# Adam Foroughi, AppLovin

Podcast: David Senra
Published: May 6, 2026
Reading time: 27 min
Canonical: https://podbrew.app/briefs/david-senra-adam-foroughi-applovin

Adam Foroughi, CEO of AppLovin, joins us to recount the compelling journey of building a dominant ad tech company. He shares how AppLovin began as a bootstrapped venture, pivoting from an app discovery tool to a sophisticated advertising platform that outmaneuvered giants like Google's AdMob by prioritizing performance marketing for app developers.

The discussion delves into AppLovin's boldest strategic moves, including a $6 billion stock buyback that eventually generated $60 billion in proceeds, navigating a complex China deal that almost unraveled the company, and the pivotal role of KKR's investment in its growth. Foroughi explains the rationale behind acquiring numerous gaming studios for crucial data and the subsequent decision to divest them to sharpen their focus.

Listeners will discover the principles guiding AppLovin's culture of hyper-competence and efficiency, its strategies for retaining top talent during market downturns, and the profound impact of its AI-powered Axon 2 platform. This conversation illuminates the strategies for scaling an incredibly innovative company, now set on expanding its reach beyond mobile gaming to empower a diverse array of businesses globally.

## Key takeaways

- AppLovin's stock crashed 92% after its 2021 IPO, falling from $115 to $9 per share, despite a significant increase in EBITDA from $700 million to over $1 billion.

- AppLovin deployed $6 billion into stock buybacks, utilizing leverage, to purchase shares from targeted sellers like private equity investors, which ultimately generated $56 billion in proceeds.

- The buyback was initiated when the company's market cap was $3.8 billion but its EBITDA exceeded $1 billion annually, indicating strong internal cash generation relative to its valuation.

- The company pursued this aggressive, debt-funded buyback strategy despite external criticism, driven by internal conviction in its future growth and high cash flow, supported by a board that saw the company trading at an attractive five times cash flow multiple.

- An app discovery tool called App 11, while unsuccessful as a consumer product, yielded a highly effective recommendation algorithm that became the core technology for AppLovin's advertising platform.

- The founder bootstrapped the initial venture for 1.5 years with personal funds, intentionally avoiding investors during the experimental phase to maintain flexibility for pivoting.

- AppLovin differentiated from Google's AdMob by building tools specifically for app developers, not brands, enabling them to both monetize their apps and acquire new users.

- The company's performance-based model allowed developers to effectively arbitrage the platform, creating a sustainable way for them to grow their businesses.

- AppLovin rapidly scaled to a $1 million monthly run rate and profitability within eight months of its 2012 launch, reaching a $12 million annual run rate.

- Adam Foroughi declined a $600 million cash acquisition offer in 2015, despite his company generating $50 million in EBITDA with 100% YoY growth.

- This bold decision led to the company eventually reaching an approximate $140 billion market capitalization, far exceeding the initial acquisition offer.

- Founders without an experienced board may overlook critical regulatory and geopolitical risks, leading to the collapse of significant investment opportunities.

- AppLovin pivoted a $1 billion equity deal with Chinese investors to a convertible note to limit their potential ownership to 10%, thereby avoiding foreign control issues and government scrutiny.

- Companies should prioritize placing the best talent in every role, even if it means co-founders or long-tenured employees transition to different positions or out of the company.

- AppLovin's IPO strategy included a low float (7-8%) and a high valuation ($28 billion), which was later recognized as a mistake.

- When advertisers refused to share their data, AppLovin strategically acquired 14-15 gaming studios to directly access and utilize their first-party data for training a more powerful advertising model.

- AppLovin sold all its studios in a single transaction to Triple Dot, prioritizing a complete divestment over maximizing profit from individual sales.

- AppLovin significantly reduced its workforce, targeting tenured staff and roles vulnerable to AI automation, with the aim of creating a leaner, more agile, and future-ready organization.

- AppLovin leverages LLMs to automate over 80% of its code writing, enabling small teams to achieve output levels typically requiring much larger workforces.

- AI tools amplify the productivity of top-tier engineers at a far greater rate than average engineers, making highly skilled individuals exponentially more efficient.

## 00:02 - 02:06 AppLovin's Stock Plummeted 92% After IPO, Despite Business Growth

AppLovin went public in April 2021 during the COVID era, initially valued at $28 billion and quickly climbing to $40 billion. However, throughout 2022, the stock price collapsed daily, dropping from $115 per share to just $9 per share. This 92% decline reduced the company's valuation to approximately $3.8 billion, creating a perception that the business was failing.

