Aman Narang: 5 Lessons Scaling Toast to $14BN Market Cap | E1192

1. 0:00 – 0:45

   Intro

   1. ANAman Narang0:00

      (instrumental music plays) Speed matters a lot in business, a lot. Once you see signal that you've got product market fit, you gotta move fast. Toast wouldn't exist without Android and cloud and, and embedded payments. Like, those were the three trends that really drove the beginnings of Toast. And 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." And 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.

   2. HSHarry Stebbings0:25

      Ready to go? 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.

   3. ANAman Narang0:44

      I'm excited to be here,

2. 0:45 – 5:13

   Childhood & Background

   1. ANAman Narang0:45

      Harry.

   2. HSHarry Stebbings0:45

      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-

   3. ANAman Narang0:52

      Hmm.

   4. HSHarry Stebbings0:52

      ... very hard moment in my childhood.

   5. ANAman Narang0:54

      Mm-hmm.

   6. HSHarry Stebbings0:54

      When you think back to the most shaping moments of your upbringing, what are one or two that really stand out?

   7. ANAman Narang1:00

      I had a great upbringing. I had, uh, these very committed parents, especially my mom, who really lived for me and my brother. And even today, like, I show up, you know, and she l- my parents live next door to me, and they're like, "What can we make for you right now?" (laughs) 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. (laughs)

   8. HSHarry Stebbings1:42

      (laughs)

   9. ANAman Narang1:42

      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 (laughs) 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. (laughs)

   10. HSHarry Stebbings2:17

       (laughs)

   11. ANAman Narang2:18

       So that experience, I think I look back to, but I, I'm grateful for it because I d- I really do think it made me stronger.

   12. HSHarry Stebbings2:22

       I, I, I totally get that.

   13. ANAman Narang2:23

       Yeah.

   14. HSHarry Stebbings2:24

       I think in today's day and age, that's called a sell-side analyst. Uh, but- (laughs)

   15. ANAman Narang2:28

       (laughs)

   16. HSHarry Stebbings2:28

       That's what those people turn out to be in life, uh, and many sell-side analysts.

   17. ANAman Narang2:32

       Yeah.

   18. HSHarry Stebbings2:32

       And I really appreciate your sponsorship. Um, but, uh, I, I do have to ask you, I think life is also made by pivotal yeses and nos.

   19. ANAman Narang2:39

       Yeah.

   20. HSHarry Stebbings2:39

       If you think back to a pivotal yes or no-

   21. ANAman Narang2:42

       Uh-huh.

   22. HSHarry Stebbings2:42

       ... what is one from each that really shaped your journey?

   23. ANAman Narang2:45

       The first job is... Toast is the second job really I've ever had and the first job was this company called Endeca. Endeca was, um, in Cambridge, in 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 where I also met Steve Papa, who was the founder of Endeca. And, um, after Endeca was bought by Oracle, um, Steve and John... S- Steve, 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 shamed 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 Endeca, they're like, "You're leaving, right? Because you've talked (laughs) 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 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 2013, you know, we were rais- we, 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 Endeca that was successful, bought by Oracle and... We had like, no after no after no. I mean, I, I remember like eight or 10 VC meetings, and maybe we just were naïve, and like everybody (laughs) said no. And so one of the big yeses was the founder of Endeca, right, who wrote the whole check. He wrote like a half a million dollar check and, uh-

   24. HSHarry Stebbings4:13

       At what price?

   25. ANAman Narang4:14

       I don't remember exactly, two and a half million, three million, something like that, Preet. And, uh... (laughs)

   26. HSHarry Stebbings4:19

       (laughs)

   27. ANAman Narang4:19

       And, uh, I remember the conversation was something along the lines of like, you know, um, "I don't understand restaurants. I don't have, you know, 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.

   28. HSHarry Stebbings4:37

       I mean, eh, that's-

   29. ANAman Narang4:38

       (laughs)

   30. HSHarry Stebbings4:38

       ... an a- amazing one for him as well. So I think you paid him back for that yes.
3. 5:13 – 9:31

   The Importance of Speed

   1. ANAman Narang5:13

   2. HSHarry Stebbings5:13

      You said about kind of, um, that are practical and build with velocity.

   3. ANAman Narang5:16

      Yeah.

   4. HSHarry Stebbings5:16

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

   5. ANAman Narang5:20

      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...... and 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?" (laughs) We're like, "I haven't done anything," right? It was 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 you, if you had taken two years to get the first thing, you know, into the hands of customers, w- we wouldn't exist.

   6. HSHarry Stebbings6:38

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

   7. ANAman Narang6:44

      Now, we- we were really naive. The truth is, you know, it's, I think to some extent when you, y- you know, we were first time founders, right? And, you know, we were in our late 20s, we probably thought no end of ourselves. And so (laughs) , and one of the things that was like this Achilles heel for me was I always leaned into, like, leaning into scarcity and doing m- more with less-

   8. HSHarry Stebbings7:03

      Yeah.

   9. ANAman Narang7:03

      ... and so I had it in my head that like, you know, I'm gonna outwork everybody, and so I'm gonna 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 (laughs) 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. We don't need any other managers." We didn't know how to manage anyone, by the way. (laughs) 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 market fit, you gotta move fast, right? Because other people see the signal too, often. And building out a team around us, um, I think would've been, w- w- w- ha- would've just helped us move faster.

   10. HSHarry Stebbings8:03

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

   11. ANAman Narang8:08

       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 entrepreneurial mindset about h- 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 offer a lot of context on 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, we made 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 gonna 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 wanna be more entrepreneurial. We wanna 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 things I love is this, this, and, and actually Chris, our old CEO, brought this to Toast. This is the Zones to Win book. I hadn't read it.

   12. HSHarry Stebbings9:18

       Yeah.

   13. ANAman Narang9:18

       And that's, 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

4. 9:31 – 14:10

   The Right Time to Bring In Specialists

   1. ANAman Narang9:31

      a generational company.

