Toptal Offers A New Arsenal For The War For Talent

Taso Du Val had multiple experiences as lead engineer at start-ups, including at Fotolog, which was acquired by Hi-Media for $100 million, and at Slide, which was acquired by Google for $228 million. His first experience as CEO came while running a small engineering consulting firm. During this time, Du Val developed an international team of co-workers, and discovered that the talent he could access rivaled the best talent in Silicon Valley. US-based companies often have difficulty tapping this high quality and cost competitive talent, but as the war for talent in Silicon Valley and in other US and European tech hubs has become more acute, better alternatives were needed.

Du Val co-founded Toptal, a freelance engineer marketplace, in 2010 to fill that gap. The company's investors include Andreessen Horowitz and Quora CEO Adam D'Angelo. The company boasts a large and growing client list that includes Airbnb, Rand McNally, JPMorgan Chase, IDEO, and Pfizer. Du Val was selected by Forbes as one of its 30 under 30 in Enterprise Technology in 2015.

Among the most fascinating developments within the company has been both its virtual workforce (the company has no offices) and the technology it has developed. Toptal built its own enterprise resource planning (ERP), customer relationship management (CRM), and business process management (BPM) solutions to ensure that they seamlessly meshed, and that the company controlled the pace at which each evolved. These were major technical feats, which are quite unusual in this day-and-age given the fact that there are off-the-shelf versions of each that work quite well. Du Val claims that this provides an advantage in as much as each works with the other seamlessly, and the company is in control of all updates to the technology.

(To listen to an unabridged audio version of this interview, please visit this link. To read future articles like this one, please follow me on Twitter @PeterAHigh.)

Peter High: Please provide a bit of a background into Toptal's founding and mission.

Toptal Co-Founder and CEO Taso Du Val

Credit: Toptal

Taso Du Val When we started the company, about seven years ago, the talent marketplace was going in two directions. There were large players such as Pivotal, Accenture, Infosys, and other big shops that had expensive medium-high to high skilled labor within them. On the opposite side, there was, Elance, and a few other freelance marketplaces. They had high skilled labor, but it was difficult to find because it was mixed in with tens of millions of users of varying skill levels. We recognized the opportunity in the market and began our journey.

High: What market segments do you focus on? Are there certain sizes or industries that have been particularly ripe for Toptal?

Du Val: Smaller companies adopt these types of models first. We started off with successful small and midsize business clients that had nine figure acquisition offers. In the past two to three years, we have adopted enterprise clients such as Fortune 100s. We have global deals with these organizations and contract to their subsidiaries across the world. We have had a lot of success in this space. Enterprises are interested in leveraging remote talent because there is a high demand for technology skills and labor is constricted within the U.S. and European markets.

High: What is the average length of a client engagement?

Du Val: Our average continues to grow because we have full-time engagements with clients. Currently, it is about nine months. Many of our clients, particularly within the enterprise space, hire the talent we contract to them. Everything we do is contract for hire. For some organizations, it is important the talent be employed directly by the company, we facilitate that.

High: How do you identify and find the people who become the top talent you employ?

Du Val: Our platform has a strong worldwide reputation for hosting top talent. Unlike other sites, Toptal only has high skilled talent. That was our intent from the beginning. We understood that high skilled talent was unhappy being associated with people who were less skilled, especially when they represented themselves as high skilled. People would claim to be a top 100 PHP contributor or a top 100 Python contributor, but they were misrepresenting their skills. As a result of those misrepresentations, everyone’s skill on the platform was questioned. Toptal is a consistent high integrity high skill marketplace. That is what has allowed our reputation to permeate throughout Poland, Brazil, Asia, etc.

High: How do you monitor talent once they are on a project?

Du Val: We do not monitor the talent once they are placed. We have a rigorous screening process that includes a multitude of tests and interviews. We screen talent heavily up front to ensure they can work in a remote and intensive environment. We test them on a variety of skills, including hard skills like algorithms, financial modeling, and the like We also test them on other components, like: Are they late for meetings? Are they consistent in what they tell us? Our screening process includes a set of software, which is crafted internally, that is valid and consistent. Our powerful combination of software, process, and skilled Toptal employees ensures that both our talent and clients have consistent high quality high integrity experiences.

