Aman Narang On Raising $400 Million To Change How You Order Your Drinks

Aman Narang is the co-founder and President of Toast which is an all-in-one point-of-sale and restaurant management platform for businesses in the foodservice and hospitality space. The company has raised so far over $400 million from top tier investors like Bessemer Venture Partners, Google Ventures, Tiger Global Management, TCV, Eight Roads Ventures, E-Prime Capital, T-Rowe Price, and Lead Edge Capital to name a few. 

In this episode you will learn:

• Aman’s top question when interviewing new hires
• This founder’s top piece of advice for first-time startup founders
• Dealing with problems and resource constraints
• Juggling different priorities when there are so many things to do
• How to get in touch with Aman

SUBSCRIBE ON:

For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Aman Narang:

Aman Narang is President and co-founder of Toast.

Prior to Toast, Aman Narang worked on innovation initiatives at Endeca, now Oracle.

Aman Narang spearheaded the development of Endeca’s business intelligence platform as well as their mobile commerce platform, each of which became major business units.

Aman Narang holds BS and MS degrees in Computer Science from MIT and currently leads innovation and business development initiatives at Toast.

• Linkedin
• Crunchbase

* * *

FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we’re going to be learning quite a bit about platforms, restaurants, and whatever. You name it. We have the co-founder today of Toast, and he’s going to be telling us a thing or two about building and scaling companies. So without further ado, Aman Narang, welcome to the show.

Aman Narang: Thank you, Alejandro. Thank you for having me.

Alejandro: Originally from India, Aman. I know that you moved here for high school, but how was life there in India?

Aman Narang: Life was good. I was born in the eastern part of the country in a place called Assam and lived in New Delhi until I was seven. It’s an interesting story where when I was seven, I moved to Nepal until I was 14 because my dad got transferred as part of his work to go to Nepal. There was a big change to move from Nepal to Rochester, New York, Upstate New York for high school.

Alejandro: Wow. I can imagine. Then from there, you started developing some type of love for computers. Is that right? 

Aman Narang: Something like that. There was a lot of opportunity. This is the late ’90s, with everything that was happening with the internet, so I was part of that. I learned a lot about all the great businesses that were being built, and I felt like I wanted to get involved.

Alejandro: Then, you landed in MIT. How was the experience of being in MIT, where some of the best engineers in the world or coming out of MIT?

Aman Narang: It was hard. I was definitely one of the worst engineers at MIT.

Alejandro: Okay.

Aman Narang: I had a good experience. The people at MIT were great, and I think the biggest thing that I got with my experience was building a great network of people. The first job that I got out of college, I probably couldn’t have gotten without the network at MIT. Actually, it was a company called Endeca right next door from where MIT was in Kendall Square. A lot of the team was ex-MIT. My two co-founders that were at Endeca were also at MIT with me. The biggest thing I got out of it was, I’d say, the network of people I got to know has landed me where I am today.

Alejandro: Let’s talk about that because you met your co-founders, and now, you guys launched Toast, and the rest is history. I want to know how you guys started, first and foremost, connected, started to discuss between each other and the potential of doing something together, and how was that day when you guys finally said, “Hey, it’s time to press the button and go at it.”?

Aman Narang: The story starts with this first job that we all got at this company Endeca, that I mentioned. My co-founder, Steve Fredette and John Grim both worked at some point within Endeca as part of the special operations team. This team’s charter, Endeca, was to break new ground. Endeca’s core business was e-commerce. We had probably 45 of the top 100 retailers on our platform. We were trying to break into new verticals and new industries with our software. It was a good experience trying to not only build software but actually trying to take it to market, working with the sales team, working with customers to try to find an early product/market fit. We were fortunate that we got to work on software, but we were trying to basically build a business within a business at Endeca when we were 21, 22 years old. Then, when the iPhone came out, one of the opportunities that we had at Endeca was to build a mobile business because a lot of these retailers that I mentioned wanted to provide a capability on mobile. Steve Fredette, my co-founder at Toast, and I worked on building Endeca’s mobile presence. Endeca was acquired in 2012 by Oracle. After the acquisition, that was a good time to say — we were in our late 20s, and it felt like it was now or never in terms of trying to start a company. We had talked about it for many years, just being part of the special operations team. Starting a company was more about starting a company with these two guys, Steve and John, more than starting a company serving restaurants. We took three months figuring out what we were going to work on. Then finally landed in restaurants by chance. There was a place in Kendall Square in Cambridge, Massachusetts, that we used to go to, probably, once a month. It was a nice bar, outdoor patio in the summer. It took us ten minutes or so to get our check and leave one night because it was busy, a line of servers at the restaurant. We said, as a fun project — we hadn’t even thought through how we’d build a commercially viable business. We could build an app. We had a lot of experience with Endeca mobile to build an app. We said, “We should build an app to make it easy to pay your bill and leave at restaurants.” The thought was it would be easier and faster. The restaurants would be happier because you could turn the tables faster, and it was recently contained in terms of what we were trying to build. That was the beginning of Toast. We struggle for I’d say, at least six months or so. We had 50 of our friends using it. Our wives were wondering what we were doing, not having real jobs, and sitting on a couch at home, coding some app for one restaurant that was using it. That went on for about six months. As part of the experience, this is probably like the story of most startups. You learn an industry; you learn what the challenges are just by getting to know the community. As much perspective and research as you have, by analyzing a space, by researching it online, or by talking to people, you learn so much more by doing.

