# Five Lessons Scaling Toast to $14BN Market Cap

The Biggest Mistakes Founders Make in Fundraising, Hiring and Selling with Aman Narang, CEO @ Toast

20VC · Aug 21, 2024 · 64 min · 14,648 words
Speakers: Aman Narang, Harry Stebbings
Source: https://www.996.fm/episodes/20vc--ep-e02ec79f/

## Cold open

**Aman Narang** [0:00]:

There's one thing to do over, it's very much recognizing that once you see signal that you've got product market fit, gotta move fast. Speed matters a lot in business. A lot. I actually think, personally, 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 always tell people Toast wouldn't exist without Android and cloud and embedded payments. Like, those are the three trends that really drove the beginnings of Toast. One of the mistakes most founders make is you don't wanna give up any control because you're like, well, I need to know what the heck's going on. The reality is you can benefit from people that are domain experts and specialists in specific areas, but you also don't wanna lose your entrepreneurial spirit.

## Intro

**Unknown** [0:39]:

So I am one of the biggest vertical SaaS nerds. And with that being the case, Toast is one of the best in class vertical SaaS companies of our time. Today with a market cap of $13,500,000,000. I'm so excited to sit down with Aman Narang, CEO and cofounder of Toast today. And five astonishing facts, they have 1,200,000,000 in ARR. Toast Capital Capital has reached a billion in annualized loans. They have 875 restaurants in The US. 75% of locations are coming from inbound channels. And finally, and this is incredible, the first investor in the company invested 500 k at a 3,000,000 price. Is that the best ever angel investment?

## Sponsor read

**Unknown** [1:21]:

But before we dive in today, all of you listening use tons of software every day. Sometimes it fills us with rage. You can't figure something out. The chatbot in the bottom right is useless. You keep getting bombarded with these useless pop ups. And for those of you who build products, no one wants their product to feel like this. Thankfully, a company exists to help users without annoying them. Command bar. It does a couple of very helpful things. First, it's a chatbot that uses AI to give users extremely personalized responses and deflect tickets. But it can be beyond just text. It can also co browse with the user and show them how to do things inside the UI. Magic. But it can also detect when users would benefit from a proactive nudge, like a helpful hint or an invitation to start a free trial. Command bar is already used by world class companies like Gusto, Hashicorp, Yotpo, and Angelist. If you're a product CX or marketing leader, check them out at commandbar.com/harry. And talking about incredible companies with Command Bar, I want to talk to you about a new venture fund making waves by taking a very different approach. It's a public venture fund anyone can invest in, not just institutions and accredited investors. The Fundrise Innovation Fund is democratizing venture capital, which could have big consequences for the industry. The fund is already off to a good start with $100,000,000 into some of the largest, most in demand AI and data infrastructure companies. Companies like OpenAI, Anthropic, and Databricks. Check out the innovation fund's impressive list of investments for yourself by visiting fundrise.com/20vc. Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the innovation fund's prospectus at fundrise.com/innovation. This is a paid sponsorship. And finally, let's talk about Squarespace. Squarespace is the all in one website platform for entrepreneurs to stand out and succeed online. Whether you're just starting out or managing a growing brand, Squarespace makes it easy to create a beautiful web site, engage with your audience, and sell anything from products to content all in one place, all on your terms. What's blown me away is the SquareSpace Blueprint AI and SEO tools. It's like crafting your site with a guided system, ensuring it not only reflects your unique style, but also ranks well on search engines. Plus, their flexible payment options cater to every customer's needs, making transactions smooth and hassle free. And the Squarespace AI? It's a content wizard helping you whip up text that truly resonates with your brand voice. So if you're ready to get started, head to squarespace.com for a free trial. And when you're ready to launch, go to squarespace.com/20vc and use the code 20 v c to save 10% off your first purchase of a website or domain.

**Harry Stebbings** [4:05]:

You have now arrived at your destination.

## Conversation

**Harry Stebbings** [4:08]:

Aman, listen. I have heard so many great things from so much of your cap table. So thank you so much for joining me today, my friend. I'm excited to be here, Harry. Now I always wanna 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?

**Aman Narang** [4:30]:

I had a great upbringing. I had these very committed parents, especially my mom, who really lived for me and my brother. And even today, like, show up, you know, and my parents live next door to me. 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. And then in ninth grade, I went to boarding school because we were living in Nepal. I was born in India and moved to Nepal when I was seven. My dad felt like I needed to go to this boarding school because the school was too easy that I was at. I think that's what he told me. Know, I showed up. I probably didn't help myself because I was a confident kid. They put me in my place and that was really really tough. And I was bullied and it was 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 you know, working through challenges, working through a tough situation where folks that 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 back to. But I I'm I'm grateful for it because I I really do think it made me stronger.

**Harry Stebbings** [5:35]:

I totally get that. I think in today's day and age, that's called a sell side analyst. That's what those people turn out to be in life. But I I do have to ask you. I think life is also made by pivotal yeses and noes. Yeah. If you think back to a pivotal yes or no, what is one from each that really shaped your journey?

**Aman Narang** [5:54]:

So the first job is Toast is the second job really I've ever had. The first job was this company called Endeca, and they sold ecommerce software. That's where I met my cofounder, Steve and John. That's also met Steve Papa who was the founder of Endeca. After Endeca was bought by Oracle, Steve and I actually have talked about how we wanted to build a business together at some point. I always joke around that initially we were shamed into building a startup because we had talked for so many years to everybody about how one day we're gonna start a business. So when Oracle bought Endeca, they're like, you're leaving. Right? Because you've talked about building a business forever. And so now it was like, became real because we had to go figure out fundraising and figure out what we wanted to build. And unlike 2008, when we initially, Steve and I had really gotten going when the iPhone came out, it wasn't as obvious what we're gonna work on. And so in 2012 and 2013, we were trying to raise some early capital. And we were confident because we felt like, you know, we'd out of this company Endeca that was successful, bought by Oracle, and we had like no after no after no. I mean, I I remember we'd do like eight or 10 VC meetings and maybe we just were naive and, like, everybody said no. And so one of the big yeses was the founder of Endeca. Right? Who wrote the whole check? He wrote, like, a $500,000 check. At what price? I don't remember exactly 2,500,000, 3,000,000, something like that And and I remember the conversation was something along the lines of, like, I don't understand restaurants. I don't have any experience in restaurants, but I respect you guys, so I'm gonna bet on you. So that yes was really, really important. We would not be here without that yes.

**Harry Stebbings** [7:19]:

Amazing one for him as well. So I think you paid him back for that yes. Yeah. I I've heard you say before that actually it wasn't so much restaurants or a love of hospitality. Yeah. It was actually just wanting to work with your cofounders. Yeah. How important and how do you think about the art of the pick, choosing what idea to work on? Do you have to love and follow your passion with the space that you choose?

**Aman Narang** [7:39]:

I've been very fortunate, I think, in life. At Endeca, I met Steve and John. And, you know, these were these proverbial 10 x engineers, which I think people underestimate. You need people that can build with velocity and are practical.

**Harry Stebbings** [7:51]:

You you said that kind of that are practical and build with velocity. Yeah. Is speed the single most important thing when you're moving from zero to one?

**Aman Narang** [7:58]:

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. 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, at least not relevant now. 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 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? Like, I hadn't done anything. Right? There's all these ideas that have just, like, gotten nowhere. 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 into the hands of customers, we wouldn't exist.

