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Ropes & Gray attorneys provide timely analysis on legal developments, court decisions and changes in legislation and regulations.
Marko Zatylny: Thank you for tuning in to another episode of the Ropes & Gray alumni podcast. I’m Marko Zatylny, a partner in our Boston office. Today, we’re excited to welcome Brian Elworthy, general counsel at Toast. I’m sure most of our audience knows Toast. Toast is one of the great technology growth stories to emerge from Boston over the last decade. Toast began with a simple but ambitious idea that restaurants deserve technology built specifically for the way they operate. Today, the company has grown into a leading technology platform for the restaurant industry. So, from independent neighborhood restaurants to some of the country’s largest hospitality brands, Toast has become an essential operating platform for an industry that is both dynamic and complex. Brian joined Toast in 2016 long before it became the public company that it is today. Over the past decade, you’ve helped guide the company through an extraordinary period of growth from a promising private company to a publicly traded market leader, all the while building the legal, compliance, and governance capabilities needed to support that journey.
Brian, we know you began your career at Ropes & Gray, and we’re going to talk about that today, too, but before we go there, you joined Toast before anybody could have anticipated the scale that it would achieve—I thought that would be a good place to start. So, first of all, what drew you to the opportunity?
Brian Elworthy: First of all, thank you for inviting me to come back here to this office. It’s nice to be sitting here with you and enjoying the great view I remember from the Boston office, and also too, that really nice introduction—you did a nice job of describing the company.
Alright, so 2016, so we’re going back a full decade, I think back to even earlier than that—it’s going to be close to 20 years since I was a summer associate here—the same thing that I think drew me here as a summer associate, was primarily the people, and even more so, what brought me in 2016 to Toast, and what keeps me there today, it’s the people, the mission, and the product. And I remember in 2016, when I was interviewing, it was a very different interview experience from anything I’ve had before. For anyone who is out there listening to this podcast, if you’ve worked at a startup, you’ll remember the feeling of a startup and the interview process—it’s a very clunky experience. You show up at an office that’s teeming with people—it’s a very, very small space, but I just remember being struck by the energy when I walked into the room. I remember meeting with two of our three co-founders—both individuals who are still very actively involved in the company today, one of them is our CEO—our then-CEO, our then-CFO, and another member of the senior team. I did a case study as well, which I certainly wasn’t accustomed to doing in an interview. But I remember just being really excited about meeting with people, and I remember the enthusiasm, the passion that they had for what they were building. Back in 2016, you might remember, there was a show called Silicon Valley, which is all about startups...
Marko Zatylny: That was your homework?
Brian Elworthy: That was exactly right—yes, that was how I prepped for the interview. And, honestly, that’s what the office felt like. There was so much energy—it was just buzzing. I was talking to a few other companies, all similar profile—they were all smallish, private, startup companies—but I remember thinking, this is one that feels like something special. Just stepping back, when I was at Ropes, the types of clients and work that I remember really enjoying were the clients’ products that you could touch and feel or see.
Marko Zatylny: You’re talking more like consumer products.
Brian Elworthy: Exactly, yes. I think one of the last deals that I did before I left here, Bain’s acquisition of Canada Goose, was a big deal and a fun transaction. So, I remember just liking the fact that it was a product that I was interacting with, and I also thought it was a good product. Back in 2016, in Boston, which was our greatest market at that point, finding a Toast terminal to interact with was actually pretty challenging—which is funny to think back, that’s just not a problem that we have now—but I knew the product was something that was really neat. I knew it was the early days of the product. And I just really liked being at a technology company that was focused on building a solution to really help the restaurant industry and the hospitality industry. And then, the mission is something that we haven’t deviated from in the nearly decade that I’ve been there. We are maniacally focused on our customers, and I think that’s similar to the way you all at Ropes also view your clients. That same sort of maniacal focus on outcomes for your customers is something that I could feel after just one day of meetings with everybody. So, that was everything that really drew me to it, and it’s what has kept me there for almost a decade, which, by the way, I joke I’m kind of a dinosaur in the technology space, in the sense that I’ve stayed at one company for 10 years—I don’t think a lot of people do that. Part of it, maybe I’m a little bit of a creature of habit, but also, I feel like I just got really, really lucky being at a company that has continued to maintain my interest, help me grow as an attorney, and as an executive, but also, it’s just been a really fun company to be a part of.