Alejandro: Yeah.

Aman Narang: Our initial hypothesis was to build this app to make it easy to pay at restaurants and allow restaurants to turn tables faster. While that didn’t work, we realized that restaurants are one of the few categories — and this is now in 2012. It was a big category. There are lots of restaurants in the U.S. alone. I think like 700,000 restaurants. It hadn’t really moved to modern cloud-based software. You go to a lot of restaurants, and they’d be using Windows-based software and hardware with servers in the restaurant. When I say servers, I mean physical computers as opposed to servers serving people food. We asked the question, “Why is this technology not cloud-enabled?” As we talked to restaurateurs about it, it became apparent that unlike the original idea that we had, restaurateurs wanted to talk to us about that. The constant theme that we heard was, “Why isn’t there POS in our technology in restaurants that’s simple? Like the smartphones in our pockets?” Whether it was being able to access some of their data and reports at home. I still remember one of our early customers was like, “One of the best things that Toast did was allow me to access my restaurant phone at home, so I don’t have to be onsite all the time. Or being able to update my menu and add specials, or allow people to order online.” This is one of the basic capabilities you can get from a cloud-based platform where anything that you can do in the restaurant, you can also do outside the restaurant. That was the beginning of Toast. We found there was this big category where the transition to the Cloud hasn’t happened. There are a lot of reasons for that. We talked forever about it wasn’t just the software. It was also the fact that these restaurant systems had custom hardware. But that was the beginning of Toast, where we found this opportunity where a true cloud-based platform that could make these restaurateurs’ lives easier just didn’t exist.

Alejandro: And man! Did you guys hit product/market fit or what! How much money have you guys raised?

Aman Narang: I don’t even know, to be honest. I think we’ve raised somewhere around 400 million or so. We were fortunate. As we went and talked to restaurants, it was very clear that building a solution that allowed them to run their restaurant more efficiently, get better access to their data, and turn their tables faster. We finally landed on a capability where — like the Apple Store where you can now go to the Apple Store, and you don’t have to stand in line because you can buy it right in the aisles with the app Genius, with the Apple team. We offered something similar, where at restaurants, servers can take orders and payments at the table with a device called the ToastGo®. It’s a cool experience for the guests, where you’ll be at the table with a big party, and you’re taking drink orders, appetizers, and entrees. Even be the server has left the table, you start to see the drinks show up because they’ve got a tablet at the table that works well. Very early on, we were seeing these signals where restaurants were very engaged with what we were doing and giving us lots of feedback. So much of it was customer-led because they realized the value of re-platforming some of this technology around the U.S. to something modern that allowed them to run their businesses more effectively.

Alejandro: Then how did you go about scaling the team because you have quite a bit of employees. How many employees do you have now?

Aman Narang: We have about 2,500 employees.

Alejandro: Wow. How did you go about scaling the team?

