Zack Kanter is the founder and CEO of Stedi, an API-first healthcare clearinghouse. After bootstrapping a wildly profitable auto-parts business, he sold it to tackle "the most complicated problem" he'd ever encountered: business-to-business transaction exchange. He spent years building EDI infrastructure, threw away the entire codebase eight times, and found extraordinary traction in healthcare. Stedi recently raised a $70M Series B co-led by Stripe and Addition. In this conversation, Brett and Zack discuss why venture capital means "going pro," why execution is never actually a moat, and how "eating glass" became Stedi's competitive advantage.

In today’s episode, we discuss:

• How 16-year-old Zack turned $2,500 into a wholesale empire


• Why bootstrapping means being "constrained by capital" and how VC removes that ceiling


• Why Zack rebuilt their EDI product eight times before launch


• The snake swallowing a deer: what extreme product-market fit really looks like


• What software companies can learn from discount retail and Toyota


• Why Stedi’s new hires are told "everything’s your fault now"


• And much more

Where to find Zack:

• LinkedIn: https://www.linkedin.com/in/zkanter


• Twitter/X: https://x.com/zackkanter

Where to find Brett:

• LinkedIn: https://www.linkedin.com/in/brett-berson-9986094/


• Twitter/X: https://twitter.com/brettberson

Where to find First Round Capital:

• Website: https://firstround.com/


• First Round Review: https://review.firstround.com/


• Twitter/X: https://twitter.com/firstround


• YouTube: https://www.youtube.com/@FirstRoundCapital


• This podcast on all platforms: https://review.firstround.com/podcast

References:

• Aetna: https://www.aetna.com/


• Amazon: https://www.amazon.com/


• AWS: https://aws.amazon.com/


• Blue Cross Blue Shield: https://www.bcbs.com/


• Change Healthcare: https://www.changehealthcare.com/


• Cigna: https://www.cigna.com/


• Clay: https://www.clay.com/


• Costco: https://www.costco.com/


• Ford Motor Company: https://www.ford.com/


• GM: https://www.gm.com/


• HIPAA overview (HHS): https://www.hhs.gov/hipaa/index.html


• Jeff Bezos: https://x.com/JeffBezos


• Kanban / TPS (Toyota): https://global.toyota/en/company/vision-and-philosophy/production-system


• Microsoft Teams: https://www.microsoft.com/microsoft-teams


• NetSuite: https://www.netsuite.com/


• O’Reilly Auto Parts: https://www.oreillyauto.com/


• Peter Thiel: https://x.com/peterthiel


• Porter’s five forces: https://www.isc.hbs.edu/strategy/pages/the-five-forces.aspx


• "Reality has a surprising amount of detail": https://johnsalvatier.org/blog/2017/reality-has-a-surprising-amount-of-detail


• Slack: https://slack.com/


• Stedi: https://www.stedi.com/


• Summit Racing: https://www.summitracing.com/


• Target: https://www.target.com/


• Walmart: https://www.walmart.com/


• Zapier: https://zapier.com/

Timestamps:

(01:24 ) Zack’s first business

(08:54 ) Why the first customer is tricky

(10:12 ) The downside of bootstrapping

(11:42 ) Why venture capital is like “going pro”

(14:20 ) The confusion between ownership vs. control

(16:08 ) Building a company you don’t want to leave

(20:46 ) Do things better than other people

(24:49 ) Stedi’s early years

(31:43 ) Physical vs. digital product-market fit

(34:41 ) How Stedi scaled decision-making

(40:08 ) Stedi’s journey to product-market fit

(45:22 ) Finding founder-approach fit

(50:42 ) “All software is a cascade of miracles”

(52:52 ) The surprising lessons from discount retail

(57:50 ) How the Toyota production system influences software

(1:01:31 ) What it means to be a high-agency person

(1:03:09 ) The core trait Zack looks for when hiring

(1:02:57 ) Maintaining conviction in unconventional practice

(1:14:19 ) When should you start to hire managers?

(1:17:42 ) “Reality has a surprising amount of detail”