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

Executive summary

AppLovin CEO and co-founder Adam Foroughi describes a strategy centered on long-term growth, measurable performance, lean teams, and aggressive adoption of AI. He argues that founders should prioritize winning over avoiding failure, that strong employees often need less formal management than companies assume, and that AI investments and organizational changes should be judged by business outcomes—not activity or headcount.

Business strategy and product

• Build around measurable advertiser results. AppLovin’s performance advertising model aims to generate more revenue for advertisers than they spend on the platform. Its recommendation models are evaluated through predictive accuracy, advertiser outcomes, and the company’s revenue growth.
• Treat recommendation systems as differentiated technology. Foroughi says a general-purpose large language model is not a substitute for a custom recommendation model designed to select content or ads. Companies building an interface on top of frontier models, by contrast, should establish a moat quickly.
• Grow through adjacent applications of the core capability.
  • Improve monetization of the gaming audience, which Foroughi described as more than one billion daily users.
  • Explore connected TV as a way to bring performance advertising to television, including for small and midsize businesses.
  • Consider engagement products or a social network as a potential way to develop modeling expertise and attract researchers—not as a requirement for growth.
• Sell incremental value, not just share-taking. Foroughi’s example: an advertiser spending $100,000 a day could add $20,000 on AppLovin and aim to increase revenue proportionally, rather than simply shift existing spend from another channel.

Operating and management playbooks

• Use “why” to remove organizational bloat. Re-examine processes, titles, and layers: Why does this process exist? Who is required to maintain it? Does it help the company deliver?
• Organize around doers and high output.
  • Keep teams lean and favor people who take ownership, learn independently, and get work done without needing extensive process.
  • Foroughi’s view is that strong performers are hard to retain in a culture surrounded by low performance and unnecessary bureaucracy.
  • AppLovin’s executive team, as described in the interview, included a CEO, CTO, CFO, and general counsel, without several common C-suite roles such as a CRO, COO, or CMO.
• Don’t assume layoffs automatically improve a culture. Cutting half a mediocre team can leave a smaller mediocre team. Foroughi says a company needs a clear picture of the high-efficiency organization it wants to build; in some cases, a deeper rebuild may be necessary.
• Manage for capability, not tenure in a role. AppLovin made a bet that AI would automate some work. Foroughi said the company was willing to part ways with people in roles it believed were becoming dead ends, while providing severance and expecting retained employees to adopt AI tools.
• Delegate once the team is strong. Foroughi described being too involved in product decisions early on, then allowing a colleague who became CTO to take over that work. His distinction: founders may need to take control back in bloated organizations, but should delegate to subject-matter experts once a capable team is in place.
• Keep management lightweight. Foroughi said he does not hold regular one-on-ones or formal reviews with his direct reports; he gives feedback in real time, often through chat. He believes strong employees tend to figure things out and need less handholding.
• Support self-directed learning. Rather than heavily structured onboarding and learning programs, the company relies on curious employees asking questions and finding answers. Written communication and recorded calls can also be searched or summarized with AI to help new employees learn how decisions are made.
• Use in-person time selectively. Most communication can be written or done by video, but in-person meetings remain valuable for building relationships with key clients. Record notes from those meetings so the learning is available to others.

AI adoption and productivity

• Measure AI by value delivered—not code volume or token consumption.
  • AppLovin’s engineers reportedly generated 80–90% of code with AI tools, but Foroughi cautioned that this percentage alone says little about quality or business value.
  • Teams should connect AI work to specific KPIs, such as model accuracy, advertiser results, and revenue.
  • The practical test is whether the value created covers the cost of the AI usage.
• Avoid token budgets and usage leaderboards as standalone goals. Foroughi argues they can reward low-value output, just as hiring quotas can encourage bloated organizations. Invest in AI when its use is tied to measurable outcomes.
• Adapt engineering roles. At AppLovin, engineers are expected to understand the product and business problem, use AI tools, and review code for quality and security. Foroughi expects product and engineering responsibilities to increasingly overlap, while still valuing engineers who can audit code and protect the codebase.
• Prepare for faster product development and security risks. AI may help identify vulnerabilities, but faster shipping can also increase the risk of bugs and breaches during the transition.

