Grit · 1 Jun 2026 · From the week of 1 June
What It Takes to Build Software for 171,000+ Restaurants | Aman Narang
These are notes on the conversation, checked against its transcript. The episode itself has the full discussion.
In brief
Aman Narang, co-founder and CEO of Toast, traces the restaurant software company from a phone-based checkout app that got little traction to a broader platform built around restaurant operations. He covers early funding from one angel backer, the problems that came from scaling before the product, hardware and support were ready, and the leadership changes that followed, including bringing in an experienced CEO. He also describes Toast's expansion into retail, enterprise and international markets, along with its AI and demand-management ideas.
For founders
- Pitching a narrow product got little response, but asking restaurateurs about their technology more broadly surfaced the pain Toast went on to solve.
- Toast could not raise venture capital until an early backer committed the first check, and that backer also asked to approve every early hire.
- Scaling sales before software, hardware and support were ready caused problems, so the company slowed down to fix them.
- Early hires were paid partly in equity instead of cash to stretch a limited initial funding base.
- Aman said Toast deliberately went deep on restaurants and built for their complexity rather than building a horizontal product.
For revenue leaders
- Toast hired salespeople who could sell across all restaurant types, not just one segment.
- Early on, Aman said he cared more about getting customers using the platform than about pricing.
- Early hiring from the founders' personal network stopped working as the company grew, and Toast later struggled to hire and assess people effectively.
- Aman said set-it-and-forget-it technology works better for small restaurants than tools that need constant attention.
What was said 25, most useful first
A narrow phone checkout app got little customer engagement, but asking restaurateurs about their technology more broadly surfaced recurring pain. Listen
Toast's founders built a phone-based checkout app for restaurants and saw almost no traction for about nine months. When they changed the conversation to how restaurateurs felt about their technology in general, they found that none liked their legacy platforms and that restaurants used more technology than the founders expected, often re-keying orders and manually exporting data between systems.
“We got barely any time from. customers. But when we pivoted the conversation to talk about like, hey, how do you like your technology more broadly?”
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Pushing to scale before the product was ready exposed gaps in hardware, offline functionality and support. Listen
After early customers arrived, investor Steve Papa pushed the team to put the pedal down, but Aman said the software did not work offline, the hardware was not ready for deployment, and support was not in place. He recalled that 100% of the first hardware iteration came back within roughly 80 days. Steve Papa and co-founder Steve Fredette told the team to slow down and fix these foundations.
“We thought we were ready to scale, but because of the complexity of the hardware, the software, the support, we just really were not ready.”
Toast could not raise venture capital until an earlier backer committed the first check. Listen
Aman said the team made introductions to many VCs but could not raise until Steve Papa, founder of the company they had left, put in the first check. Papa said he would commit $500K but initially wired $100K, paying the rest over time and requiring approval of every early hire. Aman said Papa's advice shaped the company for years.
“we couldn't really raise capital until we got Steve Papa to put in the first check.”
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Restaurants have no real concept of yield, and that filling open capacity could be a technology opportunity. Listen
Aman said restaurants have fixed costs and open slots, and that tools could use demand patterns, weather and local events to generate offers that fill capacity for delivery, pickup or in-store dining. He said restaurants are a sub-10% margin business, so an incremental order carries very high margin, and he was not certain the figure was exact.
“restaurants are, you know, sub 10% margin business. where every incremental order is like, you know, 80% margin.”
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Toast chose to go deep on restaurants and serve every restaurant type rather than build a horizontal product. Listen
Aman said the early customers included food trucks, cafes, quick-serve, full-service, fine dining, a bar and a nightclub, and Toast built for those edge cases on purpose. He described the company's branding as built around the thousand little things that make restaurant tech what it is. Aman presented this as a deliberate strategy, not a lack of focus.
“And I think that was a deliberate strategy.”