Marko Zatylny: That’s interesting, because what strikes me when you’re telling that is you started at a large law firm, you go to a large company coming out of the law firm, and then you find yourself interviewing at a startup. How did you make that decision? It was a shift from what you’d been doing.
Brian Elworthy: Totally, yes. I get that question a lot, and the way I always respond—and it trips people up, which maybe it will get your listeners’ attention—is my wife is a big reason why I ended up at a technology company. My wife is an executive at what was then—she joined right out of business school—a startup company as well, and what is now a large public company, HubSpot, which is really the darling of the Boston technology community. But I remember in 2011, when she joined, how much she loved working for a company like HubSpot. And it was a similar thing: it was the people, the mission. She worked very, very hard those early years to help build the company that it is today. And I remember thinking, “I would love to work at a company where I could be a contributing member of the team when it’s small.”
When I did the work that I did here at Ropes, the M&A deals, I always found the deals that were interesting and enjoyable were where founders of companies were selling their company or they were giving a significant ownership stake in the company to another investor. I think back actually to the Canada Goose deal—what an amazing story it was of someone who helped build a company. I think in that case, he took over the company from his parents, and then he built it into just this massive company that was really becoming the trendy product that everybody was wearing. The story was so cool to see how a company went from really small idea stage to something a lot bigger, and I wanted to try to find that. And I thought, at the time—and I think it’s still the case here, particularly in Boston—tech companies were the ones that always enabled that story to happen, and so, that was really what drew me. It was a huge shift to go from a place like this to a startup company, but I loved it. And I knew what I was going into, partially because I knew about my wife’s experience, partially because there were other folks that I knew who had done something somewhat similar. I knew it was going to be a change, but it was one that I was looking forward to.
Marko Zatylny: When I think about clients like Canada Goose—part of me thinks you get the excitement of working with the startup, you’re working with founders—we tend to come in when they’re on the cusp of something great. That’s at least how you and I practiced.
Brian Elworthy: Well, that’s when companies like my company can afford a firm like Ropes. Yes, that’s when you all come in. And we’re very happy to be a Ropes client, by the way, for all of your folks out there that are listening.
Marko Zatylny: A large law firm is run very different than a startup, but it sounds like even when you were here—this is not a startup environment, at a law firm—you combined your wife’s experience, and your Canada Goose experience. Did that combination start to give you some insights about what kind of lawyer you would need to be working at the startup?
Brian Elworthy: You’ll appreciate it—I would say to folks, “I started out my career, and I came from a law firm that existed at the time of the Civil War, and I joined a company that has been around since 2012.” Very, very different, but there are similarities in what Ropes taught me as an early associate and as I developed into mid-level, and there are a couple of things. I think hard work and that focus on constantly thinking about a solution for your client is really the same thing at a startup. I went from having been a Ropes & Gray associate, having super sophisticated clients—investment firms and private equity shops—to having equally impressive, in their own right, founders of a company: MIT grads who built a company from their basement, and guess what? They all want the same thing—they all want as right of an answer as you can possibly give them. We were told in law school to give a very hedgy answer—you go chapter and verse on how you got to the answer.
Marko Zatylny: It could be this. It could be that.
Brian Elworthy: Could be this, could be that…and that was the worst thing. I remember working on a deal with you, and it’s like, that is not what your clients want to see.
Marko Zatylny: No.
Brian Elworthy: And guess what? When you go out into the business world, or you’re doing what I’m doing for founders, or fast-moving executives of a startup, or a public company, they want the same thing—they want that answer, they want it to be quick, and they want it to be correct. This is dating myself, but I remember we had the night Word document processing team that would put all of our changes into a document when we were turning in a merger agreement or something. Yes, I do not have that infrastructure, but the expectations are still the same. And so, Ropes set me up really nicely for that, because of the training that I had here.