**Harry Stebbings** [9:04]:

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

**Aman Narang** [9:10]:

Now we were really naive. We were first time founders. Right? Know, You 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. Yeah. I had in my head that, like, you know, I'm gonna outwork everybody. And so I'm gonna make sure 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. I was like, I'll do all the management. Steve will do all the management. 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 one of the biggest, like, mistakes was not recognizing that you don't just get leverage from hiring salespeople or engineers. You actually get a ton of leverage from 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 market fee, you gotta move fast. Right? Because other people see the signal too often. And building out a team around us would have just helped us move faster.

**Harry Stebbings** [10:14]:

Does, like, management get easier? Does running Toast get easier? Yes.

**Aman Narang** [10:18]:

For sure. I mean, I think there's always new challenges, but it does, I think, fundamentally 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 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. You're small. You're like us against the world, and 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 gotta start to build up and scale. And one of the mistakes most founders make is, and I we made this mistake, was you don't wanna give up any control because you're like, well, I need to know what the heck's going on everywhere because otherwise, we're gonna f it up. The reality is you can benefit from people that are domain experts and specialists in specific areas, but you also don't wanna lose your entrepreneurial spirit. This is why all these massive companies are like, we wanna be more entrepreneurial. We wanna go back you know, innovation. And so there's this balance I always say, like, you wanna have a company that's got a balance of, like, specialists and entrepreneurs. And so one of the things I love is this this and and, actually, Chris, our old CEO, brought this to Toast. This is the Zones to Win book. Hadn't read it. Like, the one thing I really took away was this, like, horizon framework really works because it's not just about, like, innovation in horizon three and horizon one is different, but the people in horizon one and horizon three are different. You need both in a company if you wanna build a generational company.

**Harry Stebbings** [11:32]:

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

**Aman Narang** [11:39]:

One of the expressions I've heard that I like is you've gotta have clarity on when you can put the pedal down. And what that really means is, like, you've you've you're working on trying to find, 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. But right? And for Toast, we made a bunch of starts and stops there. In fact, there were these times where I remember and you can imagine that you're, like, trying to raise capital and grow and and you're having a meeting. We're like, we need to stop selling. It's like, what are we talking about? Stop selling. We fought through it, but we had issues. I remember one one discussion I had with a restaurant owner. It's like, it's great that you've got the Tesla, but it's it's not helpful when it's always in the shop. And the point they were trying to make was the product did not work well enough, and so we have to slow down and stop many times. Like, recognizing when you can put the pedal down is really important in companies. And so when you're starting to put the pedal down, back to your question, that's when you think you can really benefit from the specialist. I've got muscle memory and I've seen great before, and you can figure it out, but it just takes a lot longer.

**Harry Stebbings** [12:37]:

Right? You mentioned the 100 restaurants there and clearly feeling some signs of signal that there was market pull. Was that immediate in terms of when you release product into market with Toast, did you immediately feel like there was early product market fit? Or was it a iteration game to go, ah, we actually have customer demand?

**Aman Narang** [12:55]:

So the initial idea, as I mentioned, was six months in and we hadn't figured out what we're gonna work on. And then one of us had done some research on Alipay and WeChat about using your phones to order and pay at restaurants. Yeah. We were sitting in in a a in Cambridge. I think it took us like twenty minutes to get our check one evening. And they're like, what? This could be faster. You could use your phone. You could pay, and the table would turn over. There's all this you know, there's people waiting out outside. We started with these QR codes you see today at restaurants. It didn't go anywhere. We we we we couldn't scale it. And so we pivoted and we got and and this was a lot of questions about whether getting into restaurant software, trying to rebuild something like a point of sale was a smart idea. But once we pivoted to this point of sale, the one thing that was very clear, when you went and talk to restaurateurs about this, they would give you time of day because they did not like what they had. And like one of the learnings for me and and for the team was oftentimes you think of like startups and it's like, well, what's the 10x idea? And like rebuilding POS does not sound like a 10x idea, but getting signal from customers is like a good sign. Like, we go and pitch these QR codes, we get no time of day. They're like, please go away. And when we showed up and talked about, hey. We can help you run your restaurant better on the point of sale. There was so much interest. They give us hours. It's a down with us for hours. One thing

**Harry Stebbings** [14:06]:

that's hard with the POS. It's a bit like a bank account, I think. Incredibly sticky. Uh-huh. But people don't switch much. When you look at your numbers today, I think it's like 70% of 75% of new locations are, like, go to Toast. Uh-huh. 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?

**Aman Narang** [14:28]:

Yeah. We did. We did. I mean, it's funny how these ideas get incrementally bigger over time. You know, initially the thinking was, would we move all this technology to the cloud? When someone's opening a new restaurant, maybe that'll be enough to get those restaurants out of Toast. And then we realized, like, this is dramatically better than what's out there. Despite our challenges, we got that signal from customers. And then we realized, wait a minute. Like, these point of sale systems at the end of their computers, they don't after four years, they kinda slow down. So that's the cycle right there of how often people need to at least 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 that like, why do people buy a thousand? 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 it can be a good reason. Is it just being cheaper? Is that an okay answer, do you think? No. It's not just cheaper. It's gotta be cheaper and better. Yeah. Fundamentally, I don't think you can always you can

**Harry Stebbings** [15:23]:

just go in and send

**Aman Narang** [15:24]:

me a

**Harry Stebbings** [15:24]:

think when you're a startup, you're never gonna be better. Like, you're you're always gonna be behind in terms of product. Your r and d spend is gonna be nil compared to someone else's. Your CS is gonna be nil compared to someone else in terms of customer support. You're always gonna be kind of behind in that way. Yeah. How do you think about that for the start up?

**Aman Narang** [15:41]:

You can get a lot out of grit. I really do. I mean, the when we went in and we launched, I can share a couple stories. Yeah. I remember sitting down with restaurateurs, and 80% of the features these platforms offered actually didn't really matter. What actually mattered was the world was moving to digital and moving to phones. Right? I always tell people Toast wouldn't exist without Android and cloud and and embedded payments. Like, those are 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 in a fax machine? That's what we were getting at you know, people were doing at the time. And so a lot of what people were asking for actually wasn't done very well. Again, back to the 10 x engineers, like, one of the things that we could do even if it was has 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 when 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 got this meeting with this guy. He was, like, excited about Toast. He was a no nonsense type of guy. And he said, well, it seems like, you know, my my partner is excited about using you guys. Why should we switch? And I said, well, these handhelds, because the Android form factor is mobile, will allow you to turn your tables faster. That was, like, one of the key differentiators that Toast offered. He said, okay. And they said, well, what about support? I said, about support? And he said, I can't get support in my current provider till the morning. And if we can't use our system, it's hugely problematic as you can imagine. I I remembered that Steve had updated the website, like, a couple days ago to say that we had 247 support. And so I said, well, you don't have to worry about it. We're small, but we have 247 support. And so he's like, okay.

**Harry Stebbings** [17:20]:

Wife Nicole is like, oh.