Despite the severe stock drop, AppLovin's underlying business performance was strong. The company's EBITDA grew significantly from $700 million in 2021 to over $1 billion in 2022. The founder attributed the market's misunderstanding to several factors, including the complex nature of the ad tech space and an oversupply of IPOs during COVID, which overwhelmed large institutional investors.

This market environment created an imbalance where private investors sought to sell shares, but large funds struggled to research and support new IPOs, including AppLovin. This led to a lack of institutional backing for the stock, causing it to crumble. The continuous decline made it difficult for investors to look past the falling stock price and assess the strong business fundamentals.

> It's really hard to look past the stock price and go, 'Let me look at the fundamentals and try to assess what's going on.'

## 02:06 - 06:06 AppLovin's Debt-Fueled Stock Buyback Yielded Significant Returns

AppLovin initiated a substantial stock buyback when its market capitalization dipped to $3.8 billion, yet it was generating over $1 billion in EBITDA annually. This indicated that the company's cash flow could theoretically acquire 20% of its shares each year. Instead of purchasing shares on the open market, the company strategically targeted specific existing shareholders, including private equity investors and former founders who collectively owned about 50% of the shares and were likely to sell.

Over an 18-month period, AppLovin deployed approximately $6 billion into these buybacks, utilizing both its own capital and borrowed funds. This aggressive strategy, implemented at a time when the company was undervalued by external observers, ultimately generated around $56 billion in actual proceeds from the repurchased shares.

Despite significant external skepticism, with some observers deeming it "nuts" to take on debt for buybacks when the company's valuation was low, the internal team maintained strong conviction. They firmly believed in the company's future prospects and its inherent ability to generate high cash flow. The board supported this decision, recognizing that the company was trading at a compelling five times cash flow multiple, making the extensive buyback a clear financial opportunity.

> I never believed in saving cash for a rainy day. I feel like I'm a big believer in what we're building, I believe in where we're going, so if I believe in the future and we're a really high cash generated business, we should always be buying back our shares.

## 06:06 - 06:26 AppLovin's Early Bet on the Nascent Mobile Gaming Market

In 2012, AppLovin sought a modest $1 million investment, offering a substantial 25% equity to early venture capitalists. Despite what might seem like an attractive deal, many prominent VCs passed on the opportunity.

The primary reason for investor hesitation was the undeveloped state of the mobile gaming and app market. At the time, it was still a nascent industry, far from the colossal scale it would eventually achieve. This lack of clear market validation made it a risky proposition for traditional investors.

AppLovin's founders, however, recognized the immense potential of the burgeoning mobile ecosystem. They made a deliberate decision to bet on this small but promising sector, anticipating its future growth into a massive industry.

> this gaming space on mobile that became massive now was very little back then.

## 06:26 - 09:56 Adam Foroughi Pivoted From Early Desktop Advertising to Failed D2C Mobile Apps Before AppLovin

Adam Foroughi, having built and sold two social media advertising businesses on desktop by 2010, recognized the significant shift in traffic from desktop to mobile. Despite his success, he initially wanted to avoid advertising, finding it a tough and less exciting industry. He moved to Palo Alto with the conviction that mobile would be big, even if he wasn't sure what specific venture to pursue.

Driven by the desire to 'own the consumer' and control his destiny, Foroughi attempted to launch several direct-to-consumer mobile apps. These included a dating app, launched before Tinder, and a fashion app, released around the same time Pinterest emerged. Despite the market opportunities, he admits his team was not the right fit, particularly given his own lack of fashion sense and being married while building a dating app.

The third D2C attempt was App 11, an app discovery platform launched in late 2011. This app allowed users to see what friends were playing and recommended other apps, like suggesting 'Words with Friends.' While the app itself "stunk," its recommendation algorithm proved highly effective, with a strong response rate for app downloads. This key technology formed the foundation for AppLovin.

This successful recommendation algorithm from App 11 ultimately became the core of AppLovin's advertising platform. Despite his initial aversion, Foroughi returned to advertising, leveraging this powerful technology to build a much larger advertising business than he had initially imagined, eventually becoming a leader in mobile app advertising.

> Mobile's gonna be big. I don't know what we're gonna do in mobile, but mobile's gonna be big.

