High School Dropout to Multi-Billionaire: The Relentless Drive of Rafael Vivas
- Vivas’s rise and AppLovin’s early advantage share the same principle: demonstrated value beats credentials. He started performance marketing at 14, left school and home around 16, and proposed his own ad platform around 17. AppLovin subsequently challenged better-funded competitors through better targeting technology, sometimes monetizing inventory at “double the clip” and guaranteeing publishers more money in writing.
- AppLovin treats a small workforce and hands-on leadership as part of its economic engine. Senra describes roughly $150 billion in market value, about 400 employees and $6 billion in cash expected “this year.” Vivas connects that productivity to automation, aggressive prioritization and leaders who execute: “everyone is a doer,” including a CTO who still writes code.
- The growth opportunity requires converting customer returns into actual budget allocations. Vivas says AppLovin is on pace for $20 billion in advertiser spending against roughly half a trillion across the two largest platforms combined. He still pursues another $5,000 a day from individual customers because superior performance does not automatically move budgets: “Everything fucking matters.”
- Lion Studios demonstrates both the economics and the friction of vertical integration. Frustration with Cheetah Mobile pushed Vivas toward owning content alongside distribution; he says Lion grew from zero to over $250 million in revenue within two years, profitably. Existing advertising customers saw a competitor, while AppLovin argued that additional inventory and training data improved their results.
- The buyback story rests on management separating a collapsing valuation from growing operating results. Senra recalls market capitalization falling from around $28 billion to roughly $3.8 billion despite about $1 billion in cash flow. Foroughi borrowed and repurchased shares; Senra describes a roughly $50 billion subsequent windfall, which Vivas affirms. “Stock is crashing, revenue’s going up.”
- Vivas returned because AppLovin needed him, after discovering wealth and opportunistic projects could not replace purpose. He stepped away at 28 after making the games business independent of him, then returned around the IPO after seeing weaknesses he could address. Under Senra’s counterfactual of a thriving business with no role for him, he clarifies that he would have stayed out.
- His standard of execution was trained through uncomfortable, specific corrections. Mentor Mark Rosner made him reopen a signed agreement over an error of roughly 1%–2%, despite months of negotiation. Vivas’s enduring advice from his brother is “staying in the game”: wanting to quit can be the point at which growth is happening.
1. The dropout decision began with a visible earnings gap
- At 14, Vivas already made about $1,000 a month selling online and running game servers. His father persuaded him to intern for his older brother, initially adding terms of service and privacy policies. The decisive comparison: performance marketers could make $20,000–$30,000 a day in profit while his teacher made $25,000 a year. School’s upside looked inferior, so he stopped attending.
- Around 16, his father challenged him to move out if he was such a successful online businessman. Vivas moved into his best friend’s house, offering to employ the son as an intern and help clean. Returning home, or later returning to his brother’s company, became unacceptable outcomes; without a diploma, he considered himself “pretty much unhirable” on paper.
- Gaming supplied his model of merit: results matter more than titles or seniority. His image is a tribe judging warriors by “who brought back the food, who killed the animal.” Rather than follow a linear analyst-to-manager career, he asks what matters most to the business and where his skills can produce the greatest value.
- His father’s rigidity now makes sense to him. An immigrant from Ibagué, Colombia, his father lost his own father at 15, had four siblings and a mother who could not speak English, and became a doctor from necessity. Vivas attended a wealthy school with five pants and five shirts for the year. His father’s response to complaints: “You want stuff? Go out there and go work for it.”
2. AppLovin recruited a teenage competitor who insisted on living at work
- Vivas advanced from websites to Photoshop ads, campaigns and direct outreach without waiting for assignments: “nobody gave me the permission to do it.” Around 17, an advertising platform banned his team because its own offers competed with theirs. Furious, he proposed leaving to compete; his brother instead supplied engineers. That became the mobile advertising platform Appenda.
- Adam Foroughi, 12 years older, had topped the performance-marketing leaderboard Vivas followed. Later, Foroughi bought traffic from Appenda for consumer apps, including dating and fashion products. Their account-management conversations developed into a relationship; eventually Foroughi disclosed that he was building a competing mobile ad platform.
- Vivas was considering joining a friend’s mobile-games company in Y Combinator. Foroughi redirected him: “you know how to work your ass off,” but “you know nothing about building a real business.” Meeting the Palo Alto team convinced Vivas to join. He asked for half the company; Foroughi said someone in that role typically received a quarter of a percent. Vivas got somewhat more, but nowhere near half.
- His condition was living in the office. With a goofy name, no venture backing and an inexperienced salesperson, he believed AppLovin had to outwork everyone. Foroughi and an engineer named Furqan assembled IKEA bunk beds. Another engineer Vivas brought along immediately refused to stay; Vivas’s reaction was “Home sweet home.”
3. Better targeting overcame stronger competitors and rejected fundraising
- AppLovin was pre-revenue when Vivas joined, with engineers experimenting on consumer apps. Foroughi had previously run Social Hour, a Facebook advertising network, and recognized activity shifting from PCs to mobile. Vivas supplied relationships with advertisers and publishers; Foroughi supplied familiarity with the advertising problem and conviction about the transition.
- Senra frames the opportunity as early and overlooked; Vivas complicates that account. Established competitors already looked formidable, with backing from firms including Benchmark and Sequoia. When Foroughi offered investors 25% for $1 million, AppLovin was already profitable and growing quickly. Vivas thinks their arbitrage backgrounds looked less credible than competitors’ Facebook, Google or AdMob résumés.
- The advantage, Vivas says, was that rivals emphasized sales while relying on weak or manually optimized algorithms. AppLovin lacked a sophisticated modern machine-learning model, but used rules and “regression learning” to choose ads. Despite less demand and weaker publisher relationships, it could monetize at “double the clip.” His pitch was explicit: “I guarantee you more money than you’re making elsewhere.” They would put it in writing.
4. Customer returns only become growth when someone moves the budget
- Vivas describes AppLovin as an extension of a customer’s team, responsible for profitable returns rather than merely providing software. Employees may set up campaigns, upload ads and propose creative. Customers sometimes find them arrogant because they challenge decisions; his defense is that performance data can establish better and worse choices, even when the customer prefers otherwise.
- The runway remains large in his framing: AppLovin is on pace for $20 billion of advertiser spending, while the two biggest advertising platforms together handle roughly half a trillion dollars. That is why another $5,000 a day matters even to a multibillionaire. “Everything fucking matters.” Better results alone may fail to move budgets when customers are distracted or focused elsewhere.
- Senra’s pushback — worth keeping: relentless outreach can simply earn a block. Vivas agrees that repeated, useless emails get tuned out. Persistence works when every contact offers something useful, and when the seller recognizes that timing, staffing or competing priorities may explain silence.
- His specimen is Miami app entrepreneur Nadir Khan, whose business sold for a few hundred million dollars. For two years, Vivas sent concrete suggestions: optimize a level, place advertising differently, fix an underperforming market. Khan’s team joked that they wished they had their own Rafael Vivas. Eventually Khan responded, they began doing substantial business together, and Vivas says AppLovin helped them grow dramatically.
5. A small team stays inside the work
- Senra’s scale comparison is roughly $150 billion in market capitalization, about 400 employees and $6 billion in cash expected “this year.” Vivas’s explanation begins with leaders doing the work. There are no pure managers in his account: “everyone is a doer.” Even the CTO writes code while leading engineering.
- His anti-delegation argument is that remaining in the details reveals customer needs and the work that actually matters. Hiring layers can create tasks merely to occupy people. The gaming analogy is personal: after completing every level and reaching the final boss, “you’re gonna hand the controller to your friend? Fuck no.” Solving the next difficult problem keeps the job interesting.
- When someone is overloaded, the first questions concern automation and eliminating unnecessary work. Smart employees receive ownership without multiple approval layers. Internally, the team also leads with bad news: “This sucks, this sucks, this sucks, this sucks.” They tackle those deficiencies one at a time rather than letting celebration dominate the conversation.
- Vivas links the culture to early constraints: they lacked the money and pedigree to recruit huge teams, so they developed the people available — “torture them into greatness.” Foroughi applies pressure differently to different personalities, sometimes challenging insecurities, sometimes encouraging. Vivas says years of that treatment made the demanding standard internal; he no longer needs Foroughi to supply it.