**Aman Narang** [17:22]:

We have lots of stories about that. But he like, what's your website? And he goes to our website and he calls the number. And the phone starts ringing in my pocket because it was a Google voice number. And the way it worked is, like, I knew there was four rings after it went to the Google voice number, and I was like, that's gonna just make us look pathetic if we don't pick up the phone. I was like, hoping, like, you know, I I held the phone, the turn the buzzer off my pocket. One rang, two rang, three rings, fourth ring, I picked up the call. In front of him, I said, look. I'm telling you, we have 247 How does he respond? He's still a customer. He's

**Harry Stebbings** [17:52]:

still a customer. Yeah. That is amazing. Yeah. Okay. So we have this early demand. We clearly have these signals. Yeah. Before we go to, like, product expansion, geo expansion, all of the exciting kind of chapters, need more cash. Venture funding is important. Yeah. I spoke to Kent at Bessemer before this, and I know that there's a little bit of a story in terms of Bessemer's investing. Talk to me about Bessemer because they said no before they said yes. Talk to me about that.

**Aman Narang** [18:17]:

Yeah. This is back to the the the string of nos that we got. And How many nos did you get? Eight or 10. I mean, we we met with, like, all the prominent VCs, I'd say, in the Boston area. I think a lot of it was on us. We you're probably a little bit confident because we felt like we were good engineers, and we'd come out of this company that had been acquired and been successful and probably didn't do a enough job even articulating what we wanted to do. I remember, like, in these meetings, it'd be like, what CAC? What's LTV? Like, trying to make customer like, at least the way I my brain worked was we're here to make customers successful. Everything else will follow later. Like, it doesn't even matter. Do you still believe that? Yes. Absolutely. I think those metrics and all those things matter. It's like in sales. Right? You need the data and the scorecards. But if like you're sitting there looking at a scorecard trying to tell people you gotta do

**Harry Stebbings** [18:57]:

better, that's not helpful. Well, this is my question because like, you know, I I obviously am an early stage investor today and like you look at sales efficiency of a seed or a series a company and it's like, it may suck, but actually you need to create that customer love, that brand advocate in an early restaurant owner, which creates word-of-mouth, which creates a microbatch, which improves your sales efficiency. And so it's like, to what are your standards once suspend disbelief and say the sales efficiency will get better versus you're being an idealistic VC?

**Aman Narang** [19:25]:

You need both. I think, like, you you need to have some model. You need have some model that says, this is what it could be, and it could be a good business. Like, I remember, like, modeling out what Toast could look like without the full platform and the fintech capabilities and the payments, and it was like, well, it's gonna be kinda hard to scale because you're selling door to door with people. Right? It's a very highly considered purchase. Did you know that from day one? Did you know that the fintech component would be a Yeah. I think so. So it's not like yeah. Yeah. We and we realized not maybe on day one, but I think we realized within 10 customers that, like, the the financial model wasn't obvious to me. Because restaurants were like, you know, we were this is early too, but we're like, you know, we were making $2,300 a month on the software at most, and it was just it was not obvious given how much products weren't very good either, but the amount of support. I remember talking to one customer being like, you're calling me too much. Like, this is not scalable at all given what you're paying us. You wanna get some model that is at least somewhat credible in your head. So you wanna do put together some simple model that says, here's what it could be. But then after that very quickly pivot to like, okay, how do we make customers love what you do? So it's you need to do both. But I think in back to Bessemer in early days, we met with Kent. Of course, he didn't invest and being raised to Steve. And then Kent put the money in our series a. And so, you know, we had this conversation many times and we asked him, like, hey. How come you didn't invest? And he was like, well, you guys seem like nice guys, but he showed up and he presented and, you know, the feedback we we got. And what we noticed was you were arguing between the two of you while halfway through the pitch about what the strategy was. And so we were a little spooked. And so, you know, we probably didn't do ourselves any favors.

**Harry Stebbings** [20:59]:

That is amazing. What price did they end up coming in at? About 100, I think. To be fair on Kent, that's a very understandable element. When you look back, what you have done differently about how you fundraised in the early days?

**Aman Narang** [21:09]:

Probably put more time into it. Like, we were, on the one hand, like, rightfully so, so focused on customers. Mhmm. But you need balance. You also need to step back and say, like, okay. How are you gonna build a company and make fundraising an important part of that? And so just getting good at it. Not great at it, at least good enough at it where you just thought it through. Like, putting together a nice pitch deck, like, I think it's probably important.

**Harry Stebbings** [21:27]:

I I I totally agree with you. Okay. And so then you raise the round from Bessemer, and you have Kent on board. Yeah. And we have the cash to scale and expand. Kent then told me that actually there was then this period of kind of violent and aggressive growth were his exact words. What were the first things to break?

**Aman Narang** [21:43]:

I think one of the first things to one of the first things to break was just we back to putting the pedal down. We're like, oh, we should go higher sales capacity, and we should try to expand. And we just didn't have the infrastructure to scale. We didn't have the leadership back to, you know, try to micromanage everything. We'd have the infrastructure. We didn't have leadership. We didn't have the products. I'm so sorry. What does

**Harry Stebbings** [21:59]:

it mean you didn't have the leadership? Because you were there as founders. You'd built out a founder led sales playbook. Yeah. And you then transitioned to a sales led playbook. What what does it mean to not have the leadership? I'm just trying to

**Aman Narang** [22:11]:

I'll give an example. We were signing up customers, and I think we were maybe over indexed on revenue and scale and because, you know, 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 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 them after they went live because we didn't have any support infrastructure. And the products themselves were, in some case, not fully baked. And so I think a lot of these functions were not set up to scale. 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 issues around how fast to move because the reality is you've gotta scale. Right? You've got capital. You gotta deploy the capital. You gotta scale. On the other hand, you gotta do it well enough where things don't just all break. And so one of the expressions I've heard is, like, you gotta make sure in an organization everything's kind of in sync. And something can be ahead of another thing, but it can be so far ahead that the whole thing starts to fall apart. For us, it was just we we did not have the team to help us scale. And, like, one of the simple analogies that I that I think come to appreciate is at some point, you go from doing to coaching and teaching others, right, how to do. And then it becomes about, okay, like, how do you hire well? Right? How do you onboard well? And those were all things that I grossly underappreciated.

**Harry Stebbings** [23:40]:

Why did you not take the CEO role earlier?

**Aman Narang** [23:43]:

I wasn't given it. Actually, that was one of the most I mean, look, I think that's the most honest answer I've had in a long time. Love that. Yeah. What what talk to me about that. When you when you're early, like, no one cares about roles and titles as much. Like, it was like trying to build this business. Like, we weren't over indexed on any of this. Steve was the CEO. I was the president. Like, we're trying to make this company survive, and, like, no one no one cared. And then at some point, we just raised this 30,000,000 or whatever the money was round, real round. We're like, we're gonna put the pedal down and scale. And it was very clear that we did not know what we were doing in the scaling phase. And Did your VCs feel that? I think to some extent, I think Steve Papa was the first investor who was, like, amazing, you know, friend and mentor. Like, I think he picked up on it too. I think we all kinda picked up on the fact that was one of those rocky phases in the company where we were dealing with the the real growing pains. And we had worked with Chris at Endeca. And, you know, one of the superpowers Chris always had was he knew how to get the best out of people. And I remember in the session, we're sitting there trying to figure out the future of the company, and it was it was hard to be like, we're gonna bring someone in from the outside. But in What sort of stage was the company at at this

**Harry Stebbings** [24:47]:

point? 5,000,000 ARR, 10 No.

**Aman Narang** [24:50]:

It was, 2,000,000 ARR. Pretty early. Yeah. Setting. Yeah. Two years in. It was the best decision we made. We were able to get someone in that we could, you know, that gave us space to go do our thing, but also was just a really good sounding board and coach and also had seen how to, like, scale and lead people in ways that we didn't. And so back to your question, I just wasn't wasn't given it.

