Just when you thought AdTech was finished, one company is showing us that there is always more ground to cover. Beeswax has built the ‘Bidder as a Service’ (BASS) solution for advertisers to easily access RTB exchanges in a customizable way. Hot on the heels of an $11M funding, Beeswax is looking to get rid of the heavy lift and barriers to entry in the often obscure AdTech world.
AlleyWatch got in touch with the CEO and founder Ari Paparo and meddled around in the company’s beeswax.
Who were your investors and how much did you raise?
We raised a series A of 11 million from RRE and Foundry Group.
Tell us about your product or service.
In order to buy ads on the programmatic ad exchanges (like Google’s AdX), you need to build a number of technologies, none of which are easy. You need to connect to the exchanges. You need to filter and match the incoming auctions to your business needs. You need to keep track of how often each user sees an ad in order to “frequency cap”. You need to keep track of budget in real-time across geographic regions. You need to match your users to the third-party cookies. etc etc. All of this is *before* you do anything custom or distinct to give your buying strategies an advantage.
Beeswax solves this problem. With the Beeswax Bidder-as-a-Service (BAAS), the customer gets all the plumbing on day 1, including a UI, a REST API, data pipelines, etc. But they then can deploy their own code in our cloud to customize and extend what we do so they can build a truly custom bidding operation.
What inspired you to start the company?
I’ve been in the ad tech business for over 10 years. And since the dawn of the programmatic era I’ve gotten numerous phone calls from CEOs of ad tech companies looking for advice on bidding technology. I noticed that there were a bunch of custom development shops working on this problem, but there weren’t any product offerings that could give the customer the ability to “roll their own” RTB bidder without reinventing the wheel. So I got together with two former colleagues from Google and we built the product that the market wanted.
How is it different?
There are a lot of platforms out there for buying ads programmatically. We have three key differentiators to our Bidder-as-a-Service platform:
1) We are fully transparent, meaning the customer can literally see all the data we can see. This is distinguished from most “black box” or “grey box” platforms where the customer’s insight is limited;
2) We have flat pricing based on capacity rather than spend. Everyone else in the industry charges a percentage of spend, meaning the customer pays more as they grow. With Beeswax we charge a flat monthly fee based largely on capacity. It is like “AWS for Ad Tech”, where you pay for the servers you use, no more.
3) We are the only company in ad tech that lets our clients write their own algorithms in whatever language they choose. We have customers using our system for deep learning, and others for extremely accurate geo-fencing. It is up to the customer to determine what they want to accomplish.
What market you are targeting and how big is it?
We have two primary markets:
First, we target ad networks and other intermediaries that both buy and sell ads. This market has been traditionally under-served by the ad tech market, and often has to build their own tech. We believe this market is at least $100 million/year in technology spend.
Second, we target sophisticated hands-on advertisers. These are advertisers that generally have direct response goals, and rarely use agencies. They want to get their hands dirty with technology and are willing to invest in solutions. This market is in the hundreds of millions of dollars per year.
What’s your business model?
We charge a flat monthly fee based on the capacity of ad auction requests the customer wants to transact with. We can deploy a bidder for a starting price of $7500/month, which is radically cheaper than any other option out there.
What did working at Google teach you?
Google is obsessed with scale. They won’t lift a finger if it won’t scale to hundreds of millions of dollars and can be serviced globally without much customization. There’s a positive and a negative lesson there. On the positive side, focusing on scale allows you to avoid short-term gains and keep your eye on the prize. On the negative side, as a start-up you need to hustle, and hustle doesn’t scale.
What was the funding process like?
There’s a general negativity in the market around ad tech since some high profile public companies have struggled to maintain their valuations. With that said, the venture market understands ad tech very well, and if you come out with a better mousetrap along with a better (recurring) revenue model, there is capital available.
What are the biggest challenges that you faced while raising capital?
Everyone wants to follow; no one wants to lead. We must have had five investors breathing down our necks to give us $1 million each, but they all wanted someone else to take the pole position and make the round happen. In the end we were able to get two fabulous investors to co-lead and that made it relatively easy.
What factors about your business led your investors to write the check?
There were three factors that were exciting to investors about Beeswax: The team, the traction, and the revenue model. My cofounders and I all have extensive experience building ad tech businesses, which gives us a leg up on funding. We’ve got great traction in the market, as evidenced by our flagship client, Foursquare, which was written up extensively in a Business Insider profile at our launch. And our model, despite being in ad tech, looks and feels more like a SaaS business than anything else.
What are the milestones you plan to achieve in the next six months?
Operationally, the biggest milestone will be launching in Europe, where there is a great deal of demand for our product. We also expect to go from our current staff of 12 to over 20 by year-end.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Do stuff on the cheap. Use WeWork instead of getting a lease. Do your PR yourself. Don’t pay yourself or your co-founders. etc etc.
Where do you see the company going now over the near term?
Heads down growth. Not much more than that.
What’s your favorite restaurant in the city?
B&H Dairy. The Lox, Eggs, and Onions is the bomb.
