The Exchanges

Q Toast Capital. How does that come about? You guys sit in the room and you're like, We should do loans. Let's do loans. How does that come to be?

A This was, uh, I remember our CFO at the time, um, had, uh, um, done some research on fintech more broadly and all the things we could do. So we're not, we weren't just talking about loans. We were talked about, you know, embedded finance and banking and payments. And the, and the, and the, and this thesis was once you're the payments provider, right? That's such an anchor product in terms of you've got all this data about the sales and about the success of the restaurant. And so, what else could you do? And we'd seen some other examples where, um, lending was, um, a product that, you know, others had built. And for us, like, one of the challenges was, often when we go sell these restaurants, they, um, they wanted, um, you know, they had an existing loan, or they wanted to finance their hardware. And so, we had all these partners, and we said, well, what if we could do this on our own? And what we realized was, because we're the payments partner, We could do a better job of assessing risk. We could make the process of getting the loan out, you know, really simple. You could log into Toast so you could see you had a loan available to you based upon the health of your restaurant. The payment back was really simple because it was just built into the payments flow. And so that's really what the beginnings was for, for Capital. And also we realized that it was, it was, it was a good …

AI assessment note: “our CFO at the time, um, had, uh, um, done some research on fintech”

Q Did you have that vision for the product suite from day one, or does it come over time?

A It came over time. Initially it was, how do you solve the needs of the restaurant through the point of sale better? Because that's where we started. You can only do so much to begin with anyways. And what happened was as we got going within the first 10 customers, they're like, well, you know, Um, and you can imagine, when we started, you know, we were going after these slightly bigger restaurants because there were other providers that offered something very simple if you had two employees, and so for us, we had to, we realized, like, our niche had to be restaurants, even if they were S&B restaurants, these more complex operations that had more in revenue, more employees, more scale, more complexity, and so you'd go into the restaurants, and, you know, we talked about pitching point of sale, and we got a few customers that way, but then I remember we had this meeting with this guy, Chris Kane, in Finale, and it was like, I've got point of sale, I've got payments, I've got a loan, I've got online ordering, I've got scheduling, I've got inventory, I've got gift cards, loyalty, a website, and all this stuff has to integrate in some way to the point of sale, because that's the central nervous system of the restaurant. And so our choice is like, we can either partner or build. And sometimes people didn't want to partner because we're these tiny companies. We're like, we have to bui…

AI assessment note: “It came over time. Initially it was, how do you solve the needs”

Q Now, I always want to go back to a little bit of the childhood, actually. I was shaped by, actually, my mother getting MS. It was a very hard moment in my childhood. When you think back to the most shaping moments of your upbringing, what are one or two that really stand out?

A I had a great upbringing. I had, uh, these very committed parents, especially my mom, who Really live for me and my brother, and even today, like I show up, you know, and my parents live next door to me, and they're like, what can we make for you right now? So I've been, I was very fortunate to have been brought up in this household with lots of family and extended family that just cared deeply and made you feel so special. Um, and then in ninth grade, right, I went to boarding school because we were living in Nepal. So I was born in India and moved to Nepal when I was seven. And, uh, my parents felt like we needed to go, my dad felt like I needed to go to this boarding school because, uh, the school was too easy that I was at. I think that's what he told me. You know, I showed up. I probably didn't help myself because I was a confident kid, and, um, they put me in my place, and that was really, really tough because, you know, I was bullied, and it was, uh, I only, I only lasted a year, actually, at the school. So that was, you know, a shaping experience for me. It taught me a lot about grit. It taught me a lot about You know, working through challenges, working through, um, you know, a tough situation where you had folks that, um, um, you know, um, wanted to make your life difficult. Like I think they had put a target on my back at one point. So that experience, I think I look…

AI assessment note: “So that was, you know, a shaping experience for me. It taught me a lot”

Q Toast Capital. How does that come about? You guys sit in the room and you're like, We should do loans. Let's do loans. How does that come to be?

