Adam Foroughi, AppLovin

23:17And so, I mean, I consider him little brother, like co-founder, person at the company who's made a huge difference. And when we started here, he ended up, he was the first business hire alongside this other guy at the time. Didn't he try to like hire you first? Yeah, he tried to hire me for some business he was working on and I laughed in his face. But he was how old? At that point in time. He was like 19, right? Yeah, he was 19. And then you tell him, I'm not working for you. Your business is shit. It's the story I've heard. And I spun it to like, I got a good opportunity for you. And he shut that down and came over.

23:50But he was great. He for the first six months, he lived in the office. And And we're in downtown Palo Alto. But that's not like a, that's not a figure of speech. He had a bunk bed. No, he actually lived in the office. He had a bunk bed in the office. I can't remember where he showered. I think we had a dingy shower. But one day someone tried to break into the office in the middle of the night. We caught him on video. It was hilarious. But I think that was it. He was like, all right, it's been six months. I got to get the hell out of here. But he was 24 hours a day. What his super skill is, is he strikes deals and does them better than almost anyone.

24:22And he can sit down with you and have a conversation today 15 years later, he'll remember every word in that conversation. I forget what I did yesterday. So as a counterparty to me, he was great. And so he ran our business development efforts, and he was really helpful in it. Now he runs marketing, growth marketing. That's why you guys ended up intersecting. But we ended up with like just this group of people that almost were outcasts from other places. Like one of the things that I always looked at for hiring were find people who have a chip on their shoulder. Someone who has a reason to push hard.

24:56And I had that myself. And then we can talk about that if you care. But that was always what drove me. I had a reason to be driven. And so I always looked for that in people. And you have this kid who's high school dropout, like anywhere else. He's not getting a job at Big Tech. But skills that smoke everyone else when it comes to selling, charisma through the roof. And so seeing that, I knew bring that person in, empower that person, and they're going to be hungry, and they're going to push, and they're going to push harder than others. And that was a formula we always had. And even today, like, so he goes from high school dropout to a billionaire today.

25:29Dude, I can call him at, like, 11 o 'clock at night on a Sunday, and he'll pick up. Like, he's still very, very hungry and pushing it. He still talks to advertisers who laugh and go, dude, you're asking me for an extra 5 ,000 bucks a day. You're a fucking billionaire. What are you doing? Yeah. Like, all of us are that way. I mean, but again, it comes back to you got to have a chip on your shoulder. There has to be a reason because it's easy to go, I have a lot of money. I'm not going to take that conversation. But that's not how any of us think. I was watching this new documentary on Rupert Murdoch and like the crazy shit that's going on in his family.

25:59It's on Netflix right now. And they said that he had a boulder on his shoulder. And he's been holding a grudge for like 45 years about these people that destroyed his dad's media company. And I was like, I don't even have any grudges, but I don't know if I can hold it for almost five decades. Yeah, sometimes you don't forget where you came from. I mean, mine was that my family was uprooted out of Iran. We ended up coming here when I was four. But my dad had one of the most successful real estate development companies in the country. So he was loaded, very successful back in the day. Thousands of people worked for him.

26:28And we got booted out of our country. And so growing up, I could just tell a big part of him was lost and he wasn't whole. And so I felt this obligation. And it didn't kick in for me until later. But I always felt this obligation that I got to do whatever I can to prove that I can have the utmost success because he gave everything up to bring us over. So that's never gone away. I still think to this day, one, this notion that like you can reach a point of success. Like, I don't know what that is, but it's a moving target. Nowhere near that moving target. And two, always got to be pressing. And so I always looked for people on the team that had some reason to have a grudge or a chip on their shoulder or something that would motivate them.

27:10if they didn't have that in life was really easy those were not people that I was going to introduce to the company yeah you strike me as a person that kind of wakes up maybe paranoid a little every day I feel like most successful people are I mean there is a long time and I don't know I don't know if I'm past this yet or not probably not I'd wake up every morning and go I gotta check stats are we going bankrupt today or are we still doing well it's like yeah it's certainly like at the scale we're operating at we're probably not going bankrupt but like you check to make sure like lights are still on, things are still working.

27:38And like I have, I wake up at the exact same time every day. I do the same exact morning routine every day. I check the same stats and it just gets me to go. This is a reoccurring theme on this show. Does anybody accuse you of being autistic? Sometimes. I mean, my wife will accuse me of that. But I think, you know, it's more popular these days. I don't know that I'm autistic, but. No, I don't think you are. Yeah, I can look people in the eye when I talk most of the time, but I. Although I didn't think Brian Armstrong from Coinbase was, and everybody that knows him is like sending me messages like, he's definitely autistic, but he's got a great personality.

28:12He's a great storyteller. Like, he's not the like super antisocial autistic. Yeah, I mean, if you knew me 25 years ago, I'd be deemed a lot more antisocial autistic than I am. I've learned, I think a lot of good founders can follow patterns and figure out how to do things. There was a point in time where I never would have sat in this chair across from you. I would have been too nervous. I'd be dripping sweat. But like my first interview out of college, I walked in with a suit and like I literally walked out. It looked like I got out of a rainstorm. So there was a point in my life where I was a lot different when having communication as a requirement.

28:45Now I know that it's just a requirement to do in the job. So I got to do it well. And so I think a lot of people, whether it's autism or like just figuring out how to functionally be appropriate on the things that are necessary to get forward. People who do well in these types of roles have to solve that. Deal is how the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade. And one thing they all have in common is they understand that recruiting and hiring the very best talent is your most important priority. A players recognize other A players, which is why top companies like Ramp, Shopify, 11 Labs, Uber, and DoorDash all use Deal.

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29:50With Deal enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories, and ideas to every corner of the world. Deal is trusted by over 40 ,000 companies and growing fast. Learn how they can help your business by going to deal.com forward slash Senra. That is deal.com forward slash Senra. So let's go back to the mistakes you thought you were making. Go back to 2015 before. So the not taking the big offer was a bonus for me because if we had a board of investors, I may have faced pressure to take the offer. And so being able to make my own call on that was like, okay, this is great.

30:30Like, I don't actually have that pressure. The downside was the second you say no and parts of your team know that you turn down that much money and they can run the math and go, I would have made this much. You end up with a lot of pressure to do something. So this was late 2015. And I used to be a finance background. I was a derivatives trader out of school. And so I understood multiples. I understood capital market arbitrage. And late 2015, what was going on in the markets was that you had China investors buying a lot of U.S. tech companies because the Chinese capital markets had just opened up.

31:08The market over there, their NASDAQ is A shares back then, was ripping. And so you have these investors coming in and saying, I'm going to deploy China capital into a U.S. company and then go list that U.S. company in China, make a big spread, call it a day. and so I went out to talk to some of these investors and ended up announcing I think it was some it was some point in 2016 I don't remember the exact date but I announced a private equity investment in the company a billion dollars over 1.4 billion dollar valuation so fast forward less than a year who's this uh investment coming from the Chinese company based and orient hontai capital was the name.

