AppLovin CEO: Why Founders Shouldn't Angel Invest & Why the Best Don't Need Mentorship

The founder mentality has got to be chase winning.

In order for me to get paid anything, the stock had to clear that and then keep going up from there.

Almost in every relationship of my life, I was never really present.

That fear of blowup is one of my big motivators.

Yeah, I like it. I try to go unscripted, so I can't say I reviewed them, but it was a lot of questions.

I think you almost, if you've had success, you almost have to be inspired by winning. If you're fearful of losing or you have a fear of failure, I feel like you're almost certain to be stuck. You're not going to take shots that are material and you're going to protect downside more than go after upside. And I don't tend to believe that's really the founder mentality. If you took a risk once upon a time to start a business where there was nothing, you didn't even know what it was going to become and you knew the odds were 99.59% likely that you were going to fail, that in itself has to tell you the founder mentality's got to be chase winning. And so over the years I've taken motivation through winning. And I think it's also important to note that founders don't tend to be motivated by money as well if they're really successful. That's something that I like to ask in interview questions and I found the best people are motivated by personal growth, development, being inspired, finding things intellectually stimulating, winning, but it never tends to be money because money is a very, very tough thing to continuously be motivated by. Eventually you will reach a point where money is no longer a motivator and then you need to find something else. So, I've always pushed to win and I've always pushed to learn and grow and those are the things that really got me going.

There was a baseline that I needed to feel like family was good and I was fortunate enough to start a couple businesses before they were successful. So, I'd reached the baseline before I started this business. And I said those businesses, I really aspired to get a single. I just wanted to get enough money where I didn't have to stress about money. Once I co-founded this business with my team and we started getting going, I never really needed anything from this monetarily. And so the interesting piece there is when we were building up, we were growing really quickly. And in 2015, we got approached to sell the business for quite a lot of money in the hundreds of millions of dollars all cash. Had I not had the singles before, it might have been something that was very enticing to just cash out the whole thing at that point in time. But because I knew my bank account was sound, I wasn't in it for money. I was trying to build big and really I felt like this had to be the home run. I was able to think about the deal process there logically and understand that the business is growing really well. It's really sound. Why would we give it up on that upward trajectory? So, we were able to really play long and I think in large part that's because I didn't start this at all considering the money that I can make from it.

Yeah. So, to understand my comp in '23, you got to really look backwards in '22. We, when we went public, we went public in '21. In the first year, the stock went up to about $40 billion market cap. In 2022, we fell about 92% to a little bit under $4 billion market cap. I, for the life of the company, had only taken equity that was my founder stock and based on the money that I originally put in the company. So I'd taken no compensation. I was taking basically the bare minimum to have benefits. At the bottom in '22, I made a decision and that was for the first time to ask for compensation. And the reason I did that is because I felt like I'm public. Turning this company around is a big task. And I'd like to align myself with investors to say I'm going to get paid, but I'm only going to get paid if the stock recovers. So the thresholds of compensation that the comp committee on the board granted me were at a minimum the stock was $9. We had to get to the first threshold I think was about $38 to $40. And in order for me to get paid anything, the stock had to clear that and then keep going up from there for me to get any sort of compensation. And then there were I think five or six levels from there. So all the way up to a return to $80, which was our IPO price and I had a term to go achieve it. I feel like CEOs who are founders originally started a business taking really big risk. If the belief is that the CEO should then never get compensation ever again, it's completely flawed logic. You want to give people who chase really big upside by creating really big things the potential to continuously have that really big upside because it allows them to in a way just mentally stay motivated on what they're doing versus start drifting to other things. Because any founder, even at the low point, I was worth quite a bit of money on paper at least with my equity. I could have walked away and started something else. I've now had three successful businesses, so I believe I could have a fourth, but I really wanted to stay committed to the company and stay aligned with investors. I think the other thing that people miss is that the CEO's job in a company, especially one that's gone from small to very, very large, is an incredibly lonely, very stressful role. And if you talk to CEOs and founders, I know you do fairly often, these jobs are brutal. People these days are afraid to talk to me because I'm so busy. They perceive, even though I'm not. I'm the same person I was 10 years ago. They don't come up to me anymore. Or people inside the company or outside the company, if the stock is doing well, believe you're smarter than you are. And if the stock is doing poorly, believe you're going to be so stressed out you might jump off a building. Like it's, you don't understand the things that are going on in the CEO's mind when you really haven't done that role yourself. And very few people in the world have built a business from small to very, very large and eventually taken it public. So I say that to say it's a brutal job. It's lonely. It's stressful. You almost certainly are going to have distraction from personal life. I don't know many founders who have had that kind of success that have fantastic personal lives. Yet you end up distracted from your kids because you're always focused on work. It consumes you. And therefore to then say the CEO should take less pay is something that's quite unjust because it's not understanding of the role that the CEO has to absorb.

