AppLovin's Rafael Vivas on the $180B mobile ad empire: ecommerce hits $1B run rate in year one, now expanding self-serve

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Let me tell you about Figma agents. Meet the canvas. Your AI agents can now create and modify your Figma files with design system context. And our next guest is here with us live in the TVPN Ultra Dome. Raphael, welcome to the show. Uh please introduce yourself for everyone at home first.

Raphael Vivas. Uh helps Apploven.

Yeah. Apploven is the largest mobile ad platform that you may or may have not heard of.

Let's put this.

I think everyone on X knows. I feel like your guys's you guys have like 100% saturation at least on our corner of X.

Yeah. I feel like some people learned like forcibly because they were like, "Hey, what's going on with this business?" It came out of nowhere. Like wasn't I don't know. It wasn't like super noisy and then people were skeptical and then you kind of proved all the haters wrong again and again.

Not not a venture story, right? It was

No, not at all. We couldn't even raise a dime in Sand Hill. I think Adam was willing to give away 25% of the company out of five billion cap way back in the day.

Wow.

And now the company's worth $180 billion. We've done pretty well.

That's crazy. 25%. Uh what what was as you tell the story, what was the key to get from five billion to where you are today?

The big thing for us is really just been the model, right? The great thing is in the world of performance marketing, advertisers don't have incremental costs typically to bring in new users. And then we went into e-commerce as well.

The question is how many more times over can you do that? We've been able to do it at a pretty big scale.

Okay. So, uh, mobile games super interesting economy, sneakily large. Again, I think that part of the reason why app is sometimes misunderstood is that people misunderstand how big the mobile games market is. They think like, oh, well, I'm familiar with like a blockbuster movie. Certainly, it's about the same. It's entertainment. Uh, no, it's way bigger. Um, but walk me through first, how big is the mobile game market? How international is it? Walk through the dynamics of like whales versus daily players versus free players, like what what's the shape of the market that you're describing to a potential new app customer?

Yeah, sure. So, the mobile gamer is pretty much everyone. Think about it. You're

on a first class flight, right? you see somebody right next to you playing a word game or a solitary game or you're on the bus or it's your wife at home.

So it's not just some kid sitting in their basement.

For us we see over a billion people every single day

primarily heads of households and female.

Um so for us like we see it's a massive market and I think in the app store there's I think uh over $120 billion of annual spend just in inapp purchases. So that really speaks to the volume of

Yeah. The dads are PC master race. Mouse mouse and keyboard.

Exactly.

Can't be call dead on a mobile game. And I mean,

it's getting there. It's getting there. You You get the backbone. You click that into your phone. You can play COD Mobile. There's ways around this little Halo, but uh game streaming.

The The business grew 70% last year. And it was primarily driven by the gaming side of the business. Now, e-commerce has been the really big massive thing for us. And

listen, you say everyone's heard about us. Part of our TVPN ownership, you know, helped with that.

Yeah. Yeah. Totally. Um, but no, it's it's been incredible. I mean, you know, kind of looking back, we're in 26.

Yeah.

In 25, we announced doing having a billion dollar run rate in the e-com business. Just a year of it being open.

Now, we're have our self-s served referral only.

Yeah.

Thousands of accounts have onboarded and hundreds of millions of dollars, hundreds and hundreds of millions of dollars of value has been generated for ecoms merchants and we're so small. I mean, like just for the context of the market here, right? So, I think Facebook's got over 10 million active advertisers. We only have a few thousand, right?

And so, for us, this is like a holy crap once in an op like opportunity, especially for advertisers that are looking for a new channel.

That's amazing.

Um, for us, like, you know, we're at less than 01% of the market share. Yeah.

Um, but we have north of12 billion of ad spend compounding at 70% year-over-year, right? So we think this is going to be a massive massive opportunity.

So uh two questions on AI. Let's start with the the mobile game dynamic. We've seen those charts. The number of app store submissions is skyrocketing and yet we all can't really point to like oh there's that breakout game that was vibe coded by uh the you know the the kid in the basement or something like that. Uh and we could during the early app store boom. I remember uh was it Flappy Bird? Wasn't that created by a kid? It really not. It wasn't some Sand Hill Road $10 million.

It was some NBA related game.

Uh I didn't I didn't play it, but I had at least a handful of people, but it was all

a few games that are happening. But what are you seeing in the data? Is anything starting to move where you're like, "Oh, like that's AI or that's vibe coding. I can see something changing about the business." Or are we still sort of like pre-showing up in your business?

So, what we see is really cool. I'd say on the advertiser and the developer side, more and more people are coming onto the platform, right? And so on the developer side, what we see is that more developers are in need of distribution. Y it's now become a core part of the strategy.

