Toast: Aman Narang. How a Long Wait for the Dinner Check Launched a $2 Billion Business.
Aman Narang co-founded Toast after identifying inefficiencies in the restaurant payment system, leading to a successful platform that now supports nearly one in five U.S. restaurants. Despite facing numerous challenges including skepticism from restaurant owners and the COVID-19 pandemic, Toast has grown rapidly and achieved significant revenue milestones.
Summary
In this episode of How I Built This, Aman Narang details his journey as co-founder of Toast, a point-of-sale service tailored for restaurants. The idea for Toast was sparked by the frustrating experience of waiting for a dinner check, highlighting inefficiencies in traditional restaurant payment systems. Narang and his team initially launched an app in 2012 designed to allow customers to pay through their phones, but it failed to gain traction due to clunky technology and integration challenges with existing systems.
Recognizing the broader issues within restaurant technology, the founders pivoted to offer a complete operating system for restaurants instead of just a payment feature. This involved building out functionalities for inventory management, payroll, and more, aimed at enhancing operational efficiency. Despite initial struggles to attract clients and skepticism from investors regarding the viability of a restaurant-specific software, they managed to establish partnerships and grow within local markets quickly.
The COVID-19 pandemic dealt a significant blow to restaurants, drastically reducing Toast's revenue. However, rather than folding, the team leveraged this challenging period to innovate, introducing off-premise sales tools like QR codes for ordering and payments. As the company emerged from the pandemic, Aman Narang returned to a leadership role, emphasizing the importance of understanding customer needs and adapting solutions accordingly. Today, Toast has a strong market presence, serving a substantial portion of U.S. restaurants and looking to expand further in both restaurant and retail markets.
About this episode
<p>After waiting too long to pay his restaurant bill, <strong>Aman Narang</strong> thought there had to be a better way. His first idea—a mobile payment app—flopped.</p><p>But that failure revealed a much bigger opportunity.</p><p>Restaurants were struggling with outdated software that many owners hated. Payment systems were expensive, unreliable, and trapped on servers hidden in back offices. Replacing them cost time and money.</p><p>But that’s exactly what Aman and his co-founders set out to do: create an entirely new POS system for restaurants—from scratch.</p><p>They worked from an unfinished basement, answered customer calls on their own phones, crashed their first restaurant on day one, survived years of rejection from investors—and eventually grew <strong>Toast</strong> into a business that generates more than $2 billion in annual revenue.</p><p>In this episode, Aman shares how a failed product became a billion-dollar company.</p><p><br /></p><p><strong>What you'll learn:</strong></p><ul><li>How to know when it's time to pivot</li><li>Why investors rejected Toast again and again</li><li>How to convince customers to replace mission-critical software</li><li>Why Toast intentionally stayed small before scaling</li><li>The leadership lesson Aman learned after almost breaking the company</li><li>How Toast survived COVID after restaurants shut down</li><li>What founders should look for when choosing a co-founder</li></ul><p><br /></p><p><strong>Timestamps:</strong></p><ul><li>11:25 — The frustrating restaurant experience that inspires Toast</li><li>15:41 — The first product fails—and reveals a bigger opportunity</li><li>16:43 — Building Toast: “We grossly underappreciated what it would take.”</li><li>26:05 — Why nearly every investor said “No.”</li><li>32:31 — Toast’s disastrous first launch: writing credit card numbers by hand</li><li>34:18 — Pitching hundreds of restaurant owners before finding believers</li><li>38:08 — Why customer obsession beats competitor obsession</li><li>44:17 — Bringing in a new CEO: “We need to rethink how we do things here.” </li><li>52:31 — The biggest lessons from building a $2 billion company</li></ul><p><br /></p><p>This episode was produced by Sam Paulson with music by Ramtin Arablouei. It was edited by Neva Grant with research help from Casey Herman. Our engineer was Kwesi Lee.</p><p><br /></p><p><strong>Follow How I Built This:</strong></p><p>Instagram → <a href="https://www.instagram.com/howibuiltthis/" rel="noopener noreferrer" target="_blank">@howibuiltthis</a></p><p>X → <a href="https://x.com/howibuiltthis" rel="noopener noreferrer" target="_blank">@HowIBuiltThis</a></p><p>Facebook → <a href="https://www.facebook.com/howibuiltthis" rel="noopener noreferrer" target="_blank">How I Built This</a></p><p><br /></p><p><strong>Follow Guy Raz:</strong></p><p>Instagram → <a href="https://www.instagram.com/guy.raz/" rel="noopener noreferrer" target="_blank">@guy.raz</a></p><p>YouTube → <a href="https://www.youtube.com/channel/UCNSfrxNEmCruNtjIzxCBHjg" rel="noopener noreferrer" target="_blank">guy_raz</a></p><p>X → <a href="https://x.com/guyraz" rel="noopener noreferrer" target="_blank">@guyraz</a></p><p>Substack → <a href="http://guyraz.substack.com" rel="noopener noreferrer" target="_blank">guyraz.substack.com</a></p><p>Website → <a href="http://guyraz.com" rel="noopener noreferrer" target="_blank">guyraz.com</a></p><p>See Privacy Policy at <a href="https://art19.com/privacy" rel="noopener noreferrer" target="_blank">https://art19.com/privacy</a> and California Privacy Notice at <a href="https://art19.com/privacy#do-not-sell-my-info" rel="noopener noreferrer" target="_blank">https://art19.com/privacy#do-not-sell-my-info</a>.</p>
Key Insights
- Aman Narang identified a major opportunity in the restaurant industry due to inefficiencies in existing payment systems, stemming from his own frustrating experiences.
- The initial failure of their app to let customers pay from their phones revealed a broader issue with the technology used in restaurants which had not evolved with modern cloud solutions.
- Toast pivoted from merely addressing payment processing to offering a complete point-of-sale solution that included various operational management features for restaurants.
- Narang emphasized the importance of understanding restaurant operations by testing their system with local establishments, which helped fine-tune their offerings.
- Despite facing skepticism and challenges in convincing restaurant owners to switch to a new system, Toast focused on new restaurant openings to grow their customer base.
- The company faced significant revenue declines during the COVID-19 pandemic, prompting them to rethink their offerings and prioritize off-premise sales solutions.
- Toast's commitment to enhancing customer support and experience was crucial, especially during moments of technical failure, which built customer loyalty.
- As of today, Toast has captured approximately 20% of the U.S. restaurant market, with plans for further expansion into new geographical and sectoral markets.
Topics
Transcript
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