Breanden Beneschott is the COO + Co-founder at Toptal, a private network for the top 3% of freelance software engineers and designers that he started from his dorm room and then scaled to more than $80,000,000 a year with almost no outside funding.
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3 Key Points:
- Hire good, amazing people.
- Great people don’t really need an infrastructure.
- Offer value.
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Time Stamped Show Notes
(click the time stamp to jump directly to that point in the episode.)
- [01:18] – Breanden started Toptal from his dorm room 5 years ago
- [02:03] – Breanden was earning $5m in revenue back in Episode 132!
- [05:07] – Value Bomb Drop: Hire really good, amazing people because great people don’t really need an infrastructure and becoming a remote company is one of the best things you can do
- [07:23] – What is the biggest mistake you’ve made in the last 4 or 5 years? Hiring people that have an expertise that we don’t have a need for internally
- [11:23] – You need to acquire skills yourself first so you can train your employees to do things the way want them done
- [12:45] – What is something you’ve changed your mind about in the last 6 months? – Engineers make very good sales people
- [14:09] – What is the one thing you’re most FIRED up about today? Toptal’s expansion into the enterprise phase
- [14:30] – Toptal in the enterprise space
- [16:00] – Putting in infrastructure to make significant business moves
- [19:48] – The Lightning Round
- What was holding you back from becoming an entrepreneur? – “I don’t think anything has ever held me back from becoming an entrepreneur”
- What’s the best piece of advice you’ve ever received? – “Just start”
- What’s the personal habit that contributes to your success? – “Hiring tremendous problem solvers”
- Share an internet resource, like Evernote, with Fire Nation – Quora
- If you could recommend one book to our listeners, what would it be and why? – Rework
- [24:21] – Parting piece of guidance – “Offer value”
- [26:28] – Connect with Breanden through his email
Interviewer: Breanden, are you prepared to ignite?
Interviewee: Let’s do it.
Interviewer: Yes! Breanden is the COO and co-founder at Toptal, a private network for the top 3 percent of freelance software engineers and designers that started from his dorm room and then scaled to more than $80 million a year with almost no outside funding. Breanden take a minute, fill in some gaps from that intro and give us a little glimpse of your personal life.
Interviewee: The thing with Toptal, we’re a network of the top 3 percent software engineers and designers from all over the world and companies like Emirates and Harvard Medical School and Shopify and lots of startups and dev shops and banks and governments, etc. hire us to join their team and help solve some of their toughest technical problems.
My personal life, since we started this from my dorm room a little over five years ago has been kind of nonstop Toptal. I mean, we set it up as a completely remote company, and so for me personally and as well as a lot of Toptal, that has meant a lot of travel all over the world and kind of this idea of one, while we’re young and working this remote set up and everything, we can, we have the luxury to be able to travel and live the lifestyle that we want, but also it actually benefits the business in all sorts of significant and kind of beautiful ways, and so we end up recruiting people that would have never been on our radar had we not decided to pick up and travel, kind of, for the last several years.
Interviewer: I love this. In Fire Nation, if you are recognizing Breanden’s voice right now, you are truly a Fire Nation faithful because this guy was episode 132 of EO Fire, so that is over thirteen hundred and twenty-five episodes ago and in fact, we were talking pre-interview a little bit, that back then he was around $5 mil or so in revenue and now again he’s closing in on a $100 million a year in revenue, so just to see where Breanden and Toptal have gone in the past.
You know, not even four years yet, so just under four years, it’s just amazing to see so I just had to bring him back. You know an EO Fire alumni to kind of fill us in on these last four years, and you know, he’s learned a lot, so I want him to drop some value on our heads from all of that and Breanden that’s kind of where I want to start today because you have a specific area of expertise. So kind of expound upon that just a little bit, but then give us two “value bombs” within this niche that you have really acquired that you think Fire Nation needs to know.
Interviewee: I mean, I’d say that the expertise is probably around setting up a remote company and leveraging a lot of the latest technologies and trends to make that happen and really kind of being one of the pioneers in this space. I think if we’re not the largest remote company that doesn’t have a single office, we’re certainly one of the largest, and so we’ve learned a lot and we’ve made some mistakes as well along the way. And I think the other aspect that I’ve gotten kind of a crash course in over the last few years is how to operate and scale a hyper growth company in a bootstrapped way, where we didn’t raise tens or hundreds of millions of dollars, you know, like a lot of Silicon Valley companies typically do.
