The Silicon Valley is a major tech hub, often setting the standard for how tech companies should conduct business. However, there are major drawbacks to following Silicon Valley norms, and one company in particular, Toast, realized this and chose instead to follow its path.
This article will explore how Toast defied the Silicon Valley norms to build a $30 billion business.
Definition of Silicon Valley norms
Silicon Valley norms are the unwritten and often unspoken values and attitudes of the region’s people. These norms and attitudes have been a primary contributing factor to the success of Silicon Valley as an area where groundbreaking businesses are founded and can thrive. Many big name firms such as Google, Apple, and Amazon share these Silicon Valley norms which include work ethic above all else, creating an innovative culture powered by risk-taking, disruption for progress, embracing failure as a learning experience on the path to success, amongst others.
However, not all startups that spearhead innovation adopt these Silicon Valley norms. For example, we can see how Josh Resnick’s company Toast defied Silicon Valley norms to build a $30 billion business. Toast set itself apart by building relationships with customers first instead of just technical abilities; striving for progress but avoiding risk taking; viewing failure differently depending on how it served its customers; and involving customer feedback in every decision it made. These core values allowed them to succeed while avoiding traditional Silicon Valley approaches that they felt may not have completely benefited their customer base or their company’s goal. Their customer-first approach exemplifies why it remains important for other businesses to be aware of local cultural expectations when entering any new market and understand customer needs beyond technical innovation when considering product development.
Toast’s Success Story
Toast has succeeded incredibly with their mobile point-of-sale system by defying Silicon Valley norms. Their success story offers insight into what works for non-traditional startups, and how to stay competitive in the face of traditional Silicon Valley companies.
Let’s dive into Toast’s story and explore how they defied Silicon Valley norms and built a $30 billion empire.
How Toast Defied Silicon Valley norms
As a successful business, Toast has defied Silicon Valley norms by focusing on customer-centricity, understanding customer needs and leveraging customer feedback. This customer-centric approach is not typical of Silicon Valley, where tech firms prioritize technology over people. Instead, by prioritizing the needs of their customers and building solutions that solve real customer problems, Toast has succeeded to the tune of $30 billion.
Toast understands the importance of asking customers what they need before launching a product or service. This “center active coders” model enables them to hear real feedback from current users to develop product enhancements that customers want. The progressive approach also means that they develop an app with customer input at the early stage to make changes and iterate faster.
Toast also breaks from tradition in terms of timing standards for product releases. Instead of releasing products as soon as possible and relying heavily on post-release fixes, Toast takes a two-month validation period for each product development cycle so that potential issues are identified and fixed before launch — a precautionary measure not typically seen in the Silicon Valley landscape. Customer satisfaction is also at the center of this practice; unlike traditional Silicon Valley software companies who often prioritize speed-to-market, Toast takes extra time on their products to provide excellent user experiences for customers starting day one.
Lastly, Toast controls costs by carefully optimizing their technology stack — something relatively unheard of in Silicon Valley where companies tend to reinvest profits into further technology instead of cost optimization efforts. By being conservative with spending while pioneering meaningful technology outcomes that optimize customer experiences, Toast has created considerable value despite having comparably small budgets compared to other tech firms today.
How Toast Defied Silicon Valley Norms to Build a $30 Billion Business
Toast, a Boston-based restaurant point-of-sale platform, eventually became a $30 billion business despite it’s struggling start in Silicon Valley. At the time, venture capital firms primarily invested in consumer mobile and social media businesses, leaving Toast disadvantaged. But despite being at a disadvantage, Toast’s leadership and team demonstrated resilience and perseverance to succeed.
The firm’s CEO Jez Humble understands the unique needs of restauranteurs, but also respected their limited resources when creating their product strategy. Instead of blindly following Silicon Valley norms, Toast tailored their product to truly fit the needs of employees in restaurants, creating an intuitive experience and offering a convenient self-service approach with quick onboarding times that didn’t require extensive training. By catering to customers who were way underserved by traditional investments from venture capitalist firms. Toast established itself as a great solution for restaurants point of sale technology that prioritizes user experience first.
Moreover, because so many new technologies have relied heavily on unproven or untested business models that prioritize growth over stability and sustainability – toast also prioritized stability as part of its mission which endeared itself even more with eatery owners who place much importance on having reliable technology when dealing with customer data protection laws or controlling cashflow related complexities in terms of payments software integrations etc.
Toast’s decision to diverge from the norms set by Silicon Valley enabled them to soar past the rest while still maintaining their user centric mindset towards product design which had been ingrained at organization’s core since its inception back in 2011 over 10 years ago right up until today’s successful $30 billion business with almost 2000+ employees worldwide all devoted around building better tools for restaurateurs helping them deliver food faster and better customer experiences overall throughout these unprecedented times both for small scale local enterprises up till large multi franchise corporations across globe .