31:46And this was like a small team. I met four guys, really good guys, like we hung out in China, got along. So I liked them and they came in, they invested. What's the state of the business at the time they're investing? We're still growing a hundred percent year over year. I think at the time, part of the dollars were based on us doing 85 million of EBITDA in 2016. And so like deal structure was like, if you can knock this, if you beat this number, you get full value. Now, the structure of the deal was a little interesting. It was to clear out most of the cap table. My shares mostly would remain.

32:18Anyone else who wanted to roll could. And then we take the company public in China. Now, I don't speak, I speak five words in Mandarin. I wouldn't have been a great China public company CEO. They thought I'd be charismatic and appear well, but no communication, probably not a good idea. The other thing I didn't know, and this is where a board would have been helpful, is at the same time, President Trump had just been elected to his first term. And so this was actually fall to going in the winter of 2016. So President Trump had just been elected. Geopolitical climate was getting worse. China-US, there was a lot of suspicion around like, what are these Chinese companies doing buying all these US tech companies?

32:55I felt like it's just an arbitrage. It's like, whatever, people are trying to make money. Who cares? I didn't even know what a state-owned business was at the point in time. It turned out like, and we announced the deal. You still have to go through regulatory and we're doing a cross-border transaction. and the regulatory body that governs cross-border transactions is a committee called CFIUS. And so this committee exists to go, is there a national security threat with this foreign money coming into the U.S. to invest in a U.S. company? I don't even know what this was, but I announced this deal.

33:25People think you got rich. Everyone's congratulating you. And I'm like, OK, well, what do I have to do now? What's the next step? It turned out the next step was you got to go to D.C. and you got to convince this committee that's made up of like every government agency. There was NSA, CIA, FTC, DOJ, like everyone was in the room. Why? Is it just because it's China? Because it's China for one. And because at this point we're a large scale data platform. We're sitting on a lot of mobile devices. And I'm like, okay, what do we know about people? People like solitary games? Like who cares? But like I guess like the belief would be that if someone nefarious gets access to your technology, they could do worse things with the data than what we had access to.

34:05And so that was the general idea. But I marched into DC and I'm like, I don't know what I'm doing. I hire a law firm, no board, no one's guiding me. Everyone's just like, oh, billion dollars, get the cash, call it a day. On the other side, I got this Chinese investor who these four guys that I was working with seem like great guys. They get their billion dollars out of China. So I'm like, OK, you're doing your part. Like money's ready to go. But we walked into DC and it was just icy. It was cold. I mean, first of all, like, I'm a Persian CEO. And then at the time, CTO had just transitioned to be one of our first engineers, this Russian guy.

34:42So I'm like, this Persian guy and this Russian guy. Selling to a Chinese company. Selling to a Chinese company with like four Chinese investors. I'm like, this might not go well. And so the first meeting was like, the government agency stole it. It's like, get the Chinese people out of the room. Like, let's talk just to you guys. And so we go through this process. And I just realized like this took the better part of, I think it was over a full year, actually, of just going back and forth with DC, like trying to navigate this process with our lawyers. And it was just like, this is just not going to work.

35:15There's no way we're going to get over the finish line. And I don't want to be made an example of with trying to do a Chinese deal, getting blown up. What are the regulators specifically saying to you? Like, what are they voicing? What are their concerns that they're voicing? They don't voice concerns, but I'm pretty good at reading a room. And it's like when you give them a lot of information, you're talking about people playing solitaire. And on the other side, they're taking a bunch of notes and really asking you questions that have nothing to do with solitaire. You start realizing what the concern is, which is in the wrong hands as a platform that's as large as ours, it could become something that's risky.

35:50And so... But they'll never specifically say it. They won't specifically say that. That's what they're trying to assess it for. Now, we're selling 70%, right? This is a company that I've had full control over. And so you have this Chinese party that turned out to be a state-owned, partially state-owned private equity fund. Again, I didn't even know what that meant, but it turns out to be partially state-owned. And they're going to invest this money into us, and they're going to get 70 % control. So what could they do with that control? Whatever they want, too. I mean, it's very hard, right? Like, it's not like there are engineers on the front lines.

36:21but can they exert pressure on an American to then go against Americans' best interests? That becomes the concern, right? Like what can they do for that kind of money? These are things I had no, I wasn't aware of whatsoever. So again, I had no one to turn to. There's no one to talk to about this stuff. So not having a board, you're going through this and I'm like, okay, well, had I had a board, I wouldn't have made this mistake. I would have saved some time. And there would have been plenty of alternative means to get liquidity to the team. I just thought good valuation, good number, a billion dollars cash, and I still retain my own ownership and run the business forward.

36:54So we go forward and the business was doing really well. For this one year plus period, we couldn't issue options. Everything was frozen. We weren't really hiring people. Yet the business doubled together. We got to like, I think it was 2017. You're talking over well over a hundred million dollars. We cleared whatever numbers we told them. Everything's going well. If I had a board, they'd say, just rip up the deal. This is a mess. walk away. Your business is worth much more than the$1.4 billion valuation though. On the other hand, I've always felt like if anyone bets on me, especially as someone who's like, just always had a, you're not going to bet on me mentality.

37:29And I'm going to prove to you how wrong you are. I feel like if anyone bets on me, takes an investment in our business, got to be loyal the other way. And so these four guys bet on us, they made an investment and or thought they were making an investment. And so I didn't want to leave them hanging. I also didn't know what happens to a group of people from China that take a billion dollars offshore, and then the deal blows up. Like, what happens to the money? What happens to those people? So I didn't want to deal with any of that. And so I ended up finding a way to get them a deal that then we could unravel later.

37:59We ended up doing it so that instead of their billion dollars being an equity investment for 70 % where they would get control, which is what triggers this scrutiny, we ended up pivoting it to a billion dollar convertible note that if on conversion, we pay them back the money plus interest, they would get 10 % of the business. So under 10%, there's no control. And then they can come along for the ride. We did that deal. We dividend out a billion dollars to shareholders. Think of it as like a liquidity round pre IPO. I knew that like, okay, we're going to get the money in my team's hands. No one's selling their shares.

38:33But now I'm stuck with this massive convertible debt that I got to go unwrap. And so I called a few private equity funds. One of them was KKR. And that's what brought me to KKR as an investor in the business. Their partner, Harold Chen, and his team looked at the company. I think he would tell you, he got an email that came across his desk that said this goofy name company Apple 11 is looking to raise some private equity. My evaluation looks good. And he would have said like, just based on the name, I wouldn't have invested and ran for the other way. But his team rolled up their sleeves, they started looking and then Harold rolled up his sleeve and started looking and we all realized this is a good idea.