6. Lion Studios turned dependence on a supplier into owned content
- Vivas says Cheetah Mobile, then a major publisher partner, repeatedly squeezed AppLovin and disregarded agreements. Managing the relationship meant nights awake until 4 or 5 a.m. He concluded they should never again depend so heavily on one partner. His ultimatum to Foroughi was to build a competing business inside AppLovin or leave and do it elsewhere.
- The economic thesis drew on Netflix’s owned content and Asian businesses such as Tencent and NetEase combining games with distribution. AppLovin could supply distribution, retain better economics and build enterprise value. The emotional motivation was equally explicit: “my purpose at this point was to destroy these guys.” Naming the venture Lion Studios made the target clear.
- Vivas says Lion grew from zero to over $250 million in revenue within two years, profitably. But advertising customers now saw AppLovin as a gaming competitor. Senra clarifies that the platform was then focused on game installs. Vivas’s rebuttal: owned games created more advertising inventory and data that improved machine learning, so customers continued working with them despite the hostility.
7. Games rewarded inexpensive repetitions and imposed a personal cost
- Hyper-casual publishing depended on producing many attempts and testing marketability. Vivas says these games did not require the most elite developers. Overseas teams offered lower labor costs and greater intensity; he contrasts their broad responsibility with expensive American studios where individuals worked nine to five on narrow pieces of the process.
- Happy Glass is his strongest example: a game that generated close to $100 million in revenue with Game Five Mobile, a husband, wife and younger brother working from their shared home. Vivas says they faced returning to ordinary jobs if the studio did not work within another month. Their circumstances intensified his own commitment: “I loved making people like that successful.”
- He compares Lion’s publishing model to Universal Music Group: find talented creators and use distribution to reach the masses. The business drove more than 20 games to number one and exceeded three billion downloads. At roughly 26–28, Vivas worked from around 4 a.m. until midnight for two years, with no children or long-term relationship. “Nothing else mattered to me besides work.”
- Leaving became possible when the business stopped needing him. For about a year, he documented bottlenecks and removed his own necessity; games launched and revenue grew without him. At 28, he wanted a family. A proposed six-month transition took about three months. He moved to Miami during COVID, met the love of his life and started a family.
8. Retirement failed when the work lost its purpose
- Vivas thought he would never work again, but within three months began building products. Attractive KPIs could not compensate for indifference toward the products or lack of attachment to the team. His mobile dating show, Love or Fame, meant watching dating content for 12 hours a day. Leisure also disappointed: on Wednesday afternoons, friends were working and unavailable to play games.
- His connection to AppLovin was different: he deeply cared whether Foroughi and colleagues succeeded. Attending the IPO bell-ringing while still outside the company, he saw the shares fall and recognized flaws despite continued business growth. “This is my calling.” When Foroughi asked about a return, his answer was “I’m fucking in.”
- Senra tests whether he would have returned if the business and shares were thriving. After an initially confusing answer, Vivas clarifies that he would have stayed out if he had no value to add. His longer purpose is building a business that outlives him, helping customers hire and reinvest, and delivering tens of billions — hopefully someday hundreds of billions — of value into the economy.
9. The buyback followed cash flow through a collapsing valuation
- Senra recalls an IPO valuation around $28 billion falling to roughly $3.8 billion, with shares declining almost daily for something like 200 days, despite about $1 billion in cash flow. Vivas summarizes the divergence: “Stock is crashing, revenue’s going up.” Foroughi borrowed and repurchased shares; Senra describes a roughly $50 billion subsequent windfall, which Vivas affirms.
- If the decline continued, Vivas says they considered buying the company and taking it private, comparing the possibility with Michael Dell. They thought it was an incredible business and wanted to keep running it. Having experienced a decline exceeding 90%, a 20% drop or even a halving feels like “another day in the NFL.” His confidence is conditional on continuing to grow and do the right things for customers; then “the score will take care of itself.”
- Personal spending supported that equanimity. His World of Warcraft subscription costs about $15 a month; he keeps longtime friends and inexpensive clothes. He describes the flight-and-hotel choices as return analysis: if two options reach the same destination at the same time and one is 10 times cheaper, why pay more? Lifestyle inflation never created the cash demands that might have made falling shares frightening.
10. Founder stories are AppLovin’s next public-facing project
- Vivas wants communications to follow customers from small businesses into substantial companies, showing how AppLovin helped along the way. He says outsiders sometimes assume superior performance “must be a scam or a fraud”; his explanation is accumulated attention to details and inefficiencies. The proposed storytelling would make that work and the people behind it visible.
- Senra’s argument is that knowing a founder’s struggle changes purchasing behavior: learning how much James Dyson cared makes someone want his products. “People wanna back people, not companies.” Vivas’s own unfinished-business test is street recognition. He estimates that “99 out of 100 people, or 99.9 out of 100 people” would still ask what AppLovin is.
11. Precision came from mentors who refused to accept almost right
- Former Zedge CEO Mark Rosner, who wrote Applied Revenue, joined as CRO after a potential consulting conversation. During recruitment, he spent 15 minutes redlining AppLovin’s NDA. Vivas thought that made him untrustworthy; Foroughi saw diligence they should want inside the company. The disagreement foreshadowed the lesson Rosner would teach Vivas: scrutinizing details could be an asset rather than an obstruction.
- Their initially difficult relationship became a mentorship when Vivas moved under Rosner on the publisher side. Before AppLovin hired a lawyer, Rosner handled over 200 agreements himself; Vivas says only one went wrong. When an actual lawyer arrived, Rosner redlined that lawyer’s agreements too.
- The defining correction came while Vivas’s grandmother was hospitalized with breast cancer. After months of negotiation, he signed a deal containing an error of roughly 1%–2%. Rosner demanded that he reopen it. Vivas protested that he could not go back to the customer; Rosner asked, “Do you want to be Michael Jordan or Tiger Woods?” and hung up. Vivas renegotiated with the angry client and earned a brief “Good job.”
- Vivas connects that training to Bill Walsh’s The Score Takes Care of Itself: practice attendance, phone etiquette and locker-room standards precede winning. His brother supplied the best career advice: “staying in the game.” When Vivas felt he had already won and wanted to stop working so hard, the response was that pain could mean growth: “if you’re feeling this pain, that’s because you’re growing.”
Full transcript
You have a very interesting story—one of the most interesting entrepreneurial stories I’ve ever come across. You’re a high school dropout. You got kicked out of your house, you lived in an office, and now you’re a multibillionaire. So I want to start with this: How did you manage to get yourself kicked out of your house?
I always focused on driving as much value as I could. When I was in school, I realized I wasn’t really good at it. I had horrible grades, couldn’t pay attention, and didn’t care about anything the teachers were talking about. But internet advertising was something I gravitated to and grabbed onto.
Once I got into the business, I stopped going to classes. I was skipping school and working 24/7. It came to the point where my dad was like, “All right, you think you’re this big guy. You think you’re this hotshot making all this money online? Then just move out of the house.”
Literally, a day later, I got my stuff and moved to my best friend’s house. It was kind of funny because I showed up at his house, and his mom was a really sweet lady. She was like, “Hey, good to see you.” I was like, “Oh, can I live in your house? But I’ve got a great deal for you: I’ll employ your son as an intern at this business, and I’ll help clean the house.” That was pretty much it. I’d say that was my first foray into moving out of the house.
How old were you when this happened?
I was around 16 years old.
Okay, but why drop out of high school? A lot of people drop out of college, but you dropped out of high school. Why do that?
So, take a step back. I started working online around 14 years old, doing performance media buying. What I saw during that period was really eye-opening. At the time, I was working for my brother. These guys were making $20,000 or $30,000 a day in profit advertising different products. My teacher would make $25,000 a year. So it was a no-brainer to me, really quickly, that the upside of school was nowhere near as high as if I put all my efforts into performance marketing.
And your older brother was kind of teaching you the trade?
Yeah.
Is that how it worked?
Yeah. A little backstory: I come from a family of four brothers and two stepbrothers. All boys, but my parents got divorced very early. I wasn’t growing up with my oldest brother, but I was always online, always on the computer. I was building websites and had a game server business for a little bit.
At one point, my brother came to visit my dad, and he was telling my dad that he was doing performance marketing. My dad had this brilliant idea that I would go and intern for him. I went and interned for him for a summer, which I was initially against because I was making $1,000 a month selling stuff online and doing game servers. At that time, as a 14-year-old kid, that’s a lot of money in middle school.
