Toptal – Managed Marketplace for Freelancers
Toptal – Managed Marketplace for Freelancers
Founded in 2010, Toptal is one of the largest freelancer marketplaces globally
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Snapshot
Founded in 2010, California-headquartered Toptal is an online talent marketplace that connects companies with highly vetted freelance talent like software developers, finance experts, designers, and project and product managers. The company has been profitable since its inception but only raised funding once in a seed financing round of $1.4M led by Andreessen Horowitz, and angels like Quora’s Adam D’Angelo and Adam Rockefeller.
Toptal has served 16,000 clients and currently has a global network of talent numbering over 10,000 people in more than 100 countries. The platform is used by leading brands like Airbnb, Bridgestone, Duolingo, Shopify, USC, Cleveland Cavaliers etc to hire freelancers for important projects.
Business Overview & Products
Toptal allows companies to hire expert freelancers belonging to the following categories:
Developers
Designers
Finance Experts
Project Managers
Product Managers
It operates across 98 countries without any physical office or headquarters. Their talent network consists of freelancers belonging to 158 countries.
How It Works
Toptal is an online global network consisting of expert freelancers like designers, developers, finance experts, product and project managers that are connected with clients to work on freelance projects. The platform helps companies tap into the expertise of top tech talent around the world, while at the same time, freelancers registered on the platform find high-quality jobs and guidance from Toptal’s expert team.
The company prides itself on only offering the top 3% freelancers of the market, with the help of their extensive screening and selection process. The screening involves an evaluation of skills, English language mastery, personality test, and a rigorous, real-world test project that takes 1-3 weeks to complete. This process ensures that clients work with only high-caliber and highly skilled freelancers. The platform takes job requirements from companies looking for a freelancer, negotiates a budget, and vets them as well.
Recruiters can sign up on the platform for free. pon registration, an introductory call is set up with them to understand their hiring needs. Rather than making them sort through dozens of resumes, Toptal sends them on average 1.7 choices of freelancers before the client signs a contract. The company can connect a recruiter with a freelancer within 24 hours, and 90% of the time, the recruiter hires the first freelancer they are introduced to.
Toptal offers a two-week trial period for clients to evaluate their chosen freelancers’ performance. If the client is not satisfied, their $500 deposit is refunded without being charged for any work the freelancer has submitted in those two weeks.
The company does not charge clients to hire a freelancer, instead, it charges a commission on the earnings of freelancers. The freelancer’s hourly rate is based on their expertise, qualifications, and location. Hourly rates on the platform mostly start around $60/hour and customers are provided invoicing services and payment options, including transferring funds into bank accounts through a partnership with their cross-border payments company Payoneer.
Business Model & Pricing
Toptal is an online talent marketplace where expert developers, designers, consultants, and managers are connected to innovative companies and startups looking to expand their teams. The company has a permanent work from home policy, which helps its operations maintain a low overhead. However, it prides itself on offering the top 3% of freelancers of the market with its extensive screening process which is why their charges are higher than other freelancing platforms.
Toptal does not charge clients to hire a freelancer, instead, it earns money by charging a markup fee over the hourly rate of every freelancer in its exclusive network. The company directly invoices a client for the hourly work done on a project and then deducts its commission before paying the freelancer. This rate is predetermined and approximately half of what Toptal collects from the client.
Traction
Topal witnessed tremendous growth in 2020 due to the coronavirus pandemic, as the volume of applicants to join its on-demand network increased by 55% to more than 200,000 people. Business-client demand also rose over 20% in North America, Asia-Pacific, European Union, and 40% in the UK. That year the company reported revenue of over $200M in 2020 and a year-over-year growth rate of 40% in 2021.
By May 2021, it had received 1,200,000 talent applications and served 16,000 clients. The company has more than 4,200 active professionals working with more than 700 leading companies.
Founder(s)
Taso Du Val: CEO and Co-Founder at Toptal. Taso, previously was the Founding Team Member and Advisor at Artsy, a platform to discover, buy and sell art by the world’s leading artists. He also worked as Lead Data Admin/ Architect at Slide.
