Zerodha founder and CEO Nithin Kamath has explained how the brokerage builds its leadership team. In a recent post on the microblogging site X (formerly Twitter), he said that the company largely promotes employees who have grown within the organisation rather than hiring senior executives from outside. “Almost everyone in leadership today has grown from within the organisation,” Kamath said in a post on X, adding that Zerodha has “rarely hired anyone from outside for leadership roles.”He said most members of the leadership team joined Zerodha early in their careers, and the company was often their first or second job. Kamath also noted that Zerodha does not have leaders with what he described as “pedigree education,” highlighting the company’s focus on internal growth and experience.
Zerodha’s internal approach to leadership
Kamath said the company’s leadership model is reflected in several employees’ career paths. He cited Shoaib as an example, saying he “started as a support agent, went on to head account opening, and eventually became our head of HR.” According to Kamath, this progression gives leaders a familiarity with Zerodha’s culture that can be difficult to replicate through external hiring.“Having leaders who come from within the organisation is valuable because they understand the culture instinctively,” he added. Kamath added that internally developed leaders already understand the company’s approach to decision-making and its priorities.“You don’t have to put in effort to explain how we think, what we value, or how we make decisions,” he said. He also linked the leadership team’s composition to how an organisation’s culture develops over time.“Ultimately, the people at the top end up shaping an organisation’s culture to a large degree,” he said. “So having people who have imbibed that culture for years makes running the business so much easier.”
Nithin Kamath questions India’s CSR spending requirement
Kamath’s comments on leadership came a day after he questioned India’s mandatory 2% corporate social responsibility (CSR) spending requirement and whether the framework is the most effective way to create social impact. At Zerodha, he said the company has allocated around 10% of its profits towards what it calls “investing for the future”, largely through Rainmatter.“The keyword for me is investing,” Kamath said.He argued that companies may not always have the “bandwidth or expertise” to identify projects that can create the greatest impact. He also questioned whether CSR spending can become concentrated in states where companies have larger operations, rather than reaching regions that may need more resources.Kamath further raised questions about how CSR outcomes are measured. “Planting X lakh trees makes for a great CSR target,” he said, but argued that the long-term survival of native trees is a more meaningful measure. Similarly, he said building a school is easy to quantify, while the more important question is whether children are actually learning.“When you tell businesses to spend X%, you run the risk of incentivising CSR spending to optimise for the wrong things,” he said.Kamath also pointed to what he called “anchoring”, arguing that the 2% requirement could become a target rather than a minimum.“When times are good, businesses hit 2%. When times are bad, spending naturally falls along with profits,” Kamath said.He said companies that might otherwise spend more could end up aligning their spending with the mandated figure. Kamath did not offer a definitive alternative, saying, “I don’t know what the right solution is,” he noted.He suggested one possibility could be increasing corporate tax from 25% to 27% and having the government allocate the additional revenue, while acknowledging that this would raise another question about whether the government would allocate the money more effectively.For Kamath, the broader issue is the impact created by CSR spending rather than the amount spent.“Maybe the real question shouldn’t be how much companies spend on CSR. It should be how much long-term impact the money creates,” he said.“Spending for the sake of spending and investing for the future are two very different things,” Kamath added.