39:09Bring in traditional U.S. capital, get some debt, clear out the Chinese convertible debt, give them their ownership. Off we go. Clean cap table. And so we did that. I believe it was in the summer of 2018. And we had to build the first board that I'd ever been part of. We had myself, Eduardo Vivas, who's Raph's older brother, and then Harold Chen, this three-person board. Where are your co-founders at this time? Because AppLevin had, it was founded by three people, correct? Yeah. So one of my co-founders, this guy, John Krisenak, was in charge of technology. He's CTO or no? He was CTO originally.

39:42So he built a really good team. So I would say like a really good manager's job is build a really good team and eventually get replaced. And the first engineer that was the lead engineer at the time, this guy, Basil Shikin, just became so good that in 2016, we swapped him into the CTO role. And John then at that point was transitioning out. Out of the company completely? Yeah. And so like, I've always had this belief that like, a lot of people get complacent with the leaders that they have. And those leaders, if they're not at that moment as good for the role of someone underneath, that person underneath is going to leave and start a new business.

40:17So like you owe it to every single person and you owe it to your company to make sure the best person is in the right role at any given time. And actually this like fast forwarding to just last week, we just announced Basel is going to shift gears to a different role in the business. and one of the people that he'd hired who's built a whole bunch of our new technology and now runs the team is going to transition into CTO. So it's the same concept. So this always happens. Every role I've seen is, if we were complacent and said, you're a VP because you've been here 10 years, the person underneath who's been here two years, that's just much better and we're not getting into that VP role is going to leave.

40:51I don't want to lose the best talent. I want at any given moment, the best talent in the most important roles. And so we always do that trade. And if you don't do that trade, it's really depressing because you end up with these really long tenured people who who end up in all these really important seats but all your fresh blood is churning despite having more upside you could have given them room to grow and you could have transitioned and so we do that every chance we can get and then the other co-founder was a head of product type person and I think he transitioned out it was about three four years ago and really like what changed over time for both of them.

41:28And then like, I think just generally, like a lot of the people that were early at the business, when you go through this transitional period of like, private, fast growth, small team to, we're going to go public, we're going to be a bigger company, it changes what people the types of people that you may need for that next chapter. And so there was just transition on the team across the board, where we were constantly changing those like 50 100 % type company people who really wanted to hustle with no structure to people that could actually continue to hustle with less structure than what most public companies have, but more than a 50 % startup.

42:00You have a very, a lot of very interesting ideas on retention of talent, proving every single hire, what happens, like how you actually retain a culture of A players, because you have a couple hundred people. I think 98 % of your EBITDAs comes from like 400 people now, something like that. Yeah, that's right. So we'll get to that in one second, but I need to understand this. So go back, you almost, you almost sold the business for$600 million, right? Again, we're talking about a business. That is almost. You are$400 million off. I'm having discussions. I'm having discussions. So how much of the business did you sell to the Chinese then?

42:30Did I understand you sold them 10 % for a billion? So the way it worked, so actually like I sort of calculated to my ownership today. Okay. After the convertible note round, we diluted about 50 % to 55 % until today. So if I took, I owned about, I would say about 12 % of the company. I owned back then about 24%, 25%. So that dilution is all the dilution we've had between the convertible note, conversion to the Chinese, pay out the Chinese, convert them to 10 % equity, bring in KKR, eventually go public. There's nothing between the KKR and the IPO? Nothing else. So again, the IPO, if I recall, was about, I think we sold about like 7%, 8 % float, which is really low and probably a mistake in hindsight.

43:15Why? You want to sell more float. If anything, you need to float to lower volatility, even one of the more volatile companies. If you push up valuation to where you're round, and IPO is just like a Series D, Series E. For us, it was our Series B. But you end up doing the IPO, and we did$2 billion, I think, over$28 billion valuation. Too low a float makes you more volatile. And if the valuation is lower and you can do a 10 % to 15 % float, you end up attracting better investors who can end up being long-term with you. If you push the valuation where you can't fill a bigger round, you end up with more volatility and less blue chip investors.

43:53And you're signing up for just a much more volatile time in the public markets, which we saw. So after you do this deal with KKR, was there a chance that you were going to look for another acquirer? Or did you know, OK, the likely outcome here is we're going to IPO? No. Since then, I don't think I've had a single acquisition discussion with anyone. And by that point in time, I'd realized, well, first of all, we paid a billion dollar dividend, right? And so everyone was much wealthier than when they started Me Too. That's more money than I know what to do with. So we were past the point of worrying about liquidity, and we were much more in the mode of like, okay, let's run this long and see what we can do at that point.

44:31Is this when I'm reading the email where you're like, okay, I thought, I think six years in, maybe this could be a billion-dollar company. Now you're thinking, oh, it could be a$10 billion company. Yeah, so every level that we've gone up, I voice something aspirational, but I got to believe it to voice it. And so when we first, when we were ripping like 2012, 13, 14, I think I first said like, we're going to be a billion dollar company in 2014. When we did the Chinese round and we announced it, I didn't all hands where I said, look, like we're still growing super quickly. We just did a print over a billion dollar valuation.

45:03This is going to be a$10 billion business period. Like now we have to do the work to get there and we had a plan. And when we went public, there was some point in time, I mean, first, like we were down like 15 % that day one and I was like, buckle up. One, it's going to be volatile. Investors don't tend to like our story. Apparently I suck at selling it to investors. But beyond that, it was, look, this shit motivates me. Like, I love it when people tell us we suck. They tell us we suck, let's prove them wrong. The business is going to be much bigger. We got a plan to get to$100 billion. So I laid that out.

45:31You said that when? This was after we won IPO, stock dropped like 15%. I was trying to rally the troops, but I also believed it. I had a plan to grow the business now. So let's say the market cap's around what? 25 billion. So it's a 4X. So it sounds reasonable. When we went to under 4 billion, I was like, shit. Like 25X is a lot further away. Like people who are working on the business, we believe there's a path to a trillion dollar outcome. And we don't set time. It's just that this business can be as big as what you would need to be a trillion dollar business. And we actually just did a comp plan to some of the key people that is built on triggers to give them much bigger payouts.

46:07But the highest one is a trillion dollars. So at every moment in time, if I believe in a future plan and think that it could get to that big, I want to voice that to my team. Because I know that at least my past, they've seen that if I voice something big and I'm still working my butt off, they follow and eventually we'll get to a good place. In between the deal for KKR and IPO, there's what, three years? What's the time frame? So we closed the deal in 2018. Yeah, we went public in April 2021. So it was about three and a half. What does the business consist of at that point? It changed a lot. So when we first started, we grew really quickly and we cleared over$100 million.

