You mentioned how a decade ago, POS systems were clunky pieces of hardware physically wired to restaurants, and that's absolutely true.
But I think the biggest change in POS isn't actually the tech improvements... it's the underlying business model. Toast and Square have fundamentally shifted how POS companies make money. They're not selling software anymore, they're payment processors who happen to offer great software.
Every feature they build, every time they expand their platform, they're increasing their addressable market and capturing more payment volume. When Toast adds inventory management or Square builds employee scheduling, these aren't just features... they're hooks to route more transactions through their payment rails.
This creates an interesting dynamic where their success is tied directly to their customers' growth. The more a restaurant processes, the more revenue these companies generate. That's why they can offer the software at little to no cost while continuously investing in new capabilities.
The tech improvements are impressive, but this business model transformation is what really changed the game. It democratized access to sophisticated POS systems and created a flywheel where expanded functionality drives payment volume, which funds further development.
Looking ahead, their future seems promising, though the main vulnerability would be disruption in the payments ecosystem itself.
You mentioned how a decade ago, POS systems were clunky pieces of hardware physically wired to restaurants, and that's absolutely true.
But I think the biggest change in POS isn't actually the tech improvements... it's the underlying business model. Toast and Square have fundamentally shifted how POS companies make money. They're not selling software anymore, they're payment processors who happen to offer great software.
Every feature they build, every time they expand their platform, they're increasing their addressable market and capturing more payment volume. When Toast adds inventory management or Square builds employee scheduling, these aren't just features... they're hooks to route more transactions through their payment rails.
This creates an interesting dynamic where their success is tied directly to their customers' growth. The more a restaurant processes, the more revenue these companies generate. That's why they can offer the software at little to no cost while continuously investing in new capabilities.
The tech improvements are impressive, but this business model transformation is what really changed the game. It democratized access to sophisticated POS systems and created a flywheel where expanded functionality drives payment volume, which funds further development.
Looking ahead, their future seems promising, though the main vulnerability would be disruption in the payments ecosystem itself.
This is a good point - thank you for sharing it!