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Toast's business model depended on three things: a cloud platform, Android hardware, and embedded payments. Listen
Aman said that to make the company fundable and its business model work, Toast combined a cloud platform, Android as the hardware, and embedded payments. He said this made the hardware and service much cheaper than legacy platforms with upfront costs. He framed these three choices as the ones that mattered most.
“I think those are three things that mattered was the cloud platform, Android as the hardware, and then embedded payments to make the business model work.”
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Building your own hardware on a $100K check is very hard, so Toast used commodity Android tablets. Listen
Toast bought off-the-shelf Android tablets and related accessories rather than building its own hardware, using Amazon and Alibaba among other sources. Aman said this was a cost-driven choice given the size of the early funding. He noted that these tablets had design issues, such as a change in port configuration, that caused problems.
“It's very hard on 100K checks to build hardware.”
In the early days, Toast's support number was a Google Voice line that rang across the whole company. Listen
Aman said the support number routed through a Google Voice line that rang for everyone in the company. He described a Boston bar and nightclub owner who tested that number during a sales meeting, and Aman had to answer the phone himself. Toast had sales and product but no dedicated support function at that point.
“So Google, the support number was like a Google voice number, right?”
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Early employees were paid more in equity than cash to stretch limited funding. Listen
Aman said the founders may not have taken salaries, though he did not remember the exact details, and they were careful about burn, leaning toward equity over cash for early employees because they did not know if they would ever have more money. He said the first sales hires were recent graduates on low base salaries and did not understand commission structures until later.
“we leaned a little bit more, which worked out into equity than cash early on with employees”
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Early on, Aman said usage mattered more to him than pricing. Listen
Aman said that early in Toast's life he did not care about pricing and only needed people using the platform, because usage was fundamental to learning. He said the platform could be made cheaper than competitors if needed. He also argued that revenue growth and usage supported recruiting, fundraising and credibility.
“I don't care about pricing. We just need people using it.”
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Founders should keep disagreements away from staff because open debate distracted the team. Listen
Aman said he and a co-founder would debate strategy and priorities openly while sitting on the floor with 25 to 40 people, and staff asked what was going on. He said the team learned that disagreements should be worked through away from the rest of the company.
“if you've got disagreements to work through, we're gonna go away.”
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Hiring from the founders' personal network worked for the first 10 or 20 people but did not scale, and Toast's performance distribution showed large differences. Listen
Aman said the first 10 to 20 people were mostly known to the founders through their network, so the founders did not do enough rigorous interviewing as they hired fast. By late 2014 the company was growing from about 20 to 50 people, and the performance gap between employees was visible. He identified this as a low point for the company's execution.
“maybe it was all people we'd known in our network as we knew they were good.”
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Toast brought in an experienced CEO to help it scale, and Aman said this was tricky because founders lose some control. Listen
After Aman discussed it with Steve Fredette and Steve Papa, one of the Steves recommended hiring a leader who had scaled before. Toast brought in Chris, who had scaled customer success at the company they had worked at together, and he served as CEO from 2015 to 2023. Aman said Chris's main strength was bringing the team together, and the founders became presidents under him.
“Steve's recommendation was it would really help you to have a leader who's scaled before to help you scale.”
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Around 2021 Toast created New Ventures teams with separate comp plans to build new products, and several launched. Listen
Aman said Toast, around 2021 (he was not sure of the exact year), brought in entrepreneurs and isolated teams with compensation plans focused on their own business to revive its entrepreneurial spirit. The program launched Toast Retail, guest-facing products such as reservations and a waitlist, a local app, catering and events products, and an advertising product. Aman said not everything worked.
“and we built out these teams within toast with like literally like it was like, you know, isolate the teams, give them a comp plan that's very focused on their business.”
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Toast had about 20% of U.S. restaurants, up from about 5% at its IPO. Listen
Aman said the question about Toast's total addressable market led the company to think about how big it could be at 50% share of U.S. SMB restaurants. He gave these figures in response to a question. He also described restaurant spending as roughly a trillion dollars using round numbers.
“In the U.S. about 20%.”