## 09:56 - 14:07 AppLovin Pivots from Failed App Discovery to Successful Ad Platform

Adam Foroughi, AppLovin's founder, initially bootstrapped the company for a year and a half, investing a million dollars into an LLC from previous ventures. He intentionally avoided investors during this early phase to allow for extensive experimentation and pivoting without external pressure, only seeking VCs once a clear advertising business model emerged.

The company's first concept was an app recommendation app, but it struggled to gain users. However, Foroughi and his team observed that their underlying technology could drive high download rates based on recommendations, even if their own app lacked distribution.

This crucial insight led to a pivot: instead of trying to make their own app successful, they decided to distribute their recommendation technology directly inside other apps. They built a Software Development Kit (SDK) that developers could integrate, transforming AppLovin into an advertising platform.

This new advertising business launched in March 2012. Foroughi admitted that their initial direct-to-consumer app 'stunk' and they lacked the expertise to market it effectively, reinforcing the strategic decision to revert to an advertising model, an area where he had prior experience and success.

> we realized if you're gonna download at a really high rate based on a recommendation we can send you, well, why-- we don't need distribution on the app, why don't we just go distribute our technology inside all these other apps that are, are coming into existence?

## 14:07 - 18:07 AppLovin's developer-focused performance marketing strategy outcompeted AdMob

AppLovin entered the market by directly offering app developers a platform for both monetization and user acquisition, specifically targeting the app economy. This approach stood in stark contrast to Google's AdMob, which was primarily built for brands.

During 2012, the App Store was filled with simple apps like calendar and fart button apps, alongside early games like Candy Crush and Clash of Clans. Many developers of these apps were struggling to monetize their creations. AppLovin approached these developers, offering to pay them to integrate its ad platform, and simultaneously provided tools for developers to acquire new users for their own apps on a performance basis.

Google's AdMob, acquired in 2008, showed little innovation by 2012. Its business model focused on brand advertising, where proving the effectiveness of ad spend was often subjective and based on relationships, described as

hand wavy

> We built tools for the developer instead of building tools for the brand, a-and that really served us well at that point.

## 18:07 - 20:08 Adam Foroughi Maintained Full Control of AppLovin for Six Years Without a Board

AppLovin launched its product in March 2012 and by November of the same year, the business had achieved a $1 million monthly run rate and profitability. This rapid growth, reaching a $12 million annual run rate within eight months, made it easy to attract angel investors for a $4 million convertible note at a $25 million pre-money valuation. This early success set a strong foundation for the company.

A notable aspect of AppLovin's early structure was the absence of a formal board. Adam Foroughi operated the company without a board for six years, from its inception until 2018, when KKR invested. This setup provided him with complete control over all business decisions, with his signature appearing on every shareholder certificate and document. This allowed for singular, unhindered decision-making throughout the company's critical formative years.

> I made every decision on every shareholder certificate, it was literally my signature as the president, the vice president, a- everything.

## 20:08 - 22:08 Adam Foroughi Rejected a $600 Million Acquisition Offer

In 2015, approximately three and a half years after its launch, Adam Foroughi's company was generating around $50 million in EBITDA and experiencing a remarkable 100% year-over-year growth. This rapid expansion attracted considerable interest from other technology companies looking to acquire the business.

Adam received an acquisition offer of $600 million in cash. Despite this being a substantial and potentially life-changing sum for many on his team, he believed the company's true value was significantly higher. Given its fast-paced growth, he internally valued the business closer to $1 billion at that time.

The core challenge in evaluating the offer was the continuous, rapid growth of the business between the initial offer and a potential deal closing. As someone with a finance background, Adam trusted his own valuation and ultimately decided to walk away from the $600 million proposal.

This decision proved to be highly prescient. His conviction in the company's long-term potential was ultimately validated, as the business later grew to achieve an approximate market capitalization of $140 billion.

> I'm a finance person. I would have had a number, I would have done the deal at, but it was not that number, and so I ended up walking away from it.

## 22:08 - 36:09 AppLovin's Billion-Dollar Chinese Investment Faced US Regulatory Collapse

AppLovin's founder, leveraging his finance background, pursued a strategic $1 billion private equity investment from Orient Hantai Capital, a Chinese firm, in late 2015, valuing the company at $1.4 billion. This deal aimed to capitalize on a capital market arbitrage where Chinese investors sought to acquire US tech companies to list them on Chinese exchanges, providing an opportunity to restructure the cap table and take AppLovin public in China.