What ended up happening was that my brother convinced me to join him. I started working there, and I was below the water boy. I was the guy adding the boring terms of service and privacy policy onto the site. Whatever work those guys didn’t want to do was pretty much foisted onto me. But through that, I got to learn a lot about the industry: what types of products people are interested in, what types of ads get people’s attention, and how money is made online in general. That was my big foray into it.
At the time, you’d essentially become obsessed with online advertising, which is a funny obsession for a young teenager to have. But your other obsession was video games, right?
Yes.
Were there parallels you drew between the 2 activities?
I was never really good at sports. I played soccer and baseball as a kid, but I wasn’t good at either of them. What I loved about video games was that they were all based on merit. Whether you’re competing in a multiplayer game or a single-player game, ultimately it’s about outcompeting the people you’re competing against. That was something I loved.
So, taking it into business, I always had this analogy in my head: When they sent the warriors out back in the day to get food for the tribe, the only thing people back in the tribe cared about was who brought back the food, who killed the animal. In business, I’ve always focused on being the most valuable person in the room and doing what I could to drive the most value for everybody.
Say more about this.
I think titles and seniority are all bullshit. In business, similar to sports and video games, it’s just about delivering the most value possible. I realized early on that if you go down the same route as everybody else—“Okay, I’m going to start a company. I’m going to be an analyst for a few years, then try to get to the next level as a manager, then a senior manager,” and so on—it’s a linear and very boring path. You limit your ability to grow personally and your ability to deliver value to a company.
Instead, you can take this other approach: “What is the most important thing to the business, and what can I do with my skill set to deliver as much value as possible?” If you take that mindset, very quickly, it may not be a linear route, but you’ll be exposed to opportunities you wouldn’t have otherwise. That’s the approach I’ve always taken.
But this is one of the most fascinating things about you. When I tell other people about you and Adam Foroughi, you had that trait when you were a kid. You’ve been working with Adam since you were 17—or 19, something like that?
My brother and Adam had worked together, so I’d known of Adam since I was 14. I met him at 15, and when I told you I was the water boy, he came to the office. My brother said, “Go get Adam a water.” But I knew who he was before because there was a leaderboard in my brother’s performance marketing company, and Adam was at the top of the leaderboard at the time. I was the guy behind him.
Initially, I started building websites, then ads, and then campaigns, so I already knew who he was. That’s how I got connected with Adam. We didn’t really communicate that much in the beginning. I’d say we got closer when I was around 17 or 18, and that was because my road was not linear at all.
I didn’t wait to be given opportunities. For example, when I started building websites, I became curious about how ads were made. So I started getting on Photoshop and making ads. Then somebody showed me how to put up a MySpace campaign, and I did that. From there, I wanted more traffic, so I started reaching out to brands on my own. Nobody gave me permission to do it. I just started doing it.
Fast-forward, I was like, “Hey, we should start our own ad platform. Why are we buying from all these other ad platforms when we can reach out to the publishers ourselves, and we have demand?”
Wait. When you got this idea—“We’re going to start our own ad platform”—how old were you?
At that time, I was about 17 years old.
Okay. That’s a very unusual idea for a 17-year-old.
Yeah. The reason we started the ad platform was that the advertising platform we were working with at the time had its own advertisements, its own offers, and they banned us because we were competitive. I got so angry that night. I remember I went home, pretty much cried, and thought, “We’re going to bury these guys.”
I went to my brother and said, “Hey, I’m going to leave your company to start my own ad platform. I’m going to go head-to-head with this company.” He started laughing so hard and said, “You’re not going anywhere. I’ll give you a few engineers. Go build what you want.”
The idea at the time was Appenda. Appenda was a mobile ad platform. Around this time, Adam had already left my brother’s company, and he was done with ads and wanted to start building consumer products. At the beginning, AppLovin was a dating app, then a fashion app, and then a bunch of other products they built. Adam was buying traffic from me.
Adam was buying traffic from your ad network for his apps that he was developing?
Exactly.
Okay.
Exactly. During this time, Adam and I would talk a lot over AIM because I was effectively his account manager. But I would mess with him a lot. I’d be like, “Hey, I’ll teach you a lot about making money online.”
You know, I’ll teach you how to run a real business.
Which is also another crazy thing, because he’s 10 or 12 years older than you.
12 years older than me. Way smarter than me. The guy’s a walking calculator. But ignorance is bliss, and I just had this chip on my shoulder. I felt like I could take on the world.
As we spent more time talking, Adam, who’s very intelligent, was like, “Okay, this kid works around the clock but isn’t that intelligent. He’s built this ad platform in this wide-open blue space, and he’s seeing success. I’m going to go build a mobile ad platform.”
So he’s going to compete with you.
Yes.
This is where he pulls you into the room and says, “Don’t get—” He came on the show. Let me back up before we get to this.
Yeah.
Some people are listening who haven’t seen an episode. The Adam Foroughi episode is one of the episodes I’m most proud of. I think I titled it “The Best Entrepreneur You’ve Never Heard Of.” At the time, AppLovin was a $150 billion market cap company. They’re going to print $6 billion in cash this year, and they’re doing it with about 400 employees.
I’m proud of that episode because it goes out, and almost all of the next five or six guests who came on the show had the same reaction. We did an episode with MrBeast that’ll be out in December. I’ve known MrBeast for a while. He listens to my other podcast, Founders. He’ll send me his Spotify Wrapped every year, and Founders is at the top. As soon as we stopped recording, he leaned forward and said, “Hey, can you introduce me to Adam?”
Mickey Malka—over and over again, people were asking, “Who is this guy, and can you introduce me to him?” Adam was such an unusual, unfiltered, hardcore person. So this is the person we’re talking about. This is the person you’ve been working with for half your life.
Yeah.
So now this guy’s thinking, “This fucking kid is making all this money with this ad network.” I think he told the story: he pulled you into a room and said, “Don’t be mad, but I’m going to compete with you.”
Yeah. It’s funny. He was in the office with this shit-eating grin on his face, like somebody who had just eaten your food. Actually, I pushed him into a room because I saw him smiling. I was like, “What the hell? Why are you so happy? What are you smiling about?” That’s when he said, “Hey, don’t be mad. I’m building a competing ad platform.”
At the time, I didn’t care because, as you mentioned to me earlier, I’m a massive gamer. I love playing video games. I was actually going to join my friend’s company in Y Combinator, which built mobile games. Then Adam reverse Uno’d me. He said, “Whoa, whoa, whoa. Wait. What do you mean you’re going to join somebody else’s company? You should come work for me. You know how to work your ass off. You know everyone in mobile gaming, but you know nothing about building a real business.” Out of respect for Adam, even though I talked a lot of shit to him online and always knew he was really intelligent, I decided to come down to Palo Alto and meet the rest of the team.
Is this when you move into the office?
Yes.
A lot of people are like, “Oh, I’m here 24/7,” or, “I work 9-9-6.”
Yeah.
Raph moved into the office, and that speaks to the unique culture you guys have. Adam built the bed.
He did. He did, with another engineer. Let me double-click into it. The interviews went great. I was like, “These are the smartest guys I’ve ever spoken to in my life. It’s a no-brainer. I’m going to join.” We negotiated. I was like, “I want half the company.” He was like, “Somebody in your role typically gets a quarter of a percent.” I got a little bit more than that. I didn’t get half the company, though, obviously.
I had one condition. He was like, “What is it?” I was like, “I have to live inside the office.” He was like, “Sure, but why?” I was like, “Think of this as the Vietnam War. We have this goofy name called AppLovin. We have no VC funding. You’re going to have some five-foot-eight chubby kid go out there and sell to game developers and advertisers. The only way we’re going to win is by out-hustling everybody else, which means I have to live here. This is the only way this will work.”
Obviously, he was very happy. It’s like your first business hire says, “I’m going to fucking live in the office.” You couldn’t ask for more from an employee. He and a guy called Furqan went to IKEA and built bunk beds for me and another engineer I brought over to live in the office. The second the other engineer saw the bunk beds, he was like, “Screw that. I’m definitely not living here.” When I saw them, I was like, “Home sweet home. Time to get started.”
What was the state of the business when you moved into the office?
The state of the business was pre-revenue. It was like Animal House. Adam had a bunch of engineers working on different apps, and they were trying to find product-market fit. Their next idea was to build an app-level ad network.
For context, before that, Adam had run a very successful ad platform called Social Hour, an ad network on Facebook. Before that, he’d been doing advertising as well, so he was very familiar with the space. Something he mentioned in your last episode was that he’d already seen a lot of user activity switching from PC to mobile. He was the perfect person to tackle the space because he understood the problem, and it was a wide-open field.
