AppLovin beat better-funded ad rivals by prioritizing technology

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 16:13

   So, there was actually plenty of other companies in the space that were very well funded. And, you know, 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, you know, at the time, it was like this one kid doing sales and a few people in Palo Alto were going to succeed against these behemoths that already had a, at that time, it looked like a lot of the market.

2. 16:38

   And also, when Adam went to go try and raise this 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 compared to everyone else in the space, and he still got turned down. Why do you think that is? I think what it came down to was that we have a very untraditional story and background.

3. 17:03

   A lot of people that, you know, had raised money before, you know, they were doing these mobile game app platforms. They were game publishers or they were part of these big corporate companies. And so on paper, you know, 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. You know, they worked for all these businesses.

4. 17:22

   So on paper, they looked great versus us. We were performance marketers who, we always ran arbitrage businesses. ever run an ad network that had kind of seen its way to a very profitable exit. So I think that's really what it was. How do you start, like you guys are a smaller team, no funding, you're such a bootstrap, competing against already established players that have more money and have more people.

5. 17:46

   So how do you guys start building a company? How do you start winning? 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 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.

6. 18:08

   Now, we didn't have like 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, you know, kind of deciding what to serve. And that in itself allowed us to out-compete 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.

7. 18:29

   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, you know, double the clip of somebody else. So the conversation of when I would run into, when I'd 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, right?

8. 18:47

   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 and going all in on the tech is what allows us to succeed. 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.

9. 19:07

   Okay.