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 ad platform operating within mobile games has quietly built a $250B market cap company by focusing on performance-based advertising in a $50B mobile gaming ad market. He details surviving a 92% stock drawdown through aggressive buybacks and algorithmic improvements, and explains how discovery-based ads create economic value unlike search-based advertising.
Summary
Adam Foroughi, CEO of AppLovin, shares the story of building one of the world's most valuable companies largely outside the spotlight. AppLovin is an advertising platform embedded in over 100,000 mobile games that helps monetize the mobile gaming ecosystem, where over a billion adults play daily. The company disclosed $11 billion in annual ad spend two years prior to this interview, growing 60% year-over-year, which Foroughi estimates now represents approximately $20 billion on their platform and roughly $50 billion across the entire mobile gaming ad market.
Foroughi describes AppLovin's journey through extreme market volatility. The company went public in April 2021 at a $28 billion valuation but plummeted to $3.8 billion in 2022 while actually growing to $1 billion in EBITDA—a 92% drawdown. Rather than focusing on investor relations during this period, Foroughi implemented an aggressive share buyback program, purchasing approximately $6 billion of company stock and retiring 20-25% of shares outstanding. This decision proved transformational; that $6 billion in buybacks later became worth over $50 billion as the stock recovered to $750 per share, reaching a $250 billion market cap within two and a half years.
A critical inflection point came when AppLovin transitioned from Machine Learning 1.0 (regression models predicting game-to-game ad intent) to ML 2.0 (deep learning models enabling e-commerce recommendations). Launched in April 2023, this shift dramatically improved advertiser returns and platform performance. Foroughi resumed investor outreach in September 2023 when the stock had recovered to $80, and the stock subsequently doubled to $150 in that single week once investors recognized the company's viability.
Foroughi positions advertising as fundamentally different from search-based models and argues it represents ML 1.0—the first major implementation of technologies now powering modern AI. Unlike Google Search's bottom-of-funnel model where consumers know what they want to buy, AppLovin operates in discovery advertising, creating intent where none previously existed. This distinction is economically significant; search ads would have occurred regardless of the advertising platform's existence, while discovery ads represent genuine economic expansion by introducing consumers to products they didn't know existed.
On privacy concerns, Foroughi acknowledges regulatory pressure from Apple and the EU but argues that clear regulations actually help technology companies comply and innovate. He notes that deep learning models are powerful enough to work within privacy constraints, and consumers paradoxically prefer relevant ads to spam—evidence that users want discovery experiences even within privacy frameworks.
Regarding AppLovin's competitive position against Meta and Google, Foroughi credits focused execution, subject matter expertise in mobile gaming, operational leanness, and differentiated data. The company maintains 84% EBITDA margins—the highest in the industry—by operating a performance-based model where advertisers only pay for results. He resists suggestions that these margins represent over-earning, arguing that technological complexity and differentiated data create sustainable moats similar to those protecting large language models.
Foroughi also addresses the future of agent-based commerce, arguing that typical shoppers—the "New York Times audience"—will continue to value the dopamine and experience of shopping discovery rather than delegating purchases to AI agents, even if agents save money on routine transactions.
About this episode
<p dir="ltr">(0:00) Adam Foroughi joins the Besties!</p> <p dir="ltr">(3:07) Discovery vs search & is your phone listening?</p> <p dir="ltr">(10:04) IPO tumble & becoming your own best investor</p> <p dir="ltr">(16:00) Privacy rules, Apple's crackdown & how agents change people's shopping</p> <p dir="ltr">(20:00) How a lean team beats the giants, margin moats & building in China</p> <p dir="ltr"> </p> <p dir="ltr">Thanks to our partners for making this possible!</p> <p dir="ltr">IREN is a vertically integrated AI Cloud platform, delivering data centers, compute and software for AI training and inference. <a href="https://iren.com/">https://iren.com/</a></p> <p dir="ltr">Oracle connects the data, applications, and infrastructure that turn AI into business outcomes—with the flexibility, choice, and control to optimize as AI evolves. <a href="http://oracle.com/ai">http://oracle.com/ai</a></p> <p dir="ltr">EY helps tech innovators scale from startup to exit to megacap. You build the future. We'll handle the rest. <a href="http://www.ey.com">http://www.ey.com</a></p> <p dir="ltr">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. <a href="http://www.meta.com">http://www.meta.com</a></p> <p dir="ltr">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. <a href="https://keelinfra.com/">https://keelinfra.com/</a></p> <p dir="ltr">Airwallex - Agentic Global Business Accounts. Open local accounts in 70+ countries to accept payments, earn yield, pay globally, and manage spend. <a href="http://airwallex.com">http://airwallex.com</a></p> <p dir="ltr">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 <a href="https://www.paypal.com">https://www.paypal.com</a></p> <p dir="ltr">Google for Startups connects founders with the right people, products, and best practices to help startups build faster and go further. <a href="https://startup.google.com/">https://startup.google.com/</a></p> <p dir="ltr">Explore ideas, industries, and technologies worth understanding with Chamath every week on Learn with Me: <a href="https://research.socialcapital.com/allin">https://research.socialcapital.com/allin</a></p> <p> </p> <p dir="ltr">Follow the besties: </p> <p dir="ltr">https://x.com/chamath</p> <p dir="ltr">https://x.com/Jason</p> <p dir="ltr">https://x.com/DavidSacks</p> <p dir="ltr">https://x.com/friedberg</p> <p><strong> </strong></p> <p dir="ltr">Follow on X:</p> <p dir="ltr">https://x.com/theallinpod</p> <p><strong> </strong></p> <p dir="ltr">Follow on Instagram:</p> <p dir="ltr">https://www.instagram.com/theallinpod</p> <p><strong> </strong></p> <p dir="ltr">Follow on TikTok:</p> <p dir="ltr">https://www.tiktok.com/@allin</p> <p><strong> </strong></p> <p dir="ltr">Follow on LinkedIn: </p> <p dir="ltr">https://www.linkedin.com/company/allinpod</p> <p><strong> </strong></p> <p dir="ltr">Intro Music Credit:</p> <p dir="ltr">https://rb.gy/tppkzl</p> <p dir="ltr"><a href="https://x.com/yung_spielburg">https://x.com/yung_spielburg</a></p> <p dir="ltr"> </p> <p dir="ltr">#allin #tech #news</p>
Key Insights
- AppLovin operates a $50 billion mobile gaming ad market that remains largely hidden from mainstream awareness, with the company generating $20 billion in annual ad spend across 100,000+ games while outperforming Facebook ads for e-commerce brands.