Then I came on board and was able to connect us to the right advertisers and publishers. The rest is history.
He also told this story where he tried to sell 25% of the company to VCs for $1 million.
Yep.
He was like, “You can buy 25% of the company. You should back this.” You guys got in really early on this transition from desktop to mobile.
Yep.
And he was turned down because they thought gaming and ads were terrible businesses.
Yep.
They didn’t understand that. A few years later, they went and funded a bunch of other competitors, and he said you guys made it a company principle to drive those other competitors out of business.
Take a step back here. There were plenty of other companies in the space that were very well-funded. They were backed by the top-tier VCs at the time, like Benchmark, Sequoia, and so on. Some of them were already very successful, and it felt like the market was very mature. At the time, it was like, “How are they going to succeed?” There was this one kid doing sales and a few other people. How were they also going to succeed against these behemoths that already had a lot of the market?
Also, when Adam went to raise this money, we were already profitable. It’s funny because he was giving them a deal on a silver platter: revenue traction, a company growing like crazy month over month, and very profitable, with world-class margins compared to everyone else in the space. He still got turned down.
Why do you think that is?
I think it came down to the fact that we had a very untraditional story and background. A lot of the people who had raised money before were doing mobile game app platforms, were game publishers, or were part of big corporate companies. On paper, they looked great: they worked at Facebook or Google, they were on the AdMob team, which was one of the biggest ad platforms at the time, or they worked for all these other businesses.
We were performance marketers who always ran arbitrage businesses. We’d never run an ad network that had seen its way to a very profitable exit. I think that’s really what it was.
How do you start? You guys are a smaller team with no funding. You’re essentially bootstrapped, competing against established players with more money and more people. How do you start building a company? How do you start winning?
What Adam understood better than anybody else in the space was that the tech was the most important part. Everyone else focused on sales, so they had hundreds of advertisers and premium publishers, but their algorithms were shit. A lot of these algorithms involved people manually optimizing things in the background.
We didn’t have a state-of-the-art machine learning model. That’s not what existed back then. But we had rules in place, and we did regression learning around deciding what to serve. That in itself allowed us to outcompete our competitors, even though we didn’t have as much demand and our publishers weren’t as high-quality as those on some of the other ad platforms.
When we’d go head-to-head with another ad platform, a lot of times we’d monetize at double the clip. The conversation when I’d walk into a room or reach out to a publisher was, “I guarantee you more money than you’re making elsewhere.” It was a no-brainer. A lot of people actually thought it was too good to be true, so they’d make us put it in writing. We had no issue doing that. I’d say Adam’s vision of going all in on the tech is what allowed us to succeed.
We were talking before we started recording. You said, “I think our brand is too soft, and it doesn’t represent the insane performance culture we have inside the company.” I want to skip way ahead in the story, because I spent a ton of time with you and with Adam, and it reminds me of the Chicago Bulls led by Jordan, as you see in The Last Dance. Talk about what it’s like working inside of AppLovin.
AppLovin is a company where we’re always on, and our goal is to make sure that any dollar given to us drives a profitable return. We treat the businesses we partner and work with as an extension of our team. That’s really different from a lot of other ad platforms, where they look at it as just providing a service.
We’ve interviewed a lot of people from some of these bigger ad platforms who come to get a job at AppLovin. One of the questions I’ll ask them is, “Would you set up a campaign? Would you upload ads? Would you come up with creative ideas?” A lot of the time, they’re like, “Whoa, I haven’t done that. Why would you do that?” For us, we do all of these things. That’s part of our operational excellence. We feel like all these little things add up to delivering incredible returns for our advertisers.
We’re so focused on performance. That’s the cornerstone of our company. Customers love and hate us for it. A lot of customers would say we’re very competent, we’re great, and we deliver great results for them. But they’d also say, “You guys are pretty arrogant and aren’t always the nicest people.”
It’s not that we’re trying to be arrogant. We’re ultimately trying to deliver the best returns for them, so we’re very opinionated about what they could be doing better and always pushing them. Other companies might say, “Whatever the customer wants—the customer’s always right.” But if our goal is to deliver more customers profitably for you, there’s data you can look at, and there are right and wrong decisions. We’re always trying to push toward the right decision.
Say more about this anti-delegation take that you have.
We talked about this before the show. A lot of leaders, as you hear on podcasts, say, “Hire people. Delegate, delegate.” That’s not the cloth we’re cut from at AppLovin. To be a great leader, you have to be in the weeds.
Think about it in a sports analogy: Why did Michael Jordan always get the ball? Why was he effectively considered the captain of the team? It wasn’t because he was the oldest person there or the most senior. It’s because when they gave him the fucking ball, he made the shot. For us, if you’re in the weeds, you understand what the customers want, what they need to succeed, and what’s important.
When you delegate and hire all these people, you focus on a lot of things that aren’t important for your business. But you’ve hired these people, so they need something to do, right? You end up having them work on tasks that don’t really move the needle.
Did you watch the Todd Graves interview that I did?
I did.
He says, “Delegate?” He’s like, “What does that word even mean?” He had this nasty look on his face.
Yeah.
He’s completely anti-delegation. There are a lot of great founders who are kind of anti-delegation.
I also think it’s what makes the game fun. Going back to video games, imagine you play all these levels and then get to a boss, the final boss. Are you going to hand the controller to your friend? Fuck no. You’re going to go and do it yourself. That’s a new challenge, and that’s what keeps the job exciting for me personally.
What do you spend most of your time on? Adam told me he thinks you’re one of the best deal guys in the world.
I focus on doing the highest-leverage deals possible for the business. We have a very small team. Luckily, we’re a business that’s very profitable and growing very quickly, so we try to do deals with companies that are advertisers or partnerships with other companies that can bring us thousands of advertisers.
My goal is to bring as many customers onto AppLovin as possible so we can build the best business possible and become one of the biggest ad platforms in the world.
And then you try to expand the existing customers, too. Adam told this great story on this podcast. He was like, “Yeah, Raf’s like an animal. I get calls from customers all the time. They’re like, ‘What’s up with this guy? This guy’s a multibillionaire, and he’s harassing me to spend an extra $5,000 a day.’” And he’s like, “This shouldn’t matter to you.” And he goes, “It matters to us.”
Of course.
Everything matters.
Everything fucking matters. If you can’t do the small things right, how can you be expected to do the big things right? I’ve said this online before, but we’re just getting started. Adam talked about this. We’re on pace for $20 billion of advertiser spend. When you look at the two behemoths in the room, combined they do half a trillion dollars of ad spend on their platforms, or across their ad platforms.
There’s so much room for us to grow. When you’re able to get into the weeds and make sure that you’re succeeding for your advertisers, that’s how you do it.
And by the way, a lot of times, we do deliver better results for advertisers, but they may not move budget in the beginning because they're not focused on us or they're focused on other things. It's important that you get in there and make them care about your business. That's actually one of my superpowers. When I reach out to these customers, they're like, “What the hell is this billionaire reaching out to me for an extra $5,000?” It goes to show that we're very serious about your business. We really care about working with you. You're not just a number in a spreadsheet to us.
Is this just a persistence thing? I just read Ari Emanuel's new book, and his whole thing—I want to ask him this when he comes on the show—is, does literally just calling people over and over again actually work? People do this with me. They're like, “Hey, I want to get in touch with you. I'm just gonna email you every day till you respond.” It's like, you're getting blocked immediately.
Yeah.
That's just not gonna work with me.
If you just email people nonstop and send them useless stuff, they're just gonna tune you out, and as you said, you'll block them. I think what matters is that you're persistent, but you're always figuring out ways to deliver value for the customer.
So give me an example of that.
It's a really funny story. We're going to Miami after this, and there's this guy called Nadir Khan. He ran an apps business out of Miami and sold it for a few hundred million dollars. It took me 2 years to get ahold of him, and every single time I'd reach out to him, it was about ways they could make more revenue. It might be, “Hey, this level could be optimized,” or, “You should be showing ads here,” or, “Hey, in this market, you're dropping the ball here.”
There was an inside joke within their company: “We wish we had a Rafael Vivas on our team because this guy is always on top of things, trying to help us become better.” Eventually, he responded to me. He goes, “You are one of the most persistent folks that I've ever encountered in my whole entire life.” After that, we started doing a lot of business together, and we helped them grow dramatically.
