Podcast Summary: How I Invest with David Weisburd Episode E163: How Thiel Fellows Build Billion-Dollar Startups with Zaid Rahman Release Date: May 13, 2025
Host: David Weisburd
Guest: Zaid Rahman, Founder and CEO of Flex, Thiel Fellow
1. Introduction to Zaid Rahman and the Thiel Fellowship
David Weisburd welcomes Zaid Rahman, a serial entrepreneur and Thiel Fellow, who is the founder and CEO of Flex—a fintech super app aimed at transforming financial management for small businesses. Zaid shares insights about the prestigious Thiel Fellowship, highlighting its exclusivity and impact on fostering billion-dollar startups.
Notable Quote:
Zaid Rahman [00:00]: "Something like 10% of Thiel Fellows have started billion-dollar plus companies. A third of them have started companies valued at over 100 million."
2. The Thiel Fellowship Experience and Its Benefits
Zaid delves into his experience with the Thiel Fellowship, describing it as an elite program that brings together highly ambitious and driven individuals. He emphasizes the value of surrounding himself with top-tier peers who are committed to innovation and excellence.
Notable Quote:
Zaid Rahman [00:56]: "The Fellowship just comes in with this amazingly elite group of people that are very driven to be extremely ambitious and really change the way things are done."
3. Leveraging the Fellowship for Flex’s Growth
Zaid explains how he utilizes the Thiel Fellowship community to scale Flex. By creating a group chat for fellows, he fosters a collaborative environment where members can share challenges and seek advice, thereby creating a dynamic support network.
Notable Quote:
Zaid Rahman [02:25]: "If you go on the group chat, I can see people talking about all sorts of problems they're running across. It’s been really awesome to see this elite group of founders facing problems together and learning from each other."
4. Implementing AI in Flex’s Credit Underwriting
A significant portion of the conversation focuses on how Flex employs Large Language Models (LLMs) to streamline and enhance their credit underwriting process. Zaid describes the transformation from a 25-day underwriting period to just 48 hours, thanks to AI-driven data normalization and analysis.
Notable Quote:
Zaid Rahman [04:54]: "We started implementing LLMs for the specific problem of normalizing unstructured data in the SMB space. This has allowed us to take underwriting from 25 days down to 48 hours on average."
5. Enhancing AI Accuracy and Future Improvements
Zaid discusses the evolution of their AI's accuracy, noting significant improvements over two years. He shares plans to further reduce underwriting time by integrating AI into the gatekeeping functions, potentially bringing it down to 20 minutes.
Notable Quote:
Zaid Rahman [09:08]: "As of Q1, the AI is like 90% of the way there. It's showing significant improvements in time and effort."
6. Differentiating Flex from Competitors like Brex and Ramp
Zaid articulates how Flex distinguishes itself in a competitive fintech landscape dominated by heavily VC-funded companies like Brex and Ramp. Flex targets the middle market—“jumbo shrimps”—which comprises profitable, owner-operated businesses that fall between micro-businesses and large enterprises.
Notable Quote:
Zaid Rahman [09:46]: "There’s a very large middle market, right? These are small but kind of large businesses who are profitable and spend a lot of money. This is the client base that Flex targets."
7. Building a High-Performing Team in a Competitive Market
Zaid shares his approach to recruiting top talent in the hyper-competitive startup ecosystem. Emphasizing the importance of hiring “10x” performers across all roles, he describes a rigorous selection process that involves multiple interviews and strict standards to ensure only the best candidates join Flex.
Notable Quote:
Zaid Rahman [11:49]: "We have to be extremely selective. Typically, the last interview is me, and I try to say no to two or three people to up the bar for who we hire."
8. Cultivating a ‘Delta 4’ Customer Experience
Central to Flex’s culture is the pursuit of “Delta 4” experiences—significant improvements that make their services irreplaceable, highly shareable, and resilient to minor flaws. This philosophy drives the team to innovate continuously and focus on exceptional customer experiences.
Notable Quote:
Zaid Rahman [14:12]: "Our definition of a great teammate is how much they care about creating these Delta 4 experiences for our customers."
9. Assessing Cultural Fit and Performance
Zaid emphasizes hiring for cultural fit and high performance over merely filling positions with experienced individuals. He advocates for first-principles thinking and genuine passion, ensuring that every team member contributes meaningfully to Flex’s mission.
Notable Quote:
Zaid Rahman [31:14]: "If they are the right cultural fit, they will naturally learn what they need to solve our problems, even if they aren’t experts initially."
10. Addressing Burnout and Work Culture
The discussion touches on the sustainability of intense work hours and the risk of burnout. Zaid believes that passion for the work and a positive, high-alignment culture mitigate burnout, allowing dedicated individuals to maintain high performance over the long term.
Notable Quote:
Zaid Rahman [38:44]: "People who work very hard for extended periods do so because they love what they do, not because they have work-life balance."
11. The Current Fintech Landscape and Flex’s Position
Zaid asserts that fintech is still in its early stages, with less than 3% of global banking assets managed by fintech solutions. He highlights the vast opportunities for innovation and growth, positioning Flex to capture significant market share by offering superior user experiences and comprehensive financial solutions.
Notable Quote:
Zaid Rahman [40:54]: "Fintech still represents less than 3% of banking assets globally, which means we are very much day one in this industry."
12. Future Roadmap and AI Advancements
Looking ahead, Zaid discusses Flex’s plans to leverage AI for deeper financial insights and personalized advice. Inspired by a large audit firm's success with AI, Flex aims to revolutionize areas like accounting and financial management by integrating proprietary AI solutions that understand and optimize individual business owners' financial activities.
Notable Quote:
Zaid Rahman [44:19]: "Our strategy is well-positioned to capture advancements in AI, providing a full-stack solution that offers deep, proprietary understanding of our customers."
13. Conclusion and How to Connect
David Weisburd wraps up the episode by encouraging listeners to follow Zaid on social media and sign up for Flex via their website. Zaid expresses his gratitude and reiterates Flex’s commitment to supporting ambitious business owners.
Notable Quote:
Zaid Rahman [46:36]: "Go to www.flex.1 and we would love to support ambitious business owners."
Key Takeaways:
- Elite Networks: Leveraging the Thiel Fellowship provides invaluable connections and support for scaling innovative startups.
- AI Integration: Implementing AI, particularly LLMs, can drastically improve operational efficiencies, such as reducing credit underwriting time from days to hours.
- Market Focus: Targeting the middle market—profitable, owner-operated businesses—fills a significant gap between micro-businesses and large enterprises, differentiating Flex from competitors.
- High Standards in Hiring: Prioritizing cultural fit and high performance ensures a motivated, high-impact team that drives the company’s success.
- Customer-Centric Innovation: Emphasizing “Delta 4” experiences fosters products that are indispensable, highly recommended, and resilient to minor issues.
- Future Growth: Continuous advancements in AI present opportunities for Flex to deepen its financial solutions and expand its market presence.
This episode provides a comprehensive look into how Zaid Rahman harnesses elite networks, sophisticated AI technologies, and a stringent hiring philosophy to build and scale Flex as a leading fintech solution for small businesses.