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Toast's team estimated at least seven or eight trillion dollars of local commerce spending beyond restaurants. Listen
Aman said Toast analyzed the U.S. economy and found that restaurant spending of about a trillion dollars was only part of the opportunity. He said the team estimated seven or eight trillion dollars in spending on in-store commerce such as grocery, gas stations, community stores and clothing stores, using round numbers. He said this analysis supported expanding into retail.
“And so our team actually went back and analyzed some of this and said, well, wait a minute, like, there's at least seven or eight trillion of spend.”
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Toast sequences growth across SMB restaurants moving upmarket to U.S. restaurant chains, then going global, with retail following a similar pattern. Listen
Aman described Toast's growth factors as enterprise, international and retail, with SMB restaurants moving up market to U.S. restaurants and then going global. He said SMB retail may follow a similar pattern. He noted that Toast Retail is probably the fastest-growing business in the company.
“Enterprise, international, and retail are the three growth factors when it comes to location growth.”
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The future of software for local businesses is vertical rather than horizontal. Listen
Aman said Toast's view is that the future is vertical, and that for each sub-vertical the company builds capabilities brick by brick. He said that however much innovation sits on top, operational complexity and workflows must be solved first. He used grocery stores, bottle shops and other retail categories as examples.
“we believe the future is like vertical. It's not horizontal.”
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Toast's support agent is now handling about half of its support volume. Listen
Aman said Toast has a product called ToastIQ, built on Toast's data and accessible through a chat interface that can answer questions and make changes to the back end. He said the support agent is partly off-the-shelf software from a partner, and Toast is still using foundation models in parts of its AI work.
“We're doing about half our support through it now, or through the support agent.”
Toast probably knows what a guest will order with high accuracy, and described pre-ordering at check-in as a planned feature. Listen
Aman said Toast has a lot of data and probably knows what a guest will order on a given menu with very high accuracy because people are creatures of habit. He described a planned feature where guests pre-order at check-in so the kitchen fires early, and he said Toast wants to personalize the table experience using guest profiles.
“on any given menu, we probably know what you're gonna order, with like very high accuracy, because people are creatures of habits.”
Small restaurant operators do better with set-it-and-forget-it technology than with tools that need constant attention. Listen
Aman said many small restaurant operators are overwhelmed by technology they do not have time to manage, and that the tools that work best run in the background, such as online ordering that drives demand. He said operators also need help using platform data for decisions, which they often outsource to fractional hires.
“the types of tech that works really well is like stuff that like you just kind of set it and forget it and just works in the background”
A sales team has to be able to sell across restaurant types, not just one small segment. Listen
Aman said Toast's sales hires needed to sell across the whole restaurant industry, which was part of why the company kept the platform broad across restaurant types. He also said Toast put sales and service people on the ground in cities, which restaurateurs valued.
“if we're going to hire a sales team, they got to be able to sell not just a small segment of the restaurant industry, they got to sell across different restaurant types.”
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Toast had its employees help write its mission, purpose and values, and Aman said this made a big difference. Listen
Aman said Toast asked its top employees what makes Toast work, then used their input to write the mission, purpose and values. He said he would describe this as more about execution than strategy. He also said the company put basic hiring infrastructure in place around the same time.
“we asked them like what makes toast take and we had them put together our mission and our purpose and our values”
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The most important job of a manager is to be a good coach. Listen
Aman said many of Toast's hires came from the restaurant industry, so Toast had to teach them what it means to work in a corporate environment and be an effective manager. He said a manager who cannot coach and work alongside the team lacks credibility, and that other management skills matter less without that.
“I'm a big believer now that like a good manager, Number one thing that you have to do is you have to be a good coach”
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He regularly asks servers how they like the product and the service when he dines out. Listen
Aman said that when he eats at a restaurant he does not know, he tries most of the time to ask the server, or a manager if available, two questions: how they like the product and how they like the service. He said both are very important to restaurant operators. He described this as a personal ritual.
“I'll ask him like, how do they like the product and how do they like the service?”
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