Toast’s three co-founders join the billionaire ranks after IPO
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The Toast, Inc. IPO at the New York Stock Exchange, on September 22, 2021.
Source: NYSE
Toast’s surge past $30 billion in market cap in its stock market debut on Wednesday turned all three of its co-founders into billionaires.
Steve Fredette, Aman Narang and Jonathan Grimm started the company in 2012 after their prior employer, Endeca, was sold to Oracle for $1 billion. Endeca was located in Cambridge, Massachusetts. The three of them stayed there and developed their hardware and software by trying out products at local restaurants, cafes, bars and other venues.
Fredette, Toast‘s president, owns 33.2 million shares for a stake worth $2.1 billion as of Wednesday’s close. Grimm, company’s chief tech officer, holds 26.8m shares valued at $1.7 billion. Narang is chief operating officer and owns 24.6m shares. The stake in Narang stands just above $1.5billion.
Because the lock-up agreement prohibits the three founders from selling stock within 180 days, and Narang (chief operating officer) has 24.6 million shares. This means that the stakes they own could rise or fall significantly by the time it is possible to start cashing out.
The stock was launched at $1.01 on Wednesday. This puts them in line with other tech founders and executives, who see their net worth increase during a boom year for IPOs. The founders of Coinbase, UiPath, Roblox, and Robinhood are among the others to join the three-comma club in 2021. According to FactSet, at least 19 technology companies have been listed this year and are worth more than $10 billion.
Full circle to mobile payments
Toast’s initial product almost a decade ago focused on mobile payments, allowing consumers to pay for meals from their devices. But integrations at restaurants were complicated, and even impossible at times.
Toast needed to rebuild its entire tech stack in order to make significant progress in a low-margin industry. This included all hardware and software used by restaurants to run their business.
Toast point of sale system
Toast
The founders also sought out more experienced help from their Endeca network hiring Chris Comparato as CEO. He previously served as executive vice president of Endeca. After that, he spent two years overseeing customer success for Acquia. On Wednesday, Comparato’s share in Toast reached $700 million.
Toast, at that time Comparato had joined, was making a crucial decision which seemed risky but proved vital in the long-term.
Toast chose Android to develop their payments platform, even though iPads were being used by some start-ups.
Fredette, a New York Stock Exchange interviewer, stated, “Early, iOS was better platform.” “The devices are more expensive and of higher quality.”
But as sleek as iPads looked and felt, Toast recognized a number of potential problems if they followed the Apple route. Most important, Apple’s system is locked down — it owns all of the hardware and software. Toast, as a third party developer, could create a great app.
Even though Android was plagued by bugs and constant updates, its technology is all open-source. That meant Toast could design its own hardware and go deep into the software, using a core operating system first that Google originated, but that nobody really controlled. Toast had a lot of flexibility in meeting customer demands.
Fredette stated that as the company grew in scale, it was possible to go directly to manufacturers and build what we wanted for our industry.
These offerings include a complete point-of-sale terminal as well handheld devices that allow waitstaff to order and pay. They are currently used in 29,000 locations.
Toast is becoming more popular over the years, for reasons that the founders couldn’t have imagined.
Covid-19 initially hammered the business, which is almost entirely dependent on a thriving dine-out industry. Toast came up with many options for restaurants that were not available in traditional establishments.
The most well-known product is mobile ordering. This allows consumers to order from anywhere, to skip the physical menus or to make payments instantly. This is exactly what the company had hoped to achieve eight years ago when technology wasn’t yet ready.
Narang stated that the company sees it as a complete circle. It’s incredible to witness some of the growth.
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