We raised a tiny bit of money in the beginning and kind of stuck it in a bank account as a rainy day fund and then operated like a bootstrapped company for the last five years and that, to me that means you have to have a lot of certainty around how much money you have right now and how much money you’re gonna have, say, at the end of the week, and whatever the difference is there is how much you get to invest to make sure that next week you grow even more. And so having a lot of discipline around that type of measurement and even though we’re making significant amounts of money, it’s a really amazing business, we’re really aggressive around how we actually invest that and re-invest it at any given point in time.
And so even though there’s $100 million coming out of Toptal right now, it’s – nobody’s taking big paydays or anything like that, it’s very much a constant re-investment back in the business, asking down to every dollar, practically, of how can we best spend this or invest it to make sure that we’re set up for the long term because we’re not going for a quick flip of a business, either. We’ve turned down acquisition offers to the tune of $500 million over the last couple of years and that’s just not what we’re about. We think that this could be a ten- or hundred-billion-dollar opportunity that really changes the world and how high-level work gets done and in order to do that, you need ten, twenty years to build a Microsoft type of – scale company.
So I guess you asked me about two valuable takeaways. If you hire really good, high level, like amazing people, tremendous problem solvers, you don’t need a lot of infrastructure to accomplish amazing things. When you hire lower-level people that you really need a lot of systems and fail safes and infrastructure and processes in place and then people can really thrive. So, when you’re in a remote company, especially screening things from scratch or you’re a startup and you’re, kind of, going from zero to one or one to 50 or 50 to 100, you don’t have the benefit of having a lot of infrastructure and so you need to hire extremely smart, self-motivated, driven adults who can accomplish problems or solve problems and accomplish things on their own with, kind of, minimal direction from you.
So the direction that they do get from you is really, really important though and so I’m a really big fan of talking about this idea at Toptal of when you’re on the Toptal team we have to have perfect alignment of what our vision is. Like, what are we building towards now and in the future and then along the way what is our value system in order to get there?
And so we usually call those first principles and what you can do having that direction one year, five years out as a goal and the value system five years along the way of how we operate in order to get there – people can be in different rooms, different plants, different countries – it doesn’t matter and they can kind of derive in any situation, how they should proceed and what they should do in order to accomplish these goals.
And so, it’s an upfront investment to make sure that the vision is crystal clear and the first principles are crystal clear along the way, but it pays off every single day of operating a company and even if you’re sitting in the same office or if you’re fully distributed across the entire world like we are, I think that’s the most valuable takeaway that I’ve had or I’ve gotten throughout this entire experience.
Interviewer: Now Breanden you mentioned mistakes, so before we get to number two of your value bombs, I kind of want to do a little insert here and talk about like one of your biggest mistakes that you’ve made because you said, you know, you’ve said you’ve done a lot of things right, you know you’ve found out some things that you would have also done differently. Like, what’s one of those biggest things that you would have done differently or what are the biggest mistakes that you’ve made in the last four or five years?
Interviewee: Hiring is a very difficult thing for a lot of companies, and it’s been difficult for us as well, but not in the way that it is for most companies. For Toptal, we have this benefit that there’s thousands of really amazing software engineers inside the Toptal network, so that is what we do as a service, so we don’t have any problem hiring technical talent, and then when we go to hire for most positions within the company and then what I’ve always done is I’ve kind of gone into the Toptal network and picked somebody out who was an engineer and tremendous problem solver and they’d become a sales engineer or they filled some other role at the company and that’s worked extremely well.
Where it’s become very difficult, for us at least, was when we needed to hire people that had an expertise or a set of skills that we did not have internally and they weren’t the sorts of things that a smart person could just figure out. And so this might mean legal, like in-house general counsel, it might mean a CFO or like a VP of finance or PR or a number of other things, we really need some outside expertise, maybe even legally you need to find sets of expertise, a smart person can’t become your company’s attorney, and so doing that has been very challenging and I think we almost underdeveloped our recruiting and training processes because we didn’t need it for so long.
Because almost all of the positions that were internal – that were core to the company, we were able to fill by hiring people through the Toptal network that when it came time to act like a much bigger company and fill some of these larger roles, it was very difficult.
