Zack Kanter – All Things Business

**Patrick O'Shaughnessy** (0:04)
Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_1** (0:24)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (0:49)
This week's guest is Zack Kanter, the founder and CEO of Stedi.
Zack and I decided not to talk much about his business on this podcast and opted instead to explore business more generally. So a bit of an introduction to what they do may be helpful here for some extra context. Stedi is a platform for exchanging and automating 300 types of business to business transactions, things like purchase orders and invoices. It's a modern take on an archaic protocol called EDI, Electronic Data Interchange, something I'd never even heard of until a few months ago. Learning about EDI is a bit like finding out about the matrix. Every physical object you come across, from the food you ate for breakfast to the clothes you're wearing and the electronics you use, basically anything with a barcode on it was likely touched by EDI, often dozens of times before making it into your hands. Stedi is the first update to this messaging layer in decades.
Our conversation in this podcast is about business in general, starting with Zack's fascination with Walmart and Amazon. I should also note that my family is a recent investor in Stedi, and I'm thankful to have learned a great deal from Zack over the last few months. Please enjoy our conversation.

**Patrick O'Shaughnessy** (1:52)
I want to dive into two businesses that you've already mentioned because of how extensively you've explored them, and because they'll be great excuses to dive into 10 or 15 interesting bite-sized topics that some of which we've explored before together, some of which we have not. Those two businesses are Walmart and Amazon. I'm curious why you wrote this, and I know it was even longer than what you published. You sent me some of the stuff that got clipped left on the cutting room floor, which was even deeper into this topic.
Why are those two businesses so fascinating to you?
Maybe draw a little picture of the differences and similarities between them.

**Zack Kanter** (2:26)
Walmart and Amazon, I think a lot of people appreciate Amazon on one or two dimensions.
That's usually maybe you do business with Amazon, or you use something like Amazon Web Services or maybe you're just a consumer, and you think that the idea of Amazon Prime bringing a package to your house in one hour is the greatest thing in the world. What I've had the fortune to see being a vendor to Amazon, so I've sold with Auto Parts Business, I sold to Amazon both on the vendor platform, which is where they're the seller of record, and on the marketplace where Amazon is the seller of record, obviously as a customer in many different ways. And then also as a business customer in the sense of using Amazon Web Services, which heavily relies on Amazon Web Services for our infrastructure.
And so you just see that the surface area of this business is astonishing. And it's not only the surface area, it's the speed or what I would say the tempo, which we can come back to some of the differences on that later. But the idea that Amazon seems to be picking up velocity over time is what makes it the most interesting business. It's the only business that I can think of that as it's gotten bigger, it's gotten faster. Faster not just in one dimension, but faster across a broad range of dimensions that are certainly astonishing to watch. But you can't appreciate Amazon without appreciating Walmart because Amazon really took Walmart's playbook and then they brought it onto the internet. And I think a lot of the things that Amazon has done really well in the ways that Amazon has differentiated itself from Walmart and built what I believe is a really truly first in kind, first in class sort of business are things that were required to do business at internet scale. So I'm obsessed with the founding of Walmart, Sam Walton's book, Made in America is just fantastic, hidden beneath this veneer of folksiness is this unbelievable story where he just sort of makes it seem like, hey, I woke up out of bed for 40 years and accidentally Walmart is the biggest company on earth.