A This was, uh, I remember our CFO at the time, um, had, uh, um, done some research on fintech more broadly and all the things we could do. So we're not, we weren't just talking about loans. We were talked about, you know, embedded finance and banking and payments. And the, and the, and the, and this thesis was once you're the payments provider, right? That's such an anchor product in terms of you've got all this data about the sales and about the success of the restaurant. And so, what else could you do? And we'd seen some other examples where, um, lending was, um, a product that, you know, others had built. And for us, like, one of the challenges was, often when we go sell these restaurants, they, um, they wanted, um, you know, they had an existing loan, or they wanted to finance their hardware. And so, we had all these partners, and we said, well, what if we could do this on our own? And what we realized was, because we're the payments partner, We could do a better job of assessing risk. We could make the process of getting the loan out, you know, really simple. You could log into Toast so you could see you had a loan available to you based upon the health of your restaurant. The payment back was really simple because it was just built into the payments flow. And so that's really what the beginnings was for, for Capital. And also we realized that it was, it was, it was a good …

AI assessment note: “I remember our CFO at the time, um, had, uh, um, done some research”

Q How does that change the future of restaurants?

A I think the biggest thing that we're gonna see is there's, um, helping restaurants leverage data, A, to be smarter. Like, you think of restaurants today. Most restaurants do not have any data or perspective on how to do some very basic things, like, how do you price a menu? What do you put on a menu? What's inflation doing, right? Uh, how am I doing relative to my competitors? And so one of the, one of the most fundamental things that AI can do is helping the average restaurateur be smarter about some very basic things in their business. You know, most restaurants don't optimize yield. They don't know, like, how do you maximize the right guests in the tables? Like, you know, you think an airline or you think a hotel, they're optimizing yield all the time. Restaurants don't have no ability to do that. So I think that's, that's one opportunity. I think the other opportunity is in voice. Um, you know, imagine like, you know, in a drive-through, or you, you know, you go order at the table, imagine the advice, and we're not there yet, is listening to what's going on, and like, just knows what to do.

AI assessment note: “one of the most fundamental things that AI can do is helping the average restaurateur”

Q a bank account, I think, which is like incredibly sticky, but people don't switch much. And when you look at your numbers today, I think it's like 70% of, 75% of new locations are, like, go to toast, and like 25% is actually, like, switches, so to speak. Did you worry about that? And how did you think about, actually, that core challenge of just the challenge of the switch?

A Yeah, we did. We did. I mean, we, we, um, it's, it's funny how these ideas get incrementally bigger over time. You know, initially the thinking was, will we move all this technology to the cloud? You know, when someone's opening a new restaurant, maybe that'll be enough to get those restaurants on a toast. And then we realized, like, wait a minute, like, this is dramatically better than what's out there. Despite our challenges, we got that signal from customers. And like, you know, then we realized, wait a minute, like, these point of cell systems at the end of their computers, they don't, after four years, they kind of slow down. So that's a cycle right there of how often people need to actually go visit this decision. And then we also realized that we could bundle more into a single solution. And obviously the cloud makes this easier. We could also offer a great value and a price. In fact, early on, people didn't understand. They're like, why do people buy toast? And I was like, well, it's just cheaper. And like, that's not a good reason to invest in a VC fundable startup. And I was like, no, it can be a good reason.

AI assessment note: “Yeah, we did. We did. I mean, we, we, um, it's, it's funny”

Q Do you actually have that separated in the org, like tinkering teams and scaling teams?

A We have both. So we have all of our teams are, you know, trying to innovate, and so there are certain teams within each lines of business. We've got teams focused on scaling our products. You can imagine, you know, the fintech business, for example, we've processed like a hundred sixty billion in volume every year, and so that's about scale and making sure that it works all the time. But then there are teams within the fintech LOB that are thinking about what are the next adjacencies where we can create value. So that's within the LOBs, but then we also have a new ventures program where we, um, and we're actually going to graduate to the next program now where we, we bring in folks that, you know, would otherwise want to maybe go start companies and go raise capital for VCs and want to come work at Toast and, um, and want to go build something. And we try to make them As, um, you know, separate from the core business as we can. And so one of the things that we always talk about is the benefits of being part of toast have to outweigh some of the challenges, right? In terms of, um, you know, the, the overhead of being part of a larger organization. And so we do both in terms of both models.

AI assessment note: “We have both. So we have all of our teams are, you know, trying to innovate”

Q If you think back to a pivotal yes or no, what is one from each that really shaped your journey?

