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Freelancer marketplace Toptal sues Andela and ex-employees, alleging theft of trade secrets

The war for talent in the tech world can be brutal — and so, it turns out, can the war between platforms that help companies source it. In the latest developement, Toptal — a marketplace for filling engineering and other tech roles with freelance, remote workers — has filed a lawsuit against direct competitor Andela and several of its employees, alleging the theft of trade secrets in pursuit of “a perfect clone of its business”, according to the complaint. All of the Andela employees previously worked at Toptal.

Toptal’s lawsuit, filed in the Supreme Court of the State of New York and embedded below, alleges that the employees reneged on confidentiality, non-solicitation and non-compete agreements with Toptal. Toptal also alleges interference with contract, unfair competition and misappropriation of trade secrets.

While both Toptal and Andela have built businesses around the idea of remote freelancers filling tech jobs — a concept that has increased in profile and acceptance as people shifted to remote work during the pandemic — the pair only emerged as very direct competitors in the last year or so.

Toptal was co-founded by CEO Taso Du Val in 2010, and since then it has grown to become one of the world’s most popular on-demand talent networks. The company matches skilled tech personnel like engineers, software developers, designers, finance experts and product managers to clients across the globe. According to company data, it currently serves over 1,000 clients in more than 10 countries.

Andela, on the other hand, only recently turned to using a similar approach. Founded in 2014 in Lagos, Andela’s original business model was based on building physical hubs to source, vet, train and house talent across the continent. It did this in Kenya, Nigeria, Rwanda and Uganda.

However, Andela struggled with scaling and operating that business model, and in 2019 it laid off 400 developers. Early last year as the pandemic took hold, it laid off a further 135 employees. However this time around it did so with a strategy pivot in mind: after testing satellite models in Egypt and Ghana, the talent company decided to go forego physical hubs completely and go remote, first across Africa in 2020 and globally this year.

“We thought, ‘What if we accelerated [the African remote network] and just enabled applicants from anywhere?’ Because it was always the plan to become a global company. That was clear, but the timing was the question,” Andela CEO Jeremy Johnson told TechCrunch in April.

Yet Toptal believes Andela’s choice to scrap its hubs and source remote talent from everywhere was specifically to replicate Toptal’s business model — and success.

“Until recently, Andela operated an outsourcing operation focused on in-person, on-site hubs in Africa,” Toptal notes in the complaint.Over the course of the past year, Andela has moved away from its prior focus on in-person hubs situated in Africa and is engaging in a barely disguised attempt to become a clone of Toptal.”

Toptal claims that for Andela to pull off a “perfect clone of its business,” it poached key Toptal employees to exploit their knowledge, and that the ex-employees knowingly breached their confidentiality and non-solicitation obligations to Toptal.

Companies often try to uncover each other’s trade secrets by poaching, and many blatantly copy a competitor and do so without repercussions. On top of this, these two are hardly the only two places to for tech talent to connect with remote freelance job opportunities. Others include Fiverr, Malt, Freelancer.com, LinkedIn, Turing, Upwork and many more.

In a global economy with an estimated 1 billion so-called knowledge workers, and with freelancers accounting for some 35% of the world’s workforce, it’s a pretty gigantic market, which you could alternately look at as a major opportunity, but also a ripe field for many players with multiple permutations of the marketplace concept.

So why is Toptal crying foul play? The company says its ex-employees have not only revealed Toptal’s trade secrets and confidential information to compete unfairly but are also poaching additional Toptal personnel, clients and the talent that Toptal matches and sources to clients.

The ex-employees cited by Toptal include Sachin Bhagwata, vice president of enterprise; Martin Chikilian, head of talent operations; Courtney Machi, vice president of product; and Alvaro Oliveira, executive vice president of talent operations. Toptal says three additional former employees in non-executive roles breached express covenants not to compete in their agreements with Toptal.

While some of the allegations focus on the expertise of the employees, one of the trade secret allegations more directly references Toptal’s technology.

Toptal claims Machi tapped into her extensive knowledge of Toptal’s “proprietary software platform” and used that to help transform Andela “from a group of outsourcing hubs situated in various African locations into a fully remote, global company like Toptal.”

Asked to comment on the suit, Johnson at Andela said he believes Toptal is suing Andela for being competitive.