However, the deal's announcement coincided with a significant shift in the geopolitical landscape, as President Trump was elected in late 2016, leading to heightened US-China tensions. The founder was initially unaware of the Committee on Foreign Investment in the United States (CFIUS) or the intricate implications of dealing with a partially state-owned Chinese private equity fund, underscoring a critical blind spot in navigating cross-border transactions.

The transaction triggered intense scrutiny from CFIUS, bringing together multiple US government agencies including the NSA, CIA, FTC, and DOJ. The founder, a Persian CEO with a Russian CTO, described the meetings in Washington D.C. as "icy," sensing deep suspicion from regulators regarding potential access to technology and data, despite his view that the company's data on user behavior was benign, like people playing solitaire.

After more than a year of intense negotiations and back-and-forth with regulators, it became evident that the deal would not be approved. This arduous experience underscored the crucial importance of understanding geopolitical dynamics and having an experienced board to provide guidance through complex cross-border regulatory environments, a lesson learned the hard way without such oversight.

> When you give them a lot of information, you're talking about people playing solitaire, and on the other side, they're taking a bunch of notes and really asking you questions that have nothing to do with solitaire, you start realizing what the concerns are.

## 36:09 - 40:09 AppLovin Navigates CFIUS Concerns by Restructuring China Deal and Partnering with KKR

AppLovin faced significant concerns over a $1 billion equity deal that would grant Chinese investors 70% ownership, raising questions about foreign control over an American company and potential conflicts of interest. Without a formal board, the CEO had to independently navigate these complex and unprecedented issues.

To resolve the control issue, AppLovin pivoted the $1 billion equity investment into a convertible note. This structure ensured that upon conversion, the Chinese investors would receive only 10% of the business, effectively avoiding control and the associated government scrutiny. During this period, AppLovin also issued a $1 billion dividend to shareholders.

Despite the complexities of the deal and a freeze on issuing options and hiring for over a year, AppLovin's business continued to thrive, doubling its revenue and reaching over $100 million in EBITDA by 2017. However, this left the company with a substantial convertible debt that needed to be addressed.

To clear this large debt, AppLovin engaged with several private equity funds, eventually securing an investment from KKR. KKR partner Harold Chen and his team facilitated the process of clearing the Chinese convertible debt, cleaning up the cap table, and establishing AppLovin's first formal three-person board in 2018.

> If on conversion we pay them back the money plus interest, they would get ten percent of the business. So under ten percent, there's no control and, and they can come along for the ride.

## 40:09 - 42:10 Prioritizing the Best Person in Each Role, Including Co-Founders

AppLovin maintains a policy of constantly upgrading talent, ensuring the most qualified individual occupies each key role at any given time. This approach challenges the idea of keeping people in positions based solely on tenure, especially as the company scales from a small startup to a public entity.

For instance, the company recently transitioned Basel to a new role, promoting an individual he hired into the CTO position. This new CTO had developed significant new technology and now leads the relevant team. Another co-founder, previously the head of product, also transitioned out a few years prior.

This continuous reassessment of roles and talent is crucial for avoiding stagnation and retaining top performers. If a more capable person is prevented from advancing due to an entrenched leader, they are likely to leave, costing the company valuable expertise. The strategy also ensures leadership evolves to meet the changing demands of a company transitioning from a fast-growing startup to a public enterprise.

> You owe it to every single person and you owe it to your company to make sure the best person is in the right role at any given time.

## 42:10 - 44:09 Low Float IPOs Can Increase Stock Volatility

AppLovin's 2021 IPO involved selling only a 7-8% float, which CEO Adam Foroughi retrospectively considers a mistake. The company aimed for a $28 billion valuation when raising $2 billion, making the IPO feel more like a Series B funding round rather than a typical late-stage public offering.

A low float in the public market means there are fewer shares available for trading, which can significantly amplify price swings and lead to higher stock volatility. This lack of liquidity makes the stock more susceptible to large fluctuations.

Furthermore, pushing for a very high valuation with a limited float can deter blue-chip, long-term investors. Such conditions often attract investors looking for quick gains rather than stable, sustained growth, contributing to an even more volatile period in the public markets, which AppLovin experienced.

> Too low a float makes you more volatile, and if the valuation is lower and you can do a ten to fifteen percent float, you end up attracting better investors who can end up being long-term with you.