High: What skills are you hiring for most prevalently? How do you assess rise and fall of demand for certain skills?

Du Val: We look at current demand and forecast what will happen for the next several quarters. For instance, we saw a rise in demand for Angular JS, and we knew, with a high degree of certainty, it would continue for a few months. We have sophisticated supply and demand techniques that ensure we have the right amount of talent to meet the rising demand. We do not publicly reveal our methods. Our metrics show we have been successful when we compare what we have filled versus what we have missed.

High: What are some recent case examples of companies you are working with?

Du Val: We have worked with Bridgestone, the University of Colorado, and CSR, which is a large industrial company in Australia. For Bridgestone, we contracted engineers and designers to help them accomplish a task that was difficult for them in many regards, especially on the design front. They wanted to make interacting with and navigating through their software easy for users, but they could not find talent that allowed them to do this in an easy or smooth way. They turned to us and we made it happen.

Our work with the University of Colorado is unique. The university was hosting a group of students who brainstormed ideas, almost like a hackathon. They wanted to supplement the hackathon participants with talent who could help execute the ideas. We helped them do that. It was cool because they flew talent from Japan, the Ukraine, South America, other parts of Europe, and from across the U.S. to the University of Colorado. The university was excited because they did not think it was possible to get so many skilled people on-site so quickly. The talent had been working remotely already for some time, but bringing the whole team together in a hackathon-like environment where everyone was collaborating, brainstorming, and executing on ideas was thrilling. We work with over 10,000 clients, this one stood out as one of the most interesting we have done. It was also in the enterprise or university space, which, internally, we consider enterprise. They still work with us and love the talent we contract for them.

High: When organizations contact Toptal, how specific are the requests in terms of skills needed as opposed to problems to solve? Do clients have a good idea that they need five people with a certain skill, versus, “I have a problem that needs to be solved, and I wonder what sorts of skills are necessary?”

Du Val: We have two engagement models. In our Talent Model, we do not do much problem-solving or brainstorming with our clients because it is often a straightforward request. They say, “I need a C++ developer who knows the Qt framework.” Or, “I need a Python developer who knows Django.” Or, “I need a PHP developer who is familiar with the Zen to ID and frameworks.”

With our second model, Toptal Projects, we take on deliverables. Under this model, we brainstorm with the client, hash out the specifics, hash out the deliverables, and problem solve with them. Currently, the majority of our work is in the Talent Model because we have only had Toptal Projects for a few years. It is doing well and continues to grow. We have successfully completed projects with Fortune 500 organizations.

Peter High: The war for talent is a hot topic in technology circles. In many ways, your business model is based upon serving that shortage. What insights do you have about finding the right people and hiring them straight away versus a model that allows you to date before you get married, so to speak?

Du Val: We have a trial period for every engagement. Allowing immediate hires would be an easier model for us, but we believe a trial period is important. Clients cannot bypass it. It is hard to know, with a high degree of certainty, whether a placement will work out or not. The trial period de-risks the hiring process. It is essential that our processes are consistent. If not, for instance, talent might choose another company over yours solely because the offer is for immediate full-time work.

High: How is Toptal structured? How big is it? What sorts of skills are you hiring for the development of your own technology?

Du Val: We are about 400 full-time people. We are predominantly software engineers and product people. We run software that we have created. It took us about three years to create and integrate our own CRM, ERP, and BPM systems. This offers us massive benefits. I am good friends with the co-founder and first CTO of Uber. We have talked about how if, at its core, Uber had a BPM system that allowed it to reconfigure its requests based on what users are doing and how their processes are flowing, it would be more effective and easier to manage. At Toptal, that is what we have built. We have a highly sophisticated software system that processes what talent is coming into the pipeline, what screening process are occurring, what invoices need to be tracked, and all of the different components that comprise a business. Many people are surprised to hear this because if you go on our website or read about us, you do not know that we run through software. That is how we do what we do at scale.