“With regards to the situation overall, I can say that frivolous lawsuits are the price of doing anything that matters,” he told TechCrunch in an email. “And this is 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 story for a company that started only a decade ago. It is one of the few companies in the Valley that doesn’t issue stock options to its investors or employees. Even Du Val’s co-founder, Breanden Beneschott, was ousted from the company without any shares, according to an article from The Information.

How did it pull this off? In 2012, Toptal raised a $1.4 million seed via convertible notes and investors were entitled to 15% of the company, according to The Information article.

But there was one condition: Toptal had to raise more money.

However, the company hasn’t needed to secure additional capital because of its profitability and growing revenue ($200 million annually as of 2018, per The Information). So investors are stuck in limbo — as are employees who joined hoping that the company would raise money down the line so their stock options would convert.

The Information story strikes a distinct note of resentment, noting that some employees felt “tricked out of stock in a company that Du Val has said publicly is worth more than $1 billion.”

Given that situation, TechCrunch asked Du Val if he thought it played any role in employee departures, and ex-employee relations.

“The issuance of stock options does not excuse theft of trade secrets,” he replied. “Also, there are more than 800 full-time people at Toptal [but] the complaint names seven individual defendants.”

The full complaint is embedded below.

Canvas lands $20M so tech’s biggest companies can find diverse talent

Ben Herman and Adam Gefkovicz launched Jumpstart in 2017 with a clear mission: to make the world more equitable via a more fair and balanced hiring process.

The company released its “Diversity Recruitment Platform” in July of 2018 with the aim of helping people earlier in their careers get a “jumpstart” via technology.

Over the years, the startup’s mission has evolved beyond helping college grads to helping all employees — regardless of career stage — get a fair shot at jobs. And it’s doing that by teaming up with hundreds of companies — such as Airbnb, Bloomberg, Coinbase, Samsung, Lyft, Pinterest, Plaid, Roblox, Audible, Headspace and Stripe — to help them hire a more diverse pool of candidates.

Demand has accelerated exponentially, and the San Francisco-based startup saw its revenue grow “3x” in 2020 compared to 2019, although execs declined to provide hard figures. Considering its broadened focus, Jumpstart has rebranded to Canvas and announced today that it has closed on $20 million in funding. Early Stripe employee and angel investor Lachy Groom and Sequoia Capital co-led the round, which included participation from Four Rivers Capital. The raise brings Canvas’ total raised to $32.5 million.

“We knew we were only scratching the surface of our vision, and knew we had a solution that could reimagine diversity hiring for everyone,” said co-founder and CEO Ben Herman. “You know how everyone has a CRM? We believe every company should have a DRP, which is a diversity recruitment platform. That’s the category we want to create and we want to be the largest in that space.”

No doubt that the Black Lives Matter movement in the aftermath of George Floyd’s murder helped, well jumpstart, the company’s efforts. Canvas is able to sell its offering as more companies “are being held accountable for their promises of equity and hiring diverse talent,” Herman said.

“Hiring diverse teams is not only a matter of corporate social responsibility,” he added. “Diversity and inclusion are a competitive advantage and strategic priority for every company in today’s landscape. We believe representation is a huge part of what we stand for. So we want everyone to be able to create their own canvas, and to be able to paint their own picture.”

Canvas describes its SaaS offering as a “fully virtual” recruiting platform that is based on self-reported data. About 87% of candidates on its platform disclose their demographic information (which it says is 7x the industry standard), according to the startup. Canvas also says it gives companies the ability to narrow down the priority groups and talent it wants to focus on by filtering over 75+ self-reported candidate data points.

The startup claims that it’s different from others in the space for that reason, among other features.

“Unlike other solutions that might utilize inferred data that could be inaccurate or illegal, Canvas helps create a more accurate data set to identify diverse candidates, helping to solve the core problem of talent discovery,” Herman said. 

It also — unlike some diversity hiring platforms — does not rely on artificial intelligence, a fact that Herman is actually proud of.

“We don’t believe that AI is the future. It’s not about getting someone’s gender or ethnicity based off of their name, or to inform the hiring decision without candidates knowing,” Herman told TechCrunch. “It’s all about how to empower talent to self-identify…We want to enable the talent to own their data, and truly be able to represent themselves in unique ways. That’s not leveraging AI.”

Canvas also gives companies a way to design, promote and run events, such as webinars, aimed at hiring diverse talent.