**Harry Stebbings** [25:10]:

Okay. So then we have the $30,000,000, and we have to scale, and we have some points breaking. We have strategies to scale. What did you do that with the benefit of hindsight you wish you hadn't done?

**Aman Narang** [25:22]:

You know, one of the things at Toast that was interesting was, and this is still an issue today, is how much do you wanna do? So our focus from day one was we're gonna solve for restaurants. We're gonna be the best solution for restaurants as the verticals, you know, the thesis. And the strategy was by building a platform that was purpose built. We can solve the problems of this industry better than anybody else in the world. As we got going, we realized the sales efficiency though wasn't quite there. And so we'd say, well, what can we offer where we can make the financials work? Because it was a highly considered purchase back to what you said. It's like, you know, point of sale is like described to me many times as like a root canal switching out point of sale systems. And so you have to show

**Harry Stebbings** [26:02]:

You need to increase the ARPU on a per customer basis to make the sales efficiency better.

**Aman Narang** [26:06]:

Exactly. Exactly. And so one of the big challenges was how do we build out more of the platform and do it fast enough while scaling locations. And so one of the the challenges that we faced was how many products can we do well? And then how many segments of the market can you really do well? Like, I remember one of our early customers, I think it was Urban Outfitters. They had all the restaurants in their in their retail stores. They wanted us to do that. You're doing such a great job. Do all our retail. And I'm glad we said no. Right? And really focused in on restaurants. That was always challenging to figure out, like, what is the right surface area for us to be able to go to market with?

**Harry Stebbings** [26:39]:

What did you do that you wish you hadn't done there? It's a good question. So, like, for me, it's an interesting moment. We saw the creator economy hype of, like, the easy wins that you get from having big famous people on the show.

**Unknown** [26:51]:

Mhmm.

**Harry Stebbings** [26:52]:

And it's, like, very easy to get big numbers and be very famous, but, actually, that's not who we are. We are incredible shows with the best entrepreneurs in the world.

**Unknown** [27:01]:

Mhmm.

**Harry Stebbings** [27:01]:

Fuck having big celebrities on. It's about incredible lessons with great entrepreneurs. That's our business. Yeah. We did that, and I wish we hadn't have done that.

**Aman Narang** [27:09]:

I think for for us, one of the biggest things was we were trying to move very fast and trying to scale as fast as possible. Capital was cheap. Was it always cheap? No. Once we raised our first round, was really hard. We couldn't get any capital. But once we raised our first real round, we saw the numbers get better. It was all about, like, how fast can you move? And so I think one of the learnings was, on the one hand, you had got you've gotta move fast. Right? It's like the gold rush and you gotta move as fast as you can. On the other hand, it's very important to get your foundations and your culture right. You know, it's like the measure twice, cut once. There's some of that that I think we could have done a lot better early on. And so for us, had we slowed down to speed up, there were there were a lot of opportunities where we could have slowed down to speed up that I think would have just made it a lot easier in the long run. I mean, I remember there's one time when we were shipping out hardware to restaurants, and every piece of hardware, like, close to we felt like every piece of hardware that we shipped came back in ninety days. And we're still selling it because we're like, we need to get more customers on the platform.

**Harry Stebbings** [28:03]:

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

**Aman Narang** [28:10]:

The 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. 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 so as we get the hardware back, we were we were looking desperately to go find a device that would actually work in the restaurant grade grade environment. And so we just always I remember we'd have these conversations that we just need to find enough time, make it through like the next quarter before we got like this device we had found in with a partner in China, Elo, that that we could we had more confidence in scaling.

**Harry Stebbings** [28:57]:

When we think about expansion, there's kinda three core segments of product expansion, segment expansion, and geo expansion. Yep. So when we think about those three, the product expansion, fucking nuts what you've done. Like, Toast Capital, we we have amazing researchers. I'd love to pretend like it's all just me. But, like, in 2019, he did Toast Capital, I think. Was the notes I got. And now it does over 1,000,000,000 in annualized loans.

**Unknown** [29:21]:

Mhmm.

**Harry Stebbings** [29:21]:

Wow. Question for you. Totally not what I was gonna ask. Is Toast a fintech business or a SaaS business? It's definitely both. I mean, we If I were to force you

**Aman Narang** [29:30]:

to be one. Customers care deeply about our software. That's why they picked Toast. But it's a great business

**Harry Stebbings** [29:36]:

because it's a fintech business? I think the two together are complimentary. But I I think it's often quite removed for founders starting today where they look at someone like Toast and the product suite that you have is incredible. Yep. Did you have that vision for the product suite from day one, or does it come over time?

**Aman Narang** [29:50]:

It came over time. Initially, it was how do you solve the needs of the restaurant to the point of sale better? Because that's where we started. You can only do so much to begin with anyways. And and can you 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 SMB 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 talk 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 Cain in Finale, and he 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 have 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. Sometimes people didn't wanna partner because we're these tiny companies. We're like, we have to build it.

**Harry Stebbings** [30:46]:

Individual point solutions will always say, but we're so much more feature rich. We're much better because we are a point solution. Yeah. To what extent do you say, yes, maybe, but it's better as a bundled offering, and it's okay to be 20% less than a point solution perfection Yeah. Because it's a bundled offering, or do you say, no. We are better than those point solutions. Forget that.

**Aman Narang** [31:07]:

I think it depends. It it comes over time. Like, in any of these markets, the reality is it's very segmented. So in certain segments of the market, you may have something simple that can work. And then I remember notoriously pizza in restaurants is really complex. And when we got some pizza restaurants, like, the ability to manage the complexity of the modifiers and how all the different ways you can order pizza and have pizza delivered, we couldn't support, so we had to partner. I think it's a really a segment segment specific question where as you build out the platform in certain segments, might see success. In other segments, you have to

**Harry Stebbings** [31:37]:

you have to partner. What secondary product has been the biggest game changer? Payments. Toast Capital, how does that come about? You guys sit in the room and you're like, let's do loans. How does that come to be?

**Aman Narang** [31:47]:

This is I remember our CFO at the time had 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 talked about embedded finance and banking and payments. And the and the and the and this thesis was once you're the payments provider, 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've seen some other examples where lending was a product that, you know, others had built. And for us, like, of the challenges was often when we go sell these restaurants, they had an existing loan or they wanted to finance their hardware. And so we had all these partners. 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. 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 a good business to be in. What was the hardest element of building Toast Capital? Just not knowing how to assess risk. The biggest question we have to answer when we lend out money is what are the odds that the restaurant will survive over the next three, six, and twelve months? What was the

**Harry Stebbings** [32:57]:

worst ancillary product decision that you made? Which product did you do that you're like, oh, that didn't work?

**Aman Narang** [33:03]:

We've had many actually where we've tried and the one thing that's great about Toast back to, like, Zones to Win Horizons, you know, we've got teams that are focused on scaling what we have and their teams that are tinkering. And this is across the business. Do you

**Harry Stebbings** [33:15]:

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

**Aman Narang** [33:18]:

We have both. There are certain teams within each lines of business. We've got teams focused on scaling our products. You can imagine the fintech business, for example, we've processed, like, a 160,000,000,000 in volume every year. And so that's about scale and making sure that that works 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 this within the LOBs, but then we also have a new ventures program. We bring in folks that otherwise wanna maybe go start companies and go raise capital through VCs and wanna come work at Toast and wanna go build something. And we try to make them as 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, you know, the the overhead of being part of a larger organization. And so we do both in terms of both models.

