This is Zack Fuss, an investor at Irenic Capital, and today we’re breaking down the vertical market software business, Toast. Toast is a software platform built specifically for restaurants. Their operating system gives restauranteurs all the tools they need to serve customers, from taking orders to allocating shifts. It was founded in 2011 and went public a decade later. Today, it’s used by nearly 80,000 restaurants across the US. To breakdown Toast, I’m joined by Will Schreiber, the co-founder and CEO of Bottle – an ecommerce platform built for subscription businesses. We cover the different ways that Toast minimises the complexities of operating a restaurant, how their deep vertical focus has helped them outcompete Square, and how much room there is for potential growth. Please enjoy this breakdown of Toast.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.  ----- This episode is brought to you by Tegus, the modern research platform for leading investors. Stretch your research budget with flexible expert calls you can trust. At a fraction of the cost of traditional expert networks, Tegus customers pay only what an expert charges – with zero markups and no confusing call credits – netting an average 70% savings. Don’t want to conduct a full hour call? Tegus offers the ability to schedule 30-minutes, an offer you won’t find anywhere else. And they don’t stop there. With white-glove custom sourcing for every project and robust compliance measures, including a dedicated 50+ analyst team that vets every call transcript, Tegus ensures your privacy and protection. As the industry innovator for qualitative insights, Tegus helps you find the right experts you need at a quality and speed that can’t be matched. For a limited time, as a listener, you can trial Tegus for free by visiting tegus.co/patrick. ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke Show Notes (00:01:42) - (First question) - An overview of Toast (00:04:16) - Toast's origins and pivot to Point-of-Sale (POS) solutions (00:07:35) - Convincing restaurants to switch from antiquated systems to modern POS solutions (00:09:48) - The complexity of restaurant operations requires efficient POS systems (00:13:04) - An overview of the POS revenue model (00:17:16) - Addressable market and limiting it intentionally with pricing  (00:20:04) - How their tech expertise enabled them to build a hardware and software ecosystem (00:23:23) - The Toast network effect and their potential margin profile at full scale  (00:26:19) - Their revenue mix impacts its margin profile, with transaction revenue dominating (00:27:37) - How they aim to dominate the restaurant industry with comprehensive services (00:29:59) - APIs enable integration, yet in-house features may risk partner relationships (00:33:45) - The key risks for Toast moving forward (00:38:40) - Why expanding beyond restaurants could challenge Toast (00:41:02) - Third-party integrations may erode Toast's point-of-sale dominance (00:44:36) - Lessons learned from studying Toast

This is Matt Reustle and today we are back covering the semiconductor value chain. ASML was once a forgotten subsidiary of Philips. Today, it's one of the most important technology companies in the world. To break down ASML, I'm joined by Tom Walsh, a portfolio manager at Baillie Gifford. Tom helps explain what's happening inside an extreme ultraviolet lithography machine, and how ASML came to pioneer this technology from the Netherlands. It was a non-traditional path to say the least. This breakdown pairs very well with our breakdowns on AMD, Qualcomm and Cadence. And I'd also highlight the Founders Podcast episode #8 on the Intel Trinity. Please enjoy this breakdown of ASML. For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.  ----- This episode is brought to you by Tegus. Tegus is the modern research platform for leading investors, and provider of Canalyst. Tired of calculating fully-diluted shares outstanding? Access every publicly-reported datapoint and industry-specific KPI through their database of over 4,000 driveable global models handbuilt by a team of sector-focused analysts, 35+ industry comp sheets, and Excel add-ins that let you use their industry-leading data in your own spreadsheets. Tegus’ models automatically update each quarter, including hard to calculate KPIs like stock-based compensation and organic growth rates, empowering investors to bypass the friction of sourcing, building and updating models. Make efficiency your competitive advantage and take back your time today. As a listener, you can trial Canalyst by Tegus for free by visiting tegus.co/patrick. ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke Show Notes (00:02:44) - (First question) - The ASML back story (00:06:14) - A deep dive into what semiconductors and Lithography are   (00:08:04) - Alternate business directions ASML could have pursued  (00:19:39) - How large ASML is in the industry today (00:10:37) - A look into the management team over time (00:14:03) - Moore’s Law and the key components of chip production (00:15:09) - Overall size of the machines manufactured (00:16:14) - The evolution of UV light and its important role in the advancement of Lithography  (00:20:29) - Other competing companies within the field  (00:23:10) - A detailed look into the cost of production industry wide (00:24:04) - Unlocked innovations associated with the development technology  (00:25:32) - The life cycle of a lithography machine (00:27:04) - Revenue gained from new versus refurbished machines (00:27:27) - The cyclicality of the ASML machine revenue (00:29:32) - Potential production limitations due to capacity (00:31:00) - Margin profile and how ASML sets prices (00:32:33) - What the concentration of customers looks like (00:37:00) - Reasons why an acquisition has not taken place to date (00:38:42) - He explains where investor cash flow is directed (00:40:01) - An investors perspective on ASML opportunities  (00:42:24) - How milestones in new technology are regulated and measured (00:45:40) - Potential business risks (00:49:21) - Lessons he’s learned from studying ASML