## 44:09 - 46:12 Adam Foroughi consistently sets ambitious growth targets for AppLovin.

Adam Foroughi, AppLovin's CEO, has a history of setting extremely high growth targets for the company. He makes these aspirations public only when he genuinely believes in the company's capability to achieve them, using this approach to drive both his team and himself toward exceeding conventional business expectations.

The scale of AppLovin's financial targets has increased significantly over time. For example, in 2014, Foroughi projected the company would become a billion-dollar entity. Following a major Chinese funding round, he boldly stated the goal of becoming a ten-billion-dollar business, even in the face of initial stock market volatility.

Despite external skepticism and a 15% drop in stock value after a public announcement, Foroughi outlined a plan to reach one hundred billion dollars. Currently, he sees a clear path for AppLovin to achieve a trillion-dollar outcome, reinforcing this vision with compensation plans for key employees tied to achieving these triggers.

Foroughi views external doubt as a motivator, thriving on proving critics wrong. His personal belief in these ambitious targets, from a billion to a trillion dollars, underpins the company's long-term strategy and internal incentive structures.

> I gotta believe it to voice it.

## 46:12 - 50:12 AppLovin acquired gaming studios to build a robust machine learning model for advertising

AppLovin initially relied on a simple algorithm for performance ads: if users played solitaire and poker, they were shown other games. However, as machine learning evolved, particularly with Facebook turning ads into content by showing highly relevant products, AppLovin realized their basic system was insufficient.

By 2018, AppLovin recognized the urgent need to upgrade to machine learning to compete effectively. To train a powerful new model, they required vast amounts of advertiser data, which was crucial for predicting relevant outcomes for consumers. Facebook possessed this data through its social graph and website pixels, but AppLovin, despite being a billion-dollar company, was unable to convince advertisers to share their data.

Faced with this challenge, AppLovin pivoted its strategy dramatically. They began acquiring numerous gaming studios, eventually owning 14-15 across various categories. This vertical integration provided them with direct access to crucial advertiser data from the games, which they could then feed into their advertising model.

This strategic shift enabled AppLovin to launch their first Axon One model, a significant upgrade built on traditional machine learning, using the data from their newly acquired studios. This new model quickly led to substantial revenue growth, demonstrating the critical role of data ownership in their success.

> We were unable to convince advertisers to share that data with us, even though they were sharing it with Facebook and Google, they would not share it with us.

## 50:12 - 54:12 AppLovin's Acquisition of Gaming Studios Led to a Client Trust Crisis Which Was Resolved Through Direct Communication

AppLovin, with support from KKR, moved quickly to acquire gaming studios, despite the potential conflict of interest. The company's platform already serviced many gaming companies, and the decision to become a competitor by owning studios created a significant trust issue among its client base.

The core concern for clients was that AppLovin, which prided itself on transparency, would now use their data to gain an unfair advantage, fuel its own competing games, or even clone successful titles. This fear stemmed from the logical conclusion that a platform becoming vertically integrated might prioritize its own brands using client-supplied data.

Adam Foroughi acknowledged that he was transparent in one-on-one conversations but made the mistake of not proactively and explicitly communicating the strategic shift to the broader game developer community. This oversight led to initial suspicion and assumptions of malicious intent among clients who discovered the change independently.

Trust was eventually regained through direct, honest conversations. Adam explained that the acquisitions were primarily a strategy to acquire data for improving the advertising business, not to become a leading game developer. This clarification helped developers understand the true intent and overcome their initial concerns, allowing them to resume working with AppLovin to grow their own businesses.

> the mistake I made is I'm very transparent when I sit down with people and they start asking me questions, but I didn't convey to the community of game developers directly and explicitly, 'We're getting into gaming business and here's why.'

## 54:12 - 58:13 AppLovin Divests Gaming Studios to Refocus on Core Advertising Business

AppLovin's advertising platform, Axon, achieved significant dominance in the mobile gaming space. The platform became responsible for over 50% of marketing dollars spent in the sector, as it consistently delivered superior returns for developers. This success established Axon as the leading platform for advertisers.

The growth of Axon led AppLovin to re-evaluate its strategy regarding its gaming studios. The studios, which required a large global headcount of over 1500 people, were deemed a distraction and a "headache" compared to the lean, 400-person core advertising team. Once the advertising platform was self-sustaining and dominant, the internal studios were no longer seen as essential.

