Software Executive Magazine

OCTOBER/NOVEMBER 2017

Software Executive magazine helps software executives grow their businesses by showcasing the business best practices of our readers, executives from established and innovative software companies.

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teve Fredette was a chemistry major at MIT. He didn't envision a career in tech. Today, he's leading a cloud-based restaurant management software company that announced a $101 million round of funding in July 2017. Fredette is the president and co-founder of Toast Inc., which he's helped grow to more than 500 employees since 2012. "I've always been into tech, and I've always been interested in software. I was coding stuff in middle school, but I then ended up getting into chemistry my senior year in high school. I had always had an interest in software, and it was always a hobby of mine," he explains. This hobby turned into a 25-hour per week job at Endeca during his senior year. The Boston-based software company developed applications for customer experience management, e-commerce search, and business intelligence. His time at Endeca would prove to be pivotal to Toast's founding story. He was so enthralled with his work at the booming software com- pany that he put his classes on the back burner during the spring of his senior year so he could work full time at Endeca (which he could do, considering he already had enough credits to graduate). He says, "I felt like I was learning more working at Endeca for 25 hours a week than I was from all the classes I was taking at MIT." EMBRACE AN ENTREPRENEURIAL CULTURE During his time at Endeca, Fredette met the co-founders of Toast. He also learned how to be inno- vative and agile, two key elements for any aspiring software entrepreneur. And he wasn't the only one – Fredette estimates about 30 Boston tech startups have been founded by former Endeca em- ployees. He was in the right place at the right time to soak up this culture of entrepreneurship. He describes his time at Endeca as working at "a startup within a startup." Endeca was fewer than six years old when Fredette started working there. He had about five different roles in his seven years at Endeca, each one teaching him different ways to iterate, sell, and market enterprise software. He was also getting back into the hobby side of software development. Six months before Apple launched the App Store for the first version of the iPhone, Fredette, his twin brother Tim, and eventual Toast co-founder Aman Narang had already started developing iPhone apps. Their first projects were a Flickr app and an e-commerce app for Boston-based Shoebuy.com. They weren't making money from this side project, but they saw an opportunity to expand their app-building aptitude at Endeca. Fredette explains, "We went to the CEO of Endeca [Steve Papa] and said, 'Hey, we want to build apps.' He said, 'Well, that's great, because we have retailers who don't know what to do with mobile, and you guys have built the mobile app for Shoebuy. Why don't you build a product team here?'" Fredette and his product team ran with that directive, and within a few years had generated $10 million in software and services revenue. Why would Fredette want to leave that exciting, secure job to start his own software company? The short answer is that Endeca was bought by Oracle (for an impressive $1.1 billion). Fredette admits, "The fact was that Oracle is not a company where we could pursue something quite as en- trepreneurial as we were with Endeca. It didn't have the same culture." His time at Endeca proved that the e-commerce opportunity was ripe, and that it would be smart to focus on a vertical play. And he liked the mobile world he had been working in at Endeca. Adding up those three factors re- sulted in an idea to launch a mobile payment solution for restaurants. They identified a pain point with dining experiences (having to wait for a check when you can't find your server and are ready to leave). They built an app that would allow people to pay the check on a phone. The problem was, this first version of the product wasn't solving a big enough problem. "The app was a magical experience," says Fredette. "The problem was it's not enough of a pain point to get people to actually download the app. I describe it like the tollbooth problem. When you're waiting in the cash line and everybody else is speeding past you in the fast lane you're like, 'Man, I really need to get one of those fast lane passes, because I hate waiting in this cash line.' But you're not going to sign up for a fast pass immediately. It's too hard. You're in the car, and then once you get through SOFTWAREEXECUTIVEMAG.COM OCTOBER/NOVEMBER 2017 25

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