46:44We had a very simple algorithm. And advertising business, the algorithm is key if you're doing performance ads. So our very early algorithm was if you play a solitaire and you play a poker game, people who play solitaire and poker also play these games. And it just pushed you games and you see game, game, game, game, game. Eventually download off a simple algorithm like that. What we realized as really machine learning technologies evolved and Facebook built this fantastic platform. Over the 2010s, once they got their mobile marketing platform out, they really did turn ads into content. What does turning ads into content mean to you?

47:18If you have a very powerful algorithm on showing users ads that are really good for them, the consumer is going to discover products that they want to buy through the ads. And when you can do that, you can show people an endless amount of ads. They don't care about the ads that they're seeing. They're not disruptive. They're actually something that they can engage with. And what I saw was, and I inferred, that their algorithm was way more potent than what we had at the time. And obviously the simple rules-based algorithm wasn't going to cut it. And so in 2018, we started realizing we've got to upgrade to machine learning capability.

47:55Other companies are doing it. Facebook's way ahead of us. In order to do that, we need data. And the data that we had were games that people were playing. The data that Facebook had, of course, they have the social graph, but they're pixeled on most of the websites in the world. Advertiser data is very, very important in predicting an advertiser relevant outcome. So by that, I mean, like if you're a consumer and you're on 40 different sites and you're browsing for different products and you buy four in the last year, that's a very good data set to predict what are you actually interested in. And if you don't have that visibility.

48:26Which Facebook has and you don't. Facebook had, we didn't. And so if we were going to go build a much more robust model, it's very hard to just do it with solitaire and poker data and whatever else other games we had in the system. We needed to advertise the data. Now, in this case for us, it was inside mobile games. What are you actually spending on? If we could get that data, we could train a model that was a lot more powerful than what we had. What you buy is very much predictive of what you'll buy next. And so that was critical for us to go get our hands on that data. we were unable to convince advertisers to share that data with us even though they were sharing it with Facebook and Google they would not share it with us we were just the small startup even though billion dollar company just this other company in the space that didn't have a need for the data because we didn't yet have the model so in order to solve that problem early on I went out and then we just kicked off buying some gaming studios so actually like the business from KKR investment to IPO ended up looking wildly different than an advertising business because we ended up with like 14, 15 different game studios across all categories of gaming that we ended up owning so that we can not only understand what the game developer needs from a marketing platform and a modernization platform, but also use their data inside our model.

49:36And so we bought the studios. We launched our first Axon One model. That Axon name is the name of our advertising model. The first one was more traditional machine learning, but huge upgrade over the first system. And revenue growth started happening really quickly once we brought that to market, but we couldn't do it without owning these studios ourselves and being able to feed data into the mobile train of them. How long from the idea of we were going to, essentially, like you're vertically integrating, right? And so now you're buying gaming studios. These gaming studios all own a bunch of different games, I assume, and they're producing.

50:07And so now you have the data of what people are doing inside the games, right? So the idea of like how long from the time you had that idea until you start buying your first gaming studio? We moved really quick. We have an idea and we just go. And so one of the nice things with KKR was they were actually supportive in this. It wasn't like, let's start analyzing like what it is we're doing. It's like, Adam's got an idea. Let's go behind him. And we just made this investment. So we got to believe he knows what he's doing. And so it was idea to first acquisition almost right away. It was, we have a studio to go by.

50:35It was a studio called PeopleFun. And then we were building up our own studio internally too. And then everyone was supportive because the logic was really, really sound. Now the fear and why a bigger board might've said, hey, we don't want to do this. is we're platform servicing gaming companies. And everything I've done in my career is be transparent all the time. Like your reputation and trust can break down at any moment if you violate trust on the other side of things. And so I'm a very transparent person and we end up in this space where we're servicing the gaming clients and we're now going, we're going to compete with you.

51:11And so in their mind, it was, okay, the ad platform is becoming now vertically integrated competitor. And the proof for this was Amazon does this all the time, Like, why wouldn't the distribution platform build their own brands? In our case, it was build the brands to get data. It's very hard if you're a client on the other side and you see this to believe that they've still got your best interests in mind. And so that would have been the reason you wouldn't choose to do something like this. You could make the case to them that what you actually wanted was not the economics of the game. You want the data because you still thought the advertising business was better than the gaming business.

51:44That was what ended up over time. So, like, the... Did you think it might have changed? There was a moment in time where a lot of people stopped trusting us in the space because our games were growing really quickly. We were feeding their data into our model. And so the early adopters of our Axon One platform were our own games. So then you start seeing our games growing. On the one hand, you had companies that go, you're competing with us who just chose not to work with us, said fine. That's not only logical, it's okay because we made this bet and we're going to live with it. And it's really good for our business potentially.

52:13On the other hand, you had smaller businesses, small to medium sized inside gaming. They just need any win they can get. And so we ended up with these companies that then said, okay, your own studios are sharing your model data. We're going to share your model data and help us grow our business. Yeah, because if I'm them, like I know your product works because you're using it to grow your own games. Yes and no, right? Like you go, that's great. But then if I feed you data, that's helping your own game. So am I fueling a competitor to become better? Oh, because you could just clone their game. That's what the concern would be, right?

52:42It's like you're using my data to effectively get into the space and compete with me. Now, you have to know who's on the other side of it. One other interesting data point about me is growing up, I played games. But as an adult, I hate games. I don't spend a minute playing games. So it wasn't like... Wait, you hate games? I mean, it just consumes time. It's addictive. Like for me, myself, I don't have the patience to get good at games. So therefore, I suck at games and I don't like sucking at things. So I don't play games. You talk to these game developers and what they had to really realize is like the company run through me can't be a game developer.

53:13I don't even care about the game content. I cared about the data and I cared about the distribution platform. So once they started realizing, okay, they're never going to be a good game developer. This is clearly a strategy. It's a means to an end. It started changing things. But it requires us. Who was telling them that story, though? I know a lot of the game developers in the space. A lot of us are now quite close. And over time, like over the last decade, a lot of us have grown up in this industry together. So we've become close. So it just required a dinner, a lunch, sit down, ask me whatever question you want.

53:41I'll say in hindsight, the mistake I made is I'm very transparent when I sit down with people and they start asking me questions. But I didn't convey to the community of game developers directly and explicitly, we're getting in a gaming business and here's why. And so people started finding out on their own and then thinking there was some malicious intent when there never was. But then once they sat down with me, it was like, OK, now we can overcome that and get down to business. How are we going to grow your business? And so as a company, we've always had a belief that if our clients are improving their business, we're whole, we're good to go.

54:14I mean, the gaming, the mobile gaming space, there's very little VC funding. A lot of these companies are bootstrap businesses. The founders are the key people. The founders are the marketers. Most of the companies we work with, they're not even in the States. They're in Europe and Asia. And so these types of businesses, they need partners that are there to help them. And for a moment's time, because I was not proactive in talking about what is our strategy, I broke trust down. Then we got back together, sat down with the companies in the space. And trust comes back really quickly when you realize it's a communication error, not a desire to deceive.