A The first job is TOS is the second job really I've ever had. And the first job was this company called Ndeca. Ndeca was, um, in Cambridge and Kendall Square, and they sold e-commerce software. And so I was there for six or seven years. Uh, that's where I met my co-founder, Steve and John. And, um, that's also met Steve Papa, who was the founder of Indeca. And, um, after Indeca was bought by Oracle, um, Steve and John, Steve and I really had talked about how we wanted to build a business together at some point. And so I always joke around that, um, you know, initially we were ashamed into building a startup because we had talked for so many years to everybody about how one day we're going to start a business. And so when Oracle bought Indeca, they're like, You're leaving, right? Because you've talked about building a business forever. And, uh, and so now it was like, became real, because, you know, um, we had to go figure out fundraising, and figure out what we wanted to build, and unlike, like, 2008, um, when we were initially, Steve and I had really gotten going, when the iPhone came out, it wasn't as obvious what we were gonna work on, and, and so in, uh, 2012 and 20 13, you know, we were raised, we were trying to raise some early capital, and we were confident because we felt like, you know, we'd come out of this company in Decker that was successful, bought by Oracle, and, …

AI assessment note: “one of the big yeses was the founder of Ndeca, right, who wrote the whole check”

Q How does that change the future of restaurants?

A I think the biggest thing that we're gonna see is there's, um, helping restaurants leverage data, A, to be smarter. Like, you think of restaurants today. Most restaurants do not have any data or perspective on how to do some very basic things, like, how do you price a menu? What do you put on a menu? What's inflation doing, right? Uh, how am I doing relative to my competitors? And so one of the, one of the most fundamental things that AI can do is helping the average restaurateur be smarter about some very basic things in their business. You know, most restaurants don't optimize yield. They don't know, like, how do you maximize the right guests in the tables? Like, you know, you think an airline or you think a hotel, they're optimizing yield all the time. Restaurants don't have no ability to do that. So I think that's, that's one opportunity. I think the other opportunity is in voice. Um, you know, imagine like, you know, in a drive-through, or you, you know, you go order at the table, imagine the advice, and we're not there yet, is listening to what's going on, and like, just knows what to do.

AI assessment note: “the biggest thing that we're gonna see is there's, um, helping restaurants leverage data”

Q a bank account, I think, which is like incredibly sticky, but people don't switch much. And when you look at your numbers today, I think it's like 70% of, 75% of new locations are, like, go to toast, and like 25% is actually, like, switches, so to speak. Did you worry about that? And how did you think about, actually, that core challenge of just the challenge of the switch?

A Yeah, we did. We did. I mean, we, we, um, it's, it's funny how these ideas get incrementally bigger over time. You know, initially the thinking was, will we move all this technology to the cloud? You know, when someone's opening a new restaurant, maybe that'll be enough to get those restaurants on a toast. And then we realized, like, wait a minute, like, this is dramatically better than what's out there. Despite our challenges, we got that signal from customers. And like, you know, then we realized, wait a minute, like, these point of cell systems at the end of their computers, they don't, after four years, they kind of slow down. So that's a cycle right there of how often people need to actually go visit this decision. And then we also realized that we could bundle more into a single solution. And obviously the cloud makes this easier. We could also offer a great value and a price. In fact, early on, people didn't understand. They're like, why do people buy toast? And I was like, well, it's just cheaper. And like, that's not a good reason to invest in a VC fundable startup. And I was like, no, it can be a good reason.

AI assessment note: “Yeah, we did. We did.”

Q Did you have that vision for the product suite from day one, or does it come over time?

A It came over time. Initially it was, how do you solve the needs of the restaurant through the point of sale better? Because that's where we started. You can only do so much to begin with anyways. And what happened was as we got going within the first 10 customers, they're like, well, you know, Um, and you can imagine, when we started, you know, we were going after these slightly bigger restaurants because there were other providers that offered something very simple if you had two employees, and so for us, we had to, we realized, like, our niche had to be restaurants, even if they were S&B restaurants, these more complex operations that had more in revenue, more employees, more scale, more complexity, and so you'd go into the restaurants, and, you know, we talked about pitching point of sale, and we got a few customers that way, but then I remember we had this meeting with this guy, Chris Kane, in Finale, and it was like, I've got point of sale, I've got payments, I've got a loan, I've got online ordering, I've got scheduling, I've got inventory, I've got gift cards, loyalty, a website, and all this stuff has to integrate in some way to the point of sale, because that's the central nervous system of the restaurant. And so our choice is like, we can either partner or build. And sometimes people didn't want to partner because we're these tiny companies. We're like, we have to bui…

AI assessment note: “It came over time. Initially it was”

Q Is speed the single most important thing when you're moving from zero to one?