- The 92% stock drawdown in 2022 coincided with the company's transition from regression models to deep learning, and Foroughi responded by halting investor relations and deploying an aggressive $6 billion buyback program that later appreciated to over $50 billion in value.
- Discovery-based advertising creates genuine economic expansion by introducing consumers to previously unknown products, fundamentally different from search-based advertising where transactions would have occurred anyway, making it a structurally superior and more defensible business model.
- AppLovin maintains 84% EBITDA margins—the highest in the industry—by using a performance-based model where advertisers only pay when consumers transact, eliminating leakage points that plague competitors and creating a scalable competitive moat.
- Foroughi argues that typical consumers prefer the shopping discovery experience and psychological reward of browsing over agent-based optimization, suggesting that agentic commerce will remain niche among early adopters rather than replacing discovery advertising for mainstream shoppers.
Topics
Transcript
Adam is probably the best founder no one's ever heard of. There's an ad platform hiding inside 100,000 mobile games and is quietly outperforming Facebook ads for e-commerce brands. Of all those 1,000 plus IPOs, the number one most valuable is Applovin. Applovin CEO, Adam Peruzzi. The founder mentality's got to be chase winning. They're going to print something like $6 billion in cash this year. In a world where things don't make sense people think you're cheating. Instead of realizing you built one of the cooler technologies the world's ever seen. Please welcome Adam Farooqi. Welcome Adam. Hey man. Hey man. How you doing bro? Good to see you. Likewise. Adam, thanks for being here. We thought it'd be…
Full transcript available for MurmurCast members
Sign Up to AccessMore from All-In with Chamath, Jason, Sacks & Friedberg
Bill Gurley: Searching for Feynman
Bill Gurley presents a comparative analysis of major catastrophes (building collapse, plane crashes, hurricanes, nuclear accidents, space shuttle disaster) and argues that COVID-19, despite being 3,000 times larger in impact, lacks the rigorous independent investigation, journalism, and root cause analysis that characterized responses to these smaller incidents. He contends that five virology experts acted as 'blockers' rather than searchers, launching a misinformation campaign that prevented proper investigation into COVID's origins.
Jared Isaacman: A New Era for NASA and American Space Exploration
NASA Administrator Jared Isaacman outlines a reinvigorated space agency focused on returning humans to the moon by 2028 and eventually reaching Mars, emphasizing nuclear propulsion, competition with China, and leveraging private industry partnerships. He critiques past NASA inefficiencies, advocates for concentrated resources on high-priority missions, and positions space exploration as critical to American leadership and national security.
Nick Shirley: Exposing Government Fraud, Suing California & Taking on the Media
Nick Shirley, a self-taught investigative journalist, discusses his work exposing government fraud and waste, particularly California's high-speed rail project that has spent $15 billion with minimal infrastructure to show for it. He also details how California passed laws specifically targeting his investigative work and his efforts to uncover welfare fraud across the country.
Meta's Dina Powell McCormick: The Case for Data Centers, Backlash, AI Job Boom & Meta's Future
Dina Powell McCormick, Meta's president and vice chairwoman, discusses the company's data center expansion using Richland Parish, Louisiana as a success case study, where Meta's $50 billion investment generated substantial teacher bonuses and economic development. The conversation addresses data center backlash, workforce training initiatives, Meta's new child safety policies, and AI product development including Meta Glasses.
Brad Gerstner: No AI Bubble, Semis Eat the Nasdaq & AI's Take Off Problem
Brad Gerstner argues that the AI market is not in a bubble, driven by earnings rather than multiple expansion, with semiconductor companies capturing 70% of NASDAQ returns. The critical question for market continuation is whether AI lab revenues can reach $8 billion monthly and whether the power infrastructure can support 43 gigawatts of new compute buildout next year.