Zerodha's next growth challenge: Why are Tier 2 and 3 investors swiping left on Zerodha? asks Nithin Kamath

Time of India

28-07-2025

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Zerodha's Nithin Kamath has never shied away from straight talk. This week, he laid out a rare self-assessment of his company's recent growth, or the lack of it, in public. In a detailed post on X (formerly Twitter), Kamath shared that while Zerodha continues to manage increasing volumes of investor wealth, the number of new accounts being opened on the platform has dropped.'Our AUM share is growing (people with more money trust us), but our demat share is shrinking (fewer new accounts),' Kamath wrote.He acknowledged that the decline is likely linked to younger investors and users from tier 2 and tier 3 cities choosing other platforms. 'The people with money are sticking with us, but many others aren't opening accounts with us. Most likely, the newer and younger, and people from tier 2 and 3 towns, are probably investing elsewhere,' he said.Zerodha has long positioned itself apart from the crowd. It does not run advertisements. It does not offer cashbacks or signup offers. That's not by accident. Kamath was clear: 'We won't advertise. We won't offer account-opening incentives.'The company has grown into one of the largest brokerages in India largely through word of mouth and content. But Kamath admitted that approach might not be enough anymore. Or at least, not in its current form.'So, how do you grow when you can't play the traditional acquisition game?' he asked. 'The obvious answer may be 'content,' and we have significantly improved on it, but it's hard to measure the impact.'Rather than offering a quick fix, Kamath used his post to start a conversation. He posed a direct question to founders and marketers: 'Can brands still rely on the same tactics and strategies that worked in the past, or do changing times demand new strategies?'He also asked, 'If you were in our shoes, what would you do?'That one post triggered a wave of responses, both critical and supportive.One user pointed out what they saw as a gap in Zerodha's outreach. 'I've not done massive research into this but most of your content with Zerodha and its initiatives that I see are English. They are premium. Maybe it's time to invest in creators/channels that people want to hear in their language.'Another raised a concern about discoverability: 'Advertising is awareness as well. If it's the newer/younger gen from tier 2/3 that's not coming to Z I think it's because their mindspace is already taken up by someone else. Maybe they don't even know you exist and why are you better?'A different voice praised the long-term approach: 'You've scaled without content (except Varsity) and still done well because you stayed true to your principles. I think continuous product improvement and the initiatives (maybe a bit more in Hindi also) can help. And it's okay to not have all the customers.'Some praised Kamath directly for his transparency. One comment read: 'Wow. This is the reason why a lot of people admire you. Sticking to the core values while managing the business is very tough in this competitive world.'Zerodha has always taken a different route. Unlike many of its rivals in the broking space, it has avoided burn-driven growth, stayed profitable, and invested early in financial education through platforms like Varsity.But the broking business is changing. Younger users today are less likely to follow traditional finance brands, and more likely to be swayed by influencers, regional creators, and aggressive digital outreach.Kamath's post suggests that he knows this shift is happening. The question now is whether sticking to Zerodha's core principles can carry it through the next wave of growth, or if the company will need to evolve its playbook while still keeping its identity intact.Either way, the conversation he started is one that many in India's startup and fintech circles are watching closely.