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”

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