So it's not like, “Hey, I'm gonna keep bothering you, calling you, emailing you because I want something from you.” It's, “I'm going to keep getting in contact with you and delivering value, and you'll just realize after I tell you 6 good ideas, ‘Hey, maybe I should take this call.’”
Exactly. And also, a lot of times, it's not that these people don't think your ideas are good. It's just that they have other things going on. It may not be the right time. They may not have the right people. It's important to always stay in their ear. Like you said, if you're delivering value, these people will eventually want to work with you.
What do you think are some of the other parts of AppLovin culture that are very different from the inside, compared to some of the other companies you may see?
The really big difference about us is that we are very, very hands-on. That's something I touched on before, but even Adam sometimes will set up campaigns, or we'll be checking in on these small clients. I would say really just giving a shit, really caring, is one of the biggest things for us.
And then also, we lead with bad news internally. A lot of companies are like, “Hoorah, we did this thing, and it's great for our business.” But a lot of the internal AppLovin monologue is like, “This sucks, this sucks, this sucks, this sucks.” Then we just tackle it one by one to improve it. I would say those are really the 2 big things.
You guys seem to be immune to your stock price volatility, too. I remember something happened recently, and I don't pay attention to the news, so I don't even see this.
Yep.
But I think it dropped by quite a bit for some reason. I had called Adam, and he'd called me back right away. I just had a joke for him. It had nothing to do with anything.
Yeah.
He was laughing, and he was in a good mood. Then I found out after the fact—we were flying back from a recording, and somebody on the plane told me, “Dude, their stock dropped by, I don't know, 20% today.”
Yeah.
I was like, you would never know talking to him.
Yeah.
He just did not give a shit.
We don't care about the short term. And we don't care about the short term because ultimately, if we feel like we're doing the right things for our business and growing, the stock price will reflect that. You saw the company was, at one point, worth $4 billion. The stock dropped over 90%. Being cut by 20% or being cut by half is just another day in the NFL for us. It doesn't faze us. As long as we know we're doing the right things and helping our customers grow, the score will take care of itself.
I've heard you say in other places, too, that one of your goals is to build AppLovin into a durable business that actually outlives you.
Yes.
Where'd you get that idea?
Purpose is extremely important in life. I'm probably not gonna be the guy who cures cancer, and I'm not gonna build AI or robots or anything like that. But what I'm very confident we can build is a business that will be able to help companies grow many, many, many years past our lifetime. If I can do that successfully, I would say I've succeeded in my lifetime, personally.
So is that why you're still working? Is that what keeps you going? I was just at this event in England, and one guy sold his company for like $13 billion. He's chomping at the bit to get back in the game. He doesn't regret the sale, but he's just like, “I can't be an employee. I have to have a company. I have to have some kind of vehicle for all my creativity and my energy.” But he said his other co-founders are just fine. They made a billion dollars each or whatever the case was, and they're building houses, writing angel checks, and hanging out on the beach.
So it's a few things. One, when I say we're still early in the game, I didn't work 14 years of my life to leave before the game even got started. What are we talking about? The job's not done yet. We are so early in our life as a business and in our impact. It makes no sense to me why I would leave this early. I have to be a part of something bigger than me.
Bigger than me is helping businesses grow, delivering tens of billions of dollars, hopefully someday hundreds of billions of dollars of value back into the economy. I think that's one of the great things that we do. As we help these businesses grow profitably, they can hire employees, invest in better products, and ultimately, consumers purchase their products more, which stimulates the economy. I think that's something great that I can do for society.
What happened where you had to take a year off, though? Were you just completely burned out? Tell me the story again.
Yeah. Here's the backstory. We started a games business. The reason for starting games—
Wait, you started the ad platform first.
Yes.
Then the games business—
Yeah.
Because what was the reason for starting the games business after the ad platform?
We did a lot of business in Asia. China is one of my favorite places to do business because the founders are so intense. They move very quickly, they're intelligent—just like everything you'd want in a business partner. It's no bullshit.
One of our partners at the time was this company called Cheetah Mobile, and they were one of our biggest publishers. What they would do is just squeeze us in every way possible. We had an agreement signed with them, and they were like, “Screw the agreement. We don't care about it.” They would just break it all the time. There were so many nights I'd stay up in the States until 4 or 5 a.m. to manage them, and then spend a lot of time in Asia with the leadership over there, too.
Throughout this journey, I was thinking to myself, “We will never be in a position where we are so dependent on one of these partners.” We'd also seen what Netflix had done at the time, and we thought there was this great opportunity for owning the vertical, really.
It was great that we had the ad platform, but also to have our own content. You have better economics, a distribution advantage, and overall, you build more enterprise value. By the way, this is not an uncommon business tactic in Asia. The biggest gaming companies in the world are also distribution companies, with Tencent and NetEase being perfect examples. These companies have other things outside of games, and they use that to distribute their games. So that's how we got into the games business.
But Cheetah really pissed me off. It’s kind of like the story I told you earlier about how we started the ad platform because one of our partners screwed us. I came back after this partner had pushed us to the edge, and I went to Adam and said, “It’s very simple. I’m going to leave and build a competitor to Cheetah Mobile, or I’m going to do it here. I really want to do it here.”
Wait, pause there. Why is that simple to you? Why would you leave to go build a competitor? It’s Cheetah, the animal?
Yes.
Okay, the cheetah.
Because I had so much rage in my heart that I wanted nothing but to dominate those guys. I’m a very simple guy, David. We’ve talked about this. I stay in the $200 hotel. I’ll take the shitty commercial airline flight. Money is important to me, of course, but I don’t care about making more money to buy a big house. When I work, it’s for a purpose, and that company pushed me to a point where my purpose was to destroy those guys.
That was really the start of what was then Lion Studios. Why did I call it Lion Studios? Because the lion is the only animal that can kill a cheetah. Our thesis was: let’s work with the best developers in the world. We have one of the largest distribution platforms in the world, and we’ll help distribute their games. Within 2 years, we built that from zero to over $250 million in revenue, profitably. It was a great business.
But it was really tough for 2 reasons. First, when you start building games, all of your customers start looking at you as a competitor.
Because at the time, AppLovin was essentially advertising in games, but at this point, you’re still just doing game installs?
Exactly.
Okay.
Exactly. We were the new kid on the block making games, and our partners didn’t like that. They looked at us as hostile. In reality, there was more benefit: we were creating more inventory for the market, and this data was helping improve our machine learning model. We were able to be more efficient at driving traffic for them. Even though these partners didn’t like us, they worked with us because of the value we delivered, but there was a lot of internal stress.
The games business is also very hit-driven. You’re working around the clock. Our best partners that we published games with weren’t sitting in America. They were in Europe and Asia, all around the world.
Why do you think they weren’t in America?
I think they weren’t in America for 2 reasons. First, the cost of labor is a lot higher here, and the games we were building at the time didn’t need the best of the best. It was about getting as many reps as possible. A lot of the games we built were called hyper-casual. We had methodologies to determine what would be a hit game, and a lot of it was based on how marketable the game was.
We saw that we could get more cost-efficient employees over there, and they would outhustle the hell out of the American studios. We’d interview people at some of these game studios, and they’d say, “Yeah, I work nine to five. I handle this really small part of the equation at this game studio.” They had these bloated teams.
Here’s a perfect example. There was a team called Game Five Mobile. We released a game together called Happy Glass that did close to $100 million in revenue. It was a husband, wife, and little brother. They were so poor that they all lived in the same house, and their house was also their office. I think at one point—and I may be wrong—I’m pretty sure they all slept in the same bed. I think this is literally how—
Yeah.
—how poor these guys were. When you come from that, you can’t compete against somebody like that. They will die before they fail. Those partners were incredible to work with, but it also drove me to work harder. I saw what they came from, and I knew this was their big shot. I loved making people like that successful. They were the underdog. Nobody had believed in them.
It was funny: the 3 people at Game5 had worked at HP. They took a bet on this game studio, and if it didn’t work in the next month, they were going to have to go get jobs again. It was make or break for them.
Your story is similar to what you’ve told me in the past: you’re the kind of person who’s like, “I couldn’t go back. I got kicked out of my house. I’m moving into the office. This either works or I die.”
Yes.
That was literally what you said.
Yep.
There is no turning back. I’m going to die. I’m going to succeed. It’s like 50 Cent: “Get Rich or Die Tryin’.”
Yeah.