This will hold true even more as we go into different verticals in the next one or two years. We are hiring for that. We are built in Ruby, so we predominantly hire Ruby developers and back-end engineers who can help solidify our data science and data engineering. We are always extrapolating insights from our system to see what can be optimized and what operational efficiencies we can put into place. The two key areas that we hire for internally are data science and engineering. We are also quite heavy on the operations side, even though, at our core, we are a tech company and an internet company. We are similar to Amazon in that they are a tech company, but have a large operational component, as well. Amazon writes the software that facilitates the operational components, but they still need skilled workers to do the large majority of what they do. We are hiring, at scale, a lot of operational folks. Toptal is driven by a combination of software and operations.

High: To what extent were you an aspiring entrepreneur seeking an idea, as opposed to someone who found the spark of an idea that then led you on an entrepreneurial journey?

Du Val: I was a hardcore entrepreneur from the beginning. For years, I had been working on a software idea for a chat software-based startup. This was around 2008-2009, so they were not popular yet. I was writing the software with a few folks from overseas .We were making a lot of progress, but it was a difficult time to raise money due to the Great Recession. We were probably one of the first remote-first companies. It was not even called remote-first at that time. The term originated in the last five years, and this was almost 10 years ago. I was working fervidly on this startup and it was going nowhere. I turned to software consulting to survive. I noticed the opportunity, as we discussed earlier, to be able to contract out high skilled talent, but not at the cost of an Accenture or an Infosys, and with a higher integrity than a freelance marketplace. Our founding principles are reasonable cost, high quality, and high integrity.

I had a fight in my head that Toptal was not a software company because there are so many operational components to tasks like recruiting, stringing, invoicing, customer service, and all of the other components that make up a software company. In my mind, Toptal was not going to run like a typical software startup company that hits. Meaning, you scale, you raise money, and it becomes a typical Silicon Valley success story. However, I knew I could truly create a software company around those processes, if I took the time. I knew I would have to be ultra dedicated to the problem, as well, because it is so challenging. There are literally thousands of processes to be optimized from sourcing talent, to screening talent, to having the talent connected with who is sourcing, to how the screeners are interacting with applicants, etc. With all of the different components, I figured if I optimized and operationalized all those processes through software, over about 10 years, I could probably build one of the most relevant companies in the recruiting and staffing space. I then connected with my co-founder, and we sketched it out. We knew we would have to be committed to the idea for the next 10 years in order to build the massive innovations required to make it work.

We decided to hire software engineers and start creating the infrastructure. People are floored when they see our ERP, CRM and BPM systems. The technological feat we have achieved is amazing. Since we are our own customer, customizing and tweaking things is fast. We have a huge advantage over organizations that run on a BPM, ERP, or CRM stack they did not develop. We have a stack, but we still consider ourselves a tech company. However, we do not consider companies to be tech companies if they run purely on the stack if they have an SAP implementation coupled with an Appian or Pegasystems, coupled with a Salesforce. Those are all great products, but if you did not develop them internally, it is hard for them to intercommunicate. By using our own software, we can leverage advantages we could not if we were using a ready-built, ready-made solution.

High: Where do you see the company going in the next five years? Are there new avenues you are hoping to get into?

Du Val: We are developing additional talent verticals. We are going into legal, writers, project managers, and many other areas. You will see launch and press releases from us in the near future. The software we have built allows us to manage these verticals at scale.  In order to have the best lawyers, top software engineers, leading writers, and the like, we have developed intensive screening software. We are confident about our offerings.

A large part of Toptal’s success is due to the strength of our internal talent. We use our own services when we need someone to help us operationalize or write software. Going into new verticals and seeing the talent who are applying to work with us because they have read about us in other verticals is rewarding. We saw that with the finance vertical and design vertical. For instance, we had somebody join our network about three months ago who had been a partner at McKinsey for six years and a principle at the Carlyle Group. I said, "Wait a second, we need to hire this guy internally for our operations team.” So we did. We are excited to enter new spaces, which we will interconnect to our other offerings. With any vertical, we will always ensure it is developed at the highest integrity and quality level.