A I think in general speed matters a lot in business. A lot. I think speed really does matter. I think a lot of times people underestimate, they think that it's about getting it exactly right, or I think in product management, one of the things I find is there's so much work that happens to describe all of the permutations of the problem when you realize, like, 80% of those are not relevant, or at least not relevant now. And so one of the most important things you can do Is try to get something out because you learn so much from your end user that is way more important than anything you can come up with where, you know, you're coming up with, you're doing work to analyze the problem ahead of time and doing user requirements research, and again, nothing against user requirements research, but I actually think personally, like, there's so much value in just getting stuff out, iterating, learning, and recognizing that When you move fast, you can also pivot fast if something doesn't work. I mean, when we started Toast, I remember the first six months, like, Nicole and Heather and Amy were like, what are you guys doing on your couch all day? We're like, I haven't done anything, right? There's all these ideas that have just, like, gone nowhere. And, um, but because we were moving fast, we could iterate, and we had time, right? If we, if we had taken two years to get the first thing, yo…

AI assessment note: “one of the most important things you can do Is try to get something out”

Q What decision did you not move fast enough on that, with the benefit of hindsight, you'd wish you'd move faster?

A Now we were really naive. The truth is, you know, I think to some extent when you, you know, we were first time founders, right? And, you know, we were in our late twenties, we probably thought no end of ourselves. And so, and one of the things that was like this Achilles heel for me was I always leaned into like leaning into scarcity and doing more with less. And so I had in my head that like, you know, I'm going to outwork everybody. And so I'm going to make sure that, that The time and energy that I spend leading and managing means that I need, we need to hire people to actually do stuff, right? So I had zero value for management early on. I just wanted to hire people that could sell, that could code, that could, and that's it. And I was like, I'll do all the management. Steve will do all the management. We don't need any other managers. We didn't know how to manage anyone, by the way. And, and so we, we got into this business, and like, one of the biggest, like, mistakes was just not recognizing that you don't just get leverage from Hiring salespeople or engineers, you actually get a ton of leverage from just hiring people to help you. If we, if there's one thing to do over, it's very much recognizing that once you see signal that you've got product, you've got to move fast, right? Because other people see the signal too often. And building out a team around us, um, I think…

AI assessment note: “building out a team around us, um, I think would have been, would have just helped us move faster.”

Q Does it get easier with time, Aman? Does like management get easier? Does running toast get easier?

A Yes, for sure. I mean, I think, There's always new challenges, but it does, I think, fundamentally, you know, get easier. Like, there is something you realize where, like, early on in the company, it's all about this entrepreneur mindset about doing more with less. You have a lot of generalists. You're trying to figure out how everyone's in everyone's business, trying to make it work, and the good thing is you have a lot of empathy because you're small, you're like us against the world, and you're, you, you have a lot of context in what's going on everywhere, right, just because you're small, and at some point, you're like, okay, we've got to start to build up and scale, And one of the mistakes most founders make is, and I remade this mistake, uh, was, was you don't want to give up any control because you're like, well, I need to know what the heck's going on everywhere because otherwise we're going to F it up. And the reality is you can benefit from people that are domain experts and specialists in specific areas, but you also don't want to lose, like, you know, your entrepreneurial spirit. This is why all these massive companies are like, we want to be more entrepreneurial. We want to go back to, you know, innovation. And so there's this balance, I always say, like, you want to have a company that's got a balance of, like, specialists and entrepreneurs, and so one of the thin…

AI assessment note: “Yes, for sure. I mean, I think, There's always new challenges, but it does”

Q I'm so sorry. What does it mean you didn't have the leadership? Because you were there as, as founders. You'd built out a founder-led sales playbook, and you then transitioned to a sales-led playbook. What does it mean to not have the leadership? I'm just trying to

A I'll give an example. We were, we were, um, you know, signing up customers, and at one point, you know, and I think we were maybe over indexed on revenue and scale, and because, you know, this is, that's one of the metrics that a lot of people care about, and you get all these customers signed up, and then they would, um, either not go live, because we didn't have the onboarding set up in a way that was scalable, and we're trying to brute force it, or We had customers that felt like we were abandoning, abandoning, abandoning them after they went live because we didn't have any support infrastructure, and, um, the products themselves were in some case not fully baked, and so I think we, we, a lot of these functions were not, um, I mean, this was early and they were small, were not set up to scale, and so it was affecting customer sentiment. I remember, like, when Chris joined us, Chris was our CEO that Was with us for, I think, really the early days. That's actually one of the tough moments in the company because Steve and I were having a lot of, um, you know, um, issues around how fast to move, because the reality is you've got to scale, right? You've got capital. You've got to deploy the capital. You've got to scale. On the other hand, you've got to do it well enough where things don't just all break.