   2. HSHarry Stebbings9:32

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

   3. ANAman Narang9:38

      I think as... and, and again, there's no black or white answer-

   4. HSHarry Stebbings9:40

      Sure.

   5. ANAman Narang9:40

      ... but as soon as... One of the expressions I've heard that I like is, you know, you've gotta have clarity on when you can put the pedal down, okay? And what that really means is like you've, 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, but, right? And, and, uh, 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 where like, "We need to stop selling." It's like, "What are we talking about, stop selling?" Because we had... and, and we, we fought through it, but we had issues. I remember one ex- 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," (laughs) and the point they were trying to make was, um, the, the, the product did not work well enough and so we had 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're starting to put the pedal down, back to your question, that's when you, I think, you can really benefit from the specialists because I've got muscle memory and I've seen great before. And you can figure it out, but it just takes a lot longer.

   6. HSHarry Stebbings10:52

      You mentioned the 100 restaurants there, and clearly feeling some signs of signal that there was market pull.

   7. ANAman Narang10:57

      Yeah.

   8. HSHarry Stebbings10:57

      Was that immediate in terms of when you released 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"?

   9. ANAman Narang11:10

      So the initial idea was, um, as I mentioned, it was six months in, we hadn't figured out what we were 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.

   10. HSHarry Stebbings11:20

       Yeah.

   11. ANAman Narang11:21

       And so like we were sitting in a, in a, in a, in a bar in Cambridge, uh, in Kendall Square next to MIT is where we used to work, and I think it took us like 20 minutes to get our check one evening and we're like, "W- 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. So we started with these QR codes you see today at restaurants. That's before we had this platform. And, um, didn't go anywhere. We, we, we, we couldn't scale it, and so we pivoted and we got... and then there was a lot of questions about whether getting into restaurants off, we're trying to rebuild something like a point of sale was a smart idea. Um, but once we pivoted to this point of sale, like the one thing that was very clear was when you went and talked to restaurateurs about this, they wouldn't give you the time of day because they did not like what they had.

   12. HSHarry Stebbings12:10

       Mm-hmm.

   13. ANAman Narang12:10

       And like one of the learnings for me and f- uh, and for the team was...... you know, oftentime 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, when 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'd give us hours, they'd sit down with us for hours.

   14. HSHarry Stebbings12:36

       One thing that's hard with the POS though, to be fair, is, um, it's a bit like a bank account, I think, which is, like, incredibly sticky.

   15. ANAman Narang12:43

       Uh-huh.

   16. HSHarry Stebbings12:44

       That 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.

   17. ANAman Narang12:53

       Uh-huh.

   18. HSHarry Stebbings12:53

       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?

   19. ANAman Narang13:03

       Yeah, we did. We did. I mean, it, we, we, um... it's, it's funny how these ideas get incrementally bigger over time. You know, initially the thinking was, "Well, if 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 out of 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 sale systems, at the end of the day, they're 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 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, e- early on, people didn't understand. They're like, "Why do people buy Toast?" And I was like, "Well, it's just cheaper," and they're like, "That's not a good reason to invest in a VC fundable startup." (laughs) And I was like, "No, it can be a good reason."

   20. HSHarry Stebbings13:58

       Is it just being cheaper? Is that an okay answer, do you think?

   21. ANAman Narang14:01

       No, it's not just cheaper. It's got to be cheaper and better.

   22. HSHarry Stebbings14:03

       Mm.

   23. ANAman Narang14:03

       Yeah, fundamentally, I don't think you can always, you can just go in and send me some-

   24. HSHarry Stebbings14:05

       Do you not think when you're a startup, you're never gonna be better? Like, you're, you're always

5. 14:10 – 17:07

   How Do Startups Compete When They're Always Behind?

   1. HSHarry Stebbings14:10

      gonna be, like, bluntly, uh, behind in terms of products. Your R&D spend is going to be nil compared to someone else's.

   2. ANAman Narang14:15

      Yeah.

   3. HSHarry Stebbings14:16

      Your CS is going to be nil compared to someone else in terms of the customer support. Like, you're, you're always going to be kind of behind in that way.

   4. ANAman Narang14:22

      Yeah.

   5. HSHarry Stebbings14:22

      How do you think about that for the startup?

   6. ANAman Narang14:24

      I think you can, 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 of stories.

   7. HSHarry Stebbings14:31

      Yeah.

   8. ANAman Narang14:32

      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 that 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 from the 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 10X engineers, like, one of the things that we could do, even if we had a lot, you know, wasn't, you know, high, 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, 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.

   9. HSHarry Stebbings15:32

      (laughs)

   10. ANAman Narang15:32

       I still remember we got this meeting with this guy and, you know, he was, like, excited about Toast, and he was a no-nonsense type of guy and he said, "Well, you know, it seems like, you know, 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. And he said, "Okay." And then he said, "Well, what about support?" And, um... I said, "What about support?" And he said, "You know, I can't get support from my current provider till the morning, and if we can't use your system, it's hugely problematic, as you can imagine." (laughs) And so I, I remembered that Steve had updated the website, like, a couple of days ago to, um, to say that we had 24/7 support, and so I said, "Well, you don't have to worry about it. We're small, but we have 24/7 support." And so he said, "Okay-"

   11. HSHarry Stebbings16:22

       Your wife, Nicole is like, "Ugh." (laughs)

   12. ANAman Narang16:24

       Oh, we have lots of stories about that. But he, um, he's like, "What's your website?" And he goes to our website and he calls the number, and the phone starts ringing in my pocket 'cause it was a Google voice number. (laughs)

   13. HSHarry Stebbings16:33

       (laughs)

   14. ANAman Narang16:33

       And the way it worked was, like, you know, 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 you don't pick up the phone. So I was, like, hoping, like, you know, I held the phone, turned the buzzer off in my pocket. One ring, two ring, three rings, fourth ring, I picked up the call in front of him. I said, "Look, I'm telling you, we have 24/7 support." (laughs)

   15. HSHarry Stebbings16:54

       (laughs) How did he respond?