To streamline their operations, AppLovin decided to divest all their gaming studios. They sold the entire portfolio to Triple Dot, a company based in the UK. The sale was structured to offload all studios at once, with AppLovin pricing the deal to be enticing for Triple Dot to take on the whole operation rather than pursuing individual studio sales for maximum profit.

> Once we got to that point, we realized we don't need these studios, headache, it's a distraction.

## 58:13 - 1:02:13 Restructuring Compensation and Talent After a 92% Stock Collapse

Following a 92% stock market collapse in 2022, after going public in 2021, the company faced significant challenges with employee compensation. Initially, the founder believed everyone, including lower-paid staff, should be shareholders. However, when the stock tanked, employees earning $150,000 with $50,000 in equity faced severe financial hardship, as their total compensation dropped to $105,000. This created frustration and a dependency on equity that was no longer viable for many.

In response, the company redefined its compensation strategy. For employees with lower total compensation, equity was removed, and they were switched to full cash compensation, allowing them to buy shares if desired. This recognized that these individuals depended on their full pay for living expenses. Conversely, critical engineers and product people, who were high-earning A-players (e.g., $1 million salary with $600,000 in stock-based compensation), retained their equity, as their financial stability was less impacted by stock fluctuations.

This strategic shift helped identify and retain the most critical talent. The company narrowed its equity grants to just over 100 key personnel, primarily in product and engineering roles, as they did not focus on brand advertising or extensive sales teams. This forced a clear delineation of who was essential for the long-term success of the business.

Furthermore, the company undertook a significant workforce reduction, letting go of about 40% of the team in 2023 or 2024, despite the business growing nearly 100% year over year. This decision aimed to distill the organization down to a core group of A-players, operating as a lean and mean organization. The rationale was that A-players are less effective and can burn out when working alongside B, C, and D players, emphasizing the importance of a high-quality team environment.

> A players don't like to work with B, C, and Ds.

## 1:02:13 - 1:07:23 AppLovin's Strategic Workforce Reduction for AI Efficiency

AppLovin underwent a significant internal transformation after a new CTO, Giovanni, joined in November 2022. He immediately challenged existing processes and personnel, questioning the necessity of specific roles and teams that had accumulated over the company's decade-plus history. This critical evaluation prompted CEO Adam Foroughi to rethink the company's structure and culture from the ground up.

Driven by Giovanni's persistent questions and an anticipation of AI's rapid advancements, AppLovin decided to dramatically cut its workforce. The goal was to become significantly leaner, more agile, and to cultivate an organization composed entirely of top-tier talent, referred to as 'A people'. This move aimed to prevent stagnation and ensure the company was prepared for future technological shifts, particularly the impact of Large Language Models (LLMs).

The cuts targeted both long-tenured employees and individuals in roles deemed likely to be automated by AI within one to two years. Foroughi emphasized the importance of professional and personal growth for employees, stating that if AppLovin couldn't provide that, it was time to move on. This strategic reduction focused on retaining core innovators and empowering them by removing perceived bloat and process, making the organization feel like it truly belonged to its high-performing contributors.

AppLovin believes that A-players are exponentially better at leveraging AI tools than mediocre performers, making a lean team of top talent a powerful advantage. The company now expects leaders, who are themselves A+ players, to identify and empower A-players beneath them, while having zero tolerance for underperformance. This aggressive approach ensures continuous talent optimization and reinforces the company's commitment to hyper-efficiency and innovation.

> You need lean teams that know how to use AI. Your best people know how to use AI better than your mediocre people, and it's not by some sort of linear function, it's much greater than that.

## 1:07:23 - 1:10:14 Why AppLovin's CEO Personally Approves Every New Hire

AppLovin's CEO, Adam Foroughi, implemented a strict policy requiring his personal approval for every new hire. This change came after observing unchecked headcount growth due to automatic "backfill" hiring whenever an employee left. Foroughi questioned the necessity of immediately replacing every departing employee, noting that companies often survive periods without a specific role being filled.

By taking over the hiring approval process, Foroughi forced managers to justify each new position, shifting the mindset from automatic replacement to demonstrating critical need. This meant managers had to genuinely convince him that the absence of a particular role would cause significant operational breakdown and that current employees were overburdened.

The impact was substantial: new hires plummeted from hundreds annually to just tens. This dramatic reduction demonstrated that many previously requested roles were not, in fact, critically essential. The rigorous process ensures that only truly indispensable talent joins the AppLovin team.