And so, another aspect of that is, when you grow the way that we’ve grown, as one of the co-founders, I was doing this from my dorm room five years ago at Princeton, it was – I had the benefit of doing almost every role myself, and so we – Toptal’s a pretty straightforward business, you have thousands of engineers applying to work with us every week and thousands of companies coming to work with us every week and we have complex screening processes on either side and we have to make sure that they line up in the middle and that people are actually thriving when they work together here, of course.
And I used to be recruiter and screener and salesperson and finance guy and the machine-learning expert, and all these things inside of Toptal, and then when we go to scale, you hit the accelerator as hard as you can and inevitably there are bottlenecks in all these different pipelines and so our process has been, find the bottleneck, diagnose it, and fix it. That might mean writing some software to automate something, that might mean hiring somebody, that might mean changing the process.
But at least when it meant that we had to hire somebody, which might be the perfect solution, maybe you need another salesperson on your team, for example, I had the benefit of really sort of understanding myself how this role functions and how it should function, and had some experience, really just a base level of competence before trying to delegate anything and what has been very difficult at this company and every company I’ve been at, is when you try to hire somebody or delegate something that you don’t truly understand yourself, and what I try to do is I think a mistake that I see a lot of people make and I’ve made as well is not diving in and figuring out something myself and then trying to delegate it.
Like, trying to essentially outsource the thinking or hire somebody to solve the problem for me and that’s absolutely the number one mistake I try to avoid.
Interviewer: Fire Nation, people come to me all the time, like John, I’m looking to hire my first virtual assistant because I don’t know how to edit my podcast or to post this or post that, and I’m like, “Well, first and foremost you need to acquire those skills so that you can then train your virtual assistant into doing it how you want it to be done and then you know when things aren’t being done right and how they need to be corrected.” I mean, that is a really important step in the process, Fire Nation. Now Breanden back to you with that number two value bomb on your area of expertise.
Interviewee: Becoming a remote company, I think is by far the best thing that you can do. I mean, you don’t necessarily have to be 100 percent all in as a co-founder or entrepreneur now but you need to be able to embrace merit over proximity as a company. And so that means if you’re in a company right now and you can’t go to LinkedIn and hire anybody that you need, that means by definition you can’t hire the best people in the world for the positions that you have and that’s a horrible place to be as an entrepreneur, and so it’s not easy and it takes a lot of, I guess, setup and continual setup to operate effectively as a remote or co-located company, but it’s absolutely worth it because you can access a global talent pool that you can’t otherwise.
Interviewer: Breanden, what’s something that you’ve changed your mind about just in the last six months? What’s something you used to believe that you believe differently now?
Interviewee: I may have known this before, but I think I’ve gotten a lot more certain about it, I think that engineers make very good salespeople and maybe not for every company, but engineers – and some of them just don’t want – or some of us don’t want to talk to people and obviously that’s maybe a non-starter – but I think that engineers are tremendous problem solvers and so especially as your first hire for a sales function at a company, if you can hire somebody from an engineering background who is going to solve problems and be data-driven and experiment like crazy and use the analytics to drive things forward the way that an engineer has kind of done by training their entire academic career or professional career, it doesn’t matter if they’re slightly less personable or enthusiastic or charismatic or whatever.
They’re going to be more successful in the long run and they’re going to set you up for not one-off success, but repeatable, scalable success because they will have proven what actually works and helped build real business pipelines rather than leverage a short-lived network or – does that make sense?
Interviewer: That makes a lot of sense, Breanden. Kind of what I want to move into now as we’re moving forward is, what are you, today, most fired up about?
Interviewee: I am very fired up about Toptal’s expansion into enterprise – into the enterprise space. So, we’re doing – we’re flying past $100 million a year in revenue –
Interviewer: Well, and take a step back real quick and just maybe break down in a couple sentences exactly the core functionality of Toptal and what this move in enterprise means for you.
Interviewee: We’re a network of really senior, or elite, software engineers and designers all over the world and so companies come to us when they need to hire these types of individuals directly onto their team, and so that means that we do work with companies who are all over the world, startups, dev shops, agencies; and traditionally it hasn’t been so much in the enterprise space.
The enterprise space to me means Fortune 2000 or a company that makes, that does over $500 million a year in annual revenue. And that’s not the world that I’m from or, really, most people at Toptal are from, we really just kind of came from Silicon Valley and startup land. And things function very differently in the enterprise world.