**Harry Stebbings** [34:08]:

What was the worst product expansion? Which product was like, that that was a flop and a fail?

**Aman Narang** [34:13]:

In two learnings. One is it's not good enough to just build commodity products because it's integrated on the point of sale. Those thesis was, hey. If we just do more and more and more, if these products are integrated to the point of sale, people will buy. But, you know, you can't just build a phone system and say, oh, because it's integrated to the point of sale, that's good enough for someone to swap out their phone system. It has to be better. It has to be better. One big learning. I think the second big learning was within the solutions that each the stakeholder we serve the best is the restaurant owner or the operator. We've been building technology to serve the stakeholder for a very long time. And the other stakeholders that exist, it's employees or guests or suppliers, we're starting to get there. Like we have now tons of rich data about other stakeholders, but it's not something that is like a superpower of ours internally. We're not a consumer company. We're not company that that knows how to support all these stakeholders as well as we know how to serve restaurant operators. So we've built these applications so far, you know, app products to serve the guests or the employees. It's not to say we won't get there and there's some we're doing some really cool things to their credit, but it's something we're learning. So it's like there've been lots of starts and stops.

**Harry Stebbings** [35:19]:

So that's like product expansions to a certain extent. It's so funny. I'm such a nerd on your business. I I I love the Toast business as you know. The other element is type segment expansion. Yeah. And you mentioned that kind of you'd like to actually almost be in the middle, it seemed like in the early days, which is like, you have enough revenue where it's a sustainable business. It's not only a bust, but also it's not the largest corporations in the world, your McDonald's or your Starbucks. But you've actually spread across both now. I mean, again, I have incredible people who do a lot of the work for me now, the joys of our jobs. 2023, you did bakeries and cafe products in a more, like, self serve lower cost. Uh-huh. And then '24, we did restaurant management and more heavy enterprise. Uh-huh. What have been the biggest lessons in what it takes to expand down to SMB and do well there?

**Aman Narang** [36:04]:

Yeah. We we have been in the enterprise business actually for a while. In fact, we have more market penetration within mid market than we even do in SMB today. Think of regional chains. So we don't have lots of enterprise businesses at massive scale, but we have lots of restaurants that have hundreds of locations and have some of the same complexity. Who has the enterprises at massive scale? A lot of it is still on either custom homegrown or legacy on prem solutions. These solutions are so wired into everything else these chains do. Will you replace them over time? Yes. I think so. I think, look, it goes back to, like, there was a time when a lot of this technology was simpler. Like, if you had a simple point of sale system take orders and payments, that's very different than I remember early on, we I thought this was a glorified calculator.

**Unknown** [36:50]:

It's it's

**Aman Narang** [36:50]:

not because it's the operating system. It's the ERP of the restaurant. So as you build on top and you had online ordering and kiosks and employee scheduling and all sorts of capabilities to process where all the stakeholders is a massive list, the tech gets more and more complex. And so if you're an enterprise chain, that is not your core competency to build more and more software. And so I think that's where I see cloud providers like Toast grow and take over over time. And especially because if you look in the four walls of restaurant, whether you're in a food truck or a cafe or a bakery or a full serve restaurant or you're an enterprise change, often the needs are actually quite similar, which is how do you make this like, restaurants are about operations, workflows, speed, efficiency, you know, seconds matter. And so this this the software is about often about, like, how do you turn the tables faster? How do move the line faster? How do you make the kitchen more efficient? Are you we're making sure there's good governance that people aren't stealing from you. Like, those are the things that the point of sale does within the restaurant, and that doesn't change. And so there's a lot of overlap back to, like, segment strategy. You know, there's a lot of overlap, whether there's a restaurant here in London or there's a restaurant in in, you know There's a

**Harry Stebbings** [37:53]:

of a 100%. Yeah. But the requirements are different. Yeah. In terms of, like, you can't have the same direct outbound model in terms of sales. Yeah. You need a more self serve model with SMB. You probably have lighter touch customer support. Totally saying is that actually the case or are they actually fundamentally different companies?

**Aman Narang** [38:10]:

Yeah. I mean, they're the sales model is definitely different for sure. The service model, I think, is somewhat different, but there's also often franchise, which I can feel a bit like SMB. Mhmm. But at the end of the day,

**Harry Stebbings** [38:20]:

the When did you see that? Sorry for jumping. When did you see the flywheel kick in on sales efficiency specifically?

**Aman Narang** [38:26]:

The flywheel is, I mean, look, so we got going early on. We were getting feet on the ground, getting these partnerships. 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 inbound marketing and all those things start to help us. Then we saw this effect. Actually, this was Jonathan Bassemer, head head of revenue who's who who noticed this, which is as you get density, and it's kinda obvious, I guess, in 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 on on a street and you you get all of them. But there's so many that it it it's like it's like there's like micro flywheels that you see. Like in Cambridge, Massachusetts, you think Toast is maybe the only point of sale. 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, you get better word-of-mouth and you get more referrals and you get more top of funnel. You convert better. You grow faster.

**Harry Stebbings** [39:26]:

How does that change your approach then in terms of outbound sales, in terms of org design? Is it focusing hyper local, building very local teams, doing kind of guerrilla marketing on a per street basis? How does that actually change with that realization?

**Aman Narang** [39:39]:

Yeah. One of the challenges is, like, how do you play the long game and the short game? Because if you always play a short game, you just hire more and more sales entity in the most successful markets to grow even faster because the productivity was some of the best. We were cutting territories and growing faster and our reps were more productive. And so but they also have to put the foundational teams in all these markets around the country. It's always easier actually that we what we noticed was to actually add maybe more in these markets we were seeing more success in. And so you balance the two. But at the end of the day, like, the the more important thing was actually like, can you hire great people? This goes back to like scaling companies. And so this goes back to you have the processes to actually assess what you're looking for. Like, and we have these like big three on how you hire now. How do you onboard? You have an onboarding program. One of the rules we we we one of the things we do is everyone that joins the company, whether you're an IC, a BDR, a rep closing deals, or a manager, you have to go sell. Because you're a district manager, and it's great that you've managed people before during the running sales team, but you gotta go sell Toast for a quarter and learn it. For a quarter? Yeah. Why do you want to go through all of this? It helps you have context when you show up. And then you've gotta get out there too. So it's both combination of, like, you gotta get out there with prospects and with customers, and you've got to learn some of the basics. You don't show up and look foolish because you've just, you know, don't have any expertise or industry perspective, which is how I felt, honestly. I remember the first year, I was just learning so much about this business because we've never worked in restaurants. Toast is twelve years old. Yeah.

**Harry Stebbings** [40:57]:

How long did it take to IPO?

**Aman Narang** [40:59]:

Nine years.

**Harry Stebbings** [41:00]:

Nine years. What was the market cap on IPO? 20,000,000,000. Nine years to 20,000,000,000.

**Aman Narang** [41:05]:

You know, early on, we were like, oh, if we get this to 10,000,000 ARR or a 100,000,000 ARR, this that would be amazing. Like, we weren't worried about, like, what it could be or couldn't be. We're just focused on the customers and building a good business.

**Harry Stebbings** [41:16]:

So we have product expansion. We have segment expansion. Then we have geo expansion. Yeah. You're making a much more concerted effort in terms of international expansion, it would seem. How do you think about build versus buy on international expansion?

