Adam Foroughi, Applovin CEO: Surviving a 92% Drawdown, Ads as ML 1.0 & the $50B Game Ad Market
AppLovin CEO Adam Foroughi discusses how his advertising platform monetizes mobile gaming's $50B market, survived a devastating 92% stock drawdown through aggressive buybacks, and leverages deep learning to create product discovery moments rather than just capturing existing demand like Google Search.
Summary
Adam Foroughi, CEO of AppLovin, explains that his company operates an advertising platform embedded in over 100,000 mobile games, helping developers monetize access to over a billion daily casual mobile gamers. The broader mobile gaming ad market is worth approximately $50 billion annually, with AppLovin capturing roughly $20 billion of that ($11 billion reported 2 years ago, growing 60% year-over-year). Unlike traditional search advertising that captures existing intent, AppLovin creates product discovery moments—showing consumers ads for things they didn't know they wanted, driving genuine economic growth and consumer satisfaction.
Foroughi describes advertising as "ML 1.0," the first practical implementation of deep learning technologies now powering large language models and recommender systems. The company evolved from regression-based models to deep learning models in 2023, dramatically improving advertiser ROI and platform growth. This technological shift coincided with the company's remarkable stock recovery.
The company went public in April 2021 at a $28 billion valuation with $600 million in EBITDA. In 2022, the stock crashed 92% to a $3.8 billion market cap despite generating $1 billion in EBITDA that year—a result of poor investor quality at IPO (private equity and co-founders selling shares during a COVID market flooded with IPOs). Rather than appealing to skeptical investors, Foroughi executed an aggressive $6 billion stock buyback program, repurchasing 20-25% of outstanding shares. At peak value, this $6 billion investment became worth over $50 billion. The internal culture shift involved framing the situation as "us against the world" and implementing performance-based compensation tied to recovery for key employees.
When Foroughi emerged from silence in September 2023 to communicate the company's algorithmic improvements and strong results, the stock jumped from $80 to $150 in one week ($28 billion to $55 billion valuation), demonstrating how perception and narrative affect public market valuations.
On privacy concerns from Apple's iOS changes and EU regulations, Foroughi argues that clear rules allow technology to adapt effectively. Ironically, post-Apple-privacy-changes, users complain about less relevant ads rather than celebrating privacy gains. He maintains that consumers genuinely prefer relevant ads—whether in games where they watch 30-second ads for rewards or in discovery contexts—because relevance creates value.
Foroughi addresses the competitive moat against Meta and Google: AppLovin maintains laser focus on mobile gaming and transactional behavior, moves faster than larger competitors, and benefits from unique data and complex proprietary technologies. The company maintains an 84% EBITDA margin, among the highest in the industry, partly because it doesn't vertically integrate as the advertiser—it remains focused on efficient consumer discovery matching. He notes that attempted margin-compression competition hasn't materialized because the underlying technologies are genuinely complex and create defensible advantages.
About this episode
(0:00) Adam Foroughi joins the Besties! (3:07) Discovery vs search & is your phone listening? (10:04) IPO tumble & becoming your own best investor (16:00) Privacy rules, Apple's crackdown & how agents change people’s shopping (20:00) How a lean team beats the giants, margin moats & building in China Thanks to our partners for making this possible! IREN is a vertically integrated AI Cloud platform, delivering data centers, compute and software for AI training and inference. https://iren.com/ Oracle connects the data, applications, and infrastructure that turn AI into business outcomes—with the flexibility, choice, and control to optimize as AI evolves. http://oracle.com/ai EY helps tech innovators scale from startup to exit to megacap. You build the future. We’ll handle the rest. http://www.ey.com Meta believes the future is for everyone. We're focused on giving every person the tools to reach their full potential and making sure the benefits of technology are distributed to all. http://www.meta.com Keel Infrastructure owns the power, land, and connectivity that HPC and AI run on - backed by secured energy assets and established grid interconnections across North America. https://keelinfra.com/ Airwallex - Agentic Global Business Accounts. Open local accounts in 70+ countries to accept payments, earn yield, pay globally, and manage spend. http://airwallex.com PayPal has been revolutionizing commerce globally for more than 25 years. Creating innovative experiences that make moving money, selling, and shopping simple, personalized, and secure, PayPal empowers consumers and businesses in approximately 200 markets to join and thrive in the global economy. For more information, visit https://www.paypal.com Google for Startups connects founders with the right people, products, and best practices to help startups build faster and go further. https://startup.google.com/ Explore ideas, industries, and technologies worth understanding with Chamath every week on Learn with Me: https://research.socialcapital.com/allin Follow the besties: https://x.com/chamath https://x.com/Jason https://x.com/DavidSacks https://x.com/friedberg Follow on X: https://x.com/theallinpod Follow on Instagram: https://www.instagram.com/theallinpod Follow on TikTok: https://www.tiktok.com/@allin Follow on LinkedIn: https://www.linkedin.com/company/allinpod Intro Music Credit: https://rb.gy/tppkzl https://x.com/yung_spielburg #allin #tech #news
Key Insights
- AppLovin's $50B addressable market in mobile gaming advertising is comparable in scale to what social media represented a decade ago, with over a billion people playing casual mobile games daily and watching ads intentionally for rewards
- Advertising represents ML 1.0—the first practical implementation of deep learning technologies now powering large language models and recommender systems, creating a bidirectional research pipeline where advances in one domain transfer to the other
- AppLovin survived a 92% stock drawdown by recognizing poor investor quality at IPO (private equity and co-founder selling pressure during COVID boom), then executing a $6 billion aggressive buyback program that repurchased 20-25% of shares, eventually worth $50 billion
- Discovery-based advertising (showing consumers unknown products) creates genuine economic growth and consumer satisfaction, unlike search advertising which merely captures existing intent—this distinction explains why Meta's advertising business fundamentally outperforms transactional search models
- Apple's privacy restrictions paradoxically increased user complaints about ad relevance rather than privacy violations, as consumers preferred relevant ads—suggesting regulatory clarity enables technology adaptation and that consumer preference for discovery value supersedes privacy concerns in practice
Topics
Transcript
[0:00] Adam is probably the best founder no one has heard of. Hidden inside 100,000 mobile games is an advertising platform that is quietly ahead of Facebook in the e-commerce space. Among over a thousand IPOs, AppLovin is the most valuable company. AppLovin CEO Adam Forogi. The founder's mentality should be focused on winning. This year they will print about $6 billion in cash. In a world where things don't make sense, people think you're cheating. Instead of realizing that you created one of the coolest technologies in the world. [0:32] Welcome Adam Forogi. Congratulations, Adam. Hello, friend. Hello, Ben. How are you, brother ? Nice to see you. Mutually. Adam, thank you for coming. We thought it would be…
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