-dollar company with zero investment and marketing because the consumers were screening at each other to use Zerodha.
And today 4 million investors are making their investment using the platform of Zerodha.
Now the question is, what does an entrepreneur have to learn from this incredible case study?
We all need to understand that funding is the way to speed up your startup but not the only way to do so, if somebody reluctant to you pursue your idea because of your waiting for funding, I would highly recommend you to do some intra-fraction and to see how you can proceed without funding.
Last and most importantly, we all need to realize the fact that there are 100s if not thousands of pots of gold all around us in the form of inefficient system and each one of them offers ordinary people like you and me the opportunity to go of there and claim our pot of gold eventually to build a business empire out of it.
We hope you liked the case study of Zerodha and understood how a startup become successful.
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