54:48We ended up going forward. And all of these companies over from when we launched Axon One model in 2020 to today, they all work with us in much, much bigger scale. And our platforms become the dominant one in gaming. We're probably, I don't know how big, but maybe even almost over 50 % of the marketing dollars in the space go back to our platform because the developers on the other side are seeing the best returns that they've ever seen in their existence on the dollars that they're spending on our platform. So their businesses are growing really healthy rates. It's been powered by this desire from us to build this technology the way we did and interest from them to trust us as the platform to do right by them.

55:32And that evolved over the last few years, but it's gotten to a really great place. So you sold off the gaming studios? Aligned with the fact that we were never going to be good at gaming. We got to a place where the business had grown so much that every advertiser in mobile gaming was now starting to connect into our models and work with us the right way. Once we got to that point, we realized we don't need these studios. Headache, it's a distraction. As you said, our core team on advertising is only 400 people. Well, to run studios is a huge lift. You need a lot of headcount. There were 1 ,500 plus people on those businesses, and it was distributed over the world.

56:04So we got to a place where we said, we just can't manage this. It's not in our DNA. We don't know what's going on. We're not paying attention to it. And we ended up selling it off to this company whose founder I've known a very long time. It's a great guy. this company Triple Dot out of the UK. They bought the whole thing. And that was important to us. We didn't want to go through and say, we own 15 studios. We're going to sell off one at a time just to make a profit. So instead, we just priced it down enough to make it enticing to a company like Triple Dot to just take the whole thing off our hands.

56:34And we did that, I believe it was about a year ago. So how many years did you have to own these gaming studios? From beginning to end, I want to say five years, roughly. Adam is one of the most focused and intense founders I've ever met. As you're seeing during this conversation, Adam is driven to build a great product that serves his customers, relentlessly improve that product over time, and win. And that is exactly what Adam and his team has done with their advertising platform, Axon. Axon connects you to over a billion potential new customers in mobile games. Axon allows you to capture undivided attention.

57:07Axon's ads are full screen videos that are watched for an average of 35 seconds, retention that blows other ad platforms out of the water. You can launch on Axon in minutes. you set the goal and Axon achieves it. No complex setup, no expertise needed. And Axon scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, scaled to hundreds of thousands of dollars to spend per day, and increased their revenue by millions. So you want to get started quickly before all of your competitors are on Axon. And you can do that by going to axon.ai forward slash Senra.

57:41That is That's axon.ai forward slash Senra. You have to have one of the craziest like employee to market cap ratios. So how are you able to run$150 billion company that's making what a couple billion a year in cash flow? More than that now, quite a bit. Yeah, I mean, run rate wise, I think Q1 we made or I guess Q4, what we just announced in Q1 was, I think it was 1.3 billion in cash just in a single quarter. Okay, so$5 billion or a little bit more per year with 350 to 400 employees in the main business. Yeah. How are you able to do that? A couple things happened. When we tanked in 2022. Why'd you tank in 2022?

58:26This is when the stock collapsed 92%. Okay, because you went public in 21. 21, stock collapses in 22. That's when we ended up under$4 billion markup. A couple things. One is I needed to make sure I retained my team. but by team, I don't mean like everyone on the team. There's certain people that are just doing functions and are replaceable. There's certain people that are critical to a business and like you really need them in with you for the long haul. And so what I realized was when building a business, you feel like everyone should be a shareholder. I was like one of those, the founders that was like, you're the janitor and you should get shares in my business.

59:02When we went public and we faced this volatility, we started hearing from, or at least I started hearing from a lot of people like, Like, man, we're way down on our equity this year. Our comp is way lower. Are you going to true us up? Are you going to give us stock on the other side? And super frustrating for me because you think about the trade on the other end of it. Well, when the stock goes up, are you going to give your shares back to me? Like, you're not going to do that, right? You're going to be happy and you're going to get overpaid. And so we had these four-year grants that we distributed to everyone on the team.

59:31And what I realized was it's unfair for me to judge because some people just need compensation. if you're getting paid$150 ,000 a year and 50 ,000 of it was an equity that goes down by 90%, now you're at$105 ,000 a year, you might not be able to pay your bills. Like you really depended on that equity. On the other hand, if you're a critical engineer and you're paid a million dollars a year and your$600 ,000 of stock-based compensation goes down to a hundred grand, still getting paid 500K a year. Like, okay, there's enough money to make ends meet and to ride out the volatility. And so what we did at the low point for the team was go, So some people were just going to put on cash compensation.

1:00:09Everybody at the company can buy shares in the business, but we don't need to force that decision for people that have lower total compensation. So they can just go cash compensation. We then said, who are the people that are like critical to the business? Your key engineers, your key product people. Again, we don't want to do brand advertising whatsoever. So like this wasn't mostly the business people or sales team because we don't even have much of that. This was core product and engineering. If they build a really good product, they build a really good model, we're going to be able to scale the business.

1:00:36And so we took it down to a little over 100 people that we give equity to in the business. And why this was important was it forced me to go, who are the people that matter? Like, who am I really in this with for the long term? And we had more people at that point in time. We really slimmed down the business to this core group of people and the support around them. but it was important for me to get it to that point because to your point of having eight players eight players don't like to work with bcs d's i mean d's you're you're you're gonna just burn your a's out but like anything that's worse than an a player on the team and you're distracting your best for working with those types of people and like trying to bring them up to speed it is a huge loss because eventually you end up churning out your a's so i had to not only understand who are the key people i had to go through this period of time where in 23 either i think it was about 23 or 24, even though the business was ripping, we were firing a ton of people.

1:01:33We let go of about 40 % of the team. I think it was 24. The business grew nearly 100 % year over year, and we fired about 40 % of the team because I wanted to distill it down to these eight players. I wanted to get it to a place where fresh blood, key people, key roles, they're getting equity. They've got a lot of upside support around them, and then we're lean and mean organization. So wait, go into more of this thing in because it sounds like it's going over several years from 22 to 23 to 24 we're only talking about the ads business we're not talking about gaming studios we're not talking about the other uh you own like a sass company that i think has yeah not talking about let's just focus on this so now you're you know 350 to 400 of them today what were you back then uh so we're more yeah i'd say probably close to double that and so this guy giobani who just started as cto he joined And he joined in November 22, and he's responsible for him and Basel, the CTO I talked about.

1:02:29They basically together worked on the Axon 2 model, really Giovanni led it, and then built out the team and he runs the team. Now, the reason I raised his name is he came in and he started asking me interesting but difficult questions. Questions like, why do we have this person? Why do we have this team? Why do we have like these processes? And as a business, you sort of go, when I first started, I didn't want any process. I have almost a no-meanings rule. Like, I wanted everything to be as highly efficient as possible. But over a decade plus, you inherit some process. You go public, you're told you need these processes, you need these people.

