The war for talent in the tech world can be brutal, as can the war between platforms that help companies get hold of them. In the latest development, Toptal – a marketplace to fill engineering and other technology roles with freelance and remote workers – filed a lawsuit against its direct competitor Andela and several of its employees, alleging the theft of trade secrets in search of a “perfect clone of his company”, according to the complaint. All of Andela’s employees previously worked at Toptal.
Toptal’s lawsuit, filed in the New York State Supreme Court and incorporated below, alleges employees breached confidentiality, non-solicitation and non-compete agreements with Toptal. Toptal also alleges interference with the contract, unfair competition and the misappropriation of trade secrets.
While Toptal and Andela both built businesses around the idea of remote freelancers in tech jobs – a concept that gained visibility and acceptance as people moved to remote working during the pandemic – the pair only emerged as very direct competitors last year or so.
Toptal was co-founded by CEO Taso Du Val in 2010, and since then it has grown into one of the world’s most popular on-demand talent networks.. The company connects qualified technical personnel such as engineers, software developers, designers, financial experts and product managers with clients around the world.. According to company data, it currently serves more than 1,000 customers in more than 10 countries.
Andela, on the other hand, recently turned to the use of a approach. Founded in 2014 in Lagos, Andela’s original business model was based on the creation of physical hubs to search, monitor, train and host talent across the continent. It did so in Kenya, Nigeria, Rwanda and Uganda.
However, Andela struggled to scale and operate this business model, and in 2019 she laid off 400 developers.. EBarely last year, as the pandemic set in, it laid off 135 other employees. However, this time around, it did so with a strategic pivot in mind: after testing satellite models in Egypt and Ghana, the talent company decided to forgo physical hubs altogether and move away, ffor the first time in Africa in 2020 and in the world this year.
“We thought, ‘What if we accelerate [the African remote network] and fair allowed applicants from anywhere? ‘ Because it was always the plan to become a global company. It was clear, but the timing was the question, ”Andela CEO Jeremy Johnson told TechCrunch in April.
Yet Toptal believes that Andela’s choice to drop her hubs and recruit remote talent from anywhere was precisely to replicate Toptal’s business model – and its success.
“Until recently, Andela operated an outsourcing operation focused on in-person and on-site hubs in Africa,” Toptal notes in the complaint. “Over the past year, Andela has moved away from its earlier focus on in-person hubs located in Africa and is embarking on a barely disguised attempt to become a Toptal clone.
Toptal claims that in order for Andela to be a “perfect clone of her business”, she debauchery key Toptal employees to harness their knowledge, and that the former employees knowingly violated their confidentiality and non-solicitation obligations to Toptal.
Companies often try to uncover each other’s trade secrets through poaching, and many blatantly copy a competitor and do it without repercussions. On top of that, these two are hardly the only two places tech talent can connect with remote freelance employment opportunities. Others include Fiverr, Malt, Freelancer.com, LinkedIn, Turing, Upwork, and many more.
In a global economy with around 1 billion so-called knowledge workers, and with freelancers making up around 35% of the global workforce, this is a pretty massive market, which you could alternatively see as a major opportunity. , but also like a ripe field. for many players with multiple permutations of the market concept.
So why is Toptal crying for foul play? Company Says Former Employees Did Not Just Reveal Toptal Trade Secrets And Confidential Information To Compete unfairly but also do poaching Additional Toptal staff, clients and the talents that Toptal associates with and recruits from clients.
The former employees cited by Toptal include Sachin Bhagwata, vice president of the company; Martin Chikilian, Head of Talent Operations; Courtney Machi, Vice President of Products; and Alvaro Oliveira, Executive Vice President of Talent Operations. Toptal says Three additional former non-managerial employees roles violated express commitments not to compete in their agreements with Toptal.
While some of the claims focus on employee expertise, one of the trade secret claims more directly refers to Toptal’s technology.
Toptal claims that Machi drew on his in-depth knowledge of Toptal’s’ proprietary software platform ‘and used it to help transform Andela’ from a cluster of outsourcing centers located in various African locations into a fully a remote global company like Toptal. “
Asked to comment on the lawsuit, Johnson at Andela said he believes Toptal is chasing Andela to be competitive.
“Regarding the situation overall, I can say that frivolous lawsuits are the price of all that matters, ”he told TechCrunch in an email. “And that’s the kind of baseless bullying and fear tactics that make employees want to leave in the first place.. We will defend ourselves and our colleagues vigorously.”
Toptal has an unconventional history for a business that started only a decade ago. It is one of the few companies in the Valley that does not issue stock options to its investors or employees.. same Du Val co-founder Breanden Beneschott, was ousted of the company without any stock, according to an article in The Information.
How did it work? In 2012, Toptal raised $ 1.4 million via convertible notes and investors were entitled at 15% of the company, according to The Information article.
But there was one condition: Toptal had to raise more money.
However, the company did not need to secure Additional capital due to its profitability and growing income ($ 200 million per year as of 2018, according to The Information). Investors are therefore stuck in limbo – as are the employees who have joined in with the hope that the company would raise funds down the line so that their stock options convert..
The Information story emits a separate note of resentment, noting that some employees felt “cheated out of stock at a company which Du Val has publicly said was worth over $ 1 billion.”
Given this situation, TechCrunch asked Du Val if he thought it played a role in employee departures and relationships with ex-employees.
“The issuance of stock options does not excuse the theft of trade secrets,” he replied. “Also, there are more than 800 full-time people at Toptal [but] the complaint names seven individual accused. “
The full complaint is incorporated below.