   16. ANAman Narang16:55

       He's still a customer.

   17. HSHarry Stebbings16:56

       (laughs)

   18. ANAman Narang16:56

       Still a customer.

   19. HSHarry Stebbings16:57

       (laughs)

   20. ANAman Narang16:57

       Yeah.

   21. HSHarry Stebbings16:57

       That is amazing.

   22. ANAman Narang16:58

       Yeah.

   23. HSHarry Stebbings16:58

       Okay, so we have this early demand. We clearly have these signals.

   24. ANAman Narang17:02

       Yeah.

   25. HSHarry Stebbings17:02

       Before we go to, like, product expansion, geo expansion, all of the exciting kind of chapters,

6. 17:07 – 23:55

   Investing Story with Bessemer

   1. HSHarry Stebbings17:07

      need more cash. Venture funding is important.

   2. ANAman Narang17:09

      Yeah.

   3. HSHarry Stebbings17:09

      I spoke to Kent at Bessemer before this, uh, 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.

   4. ANAman Narang17:23

      Yeah. This is back to the, the string of nos that we got. And, um-

   5. HSHarry Stebbings17:27

      How many nos did you get?

   6. ANAman Narang17:29

      Eight or ten. Yeah, eight or ten. I mean, we, we met with, like, all the prominent VCs, I'd say, in the Boston area. And, um, I think a lot of it was on us. We underappreciated, like... we were probably a little bit confident because we felt like we were good engineers and, uh, and we had a good team and we could... we'd come out of this company that had been acquired and been successful and, and probably didn't do a good enough job even articulating what we wanted to do. I remember, like, in these meetings, it'd be like, "What is CAC? (laughs) What's LTV?" Like, trying to make customer... 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.

   7. HSHarry Stebbings18:03

      Do you still believe that?

   8. ANAman Narang18:03

      Yes, absolutely. I think those metrics and all those things matter. And of course, it's like in sales, right? You need the data and the scorecards, but if you're, like, sitting there looking at a scorecard trying to tell people, "You got to do better," that's not helpful.

   9. HSHarry Stebbings18:15

      This is my question, though-

   10. ANAman Narang18:16

       Yeah.

   11. HSHarry Stebbings18:16

       ... 'cause, you know, I obviously am an early stage investor today, and, like, you look at sales efficiency of a cedar or 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-

   12. ANAman Narang18:29

       Right.

   13. HSHarry Stebbings18:29

       ... which creates word of mouth-

   14. ANAman Narang18:31

       Yes.

   15. HSHarry Stebbings18:31

       ... which creates a microbrand-

   16. ANAman Narang18:32

       Absolutely.

   17. HSHarry Stebbings18:32

       ... which improves your sales efficiency. And so it's like, to what extent does one s- suspend disbelief and say, "The sales efficiency will get better-"

   18. ANAman Narang18:40

       Mm-hmm.

   19. HSHarry Stebbings18:40

       ... versus you're being an idealistic VC?

   20. ANAman Narang18:44

       I think you need both. You need both.

   21. HSHarry Stebbings18:46

       Mm-hmm.

   22. ANAman Narang18:46

       I think, like, y- you need to have some model. You need to 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? So a very highly considered purchase."

   23. HSHarry Stebbings19:05

       Did you know that from day one? Did you know that the fintech component would be a-

   24. ANAman Narang19:08

       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 f- the financial model wasn't obvious to me.

   25. HSHarry Stebbings19:17

       Mm-hmm.

   26. ANAman Narang19:17

       Because restaurants were like, you know... and we were, this is early too, but we were like, you know, we were making $200, $300 bucks a month on the software at most, and it was just, it was, um, not obvious given how much... and our 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 (laughs) scalable at all given what you're paying us." And so I think it's a, it's, you gotta, it's, it's a lot of factors. There's never, like, a black and white answer, but you wanna get some model that is at least somewhat credible in your head, right? So you wanna be, put together some simple model that says, "Here's what it could be." You don't... 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, and back to Bessemer and early days-

   27. HSHarry Stebbings19:59

       Mm-hmm.

   28. ANAman Narang19:59

       ... like with Kent, you know, we, we met with Kent and, um, of course he didn't invest and we raised with Steve, and then Kent r- r- put, you know, uh, put in 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 know, you guys seem like nice guys, but you showed up and you presented and, you know, um, the feedback we, we got was y- y- you," y- you know, "and what we noticed was you were arguing between the two of you while halfway through the pitch, and, uh, (laughs) about what the strategy was. And so we were a little spooked and, uh, and so, you know, we probably didn't do ourselves any favors."

   29. HSHarry Stebbings20:37

       That is amazing. What price did they end up coming in at?

   30. ANAman Narang20:39

       About 100, I think.
7. 23:55 – 30:16

   Why Aman Didn’t Take a Role of CEO Earlier

   1. ANAman Narang23:55

   2. HSHarry Stebbings23:55

      Why did you not take the CEO role earlier?

   3. ANAman Narang23:58

      I wasn't given it. (laughs)

   4. HSHarry Stebbings24:01

      (laughs)

   5. ANAman Narang24:01

      Actually, that was one of the most... I mean, look, I think Earl-

   6. HSHarry Stebbings24:03

      That's the most honest answer (laughs) I've had in a long time.

   7. ANAman Narang24:06

      (laughs)

   8. HSHarry Stebbings24:06

      I love that.

   9. ANAman Narang24:07

      Yeah.

   10. HSHarry Stebbings24:08

       What, uh, what told you about that?

   11. ANAman Narang24:09

       When you, when you're early, like, no one cares about, like, roles and titles as much. Like, it was like we're 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 were trying to make this company survive, and, like, no one, no one cared. And then at some point, it was like, we'd just raised this-... 30 million, whatever the mon- money was round, real round when I, when I put the pedal down in scale, and it was very clear that we did not know what we were doing in the scaling phase. And, and, um-

   12. HSHarry Stebbings24:33

       Did your VCs feel that?

