Software is eating the world, but who’s setting the table? Engineers, and everyone needs them. But companies that hire freelance programmers are realizing an ugly product is as broken as buggy code. The talent crunch around engineers has now spawned a parallel desperation for designers. Toptal wants to answer that call by routing designers with spare cycles to companies in need after doing the same with engineers.
Toptal is one of those companies that Silicon Valley doesn’t talk about enough just because it isn’t out raising gobs money. But that’s because it hasn’t had to. With so much demand, Toptal’s freelance engineer marketplace merely needed a $1.4 million seed from Andreessen Horowitz, and angels like Quora’s Adam D’Angelo and Adam Rockefeller to build a profitable business. It’s on track for an $80 million annual run rate, and it only started in 2010. True to the company’s nature, founder and CEO Taso Du Val insists “we’re the largest company in the world without an office.”
Toptal finds high quality engineers who for whatever reason don’t want a traditional 9 to 5…or a 9 to 9 as is more common in startupland. It screens them to ensure they’re top talent, and works to set a reasonable rate for their services. Meanwhile Toptal takes job requirements from companies looking for a freelancer, negotiates a budget, and vets them too. Du Val tells me evaluating both sides prevents anyone from having a “shitty experience”.
Confident both sides are legit, Toptal matches them up. Rather than making the hirer sort through dozens of resumes, Toptal sends them on average just 1.7 choices of coders before the client signs a contract. Client pays Toptal, Toptal pays the freelancer, and Toptal pockets the difference. Du Val refused to reveal Toptal’s margin but he says its “a markup we think is reasonable.” The business can always buy out a developer’s contract if they ever want to hire them outright.
With a supply of thousands of engineers, Toptal now works with about 2,000 clients from J.P. Morgan and Pfizer to Airbnb and Zendesk to fledgling startups. They like the service because it’s faster and cheaper than sourcing on their own, and its risk-free. The first two weeks of any gig are a trial period where the client can choose not to pay for any reason if they’re dissatisfied. Word gets around, so if Toptal’s workers weren’t worth it, there’s no way it could have grown as fast as it has.
Du Val started the company after working as a lead database architect at pioneering app house Slide. While helping friends at Artsy with coding, he noticed how tough it was to find great freelance engineers on oDesk and Elance (now merged as Upwork), and figured he could source better talent from his own network. It blossomed into the Uber of engineers.
Now Toptal is trying to gobble up the adjacent market of freelance designers with the same model. Clients were craving them, so it’s signing on experts in UX, UI, visual and interaction design.
It won’t be easy. While working with engineers is a matter of managing schedules, in the end an app either runs smoothly or it doesn’t. Success is more objective. Working with designers is a notoriously prickly back-and-forth process. In-house, that iteration happens by force. But interfacing with a remote designer could be rocky if Toptal can’t ensure its freelancers have excellent communication skills and don’t flip out over constant nitpicks from management.
As the startup scales, keeping its talent level high could be a challenge. Anyone who’s felt like driver quality at Uber and Lyft has suffered a bit as they’ve grown will understand. Toptal is only about 1/12th the size of Upwork, with its $1 billion yearly revenue, though Upwork also offers freelancers in sales, customer service, legal and many other categories.
Toptal’s core business is also seeing increased competition. In a strange turn of events, one of its early angels Roger Dickey has started his own Y Combinator-backed freelance engineer marketplace called Gigster. Du Val was a bit sore about that when we spoke on the phone. But Gigster fully manages engineers with its own PMs and is currently focused on serving the startup market. Du Val sees the real jackpot serving huge companies, doing what Accenture and Deloitte did for business consulting, but for engineering and design.
Toptal’s also looking to turbocharge its freelancers by building special tools to make remote work more efficient, including performance review and HR systems. Plus it’s experimenting with its own fully-managed service so if clients want to send in a spec and get a full-fledged product delivered to them, Toptal can handle it.
Surprisingly, when I asked Du Val why, on a philosophical level, he wanted to build Toptal and make it his legacy, he snapped “I absolutely do not want to make this my legacy.” But then he backtracked, saying how proud he was to “build a futuristic company” with “absolutely no office.”
We are in an age where high-paid technologists seem hell-bent on grinding out long hours at the office rather than finding a better work-life balance or just escaping to an island with their money. Toptal could offer an alternative destiny where the skilled can work just enough to live well, rather than working themselves to death.