Benefits of Defying Silicon Valley Norms
Toast, successful restaurant software business, is a perfect example of how going against typical Silicon Valley norms can be beneficial. Toast’s success story is an inspiration demonstrating how working smarter and not harder can pay off.
In this article, we will explore how Toast defied Silicon Valley business norms and how this decision has benefited their business, allowing them to achieve their success.
Throughout Silicon Valley’s history, companies have followed specific rules, or norms, to encourage innovation and propel growth. However, these norms don’t always apply to all businesses equally – by defying them, companies can find success in unexpected ways. Toast, a multi-billion dollar point-of-sale (POS) technology company based in the United States, proves that bucking the Silicon Valley trend can lead to immense success.
By taking a different approach to the traditional Silicon Valley model and embracing increased creativity within their organization, Toast achieved incredible success despite going against standard practice in the industry. Rather than relying on venture capital funding and rapid growth as many other tech companies do, Toast opted for slower but more sustainable growth. The team at Toast focused on developing products with superior customer experience and technological capabilities that addressed problems faced by restaurants and merchants.
Additionally, the company made a conscious decision to delay product features driven by profitability that wouldn’t benefit user experience for its customers. To ensure long-term success for its users even amidst market downturns or other economic conditions outside their control, Toast elected to finance itself through debt rather than capital from venture capitalists. This enabled them to focus on what was best for their customers without worrying about outside investors interrupting resources or influencing product development directions for quick gains instead of long-term value.
The creative strategies employed by Toast proved very effective as evidenced by how much it has grown since its founding in 2011 – with an estimated annual revenue between $1-10 billion dollars in 2019, it’s now valued at more than 30 billion dollars. It just goes to show that breaking away from standard norms can benefit both your business and your customers regardless of industry, allowing creativity and technology will paying attention to user needs be sufficient drive success.
Improved customer focus
Toast founder and CEO Steve Fredette decided to buck Silicon Valley norms regarding his company’s focus. He chose to ignore the industry standard of focusing solely on maximizing profits and instead aligned Toast with a mission of relentless customer obsession. This ensured that, first and foremost, all decisions made at Toast would be in the best interest of their clients and customers. Their goal became focused on getting great products into the hands of restaurants for affordable prices, something Silicon Valley was not likely to pursue given traditional industry priorities.
By improving the customer experience through prioritizing their needs and developing solutions tailored specifically for them, Toast quickly rose from an unknown startup to a valuation of $30 billion in less than nine years. Without its commitment to putting customers first and improving customer experience, it is unlikely Toast could have achieved such incredible success—defying established norms paid off for them tenfold.
Toast is a company that has seen immense success without following the traditional Silicon Valley model. Instead, the restaurant technology platform has used creative marketing strategies and financial planning to break away from the standard approach, while remaining profitable. With the help of Toast’s CEO Chris Comparato, Toast has increased their profits by 19% in 2020 and reached a $30 billion market capitalization (up from $625 million in 2017).
Rather than focusing on aggressive expansion, Toast chose to put more emphasis on developing autonomous and profitable operations. By setting tighter budgets, focusing on cash conservation and prioritizing customer success, Toast became one of the most successful IPOs of 2019. In addition, Toast established more diverse teams and cultures than those seen in Silicon Valley, leading them to develop more effective products for their customers.
By pushing back against industry norms and taking risks with their business model and practices, Toast was able to experience increased profitability for all stakeholders involved.
Challenges of Defying Silicon Valley Norms
Building a successful business in the competitive landscape of Silicon Valley is no easy feat. Many companies, like Toast, have become successful by challenging the norms of Silicon Valley. However, the challenge of defying Silicon Valley norms comes with its own set of risks and rewards.
This article will explore what it takes to build a profitable business while also going against the grain.
Risk of failure
The risk of failure looms large when attempting to defy Silicon Valley norms, as it does for any new business venture. It takes a tremendous sense of conviction and belief in one’s business idea to override the established conventions of the Valley, which can often appear intimidating. For Austin McChord, founder of data storage company Datto, this meant hiring outside help to break into the “club” and gain access to venture capital he needed to make his startup a success—an unconventional move at the time.
Others, like former CEO and co-founder of Toast David Scott, had to recognize that their view of how businesses should be run was different than what was practiced in the Valley—even if it ran countercurrent to the status quo. Toast had figured out which rules could be broken (like not seeking outside validation beyond customers) and which still needed to be followed (like developing their software product agilely). By rebelling against certain norms while adopting others they succeeded where others had failed—growing at a rate that led them from a small start-up valued at $30 billion.
