The CEO Who Warns His Own Customers: Candour as a Business Strategy

Profits Alongside Plain Warnings: The Zerodha Phenomenon

In August 2026, Zerodha's founder and CEO, Nithin Kamath, marked 16 years of the company with a blog post that YourStory summarised. The numbers were strong: profit of Rs 4,283 crore for the year to 31 March 2026, up about 1.2% from Rs 4,231 crore, with fewer than 100 people on the team. What stood out more was what he chose to emphasise: the risks.

He said that futures and options are unprofitable for 99% of retail traders and that regulation is tightening. On the margin trading facility, where clients borrow to trade, he said: "Leverage gives you a boost when things are good. But when things go bad, they can get bad really, really quickly." The facility has grown to about Rs 9,000 crore of lending, with clients borrowing Rs 6,000 crore, equal to 25% of Zerodha's net worth, and it contributes about 10% of revenue.

The Strategic Logic of Radical Transparency

The easy reading is that it is good public relations. A better reading is that it is business logic. A broker whose clients are solvent and invested for years earns more over time than one whose clients are wiped out in a bad quarter.

Candour about risk protects the customer base, the company's reputation and, in a regulated industry, its relationship with regulators.

“Leverage gives you a boost when things are good. But when things go bad, they can get bad really, really quickly.”

Lean Operational Architecture: Under 100 People

The same report records another choice: a team of fewer than 100 people running what YourStory describes as India's largest retail broker by assets, with a model that has not relied on outside venture funding. A small team forces clear thinking.

Decisions are made close to the product, and there are fewer layers to defend. It also means that a failure in a key system can affect a very large number of customers at once, a point Kamath made in the same post.

Proactive Diversification Before Market Peaks Wane

Kamath also said trading activity had cooled since the market peak of September 2024, and that Zerodha is expanding into Zerodha Capital, Zerodha AMC and the Rainmatter Foundation to reduce its dependence on one line of business. Planned launches include US investing and integrated mutual fund transactions on its Kite platform.

Five Principles of Candour for Business Leaders

1. Name the risk in your own product. If customers will be harmed by misuse, say so before a regulator or a journalist does. 2. Measure what you earn from risky behaviour. Zerodha knows the share of revenue from margin trading (about 10%). Know yours. 3. Keep your own balance sheet strong. A capital requirement that is a barrier to smaller competitors is also a cushion for you. 4. Keep the team small enough to hold a conversation. Complexity increases when headcount grows faster than clarity. 5. Diversify before you have to. Kamath is building new lines while profits are high.

A word for MSMEs: A small contract manufacturer can apply the same logic to customer concentration. If one buyer accounts for most of your sales, tell your bank and your board, and work on a second customer now. Our Expansion guide for MSMEs covers diversification.

Writing Risk Disclosures Customers Actually Read

A warning buried in terms and conditions protects the company, not the customer. A useful one is short, specific and placed where the decision happens. Say what can go wrong in one sentence ("a fall of this size may force a sale of your holdings"). Give one number, such as the share of customers who lose money, if it can be sourced. Tell the customer what to do next. And check, with a sample of real users, whether they understood it. If they did not, rewrite it.

Caveat: Candour is not a guarantee against problems. Revenue was flat in FY26, and trading volumes can fall further. The point here is the habit of speaking plainly, not a prediction of results. This article is not investment advice.

A habit worth copying: Once a quarter, ask your team a simple question: what is the product or practice in our company that we would be uncomfortable explaining to a customer's family? The answers are usually the places where a plain warning, or a change in design, is overdue.

Analysis built from public reports. We have not interviewed Mr Kamath.