Zerodha co-founder Nithin Kamath has opened up about one of the biggest financial mistakes of his early career, revealing that he spent nearly two years involved in a multi-level marketing company that eventually turned out to be a pyramid scheme.
In a post on X after watching the documentary series Pyramid Scheme on Prime Video, Kamath said the show brought back vivid memories of the moment the fraudulent business collapsed.
"When I started my career at around 18, I was trying to find ways to fund my trading account. For about two years, I got drawn into a multilevel marketing company that turned out to be a pyramid scheme," Kamath wrote.
He said he did not believe the person who introduced him had intentionally deceived him, but rather that they had both been misled by the company.
"I don't think I was deceived by the person who introduced me, but by the company itself. Partly because I ended up introducing a lot of people to it too," he said.
Kamath said the series accurately captured the desperation that followed when the scheme unravelled.
"The scene in the series showing the moment the fraud unravelled was surreal to watch. The director has captured the desperation of that moment remarkably well," he wrote.
The Zerodha founder said he had assumed such scams were largely a thing of the past, only to discover that pyramid schemes continue to proliferate across India.
"I thought this was something that only happened in the early 2000s. I didn't realise that even today, two new pyramid schemes launch every day in India," he said.
Citing estimates, Kamath said more than 5.5 crore Indians have lost their savings to over 5,300 such schemes, with losses estimated at around Rs 10 lakh crore as of 2015, a figure he said is likely much higher today.
Reflecting on the lessons from his experience, Kamath said there is no shortcut to creating wealth, whether through investing, trading or entrepreneurship.
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"One truth my experience has taught me: there is no quick way to make a lot of money, be it trading or any other business," he wrote.
He cautioned investors against products or opportunities promising unusually high returns.
"Anything promising returns higher than a bank FD comes with risk. The higher the claim, the greater the risk," he said.
Kamath also linked the lesson to the recent surge in retail participation in Indian stock markets, warning against the perception that investing in equities is an easy way to make money.
"This dynamic has also played a big part in the recent growth of retail markets, people spreading the word that it's easy to make money in stocks. It isn't, and the reckoning tends to come quietly, one account at a time," he wrote.
Ending his post with a blunt warning, Kamath advised people to stay away from businesses that reward recruitment over genuine value creation.
"And if someone tells you that you can make easy money just by introducing others, run. Almost every single one of those is a fraud," he said.
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