Aman Narang: It’s a lot of learnings the hard way. It’s funny how for most folks — especially first-time founders like we were, the skills and the capabilities necessary to go find product/market fit versus scaling a company — and it’s never black or white. It’s always like gradually this happens. They’re quite different because early on, a lot of it is about — there’s some luck involved, for sure, but it’s like trying to analyze an industry and an opportunity. You’re often very resource-constrained, so you’re in a lot of the details actively working through problems yourself. The hard challenge very early on, even if you find some early traction, it’s like there’s so much to do to get a company off the ground. You’re often juggling many different priorities. You can only do things so well. Once you start to get some capital in the business, you say, “Okay. It’s time to scale.” Let’s say you’re fortunate, and you found something there’s demand for, and it’s a big market, and you’ve been able to raise capital. The challenge often starts to change, where it’s so much more about: can you actually build a great team? Can you attract great talent? Can you keep people aligned? Can you get folks to understand the why behind the decision-making? So, it’s a different challenge because when you’re at 20, 15, 100 people, often you know everybody by name. You’re working actively with them. You’ve got relationships with everybody that change as the team scales. As much as you want to connect with the whole team, you cannot do it at 2,500 people. The challenge is very different at scaling a team. You think about building a great team. It starts by, first, being able to articulate a great vision about what the opportunity is. While it may be obvious, like being able to put on paper and articulate in a way that gets people to galvanize around an opportunity is actually, in some ways, different than finding an early product/market fit. Even though it might be the same, it’s happening that you articulated. Often, it’s about selling. It’s about articulating to a big group of folks and helping them understand the why behind things. Then, on the team side, as you build a bigger team, it’s about what are the ways in which you operate. What’s your operation system? How do you build a culture where people have a voice and can be part of a solution, but also, are aligned on a common mission? Those are different challenges. The one thing that I had to personally learn, often the hard way, was things like how important it was to be data-driven in your decision-making. Early on, you’re typically making decisions off of intuition and gut. As you get bigger, you’re not in all the details. So you have to build a culture where as much as possible, you’re using data to make decisions. How hard it is to attract and hire great talent was another big challenge for us. I had to learn it the hard way, just the process of even something as simple as how do you assess an interview? How do you go about finding people that are a good match for the business, not only in skills but also in culture? Those are all things you have to learn, especially for folks like me who are first-time founders.

Alejandro: Got it. So, when you’re doing an interview like you were saying, what is the one question to which you pay the most attention to the answer that you’ll be getting, and why?

Read More: Rahul Dhanda On Raising $50 Million To Create The Ultimate Coronavirus Test

Aman Narang: It’s a good question. For me, in interviews, what’s worked well is — they understand why they’re excited about Toast because it gives me perspective on why the candidate sees a great opportunity and why they’re excited about what Toast is doing, and whether it’s a passion for restaurants or the culture that we have as an organization. Then, also, I like to pick something in their resume and go deeper on it to understand how they think and some of the challenges that they’ve faced working through something complex, and how they’ve navigated those. The biggest thing is more than any one specific question. It’s about taking one experience on their resume, and often, I ask them, “What do you think is the best match is for this opportunity at Toast from your background.” Then spend maybe 45 minutes talking about it to understand to add some depth about what they went through.

Alejandro: One of the questions that I typically ask the guests that come on the show is — Aman, you’ve been at it for quite a while now. You guys got started in 2011, so it’s been quite a wild ride. I think if you had the opportunity to have a chat with your younger self, with that younger self that was brainstorming still at Endeca, what would be that one piece of business advice that you would give to yourself before launching a business knowing what you know now, and why?

Aman Narang: I think the biggest thing I’d give for myself was to be more patient and to listen better. Maybe it’s very cliché advice, but I think often I was quick to jump to conclusions and I was definitely very passionate about making an impact and winning, but sometimes I would try to do things too quickly and not actively listen, makes things harder when they don’t need to be. That’s probably what I would say.

Alejandro: The listening is so easy to say, but it’s so hard to do. How do you go about mastering listening all around and all across the board, either with investors, with customers, with employees? What have you learned about that?

Aman Narang: I think you learn some of that the hard way, often. I’ve gotten feedback over the years where making sure, for example, that people understand the why behind any decision, that people feel heard, and there’s good two-way dialog is such an important part of an organization and all growing in the same direction. I think a lot of it, we learn through experience, I’d say, and I did too where the best way to learn is you see a situation where not everyone’s aligned, and then the progress that you make, as a result, is suboptimal. I’m sure part of it is also just over the years you get older. You learn that over time, as well.

Alejandro: Yeah. Absolutely. Very cool. So, Aman, for the folks that are listening, what is the best way for them to reach out and say hello?

Aman Narang: They can reach out to me on LinkedIn. They can connect with me, and I’m happy to connect, as well.

Alejandro: Fantastic. Well, Aman, it has been a pleasure. Thank you so much for being on the DealMakers show today.

Aman Narang: Thank you, Alejandro, for hosting this. It’s fun.

 

* * *

If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at [email protected].

Podcast: Play in new window | Download

Subscribe: Apple Podcasts | Google Podcasts | Spotify | Stitcher | TuneIn | RSS | More