Equities

AppLovin: A culture-driven success story

May 20, 2025 - 7 min read

At WCM, we believe culture is the driving force behind execution. Over the past two decades, we have studied countless organizations, seeking to understand the link between culture and performance. Through this journey, one fundamental truth has emerged: there is no single blueprint for a "good" or "bad" culture. In fact, the same cultural traits that drive success in one company can lead to failure in another. Instead of searching for universal principles, our focus is on identifying how well a company’s culture aligns with its strategy, how effectively leadership reinforces it, and how adaptable it is to change.

Our research process is designed to mitigate personal biases, allowing us to more objectively evaluate culture’s role in execution. While we don’t rank cultures as "best" or "worst," we do occasionally come across companies where culture plays such a decisive role in success that even our most optimistic assumptions prove conservative.

AppLovin is one such case study—an organization where culture has enabled extraordinary execution and growth. It is one of exceedingly few companies that we believe meet the following bar: the more you learn, the more you are impressed. In fact, the AppLovin story is so good that it’s even informed some decisions we have made about our own culture.

We believe our culture is unique. By staying lean and retaining key contributors, we have built an exceptionally high-performing team of subject matter experts capable of innovating faster and more effectively than those at other companies."

– Adam Foroughi, AppLovin’s CEO (Q1-2024 earnings call)

One of a kind

In simple terms, AppLovin helps mobile game developers make money. Gaming companies use it to monetize their games through ads, while gaming advertisers use it to acquire new users. It’s a true win-win, performance-driven business model, and AppLovin has proven so adept at performance that it has propelled market growth far beyond even the most ambitious forecasts. The company’s market value recently eclipsed $150 billion, fueled by a string of eye-popping results. In 2024, AppLovin’s core advertising business grew revenue by 75% and generated 75% EBITDA margins. To put this into perspective, while most tech companies benchmark success using the “Rule of 40” (a combined measure of revenue growth and profit margins), AppLovin secured a spot in the exclusive.

“Rule of 150” club

However, what makes this story unique has less to do about where AppLovin sits today and more about where the company has come from. It’s a story about how culture and organizational design allowed a scrappy tech company to overcome enormous odds, survive multiple potentially fatal blows, and ultimately build one of the most impressive companies we’ve seen.

A roller coaster journey

In January 2023, AppLovin had a market value of $3 billion, down 90% from its all-time high. While it was far from the only company deemed a 2021 IPO bust, the company was under acute pressure following a set of privacy changes at Apple that threatened its existence. Amid a gaming ad-tech industry most notorious for its graveyard of failures, it wasn’t hard to conclude that AppLovin would be the next casualty.

WCM had a front-row seat during this period. In March 2022, upon listening to a podcast interview with CEO Adam Foroughi, we started actively digging into the story and conducted a culture-focused call with management. While we were highly compelled by what we learned about AppLovin’s culture, we couldn’t gain sufficient conviction in how the privacy changes would play out. We placed the stock in the “too hard” pile for the time being.

Then, a series of interesting events took place. After a dreadful 2022, which made our initial pass look wise, growth started to re-accelerate in early 2023. It was challenging to parse how much of the improvement was due to “external” factors, such as competitor struggles and lapping difficult COVID comps, versus “internal” execution, notably the launch of the firm’s new ad platform, AXON 2.0.

A memorable moment came in May 2023 when we re-engaged the company. We were told that Foroughi wasn’t actively speaking with investors, as AppLovin was heads-down on product and operating as it had while private. This wasn’t the first time we had a management request turned down, but AppLovin’s response stood out. The business had started to re-accelerate, and this is exactly when you’d expect companies to ramp up investor communication.

As our research progressed, it became clear that long-term success depended on AppLovin’s ability to sustain 20%+ revenue growth—something most investors doubted due to the perceived maturity of the gaming ad market. The answer to this question boiled down to execution which, as always, is ultimately a function of culture. Fortunately, we had the framework in place to evaluate.

The secret sauce: inside Applovin’s culture

While many companies attribute their achievements to strategy or market positioning, AppLovin’s success stems from something deeper—how it operates at its core. Three defining traits set its culture apart and drive its execution.

Low ego
We hesitate to describe any company as "engineering-led," but AppLovin comes closer than any we’ve seen. Executives consistently describe their role as serving the engineers. This reflects not only a refreshing humility but also an awareness that, with the rise of AI, the technology stack now surpasses human decision-making in importance. Even Foroughi, no slouch in technology himself, has acknowledged he could be expendable—which explains why he now primarily focuses on HR. Few leadership behaviors better model the right cultural priorities (low ego, supporting engineers).
Commercial acumen
When asked what he looks for in engineers, AppLovin’s Chief Technology Officer, Basil Shikin listed two qualities: (a) technical aptitude and (b) business acumen. The first is expected, but the second is what sets AppLovin apart. Many tech companies don’t expect engineers to bridge the gap between technical innovation and business outcomes. Yet, this mindset permeates the entire organization, fostering a true ownership mindset. As Chief Legal Officer Tory Valenzuela put it, AppLovin doesn’t hire lawyers—it hires businesspeople with exceptional legal skills.
Lean structure
Perhaps the most defining trait of AppLovin’s culture is its obsession around staying lean. While Google and Meta employ tens of thousands of engineers, AppLovin operates with just 500. This is by design. The company could easily hire more, but doing so would dilute its talent, hinder communication, and stifle adaptability. The lean approach extends beyond headcount—AppLovin intentionally limits access to resources (e.g., GPUs) to encourage efficiency, while remaining mindful of not starving its models. Axon, for example, was built by just five people, proving that a lean constraint can actually accelerate innovation.

In a fiercely competitive marketplace for talent, especially AI talent, these three factors make AppLovin stand out. Elite engineers are drawn to streamlined, talent-rich environments where they can drive significant business impact and reap well-deserved rewards. It's also easy to see how these factors work in concert. For instance, without unequivocal clarity that engineers are in charge—and without ensuring these engineers are commercially savvy—AppLovin’s ultra-lean structure couldn’t be maintained, let alone scaled.

Learning from the best

AppLovin’s cultural principles aren’t merely interesting observations—they offer valuable insights into what makes an organization resilient, adaptable, and consistently high-performing. As we reflect on these lessons, they’ve reinforced some of the core beliefs we hold at WCM. For instance, we too strongly believe in the power of small teams, limiting bureaucracy, and making sure everyone understands how their work drives business outcomes. History would suggest that creeping organizational inefficiencies are an inevitability for tech companies and money managers alike. Both AppLovin and WCM aspire to be outliers on this front.

At the same time, certain aspects of AppLovin might not work for us. Its commitment to lean is so strong that it’s currently cutting headcount for each new person hired.

As questions arise about AppLovin’s future, many point to its growing data advantage—the more ads it places, the smarter its models become. Others highlight the vast e-commerce advertising opportunity as it expands beyond gaming or the potential in new ad placements such as connected TV.

We too are optimistic about these potential sources of AppLovin’s moat trajectory, but we also fully embrace the reality that the backdrop will remain uncertain and volatile.* And if there’s one thing we’ve learned, it’s that a strong culture acts as a compass in unpredictable terrain. In AppLovin’s case, that compass has guided them time and again through challenges others couldn’t navigate.

Here at WCM, we have the privilege of continuously calibrating our course by learning from the world's best.

[These growth drivers] are unpredictable. And when things are unpredictable, a lot of times people assume they're going to be unpredictably bad. Well, in our business, we've got [some] things that can be unpredictably really good."

*On the topic of unpredictability, Adam shared this gem on the last earnings call, which we fully agree with.

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