   13. ANAman Narang24:35

       I think to some extent. I think Steve Poppen, who was the first investor, who was like a, he's, you know, friend and mentor, like, I think he picked up on it too. I think we all kind of picked up on the fact that there were, that that was like, that was one of those rocky phases in the company where, um, where, um, we're dealing with the, the real growing pains. And, uh, we had worked with Chris at, at, uh, Endeca, and, you know, one of the superpowers Chris always had was he knew how to get the best out of people. That was his sup- that was one of the things that... And so, um, and, um, and I remember in this session, we're sitting there trying to figure out the future of the company, and, and, um, and, um, it was, it was hard to be like, "We're gonna bring someone in from the outside," right? And this, we, we were early, uh, but in-

   14. HSHarry Stebbings25:23

       What sort of stage was the company at, at this point? 5 million ARR, 10 million?

   15. ANAman Narang25:27

       No, it was like 2 million ARR.

   16. HSHarry Stebbings25:28

       Wow.

   17. ANAman Narang25:28

       Pretty early, yeah.

   18. HSHarry Stebbings25:28

       Stunning.

   19. ANAman Narang25:29

       Yeah, two years in. And, um, and it was the best decision we made because we were able to, we were able to, um, 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 certainly I didn't, uh, you know, I think, um, and, um, and so back to your question, I just wasn't, wasn't giving it.

   20. HSHarry Stebbings25:58

       Okay. Uh, so then we have the $30 million (cash register ringing) and we have to scale and we have some points breaking. Uh, we have strategies to scale. What did you do that, with the benefit of hindsight, you wish you hadn't done?

   21. ANAman Narang26:11

       You know, one of the things at Toast that was interesting was, and this is still an issue today-

   22. HSHarry Stebbings26:17

       Mm-hmm.

   23. ANAman Narang26:17

       ... is how much do you wanna do? So our focus from day one was we're gonna solve for restaurants and we're gonna be the best solution for restaurants as a vertical, you know, the thesis, and the strategy was by building a platform that was purpose-built, we can, we can, 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, we, wasn't quite there. And so we had to say, "Well, what can we offer where, um, we can make the financials work?" Because it was a highly considered purchase, back to what you said, it's like, you know, these point of sales, like things described to me many times as like a root canal, switching out point of sale systems. And so you have to show up and-

   24. HSHarry Stebbings26:54

       So you need to increase the ARPU on a per customer basis-

   25. ANAman Narang26:57

       Yeah.

   26. HSHarry Stebbings26:57

       ... to make the sales efficiency better.

   27. ANAman Narang26:58

       Exactly. Exactly. And so one of the big challenges, uh, was how do we build out more of the platform and do it fast enough while scaling locations? And so I think one of the, the, the, the challenges that we faced was (clears throat) how many products can we do well?

   28. HSHarry Stebbings27:16

       Mm-hmm.

   29. ANAman Narang27:16

       How many products can you really build well? And then how many segments of the market can you really do well? Like, I remember one of our early customers was this, um, I think it was Urban Outfitters. They had all the restaurants in their, in their, in their, in their, in their retail stores, and they wanted us to do that, "You're doing such a great job, do all our retail." And, um, and, um, I'm glad we said no, right? And really focused in on restaurants. Um, but that was always, that was always challenging to figure out, like, what is the right surface area for us to be able to go to market with?

   30. HSHarry Stebbings27:43

       Okay. What did you do that you wish you hadn't done there? (laughs)
8. 30:16 – 34:57

   Is Toast a Fintech Business or a SaaS Business?

   1. ANAman Narang30:16

      in scaling.

   2. HSHarry Stebbings30:16

      When we think about expansion, there's kind of three core segments, so product expansion, segment expansion, and geo expansion.

   3. ANAman Narang30:22

      Yep.

   4. HSHarry Stebbings30:22

      So when we think about those three, the product expansion-... fucking nuts what you've done. Like, Toast Capital-

   5. ANAman Narang30:29

      Mm-hmm.

   6. HSHarry Stebbings30:30

      Right? We, we have amazing researchers. I would love to pretend like it's all just me. Um, but like in 2019, you did Toast Capital, I think, uh, was the notes I got. And now it does over a billion in annualized loans.

   7. ANAman Narang30:41

      Mm-hmm.

   8. HSHarry Stebbings30:42

      Wow. Question for you. Totally not what I was gonna ask. Is Toast a fintech business or a SaaS business?

   9. ANAman Narang30:49

      I think it's both. It's definitely both. I mean, we-

   10. HSHarry Stebbings30:52

       If I were to force you to be one?

   11. ANAman Narang30:54

       Customers care deeply about our software. That's why they picked Toast, founda- fundamentally, so maybe, maybe that's, that's what I'll say.

   12. HSHarry Stebbings31:02

       But it's a great business because it's a fintech business?

   13. ANAman Narang31:04

       I think the two together are complementary, yeah.

   14. HSHarry Stebbings31:06

       But I, I think it's often quite, um, removed for founders starting today, where they look at someone like Toast and the, the product suite that you have is incredible.

   15. ANAman Narang31:13

       Yeah.

   16. HSHarry Stebbings31:14

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

   17. ANAman Narang31:17

       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, and 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 SMB restaurants, these more complex operations that had more in revenue, more employees, more scale, and more complexity. And so you'd go into these restaurants and, you know, we'd 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 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, you know, gift cards and loyalty, a website. And all this stuff has to integrate in some way to the point of sale because that's the cent- central nervous system of the restaurant." And so our choice was, like, we can either partner or build, and sometimes people didn't wanna partner because we're these teeny companies. We're like, "Well, you have to build it," so... (laughs)

   18. HSHarry Stebbings32:20

       (laughs) Those individual point solutions will always say, "Ah, but we're so much more feature-rich."

   19. ANAman Narang32:24

       Yeah.

