Adam Foroughi

In 2022, with AppLovin's stock down roughly 92 percent from its peak, Adam Foroughi told his engineers to throw out the recommendation model the company had been built on and write a new one from scratch. He then spent billions of dollars of operating cash and borrowed money buying the company's own shares back from the investors who wanted out.¹

Foroughi is the co-founder and chief executive officer of AppLovin, an advertising technology company that helps mobile app developers, mostly game studios, find and acquire new users through automated, data-driven ad placement. Its core product is a machine-learning system that predicts which ad, shown to which person, is most likely to convert into a paying user. The company went public in 2021, and the recovery that followed the collapse carried it to a market capitalization in the hundreds of billions of dollars, one of the sharper turnaround stories in recent public-market history.

Background

Foroughi comes from an Iranian family that settled in Southern California, where his father ran a construction company. He grew up in Laguna Niguel, attended Aliso Niguel High School, and earned a bachelor's degree in economics from the University of California, Berkeley. After college he worked as a derivatives trader, an experience that shaped how he later thought about risk and valuation when financing AppLovin's stock buyback.¹

Getting started

Before AppLovin, Foroughi started two earlier marketing businesses, in 2005 and 2008, built around desktop and social-media advertising. Selling those and watching traffic shift from desktop to mobile gave him what he later called a data advantage, seeing ahead of most of the market where usage was migrating, and he moved to Palo Alto around 2010 convinced mobile would matter, without yet knowing what to build.

Not wanting to return to advertising's demanding brand clients, he tried two consumer apps, a dating app and a fashion app, that both failed quickly. A third attempt, an app-discovery and recommendation tool built in late 2011, also failed as a consumer product, but its recommendation algorithm performed far better than expected at predicting what a user would respond to. He and co-founders John Krystynak and Andrew Karam packaged that engine into a software development kit and launched it as an ad network in March 2012, which became AppLovin.

He pitched the idea to essentially every major venture capital firm that spring, seeking about $1 million for 25 percent of the company. All passed, reasoning that mobile gaming advertising was crowded and already contested by Google and Facebook; some later funded AppLovin's copycats.¹ Unable to raise institutional money, Foroughi bootstrapped the company through a personally funded LLC and then a late-2012 angel round structured as a convertible note, running it without venture capital or a formal board for seven years.

What he built

AppLovin's model treats advertising as a form of arbitrage: a game developer spends money to acquire a user, and AppLovin's system is built to make that developer confident the resulting in-app purchases will exceed what they paid. Because installs are priced on performance rather than impressions or clicks, developers scale spending until it stops being profitable, and AppLovin extends that ceiling with a more accurate model. The company has never built a traditional sales force.

To train a better model, AppLovin needed conversion data that advertisers shared with larger platforms like Google and Facebook but not with a smaller company. Foroughi's response was to acquire fourteen or fifteen mobile game studios over several years, starting with People Fun, feeding that data into the recommendation system, first called Axon. Once the model matured, AppLovin sold the studio portfolio to Tripledot, having used the acquisitions as a route to a data advantage rather than as a permanent gaming business.¹

AppLovin nearly took a different path in 2016, agreeing to sell roughly 70 percent of the company to Orient Hontai Capital, a partially state-owned Chinese fund, with plans to list in China. The deal could not clear U.S. national-security review, so Foroughi restructured it into a convertible note under 10 percent ownership plus a shareholder dividend; KKR then invested in 2018, giving the company its first board. AppLovin went public in April 2021 at roughly a $28 billion valuation, fell about 92 percent through 2022, then recovered after the April 2023 release of Axon 2, a rebuilt recommendation model, climbing into the hundreds of billions.

How he operates

At the bottom of the 2022 drawdown, Foroughi overhauled his own health after months of heavy caffeine use and sleeplessness, and simultaneously ordered engineers to rebuild the core recommendation model from scratch rather than patch it, even though this meant slowing near-term development and losing engineers attached to the old system. He also directed a large stock buyback, deploying billions in operating cash and debt to buy shares directly from known sellers on the cap table, a decision he says the board supported because the arithmetic, roughly five times cash flow, was straightforward.¹

Foroughi runs AppLovin with a four-person executive team, himself, a chief technology officer, a chief financial officer, and general counsel, no dedicated product organization, and personal sign-off on every hire. He has never hired anyone with an MBA, believing pedigree is a poor predictor of performance in a category that barely existed a decade earlier, and will promote an employee several levels at once if output warrants it.² He also says founders should not spend attention on outside angel investing, arguing every unit of his own attention belongs to AppLovin.³

Where things stand

As of the mid-2020s, Foroughi remains AppLovin's chief executive and a major shareholder, owning roughly 11 percent of the company. AppLovin generates billions in annual revenue with a lean employee base, and its market value has recovered many times over from its 2022 low, placing Foroughi among the wealthiest self-made technology founders in the United States.¹

Key facts

• Raised in Laguna Niguel, California, in an Iranian family, educated in economics at UC Berkeley, then worked as a derivatives trader.
• Co-founded AppLovin in 2011 to 2012 after two earlier marketing companies and two failed consumer apps, then had every major venture capital firm reject his 2012 fundraising pitch.
• Bootstrapped AppLovin for seven years with no institutional board until KKR invested in 2018, following a failed attempted sale to a Chinese state-linked fund.
• Took AppLovin public in 2021 at roughly a $28 billion valuation, watched the stock fall about 92 percent in 2022, then rebuilt the recommendation model and directed a multibillion-dollar targeted stock buyback.
• Acquired fourteen or fifteen mobile game studios largely for training data, then divested the studio business once that data advantage was captured.
• Requires personal approval for every hire, has never hired an employee with an MBA, and runs AppLovin with a four-person executive team and no product organization.