This approach aligns with the principle of building a company composed entirely of "A players." When surrounded by other highly talented individuals, A players are more likely to thrive and remain with the company. Avoiding the dilution of talent with less capable individuals prevents high performers from becoming disillusioned and leaving.

> Convince me that you need the person.

## 1:16:14 - 1:19:35 AppLovin's Performance Marketing Strategy Turns Advertisers into Arbitrageurs

AppLovin's core strategy is to develop an advertising product so effective that clients earn more revenue than their ad spend, effectively turning them into arbitrageurs. This means the only limit to their scale within the system is the money they have available to invest. The company aims for a measurable return where advertisers know they are profiting, whether breaking even in 30 days or a year, ultimately making more in the long run.

This approach was initially applied to game developers and has since expanded to e-commerce businesses, where AppLovin provides access to over a billion people playing games and shows them relevant e-commerce ads. The focus remains on generating verifiable revenue for dollars spent, which encourages advertisers to scale their campaigns.

Unlike large language models with a consumer interface, AppLovin's internal models, such as Axon 2, a deep learning model rolled out in April 2023, are constantly iterated upon by research scientists. The goal is to improve accuracy in predicting value for advertisers, driving more spend and reach while maintaining or improving return on ad spend. This creates a symbiotic relationship: as advertisers get wealthier, AppLovin also gets wealthier.

> If you do that in what I call performance marketing is that make the advertiser an arbitrageur.

## 1:19:35 - 1:20:15 Axon 2 Deep Learning Model Simplifies Advertiser Profit Generation

The launch of Axon 2 in April 2023 represented a significant shift for advertisers utilizing AppLovin's platform. Previously, with Axon 1, arbitrage marketers often faced substantial manual labor and financial outlay to achieve profitable results, requiring the model to learn over time.

Axon 2 fundamentally changed this by allowing any advertiser to simply plug in, begin spending money, and generate revenue, effectively creating a profit spread. This streamlined process eliminated much of the manual effort and made profitability more accessible.

The immense scalability of Axon 2 had a dramatic impact on AppLovin's valuation. From April 2023, when the stock traded around $9-$11, the company's market capitalization surged from under $4 billion to peak at $250 billion, with shares reaching $750 within approximately six months.

> To action two, any advertiser can just plug in, get going, spend money, get revenue on the other side, and make a spread.

## 1:20:15 - 1:22:15 AI Tools Exponentially Increase Top Engineers' Efficiency

AppLovin has seen a dramatic increase in engineering efficiency through the adoption of AI tools, particularly large language models (LLMs). This allows small teams to achieve significantly more output.

A key metric highlighting this transformation is that over 80% of AppLovin's code was LLM-written about a year and a half ago, a figure that has since climbed even higher. This demonstrates how LLMs, when paired with skilled engineers, become powerful accelerators.

The impact of AI on productivity is not uniform; it disproportionately benefits high-performing individuals. A ten-times more efficient engineer, when augmented by an LLM, can become a hundred-times more efficient, far exceeding the gains seen by average performers.

Beyond coding, LLMs also help engineers process and understand vast amounts of research in their field. This enables smart individuals to quickly synthesize complex information and generate new experiments based on all available knowledge, rather than being limited by human capacity to read and comprehend.

> your ten X engineer might be a hundred X more efficient.

## 1:22:15 - 1:26:15 AppLovin Expands Ad Platform Beyond Gaming to Serve E-commerce and Small Businesses

AppLovin's ad platform, powered by deep learning models, is expanding its reach beyond its traditional mobile gaming audience. The company leverages over a billion global users who play casual games, many of whom are middle-aged adults, and are receptive to lengthy video advertisements, often over 35 seconds long, resembling television commercials on mobile devices.

Previously focused solely on gaming ads, the platform is now diversifying into product ads for e-commerce businesses. The long-term vision is to serve any type of business worldwide, particularly small to medium-sized businesses (SMBs), by improving ad diversity and value for the end consumer.

The expansion aims to connect local businesses, such as a laundromat or a new Shopify store, with relevant users from their vast gaming audience. This strategy mirrors AppLovin's success in supporting small mobile game developers, including a Turkish company of 10-15 people that sold for a billion dollars within a year, largely due to growth facilitated by their platform. The company believes empowering SMBs represents its greatest opportunity for economic impact.

> The hope we have is that we can get the local laundromat discovered by someone playing a game because we serve a really good ad to someone who needs a clothes wash.

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