   20. HSHarry Stebbings32:24

       "We're much better because we're a point solution."

   21. ANAman Narang32:27

       Yeah.

   22. HSHarry Stebbings32:27

       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-"

   23. ANAman Narang32:35

       Yeah.

   24. HSHarry Stebbings32:36

       "... because it's a bundled offering," or do you say, "No, we are better than those point solutions. Forget that"?

   25. ANAman Narang32:42

       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, uh... I remember notoriously, pizza in restaurants is really complex. And when we got going, when we got some pizza restaurants, like, you know, 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. So I think it's really a seg- segment-specific question where, as you build out the platform, in certain segments, you might see success. In other segments, you have to, you have to partner.

   26. HSHarry Stebbings33:15

       What secondary product has been the biggest game changer?

   27. ANAman Narang33:17

       Payments.

   28. HSHarry Stebbings33:18

       Toast Capital-

   29. ANAman Narang33:19

       Yeah.

   30. HSHarry Stebbings33:19

       How does that come about? You guys sit in a room and you're like, "We should do loans. Let's do loans."
9. 34:57 – 36:24

   Biggest Miss on an Ancillary Product

   1. ANAman Narang34:57

      yeah.

   2. HSHarry Stebbings34:57

      Need a good data science team.

   3. ANAman Narang34:58

      Yeah.

   4. HSHarry Stebbings34:59

      Uh, what was the worst ancillary product decision that you made? Which product did you do that you're like, "Oh, that didn't work"?

   5. ANAman Narang35:05

      Many, actually, where we've tried... And the one thing that's great about Toast, back to the Zones to Win horizons, you know, we've got teams that are focused on scaling what we have, and then there are teams that are tinkering, and this is across the business. We then-

   6. HSHarry Stebbings35:17

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

   7. ANAman Narang35:20

      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 160 billion 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, there's been in the LOBs, but then we also have a new ventures program where we, um... and we're actually gonna graduate to the next program now, where we, we bring in folks that, you know, would otherwise wanna maybe go start companies and go raise capital through VCs, and wanna come work at Toast and, um, and wanna 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

10. 36:24 – 37:45

    The Worst Product Expansion

    1. ANAman Narang36:24

       of both models.

    2. HSHarry Stebbings36:24

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

    3. ANAman Narang36:29

       I think two learnings. One is it's not good enough to just build commodity products because it's integrated on the point of sale.... it was, thesis was, "Hey, if we just do more and more and more, if these products are integrated with 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 with the point of sale, that's good enough for someone to swap out their phone system."

    4. HSHarry Stebbings36:49

       It has to be better.

    5. ANAman Narang36:49

       It has to be better. I think the second big learning was within the solutions, the e- the stakeholder we serve the best is the restaurant owner or the operator. Right? We've been building technology to serve the stakeholder for a very long time. And the other stakeholders that exist, whether it's employees or guests or suppliers, we're starting to get there, like, we have now tons of rich data-

    6. HSHarry Stebbings37:12

       Mm-hmm.

    7. ANAman Narang37:12

       ... about, um, 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 a, you know, um, company that, that knows how to support all these stakeholders as well as we know how to serve restaurant operators. So when we've built these applications so far, like, you know, app products to serve, um, the guests or the employees, um, direct employee, direct to guest, it's not to say we won't get there, and there's some, we're doing some really cool things to their credit, um, but it's just something we're learning. So it's like, there've been lots of

11. 37:45 – 44:34

    Biggest Lessons in Expanding to SMB & Enterprise

    1. ANAman Narang37:45

       starts and stops.

    2. HSHarry Stebbings37:45

       It's always gonna happen. So that's like product expansions to a certain extent. Um, it's so funny, I'm such a nerd on your business.

    3. ANAman Narang37:53

       (laughs)

    4. HSHarry Stebbings37:54

       I, I, I love the Toast business, as you know. Um, the other element is, like, segment expansion.

    5. ANAman Narang38:00

       Yeah.

    6. HSHarry Stebbings38:00

       And you mentioned there kind of you like to actually almost be in the middle, it seemed like in the early days, which is like-

    7. ANAman Narang38:04

       Mm-hmm.

    8. HSHarry Stebbings38:04

       ... you have enough revenue where it's a sustainable business, it's not gonna be a bust, but also it's not the largest corporations in the world, your McDonald's or your Starbucks.

    9. ANAman Narang38:12

       Yep.

    10. HSHarry Stebbings38:12

        Um, but you've actually spread across both now. I mean, again, I have, you know, incredible people who do a lot of the work for me now, the joys of our jobs.

    11. ANAman Narang38:20

        (laughs)

    12. HSHarry Stebbings38:20

        Uh, 2023, you did bakeries and cafe products in a more, like, self-serve, lower cost.

    13. ANAman Narang38:25

        Uh-huh.

    14. HSHarry Stebbings38:25

        And then '24, we did restaurant management and more heavy enterprise.

    15. ANAman Narang38:29

        Uh-huh.

    16. HSHarry Stebbings38:29

        Yeah? What have been the biggest lessons in what it takes to expand down to SMB and do well there?

    17. ANAman Narang38:36

        We have been, um, 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. Maybe not enterprises, like if you think of regional chains, so we don't have lots of enterprise s- uh, businesses at massive scale, but we have lots of restaurants that have hundreds of locations and have s- some of the same complexity.

    18. HSHarry Stebbings38:55

        Who has the enterprises at massive scale?

    19. ANAman Narang38:57

        A lot of it is still on either custom homegrown or legacy on-prem solutions, because these solutions are so wired into everything else these, these chains do.

    20. HSHarry Stebbings39:10

        Will you replace them over time?