So much sense. Yeah.

In 2012, 2013, when we started the business, most advertisers would depend on just getting an app store feature. Sure. That is no longer the

Yeah. Yeah. Yeah.

Yeah. Buddy of mine the rankings coded an app.

Yeah.

I downloaded it.

Yep. and then was later trying to leave a review because he's like, "Hey, this helps visibility." Yeah. Couldn't find the app in the app store even if I searched the app like the exact

phrase. Yeah, there were so many find it through the link. So like app store discovery seems like you know

there were so many little like uh I don't know the like the web 2.0 0 playbook of like uh contact, import, invite your friends, share social media board, and people would be oh yeah, game center integration is going to be the thing that makes you pop out. And none of that was they were always sort of overpromising, but some of them did work. Like some of them really did go viral and and had interesting distribution techniques, but a lot of those have been commoditized. So actually showing up and and you know, building your business on the back of Apple makes a lot of sense. Um, what about AI internally? Uh, Eric Suffort at Mobile Dev Memo is writing a lot about uh, GEM's model, the GEM model over at Facebook that they're getting a lot of lift at Meta out of new, more advanced transformer-based, you know, uh, matching algorithms, advertising algorithms. It's sort of like the unsexy part of Meta's AI strategy. But have you started to see uh glimpses of just improvement in your system during the AI era?

So yeah. So you know on our side our developers on a weekly basis are releasing improvements to our algorithm

and a lot of those improvements are also on the backs of using the state-of-the-art models out there. So we definitely get an advantage of it.

Yeah.

And outside of just like the ad algorithm itself internally our efficiency gains have been massive. Like I can speak for myself personally. Our marketing team is eight other people. Every single person on the marketing team is a vibe coder, right? They're using cloud code. They're using codecs and they're building tools to make them more efficient in their role. You know, we before used to have to run everything through an engineer. Now, everyone is their own engineer.

Are you token maxing? Are you token mining? Or are you token min maxing?

We're token maxing, baby.

Maxing.

We're token max.

Wow. Flashback to February. What's going on? Isn't this going to be a problem? Aren't you sure he's going to be upset?

Messages. We've gotten some messages from

flashback coming in.

We've uh you know, we've got some messages about cost getting a little about out of hand, but you know, the good thing is this.

This not showing up in the quarterly earnings yet.

No, not at all. I mean, the beauty is that when you've only got a few hundred employees and you're generating as much revenue as us, you're going to have to be doing

Hey, there was somebody who allegedly, it might be a complete rumor, but $90,000 in a day.

Wow. So I I think you might be changing your tune. Pull out. We're nowhere near that.

It was a light week.

Half a million dollars.

But yeah, judicious use token maxing but not taken to the extreme.

Yes,

the judicious usage. That makes sense.

Uh what what what does it take to all the digital marketers, growth people I know will happily test any new ad platform. what what has been the key to retaining customers, right? like you know marketer let's say they're managing $20 million budget a lot of it's going to meta Google handful you know maybe some TV you come to them and you say like give us a shot with like you know a quarter mill or half a mill or something like that everyone will take the shot right but you got to if you want to build a big business you got to retain that

profitability at scale so that scale is different for everyone some people are happy with you driving an extra 10% growth to their business some are saying hey you have to be the next you know Facebook or Google for us.

But I would say for us like we see over half our clients actually retain. So we do a pretty good job. The algorithm works for a lot of people who come on. Now it's just getting the word out to the masses. Right.

Yeah. Awesome. That's next week.

Uh that is next week we open it. One other big thing um is that we are going back to the app loving name and this is a part of the amazing

that's what I wanted. I wanted the whole time. I wanted the whole time.

Apploving's amazing. It's it it transcends app like I think of it as its own entity. Apploving, you know, it doesn't it doesn't matter.

And for for anyone that's confused as to why app is going back to the name Apploven, you guys were thinking about having the ad platform be named something else.

Axelon. Yeah. Yeah.

So, smart smart play. I always I always it's what I always wanted. I have no say in the matter,

but uh I was always

Yeah, more marketing people.

That's amazing. Um, talk about generative creative. Is is that in demand from your partners? Because I can imagine a marketer saying, you know, for this particular audience on this particular platform, yeah, I want you to just go to a frontier model and generate me a hundred different copy lines that all fit neatly in the box and generate some images and here's some screenshots to sort of work through. You could even have an AI agent actually use my game, take real screenshots, then you don't get the slop allegations. But in terms of layout, in terms of distribution, like how much of that is brands coming to you saying, "Look, I'm already really comfortable with ChachiBT images or Nano Banana or Higsfield, so I got it handled. I don't need your tool." Versus, "I would love for you to do this for me."