AI assessment note: “a lot of these functions were not... set up to scale”

Q like, yep, I've heard that before. Um, if I had it, literally, I would have a billion dollars if I got a dollar for every time I heard that. So we have product expansion, we have segment expansion, then we have geo expansion. You're making a much more concerted effort in terms of international expansion, it would seem. Um, how do you think about build versus buy on international expansion?

A You know, one of the decisions we made was this point of sale platform is like the central nervous system of the restaurant, and there's a lot to it. There's a lot of surface area to our product. When we think about, like, M&A and where it's worked is often products that are great products with great founders earlier, where they can plug it into our go-to-market engine, and we drive better sales efficiency for them. Like, that's where we've seen success, and so when we think about expansion to segments or You know, geos or, or, or products. It's been often about like, that's the one rule that we've kind of stuck to, which is the central nervous system has to be toast.

AI assessment note: “that's the one rule that we've kind of stuck to, which is”

Q Does it get easier with time, Aman? Does like management get easier? Does running toast get easier?

A Yes, for sure. I mean, I think, There's always new challenges, but it does, I think, fundamentally, you know, get easier. Like, there is something you realize where, like, early on in the company, it's all about this entrepreneur mindset about doing more with less. You have a lot of generalists. You're trying to figure out how everyone's in everyone's business, trying to make it work, and the good thing is you have a lot of empathy because you're small, you're like us against the world, and you're, you, you have a lot of context in what's going on everywhere, right, just because you're small, and at some point, you're like, okay, we've got to start to build up and scale, And one of the mistakes most founders make is, and I remade this mistake, uh, was, was you don't want to give up any control because you're like, well, I need to know what the heck's going on everywhere because otherwise we're going to F it up. And the reality is you can benefit from people that are domain experts and specialists in specific areas, but you also don't want to lose, like, you know, your entrepreneurial spirit. This is why all these massive companies are like, we want to be more entrepreneurial. We want to go back to, you know, innovation. And so there's this balance, I always say, like, you want to have a company that's got a balance of, like, specialists and entrepreneurs, and so one of the thin…

AI assessment note: “Yes, for sure. I mean, I think, There's always new challenges, but it does”

Q Is speed the single most important thing when you're moving from zero to one?

A I think in general speed matters a lot in business. A lot. I think speed really does matter. I think a lot of times people underestimate, they think that it's about getting it exactly right, or I think in product management, one of the things I find is there's so much work that happens to describe all of the permutations of the problem when you realize, like, 80% of those are not relevant, or at least not relevant now. And so one of the most important things you can do Is try to get something out because you learn so much from your end user that is way more important than anything you can come up with where, you know, you're coming up with, you're doing work to analyze the problem ahead of time and doing user requirements research, and again, nothing against user requirements research, but I actually think personally, like, there's so much value in just getting stuff out, iterating, learning, and recognizing that When you move fast, you can also pivot fast if something doesn't work. I mean, when we started Toast, I remember the first six months, like, Nicole and Heather and Amy were like, what are you guys doing on your couch all day? We're like, I haven't done anything, right? There's all these ideas that have just, like, gone nowhere. And, um, but because we were moving fast, we could iterate, and we had time, right? If we, if we had taken two years to get the first thing, yo…

AI assessment note: “I think in general speed matters a lot in business. A lot.”

Q What decision did you not move fast enough on that, with the benefit of hindsight, you'd wish you'd move faster?

A Now we were really naive. The truth is, you know, I think to some extent when you, you know, we were first time founders, right? And, you know, we were in our late twenties, we probably thought no end of ourselves. And so, and one of the things that was like this Achilles heel for me was I always leaned into like leaning into scarcity and doing more with less. And so I had in my head that like, you know, I'm going to outwork everybody. And so I'm going to make sure that, that The time and energy that I spend leading and managing means that I need, we need to hire people to actually do stuff, right? So I had zero value for management early on. I just wanted to hire people that could sell, that could code, that could, and that's it. And I was like, I'll do all the management. Steve will do all the management. We don't need any other managers. We didn't know how to manage anyone, by the way. And, and so we, we got into this business, and like, one of the biggest, like, mistakes was just not recognizing that you don't just get leverage from Hiring salespeople or engineers, you actually get a ton of leverage from just hiring people to help you. If we, if there's one thing to do over, it's very much recognizing that once you see signal that you've got product, you've got to move fast, right? Because other people see the signal too often. And building out a team around us, um, I think…

AI assessment note: “building out a team around us, I think would have been, would have just helped us move faster”

Q What did you do when you have return cycles where it feels like so much is coming back so quickly? What is the What, what is the management decision on that?