**Aman Narang** [41:29]:

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. The way we think about, like, m and 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 of segments or geos or products, it's been often about that's the one rule that we've kinda stuck to, which is the central nervous system has to be toast.

**Harry Stebbings** [42:01]:

Given the importance of that POS and being that kind of heartbeat of the the kind of restaurant itself Yeah. But actually the acknowledgement that it's incredibly difficult to get people to switch. Yeah. Does it not make sense just to do a roll up play on international expansion? Go to each individual country, pick up Yeah. The individuals, and then plug in the ancillary products that none of those guys have and juice up your ARPUs on that.

**Aman Narang** [42:22]:

Yeah. No. Look, our beliefs are that if we go into these markets and offer the best solution, I know this is hard to switch and all that, but there's plenty of opportunity. I always like this expression of like, you know, you've got strong opinions loosely held. Like, I think, you know, as we grow in scale, that might change. So far that's just been the thesis. Totally got that. You've done five m and a's now? I think four.

**Harry Stebbings** [42:40]:

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

**Aman Narang** [42:44]:

Back to the the thesis on the m and 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 one of the benefits we've got is we've got this on the ground sales model in these markets, restaurants like to buy for people in person, and we've got enough ARPU that you can actually scale it that way. And so if there are point solutions of 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, bring it down market into the smaller restaurants and plug it into our go to market and that's gonna work. And what you don't realize is like, well, those restaurant tours don't have the people 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 right now. And so it's it's like one of the learnings has been as you add more of the product portfolio, you gotta think through, like, can the the your your buyer actually absorb it? Right? Versus if you buy from a solution that serves a different segment of the market. Maybe they serve a different segment of the market for a reason, if that makes sense.

**Harry Stebbings** [44:05]:

How much juice can you extract from restaurants? And I know that's a horrible statement. That's why I'm a VC. But, like, how much revenue can you actually get before you hit the ceiling and go, we gotta go to retail?

**Aman Narang** [44:16]:

First of all, like, think it's about value creation. I think the monetization follows. It always starts with value creation. This is one piece of advice. It's like, everyone should focus on what is the value you're creating. I think often companies get in trouble when they're looking around to say, how do we drive our metrics versus the customer's metrics? And then back to like the strategy of like, how much can you do? It's really hard. But the fundamental question is like, how much can you do well? Which actually goes back to people. Always goes back to people. If you've got average talent, you get in the details of why it's not working and the million reasons why not the things don't work and you get into this mode of, like, you're micromanaging. Versus, like, you can bring in great talent and actually, like, they go and figure it out. A lot of, like, how much can you do and how much can you do well always goes back to people and talent. When we think about all the different variables and all the different ways in which you can grow, as we looked at, like and maybe you could argue we're doing too much, but we see opportunity where the platform we serve, the strategy can work in other segments, in other geos, upmarket enterprise, and we can expand the platform. And the question is, how do you sequence all this in ways that is thoughtful? And so one line I like is, like, you know, you underestimate what you can do over a decade, but overestimate what you can do in a year. So this is a long game. Like, it's not about doing all this in one year. It's about a longer term strategy of, we look at how much we did in the first ten years. Well, how much can you do in the next ten years? And that's the mindset you've gotta have.

**Harry Stebbings** [45:29]:

It's so funny because I have obviously a media business and a venture business. And I say the only thing that matters is knowing that the supply of great guests drives our entire business flywheel. We get great guests on the show. We'll have amazing shows, which deliver amazing value to millions of founders. Uh-huh. And then more founders will wanna take money from us. We'll make great investments. Uh-huh. And it'll lead to more great guests on the show. Yeah.

**Aman Narang** [45:50]:

Makes sense.

**Harry Stebbings** [45:50]:

The only thing that matters is getting you in the hot seat.

**Aman Narang** [45:53]:

Yes.

**Harry Stebbings** [45:53]:

But it goes back to the value It's very general. Thank you. Not at all. I've made many hiring mistakes, dude. What's your biggest hiring mistake?

**Aman Narang** [46:00]:

Like, hiring is hard. And so just building a rigorous process actually is really important. And we we're still not great at it in trans trans because it's hard because it takes time. Right? Like, you're busy, but like And it differs per function. Yes. It does. But I think fundamentally, like, doing the hard work to say, what are you looking for up front of the process, writing it down, right, being clear about it. Sometimes, don't even make the basics are lost. Like, what are you hiring this person for? What are gonna do? And then being clear about it as a group. In the interview process, like, having I think Amazon does as well, like, writing down your notes, like, literally the transcript of what happened in the interview. And and I think in the interview itself, you have to be able to go deep because you only have so much time. It's hard to go deep and ask hard questions somebody you don't know. One of the things I've learned is you have to do it even if it's uncomfortable or hard because you have to understand where has this person really dealt with challenges and had to be resilient. Where what have they done that has been impactful where they were the driver on the bus and not just the passenger? That's what's, like, really important in the process.

**Harry Stebbings** [46:52]:

Do you know my favorite question to ask on that is what trait do you have that you're most ashamed of Yeah. That has also contributed to your success?

**Aman Narang** [47:00]:

100%. Yeah. Your your your superpower is also often your kryptonite.

**Harry Stebbings** [47:04]:

What traits do you have that you're slightly ashamed of Yeah. But has also contributed to your success? What would it be?

**Aman Narang** [47:10]:

When I get fixated on something, I can be very, very annoying and Oh, Steve told me. Yeah. Or I can be, you know, passionate in the details and care deeply. So I think there's a fine line often there where you it's great to be in the details and care and go deep. Are you also

**Harry Stebbings** [47:28]:

are you a micromanager?

**Aman Narang** [47:29]:

I think it just it depends on the situation. I'm sure there are people who would tell you that I'm not a great manager or that I am a micromanager. And I have to learn along the way. Do you you're a great CEO. I'm learning. I mean, look. I think a lot of this goes back to we're all on a learning journey. And as long as we as all of us are trying to get better every day, that's the most important thing more than whether or not I'm good or great or bad. Like, I think that's what matters. What are you not great at today that you would like to get better at? I think communication and recognizing how important it is to align and inspire a big group is really, really important. I've always underappreciated that. Where I get the most energy is, like, solving the problems and the details or coming up with, like, the strategy of the business and thinking about the competitive landscape and the chessboard. And those things matter. But, actually, like, if you're managing a team at scale, it's really, really important to make sure everybody understands where you're going and why and why we're making certain decisions. And you gotta we gotta overcommunicate a lot of that. And I think that's an area where I absolutely wanna get better.

**Harry Stebbings** [48:25]:

You have to overcommunicate. You also have to create a sense of followership. Yes. And the reason why you don't have followership, not you, but leaders don't have followership because they don't feel like they're authentic. They feel like they're being salted by politicians, by people who hate politicians. Yes. One thing that you're very good at, you're authentic. Yes. You're not selling this, I'm a fucking great CEO already. People buy that.

**Unknown** [48:44]:

Yeah.

**Harry Stebbings** [48:44]:

At the end of the day, people buy from people.

**Aman Narang** [48:46]:

I say I would say businesses and one thing I learned from Chris is, like, business is about people. At the end of the fundamentally back to, you know, it's not a business strategy. Like, know, any strategy you want, put a PowerPoint together and Excel spreadsheet together as it says, like, you know, here's a business model. It's about the people. And so 100%, like, it's about bringing great people, great values, complementary skills, and then being aligned on what matters, having a having the right tension in the organization where you can work together, but also push each other. Like, yeah, those things are that's where the magic happens.