Interviewer: By “differently” do you mean a lot slower?
Interviewee: That’s one way to look at it. But they’re also huge! A lot of tremendous innovation comes out of enterprise clients as well and so we’re talking like Apple, Google, Facebook and much more traditional types of companies as well. Railroad companies, universities, these are all enterprise-type companies and to do business with an enterprise company in a meaningful way, you have to act like a big company yourself in many ways and so legally you need to have the right infrastructure, you need to be able to deal with their procurement departments, and all sorts of things that I didn’t even know existed as somebody who came from Silicon Valley.
And we’ve been putting in the infrastructure for a while now, to make it so that we can do significant business with the Apples and Googles of the world and we pulled the trigger on this just under a year ago and dozens and dozens of the largest companies in the world are doing amazing work with Toptal. It has been much slower than our expansion in the software space, I mean, sorry, the startup space, where a salesperson focusing on startups at Toptal could bring in five clients in a day, and that wouldn’t even be a crazy day. But for, in the enterprise space, they’re never gonna bring in five clients in a single day.
It takes months of working with them and going back and forth with legal and talking to the right people and getting the right sponsorship and buy-in across an organization. But when you do, the sky is the limit and you really start doing some interesting work, and things that affect millions of people or really transfer or shift value in industries in huge ways that many startups just don’t.
So to Toptal this is really exciting because that – being able to be on a different type of leading edge in terms of technology that actually impacts the millions or billions of people and transfers value in industries in completely new ways in the wave of the future is amazing and then the total addressable market here is obviously enormous as well, I mean some people say that software development is a trillion-dollar industry. And so the – in terms of growth for Toptal – it’s non-trivial.
Interviewer: Well, Fire Nation we have literally a trillion dollars of value waiting for you in the lightning round, so don’t you go anywhere; we’re going to take a quick minute first to thank our sponsors.
Breanden, are you prepared for the lightning rounds?
Interviewee: Yep, let’s do it.
Interviewer: What was holding you back from becoming an entrepreneur?
Interviewee: I don’t think anything has ever held me back from becoming an entrepreneur. I was sort of hustling and coming up with my own ways of doing things ever since high school and even into university. I guess, my freshman year as a chemical engineer at a hard school, that was holding me back a little bit, so I took three years off and did entrepreneurial stuff with lots of different companies and then went back to school to finish, had three years left of an undergraduate degree and within a few months of going back, had started other things in my dorm room and was pitching at business plan competitions and doing consulting and freelance-type software development work and everything, so nothing has ever stopped me from doing it, I’ve always found a way.
Interviewer: What’s the best advice you’ve ever received?
Interviewee: Just start. I think Tom Szaky said this at that TED talk he gave at Princeton several years ago and I really liked it, so I guess the context is, when’s the best time to start a company or kind of when’s the best time to do anything that you’re really itching to do and the advice was just start. You’re gonna make mistakes along the way that, honestly, if you’re moving fast enough to be successful, like, just expect mistakes, and mistakes are fine, just make sure that you correct them along the way and deal with them appropriately, but just start.
Interviewer: What’s a personal habit that contributes to your success?
Interviewee: I think hiring tremendous problem solvers is a personal habit. I interview people almost every day and on interviews I always try to learn something from people, and I look for people that can relay complex ideas in very simple terms and see if they see things that I don’t, and then make sure that I’m coming away from the conversation like this person’s just relentlessly resourceful and super-smart. The type of person that, “Wow, this guy or girl’s gonna be successful no matter what.” If you can feel like that after an interview, so it’s not like, “Yeah, this person’s pretty good,” but it’s more like, “Hell yeah, this person’s amazing.” That’s what I go for on interviews and that’s been very successful.
Interviewer: Can you share an internet resource like Toptal with the Fire Nation?
Interviewee: This might have been my same answer a few years ago, but it’s gonna be Quora, for sure. So, Quora’s an amazing question and answer site with lots of, like, university professors, people like Elon Musk are on there, lots of particle physicists, NASA researchers, etc. and it’s just a fantastic community that started out of Silicon Valley where you can ask any question and ask specific people to answer, and they do.