I’m going to succeed or die trying.
Yeah. It’s funny. I was dating a girl at the time, and I told her, “I’m going full Black Mamba.” When I worked, I would listen to motivational videos all day. I was kind of a psychopath.
I did this every morning. You’re a fan of Founders. That’s how we met. For the first 5 and a half years, I was like, “I don’t get it. This is a better podcast than—” I’m obsessed with podcasts. I know what a good podcast is. This is better, and no one’s listening to it. I’d have to wake up every day and brainwash myself with this stuff.
Right, and just continue going.
It really works.
Yeah. It was especially intense internally. Adam was pressing really hard on me. I understood that the future of the company was on my back because all guns were pointed at us. We’d burned the ships. We were there to win. There was no other option. I’d wake up at 4:00 a.m. and stay up until midnight.
And you were in your early 20s?
I was, yeah.
Okay.
At that time, I was, let’s say, 26 to 28.
Okay.
So I was doing this—
But no kids.
No kids.
No long-term relationship.
None of that.
Basically just work.
Yeah, just work.
Yeah.
Nothing else mattered to me besides work. It was the most important thing. I did that for 2 years, and then I kind of put my head up again from the fray and realized, “Oh, shit, this business doesn’t need me anymore, actually.”
This is the game studio, or the—
The game studio.
Okay.
It was a game publishing business.
Okay.
The way I would compare it is to Universal Music Group. We had the distribution.
We’d go find talented game developers and bring their games to the masses. By the way, we drove over 20 games to number one and had over 3 billion downloads. This was an incredible business, and we were one of the biggest at the time. I’d gotten the business to a point where I was no longer mission-critical, and at that same time, I started reflecting on myself. I was like, “Oh, okay, so the business no longer needs you to succeed, right?”
We’d also done other acquisitions of game studios. So what do I really want to focus on? For me, having a family was really important. I was 28 when I took a step away from the business, and I was like, “I need to start thinking about having children.” This was something that was always really important to me. I always knew I wanted to be a father.
So I took some time off from the business. It’s funny you say a year, but I wasn’t really good at taking time off, because 3 months in, I started going crazy and just started building products for fun. I moved to Miami at the time because San Francisco was so depressing. COVID, everything was shut down. I went to Miami. It was supposed to be just a vacation for a weekend, and I was like, “Oh my God, COVID doesn’t exist here.”
Yeah.
Everything’s open. And then I ended up planting my roots there, meeting the love of my life, and having a family.
Yeah, I was there during that time too.
Yeah.
I remember because one of my favorite pizza spots is Lucali in Sunset Harbour. At the time, you used to go up there. First of all, there would never be a wait, and then there started being a wait during COVID. You’d put your phone number down, and I kept seeing all these 415 and 212 area codes, because everybody from San Francisco and New York came to Miami at that point.
So wait, you take a sabbatical. How did you frame this with Adam? Was it a sabbatical? What’d you say? “I’m fucking done forever”?
Yeah, I wasn’t really good at breaking the news to him. Adam’s like a big brother to me, so I waited for my birthday. I’d actually been journaling about it for a while. I knew I wanted to take time off. About a year before, I was writing about where I was the bottleneck and where the business needed to be so that I didn’t need to be there for it.
I started marking things off the list, and before I knew it, everything had been accomplished. I could be away, new games were being released, and revenue was growing. So I called Adam and said, “Hey, it’s my birthday.” He said, “Happy birthday, of course.” And I was like, “Hey, I want to take some time off from the business.”
Adam is not a very emotional guy. He was just like, “Are you sure?” I was like, “Yeah.” He was like, “Well, I respect whatever you want to do.” Then we kind of ended the conversation. After that, a lot of people called me, saying, “What the hell are you thinking?” or, “What are you doing?” My brother, this guy Harold Chen, all these guys—they were trying to convince me to stay and offering me all these different packages.
I was like, “It has nothing to do with the money. The business is in a place to succeed, and there are other things in my life I want to go accomplish.” So I took a step away from the business. I’d say it was supposed to be a 6-month transition, but within 3 months, I was kind of out.
At the time, though, did you think, “I’m out of AppLovin for good”?
Oh, yeah. I thought I was going to go off into the sunset, enjoy my life, chill on a beach, and never work again. But you realize very quickly that it’s a very fucking depressing life. There’s no purpose.
We should have a fucking ad in every one of our episodes about this. These post-exit founders who have never found something else to work on are the most miserable souls to be around.
Yeah, and to double-click on it, I love playing video games. What you realize is that on a Wednesday afternoon, you have no one to play games with. None of your friends are around. They’re all fucking productive. They’re doing things, right? So you have no one to hang out with. It gets lonely.
But then I started working on these businesses, and this actually double-clicks into what drives me. I’d found this great tech team, and we were working together on all these products. One, I didn’t care about the products we were building. I had no connection with them. For me, it was just opportunistically, “Hey, I think this vertical’s right. The KPIs look good. Let’s go and build into it.”
That was one thing. One funny thing is, I ran a dating show for a little bit. I don’t recommend that business.
You ran a dating show?
Yeah, it was Love or Fame. The idea was that you’d come and compete for love or fame. It was on a mobile phone. But imagine watching 12 hours a day of dating shows. You want to jump out of a window. So that wasn’t for me.
Sure. You take time off to go to a beach. You’re not even on a beach. And you’re just doing low-quality work.
Yeah, it was just horrible. And then the second thing was, I didn’t truly care about the people I was working with when I started the second company. I’d say one of the things that’s kept me here at AppLovin for as long as I’ve been here, outside of helping our customers succeed, is that I really deeply care about the success of Adam and the rest of our team. If they don’t do well, it doesn’t sit well with me. I will run myself into the ground to make those around me succeed.
I didn’t have either of those things. My journey back to AppLovin was at the New York Stock Exchange, ringing the bell. We were all hanging out, and—
So when you go public, you’re still outside of the company?
Still outside of the company.
Got it. Okay.
Great shape, by the way. So, we go there, we ring the bell, and first day out, the stock drops. I’m talking to people there, and the company is still growing, but there were definitely some flaws within the business. It was very clear to me that I needed to be here. This is my calling.
You found your purpose.
This is my company. We were drinking our sorrows away. I wouldn’t say partying, because it wasn’t a super happy moment. Your IPO happens and your stock immediately drops after. Adam looked at me and he was like, “Hey, I’m hearing from people you’re thinking about coming.” And I was like, “I’m fucking in.” Then I’ve been here ever since. I got drawn back in through the purpose of the business, and I knew there was a lot more I could be doing here.
Do you think you would’ve made that decision if the business was ripping, in a good spot, and the stock price was going up?
I think I would’ve. Because at that point, there would’ve been nothing else for me to offer to the company, or no value that I could deliver. I mean, if—
So you would’ve stayed out of it?
I would’ve stayed out of it, and I would’ve had to figure something else out. But I felt like at that point, the business needed me.
And this is where I think you guys go public with something like a $28 billion market cap, and it goes down, I think, almost every day for 200 days or something like that.
Yes.
This is the legendary stock buyback.
Yes, yes, yeah.
Which we should retell this story now—
Yes.
—because it’s incredible.
The company’s crashing. It’s funny, it’s the inverse, right? The stock is crashing, revenue’s going up. Adam tells the story better than anybody, but he just doubled down on buying AppLovin stock, levered up the company, and it was one of the greatest returns of all time, right?
Yeah, because I think at the time you went down to a $3.8 billion market cap, right? Something like that.
Yep.
But I think you guys were doing like a billion in cash flow or something.
Yes.
Right?
Yeah, yeah.
And so the idea is, like, let’s take—no one else is going to buy our stock.
Yep.
Let’s take this billion in cash flow, start buying back our stock, and then at one point, the company reaped like a $50 billion windfall—
Yes.
…on that decision to buy back the stock.
Yes, yes, yes. It was funny because at the time, we were thinking, if the stock continued dropping, we were just going to buy the company and take it private, kind of like Michael Dell did with his own company. That was one of the directions we were going to go if it kept freefalling, because we thought it was such an incredible business, and we knew we wanted to continue running it.
Well, that was going to be my next question. When this is happening, and you’re thinking, “Okay, we went public at $28 billion, and now we’re down to $3.8 billion,” you’re not stressed?
