00:14:49 · Rafael Vivas, David Senra
[00:14:49] S1: State of the business is pre revenue. It was like an animal house. Adam had a bunch of engineers just working on different apps, they were just trying to find product market fit. Their next idea was to build AppLovin ad network. And for context on Adam as well is that Adam before had ran a very successful ad platform called Social Hour. That was an ad network on Facebook and then before that, he'd been doing advertising as well. So he was very, very familiar with the space and something that he mentioned in your last episode, he already saw a lot of user activity switching from PC to mobile. So it was kind of like he was the perfect person to tackle the space because he understood the problem. It was a wide open field. And then also me coming on board, I was able to connect us at that time to the right advertisers and publishers and the rest is history. [00:15:40] S0: He also told the story too where he tried to sell 25% of the company to VCs for a million dollars. Yep. He's like, you know, you can buy 25% of the company. We should back this. You guys got in really early in this trend where you just said this transition from desktop to mobile. Yep. And he was turned down because they thought they're like gaming and ads. Like, are terrible businesses. Yeah. They didn't understand that. And then a few years later, they go and fund a bunch of other competitors to you. And he said you guys made it a company principle to put those... To drive those other competitors out of business.
00:15:40 · David Senra, Rafael Vivas
[00:15:40] S0: He also told the story too where he tried to sell 25% of the company to VCs for a million dollars. Yep. He's like, you know, you can buy 25% of the company. We should back this. You guys got in really early in this trend where you just said this transition from desktop to mobile. Yep. And he was turned down because they thought they're like gaming and ads. Like, are terrible businesses. Yeah. They didn't understand that. And then a few years later, they go and fund a bunch of other competitors to you. And he said you guys made it a company principle to put those... To drive those other competitors out of business. [00:16:10] S1: So take a step back here. So there was actually plenty of other companies in the space that were very well funded. And they were backed by the top tier VCs at the time, so Benchmark, Sequoia, and so on. Some of them were very, very successful already. It felt like the market actually at the time was very mature. It was like, how are these? At the time, it was like this one kid that's doing sales and a few people in Palo Alto gonna succeed against these behemoths that already had a... At that time, it looked like a lot of the market. And also when Adam went to go try and raise his money, we were already profitable. It's funny because he was giving them a deal on a silver platter. Revenue traction, companies growing like crazy month over month, very profitable, you know, world class margins convert to everyone else in the space, and he still got turned down. [00:16:54] S0: Why do you think that is?
00:16:54 · David Senra, Rafael Vivas
[00:16:54] S0: Why do you think that is? [00:16:56] S1: I think what it came down to was that we have a very untraditional story and background. A lot of people that, you know, had raised money before, you know, they were doing these mobile game app, they were game publishers or they were part of these big corporate companies. And so on paper, they worked at Facebook or they worked at Google, they were on the AdMob team, which was one of the biggest ad platforms at the time. They worked for all these businesses. On paper, they looked great Versus us, we were performance marketers who... We always ran arbitrage businesses. We'd never run an ad network that had kind of seen its way to... It's like a very profitable ad set. So I I think that's really what it was. [00:17:35] S0: How do you start? Like, you guys are a smaller team, no funding, you're essentially bootstrap competing against already established players that have more money and have more people. So how do you guys start building company? How do you start winning?
00:17:49 · Rafael Vivas
[00:17:49] S1: What Adam understood better than anybody else in the space was that the tech is the most important part. Everyone else focused on sales. Right? So they had, you know, hundreds of advertisers and they had, you know, these premium publishers, but their algorithms were shit. A lot of these algorithms were people just, like, manually optimizing things in the background. Now 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. And that in itself allowed us to outcompete our competitors even though we didn't have as much demand and even though our publishers at that time weren't as high quality as some of the other ad platforms. And so when we would go and we'd actually see our monetization, let's say we'd go head to head with another ad platform, And a lot of times we would monetize at double the clip of somebody else. So the conversation of when I would walk into a room where I'd 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, they believed it was too good to be true actually, so they make us put it in writing. We had no issue doing that. I would really say it was like Adam's vision in going all in on the tech is what allowed us to succeed.
00:18:57 · David Senra
[00:18:57] S0: Okay. We were talking before we started recording. You're like, I think our brand is like too soft and it doesn't represent like the insane performance culture that we have inside the company. Okay. I wanna skip ahead... Way ahead in the story because this is... Spent a ton of time with you, spent a ton of time with Adam. And it does kind of remind me of like the Chicago Bulls being led by Jordan that you see in like the last dance. So just talk about like what it's like working inside of AppLovin.
00:19:21 · Rafael Vivas
[00:19:21] S1: AppLovin is a company where we're always on and our goal is to make sure that any dollar that is given to us, that we're driving a profitable return. And so the businesses that we partner with and we work with, we treat ourselves as an extension of their team. And that is really different than a lot of these other ad platforms where they look at it as they're just providing a service. So I'll give you an example. Like We've interviewed a lot of people from some of these bigger ad platforms and they try to come and get a job at AppLovin. And one of the questions I'll simply ask them is that, Hey, would you set up a campaign? Would you upload ads? Would you come up with creative ideas? And a lot of times like, Woah, I haven't done that. Why would you do that? And for us, we do all of these things. And this is a part of, like, our operational excellence is that it's... We feel like all of these little things, they all add up to delivering incredible returns for our advertisers. And so that I would say is one big thing that's different. We are so focused on performance. That is actually like the cornerstone of our company. So a lot of people may say to us, like customers, they love and hate us for it. Some customers say like, or well, I'd say a lot of customers would say, we're very competent, we're great, we deliver great results for them. But they would say like, you guys are pretty arrogant and aren't always the nicest people. But it's not that we're trying to be arrogant, it's that we just ultimately are trying to deliver the best returns for them. And so we are very opinionated on what they could be doing better and always pushing them versus other companies out there. They would say, well, whatever the customer wants, the customer is always right. It's like, if our goal is to deliver more customers profitably for you, then there is data that you can look at and there is right and wrong decisions. And for us, we're always trying to push towards the right decision.