A One of the things that was a crucial decision that we made was we built this platform on Android versus iOS, and it was not, in hindsight, it's like, feels like a strategic decision, but in reality, it was simply because we thought Android was an easier platform to build on, right? And, um, but what happened was Android had this proliferation of hardware. I think one of the complexities was the hardware that we got didn't have the right configurations. To support, like, card readers and all the componentry that you need in a restaurant. And, um, as soon as we were getting the hardware back, we were, we were looking desperately to go find a device that would actually work in the restaurant-grade environment, and so we just, I remember we'd have these conversations and say, we just need to find enough time, make it through, like, the next quarter before we got, like, this device we had found with a partner in China, Elo, that, that, uh, we could, we had more confidence in scaling.

AI assessment note: “we were looking desperately to go find a device that would actually work”

Q How do you think about that for the startup?

A I think you can, you can get a lot out of grit. I really do. I mean, when we went in and we launched, I can share a couple of stories, but We had, you know, I remember sitting down with restaurateurs and 80% of the features these, these platforms offered actually didn't really matter. And what actually mattered was the world was moving to digital and moving to phones, right? Like I always tell people Toast wouldn't exist without Android and cloud and, you know, and embedded payments. Like those were the three trends that really drove the beginnings of Toast. And so what people cared about was, hey, people are ordering online. Can you make that easier with my kitchen versus getting a fax and a fax machine? That's what we were getting at. You know, people were doing at the time, and so a lot of what, what people were asking for actually wasn't done very well, and again, back to the TenX engineers, like one of the things that we could do, even if we had a lot, you know, wasn't, you know, high, was, had sometimes buggy, we could build a lot of software very quickly, so it was in our sweet spot to go build for what customers needed, and then, you know, I think on the, some of the support and the experience, I think I remember, you know, the first, like, big restaurant we got, it was like this restaurant, they also had nightclubs, And this guy's name was Billy. I still remember we go…

AI assessment note: “I think you can, you can get a lot out of grit. I really do.”

Q When did you see the flywheel kick in on sales efficiency specifically?

A I mean, look, we, we, so we got going early on. We were, you know, getting feet on the ground, getting these partnerships. We were smart. Actually, we were lucky that we found some of these key partners to get us going. And then we started to do some performance marketing. We, you know, built, you know, inbound marketing, and all those things started to help us. And then we saw this effect. Actually, this was Jonathan Vassler, Head of Revenue, who's, who, who noticed this, which is, as you get density, and it's kind of obvious, I guess, in hindsight, but as you get density, because restaurants has unique business where every street corner, you got like five of them, right? And so we were starting to see this pattern where, like, you go sell one restaurant, um, You know, on the street and you get all of them, but there's so many that it's like, there's like micro flywheels that you see. Like in Cambridge, Massachusetts, you'd think toast is maybe the only point of sale. I'm exaggerating, but, and so that's, the pattern was actually at a very micro level and a local level, and so we started to look at this data to say, what are we seeing in terms of these different markets? And we saw this pattern that as you get more restaurants, Uh, you get better word of mouth, and you get more referrals, and you get more top of funnel, you convert better, you grow faster.

AI assessment note: “we were starting to see this pattern where, like, you go sell one restaurant”

Q Four. Okay. What's not worked that you've really learned from?