Jimmy Wales, the creator of Wikipedia, is heavy on there and lots and lots of people like him and other people that might be a lot more specific. I mean, there’s great answers on there about what was it like to be in the World Trade Center on 9/11 and there’s firsthand accounts and beautiful stories that I think only exist on Quora. So I spend time on it every single day and I ask a handful of questions when I need advice and it’s actually a good place to recruit people, too. Just go look at what people are talking about.
Interviewer: Collabshot.com was your resource back in 2012.
Interviewee: Ah, interesting. Collabshot’s still pretty good.
Interviewer: Cool! If you could recommend one book, what would it be and why?
Interviewee: Again, you asked me this a few years ago and I would say the same answer, but –
Interviewer: Do you remember what the answer was?
Interviewee: I think it was The Leadership Pill.
Interviewer: It was! It’s right here, that’s amazing.
Interviewee: I’ve read a lot of books since then and I actually had a baby in the last year as well –
Interviewee: --and so there’s some really good parenting books that I recommend as well, but business books, I think Rework by Jason Fried and D.H.H’s, the 37 Signals founders is really, really good. A pretty quick read, very entertaining, and just one of those books where you end up – if you’re an annotator or an underliner of books – you end up – you might as well just underline the whole thing.
Interviewer: And again, it’s not a huge read Fire Nation, so it’s not like it’s gonna be a ton of underlining. You’re going to take away great value, you’re gonna be done in a couple hours, and move on. And now Breanden, let’s end on fire with you sharing a parting piece of guidance, the best way that we can connect with you, and then we’ll say good bye.
Interviewee: In addition to just setting up your company to be remote, I think just that’s one of the best things that you can do right now, if you’re bootstrapped or even if you’re not bootstrapped as a company, I think a really amazing way to get value quickly and cheaply and sometimes in significant ways, is to offer value.
I think the – one of the ways that I’ve been very successful is by writing and don’t consider myself to be a very good writer, I’m certainly not fast, but I can sit down and spend five, ten hours to get a first draft of something that I think is really good. I think that the internet does not need more fluffy content, so it can’t be fluff, it needs to be A-plus and don’t publish something until it’s A-plus, and go get help and feedback from other people until it’s A-plus, down to the titles and the intro and conclusion and the takeaways and bold parts. And everything needs to be amazing and you’ll kind of know it when you have it.
When you do that and you put it out in the world, whether it’s on medium or your own blog or something like that, or Quora even, so many amazing things happen. We’ve done this many times at Toptal, where posts have gone viral and they’ve either gotten re-syndicated, they’ve shot up to the top of Hacker News or they’ve been re-syndicated on leading publications, or like Tim Ferriss e-mailed me and asked me if I could publish something on his website, and like the Tim Ferriss thing, for example, that was – I spent eight hours on a plane to New Zealand writing a post and then it went up on his site and we easily have made $2 million from that one post.
And so this writing, but not writing fluff, writing like really impactful things that people remember and can use out there as a strategy, I think, is an amazing tool where you can create value from almost nothing. I mean, you’re just converting your time and effort into value that will come back over and over and over. And so if you’re a big company or a small company, that is the tool that you should use.
Interviewer: And what’s the best way that we can connect with you?
Interviewee: My e-mail is [email protected], so you can shoot me an e-mail. I always put it out there in interviews, it’s b-r-e-a-n-d-e-n at Toptal, t-o-p-t-a-l.com. Might not be able to respond immediately, but I will respond, so happy to connect.
Interviewer: Fire Nation, you’re the average of the five people you spend the most time with, you’ve been hanging out with B.B. and J.L.D. today, so keep up the heat. And if you want to have a nice chuckle, go back and listen to episode 132 to see a much younger J.L.D. and B.B. chatting away to see what was going on in our world back then, and of course head over to eofire.com, just type breanden in the search bar, his shows page will pop up, as well as will episode 132 and you can get all the links to everything that we’ve been talking about today.
Guys, when the founder and COO of a, what is it now, almost nine figure a year company, gives you his e-mail address and you have questions, like utilize it. [email protected], that’s b-r-e-a-n-d-e-n at Toptal, t-o-p-t-a-l.com, and of course Toptal is a great company and toptal.com/fire is gonna get you some pretty awesomeness if you want to check out that link, so Breanden thank you for sharing your journey today with Fire Nation today and for that, we salute you and we’ll catch you on the flip side.
Interviewee: Thank you very much.
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