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

The war for talent in the tech world can be brutal – as can the war between platforms that help companies attract talent. In the latest development, Toptal – a marketplace for filling engineering and other technical positions with freelance remote workers – has a lawsuit against its direct competitor Andela and several of its Employees accused of stealing trade secrets while searching for “a perfect clone of their business,” according to the lawsuit. All Andela employees previously worked at Toptal.

Toptal’s lawsuit, filed in the New York State Supreme Court and embedded below, alleges that the employees violated its confidentiality, solicitation, and non-compete agreements with Toptal. Toptal also accuses the violation of contracts, unfair competition and the misappropriation of trade secrets.

While both Toptal and Andela built companies around the idea of ​​remote freelancers filling tech jobs – a concept that increased in profile and acceptance as people switched to remote work during the pandemic – the two stepped first last year as a very direct competitor or something.

Toptal was co-founded by CEO Taso Du Val in 2010 and has since grown into one of the world’s most popular on-demand talent networks. The company places qualified technical personnel such as engineers, software developers, designers, financial experts and product managers with customers all over the world. According to the company, she currently looks after over 1,000 customers in more than 10 countries.

Andela, on the other hand, only recently used a similar one Approach. Founded in 2014 in Lagos, Andela’s original business model based in building physical centers to find, test, train and host talent across the continent. This happened in Kenya, Nigeria, Rwanda and Uganda.

However, Andela struggled to scale and operate this business model and laid off 400 developers in 2019. E.At the beginning of last year, a further 135 employees were laid off in the wake of the pandemic. This time, however, it did so with a strategic focus: after testing satellite models in Egypt and Ghana, the talent company decided to forego physical hubs entirely and venture into the distance, e.g.2020 for the first time in Africa and this year worldwide.

“We thought, ‘What if we accelerated? [the African remote network] and just activated applicants from all over the place? ‘ Because the plan was always to become a global company. That was clear, but the timing was important, “Andela CEO Jeremy Johnson told TechCrunch in April.

Top valley believes Andela’s decision to ditch its hubs and source remote talent from anywhere was specifically one of replicating Toptal’s business model – and success.

“Until recently, Andela operated an outsourcing business that focused on personal on-site hubs in Africa,” Toptal stated in the complaint.Over the past year, Andela has moved away from his previous focus on personal hubs in Africa and is involved in one barely camouflaged attempt to become a clone of Toptal. “

Toptal claims that Andela, in order to create a “perfect clone of his business”, poached key Toptal employees to use their knowledge, and that the former employees knowingly violated their confidentiality and non-solicitation obligations towards Toptal.

Companies often try to expose their trade secrets through poaching, and many obviously Copy a competitor and do so with no impact. Additionally, these two are hardly the only places tech talent can connect to remote freelance workplaces. Others are Fiverr, Malt, Freelancer.com, LinkedIn, Turing, Upwork and many more.

In a global economy with an estimated 1 billion so-called knowledge workers and freelancers who make up about 35% of the global workforce, this is a pretty gigantic market that could alternatively be viewed as a great opportunity, but also a ripe field for many players with multiple permutations of the Marketplace concept.

So why does Toptal cry for a foul? The company says its former employees didn’t just divulge Toptal’s trade secrets and confidential information in order to compete unfair but also poaching additionally Toptal employees, customers and the talents that Toptal brings together and provides them to customers.

The former employees quoted by Toptal include Sachin Bhagwata, vice president, corporate; Martin Chikilian, Head of Talent Operations; Courtney Machi, vice president, product; and Alvaro Oliveira, Executive Vice President of Talent Operations. Toptal says three additional former employees in the non-executive Roles violate express agreements not to compete in their agreements with Toptal.

While some of the allegations focus on employee expertise, one of the trade secret allegations relates more directly to Toptal’s technology.

Toptal claims that Machi used her extensive knowledge of Toptal’s “proprietary software platform” and used it to “move Andela from a group of outsourcing hubs in various African locations.” completely distant, global company like Toptal. “

When asked to comment on the lawsuit, Andela’s Johnson said he believed Toptal is suing Andela over her competitiveness.

“In relation to the situation a total of, I can tell that frivolous lawsuits are the price of anything that matters, ”he told TechCrunch in an email. “And that’s the kind of baseless bullying and fear tactics that get employees to leave in the first place. We will defend ourselves and our colleagues energetic. “

Toptal has an unconventional history for a company that was founded 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. Even The co-founder of Du Val, Breanden Beneschott, was ousted according to an article by The Information from the company with no shares.

How did it do that? In 2012, Toptal raised a $ 1.4 million seed through convertibles and investors were justified on 15% of the company according to The Information article.

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

however, the company didn’t have to back up additionally due to its profitability and growing revenue ($ 200 million annually as of 2018, according to The Information). So investors are in limbo – as are employees who have joined, hoping the company will raise money across the board to convert their stock options.

The information story meets with clear resentment and states that some employees “felt they had been tricked in a company that, according to Du Val, is publicly worth more than $ 1 billion”.

Given this situation, TechCrunch asked Du Val if he believed this had played a role in employee resignations and relationships with former employees.

“The issue of stock options does not excuse the theft of trade secrets,” he replied. “There are also more than 800 full-time employees at Toptal [but] the lawsuit names seven individual defendants. “

The full complaint is embedded below.

July 13, 2021