A One of the things that we, back to the thesis on the M&A has been, you take great products with great entrepreneurs, and you plug it into our go-to-market engine, and they can scale faster back to like, you know, one of the benefits we've got is we've got this on-the-ground sales model in these markets, restaurants like to buy from people in person, and we've got enough ARPU that you can actually scale it that way. And, uh, and so if there are point solutions or products where you're trying to sell, let's say through e-com or through, you know, inside, those don't scale as quickly. And that's worked quite well. The, the, the challenge that I think you have to be careful about is to say, let's say there's a product that's having a lot of success in a segment of the market. Like, let's say you have a product that's having a lot of success either down market or with larger groups. And you say, well, you can just bring a down market into the smaller restaurants and plug it into a go-to-market and that's going to work. And what you don't realize is like, well, those restauranteurs don't have the people. Right. To do all these specialized things that may help them, because you can imagine a restaurateur is just trying to make sure you get through the day. Often they're like, one of the expressions that I like is like restaurateurs are like in the here and now they're dealing with rig…

AI assessment note: “one of the learnings has been... you got to think through like, can the buyer actually absorb it”

Q I'm so sorry. What does it mean you didn't have the leadership? Because you were there as, as founders. You'd built out a founder-led sales playbook, and you then transitioned to a sales-led playbook. What does it mean to not have the leadership? I'm just trying to

A I'll give an example. We were, we were, um, you know, signing up customers, and at one point, you know, and I think we were maybe over indexed on revenue and scale, and because, you know, this is, that's one of the metrics that a lot of people care about, and you get all these customers signed up, and then they would, um, either not go live, because we didn't have the onboarding set up in a way that was scalable, and we're trying to brute force it, or We had customers that felt like we were abandoning, abandoning, abandoning them after they went live because we didn't have any support infrastructure, and, um, the products themselves were in some case not fully baked, and so I think we, we, a lot of these functions were not, um, I mean, this was early and they were small, were not set up to scale, and so it was affecting customer sentiment. I remember, like, when Chris joined us, Chris was our CEO that Was with us for, I think, really the early days. That's actually one of the tough moments in the company because Steve and I were having a lot of, um, you know, um, issues around how fast to move, because the reality is you've got to scale, right? You've got capital. You've got to deploy the capital. You've got to scale. On the other hand, you've got to do it well enough where things don't just all break.

AI assessment note: “a lot of these functions were not... set up to scale”

Q Four. Okay. What's not worked that you've really learned from?

A One of the things that we, back to the thesis on the M&A has been, you take great products with great entrepreneurs, and you plug it into our go-to-market engine, and they can scale faster back to like, you know, one of the benefits we've got is we've got this on-the-ground sales model in these markets, restaurants like to buy from people in person, and we've got enough ARPU that you can actually scale it that way. And, uh, and so if there are point solutions or products where you're trying to sell, let's say through e-com or through, you know, inside, those don't scale as quickly. And that's worked quite well. The, the, the challenge that I think you have to be careful about is to say, let's say there's a product that's having a lot of success in a segment of the market. Like, let's say you have a product that's having a lot of success either down market or with larger groups. And you say, well, you can just bring a down market into the smaller restaurants and plug it into a go-to-market and that's going to work. And what you don't realize is like, well, those restauranteurs don't have the people. Right. To do all these specialized things that may help them, because you can imagine a restaurateur is just trying to make sure you get through the day. Often they're like, one of the expressions that I like is like restaurateurs are like in the here and now they're dealing with rig…

AI assessment note: “one of the learnings has been, as you add more of the product portfolio”

Q When do you bring in the specialist? Because we always hear that you need the generalist from zero to one. When's that right time to bring in the specialist?

A I think as, and again, there's no black or white answer, but as soon as one of the expressions I've heard that I like is, you know, you've got to have clarity on when you can put the paddle down. Okay. And what that really means is like, you, you, you're working on trying to find, like, do you have everything lined up to actually just go right. And, and so that could be performance marketing. It could be sales. It could be, but really start to scale and put, right. And, And, ah, for toast, we made a bunch of starts and stops there. In fact, there were these times where I remember, and you can imagine, right, you're like trying to raise capital and grow, and, and having a meeting, we're like, well, we need to stop selling. It's like, what are we talking about? Stop selling. Because we had, and we, we fought through it, but we had issues. I remember one, one discussion I had was restaurant owners, like, it's great that you've got the Tesla, but it's, it's not helpful when it's always in the shop, right? And the point they were trying to make was, um, the, the, the product did not work well enough. And so we have to slow down and stop many times. And so, um, like recognizing when you can put the pedal down is really important in companies. And so when you start to put the pedal down back to your question, that's when you, I think you can really benefit from the specialist because …

AI assessment note: “when you start to put the pedal down back to your question, that's when”

Q When did you see the flywheel kick in on sales efficiency specifically?

