Zerodha co-founder Nithin Kamath has revealed that long before building one of India's largest stockbroking platforms, he spent nearly two years associated with what eventually turned out to be a pyramid scheme. According to his latest LinkedIn post, Kamath said watching the web series Pyramid Scheme on Prime Video 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. The experience, he said, shaped his views on investing and reinforced a lesson that continues to guide him today: there are no shortcuts to creating wealth. "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," Kamath acknowledged, emphasizing that the deception wasn't necessarily perpetrated by the individual who recruited him but by the company's structure itself. He noted that "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."
What surprised Kamath even more was discovering that pyramid schemes remain widespread despite greater financial awareness and increased market participation. As reported by LiveMint, citing industry estimates, he said around two new pyramid schemes are launched every day in India. More than 5.5 crore Indians had reportedly lost their savings to over 5,300 such schemes, with estimated losses of ₹10 lakh crore as of 2015—a figure he believes is likely much higher today. "I thought this was something that only happened in the early 2000s. I didn't realise that even today, 2 new pyramid schemes launch every day in India," Kamath noted, highlighting how the schemes continue to operate despite public awareness campaigns. He said he had assumed such scams were largely a thing of the past, only to discover that "even today, two new pyramid schemes launch every day in India."
The Zerodha co-founder said his personal experience taught him that extraordinary promises of wealth should always be viewed with caution, whether they involve investing, trading or business opportunities. According to LiveMint, Kamath warned that the promise of easy profits has lured many first-time investors, stating that losses in equities rarely arrive dramatically but instead accumulate quietly, one investor at a time. He cautioned that the reckoning tends to come quietly, one account at a time, making it easy for people to underestimate the risks involved. "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," Kamath emphasized, distilling his core principle that investments promising substantially higher returns than standard bank fixed deposits inherently carry elevated risk. He cautioned against products or opportunities promising unusually high returns, stating "Anything promising returns higher than a bank FD comes with risk. The higher the claim, the greater the risk."
Kamath drew parallels between pyramid schemes and the growing perception that making money in the stock market is easy. As reported by LiveMint, he said social media and word-of-mouth have encouraged many first-time investors to believe that quick profits are the norm, even though markets often punish unrealistic expectations. He observed that the narrative of easy money in stocks has been widely disseminated, potentially leading many new investors to underestimate the complexities and risks involved. He noted that "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 ended his post with a blunt warning, urging people to avoid any opportunity that rewards recruitment over genuine value creation, asserting that "if someone tells you that you can make easy money just by introducing others, run. Almost every single one of those is a fraud."