Marko Zatylny: Along the way, there are things that you learn, and you unlearn. You’ve given the example of one consistency is client focus. And now, at Toast, it’s customer focus…
Brian Elworthy: Same thing. Exactly, yes.
Marko Zatylny: Same thing. And then, there are things along the way that you have to unlearn. All of us go to law school, and we’re taught to figure out how we can argue both sides in a six-page final exam—that’s how you succeed in law school. And I think you have to unlearn that pretty quickly here, right?
Brian Elworthy: Definitely.
Marko Zatylny: We want to be business advisors, and we want to give people advice that they can use, so that’s something I think that you unlearn here. Then, you go to inVentiv. It’s obviously a different place than Ropes. I’m sure it’s different than Toast. Were there things you had to learn or unlearn when you first stepped out of the law firm and went in-house?
Brian Elworthy: Yes. I always knew coming out of my time at Ropes that I wanted to do exactly what I’m doing right now, but it was going to be really tough—you don’t really have that credibility. I’m thinking about when you said unlearning things, one of the things that I had to unlearn—and I see it a lot in the more junior members of our team that haven’t had six/seven years at a large law firm and a couple years in-house, and they’ve just gone from maybe law school to two years in a software company, and then they join—there’s not an incentive to really take risk. If you mess up an answer, you’re in a tough spot.
Marko Zatylny: It’s called malpractice.
Brian Elworthy: Exactly. Yes, exactly. But even the point where it’s not malpractice, but you just have to make a risk-adjusted basis decision, taking into account a whole bunch of different facts, the instinct to play it safe is something that I had to unlearn, and there’s a couple of reasons for that. At the time when I started at Toast, we would do equity raises, we would always get asked about Square. Square is obviously a great competitor. It’s a great company. And we compete with them in many ways. They are certainly one of the leaders in the space, but they were certainly better capitalized than we were. They had it really all figured out. But I remember investors being like, “Well, what about Square, if they just start focusing on the restaurant vertical?” And we get that question a lot. And so, when I look back at what made Toast successful was, we were willing to do things and to try things that maybe a well-capitalized public company didn’t do or wasn’t accustomed to doing, or maybe they had lost the ability to be a little bit more risk-neutral. I saw the business having to do that, and so, as an attorney, and as a general counsel, a lot of the potential risks would roll up to me. I had to quickly determine whether or not a risk was worth taking, and that was a decision that I had to make. I couldn’t look to you as a partner or somebody else who was more senior to me. I was the one that had to make the decision. One, if I made the wrong decision, it wasn’t great, but the wrong decision also could have been to not take something that was a potentially risk-neutral position, but that could have had a much greatest outcome for the business—that was actually a bigger risk, to actually play it safe and not be the leader that we are today in our space. And so, I did have to unlearn the comfort and instinct of, you know what, let’s just give the safe answer. Let’s play it safe because at the end of the day, really, I’ve got nothing to lose. When as a general counsel, and as a member of the executive team, at a company like Toast, if I played it safe, I actually had a lot to lose if I actually chose the wrong answer. And so, that was a little bit of a difference.
Marko Zatylny: Well, I imagine, you’re new at the company, they’ve got clear goals, and just driving forward and winning in a competitive market, so there’s got to be tension that you’re trying to figure out, because on the one hand, you’ve got founders who want to move quickly, and they’ve built an organization to do so. Your job is to help them do that, right?
Brian Elworthy: You’re exactly right.
Marko Zatylny: At the same time, you’re charged with being the executive that worries about a bunch of stuff that everybody else doesn’t. How do you achieve that business goal without creating unnecessary legal risk? And so, I’m curious: How did that start to play out in the early years? You’re a smaller organization, you probably have a smaller budget, and all of a sudden, you have to do both of those things successfully.