No. You’re talking to a guy whose hobbies cost $15 a month. I play World of Warcraft, which is a subscription. I hang out with the same friends I had in high school or people I work with. I wear pretty cheap clothes, and I don’t have extravagant tastes. I think what happens with a lot of people is their lifestyle creeps up beyond what they have. That never happened to me, so I was never concerned about cash flow. I knew we had a great business, and it was still growing, so I was just like, “Let’s double down on what we have.”
Is frugality something you guys talk about inside the company? I remember talking to Adam, and at the time, the stock price was amazing. On paper, he was worth $20 billion.
Yep.
And he was taking JetBlue.
Yeah.
Then I introduced him to my friend Patrick, and I think he was doing investor meetings, but he was flying Southwest or something.
Yeah.
It was a normal budget airline. I was like, “What is this guy doing?”
Yeah. I think it’s less about frugality. If you look at dashboards all day and the main KPI you’re looking at is return on ad spend, you think about life like that: “How much return am I going to get for my investment?” If I can get to the same place at the same time, but one option is 10 times cheaper, why wouldn’t I take that every time? That was really the mindset. It was less about frugality and more that the return wasn’t there.
What is this relentless focus you guys have on the number of employees in the business?
The thing for us is—
Is it the same situation? We can hit this much revenue with half the people. It’s almost like a demonstration of an entrepreneur’s actual skill set: “I can do twice as much with half of what—”
Exactly, right? It’s a distraction. You’re managing C-players who are just wasting your time, or you’re focused on things that don’t matter at all. It’s actually great when you have fewer people. It forces you to be very focused.
Is this something that’s talked about inside the company, or does it just happen naturally? This relentless—
It just happens naturally. It’s just who we are.
Because this goes back to your insane performance culture.
Yeah. Amazon was maybe one of those companies that really focused on being frugal. But for us, because the company is founder-led, we spend the money like it’s ours. We’re also very data-driven and analytical. We look at everything we do, and when you look at it from a spreadsheet perspective, it’s very obvious which things make sense to double down on and which don’t.
You mentioned earlier that you can do every single job in the company. You can do the campaign, you can make the creative. So there aren’t many layers of management?
No, not really. Obviously, we can’t do the algorithms. Luckily, we have an incredible team that’s able to build those systems that Adam, I, and others can’t. This goes to the culture of our company: there’s not much red tape. Our belief is that we’re hiring smart people who understand the value of a dollar, and we let them go out there and do what we feel is best for the company. It’s not like there are layers of approval to get things done.
Is there anything else you think is rare or unique about the way you run your company that you don’t see in other businesses?
We try to give people as much ownership and as much work as possible. A lot of companies say, “Oh, you’re overworked. We’re going to hire a bunch more people.” Our approach is, “What can we build to automate certain parts of your work and make it a lot more efficient? What things aren’t important, and what are you wasting time on that we shouldn’t be doing at all?” There are no pure managers at AppLovin. Everyone is a doer. Even our CTO is pushing code himself, and he manages 100% of the engineering work. Being relentless about prioritizing what we work on and being hands-on are really the 2 difference-makers. There’s no special magic, David. It’s fucking work on the things that matter, and do it over a long period of time. Success will come.
You and I were talking about the Luca Ferrari episode I just did. A lot of what you just said is similar to Luca. He has this idea: “I don’t really give a shit about pedigree. I want to hire young people.” He loves people who have no experience. He says, “Then you find somebody young, talented, and hungry, and you saturate their capacity,” which is exactly what you just said. It’s like, “We’re all working, and I’m going to give you more than you can handle.” Why do you think you, Adam, and Luca arrived at the same conclusion, and why is that so important?
I think it’s because we weren’t able to hire massive teams. We didn’t have the cash, and at the time, we didn’t have the pedigree or background to hire the best talent out there. We had to go get the people we could, and we had to torture them into greatness, kind of like Jensen Huang talks about.
I love that idea. In his biography, The NVIDIA Way, Jensen has a line: “I don’t like giving up on people. I’d rather torture them into greatness.” At the end of the book, he talks about how he wakes up every day and looks in the mirror and says, “Why do I suck so much?” And this is even after, I think, he—
Yep.
…has the most valuable company in the world. He tortured himself into greatness, too.
Yeah, and Adam did that to me. To this day, it’s always conflict and confrontation. He’s always pushing, and that starts at the top and boils its way down throughout the organization.
You described him before as an incredible taskmaster.
Yes.
For somebody on the outside, explain what that feels like.
He understands the right buttons to push for everybody. If you’re insecure, he’s going to double-click on that and say, “Oh, you’re stupid. You’re not that good. You can’t do it.” And you’re like, “Well, I’m going to show this guy I can do it.” For other people, he’ll be really nice to them, and that’s how he gets more out of them. With other people, he’ll say, “Oh, that’s interesting, the way you think about it.” Then that person senses doubt and goes and executes on it. Adam is hypercompetitive, and that’s what makes him a great leader. He understands the things that make people tick and really pushes them to do their best work.
Does he push you further than you think you can go?
There’s a great quote in Andre Agassi’s biography where he says his dad tortured him. At a certain point, he says, “I no longer need my dad to…” I’m probably butchering this, but, “I no longer need my dad to torture me. I’m old enough to do it myself.” That’s how I am with him now. I went through so many years of it; I don’t need him to do it. It’s ingrained in me.
This is what I love about you guys. The next question I’m going to ask is, what do you think people on the outside get wrong about this performance culture? It goes back to this idea: “Hey, maybe our brand is a little too friendly and too soft. It doesn’t represent this ruthless culture inside.” I think I mentioned on the episode I did with him that what I like about Raph is I can call him at 11:00 p.m., and he picks up. You mentioned it earlier—
Yeah.
…
“Dude, you don’t believe in scheduled phone calls.” “No, I just call people.”
Yeah.
And—
Yeah.
And that’s it. We’ll just talk now. Where do you think you should update the new AppLovin brand and the communication you’re going to start doing externally? What’s going to be different from what you were doing?
I think what’s going to be different is that we’re really going to focus on telling the stories of the founders we work with and the brands, showing them from when they were a small business to how we helped them grow into massive companies, and the journey throughout it.
I think what a lot of people get wrong about AppLovin is they see this ad platform outperforming its peers and say, “It must be a scam or a fraud.” What they don’t take the time to do is really peel back the fruit and say, “Oh, wow, look at these guys. They have the perfect edges. They execute everything great.” If you really take the time to look into the details of our business, we care about every single detail. You notice these little things add up, and that’s what sets us apart from our peers.
This is what Luca Ferrari talks about as well, right? If you compare—if you look at his business, or Long Lake as well, you’d say, “Oh, it’s just a PE shop. What do they do? They just go in, fire a bunch of people, and make it more efficient.” It’s like, no, it’s way more than that. They have better technology stacks, right? They’re—
They’re actually hiring more people.
Well, that’s Long Lake specifically. They’re hiring more people. They’re able to make their employees more efficient and get more output. That’s one of the things for us: the way we approach things is different from everybody else. We optimize on the inefficiencies of these other businesses, and those combined allow us to set ourselves apart from our peers.
I think telling the stories of the founders of the companies you work with is really smart. Obviously, telling the story of the founders of AppLovin, too, and the important people who play a role in the company is super important. You just mentioned Long Lake. You and I had dinner with one of the Long Lake founders. At the first dinner, you were like, “Oh, no shit, this is like—if that guy’s involved...” Do you remember calling me after?
Yeah, yeah, yeah. Honestly, there aren’t many times I walk away from a dinner thinking, “This human is so impressive.” I thought he was part of the Illuminati.
Yeah, you were like, “I don’t understand.”
Yeah.
And then—
How come I never heard of him?
Exactly. How come you never heard of him? And then you see, oh, of course—
Yeah.
—then you see the other companies involved, and it’s like, oh, they’re all outperforming. Well, it makes sense. It ties back to this person.
Yeah.
This is something that you and I have talked about, going over a lot of the biographies—the same biographies I do on the Founders podcast. People don’t understand how important this is. It really is a superpower. If you know all the struggle James Dyson went through to make his products, and you read the book on him, or listen to the podcast about him, or watch an interview with him, what are you going to do at the end of that? You’re going to be like, “Hey, this guy cares so much. I’m buying his product.”
Yep.
And this is what has happened to me. A lot of people didn’t know what AppLovin was. They’d never heard about it. They listened, and they’re like—
Yep.
—if that’s the guy running it, I’m going to at least try to use this tool for my business.
Yep.
It’s super valuable.
100%.