    21. ANAman Narang39:12

        I think so. I think, look, it goes back to, like, i- i- there was a time when a lot of this technology was, was simpler. Like, if you had a simple point of sale system take orders and payments, um, that's very different than... I remember early on, we, you know, I thought this was a g- glorified calculator. This, like-

    22. HSHarry Stebbings39:27

        (laughs)

    23. ANAman Narang39:27

        It's not, because it's the operating system, it's the ERP of the restaurant. And so as you build on top and you add, you know, online ordering and kiosks and employee scheduling and all sorts of capability support to support all the stakeholders, there's a massive list, the tech gets more and more complex. And so if you're an enterprise chain, right, that is not your core competency-

    24. HSHarry Stebbings39:47

        Yeah.

    25. ANAman Narang39:48

        ... to build more and more software. And so I think that's where I see, you know, cloud p- providers like Toast grow and take over over time, and especially because if you look in the four walls of a restaurant, whether you're a, you know, food truck or a cafe or a bakery or a full-serve restaurant or you're an enterprise chain, 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 how do you turn the tables faster? How do you move the line faster? How do you make the kitchen more efficient? Are you, I mean, 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, fundamentally, like, you know, there's a lot of overlap, whether it's a restaurant here in London or there's a restaurant in, in, you know, SMB restaurant.

    26. HSHarry Stebbings40:36

        There's a, there's a lot of overlap, 100%.

    27. ANAman Narang40:37

        Yeah.

    28. HSHarry Stebbings40:39

        But the requirements are different.

    29. ANAman Narang40:40

        Yeah.

    30. HSHarry Stebbings40:41

        In terms of, like, you can't have the same direct outbound model in terms of sales.
12. 44:34 – 47:51

    Build vs. Buy: How To Approach International Expansion

    1. HSHarry Stebbings44:34

       two things, that, and then also, "This is the last round of funding we ever need to raise."

    2. ANAman Narang44:38

       (laughs)

    3. HSHarry Stebbings44:38

       You're like, "Yep, uh, I've heard that before. Um, uh..." (laughs) If I had literally, I would have a billion dollars if I got a dollar for every time I heard that.

    4. ANAman Narang44:46

       Mm-hmm.

    5. HSHarry Stebbings44:47

       Uh, so we have product expansion, we have segment expansion-

    6. ANAman Narang44:49

       Yeah.

    7. HSHarry Stebbings44:49

       ... then we have geo expansion.

    8. ANAman Narang44:50

       Yeah.

    9. HSHarry Stebbings44:51

       You're making a much more concerted effort in terms of international expansion it would seem.

    10. ANAman Narang44:55

        Mm-hmm.

    11. HSHarry Stebbings44:55

        Um, how do you think about build versus buy on international expansion?

    12. ANAman Narang45:01

        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 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 into segments or, you know, geos or, 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.

    13. HSHarry Stebbings45:37

        Given the importance of that POS and being that kind of heartbeat of the, the kind of restaurant itself-

    14. ANAman Narang45:42

        Yeah.

    15. HSHarry Stebbings45:42

        ... but actually the acknowledgement that it's incredibly difficult to get people to switch, does it not make sense just to do a roll up play on international expansion? Go to each individual country, pick up (laughs) -

    16. ANAman Narang45:51

        Yeah.

    17. HSHarry Stebbings45:51

        ... the individuals and then plug in the ancillary products that none of those guys have-

    18. ANAman Narang45:56

        (clears throat) Yeah.

    19. HSHarry Stebbings45:56

        ... and juice up your ARPUs on that?

    20. ANAman Narang45:57

        No, our, like, our beliefs are that if we go into these markets and, um, build the best, offer the best solution, um, you know, there's, I know that it's 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 and scale that might change, but so far that's just been the thesis.

    21. HSHarry Stebbings46:17

        Uh, you've done five M&As now?

    22. ANAman Narang46:19

        Four.

    23. HSHarry Stebbings46:19

        Four.

    24. ANAman Narang46:20

        Yeah.

    25. HSHarry Stebbings46:20

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

    26. ANAman Narang46:24

        One of the things that we, back to the, 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-comm 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.

    27. HSHarry Stebbings47:01

        Mm-hmm.

    28. ANAman Narang47:02

        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 it down market into the smaller restaurants and plug into our go-to-market engine, that's gonna work." And what you don't realize is like, well, those restaurateurs 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 (laughs) you get through the day often. They're like, uh, one of the expressions that I like is, like, restaurateurs are like in the here and now, they're dealing with right now. It's like one of the learnings has been as you add more of the p- product p- portfolio, you gotta think through like, can the, the, your, your buyer actually absorb it, right? Versus, um, you know, if you buy from a solution that serves a different segment of the market, maybe they serve a different segment of the market

13. 47:51 – 51:00

    How Far You Can Push Revenue from Restaurants

    1. ANAman Narang47:51

       for a reason.

    2. HSHarry Stebbings47:51

       How much juice can you extract from restaurants? And I know that's a horrible statement and it's why I'm a VC obviously, um, but like how much revenue can you actually get before you hit the ceiling and go, "We gotta go to retail. We gotta go to broader hospitality."

    3. ANAman Narang48:05

       First of all, like I think it's about value creation. I think the monetization follows, it always starts with value creation 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. If you've got average talent, you get into details of why it's not working and there's a million reasons why noth- the things don't work and you get into this mode of like you're micromanaging versus like you bring in great talent and actually like they go and figure it out. And so a lot of like how much can you do and how much can you do well always goes back to people and talent. Um, and for us, I think, you know, when we think about all the different variables and all the different ways in which you can grow, as we, as we looked at, like-... you know, and maybe w- we could argue we're doing too much, but we, we have, you know, we, we see opportunity where the platform we serve, the strategy can work in other segments, in other GOs, upmarket enterprise, and we can expand the platform. And the question is, how do you sequence all this in ways, right, 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. And 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, like, "We look at how much we did in the first 10 years. Well, how much can you do in the next 10 years?" And that's the mindset you've gotta have.

    4. HSHarry Stebbings49:27

       It's so funny 'cause 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.

    5. ANAman Narang49:37

       Yeah.

    6. HSHarry Stebbings49:37

       If we get great guests on the show-

    7. ANAman Narang49:39

       Yeah.

