Alex Jekowsky at Cents: Hardware as an AI Moat
How Cents is owning the laundry industry by inverting the Toast model
Every Vertical AI founder is worried about the same thing right now: what happens when someone vibe-codes a clone of my product in a weekend? For most application-layer companies in search of their moat, that fear is rational. For Alex Jekowsky — co-founder and CEO of Cents — not so much. Because the core of their defensibility isn’t code; it’s thousands of payment devices physically bolted to laundry machines across 4,500+ locations, processing >$1B in payments annually.
Cents just closed a $140M Series C: the largest software investment — probably the largest investment period — in the laundry vertical’s history. Alex isn’t from the space. He dropped out of college to build his first company, Ulyngo, a payments platform for higher ed that he sold at 23. During his earnout, he stumbled into laundromats for a different reason: looking for a good cash-flowing business on the side. But he couldn’t get over the insanity of the technology gap — 70–80% still coin-operated — and decided it the opportunity was just too glaringly obvious. He went full-time when Bessemer first invested in 2021. The thesis that got him to where is today is one investors have rejected for years, but yet has created one of the biggest vertical winners in history (Toast): hardware-first vertical software.
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Alex built Cents by explicitly rejecting the Toast growth model (give away hardware, hire 1,000+ salespeople, optimize NRR on a venture timeline) and instead building around the actual purchasing dynamics of his industry: hardware-led land, CS-heavy expand, distributor-driven GTM. Every time Cents tried to look like Toast, they missed plan. When they built for the industry they actually served, they hit it. The evidence: more CS reps than salespeople, CAC-to-LTV ratios “in the thousands of X” on hardware+software, 99% retention, $140M Series C.
Cent’s hardware bet worked because it unlocked three compounding advantages:
Payments Volume
On-machine devices capture the majority of a location’s transactions, not just the wash-and-fold counter.
Retention
Removing a POS is easy, but removing hardware wired into every machine in a store is structurally painful. Cents reports 99%+ customer retention.Distribution
This one was less intuitive. Cents’ hardware is sold exclusively through laundry equipment distributors, the same trusted advisors who’ve had deep, multi-year relationships with operators. Those distributors wouldn’t even take Alex’s call before the hardware acquisition. After it, they became his most productive sales channel — now selling Cents software alongside the machines. “Friends want friends to make money,” Alex said. “Distributors want us to make money. Operators want us to make money.”
Hardware-as-wedge isn’t going to work in most verticals — at the least, its more nuanced outside of point-of-sale environments. But it’s interesting to consider how owning the hardware can foster a durable moat in the AI era. When horizontal AI voice companies tried to sell into laundromats, they hit a wall: they didn’t have context on which machines were available, what inventory looked like, or how a self-serve customer paid. That context lives in Cents’ hardware layer — and it’s what powers their emerging agentic product suite, from automated marketing campaigns targeting lapsed customers to AI-driven store management. As we wrote in The Disapatcher Problem, the startups that endure are those embedding themselves so deeply in customer operations that switching becomes structurally painful, not just inconvenient. Hardware is the most literal expression of that principle.
The broader implication for vertical founders: in a world where intelligence is commoditizing, the scarce asset may be the physical and operational layer that feeds it. That depth of integration into a customer’s workflow — capturing data, controlling equipment, processing payments — creates a substrate that no software authoring layer can easily replicate.
For the full tactical breakdown — including Alex’s distributor playbook, why he has more Customer Success reps than salespeople, and how he reverse-engineered his Series C valuation for investors — watch the full episode.
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