Brian Elworthy: You hit it right on the head. There is that tension that exists and existed on day one. When I first joined, and they sent out this big announcement, “We’ve got a general counsel now,” I remember within a few minutes of that, someone walking up to my desk and handing me a piece of paper, and it was probably like a 25-year-old who just said, “Can you help me get out of my lease?” And I thought, you are just totally misunderstanding what my role is here, but okay. So first, I had to educate folks on exactly what a lawyer for the company does, but you’re exactly right—once everybody understood, then that’s how folks started looking at me, which is like, “Can we do this? Can we?” We were chatting beforehand about how do you build the credibility? It’s so cliché for folks who are either interviewing to be an in-house attorney or who say they want to be an in-house attorney—they always say, “I want to get to ‘yes.’” And that’s great. However, you’ve got to sometimes be willing to say “no.”
I know I said a moment ago that I was always having to make these decisions—that is such an intricate balance and dance that you’re constantly having to do. But the way I had to constantly make those decisions, and deal with those competing interests—I didn’t have much budget, and we didn’t have AI (there was so no such thing as Claude or Harvey)—a lot of it was dipping back into some of the things that I had seen or experienced at Ropes or the prior company that I was at for about a year and a half, and trying to make decisions on that part. But, yes, it is a tension that exists. I definitely made wrong decisions. For anyone to say that they’re always right, they’re probably lying, or they’re just completely confused. The things that really mattered I think I got right. I always looked at: What is the size of our company? What is the risk that we’re taking? Is the risk a potential regulatory fine? What can we actually afford? Is it reputational harm? That’s the greatest risk, especially with our customer base. And I just navigated it that way with few resources until we started getting bigger and bigger and we started doing more fundraisers, and then I could afford new equity rounds, and I could afford firms like you guys.
Marko Zatylny: You start to figure out how to let the company grow, how to drive that growth together with the other members of management, trying to be a lawyer at the same time, which is why you were hired. Growth happens, fundraising happens, an IPO comes on the horizon, so then you’re charged with building infrastructure and a team. Did you know when that needed to happen? Were you saying, “We’ve got to build things out if we’re going to continue this path”? Tell us about when you figured out that that’s the next phase.
Brian Elworthy: I won’t fault you for overlooking an important part of just that trajectory is you may recall a global pandemic in 2020 right after we had completed. We track payment volume and we saw overnight with the lockdowns imposed the GPV just drop, and we knew that we were going to have to probably make some moves because we didn’t know how long the restaurants were going to be shuttered and various reasons. And so, we had to cut 45% of our entire workforce, which, of course, hit my team a lot, that I had been building. And I remember thinking, when we do come back—because we knew restaurants we’re going to come back—how are we going to rebuild this team? And also, we saw them come back so quickly that we knew that the next capital event for us was going to be an IPO. And so, then I thought, “Wow, I really need to bring this team together.” How do you make the case for this type of infrastructure on a legal team? Very few of the executives had actually worked at a public company. Our three co-founders—who are wonderful and incredibly gifted in so many ways, one of whom is now our CEO, there’s our CTO—they’ve never worked at public companies before. A couple of our members in the management team had worked at public companies, but they were dealing with their own thing as we went to go public. And so, for me, it was: How do I bring in the SEC expertise? How do I bring in the governance expertise? Now this risk function totally changes as a public company. That was something that as a first-time general counsel at a public company, I relied a lot upon mentors that I had who were general counsels, CLOs at other public companies, including the GC at HubSpot, who was a big help, and just talking with him on how he built his team. The good thing is there was a pretty good playbook for it, but mentors actually really help along the way, and then contacts at firms.