Metrics and targets mentioned

Figures below are as stated or estimated in the interview; some were presented approximately.

• Stock and compensation: AppLovin’s share price fell about 92% in 2022. At the low point, Foroughi sought performance-based compensation, with the first payout thresholds around $38–$40 per share and further milestones up to about $80. His reported 2023 compensation was $83 million.
• Business growth and profitability: Foroughi described growth following the launch of the Axon 2 model in April 2023 as near triple-digit in some periods. He cited roughly 70% year-over-year growth in the most recent quarter discussed and about 84% EBITDA margins.
• Team size and output: AppLovin had about 895 employees overall, with roughly 400 in the core advertising business. Foroughi said core-business EBITDA per employee was approaching or above $10 million.
• Organizational changes: The company reduced staffing by roughly 40–50% in most departments during the period discussed. Its HR organization reportedly went from around 70–80 people to about 15.
• Stock-based compensation: Foroughi said AppLovin issued roughly $300 million of stock annually. He described a policy in which the top 10–15% of employees received company equity, while others could choose to buy shares through employee programs or receive cash compensation.
• Advertising scale: He cited an advertising spend run rate of about $11 billion more than a year before the interview, and said the business had grown since then.
• Long-term planning: Foroughi recommends planning three to five years ahead and working backward, rather than judging a CEO primarily on the next quarter.

Capital allocation and public-company lessons

• Align executive incentives with long-term performance. Foroughi framed his compensation plan as a way to align his reward with a recovery in the company’s share price after the 2022 decline.
• Evaluate stock-based compensation as a real cost. He favors assessing cash flow after stock-based compensation, arguing that dilution or spending cash to offset dilution reduces the economic value of cash generation.
• Use buybacks only when the situation supports them. AppLovin’s 2022 buyback was designed to provide liquidity to existing sellers and reduce selling pressure after the stock collapse. Foroughi said the company worked directly with shareholders who wanted to sell rather than buying indiscriminately in the market. He estimated, based on the company’s later value, that roughly a third of its value—about $50 billion—was attributable to that buyback. He cautioned that this was an unusual case, not a general buyback playbook.
• Explain the business proactively. AppLovin had focused heavily on execution and, in Foroughi’s view, did too little to explain its business to investors and the market. Short-seller attacks pushed the company to communicate its model more clearly and make leadership more available.
• Treat going public as a financing decision, not a market-timing exercise. Foroughi’s lesson was to go public when the business has long-term growth prospects and can attract public investors, then focus on delivering returns over several years rather than predicting the next quarter.

Founder and leadership lessons

• Optimize for winning rather than avoiding loss. Foroughi believes fear of failure can lead founders to protect the downside instead of taking meaningful risks.
• Look beyond money as a motivator. He said the strongest employees are often driven by growth, learning, intellectual challenge, and winning; money may stop being motivating once someone reaches financial security.
• Expect the CEO role to be demanding and isolating. After recognizing that stress was damaging his health and presence with his children, Foroughi made changes including protecting short periods of fully present time with his family and taking up surfing as a way to disconnect.
• Stay confident while remaining alert. Foroughi said doubt about whether the business will endure is a continuing motivator, but conviction in a strategy and team helps a CEO lead through a downturn.
• Invest in the core business rather than angel investing. Foroughi said he no longer invests elsewhere. His reasoning: doing so can require selling shares, divert attention, and compound the opportunity cost of time that could go toward improving his own company.
• Mentorship is not a substitute for self-direction. Foroughi’s view is that the strongest employees ask questions, learn independently, and find a way to deliver; he therefore favors hiring curious, capable people over building extensive formal development structures.

Presenters and sources

• Adam Foroughi — Co-founder and CEO of AppLovin; interview guest.
• Harry Stebbings — Host of 20VC.