Breanden Beneschott: Co-Founder at Toptal. Breanden, a Princeton graduate, co-founded smsPREP, Bold.org, and Mechanism Ventures. He also worked as Director of Technology at Snafu.
History & Evolution
In 2010, Taso was working as a lead database architect at Slide, an app house, and helping friends at Artsy with coding in his free time. It was during these coding sessions that he noticed how difficult it was to find expert freelance engineers on oDesk and Elance. To fill this gap, Taso came up with the idea of Toptal, an online talent marketplace. As a result, the domain name, Toptal.com was officially registered and it became Toptal LLC in November. In 2011, Toptal Platform was introduced, a proprietary piece of technology created to run all operations.
In 2015, the company reported year to year growth of 2,861% and ranked 33rd on Deloitte’s 2015 Technology Fast 500 list. The company also expanded its talent network to include designers and launched a scholarship program for female developers.
In 2016, Toptal acquired Skillbridge, a freelance marketplace for accountants, market research consultants, financial modelers, and statisticians. That year it also launched Top Tracker, the first of its kind free time-tracking tool tethered to a specific freelance marketplace; Toptal Enterprise, a platform to meet the growing demand for enterprise-grade freelance talent solutions; and Toptal Projects, a service to help clients solve urgent business needs by assembling and managing a team of experts.
In 2017, Toptal expanded its talent network to include on-demand finance experts that had the experience and skills set to meet the demands of Fortune 500 companies.
In 2018, the company partnered with Payoneer to allow free payments between companies and freelancers around the world who used their platform. It also launched TopVolunteer, a platform connecting NGOs, charities, and other nonprofit organizations with talent in the network.
In 2019, Toptal launched Staffing.com, a platform to foster conversations about the expansion of the freelance economy, the rise of remote work, and the future of procurement and staffing at large enterprises. It also expanded its talent network again by including on-demand product and project managers.
In 2020, Toptal launched The Suddenly Remote Playbook, a comprehensive guide to help companies and employees manage to work remotely. It also launched Remote Work Solutions that offers customized solutions to help companies build and sustain a robust remote work environment.
In 2021, Toptal ranked as Market Leader in Ardent Partners' list of 2021 Digital Staffing Marketplaces Technology Advisor report.
Additional Learnings
Toptal’s competitive edge is its extensive selection process that results in only 3% of highly skilled applicants getting approved. While other platforms are open for all freelancers to sign-up, Toptal has a rigorous selection process that includes online exercises and interviews. As a result, out of the hundreds of talent applications they receive every day, only 3% are approved to be listed on the platform. This strategy helps the company to capture the high-end segment of the online staffing market, specifically companies that are looking to hire expert freelancers.
In 2021, Toptal filed a lawsuit against Andela and its ex-employees for the alleged theft of trade secrets. According to the complaint, the ex-employees of Toptal not only failed to honor the confidentiality, non-solicitation, and non-compete agreements with Toptal but also indulged in misappropriation of trade secrets.
Market Snapshot
India’s freelance industry is estimated to grow to around $20-30B by 2025.
With an estimated 15M freelancers, India is the world’s second-fastest-growing freelance industry, though freelancers in India are paid less than their counterparts in other countries.
Suggested starting points to dive deeper
The Talent Economy Podcast: Putting a Dent in the Universe: Introducing Toptal Chief Economist Erik Stettler on Apple Podcasts (The Talent Economy Podcast, ‘21)
Toptal Sees Applications Surge over 50% as COVID-19 Disruption Accelerates Shift to Remote Working (Cision PR Newswire, Oct ‘21)
Toptal Ranks As Market Leader In Ardent Partners' List Of Leading Digital Staffing Marketplaces And Solutions (Yahoo Finance, Sep ‘21)
Best of Bootstrapping: Toptal CEO Bootstraps a Virtual Company to Scale (One Million Blog, Feb ‘21)
Toptal : A No-office Startup for the Freelancer Community (Annasha, Your Tech Story, Oct ‘19)
As Toptal employees and investors demand equity, founder points to the fine print (Conor Grant, The Hustle, Aug ‘16)
How Community Became Toptal's Competitive Advantage (Carrie Melissa Jones, CMX Hub, March ‘16)