**Harry Stebbings** [49:13]:

Final one before we do a quick fire round. I spoke to Steve before, sorry, and he said that you have not much tolerance for BS. And you said before, I think it was a a humble mindset towards learning or something. Was it culture? Cultural value. One of the values is lead with humility. Lead with humility. Yes. Brilliant value. So values that are good Uh-huh. Are ones where you could take your opposite side. Okay? So it's like, for me, we work unbelievably hard and you will do the best work of your career. Uh-huh. And I believe that more hours leads to more success. Uh-huh. A lot of people will say it's wrong. Strategic work, less hours, balance. Yeah. Go somewhere else. Both strategic and I just think actually brute force most things. Did you go to gym

**Aman Narang** [49:51]:

this morning?

**Harry Stebbings** [49:51]:

Yeah. I can't take the opposite side of learn with humility.

**Aman Narang** [49:57]:

Yeah.

**Harry Stebbings** [49:57]:

Is that a good value? Is that Absolutely. Mistakes?

**Aman Narang** [50:00]:

I think, like, for us, leading with humility is about recognizing that as a leader, you've gotta be close to the front lines. Like, that's one one way to interpret that value. Back to, like, you know, to build a great business, you have to stay close to customers, stay close to the people that are actually doing the work because things change. Even if you had some perspective from ten years ago, how things happen, like, things change. And so not being close to the front lines, you're making important decisions about the future of the business. If you don't have tech context and perspective and texture on what's going on,

**Harry Stebbings** [50:29]:

you can make really bad decisions. I am pushing you. I'm just wondering, like, if that's still because no one's gonna say, oh, I because what you're saying there is actually customer proximity drives success. Yeah. Or customer facing teams. Or or in fact, not just

**Aman Narang** [50:39]:

customer facing teams, all of the frontline teams.

**Harry Stebbings** [50:41]:

But no one's gonna say that not being close to customers Yeah.

**Aman Narang** [50:45]:

Drives success. So your question is what? Is is that a good value? Yeah. I mean, like, I think you can take it to an extreme where, like, you know, you also have to have some level of self confidence because you wanna go in and say, like, hey. I've done it, and confidence instills confidence in others. And so I think it's a balance there of anything. But I think overall, it is a good value. I do think most people, as individuals, most companies, they can get in trouble if they think they know that they're the shit. Like, I think there's a lot of value to just always being balanced and always being grounded. But I know it's interesting you said Steve said that I have no tolerance for BS.

**Harry Stebbings** [51:16]:

No tolerance.

**Aman Narang** [51:17]:

Yeah. I've been told to my face many times that Steve's the fun one.

**Harry Stebbings** [51:22]:

Listen. I wanna do a quick fire. So I say a short statement. You give me your immediate thoughts. Does that sound okay? Sounds good. Yeah. So what's been the most memorable near death experience for Toast?

**Aman Narang** [51:31]:

It was actually pretty early. When we were building these QR codes, I said, you know, we were we were trying to get we spent a year working on this, and we were ready to give up. And that pivot to point of sale, like, that was the closest we came to shutting it down.

**Harry Stebbings** [51:41]:

Did you have much money then? Like, were you close runway wise?

**Aman Narang** [51:44]:

No. Not at all. We were, like, funding this from, like, the little money we had made from the last company.

**Harry Stebbings** [51:49]:

What board member do you not have that you would love to have?

**Aman Narang** [51:52]:

I I mean, I've heard just, like, great things about Satya, about how he's transformed Microsoft, you know, in terms of building an amazing culture and learn from a learning mindset and growth mindset. That's somebody that comes to mind.

**Harry Stebbings** [52:02]:

What was the most memorable first investor meeting?

**Aman Narang** [52:04]:

I remember we're going to Steve Papa's house. This is like one of New Hampshire. We're driving from Boston, New Hampshire. We put together some slides and sitting down meeting him, and he looked at this. I remember one of the things he noticed was our spreadsheet had a zero. We were off by a factor of 10 in the meeting. At the end of the meeting, I think he said something like, yeah. Yeah. I don't really understand restaurants. And so that's that's all that's all he

**Harry Stebbings** [52:24]:

said, I think, at the end of the presentation. Did he commit on the spot?

**Aman Narang** [52:28]:

No. No. We had a couple meetings. I think at one point, I had to tell him. I was like, look. We've done good work for you. At a minimum, someone will acqui hire us even if it doesn't work.

**Harry Stebbings** [52:36]:

What was the hardest round to raise?

**Aman Narang** [52:38]:

You know, it's interesting. We've been really fortunate. Like, once we got that series b, we grew up in a world of low interest rates and there was a lot of capital in the business, had really good fundamentals. Not to say it was perfect, but had good fundamentals. We know we hired some great people to surround us that were really good at it, if I'm honest. So it never felt like we were constrained by capital. What have you changed your mind on in the last twelve months? It's actually interesting you brought up leading with humility. I think one of the pieces of I've gotten advice is like trust your instincts more. Because I think sometimes you can end up in a world where like if you don't trust your instincts, can move too slowly. What did you not trust your instincts

**Harry Stebbings** [53:13]:

on that you should have done? Often the hardest decisions are about people, not about business and strategy. What's your biggest most unorthodox advice for founders listening?

**Aman Narang** [53:22]:

This may sound odd, but don't raise too much capital. I think there's always this this perspective where we get plenty of runway that's healthy, that's good. On the on the one hand, like, VCs aren't stupid. So if you're raise too much capital, you get diluted early on. Secondly, I think there's a lot to be said about doing more with less.

**Harry Stebbings** [53:38]:

What did you do more with less that really comes to mind? You said earlier about scarcity driving creativity. Yeah. There Is an example where you're like, we didn't have money and so we did this?

**Aman Narang** [53:48]:

For us, like, we didn't have the money to try to do a lot of marketing and get the brand out there. You know, the creativity we had was to go find all these trade shows and go make sure Toast was right next to the biggest provider in this space.

**Harry Stebbings** [54:03]:

Tell me, what do you know now that you wish you'd known when you founded Toast?

**Aman Narang** [54:08]:

Culture values really do matter. It really do really do matter. And, like, hiring spending the time, hiring the right people really does matter, especially at the leadership levels. If you get caught up in, like, the here and now and what happens the next deal or you know, it's like someone's once told me, like, if you're gonna prioritize, like, an interview versus a deal versus, let's say, you know, like a internal meeting, you really wanna make sure if there's one thing you prioritize is, like, the interview. Because especially early on when you're founding the culture, if you get it wrong, it's hard to change afterwards. It's, like, not easy. We said about BS meter. Yeah.

**Harry Stebbings** [54:40]:

AI. Yes. Every public company's CEO needs an AI story. Yes. To what extent is it like a bit of an AI story for public markets versus this is a genuine information on our

**Aman Narang** [54:51]:

business. Yeah. It's interesting. Like, you know, I think we I I would I think maybe I'm little bit skeptical by nature. So I always am trying to figure out, like, why something might not work. Like, I I I I I think that's a healthy way to look at things also. And so with the metaverse or with crypto, like, I was I always struggled with first principles on, like, on how it's just gonna scale. And by the in many ways, I've been wrong. AI, it's interesting. It's it felt different because you were seeing, like, real applications. You you go to the doctor. I went to the doctor recently and, like, AI listened to our conversation, figured out what to do. It worked. I was pretty impressed. And so you're starting to see, like, these early signals. I don't know how scalable it might AI might be where the Internet was pre bubble, like where like things have to like know, which applications take out, we're still trying to figure out. But the fundamental technology like of being able to especially like things like voice AI is so powerful. You can listen to a conversation, have a conversation. I think another thing I think about is, like, you know, I want an AI personal assistant. I think that's coming. That can actually like, can you think of the Internet? What's been amazing is, like, you can do so much, but you have to learn all these interfaces and it's complex. And I I would love to just talk to someone and say, hey. Can you get me a table tonight? Or can you How does that change the

**Harry Stebbings** [55:56]:

future of restaurants?