1:03:02Well, you got someone in who's fresh blood, who's really hungry, insanely high IQ person. I mean, one of the smartest people I've ever met, much smarter than I am. And he's grilling me with this question every day. Like, why is this person in this role? Why is this person here? Like, how come this person is a VP to this person and the person underneath that person is much better than the VP? So I kept getting these questions. I was like, either I'm going to have to address these questions or I'm going to risk losing talent like this person or the other people that are talented like it. In doing that, we ended up going, I changed my philosophy to culture and how a company is structured.

1:03:37You start a business, you have culture, you have cultural values and like you hope those hold true forever. Well, the world's changing really quickly and the world of technology is changing and companies are evolving. If you just consider it static, where your culture from day one is going to hold true over time, I think it's a mistake. So what we did is I took his questions to heart and said, at every moment in time, we've got to rethink our culture for what the world has today. And you started having LMs at that point in time, and a lot of automation was coming. And we also had a business where we had these key contributors that are killers.

1:04:12And then we had support around them, but we had a lot of bloat and process. Even we did it despite the low headcount to revenue because of 10 plus years of operating and just the way it was. And so I re-challenged it and said, if I was starting the business today, what would I start it with? What is it going to look like? What is going to be automated away in a year or two years? How am I going to get Giovanni to stop asking me why and just be excited about his role? Because everywhere he looks, there's a super capable person around. And so I went in and just said, we're going to kick off a whole bunch of cuts all over the board.

1:04:42And we're going to do it in this hope of getting leaner, but more importantly, keeping eight people from getting contaminated so that those eight people can be retained, feel like the organization is theirs. And we ended up turning over a lot of tenured people that were here for a long time. We ended up turning over people whose roles I felt like were eventually going to get automated by LLMs. And if we felt that way about their role, I wasn't going to keep them in a dead job. I want people to go and do whatever is best for them. And usually professional and personal growth leads into what's best for them.

1:05:15And if we didn't have that, we were going to move on from it. And so we just leaned everything up and it ended up working really well for us. That's excellent. Do you think there's a certain size, like a limit to how many, if you want to, if you're running a company, you want a team of all A players. Yeah. Do you think there's an upper bound to how many employees you could have? You have two types of employees. You need some support functions, right? Like end of the day as a public company, like not everyone can be like an A player because they're not in roles to innovate. So let's say there's some people that are just doing roles to keep the lights on.

1:05:45That's just a requirement. So set that aside. Then you've got like your core people, especially product and engineering. We expect our engineers to be product people. So we don't have much of a product org. So let's call it core engineering. We expect them to be A people. Now to have a team of A players, you've got to be able to recognize A players. So I know that Giovanni he's an A-plus player. I know that he has no tolerance for anything that's not an A-player. So he goes and he's very quick to go, you're either cutting it or you're not on my team, but you got to be at this level or you're out.

1:06:15And so putting people in these leadership roles that require that level of talent allows me to have confidence that because they're impatient, they're not going to enable talent that's not qualified in these key roles. And so you're always turning over people that don't meet your need and you're going as lean as possible. Now, Now, when you have an A player, you don't want to cut those people. Those people are super powerful, especially as we go forward. And you're going to need lean teams that know how to use AI. Your best people know how to use AI better than your mediocre people. And it's not by some sort of linear function.

1:06:46It's much greater than that. And so our team is constructed to have leaders who are A players or A plus players who can see the A players underneath and who have no patience for anything that's not and are very willing to fire on site. If they feel like you're not cutting it, this role is not one that you're passionate about. And most of our people, because we're lean, are very smart. But sometimes being smart is not enough. You've got to be really into building what we want to build. And you're not cut out for it. You get a really good severance and you go off along your way. So this leads me to another thing that I find remarkable about you, that even to this day, if anybody wants to hire anybody in the company, they have to get an approval directly from you.

1:07:25So this was a funny one. And the reason this came up is there's a period of time we went through turnover in HR and I took over the HR organization. And I saw that same period before we did the cuts, we'd become bloated. And I was like, why is the headcount so high? Why does it keep going up? Well, it turned out every time we let someone go or someone quit, there was automatically just a new job placement that went up. It was a job placement as a quote unquote backfill. So I had a role. This role disappears. I'm going to automatically rehire, which means there's no way your headcount can go down.

1:07:54and your headcount's only going up because you're still inevitably hiring other roles too. Now, what bugged me about that was we had hundreds of job postings and in order to hire and train and get value out of a new employee, you're talking about six to 12 month process. What happens in the period of time when that person quits and you don't have that person? Why do you need a backfill if you can survive without that person, without anyone in that role for some period of time? You probably don't, but it feels better to say, I want the head. And so I took it over and I said, look, convince me that you need the person.

1:08:26So we went from somewhere in the neighborhood of hundreds of new hires that were doing a year, or at least attempting to do a year, to in the tens, because people were so spooked about trying to convince me that they need the role, they wouldn't come to me. And like, now it's like, if they come to me, I know that they're desperate. It's, everything's going to break down around me. People are working so much that they're, they really need this extra hire. Okay, go make it. I really think what's remarkable about you is you just took this insight that everybody agrees on, right? That the value of your company is just the talent, the level of talent that you have, your employees, your team, you only want to work with A players.

1:09:02There is some kind of upper bound to it. I remember the reason I asked you the question earlier is because like Steve Jobs said that he had only ever seen one company in his entire history and his entire experience that was all full of A players. He says it was Pixar. He said, but they had 400 employees. And at the time, Apple had like 3 ,000. So he says, of course, I have 3 ,000 employees. They can't all be A players. But what's remarkable is everybody agrees on it, but no one actually does the difficult job of like making sure that you don't alienate these A players and essentially surrounding them with Bs and Cs and other less talented people because you jump to the right conclusion.

1:09:36They're going to lead. And in many cases, they'll just go start their own company. Yeah, the challenge, I mean, like you see it in the software world today, the challenge that a lot of companies have now is bloated workforce and the talent's mostly mediocre. So what's the solution? You can't just fire people. If you fire half the people and everyone was not an A player, you're just left with half mediocre. And so what do you actually do? Where we were lucky is that I've always felt I'm a cheerleader for the folks on the team. And like for a long time, I was making a lot of the decisions on the team and I ran product and I was hands on.

1:10:06But I still try to direct people and surround myself with people smarter than me. And I always felt like pretty reasonable IQ. I'm not exceptionally high IQ. I just see really, I see patterns and problems really well. And I can typically like understand what that problem is and try to propose a solution and move forward. And if I'm wrong, I can pivot quickly and get to a good answer. And so maybe that was the skill that I had. But paired with that, I was always humble enough to know that when you hire, you always want to upgrade yourself. You want to hire better than yourself. It's something that you're not as good at.