    8. HSHarry Stebbings49:39

       ... we'll have amazing shows which deliver amazing value to millions of founders.

    9. ANAman Narang49:43

       Uh-huh.

    10. HSHarry Stebbings49:43

        And then more founders will wanna take money from us.

    11. ANAman Narang49:45

        Uh-huh.

    12. HSHarry Stebbings49:45

        We'll make great investments-

    13. ANAman Narang49:47

        Uh-huh.

    14. HSHarry Stebbings49:47

        ... and it'll lead to more great guests on the show.

    15. ANAman Narang49:49

        Yeah, makes sense.

    16. HSHarry Stebbings49:49

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

    17. ANAman Narang49:52

        Yes.

    18. HSHarry Stebbings49:52

        But it goes back to the values (inaudible)

    19. ANAman Narang49:53

        That's very generous. Thank you.

    20. HSHarry Stebbings49:54

        Not at all.

    21. ANAman Narang49:55

        (laughs) Yeah.

    22. HSHarry Stebbings49:55

        Um, I've made many hiring mistakes, dude. What's your biggest hiring mistake?

    23. ANAman Narang49:58

        Look, hiring is hard. And so just building a rigorous process actually is really important, and we, we're still not great at it. And transparency, because it's hard, because it takes time, right? Like, you're busy, but, like, this-

    24. HSHarry Stebbings50:09

        And it differs per function.

    25. ANAman Narang50:10

        Yeah, fair, but I think, yes, it does, but I think fundamentally, like, g- doing the hard work to say, "What are you looking for?" Upfront in the process, writing it down, right, being clear about it. Sometimes you don't even, like, the basics are lost, like, what are you hiring this person for? What are they gonna do? (laughs) Like, uh, and being clear about it as a group. In the interview process, like, having, l- like, I think Amazon does as well, like, writing down your notes, like, literally the transcript of what happened in the interview. I think in the interview itself, you have to be able to go deep because you only have so much time, and it's hard to go deep and h- a- ask hard questions to someone you don't know. One of the things I've learnt is you have to do it, even if it's uncomfortable or hard, because you have to understand, like, you know, w- w- where has this person really ha- dealt with great, uh, dealt with, you know, 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 a passenger? And so, that, that's what's, like, really important in the

14. 51:00 – 53:48

    A Flaw That Led to Aman’s Success

    1. ANAman Narang51:00

       process.

    2. HSHarry Stebbings51:00

       Do you know my favorite question to ask on that is what s- trait do you have that you're most ashamed of-

    3. ANAman Narang51:07

       Yeah.

    4. HSHarry Stebbings51:07

       ... but has also contributed to your success?

    5. ANAman Narang51:09

       100%, yeah. Your, your, your superpower is also often your kryptonite. When I get fixated on something, I can be very, um, um, depending who you ask, I can be, uh, uh, very annoying and, um-

    6. HSHarry Stebbings51:20

       Oh, Steve told me. (laughs)

    7. ANAman Narang51:23

       Yeah. (laughs) Or, uh, or, um, or I can be, um, you know, passionate in the details and care deeply. So I think it's, it's, there's a fine line often there where you, you, um, you know, like, you, um, you know, you wanna, y- y- y- y- y- it's, it's great to be in the details and care and go deep.

    8. HSHarry Stebbings51:43

       Are you a micromanager?

    9. ANAman Narang51:45

       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 had to learn along the way. Do you-

    10. HSHarry Stebbings51:52

        Do you think you're a great CEO?

    11. ANAman Narang51:54

        I'm learning. I mean, look, I think it c- I would say that a lot of this goes back to we're all on a learning journey, and it's all relative. Like, none of this is perfect. It's not, it's not, like, black or white. And I think 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.

    12. HSHarry Stebbings52:13

        What are you not great at today that you would like to get better at?

    13. ANAman Narang52:16

        I think communication and, and recognizing how important it is to align and inspire a big group is really, really important. I've always underappreciated that.

    14. HSHarry Stebbings52:25

        Mm-hmm.

    15. ANAman Narang52:25

        Like, I think I, 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 chess board. 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've gotta almost, uh, you've gotta overcommunicate a lot of that.

    16. HSHarry Stebbings52:48

        Mm-hmm.

    17. ANAman Narang52:50

        And, um, and I think that's an area where, you know, I, I s- I absolutely wanna get better.

    18. HSHarry Stebbings52:53

        You have to overcommunicate. You also have to create a sense of followership.

    19. ANAman Narang52:57

        Yes.

    20. HSHarry Stebbings52:57

        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.

    21. ANAman Narang53:02

        Yeah.

    22. HSHarry Stebbings53:02

        They feel like they're being sold to by politicians, like, people hate politicians.

    23. ANAman Narang53:05

        Yes.

    24. HSHarry Stebbings53:05

        Yeah?

    25. ANAman Narang53:06

        Yeah.

    26. HSHarry Stebbings53:06

        One thing that you're very good at, you're authentic.

    27. ANAman Narang53:09

        Yes. Yes.

    28. HSHarry Stebbings53:10

        You're not selling this, "I'm a fucking great CEO already."

    29. ANAman Narang53:13

        Yes.

    30. HSHarry Stebbings53:13

        Like, this is... People buy that.
15. 53:48 – 56:33

    Is Humility a Good Value?

    1. ANAman Narang53:48

       happens.

    2. HSHarry Stebbings53:48

       Final one before we do a quick fire round. You said about, um... I spoke to Steve before, sorry, and he said that you have, like, not much tolerance for BS.

    3. ANAman Narang53:56

       (laughs)

    4. HSHarry Stebbings53:56

       Uh, and you said before, I think it was, uh, was it a h- hu- humble mindset towards learning or something? It was a culture, a cultural value?

    5. ANAman Narang54:04

       We... One of the values is lead with humility. Yes.

    6. HSHarry Stebbings54:06

       Lead with humility.