I would say at the low, low point in '22 I decided to make some changes because I did question the sacrifice I was making. There were two tolls that I saw that were being taken on my life. One was my health was decaying and I felt like if I'm this stressed out where I'm not sleeping, I'm drinking eight cups of coffee a day. I'm losing, I mean losing my hair, losing my fitness, just losing the things that allow me to focus. If I don't reverse that, I'm never going to be in a place to be mentally sound to run the business. And I felt like as a CEO of a public company, I'm committing for the next 10, 20 years. I need to be here a long time. To do that, I needed my health. So, I stopped what I was doing and reset that. The other piece was I felt like from my children, I drifted a little bit more distant because I wasn't paying attention to them. And I think any founder or anyone who works at a tech company that's always on knows this experience, if they have kids. You hang out with your kids, but your mind is elsewhere. Either that or you're on your phone. And so, you're never really present. And what I realized is like almost in every relationship in my life, I was never really present. And so, what I tried to do to change that is at least take small moments to feel like I was present. And so, small moments might be 10 minutes at a time because I'm not going to be able to sit down and have hours at a time. But if I gave myself 10 minutes at a time to hang out with one of my children or a couple of my children, I felt like, okay, now I'm actually committing to them to be 100% present. And that was a change. And the third change I made at the point in time was that I started introducing hobbies to myself. So for example, I started learning how to surf in the last year or two years. You have to put the phone down. You have to be completely disconnected. You get mental ease. And in the absence of these changes, I feel like I would have felt like I'm giving away a big part of my own ability to be stable and happy. And by getting that back, I became a better CEO of the business. I became someone who could be more thoughtful and who could be more long-term focused.

I mean like to fall 92% in a year you go down almost every single day of the year. So and I think most...

Yeah it's a lot. And then also like when you realize you fall 92% you got to go up 10x to get back to where you started. So it's like it is a bloodbath. A couple things like one is a lot of people think your psyche is tied to the stock and I mean beyond that when you talk to some executives who are at public companies they'll say they don't look at the stock price. It is, I can say I 100% look at the stock price. Like it is very, very hard to run a public company and say I'm just going to choose not to look at the stock price for a few days, week, whatever because you've got investors that care. You got your team that cares and it's a real-time ticker on what the world thinks of your business. The challenges there are when everyone is telling you that the stock is going down every single day, investors are not buying your shares. It's very easy to go, am I doing something wrong? Is the business [__]? Is something here that I don't understand that everyone else in the world is smarter than me on and understands? And so it can make you lose confidence and second guess yourself. In the face of that, I think what's important is if you believe in your business, maintaining conviction. And so we did a couple things and really that allowed us to turn the business around. As an advertising business, there's an advertising model that drives a lot of the success that we have on platform. Everything we do is on a performance basis. So advertisers plug in, they aim to get a certain amount of revenue that's more than the ad dollars that they spend on the platform. Now what delivers that equation for them is how potent our advertising model is. And these models are recommendation system models and that's one of the earlier forms of machine learning that existed and it's really gotten supercharged with what we see today in AI and the research advancements in LLMs. Well, in '22 at the very bottom we said we're on an older version of machine learning. We're going to completely throw out our technology, rebuild it, and go to what is really cutting edge and current in the field of recommendation systems. To do that was a big internal change. One, we had to slow down basically all research and development on the current system because we said we're going to throw it out. It's now outdated. It's not going to carry us forward where we got to go. We had to turn over some people. We had to take some of the people that had helped us get to that point, which again was a $30 billion IPO and up from there and then cratered. But a big business, we had to turn over some people who were committed to the old system and just say the old system's done. We're rebuilding to something new. And then we had to have conviction behind that bet and rally everyone at the company that this is the right thing to do and we're going to go execute on it and win. And so when you do that...

Yeah. Yeah. You almost like didn't get that, but you got looks like you should probably like go consult a therapist because it looks like you're going to kill yourself. And like I wasn't giving off those vibes because like at least I didn't think so. Because I've always had a belief that so long as we have conviction on a path and we've got a strategy that sounds right and we've got a motivated team behind it, we're good to go. And so I was able to voice confidence internally. In doing so, we were able to retain core team and the important people that we needed to go execute on this path forward. And that's really the challenge you get into when the stock falls that much. It's really, really hard to understand how can you retain people as people are working and seeing the exact same thing that we're talking about and they're probably and their families are probably going, is this company a piece of [__]? Why aren't investors buying the shares? Well, it's easy to get tricked into believing it is when it goes down 92%.

