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”
In Depth 