1:10:37Like the Raph discussion earlier where he's exceptional at BD. Well, I don't remember the conversations I had a day ago, five days ago, five years ago. So I needed someone like that exceptional talent and a function could upgrade me. And so I can go, he's much better than me at that. And so what's important in that is that I took the humble approach to upgrade at every level and then be the cheerleader for these people and give them whatever they need to succeed. And that hasn't changed since we started the business. And I think it's very challenging to maintain that because a lot of times when you're building a business, you start hiring these executives.

1:11:11and these executives come in and they're trained to hire Empire Build and they build up these teams. And all of a sudden, train leaves the station. You had this core group of eight people and all of a sudden you surrounded them with these professional managers and workforce gets bloated and those really good people that you used to love working with, they get disillusioned, they churn out and where you're left with is a miserable place. That function has held true a lot of businesses. And because I was so controlling and hands-on, I never let it happen. To this day, we don't have a CRO. We're an ads business.

1:11:42I mean, anywhere you look advertising business, who doesn't have a CRO? We don't have a CRO. We don't have a COO. We have today the C-suite is myself, the CFO, the CTO, and we have a general counsel. That's it. And so you look at the structure of the business. I made sure that we didn't alienate a people when we found them. And I made sure that they had a perfect environment to grow, develop, and contribute so that they feel good. And if you give them a place to feel good and take ownership and learn as they go, really smart people love working with really smart people. So we've now spent many hours talking about the way you think about building your business.

1:12:19The way I would describe it, if I had to like distill it down to just a handful of words, I would say it's like ruthless efficiency and like hyper competence. Is this in response? Because it's not common, especially in the startup VC world where it's just like they just throw money at everything. They have thousands of people or over hire and everything else. Is your like ruthless efficiency and hyper-confidence in response to something? Or is this just how you've always been? Maybe we got lucky in the VCs telling us no. Because when VCs tell you yes, they want to put more money to work. So it's always like you took your round, use a round, hire more people, get to the next level.

1:12:53Don't worry about making money. When we started, I mean, we worry about making money. I don't want to put more money into the business. I had made enough not to worry about money, but I didn't make that much. And so we wanted to be profitable. And then once we started getting profitable, what I realized is one of the most important things when I hire and work with someone is I want them to believe that at any given time, they're in the best role for them anywhere on the planet. And so I define best role as massive growth opportunity, professionally and personally. I think really good jobs where people become passionate and love their work, give them an ability to grow.

1:13:26If you take that away, then they should leave. And a lot of times people get complacent and stick around, but in theory, you should just force them out. And so what that means is to give very smart people room to grow, you've got to maintain lean and efficient. If you don't, those smart people get bogged down with process with other people. And I've also found a common characteristic of really smart people is they don't want to deal with other people. They just want to get shit done. And if in the middle of them getting stuff done, they're stuck with dealing with other people, they're going to eventually get burned out.

1:13:58And so because of this pattern recognition, where I knew what would retain this type of talent, I never wanted to waver from the belief that we got to give very smart people plenty of room to own and operate however they want, which is in their own world, highly efficient, limited on process. And that kept us laying. I'm curious what happened to your better funded competitors that started either around the same time or after years. The reason I ask, because I talked to Michael Dell about this. You know, there's a million people doing what he was trying to do. And in many cases, they were doing it in the same city that he was trying to do.

1:14:32All better funded than him. Some had raised, you know, I think over$100 million. He smoked every single one of them. What happened to these competitors that you mentioned earlier? I mean, we're in a big market. So a couple are, one of them is public today. A couple more will eventually be public. But no one's even remotely close to the scale that we operate at. And the private ones, like I said, the ones of the VCs that funded either sold for very little or are gone. and very common would be raise money, hire a bunch of people. And along the way, I've always gotten the, you have a huge opportunity, you're doing really well.

1:15:03Why aren't you hiring people? We have big business opportunity in front of us right now. As we go forward, we're really expanding the platform that we operate in outside of gaming to service companies of any kind to come advertise on our platform. Well, most people look at that and go naturally, why aren't you hiring a sales force? Why aren't you hiring a CRO? Why aren't you hitting it hard? And because the reason I don't is that now with AI tools, one person who's really good can be as powerful as 10, 20, 50, 100 people. And so why would I go hire in advance of that versus go find those single individuals who can be really good, who understand how to deploy agents to tackle jobs that many people would have done before?

1:15:41And so I've stuck to this view with high conviction because I've seen companies do exactly that, hire into opportunity, dilute their IQ, and then you're stuck with a mess. and how do you unravel a mess? If you lose those eight people, there's no way to do it. You're just host. You know if your Axon model is good or not immediately, right? Because you're like, essentially you're in the business of selling revenue, I think is the way you put it, right? So explain when you knew it was working the way it is now and what was happening before, like what was the model before that? Yeah, I mean, so where we are today is, and this is where we wanted to get to, which is the product has to be good enough to sell itself.

1:16:20Otherwise, if we're begging for business, We don't have a good advertising solution that's scalable. We don't have the salespeople to go beg for business. And so what does that mean? Well, if you're a game developer today and you plug into our platform, you're going to spend$1 ,000. You're going to know with certainty you made more than$1 ,000 on that spend. You may have a business model that says, I want to break even on that$1 ,000 in a year. And by year five, I know I'm going to make$5 ,000. And so you put the$1 ,000 in, you get$1 ,000 back in a year. And year five, you're at$5 ,000. You may have a shorter cycle.

1:16:50You might break even on the thousand and 30 days. And then by six months out, you made two,$3 ,000. Whatever your business model allows, you're going to be able to price into our system and generate more money from the dollar spent than what you put into the system. Now, what's important about that approach is that they become an arbitrager. The only constraint on them scaling in our system is the money that they have in their bank account. Because if you tell someone you're certain to make more money than what you put in, you're going to know it. our reporting is going to tell you. Otherwise, you're not going to scale.

1:17:22They'll put as much as they have in their bank account, and we will drive as much scale as we can before that arbitrage breaks down. When we took the e-commerce business to the market, and e-commerce is us accessing a billion plus people playing games, but instead of just showing them game ads, we now show them e-commerce ads. This category started growing really quickly too. We took the exact same approach. Give them revenue for the dollars that they spend, make it measurable, make sure that they know they're making money, they're going to scale. And if you do that, and what I call performance marketing is that make the advertiser and arbitrage.

1:17:56Very few people define performance marketing as that and very few companies have executed. Facebook's done a fantastic job of it. Google part of their business says this, this is entirely what we're focused on. If they're making money, they're going to spend. And so the models themselves, when we go and create different iterations of the models, we're not a, we're not in a large language model. So there's no consumer interface. We don't need to go, this is Axon 2, 2, 1, 2, 2, 2, 3. But every time our research scientists go and improve the model, the goal is, can you drive more spend to the advertiser at their return on ad spend goals?