Yeah. I mean, look, I think it's the latter today because the former is still yet to take full effect at most companies. But a couple years ago, we grew, I've been growing really fast ever since we launched this Model Axon 2 in April of 2023 and the stock recovered. But I think it was in '24, '25, but mostly in '24 we had a year where we probably grew near triple digits but we ended up cutting the team's staff by 40-50% in most departments and the reason I did that then is a belief that if the role was going to get automated or that AI was not being adopted fast enough in those departments, it's time to let those people go and rebuild the organization as if we were building it knowing what technologies were available to us today. And...

Yeah.

Yeah. I mean it's like first of all like a lot of, one, you end up over time companies get bloated. So I said like what are the process-oriented organizations like what is created even in our company we run really lean. We've got a really high revenue per employee and EBITDA per employee but even at that time we'd gotten bloated over a decade plus and so I looked at first like what are the process-enabling parts of the organization so one was HR. HR as a function was necessary to have because you've got to be able to do things like hire people and fire people but our team had gotten bloated and there was a lot of process that the HR team was introducing in the organization. As a founder I still remember the days we were 10, 20, 50, 100 people and you didn't have that much process. You had one HR person per 1 to 200 people and things felt faster. So I wanted to get back to that point and so I went through and said what are the processes I don't like at the company? Let me just eliminate those. Then we can go through and say like who are the gatekeepers of those processes? You can remove those people and then you go to where are the areas that you're going to start seeing a lot more automation. So an example in our business is creative production. We felt like AI is going to get to the point where creatives are going to be automatically produced. You still need humans to innovate, but you can have less humans because a lot of the design work can be handed off. In engineering, your best engineers can use these tools to really accelerate themselves and your weaker engineers might not understand how to use these tools or might only get a 2x instead of a 10x or 100x increase in output. So...

So, your earlier question about winning ties in here is...

I don't play in fear of failure or fear of losing. And I also believe on my team across the board, our job for them has to be the right job for them at this moment and right defined by the best place to have personal development and growth. And if we believe that every single person has a good role, if we think that's no longer true, we should part ways, good severance, and make sure they're free to go do something else because I don't like to keep people in roles that are going towards a dead end. Now, it was a bet and a belief that these technologies were going to get good enough to automate these roles away, but we didn't want to take the risk that we were going to keep people in dead-end roles. That just creates morale hit that creates this organization that ends up optimizing to people who are just not happy. And we try to optimize to our best performers. Best performers, your A players want free reign to just go crush it. But they don't want to be distracted by unhappiness. They don't want to be distracted by people who are working at a role that is almost certainly going to get automated away. And so by taking it and saying build the culture as if we were building it today knowing what technologies are available to us, what would we look like? We just went to what we would look like and then that forcing function made us have to get to an automated place faster and it would have been a lot slower had we had people that were trying to fight adoption of the technologies because they were fearful it was going to lead to their job loss.

So our core business, so we bought a couple businesses. We have Adjust is an analytics company and World is a CTV business. So those two aren't integrated. They run their own business. So if I just went to the core business, our core advertising products are about 400 people. So call it some very, very high percentage of all the company's EBITDA comes from the core business. So if you then calculate the EBITDA per employee over 400, it's a really, really high number. I think it's reaching or over 10 million ahead now. And so the question on can you have a team full of A players? Not everyone can be an A player in a team. You need some roles that are just there to be processed and keep the lights on. Like we're a public company, so there's certain things that have to happen just because they have to happen. But like HR for example, that I touched on earlier, we went and took a pretty large HR organization, one that I think had 70-80 people on it and now might have 15. The people that we retained are your A players in HR. They're the doers who are individual contributors. They just get stuff done. They don't get bogged down in process. And so every organization we said, how do we slim down to the best people? And for us, the best people are defined by those that really want to come in and make a difference and learn and develop themselves, but not need process to get there. No management layer, no slowdown. It's just people who just want to get [__] done. And so that went through the entire organization where we leaned up to just those kinds of people. And then you start looking around the room and you've got great people everywhere. Then you enjoy working at that company. And so A players, what I've learned, can exist whether it is a back office role or an engineering role or a front lines revenue generating role, but A players won't exist in bulk if you have a bunch of B's, C's, and D's around them.

I mean, so long as I have all people who are doers who are really high output, I don't dislike any role because it fits our culture and every part of that comes together to build the business. But it's like as an example, if you look at our exec team, we have CEO, CTO, CFO, and general counsel. We don't have a CRO, we don't have a COO. Go down the list of other C levels that people might have. We don't have a CMO. We don't have a chief people officer. We don't have any of these roles.

None of these people.

No. What's the point?