In fact, I joined the company and our first acquisition that we did in 2019, I remember thinking, I’m going to use Ropes & Gray for this acquisition, because I know that you all do deals really, really well, and it’s something that I did when I was here. I remember one of the very influential members of the board asking me, “Why aren’t you giving it to this other law firm?” And I said, “I know that this is the right law firm that’s going to do the deal.” And I will tell you, it was a good deal. Your team was fantastic. One of the associates, I think, at the time, who worked on the deal, is now actually at Toast—he’s a member of our team and he’s fantastic. But I remember we were getting to a closing—we were represented by Ropes, and Loretta Richard, a retired partner—we needed to have the other side do an analysis, and the other side was proving to be very difficult, and they did not have experts on their team, because by the way, they didn’t use a great law firm like Ropes & Gray. And I remember Loretta saying, “Here’s the deal, Brian. I know you want to close this deal tomorrow, and we’re going to do this for you.” That validated for me the reason why Ropes was our team for that deal. You guys are our M&A counsel now. You’ve helped us out on a number of deals. I really appreciated Loretta doing a solid for us, and you all had a great mindset on that.
Marko Zatylny: As you’re telling your experience about delivering for your team at Toast and otherwise, it’s a great reminder for me: When do I feel the best being a lawyer? It’s when I can come to a client with a solution that gives them the path that they want to take. I’m sure that’s what Loretta was experiencing, which is you find yourself on the eve of a close, there’s a problem, and she has the smarts and the confidence to call you and say, “We’re going to get this out. Get it done.”
Brian Elworthy: Yes, and that’s that client focus that I remember as a junior associate. From your leadership to the leaders in my practice group, you all really drilled that into our heads as junior associates. And that’s a similarity to my company and what I do now, which is, how do we keep our customers happy?
Marko Zatylny: Yes. When you think about being able to be that lawyer, how important is it to you, in terms of what you do, what you expect out of the legal team at Toast, and then what you expect out of your outside counsel to know your industry?
Brian Elworthy: Our industry is not just technology, as I know you know—we’re in financial services. We also expanded our product offering to include—and it is part of financial services—a capital program for our customers. And so, you quickly have to learn, especially when doing deals, and especially as an associate—and I don’t know if they still do it now with AI, but—we had to do a lot of diligence. We had to learn the client that was either being acquired or that was being sold. And so, you go through this really intensive period where you’re quickly getting smart on the product offering or the industry. That was really important, because if you didn’t really understand what your client was selling or their offering, then you were not going to be successful, especially as you read through a merger agreement. You have to look through raps, or think about purchase price mechanics, or when is the revenue recognized—all of these things that you don’t appreciate unless you really understand the business. So, when I think of either folks that I’m hiring, or I’m thinking about other law firms that we’re working with, it is important that they know the space. And also, I don’t expect everyone to understand the ins and outs of the restaurant, retail, and hospitality industry as much as we do, but show curiosity for it, and show a willingness to learn. I would actually much prefer people ask questions as opposed to coming in and acting like they get it, because that’s not going to help anybody.
Marko Zatylny: Yes, I think that that’s true. And you touched on AI for a second. I actually think that one of the best things that AI does for me is that initial phase of diligence where it’s like, can I really learn what this company does? It does a great job in teaching me much better than the 60-page marketing slide deck that you get from the sales side bankers.
Brian Elworthy: That’s all just fluff, and then also like industry speak. The greatest prompt is “Hey, explain this to me, and explain it to me like I’m a 12-year-old.” It really will boil it down, and it will tell you exactly what the company is doing. Anyone can do that now—that is a great part of AI.
Marko Zatylny: Is the Toast legal team using AI?
Brian Elworthy: Yes. In fact, my wife will be very happy to know that, now I’ve mentioned her twice, another nod to her influence, she’s been a big part of the transformation and use of AI at her company. I remember her probably about two years ago saying, “If you’re not really focusing on AI right now, you’re really going to miss the boat.” I remember looking into it and reading. And then, last year, my legal leadership team, we did an offsite. We did an AI hackathon, which for the folks that are unfamiliar with what that is, essentially, you take a day or a couple hours and you just say, “You’re not doing anything else, but right now, take an issue that you’re dealing with, struggling with, and use AI to somehow come up with a way to solve it.” We started doing that. And then, about four or five months ago, I, along with the management team at Toast, and our CTO and CISO (chief information security officer], decided that we would allow team members to use Claude Cowork. I remember at the time being at a roundtable with a bunch of GCs, and nobody else was doing that, and I thought, “Oh goodness, what did I do?” But I knew it was the right decision, and I knew that we had the ability as a first mover, if we were using it as a legal team and as a company, that we could really differentiate ourselves. I knew the technology wasn’t going to go away no matter how much folks try to regulate it away. This technology is here, and it will exist and it will completely transform the way many, many industries work. So, I did—I pushed Claude Cowork. And by the way, I think it’s a fantastic tool, and I know that the team also thinks it’s a really great tool and uses it a lot. It’s very expensive, but it’s very good.
