When Regina Ye was in college, she was a Shopify seller and remembers being so fed up with advertising solutions that she spent the week of her final exams awake to figure out how ads worked on Facebook and Amazon.
"It was super complicated," he said. “I was an early adopter of the B2B market, but advertising was a black box. I didn't realize how much I would have to do this task as a salesperson."
There were two things that were frustrating: one was the complex structure of effectively monetizing those channels, and the other was the lack of direct promotional tools available in the retail channels you sell through, which you'd think would be less saturated and competitive. than Facebook and Google.
During his time as product lead, Ye met Stanford professor Michael Ostrovsky, an expert in market design and auction theory, and Francisco Larrain, a serial entrepreneur who had an early exit from Groupon and headed its engineering.
As more markets are affected by the shift to user privacy, the group looked at how to innovate in this space without dealing with privacy. Exploring Ostrovsky's work on auctions, together they founded top sort in 2021 to provide auction-based advertising technology, via APIs, so smaller retailers and sellers can more easily promote without relying on cookies, which are about to go away.
His focus is retail media technology for small businesses to use auctions as a way to create effective advertising. When you install the API, you can start a campaign, including sponsored listings, banner ads, and video ads, and you can control how ads are displayed, how ad quality and relevance are measured, and who can launch campaigns. Larrain says that auctions run in as little as 20 milliseconds at 10.000 requests per second.
When considering how much to bid for clicks, TOPBlack offers suggestions using its algorithm to maximize clicks and conversions. It also has an auto-bid feature for pay-per-click ads so vendors can enter a budget and time period, and the company will handle it. Ye said he can guarantee two to four times of response depending on the market.
"I don't agree that ads should be a guessing game," Ye added. “This is very much a clean way to advertise, and we fill the gap not with privacy data, but with math and machine learning. What sets us apart is how easy it is, which is why ad tech has traditionally gotten a bad rap.”
TOPBlack has won most of its clients in the last four months, and some of them are already generating between 1 and 15 million dollars in gross profit value.
One of his first clients was babytuto, a retailer of parenting and baby products in Chile that initially worked with the company for Cyber Monday. Based on achieving a 40% vendor adoption rate, TOPBlack reported in its case study that “based on provider activity, the performance of this batch of sponsored lists, and market characteristics, our projection is that the lists promoted by babytuto will generate an applicability equivalent to approximately 5% of the gross value”.
Ye says the company has learned a lot from babytuto and its dozens of other early adopters so far, including Yummy, Facility, Airlift and Chiper, and wants to accelerate growth and scale its go-to-market strategy.
The company raised $8 million in seed funding valuing the company at $110 million. The round includes investments from market investors including Pear Ventures, Quiet Capital, FJLabs, Micky Malka (Ribbit Capital), Lydia Jett (SoftBank), Akhil Paul, Comma VC and a group of individual investors.
Ye and Larrain say the new funding will go toward growing a sales and marketing team and deepening the footprint that TOPBlack has in Latin America and Asia.
“We are getting to a point where we have gone from zero to one, and all investors doubled down,” Ye said. “We have reached our customers in their acceleration, but we would love to be there sooner. This area is very misunderstood, and we want to further educate users and create different product ranges to help smaller markets get started as well, as we work with all markets on a different scale.”
