Toast’s three co-founders are all billionaires after company’s IPO

Toast’s stock market launch on Wednesday pushed the company’s market valuation above $30 billion, making all three of its co-founders’ billionaires.

After their previous employer, Endeca was sold to Oracle for $1 billion, Steve Fredette, Aman Narang, and Jonathan Grimm founded the company in 2012. They stayed in Cambridge, Massachusetts, where Endeca was situated and developed their restaurant hardware and software system by putting it through its paces at local pubs, restaurants, and cafés.

Toast’s stock market launch on Wednesday pushed the company’s market valuation above $30 billion, making all three of its co-founders’ billionaires.

After their previous employer, Endeca was sold to Oracle for $1 billion, Steve Fredette, Aman Narang, and Jonathan Grimm founded the company in 2012. They stayed in Cambridge, Massachusetts, where Endeca was situated and developed their restaurant hardware and software system by putting it through its paces at local pubs, restaurants, and cafés.

The Toast, Inc. IPO at the New York Stock Exchange, on September 22, 2021.

As part of the lockup agreement, the three founders and other insiders are prohibited from selling the stock for 180 days, meaning the value of their stakes could substantially rise or fall by the time they can start cashing out.

However, based on the stock’s launch price on Wednesday, the trio joins a growing list of tech executives and founders who have seen their net worth rise as a result of a record year for IPOs and rising tech valuations. Among those who have joined the three-comma club in 2021 are the founders of CoinbaseUiPathRoblox and Robinhood. According to FactSet, at least 19 IT businesses that went public this year are now worth at least $10 billion.

Mobile payments have come full circle.

Toast’s first product, released almost a decade ago, was centered on mobile payments, allowing customers to pay for meals using their smartphones. However, at the time, restaurant point-of-sale systems made integration difficult, if not impossible.

Toast concluded that to achieve genuine progress in an industry with low margins and tight budgets, it needed to rewrite the complete tech stack, which included all of the hardware and software that restaurants use to run their businesses.

Toast point of sale system
Toast’s point-of-sale software

After seeking more experienced help from their Endeca network, the founders engaged Chris Comparato as CEO. He was previously an executive vice president at Endeca and then spent over two years at Acquia as the director of customer success. On Wednesday, the value of Comparato’s Toast share increased to nearly $700 million.

Toast had made a significant decision by the time Comparato joined, which looked risky at the time but turned out to be critical in the long term.

Although some payment startups used iPads as cash registers, Toast elected to build on Android, even though the technology was inferior.

“From the start, iOS the stronger system,” Fredette said in a New York Stock Exchange interview on Wednesday. “The equipment was more expensive and of higher quality.”

However, as attractive as iPads appeared to be, Toast saw a lot of issues if they went the Apple route. Most importantly, Apple’s system is password-protected; the company owns all of the hardware and software. Toast’s greatest bet as a third-party developer would be to create a killer app.

Android’s technology was fully open source, despite its flawed software and frequent changes. That meant Toast could create its hardware and dive deep into the software, all while relying on a basic operating system developed by Google but owned by no one. Toast has a lot of flexibility in terms of meeting client demand as a result of this.

“As we grew in size, we were able to go directly to manufacturers and construct whatever we required for the industry,” Fredette explained.

29,000 customers in 48,000 restaurant locations are using the company’s products, which include a full point-of-sale terminal, handheld devices for waitstaff, and mobile ordering and payment software for customers.

Consumers have gotten far more familiar with Toast in the last year, for reasons the founders could never have foreseen.

The business, which is virtually exclusively reliant on a robust dine-out economy, was originally hit by Covid-19. However, as businesses wrestled with pandemic constraints and sought to meet consumer demand for takeout and contactless ordering, Toast emerged with a suite of choices that most premium restaurants had never explored.

Mobile ordering has proven to be one of the most popular offerings, allowing customers to bypass physical menus and pay without having to wait for a check. It’s exactly what the business planned to achieve eight years ago when the technology was still in its infancy.

On Wednesday, Narang added, “We certainly regard it as something that has come full circle.” “It’s incredible to witness some of the progress.”

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