Marko Zatylny: The question is whether your team plus Claude Cowork is less expensive than your legal budget without it.
Brian Elworthy: Yes. I always think, too, there will always be a need for external counsel. Even if you put aside sometimes AI tools can get it wrong, sometimes partners at large law firms can get it wrong—everyone makes mistakes—I do think though the ability to have that sort of back-and-forth conversational way of deciding something and thinking through things is always going to be needed. You’re always going to need the person who has been doing this for 20 years because you trust that person, but I do think, though, that AI, particularly for the tasks that are being handled at junior levels, can actually make that more efficient. I applaud Ropes, too, for being also very much on the cutting edge of AI. I’ve followed it and I’ve really been very impressed with our initiative of allowing junior associates to allocate time to AI learning. I think Julie Jones was a big proponent of that. A law firm that’s been around since the beginning of time, you’re actually leaning into that technology, and I think that will help also differentiate you from other competitors in your space.
Marko Zatylny: I think that it already is, and it’s going to continue to be a critical piece of how we deliver client service and practice law. I think it’s also going to be something that when our associates go in-house or take the next job, I think we owe it to them to create in them AI fluency. I can’t imagine your inbound hiring that you’re not trying to assess whether people know how to use AI. It’s becoming such a critical piece of how we practice.
Brian Elworthy: In the legal industry, and you’ve probably seen this as well, it’s creating new roles that exist. You want a legal ops person who’s also AI native. That person right now, if they exist, they’re really hard to find, but in a couple of years they won’t be. That’s where you can really help drive efficiencies at companies that have legal functions that are using AI. I think that’s a big part of it.
Marko Zatylny: The audience for this podcast is a lot of associates at Ropes, maybe elsewhere, certainly alums as well. They’re either looking to make an in-house move or trying to decide what their next in-house role is. What’s your one piece of advice you wish you would have been given before you made the transition?
Brian Elworthy: If you’re looking to leave, stay, because I find that people are always looking to leave a year or two earlier than they should. I really appreciated my time here at Ropes. I think it made me the type of attorney that I am today, and I owe a big part of my professional career to this firm and starting here. But I got a sense by the time I was probably halfway through my fourth year that this wasn’t something that I was going to do. I knew exactly what I wanted to do is what I’m doing right now. But if I had left when I left, I would not have ended up at Toast. There’s a lot of value in staying longer than you think you need, because guess what, I was not ready to go as a fourth-year associate to be a general counsel of a company that would one day go public. But if I stayed an extra couple of years, and I got some additional in-house training, then I felt ready, and then I felt like I had earned my spot and I’d earned a seat at the table. I could sit down with a CEO, with credibility, and advise them on anything that they’re thinking about doing. And so, that’s the one piece of advice: If you can, stick it out, and get as much knowledge and experience from a place like this that you can, and it will make you that much more marketable, and more importantly, just a better attorney and a better advisor.
Marko Zatylny: I really like that, because it’s not saying stop because you might be wrong about where you want to take your career. It’s saying, in your case, you had two more years of being at a law firm where every year the job accelerates your experience. You’re growing every year that you’re at a firm like Ropes. And so, I think that that’s great advice because you also have two years to really hone on where you want to go, why you want to go—I think it’s really solid. To watch how your career has grown, opportunities that you took advantage of, and to see what you’ve been able to build and how you’ve really been able to develop a career that’s taken all of these different aspects of your practice along the way, and turn it into something great, is amazing to see. So, thanks for joining us.
Brian Elworthy: Thank you.