1:18:29So are they making more revenue? And are they getting more reach? If a large language model gets more accurate, you prompt it, you're going to get a better output. And so and obviously, the use cases go up. If we get more accurate, the prompt effectively is advertiser has all the budget and has these goals. And can we deliver more accuracy for them? Can we get them more scale? Can we get them more spend? So we're constantly doing iterations on our work and doing tasks in our experiment framework to try to extract more value. More value is get the advertiser wealthier. They get wealthier, we get wealthier.

1:19:03I remember seeing a graph, this like inflection point. The business itself inflected big time in, I think it was April, 2023, when we rolled out Axon 2. The Axon 1 model, I mean, the first version, like I told you, was just a rules-based system. Axon 1 was more traditional machine learning. Axon 2 was a deep learning model. Much more complex, much higher ability to create these predictions of value for advertisers. So it went from the point of like, no ability to do what this value proposition was that I had in my mind, which is turn the advertiser into an arbitrage marketer. To Axon 1, they can get there, but they have to spend a lot of money.

1:19:40The model has to learn. They have to do a lot of manual labor to get to that point. To Axon 2, any advertiser can just plug in, get going, spend money, get revenue on the other side and make a spread. When you have that product and it's very, very scalable, the business can grow a lot. And so we went from, I think it was April 2023 was when the stock was 9, 10, 11 bucks. to we peaked, it was probably six months ago or so, at 750 bucks. So the valuation went from under 4 billion to a peak at 250 billion. Now we've come down some since, but the business is still doing phenomenally well. And the only way we could have grown like that on market cap was if the business fundamentals grew as well alongside it.

1:20:22And it truly did. Our growth has been phenomenal over the last three years because this Axon 2 model was so powerful in delivering this kind of value for advertisers. When somebody might've heard you say, hey, we don't have like specific market cap goals, but we do have a plan in place for some of the key players for compensation that goes all the way up to like a trillion dollar market cap. Might sound a little crazy, but it seems like you just have a ton of tailwinds, like AI tailwinds for the specific business. Not only the actual, what the product is, but your like ruthless efficiency and hyper-competence with only like having a small team of A players.

1:20:56Obviously you have somebody who's really gifted. It could be, it's not one employee. You don't really have 400 employees. You could have them doing the work of 4 ,000. Explain how, even the last three or four years, how AI has transformed the way you're running the business and the impact on the business. I mean, for sure, the tools that are available, and I'd say, as we've all seen, there's been breakaway speed on the potency of these technologies over the last few months. You've got small teams can do much, much more. So it's huge. I mean, we over, I think it was about a year and a half ago, over 80 % of our code was LLM written, and now it's much higher than that.

1:21:31And so you've got the ability for the LLM paired with really exceptional engineers to create more output. And this isn't like, if you lived in a world of B players, your 1x engineer might be 2x more efficient, but your 10x engineer might be 100x more efficient. Not only can they go out and accelerate the rate of speed that they can create experiments and improvements on machine learning models, the LLM can also process all of the research in the space. These are research-oriented sectors, open source. But five years ago, us humans couldn't have gone and read all the research and understood it.

1:22:04Now, very smart people who understand math and research can go use the LLM, pair with it to create the future experiments off all the resources out there, not believing they're missing anything because the LLM is scraping everything in. So massive amount of potential for efficiency gains. And we're built on a deep learning model. So as these technologies get more powerful, the predictive value goes up. Now, what does that mean? Well, for us in our business, on one hand, we have billion users who are playing games, billion plus users who are playing games every single day around the world. In the US, it's over 150 million, only adults.

1:22:38So penetration into the world is high. The power user who plays games is not the same 21-year-old who's on Instagram for six hours a day. The power user who's playing casual games, Candy Crush, for two, three hours a day, as an example, is more of like a middle-aged person who has more time and is just getting relaxation here. That's the framework. So we have this really good audience, a billion plus, good amount of time spent, and they're willing to watch an ad. And they're willing to watch an ad for a long time. Our average ad is over 35 seconds long. It's like a television commercial on the mobile device.

1:23:11So the framework is really good. What we show in that ad is only gonna get much better as the technologies get better and we service more customers. And if you think about a couple of years ago on our platform, we only served gaming ads. We used to take a user and say, game, game, game, game, game. If you weren't in the business of switching games, that's a pretty bad ad format to show you. Well, now as we've gotten into product ads for e-commerce businesses, and it really, as we go forward, it'll be for any kind of business in the world. The diversity will go up. The technology is already capable to do it.

1:23:46And then the value to the end consumer will go up. and that whole thing I said earlier of the ad becomes more like content. The hope we have is that we can get the local laundromat discovered by someone playing a game because we serve a really good ad to someone who needs their clothes wash. If that happens and we get to that level of scale, this business is going to be much, much bigger than it is today. And the opportunity for us to really impact economic growth for businesses that are small to medium size is going to be much bigger than it is today. So you go from gaming to e-commerce. You literally just, my next question was going to be like, what other kind of businesses do you want to expand out to?

1:24:18You really believe that you can do this for every single segment? When you have this many people who are playing games and they're middle-aged, the only limit is the technology for targeting and the customer on the other side. And I fundamentally believe the biggest opportunity we have as a business is help the small to medium-sized businesses. We don't have a sales force, so eventually we'll get the large enterprises because they're going to come to a platform as big as ours. But we're not out there selling them. We want to help those small to medium-sized businesses. What made us really successful in gaming was going to the companies that really didn't have much support at most of the other businesses and going, look, you're 10 people.

1:24:53Let's work together. Let us grow your business. There's a company that recently exited out of Turkey and mobile gaming that I believe was like 10, 15 people and sold for a billion dollars. They sold under one year from launch for a billion dollars. Almost all of their business growth on the marketing and monetization side was built on our platform. And they had a fantastic game that was super innovative around that. But because our platform's built for this, we were able to help a company like that. And that makes us feel really good. So if we can translate that into these other categories, the local laundromat or to the company that spins up a Shopify store and is selling lipstick and has some cool spin on selling lipstick and they launch on our platform, they can really ramp up.

1:25:31We'll feel really good about ourselves. Is this targeted for like direct to consumer? Do you think you'll be doing this B2B as well? Eventually, we hope to tackle the consumer market and the enterprise market. There's no reason not to. Because again, on the other side, if you have a billion users and they're adults, they have jobs as well. If we get to the point where our technology can do the targeting across every consumer category, I'm pretty sure it's going to have no limit when it comes to the enterprise side as well. Like the way you run the business, this conversation had no fat on it. Thanks very much for making the time out, and this was awesome.

1:25:58Yeah, thanks for having me. This was really cool. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast founders. For almost a decade, I've obsessively read over 400 biographies of History's Greatest Entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through founders.