Editor’s note: This piece originally appeared on Distributed.blog, which hosts the Distributed podcast. Scroll down to listen to the full episode of Distributed featuring Toptal CEO Taso Du Val and hosted by Matt Mullenweg, cofounder of WordPress and CEO of Automattic.
In tech hubs like San Francisco and New York, the demand for top-tier talent can outstrip supply, so HR departments find themselves in fierce competition for local job applicants. In response, some companies have turned to the distributed model, which allows them to reach beyond hub cities and access qualified candidates around the country and internationally. Hiring for distributed positions comes with its own set of challenges, though.
When hiring managers interview a candidate for a high-level role, they want to get a clear sense of that person’s productivity, honesty, and ability to thrive in a specific team and company culture. But how can you gauge these qualities when the hiring process takes place over video or text chat? Distributed HR leaders might never meet an applicant face to face, which makes it even more crucial to vet their abilities, work ethic, and alignment with the company’s expectations.
One solution to this conundrum is to lean heavily on referrals, but that approach is difficult to scale and often provides leads in the same hub cities that companies are trying to avoid. Alternatively, hiring managers can establish a rigorous hiring process that involves a mix of trial projects, tests, and performance evaluations—but that can slow things down. (For a look at Automattic’s approach to hiring engineers, listen to Matt Mullenweg’s interview with Head of Developer Experience Cate Huston). Another solution is to outsource the vetting process to a third party like Toptal.
Toptal bills itself as a high-touch alternative to the many freelance marketplaces that have cropped up to help companies scale with speed, find professionals with specialized skill sets, or hire for short-term projects. Toptal claims to accept only three percent of all applicants. In order to make the cut, they undergo a screening process to verify that they possess the appropriate skills for the job along with the necessary professionalism and soft skills. With Toptal as a partner, companies can activate and terminate partnerships quickly, and scale teams up or down in a matter of weeks instead of months.
Finding Flexible Executives
CEO Taso Du Val started Toptal in 2010 after learning that his business acquaintances were having trouble finding quality talent online. This came as a surprise to Taso, who’d had no trouble finding excellent engineers through various freelance marketplaces. Taso had served as the lead engineer at Fotolog and Slide, both of which were successfully acquired. He also served as CEO of a small engineering consulting firm, giving him ample experience building teams of engineers.
As Taso considered his colleagues’ conundrum, it occurred to him that he, too, was an engineer. He already possessed the subject-matter expertise to determine if candidates had the right stuff. For non-engineers, however, hiring lots of high-level technical personnel can be daunting. Taso saw a need for a marketplace that curates and vets applicants, and thus Toptal (short for “Top Talent”) was born.
Toptal was a distributed company from the get-go. Taso started small, contracting with a software developer in Argentina and another in South Africa.
I was going into an office but not seeing anyone or interacting with anyone except myself. So it almost was this zombie-like walk to the office every morning where I’m going to the office because I go to work, but I don’t see anyone who I work with. And so I actually started waking up and just working on my computer at home. And then I said to myself, ‘Well, why am I even working from home?
After this realization, Taso began traveling around the world and never looked back. Meanwhile, the company grew steadily. The Toptal network now attracts over a million applications each year, and this year its revenue crossed the nine-figure threshold. Taso hopes to grow the company far beyond its current metrics, and claims that the global talent market could generate five times as many applications as it currently sees.
Toptal and its high-touch approach aim to disrupt more than freelance marketplaces. The company is also competing against staffing and recruitment agencies, which typically provide clients with several candidates to interview. Toptal usually connects clients with only one candidate. As Taso explains:
The reason that we are able to do that is because we actually have a lot of process and domain expertise internally to be able to vet those talents . . . to ensure that person, before we send them to you, is the perfect match. So it’s about getting information from you up front in a more modern way than a staffing or recruitment company generally does it, and then facilitating the matching process through software and processes that are reinforced through software.
Historically, Toptal’s core business has been placing developers at companies that needed them, as there’s a higher demand for non-local technical talent because engineers based in tech hub cities are often both scarce and expensive. The increased ubiquity of distributed work and improvements in communication and collaboration technologies have made it possible for Toptal to add other high-level roles to its marketplace, including designers and project and product managers - and even an interim CFO.
The Art of Screening
Screening employees is a vital function for any human resources department, but it’s become even more important as both fully distributed companies and those experimenting with a partially remote workforce are hiring global workers they might never meet in person.
Toptal begins the process with a comprehensive language, personality, and communication interview. It ensures that candidates can read, write, and speak English fluently and that they demonstrate drive, professional ambition, and inherent motivation to perform. Just over a quarter of Toptal’s applicants pass this portion of the screening process. Next, the company conducts a skill review, checking for technical knowledge and problem-solving ability; less than 10 percent of Toptal hopefuls continue beyond this stage. Finally, candidates complete live exercises that cover core topics within their domain of expertise, as well as a real-world project that lasts up to three weeks. By the time a Toptaler is ready to connect with a client, they’re among the final three percent of the initial applicant pool.
Toptal screens for role-specific attributes—the technical capabilities that pertain to the job, such as proficiency in a specific programming language. They’ve also developed their own methods to assess candidates’ soft skills, including attitude, ethical values, and energy. The goal is to ensure a good fit between candidates and teams. Toptal seeks workers who are flexible, well versed in common collaboration tools, and able to integrate smoothly into their new teams’ workflows.
Taso says that soft skills are even more important than technical aptitude. “Do you know how to write an algorithm in constant time versus quadratic time?” asks Taso, acknowledging that this is an important skill to have. But in a remote context, soft skills are predominant; the interviewee’s general character and demeanor are crucial.
One element that I can speak to is the character of the person. As many people know, great engineers can be very abrasive. If you go into an interview process and you understand it’s professional, you have to show your best self. And if you are abrasive when you’re showing your best self, it doesn’t go uphill from there.
“You have to be very judgmental on those factors,” says Taso, arguing that these subjective qualities must be factored into the equation. “It’s not just about whether you can write algorithms or not.”
One quality that might not immediately come to mind as an important skill? Punctuality. Toptal has a zero-tolerance policy for tardiness during their screening process. Some candidates find this harsh, but punctuality, for Taso, is an indicator of integrity. If an interviewee can’t bother to show up on time for a meeting during the application phase, it raises questions about the applicant’s dedication to their work across the board.
The punctuality component is very, very real. So if you show up just a little late, you will literally be rejected automatically. And people get pissed on this point. They’re like, 'Hey, I was on another call, I went through the—' Hey, look, that’s our integrity on the line. If McKinsey and the best companies have survived by upping the bar in terms of integrity, we’re going to do the same.
This exacting process has paid off for Toptal. According to Taso, the company’s send-to-hire ratio is roughly 1.5:1. In other words, for every three candidates they send to a client, that client hires two as full-time, permanent employees. Companies can experiment with freelancers, and then bring the best ones on board as distributed employees. It’s a way for colocated companies to test distributed work and learn about its benefits and challenges. This trend demonstrates that a temporary placement can sometimes serve as a stepping stone for a long-term relationship between enterprises and freelance workers. Toptal’s success as a matchmaker suggests that the gig economy might be evolving. The speed and ease with which companies can attract the most skilled freelancers is still a major draw, but the real value might lie in fostering long-term, productive relationships with highly qualified professionals.