As the global tech industry is on the constant lookout for new and exceptional talent and as a shortage of skilled workers looms in Israel and elsewhere, US startup Toptal is presenting a flexible alternative to employers: it matches them with the best suited talent on demand, remotely, wherever it is around the world — without having to bother with relocation or visas.
Founded in 2010 by entrepreneur Taso Du Val, who was selected in 2015 by Forbes as one of its 30 under 30 in the Enterprise Technology category, Toptal has set up a network that connects what it says is the world’s top talent with tech companies globally, on demand. The startup, which says it has over $100 million in revenue a year, serves thousands of clients, including Fortune 500 companies J.P. Morgan and Pfizer and startups Airbnb and Zendesk, and has worked with some 400 companies in Israel.
“We have essentially created an almost cloud Silicon Valley, where the talent caliber is that of Silicon Valley or even Israeli talent, but it is virtual,” Du Val, now 31, said in an interview followed up by emails with The Times of Israel, during his first visit earlier this year to Israel.
The most talented engineers today are from Russia and Argentina, he said. There is local demand for engineers in these countries, but those who live in a small city on the periphery would generally need to relocate to find a job with a large corporation. Toptal allows them to stay at home but get the big jobs anyway.
“You might have a genius or a really smart kid in Colombia or in the middle of nowhere in Argentina,” Du Val said. “If you just have one genius in each country, that would still be a lot. We have several talented people in each country and we are able to contract out very top talent to companies all over the world including Israel, to be able to supply companies with really high caliber engineers.”
Worldwide and in Israel governments are creating initiatives to meet the global shortage of engineers, needed to help power the reality of an ever more connected world. According to ManpowerGroup, employers worldwide are reporting the highest global talent shortage since 2007. Of the more than 42,000 employers surveyed, 40 percent are experiencing difficulties filling roles. In the IT sector, businesses are reporting the most marked talent shortage in a number of years, the Talent Shortage Survey released in October 2016 shows.
Israel’s high-tech sector, which has been a growth engine for the economy, is also facing an acute shortage of engineers and programmers as students shy away from computer science, math and statistics.
This lack of skilled workers is highlighted even more by the burst of activity in the sector in Israel, which has almost doubled the number of companies operating locally in the past decade. There are about 1,000 new startups set up in Israel every year, with workers wanting the challenge of starting their own company rather than joining an existing one and successful entrepreneurs returning to the market with new ventures
Toptal’s applicants undergo a rigorous screening process including language and personality tests. “Candidates must be able to read, write, and speak English extremely well. We also probe into the inner depths of personality traits, looking for passionate and driven individuals who are hands-on and fully engaged in their work,” the website says.
Then the candidates are tested for technical knowledge and problem solving abilities, and only candidates with “exceptional results” are accepted. A live screening process follows in which the candidates are tested by experts in their field, and then they are assigned a test project.
Only the top 3% of candidates pass the screening process, Toptal says.
The firm then looks for the perfect fit between the client and talent using software that automates the process, without the need for time-consuming resume reviews and interviews.
Since 2012, Toptal has worked with some 400 Israeli clients, both companies that need talent and skilled workers that Toptal has tapped into for its other customers.
“This year we will mostly likely do millions in sales with Israeli companies alone,” said Du Val. “Our growth in Israel every year has been in the hundreds of percent year over year and we have dozens of active talent in our network from Israel.”
Du Val, who is the company’s co-founder and CEO, got the idea while he was running a small engineering consulting firm and realized that many of his co-workers overseas were just as good as his friends and colleagues working for Google or Facebook. But he also realized it was not always easy for companies to connect with the talent available overseas. And as demand for top engineers in Silicon Valley and the rest of the US and Europe skyrocketed, Toptal presented employers with a new and original solution.
“About four years ago we were running into a lot of friction — people would say Toptal sounds like a great model but to work remotely — it is a little bit too much for our company,” he said. “Now it is completely opposite. Everyone is working remotely, everyone is open to it. It allows us to do more business and allows them to have a much more flexible workforce.”
All of Toptal’s employees, just like its clients, work remotely, Du Val said.
“Generally speaking our model is like Uber– if you need someone on demand and you work with them, we take a percentage of that contract and that is how we make our money,” he said.
Global demand for flexible working arrangements has increased, as has the number of companies relying on contract labor, according to New York-based data company CB Insights. “As a result, instead of holding full-time jobs, millions of workers are contracting out their labor through part-time, temporary, seasonal, or leased work arrangements,” the data firm said in a December 2016 report.
Companies offering solutions aimed at flexible workforce recruitment and management include SnagAJob, an online marketplace for on-demand temporary workers including in the retail, hospitality, and healthcare industries, and ShiftGig, which is an online marketplace for on-demand workers in the entertainment, hospitality, and retail industries, the report said.
Du Val, who now lives in New York, grew up in Western Massachusetts and dropped out of high school “at a pretty young age.” But he didn’t drop out because he was “a rebel, or whatever, but because I knew exactly what I wanted to do,” he said. “I wanted to write software — I was reading books of software from a very young age, I was very interested in developing software and there was no path for me. So, as I studied on my own, I got hooked on enough to know that that is what I wanted to do for my career. So I ended up dropping out and writing software, working with systems and getting involved in startups and other areas.”
“While I was coding online, I’d connect with other, Israeli coders. We’d write software and trade tips and tricks on how to write software and do all this other stuff,” he said. “They were always so advanced and I would learn so much from them. Israelis have a very advanced education regarding software, coding and engineering. They are very diligent and clever when it comes to writing code and working with engineering. I respect it and I recognize it and I am certainly looking forward to working with a lot more Israeli engineers in the future.”
Du Val later gained experience working as a lead engineer at Fotolog, acquired by Hi-Media for $100 million, at Slide, bought up by Google for $228 million, and at his owns startups before creating Toptal.
The company makes over $100 million in revenue a year, Du Val said, and in recent talks with investors, valuation of the company “has been in the 10 figures, in terms of valuation,” he said. “Our valuation is certainly north of a billion” dollars.
Toptal has received acquisition offers from two top tech companies but has rejected them both, Du Val said.
“Even now, this year, we would have the revenues to IPO on the Nasdaq or so. But that is not something we need to do at this time, just like we don’t need to raise funds necessarily,” he said. “Thankfully we are all quite young. All of us in the founding team are in our 20s or our early 30s. And so we don’t have a lot of the responsibilities or requirements that other people have, making them need larger amounts of cash into their lives. We are pretty light, let’s say, and not pressed for money at this time.”
The company’s fortunes could get a boost if US President Donald Trump’s immigration policies make it harder for American tech firms to get visas for their employees. Earlier this month the Trump administration decided to halt expedited processing of H-1B visas, used to bring in skilled foreign workers for the technology sector or health care in the US, CNN Money reported.
“I don’t believe Trump’s immigration policies will have a significant effect on our business. This is due to the fact that our talent is quite rare regardless of the policies due to the fact that our standards are quite exceptional,” Du Val said. “However, if an H-1B freeze happens, such as the one that’s being discussed, then our business may certainly have an uptick, as this will materially impact many companies.”