The startup also wants to get to a place where companies are working together “to complete the diversity data gap.”

“The problem is about accessibility, and so we want to give equal access to anyone and everyone — from all companies to all candidates,” Herman said. “And so that is really the most important part of what we are creating — the ability for companies to share data.”

So, how does it measure its own success? Canvas claims that 56% of all hires on the Canvas platform are made from underrepresented groups (URGs), and that it helps employers achieve a 30% reduction in time to hire.

Herman is not your typical startup founder, having dropped out of high school and starting his own recruitment agency at the age of 21. His tenacity is one of the things that attracted Sequoia partner and Canvas board member Mike Vernal to back the company.

“When we first met Ben, it was clear that he was…a natural-born talent scout,” Vernal told TechCrunch. “He thought there was a better way for the industry to work — one where companies and recruiters were more collaborative and used technology to build stronger, more diverse teams.”

Since its initial investment in the company, Vernal believes building diverse teams has never been more important.

“Those teams create better products, make stronger business decisions, and it’s just the right thing to do,” he said. “We believe companies can do a better job sourcing underrepresented talent using Canvas than on their own.” 

Canvas plans to use its new capital to expand the product into other industries and verticals beyond technology and continue to address the recruiting process for later stages of people’s careers. The company currently has 70 employees and expects to have 100 by the end of 2021.

As mentioned above, hiring diverse talent is becoming a bigger priority for big tech companies (such as HP) and startups alike. Earlier this year, diverse hiring startup SeekOut raised $65 million. The company has built out a database with hundreds of millions of profiles using its AI-powered talent search engine and “deep interactive analytics.”

HP outlines ambitious diversity goals

HP today announced a series of ambitious goals aimed at driving “a more diverse, equitable and inclusive” tech industry.

The tech giant, of course, is not the first company to have made strong claims about its intentions around diversity. As former TC reporter Megan Rose Dickey reported extensively, diversity and inclusion as an idea has been on the agenda of tech companies for years now. 

HP Chief Diversity Officer Lesley Slaton Brown says diversity and inclusion is something that the company has been focused on since its 1939 inception. Today, HP has roughly 50,000 employees globally with 31% of its leadership roles and 22% of its technical roles currently held by women – numbers that appear to be higher than most industry averages.

In order to further improve these numbers, HP announced three goals that Slaton Brown says the company is determined to achieve by 2030: 50/50 gender equality in HP leadership (defined as director level and up); greater than 30% technical women and women in engineering; and meet or exceed labor market representation for racial/ethnic minorities. 

I talked with Slaton Brown to get more details on the goals themselves, how the company plans to achieve them and what it plans to do to hold itself accountable. 

This interview has been edited for brevity and clarity.


TC:  Tell me more about the genesis of these goals and what HP has done up until now to achieve more equality – whether it be with regard to gender, race or ethnicity – within the company?

Slaton Brown: It’s foundationally something that we’ve always been focused on. We’re now at a place where I think going into COVID and quarantine last year and the impact that the George Floyd murder had on us as a nation really allowed us to do the double click down into racial equality and the systemic and structural discrimination that exists. 

From that, we were able to then stand up our Racial Equality and Social Justice Task Force. One of our goals has been to increase the representation of Black and African Americans in particular at HP. And also look at what we would need to do to increase the opportunity of Black and African American suppliers and vendors who work with and partner with HP. And then ultimately, how can we impact the communities locally and nationally – whether it’s from policy and legislation to working with municipalities in order to provide bias training and things like that. So all of that was stood up, and now a year later, we’ve made some great progress. 

HP Chief Diversity Officer Lesley Slaton Brown / HP

We have also launched our Human Rights Initiative. We’re looking at standing up for equal and human rights. We’re really focused on how we go after climate action and human rights.

TC: It sounds like that you are committing to a variety of things in terms of more balance among leadership and technical talent in terms of gender, for one. So it’s not just about race. But I’d like to hear more specifics on these particular goals and what you have done historically to work toward greater diversity and inclusion.

Slaton Brown: When we separated in 2015 from HP Co. We were very intentional about creating a diverse board of directors, first and foremost. And so today when I think about our board composition, we’re made up of I think it’s about 45% women, 35% ethnic minorities and over 60% total minorities with just our board of directors alone. We’re one of the most diverse boards in the tech industry. Now why is that important? The importance of building or standing up a board of directors is because they help with the vision of the company and help guide the strategy for the company.