Yeah. So, taking a step back. Yeah. The value of creative is that if you find the right creative that resonates with the right audience, it can be one of the biggest growth levers for your business, right? You know,

sort of a power law.

Exactly. Right. It's, you know, let's say you spend an extra 5% on creative and you fight a winner. It doesn't mean you're only going to spend another 5%, you could spend double, right? And so every advertiser wants more creative that's performant and high quality.

And so amongst all the advertisers we talk about, they all want the generative tools.

What we have right now is generative interactives. So that has been very helpful for us. Yeah.

Why is that? Why interactives? And we'll talk about video in a second.

How our ad unit works is we show a video, then there's interactive, and then there's the catalog. A lot of the clicks that happen on our ads are within the interactive and so that has been massively adopted

and that's basically playing a demo of the game or a smaller version loaded probably in HTML uh or JavaScript and then you get to demo it.

You hit the nail on the head. That's exactly

and that's probably extremely cumbersome for a small small developer with a new game. They have to go create a new version of their game that loads quickly in the app platform very seamlessly. And that's a perfect use case for

100%. And imagine you're not even a game studio, right? You're an e-commerce store. You're selling wallets

and you want to use the interactive, right? Exactly. Oh, interesting.

Right. Well, the interactives are massive, right? And so, it's where we get a majority of the engagement. And you're showing an ad within a game, right? So, how do you gamify that experience or how do you allow it to look at more specifications of the product, right?

All I would say 80% of our top advertisers use interactives. And so, it's such a massive unit. Now, where is this going? So, right now, we've got the interactives. Now,

video has been our main focus. We have it in beta and it's been really good.

And so, our goal is to get that out to everybody.

Yeah.

By the end of the year, how we envision onboarding on Apploving is you go onto the site,

you set up the pixel.

Yep.

Then you create a campaign with one button,

it automatically generates the creatives,

it pulls the links. Yep.

And then you're off onto the races, right? You just have to tell it your goal as well. So that's where we expect where the market is going and it's part of our goal which is making profitable advertising accessible to everybody.

What uh what's your advice for somebody that wants to be the first hire at a company that becomes worth 175 billion in the public markets.

Work harder than everyone else around you and always be meeting people. I you know I got lucky to meet Adam.

I don't think there was any luck. I think it was pure yourself. That's why I asked.

But no, I mean like my background, funny enough, is I'm a high school dropout, right? And what I tell everyone is that

you get your GED or

no GED. If mom and dad are listening, sorry.

Have you have you actually gamed out, can you get like an honorary PhD from some elite institution?

I don't know. I I haven't reached out

because that's the maxing graduate.

Yeah. wherever like your hometown has a university you go give the commencement speech you start donating and all of a sudden they're just like PhD and it's like probably cheaper like if you donate what the tuition would have been you probably get the honorary degree

well Stanford and Harvard are listening you know my email box is open for you

I think they need you

um but but my analogy I always tell everyone is that you know when you send the warriors out to go get food the first question they ask back isn't who is the the eldest tribes leader it was who killed the animal and who brought us back the food and So that was always my analogy of like as long as I outworked everyone and delivered a ton of value then I would be at the same conversation in the same table as everybody else.

Your advice one word kill.

Yeah. Kill.

I mean yeah you kill at a lot of small companies and if you provide value, if you pro provide ROI, you keep showing up. Um what about um other platforms? I mean we were just talking earlier in the show about Fox acquiring uh Roku. They have TB. There's a lot of ad inventory there. Have you thought about getting into that space? Like what does that look like? What does a product line expansion beyond the phone look like in the future?

You know, it's funny. Everyone talks about expanding. We're thinking about consolidating more focus. Yeah. Focus. Exactly. Right. You know, you try to do everything and you can't go deep on many things, right? And so our what I would say is like our company has grown so much since we got rid of a lot of the gaming studios since we stopped focusing on that side of the business.

For us, we feel like we have so much room to grow. I mean remember less than a tenth of a percent of advertisers in the world even use app 11. So let us get to millions of advertisers and then we can talk about the rest of the other platform.

That makes sense. And also you're very fortunate like you're focused on a market that is growing both like mobile gaming and advertising in mobile gaming and e-commerce and time on like you're I like 12 different tailwinds. Why go into a market that has headwinds?

100%. I I don't think people are spending less time on their phone these days.

Nope. No. Maybe in the UK if you're under 16 soon.

John with your Apple Vision Pro. Yeah,

you know that's taking away some screen time. That's a threat. That's a real threat to you guys.

It's actually twice the screen time cuz it's both eyes, two screens.

Nick Nixon one YouTube on the left.