• Wealthier investors stay loyal despite a drop in new demat accounts.
• Zerodha avoids ads and incentives, focusing instead on content-led growth.
• Nithin Kamath sparks a debate, asking founders how to scale without traditional marketing.

Zerodha CEO Nithin Kamath ignited a firestorm of debate on fintech expansion techniques after posting that although the firm's market share of new demat accounts is dropping, its Assets Under Management (AUM) are still increasing due to a loyal, wealthier clientele.

"Our AUM share is expanding (richer people trust us), but our demat share is reducing (less new accounts)," Kamath posted on X (formerly Twitter).

He admitted that new, younger investors specifically those in Tier 2 and Tier 3 cities are opting for competitors' platforms, with marketing elsewhere likely to be a driving factor.

Also Read- Zerodha Founders Address Regulatory Hurdles in Broking Industry

Kamath highligted that Zerodha's not dependent on conventional methods such as advertising or incentives for opening an account, which leaves the company at a disadvantage when trying to gain first-time users.

"The issue is that once individuals select a platform, they are hardly likely to switch," he said, prefacing that the broking business itself is cyclical by nature.

Zerodha has been pursuing content-led growth, but Kamath conceded that quantifying the actual influence of content is still challenging.

"So, how do you grow when you can't play the old-school acquisition game? The easy answer might be 'content,' and we've gotten much better at it, but it's difficult to quantify the effect."

He ended his post with a query to the ecosystem:

"If you were in our shoes, what would you do?"

Netizens Opine

The post elicited a deluge of comments from marketers, founders, and fintech observers. One commenter questioned the anti-advertising argument:

" some view ads as somehow 'gaming the system' because it's 'inorganic' and likely you do too? Is that the reason not to stick with classic models? Awareness matters perhaps the younger crowd doesn't even know why you're superior."

Another underlined remaining faithful to the essence:

You've grown without content (apart from Varsity) and performed well because you've remained faithful to your values. Perhaps some more Hindi content, product refinement, and yes it's alright not to have all the customers.