**Aman Narang** [55:58]:

I I think the biggest thing that we're gonna see is helping restaurants leverage data 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? How am I doing relative to my competitors? And so one of the most fundamental things that AI can do is helping the average restaurant tour be smarter about some very basic things in their business. Most restaurants don't optimize yield. They don't know how do you maximize the right guests in the tables. 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. That's one opportunity. I think the other opportunity is in voice. Imagine, like, in a drive through or you you know, go order the table, imagine the device, and we're not there yet, is listening to what's going on and, like, just knows what to do.

**Harry Stebbings** [56:45]:

So I am, as we've discovered, a massive Toast fan. When I think about the future and value creation and we think about Toast being a $100,000,000,000 business, what does that pathway to a $100,000,000,000 look like? Is it a, much deeper partnership integrations in the restaurant vertical and really owning more of that wallet? Mhmm. Or is it the expansion much more into retail, hospitality, hotels, and expansion on that segment basis? Yeah. Paint that pathway.

**Aman Narang** [57:13]:

Yeah. I think it's a it's it's a it's a I talk about a few things when I talk about the longer term strategy of Toast. One, we've got 13 or 14% share in The US in restaurants. We've got a scale and be one of the leading providers in this space. That's priority number one. As we've built out this anchor solution to power restaurants, we have the ability to create a lot of value by having a broader platform. And so doing more for restaurants over time to support the broader ecosystem, more of the stakeholders is an is an opportunity where we believe we have a right to win and create value for restaurants. Then the platform we've built, if you think about all the complexity of hardware and software and network, you know, applies a lot of brick and mortar verticals, not just restaurants. And so the same deep approach that we took to say we're gonna solve for the needs of restaurants, we've gotta do it gradually one by one in other sub verticals. I mean, start start with food and beverage retail, with grocery, convenience stores, and gas stations. And what you see is in bottle shops, what you see in these subcategories is these are also businesses that have complexity, have lots of employees, they have lots of revenue. And so the sales model, the service model, and the complexity and depth of product really applies. And so that's a growth opportunity for us. And And then I think over time, you know, as you think about upmarket enterprise international, we've gotta just be thoughtful about how how many markets we can do without, you know, falling over. So I think it's all about how do you do it thoughtfully across all of these growth factors and how you sequence it over the next decade versus the next year or two. Do you worry about recessions?

**Harry Stebbings** [58:36]:

And what I mean by that is your business obviously depends on consumer spending Yeah. And transaction volume in large part. Yeah. You have consumer budgets hit and they don't spend as much.

**Aman Narang** [58:45]:

Not not as much because if you think about we went and studied some previous recessions and what you see is restaurants are largely very resilient. People love to go out to eat. And so yes, there may be some shifting in terms of shifting from FSRs to QSRs or there might be a little bit of shifting, but it's not dramatic. You know, one of the things that's great about Toast is the value proposition is about efficiency. It's about how do you do more with less. It's how do you turn the tables faster. How do you drive incremental demand through online ordering channels that's cheaper? The value proposition in some ways is actually stronger when things are more challenging. In fact, one of the things that longer term that we don't talk enough about is the data. As you get to know, today, we've got 100,000,000 plus guests that dine at Toast restaurants. We've got millions of employees working at Toast restaurants. We've got hundreds and thousands of suppliers in the Toast platform that interact through our supply and accounting product. And so the ability to leverage that data to create value for restaurants, I think, is like a big area where that where we have a lot of potential over time that's underappreciated. You think of like McDonald's. Right? When what they do for their franchisees, it's not just about, you know, providing tech. It's about helping them think through what to put on menus. It's help about helping them think through how to get the best pricing on the delivery. It's about helping them get marketing and brand. And and so we think of in some ways, like, like that bottle about how do we provide our small business restaurants the ability to leverage the data and the expertise to run a better business. And so that's an area that I think we're also thinking about over the next decade.

**Harry Stebbings** [60:17]:

As I said throughout this, I love the business itself. I'm the biggest vertical SaaSner. This has been such a joy to do. So thank you so much for joining me. It's been great, Harry. Thank you so much.

**Unknown** [60:28]:

As you can tell, I'm such a fan of the Toast business, and what an incredible journey to the $14,000,000,000 market cap today. I wanna say a huge thank you to Aman for being such a great guest. If you'd like to see the full video, then you can check it out on YouTube by searching for 20 VC c on YouTube. But before we leave you today,

## Sponsor read

**Unknown** [60:43]:

all of you listening use tons of software every day. Sometimes it fills us with rage. You can't figure something out. The chatbot in the bottom right is useless. You keep getting bombarded with these useless pop ups. And for those of you who build products, no one wants their product to feel like this. Thankfully, a company exists to help users without annoying them. Command bar. It does a couple of very helpful things. First, it's a chatbot that uses AI to give users extremely personalized responses and deflect tickets. But it can be beyond just text. It can also co browse with the user and show them how to do things inside the UI. Magic. But it can also detect when users would benefit from a proactive nudge, like a helpful hint or an invitation to start a free trial. Command Bar is already used by world class companies like Gusto, Hashicorp, Yotpo, and AngelList. If you're a product CX or marketing leader, check them out at commandbar.com/harry. And talking about incredible companies with Command Bar, I want to talk to you about a new venture fund making waves by taking a very different approach. It's a public venture fund anyone can invest in, not just institutions and accredited investors. The Fundrise Innovation Fund is democratizing venture capital, which could have big consequences for the industry. The fund is already off to a good start with $100,000,000 into some of the largest, most in demand AI and data infrastructure companies. Companies like OpenAI, Anthropic, and Databricks. Check out the innovation fund's impressive list of investments for yourself by visiting fundrise.com/20vc. Carefully consider the investment material before investing, including objectives, risk charges, and expenses. This and other information can be found in the innovation fund's prospectus at fundrise.com/innovation. This is a paid sponsorship. And finally, let's talk about Squarespace. Squarespace is the all in one website platform for entrepreneurs to stand out and succeed online. Whether you're just starting out or managing a growing brand, Squarespace makes it easy to create a beautiful website, engage with your audience, and sell anything from products to content all in one place, all on your terms. What's blown me away is the Squarespace Blueprint AI and SEO tools. It's like crafting your site with a guided system, ensuring it not only reflects your unique style, but also ranks well on search engines. Plus, their flexible payment options cater to every customer's needs, making transactions smooth and hassle free. And the Squarespace AI, it's a content wizard helping you whip up text that truly resonates with your brand voice. So if you're ready to get started, head to squarespace.com for a free trial. And when you're ready to launch, go to squarespace.com/20vc and use the code 20 v c to save 10% off your first purchase of a web site or domain. As always, I so appreciate all your support, and stay tuned for an incredible episode coming on 20 Growth this Friday.