Why is Elon out there doing all the product demonstrations? Why did Steve Jobs? People want to back people, not companies.
Yep.
They don’t have a love of companies; they have a love of people.
Yep, 100%.
Yeah, so the more you guys can do that—even this. I don’t remember: when I first floated this idea, did you tell me no?
I didn’t want to do it, you know. But you pushed me. You were like, “You gotta get out here and get on the podcast.” I did another podcast before this as well. It was kind of my media training for it, and you were like, “No, we’re gonna throw you right in the deep end.”
Yeah, because we’ve had a million conversations. Your story—where do I start? It’s like, wait a minute, this kid dropped out of high school? What? He lived in the office? This isn’t a joke? He did this? He’s been working for this company for 14, almost 14 years, and he’s in his early 30s? How did this happen?
Again, understanding the personality that develops the ideas, it makes sense. You have a bunch of older brothers. You have a dad who talked shit about you. I think he wanted you to be a doctor or something, right?
Well, he wanted me to be a doctor. It’s funny: my dad doesn’t own AppLovin stock, right? So you have a man who, by the way, thought the internet was a scam.
That’s right.
He thought the internet was a scam, and he didn’t take the time to care about our business. I don’t hold it against him, but I have it in me to prove everybody wrong, right? The beauty is, we’ve done a good job over 15 years, but we still have so much more room to go.
I think my journey will be over when I walk down the street and everybody says, “Oh, I know that AppLovin brand.” But today, you walk down the street, and 99 out of 100 people, or 99.9 out of 100 people, would be like, “App who? What is AppLovin?” We obviously make a big impact, but we’re very early in our journey.
What’s your relationship with your dad like today?
It’s good. I never hold it against him, because I always think about how he was raised. My father’s dad died when he was 15 years old. He had 4 other siblings he had to take care of, and a mom who couldn’t speak English. They came from Colombia. My dad’s from Ibagué. He came from Colombia to West Palm Beach in the United States, and his dad was a lawyer.
He grew up in a house where he didn’t have anything to fall back on. His dad was a hard-ass, and he became a doctor not because he wanted to, but because he needed to. It was the only way to make a lot of money to help support the family. When I think about that, I’m like, “Oh, of course it makes sense who he is.” That’s why he was so hard on me.
One of the things we talked about before this podcast is that I grew up in a nice neighborhood. I went to a nice school, but I was the poorest kid among all the rich kids. I had 5 pants and 5 shirts for the whole school year, and that was it. When I’d come home and complain, “Oh, my friend’s got Nikes,” or, “He’s got this nice shirt,” my dad would say, “I don’t give a shit. You want stuff? Go out there and work for it. Go out there and hustle.” That’s what pushed me to become a better version of myself.
I know you have this chip on your shoulder. I’d say you have a boulder on your shoulder. I don’t think it’s a chip; it’s a giant rock. I know Adam pushed you in your professional career. Did your dad push you at all? I know he’s skeptical of the internet and everything else, but is there something about your relationship where you can say some of your drive comes from him?
His impact kind of ended when I left his house, right? He set me off to go free. The most indirect influence was this: I couldn’t fail. There was no way I could ever move back into my parents’ house.
Richard Branson says, “The only thing worse than being poor is becoming rich and going poor again.” I’d moved out of my parents’ house, I was living in San Francisco, I was working for my brother, and then I was doing the startup. I was like, “There’s no fucking way I’m going to move back in with my parents,” right?
Remember, I dropped out of high school, so it’s not like I could’ve gone to any good college. I’m pretty much unhirable on paper, right? Who’s going to hire this high school dropout? The idea of going back to work for my brother would also have been an equal failure to me. I love my brother, and he gave me the tools I needed to succeed. Ultimately, I chipped my own stone and paved my own way. Those things all combined to help me become the best version of myself and really pushed me forward.
Where do you get this attention to detail from? Is that innate? Did somebody mentor you at AppLovin?
Yeah. There was this guy, Mark Rosner, and he was my mentor. Before we had a lawyer, he was our in-house counsel.
What was his position at AppLovin?
He was our CRO.
Okay.
How we got ahold of Mark was, at the time, he was the CEO of a company called Zedge, which did ringtones and wallpapers. He broke off on his own and had this blog called Applied Revenue, where he talked about ways to make more revenue on apps and within the mobile app ecosystem. I told Adam, “Hey, we want to work with Zedge, and this guy seems pretty intelligent. You should reach out to him.”
What started as a potential consulting arrangement turned into Mark coming in as our CRO. What was hilarious was that when Mark first met Adam, and they were sitting down, Adam put an NDA in front of him. Most people just sign the NDA, but Mark said, “Hey, can I get 15 minutes?” Adam stepped out of the room, and Mark went through the whole thing and marked it up. When Adam came back, he called me in, and Mark was like, “I can’t agree to this, I can’t agree to that, I can’t agree here.”
I pulled Adam to the side and whispered in his ear, “We can’t trust this guy. There’s no way we can work with this guy. What type of fucking human being is going to redline an NDA for a company they’re interviewing with? What are they going to do, share trade secrets?” Adam had a different perspective. He said, “This guy was diligent enough to take the time to redline the agreement and go over the details. This is somebody we want to work with.”
Mark came on board. We ended up hiring him, and initially we didn’t get along well at all. He was managing the supply side, and I was focused on the demand side. I brought in a ton of demand, and he was working with publishers. Over time, I ended up working on his team. I say “team” because it was only one person, so I ended up working under him. What wasn’t a great relationship turned into a great mentorship.
Mark saw this raw kid who had a ton of energy and skill, but it wasn’t honed in. He always pushed me to really dig into the details. When we did contracts, he made sure we were very specific about what we did. Going back to what I told you, we didn’t have in-house counsel, and Mark probably did over 200 agreements himself. We only got screwed on one of them. His hit record is incredible. When we hired our first lawyer and the lawyer started redlining agreements, Mark would redline our lawyer’s agreements.
The best Mark Rosner story—and, by the way, he’s going to hate that I’m bringing him up—is that Mark doesn’t hate anybody besides the one guy he lent 20 bucks to when he was in fifth grade. He still sees him to this day. You’re talking about a guy for whom every detail matters.
To go further into the story, at one point my grandmother had breast cancer, and I had to go to the hospital. There was a deal we’d been working on for months with a company just outside of LA. We were so happy we got the deal done. I was working on the agreement in the hospital, and I sent it out. They signed it, and I signed it.
Mark called me, and I was expecting him to say, “Oh, how is your grandmother doing?” Instead, he said, “Raph, you screwed up big time on this deal. There’s one point you’re off. Effectively, it was off by 1% or 2%.” I said, “Mark, are you kidding me? We spent months on this. I can’t go back to the client. I can’t have this conversation with them.” He said, “Do you want to be Michael Jordan or Tiger Woods?” Then he hung up.
We followed up with the client and renegotiated the deal. As you can imagine, the client was very irate. We got the deal done, and then Mark called me back and said, “Good job.” That was the type of guy who mentored me. That’s why I cared so much about every single detail: for him, it wasn’t good enough unless it was perfect.
Yeah, I think a very common trait among people whose North Star is excellence, and who get to the top of their profession, is that you’ll hear them say the same maxim over and over again: “How you do one thing is how you do everything.” There are no small details.
Yep. And The Score Takes Care of Itself, which is a book about Bill Walsh and the 49ers. When he took over the team, it was a losing team, and then it won 3 Super Bowls under his management. It was about every little detail: how they showed up to practice on time, how they answered the phones, how the locker rooms were. Everything was focused on every detail. All the actions you take are more important than focusing on the scoreboard, because if you do all the little things right, then the score will take care of itself.
That’s great advice Mark gave you. What’s the best advice you’ve ever received?
The best advice I ever received is to stay in the game. When it hurts, when you want to quit, that’s when you know you’re growing in your career. There have been many times in my career when I’ve wanted to throw in the towel. This advice came from my brother. I’d think, “I’ve already won. Why am I doing this? I don’t need to be working this hard.” And he’d say, “Sack up. Work your ass off. If you’re feeling this pain, that’s because you’re growing.” I think that was the best advice I ever got in my career.
I think it’s probably the best advice anybody could ever get: just stay in the game. It’s awesome.
Thank you.
Raph, this was awesome, man. I had high expectations for this conversation, and you exceeded them. I really appreciate you trusting me and actually letting me twist your arm and make you do the podcast. I hope we can run this back again in the future. Thanks.
Thanks, David.