A I mean, look, we, we, so we got going early on. We were, you know, getting feet on the ground, getting these partnerships. We were smart. Actually, we were lucky that we found some of these key partners to get us going. And then we started to do some performance marketing. We, you know, built, you know, inbound marketing, and all those things started to help us. And then we saw this effect. Actually, this was Jonathan Vassler, Head of Revenue, who's, who, who noticed this, which is, as you get density, and it's kind of obvious, I guess, in hindsight, but as you get density, because restaurants has unique business where every street corner, you got like five of them, right? And so we were starting to see this pattern where, like, you go sell one restaurant, um, You know, on the street and you get all of them, but there's so many that it's like, there's like micro flywheels that you see. Like in Cambridge, Massachusetts, you'd think toast is maybe the only point of sale. I'm exaggerating, but, and so that's, the pattern was actually at a very micro level and a local level, and so we started to look at this data to say, what are we seeing in terms of these different markets? And we saw this pattern that as you get more restaurants, Uh, you get better word of mouth, and you get more referrals, and you get more top of funnel, you convert better, you grow faster.

AI assessment note: “we saw this pattern that as you get more restaurants, Uh, you get better word of mouth”

Q If you think back to a pivotal yes or no, what is one from each that really shaped your journey?

A The first job is TOS is the second job really I've ever had. And the first job was this company called Ndeca. Ndeca was, um, in Cambridge and Kendall Square, and they sold e-commerce software. And so I was there for six or seven years. Uh, that's where I met my co-founder, Steve and John. And, um, that's also met Steve Papa, who was the founder of Indeca. And, um, after Indeca was bought by Oracle, um, Steve and John, Steve and I really had talked about how we wanted to build a business together at some point. And so I always joke around that, um, you know, initially we were ashamed into building a startup because we had talked for so many years to everybody about how one day we're going to start a business. And so when Oracle bought Indeca, they're like, You're leaving, right? Because you've talked about building a business forever. And, uh, and so now it was like, became real, because, you know, um, we had to go figure out fundraising, and figure out what we wanted to build, and unlike, like, 2008, um, when we were initially, Steve and I had really gotten going, when the iPhone came out, it wasn't as obvious what we were gonna work on, and, and so in, uh, 2012 and 20 13, you know, we were raised, we were trying to raise some early capital, and we were confident because we felt like, you know, we'd come out of this company in Decker that was successful, bought by Oracle, and, …

AI assessment note: “everybody said no, and so one of the big yeses was the founder of Ndeca”

Q When do you bring in the specialist? Because we always hear that you need the generalist from zero to one. When's that right time to bring in the specialist?

A I think as, and again, there's no black or white answer, but as soon as one of the expressions I've heard that I like is, you know, you've got to have clarity on when you can put the paddle down. Okay. And what that really means is like, you, you, you're working on trying to find, like, do you have everything lined up to actually just go right. And, and so that could be performance marketing. It could be sales. It could be, but really start to scale and put, right. And, And, ah, for toast, we made a bunch of starts and stops there. In fact, there were these times where I remember, and you can imagine, right, you're like trying to raise capital and grow, and, and having a meeting, we're like, well, we need to stop selling. It's like, what are we talking about? Stop selling. Because we had, and we, we fought through it, but we had issues. I remember one, one discussion I had was restaurant owners, like, it's great that you've got the Tesla, but it's, it's not helpful when it's always in the shop, right? And the point they were trying to make was, um, the, the, the product did not work well enough. And so we have to slow down and stop many times. And so, um, like recognizing when you can put the pedal down is really important in companies. And so when you start to put the pedal down back to your question, that's when you, I think you can really benefit from the specialist because …

AI assessment note: “when you start to put the pedal down... that's when you... benefit from the specialist”

Q like, yep, I've heard that before. Um, if I had it, literally, I would have a billion dollars if I got a dollar for every time I heard that. So we have product expansion, we have segment expansion, then we have geo expansion. You're making a much more concerted effort in terms of international expansion, it would seem. Um, how do you think about build versus buy on international expansion?

A You know, one of the decisions we made was this point of sale platform is like the central nervous system of the restaurant, and there's a lot to it. There's a lot of surface area to our product. When we think about, like, M&A and where it's worked is often products that are great products with great founders earlier, where they can plug it into our go-to-market engine, and we drive better sales efficiency for them. Like, that's where we've seen success, and so when we think about expansion to segments or You know, geos or, or, or products. It's been often about like, that's the one rule that we've kind of stuck to, which is the central nervous system has to be toast.

AI assessment note: “when we think about expansion to segments or You know, geos... central nervous system has to be toast”