Ultimately there are no guarantees when it comes to bucking accepted conventions in Silicon Valley— but with enough conviction and hard work, ignoring existing standards has ample potential for success.
Difficulty in finding funding
Challenges exist when attempting to defy the Silicon Valley norms and build a successful business. One particularly difficult challenge can be finding adequate funding to launch and grow your business. Many Silicon Valley businesses receive venture capital or other forms of financial investments, making it difficult for startups who don’t conform to the established norms.
Businesses looking to challenge the status quo should consider products or services with a unique angle that can attract investors interested in backing businesses breaking the trends of Silicon Valley. For example, in the case of Toast, an all-in-one platform designed for restaurants that aimed to make operations more efficient, streamlined its ability to secure investments from major sources such as Bessemer Venture Partners and Bezos Expeditions.
For business founders interested in challenging norms, targeted marketing campaigns and special events can help gain interest from potential investors. However, it is also essential to clearly define goals and share an idea for creating a successful product or service that stands out from competitors within the industry. For example, through Toast’s unique approach to making restaurant operations easier through its platform, it obtained funding that helped it become a $30 Billion success story while defying traditional Silicon Valley norms.
Negative perception from investors
A key challenge startups face that defy Silicon Valley norms and build their brand with their investors is the negative perception they can face among the region’s more risk-averse and traditional investors. In addition, silicon Valley’s culture puts a disproportionate emphasis on success stories—the oft-repeated tales of large companies, such as Google and Microsoft, being founded and achieving explosive growth—making it difficult for smaller companies to face steep early obstacles to find investors.
This was a challenge faced by Toast, a $30 billion enterprise software company that ascended to success by bucking existing software industry norms.
When Toast launched its initial seed funding round in 2011, the startup struggled to acquire venture capital or a buy-in from established venture capitalists. Initially, Toast had difficulty gaining traction because it was going up against well-established competitors who were ahead of them in product development, name recognition, and market penetration. Without experienced venture capitalists’ backing or acceptance from influencers in the space, investors were apprehensive to fund Toast’s bold new vision for simplifying restaurant management technology. Furthermore, as all software investment comes with an inherent risk due to how quickly technology advances and trends shift, traditional Silicon Valley VCs saw little reason to gamble on Toast without proof that their idea could work out successfully.
Toast is a prime example of a company that has defied Silicon Valley norms to pursue their vision and become a unicorn. Through focusing on customer success, expanding their product portfolio, and understanding their market, Toast has achieved a successful $30 billion business.
It is clear that Silicon Valley norms do not work for everyone, and Toast exemplifies why it is important to be mindful of the needs of your customer base and the industry you are entering when approaching a business venture.
Summary of Toast’s success story
Toast is one of the prime examples of how defying Silicon Valley norms can pay off. Unlike many other tech companies, Toast didn’t focus on a single vertical market, or develop bells and whistles to make their product stand out; they simply made a software package with superior usability and cost-effectiveness.
By focusing on the needs of restauranteurs and delivering an integrated solution, Toast was able to quickly scale and grow into a multi-billion-dollar business. They embraced their B2B model, drove customer success through user experience research, and implemented a flexible but rigorous development framework. They also actively sought out feedback from customers to continually improve their platform.
In essence, Toast took an approach that kept business users first in mind as they evolved their product strategy – rather than relying solely on features and gimmicks – reaping huge rewards. This lesson is critical for all startups: focus on user needs first when developing products, rather than relying solely on features and marketing gimmicks that may be appealing initially but fail to deliver value. Ultimately, the customer experience drives customer loyalty and lasting success for any business venture.
Benefits and challenges of defying Silicon Valley norms
Toast’s success in defying Silicon Valley norms demonstrates there can be benefits to doing so. By pursuing a customer-centric focus, Toast created a product that resonated with hospitality workers, growing the business exponentially and creating lasting customer loyalty. The customer-centric focus also helped ensure that even after raising large amounts of money, it could stay nimble and make decisions that served its customer base first and foremost.
At the same time, Toast faced several challenges by taking this path. For example, they had difficulty bringing on venture investors who may not have understood their customer-centric approach or seen enough growth in areas they wanted brands to invest in more heavily such as sales and marketing to generate greater returns. Toast also experienced internal conflict when trying to scale the company quickly after President Barack Obama selected them for a White House incubator program given it flew in the face traditional Silicon Valley norms which prioritize scalability over anything else.
While there are numerous potential benefits and drawbacks of straying from conventional Silicon Valley norms, innovators such as Toast offer examples of how success can still be achieved without following the same playbook as everyone else.
tags = Focus on small business, Toast’s decision to remain private, arealevycnbc boston 500k endeca steve papa, arealevycnbc boston 500k steve papa vcs, arealevycnbc boston 500k endeca papa vcs