That was one of the first things we did, and when I came into this role at that time, my goal was to embed diversity, equity and inclusion into everything that we do. 

TC: How are you holding yourselves accountable?

Slaton Brown: We’re really talking about answering all the way up to the board of directors on what we’re doing – our dashboards, our matrices that we pulled together will go to our board of directors to say, ‘Here’s what we said we’re going to do, how are we tracking, and then ultimately what was the impact.’ And so that’s what we’re building today. I consider that the infrastructure. So from the board of directors down cascading to your executive leadership team, ensuring that we have a strong narrative built.

By having this goal, we can then drive the actions, the programs, and then the implementation through our infrastructure and an ecosystem to achieve those goals. That includes things like working with organizations like the Society of Women Engineers, the Society of Black Engineers and the Society of Asian Engineers. And not only working with them, but building and investing in them so that we build the partnership in order to get to that pipeline.

TC: Can you be more specific in terms of what you mean by meeting or exceeding labor market representation?

Slaton Brown: I can see where that would be confusing. First, what it doesn’t mean is trying to match the demographics of the overall population, but rather to the labor market in the tech industry. For example, we’re at nearly 4% of having African Americans in a leadership position. Our goal is to achieve hiring at or more than 6% by 2025.

TC: What if you’re not getting enough women or minorities to apply for these leadership and technical roles? Would you rule out qualified white males, for example?

Slaton Brown: We are standing up for equal human rights. What we’re focusing on is also accelerating our gender, racial equality and social justice efforts. Part of that is looking at how do we increase our pipeline? And, how do we increase the talent pool? 

I would submit there is not a shortage of talent. It’s about how do you get to the talent? It has traditionally been through top tier schools such as Stanford and MIT. But you know what? Smart people and great talent are everywhere. People are sometimes financially challenged and so they may go the community college route, and then they might move into some of the top tier schools. That’s one means in addition to HBCUs (historically Black colleges and universities).

For example, we’ve stood up a very good program in the HBCU space to ensure that students that have not traditionally had the opportunity to compete for certain positions have that opportunity and not only have that opportunity, but have the ability to travel to HP sites to see where they would be likely interning. Our goal is to have a 100% conversion rate in terms of converting interns into full-time hires based off of performance, of course. And so it is a holistic or an end-to-end approach.

Okay, so now you’ve made these goals for women and for ethnic minorities and the white guy might say, ‘I’m left out.’ I think the interesting thing about that is that within the tech industry, the white male is the majority. What we’re doing at HP is building a powerful culture of inclusion and belonging. So we’re still getting white guys, but we’re also getting very talented women, and US ethnic minorities, as well, in addition to veterans and people with disabilities. 

It’s about where you go, how you show up as a brand of choice – which is a goal of ours: to be a destination of choice for the underrepresented group – and  then how you welcome them. It’s the attraction, the hiring, the retention, the investment you make in their learning and development, and then in promotion, as well. And so those are some of the things that we’re doing.

TC: What are other ways you are fighting for human rights?

Slaton Brown: This announcement is around how we’re doubling down on our workforce, workforce empowerment, and that is about how we do things is just as important as what we do. And that’s about respecting human rights, and making it a priority. Our commitment to our supply chain workers is to ensure that our vendors are not contributing to the modern day slavery, or bringing in people with degrees and education and then bringing them into a system that charges them charges them ginormous fees and takes their passport.

We want to ensure that we create an environment, and create visibility and a resilient supply chain to ensure that that doesn’t happen, that we respect human rights, and that our manufacturing suppliers are contributing to that, as well.

TC:  In press materials, the company claimed to be the first Fortune 100 tech company to commit to gender parity in leadership.” Hopefully you’ll be setting an example and others will follow.

Slaton Brown: Well, it’s a huge goal and so some of the strategies and best practices that we’ve put in place really is not just about bringing women in as a checkbox exercise for us, but to really establish a new standard.

Our goal and our vision is to become the most sustainable and just tech company in the world. And so we can’t just say that we have to do it. And that’s what I love about the culture of HP – it’s moving from the talk, and really showing the actions in which we’re going to get to that place of being sustainable and just by 2030.