Adam Foroughi, AppLovin CEO and Matt Stumpf CFO were interviewed by Matthew Cost from Morgan Stanley on December 11, 2024.
If you have any interest in AppLovin (and you should have an interest in this company if you follow this board) it’s highly likely that this interview will interest you. I’ll provide the SA transcript link below.
I find it very difficult to summarize the content. But possibly one of the most interesting points Adam made is that the AppLovin culture is vitally important to the success of the company. While it’s difficult to encapsulate what that means, I’ll provide some of the observations that are born from that culture.
Adam asserted that as founder he used to spend the majority of his time in direct involvement with the product. But, as the product has become increasingly sophisticated and complicated he found himself in the position of not really know what his most important contribution might be. After reflecting on it, he determined that the most important role he could assume was head of HR. The human resources of a company is where corporate culture lives.
Adam believes that AppLovin can continue to grow while reducing headcount as opposed to increasing the people in order to increase revenue. He is only interested in hiring A+ people, and there just aren’t a lot of unemployed A+ people in the job pool. AppLovin has introduced a cash flow per employee as a new financial metric. He believes that the numerator should go up while the denominator should go down over time.
Another interesting observation made by Adam was that he did not consider Google or Facebook to be competitors, rather he felt that AppLovin would “create its own economy” and be additive. He additionally observed that it was interesting that while CTV was disrupting linear TV, the advertising model was exactly the same on CTV as it is on linear TV.
I’m leaving a great deal out and providing a rather incomplete summary of the content. Let me urge you to read it for yourself. The link is just below.
Hi Brittlerock,
Thanks for suggesting this interview here. I watched SatyaNadella interviewed on BG2 today and he said advertising will need to change when AI Agents are making purchasing decisions and the AI CoPilots at MS are already doing that within the org. When consumer decisions are made with the use of Answer Engines that are replacing search, that’s when the Sea Change will happen.
I’ve been following all the posting here on Applovin and the company checks all my boxes, except of course Saul’s reluctance to invest in Add Tech - which admittedly he ignores on occasion. But, if Applovin is able to not only take advantage of scaling with AI, as suggested in this interview - ‘growing economies’. And if they manage there way through the upcoming Sea Change in Add Tech, as mentioned above, then I’ll wish I had added this one to my portfolio, no doubt. I think they may be able to manage the AI Agent making purchasing decisions better than existing platforms; but, Imma gonna need to look into that a bit more.
My best guess for there to be a consumer ‘AI Co-Pilot’ with a memory, working on a standardized harmonization layer, that would enable purchasing decisions, is not going to happen sooner than one year and likely greater than 3.
Given this and all my other criteria for Applovin to be in my portfolio having been met, I took a 3.8% position and I am likely to add more. I try to get into a new position in thirds.
Thanks again to everyone for all the work they’ve posted here and elsewhere!
Good summary so far, a couple new insights from the conference I had,
They described what it means for the e-commerce pilot to be “100% incremental”, previous if a mattress company was selling on Meta, they might find 1,000 customers and AppLovin’s solution is capable to bring in a completely separate extra 1,000 customers which have no overlap to the Meta customers. This means they aren’t taking business from Meta but are purely additive, so companies will be fine to run both campaigns
the vast majority of FCF is going to go back into share buybacks
will be able to get every single advertiser over time, just need patience for the product to sell itself
in the free to play games category they worked with indie studios first and didn’t even bother catering to large studios who want to be treated like a VIP, however eventually there became such a huge buzz around AppLovin in the FTP space that those companies don’t have a choice and adopted the product
the company is creating entire new economies and said the biggest companies create economies
