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AppLovin's failed $1.4B sale became the best thing that ever happened to it
Furqan Rydhan recounts how AppLovin's agreed acquisition by a Chinese acquirer collapsed after the 2016 election blocked foreign approval. The deal converted into a non-voting investment, employees still got over $1 billion in liquidity, and the company kept compounding all the way to a ~$30B IPO.
“And so it looked like the deal was not going to happen. The company had multiplied in value during that time. And so now there's all this leverage on the company side to be like, well, we don't actually need this sale, right? We're a lot bigger than what that value was. And I think they turned it into an investment instead. With non-voting or some kind of distinction there. And we ended up getting some liquidity then, which was fantastic. It was over $1 billion, felt great.”
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$4-5M of founder money and 9 months on a dead Pinterest clone before the pivot
Furqan recounts AppLovin's three founders putting in ~$4-5M of their own money, which bought years of runway. Their first project, Style Page, was a Pinterest-style fashion site they killed after 9 months because, as he put it, they were five guys in Palo Alto with no fashion sense.
“But them three put in the initial funding. I think it was like around $4 or $5 million, if I remember correctly. But it was a lot in the sense that it gave us many years of runway to work on whatever We started with one project called Style Page. We did that for like 9 months. That was kind of like Pinterest. We really quickly realized we're like, you know, 5 dudes in like Palo Alto with no fashion sense trying to build a fashion website. This is not going to work very well.”
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He took the lower salary, moved in with his parents, and chose the messier startup
Furqan had a polished job offer with an early Google infra leader, but picked AppLovin's chaos instead. Adam offered higher-salary/low-stock or lower-salary/high-stock; Furqan took the low salary, moved back in with his parents, and bet on equity because it would be more fun and a higher rate of learning.
“And Adam gave me two options. He gave me a higher salary and a low stock. A lower salary and a higher stock option. And I was like, I kind of just made the decision down to like, well, if I go with Adam, I need to take the low salary, move back in with my parents, take the stock because I'm going to be in it for the ride.”
Take
Kill the 9 distractions to land the 1 you can win
Reed's discipline lesson: with endless inbound pitches and opportunities, the hard part is staying focused on what you know you can execute. Don't chase the nine shiny opportunities and miss the one in front of you that you're sure to win.
“You just have to be like, where are the ones that we know we're going to win on? And let's make sure we execute on that and not miss the one in front of us because there's 9 over here that we're paying attention to.”
Steal thisPick the opportunities you're certain you can execute and ignore the rest, however shiny.
Number
AppLovin's first liquidity event: over $1.4 billion
Furqan Rydhan, co-founder/CTO at AppLovin, notes the company had a big liquidity event a couple years prior valued at over $1.4 billion, on roughly $5M total funding.
$1400M
Liquidity event value · USD
“a couple of years back they had a big liquidity event, over $1.4 billion. So, and I think they've probably grown in multiple since then.”
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AppLovin: from launch to $10K+ in revenue per DAY in the first month
Furqan Rydhan describes AppLovin's product-market fit: in the first month the ad product jumped to over $10,000 in revenue a day, with servers getting hammered as money flowed in.
$10K
Daily revenue, first month · USD/day
“But the first, first month it was like, man, we just jump up to like $10,000+ in revenue a day. And then you just kind of keep skyrocketing up from that.”
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He left a grand-slam startup after 3 years, not fully vested, to build games
Shaan flags Furqan as counterintuitive: most people ride a winner for 7 years and take the victory lap, but Furqan left AppLovin after ~3 years, leaving money on the table, because he wanted to build consumer products, not an ad platform.
“Cuz who would leave this company that's crushing it? Like most people, when you finally hit a grand slam, you wanna do the victory lap and people stay for 7 years and then they write this cheesy letter about how great the journey has been and they're finally ready for their next chapter. He basically left after 3 years. You weren't even fully vested, right?”
Take
A+ execution: decide, then act now and announce it immediately
Furqan's biggest lesson from AppLovin CEO Adam: once a call is made (a hire, a deal, an org change), don't wait for a 'good time'. Adam acted now and communicated the change to the whole team the next morning with a new org chart. Speed creates clarity; logical, unemotional, fast.
“A lot of people kind of wait on it a little bit after deciding, and you kind of create some time. What's a good time to do it? For him, it was like, okay, we'll just go do this now. Like, what's stopping us?”
Steal thisOnce you've decided, execute and communicate it immediately instead of waiting for the right moment.