It becomes a ‘deep pocket game’ if companies sell exactly the same product, says Zerodha CEO

Kamath believes that cheap capital has wired everyone to think about business in terms of valuations rather than profitability.

He said, “I don't think investors today really look for profitability. I mean, they are looking at creating max valuations, because max valuations exiting through capital gains is really a very tax efficient way to be able to make money versus trying to take profits out, paying whatever, like, 2.5 times more taxes. So it probably also, this whole cheap capital has also wired everyone to think of business as valuations, and not in terms of business in terms of, like profitability.”

Kamath pointed out that many companies are finding it hard to generate revenue, and as a result, many people are struggling. Speaking about broking he said, “Even in broking, I somehow feel like we have kind of hit a plateau. Because the new user growth has dropped, existing users aren't really adding more as such. So I think the big challenge is that while India is a large country, we are still a poor country. And the real problem in this country is to get rich, inclusively, get a lot more Indians to a position where they can actually spend money online.”

Kamath believes that the ability to make money from the masses is key to success. He warned that "if funding winter doesn't end, many companies will merge with others."

He said, “India is really hard when it comes to the ability to be able to make money from the masses. The issue is that, if the winter doesn't end first, I think there'll be a lot of companies, which will pose to merge with others or forced to shut down.”

Kamath believes that businesses cannot build a successful enterprise quickly. It took Zerodha a 20-year journey to achieve all its success, and all of that success came after 15 years.