Applovin IPO

I’ve worked in the mobile ad and gaming industry for the last 10 years and Applovin is one of those stories for the books. I saw the company grow up from the sidelines as a partner and competitor, and have nothing but great things to say about their leadership and success. It’s truly inspiring. One of the things that always inspired me about Adam: his indifference on others’ opinions when making tough decisions. I remember distinct discussions with him when Lion Studios was first formed, asking him if he’s worried if there will be a backlash from developers / customers on competing unfairly. His response: “we’ll see what happens.” It takes someone truly brave to do this, but he “felt” it was the right thing to do. Honestly, the outcome of that move was brilliant, especially in relation to Apple’s move on privacy; as networks have less access to user level data as a 3rd party, having owned content allows them to continue getting user level data with a distinct advantage over ad networks that don’t have that readily available anymore. This amount of foresight and bravery allows him to plan ahead and avoid a lot of pitfalls.

Starting off as a company that was very focused on the casino niche, optimizing the ad ecosystem there, and moving onto other genres and optimization techniques, I was honestly floored to witness the path he took to build things and eventually acquire content. Aside from knowing Adam in this way, I think Applovin has amassed an amazing technology wheel of content, distribution, and services. The one thing left in my mind: how do all these things come together practically and where is the next market for them to tackle? This, for me, is the hardest thing to wrap my head around. For example, investing in gaming companies to distribute their first party content through the AL distribution service makes for a ton of synergy, but games have a user lifecycle that doesn’t last forever - especially genres like hypercasual. The economics around the publishing and content creation business are murky and getting more competitive on a margin basis, so how can you maintain that wheel without eventually paying up for the new content? Unlike social networks like FB and Google who have inherent retention for users to come back, games require new content to get created from internal sources which economically are more prohibitive.

The AL team will need to figure out how to constantly find new content to publish and potentially pay up to publish good apps in a slowly contracting ecosystem. Big publishers are starting to get very competitive on developer deals for publishing, and to an extent, even some of the internal functions at Applovin compete on a technical level, lowering the barrier to entry for app developers who want to publish on their own. How do these opposing forces cooperate?

Needless to say, the financials honestly don’t really surprise me, and the moves for merging content and adtech are expected (written in previous posts). I knew they were already growing at a stellar rate as one of the best ad networks in the industry. Their gaming studios are likely also benefiting a massive amount from their internal distribution engine. The first party content data is also likely helping the ad network optimize performance for its advertising enterprise clients. Buying the Adjust attribution provider will also accelerate this (another brave move that is unusual and creates conflict with customers and service providing teams). However, if anyone invests in this company at IPO, the biggest reason to be bullish is simply that Adam will probably figure out any headwinds and issues.