    7. ANAman Narang54:07

       Yes.

    8. HSHarry Stebbings54:07

       Brilliant value.

    9. ANAman Narang54:08

       Yes.

    10. HSHarry Stebbings54:08

        So values that are good-

    11. ANAman Narang54:10

        Uh-huh.

    12. HSHarry Stebbings54:10

        ... are ones where you could take the opp- opposite side. Okay? So it's like, for me, we work unbelievably hard, and you will do the best work of your career here.

    13. ANAman Narang54:19

        Uh-huh.

    14. HSHarry Stebbings54:20

        And I believe that more hours leads to more success. A lot of people say it's wrong, strategic work, less hours, balance.

    15. ANAman Narang54:27

        Uh-huh.

    16. HSHarry Stebbings54:27

        Fine.

    17. ANAman Narang54:28

        Yeah.

    18. HSHarry Stebbings54:28

        Go somewhere else. (laughs)

    19. ANAman Narang54:29

        Both strategic and...

    20. HSHarry Stebbings54:31

        Uh, I just think actually brute force most things. (laughs)

    21. ANAman Narang54:33

        (laughs)

    22. HSHarry Stebbings54:33

        Uh, and I can't-

    23. ANAman Narang54:35

        Did you go to gym this morning?

    24. HSHarry Stebbings54:36

        Uh, yeah.

    25. ANAman Narang54:37

        That's good.

    26. HSHarry Stebbings54:37

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

    27. ANAman Narang54:42

        Yeah.

    28. HSHarry Stebbings54:43

        Is that a good value?

    29. ANAman Narang54:45

        I think, like, for us, leading with humility is about, like, recognizing that as a leader, you've gotta be close to the front lines. Like, that's one, one way to interpret that value. And back to, like, you know, to build a great business, you have to stay close to customers, stay s- click, c- close to the people that are actually doing the work, because things change.... even if you had some perspective from 10 years ago how things happen, like, things change. And so not being close to 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, uh, you can make really bad decisions.

    30. HSHarry Stebbings55:18

        I am pushing you. I'm just wondering, like-
16. 56:33 – 1:05:36

    Quick-Fire Round

    1. HSHarry Stebbings56:33

       That's funny.

    2. ANAman Narang56:33

       Yeah.

    3. HSHarry Stebbings56:34

       Now listen, I wanna do a quick fire. So I say a short statement, and you give me your immediate thoughts. Does that sound okay?

    4. ANAman Narang56:38

       Let's do it. Sounds good, yeah.

    5. HSHarry Stebbings56:38

       So what has been the most memorable near-death experience for Toast?

    6. ANAman Narang56:42

       It was actually pretty early. When we were building these QR codes, I said, you know, we were, we were trying to get, you know... 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.

    7. HSHarry Stebbings56:52

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

    8. ANAman Narang56:55

       No. What's that?

    9. HSHarry Stebbings56:56

       Did... We... Runway-wise, were you near-

    10. ANAman Narang56:58

        No. No. No, not at all. We were, we were like, you know, funding this from, like, the little money we had made from the last company. It was... No.

    11. HSHarry Stebbings57:06

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

    12. ANAman Narang57:09

        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 a growth mindset. That's somebody that comes to mind.

    13. HSHarry Stebbings57:19

        What was the most memorable first invest meeting?

    14. ANAman Narang57:22

        I remember we going to Steve Papa's house, right? This is like, we went up to New Hampshire. We were driving from Boston to 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, a zero. (laughs) We were off by a f- factor of 10 (laughs) 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 (laughs) that's, that's all, that's all he said, I think, at the end of the presentation. (laughs)

    15. HSHarry Stebbings57:44

        (laughs) Did you-

    16. ANAman Narang57:45

        In fact, initially, he thought we were trying (laughs) to start a restaurant. That's how much he was paying attention, I think. (laughs)

    17. HSHarry Stebbings57:48

        Did he commit on the spot?

    18. ANAman Narang57:50

        No. No. We had a couple meetings. I think at one point, I had to tell him, I was like, "Look, we have done good work for you. At a minimum, someone will aqua-hire us (laughs) even if it doesn't work." (laughs)

    19. HSHarry Stebbings57:58

        What was the hardest round to raise?

    20. ANAman Narang58:00

        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 it had good fundamentals. We also had w- you 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.

    21. HSHarry Stebbings58:20

        What have you changed your mind on in the last 12 months?

    22. ANAman Narang58:23

        It's actually interesting you brought up leading with humility. I think one of the pieces I've gotten, advice, is like trust your instincts more 'cause I think sometimes you can, you can end up in a world where, like, if you're, if you don't trust your instincts, you c- you can s- it can, you can move too slowly.

    23. HSHarry Stebbings58:36

        What did you not trust your instincts on that you should have done?

    24. ANAman Narang58:38

        Often, the hardest decisions are about people. Often, the hardest decisions are about people, not about business and strategy.

    25. HSHarry Stebbings58:45

        What's your biggest, most unorthodox advice for founders listening?

    26. ANAman Narang58:48

        I think one of the things that, that, um... This may sound, uh, odd, but don't raise too much capital. I think there's all this, this, this perspective about we got plenty of runway that's healthy, that's good. On the other- on, on the one hand, like, you know, VCs aren't stupid, so if you're gonna raise too much capital, you get diluted early on. Secondly, like, it c- I think there's a lot to be said about doing more with less.

    27. HSHarry Stebbings59:09

        What did you do more with less that really sh- comes to mind? Like, you said earlier about scarcity driving creativity.

    28. ANAman Narang59:16

        Yeah.

    29. HSHarry Stebbings59:17

        Is there an example where you're like, "We didn't have money, and so we did this"?

    30. ANAman Narang59:20

        I mean, there was, there was, there was... I think for us, like, we didn't have the money to try to build, you know, do, do a lot of marketing and get the brand out there. And so, 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 (laughs) in the space. (laughs)

Episode duration: 1:07:37