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'That shaped me': How an Iranian immigrant and tech CEO built his American Dream

Andy Serwer with Max Zahn

At first blush, Adam Foroughi’s company, AppLovin, appears to be just another Silicon Valley unicorn, to the extent that such a thing is commonplace. It’s a platform for mobile game developers based in Palo Alto—with the requisite cutesy name to boot.

But look more closely and you see that Foroughi’s story is actually pretty darn singular, and even more than that, reflective and emblematic of much that is going on in business and society.

Lanky and with a big smile, Foroughi, 39, is like a good many successful American entrepreneurs, an immigrant. His story begins in Iran, where he was born the son of a prosperous real estate developer. In the years after the Iranian Revolution of 1979, Foroughi’s secular-leaning family ran afoul of Ayatollah Khomeini’s regime and fled first to France and eventually received asylum in the United States. Like thousands of other Iranians, they settled in Southern California, in Foroughi’s case in 1984 when he was 4 years old. “For sure that shaped me,” Foroughi tells me. “Watching my late father, who was never able to build back what he had in Iran, that really motivated me to succeed.”

Foroughi worked hard in school and ended up going to Cal Berkeley where he majored in finance. He began his career as a derivatives trader before switching over to the world of startups.

‘A pawn’ in the trade war with China

After cutting his teeth at the likes of LifeStreet and Social Hour, Foroughi co-founded his current company, AppLovin, in 2012 with John Krystynak and Andrew Karam. Foroughi is the CEO.

Adam Foroughi, CEO of AppLovin. Photo courtesy of AppLovin
Adam Foroughi, CEO of AppLovin. Photo courtesy of AppLovin

AppLovin began as a discovery platform, meaning it helped app developers get their content discovered by consumers, and later evolved into a business that specifically helps mobile game developers create and especially market and distribute their games on giant platforms; Google (GOOG, GOOGL) Facebook (FB) and Apple (AAPL). AppLovin is a business-to-business company, not a consumer brand.

Note by the way, that the business of creating and marketing games played on mobile phones is highly fragmented and app-based, an entirely different business than console and PC-based game companies such as Sony PlayStation, Microsoft Xbox, or Nintendo.

Also a quick word about the company’s name, “Applovin.” While some have suggested that AppLovin is an homage to actor Christopher Charles Mintz-Plasse character’s pseudonym, “McLovin,” in the 2007 movie “Superbad,” Foroughi says that’s not the case. “I mean I like the movie, it’s pretty cool, but actually we just needed to come up with a name and we knew about the company [content organizing platform] Bloglovin’ [it has an apostrophe, AppLovin does not], and we just kind of followed their lead.” (A little bit different from the typical computer-generated-ending-with-the-suffix-’ly’ name, right?)

A boy wearing an U.S. t-shirt waves a Chinese national flag in Tiananmen Square in Beijing, China May 7, 2019.  Picture taken May 7, 2019.  REUTERS/Thomas Peter
A boy wearing an U.S. t-shirt waves a Chinese national flag in Tiananmen Square in Beijing, China May 7, 2019. Picture taken May 7, 2019. REUTERS/Thomas Peter

Foroughi says though the company was profitable early on, he was unable to secure venture funding, and raised $4 million from angel investors.

With the company growing rapidly, Foroughi and team decided to sell out to a Chinese private equity firm, Orient Hontai Capital, in September 2016 at a valuation of $1.4 billion. Foroughi says he tapped a Chinese investor because China is such a huge market for mobile gaming and an investor there might place a higher value on the business. Down the road, an IPO in the then high-flying Chinese market looked like a possibility.

And that might have been AppLovin’s path, except for the election of Donald Trump two months later and the ensuing trade war with China. Foroughi’s deal you see, had to be approved by the Chinese authorities—and was in fact—and then greenlit by the Committee on Foreign Investment in the United States (CFIUS), a government panel that scrutinizes transactions for potential national security threats.

But guess what? CIFUS didn’t sign off.

“There was a huge backlog of Chinese-U.S. deals at the time getting road blocked,” says Foroughi. “{And] we’ve seen what’s developed: the global trade war. We were a pawn in that.”

Foroughi said that his team tried to explain that a mobile gaming platform might not be strategically significant or a security threat if owned by a Chinese investor, but that the lift was just too great. And after more than a year of sitting in regulatory limbo with no end in sight to the process, Foroughi “pulled the plug.”

‘Laying the foundation to go public’

And so in the fall of 2017, Applovin restructured the deal with Hontai, so that instead of the Chinese company having a controlling equity stake it became primarily a debt investor in AppLovin. (Orient retained a small equity position in the company.)

Then last July, private equity giant KKR paid $400 million for a minority equity stake in AppLovin valuing the company at $2 billion. Foroughi had figured out another way to tap the capital markets—maybe in a way that made everyone happy.

AppLovin’s is a super-competitive business but as CEO and chief cheerleader, Foroughi is, not surprisingly, bullish on his company, which now has some 200 employees. Foroughi says the company has a revenue run rate of around $1 billion with more than 300 million daily active users on its platforms, and growing by high double digits.

Monitors display FAANG stock information on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Tuesday, Jan. 22, 2019. Photographer: Michael Nagle/Bloomberg
Monitors display FAANG stock information on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Tuesday, Jan. 22, 2019. Photographer: Michael Nagle/Bloomberg

“We’re a profitable business. We have an opportunity in going public. We’re laying the foundation to go public sometime early next year,” he says.

The risks, though, to AppLovin are hardly hidden. The company is to a significant degree at the mercy of the FAANG companies, some of which are his giant partners. Of course, FAANG refers to Facebook, Apple, Amazon (AMZN), Netflix (NFLX), and Google.

“Of all the hundreds of mobile and app ad networks that have emerged, [AppLovin has] carved out a pretty strong position,” says James Cooper, director of trade publication Business of Apps. “And that’s great but obviously they’re up against Google and Facebook. Plus all the other platforms, Snap (SNAP) and Reddit now. Twitter (TWTR), to some extent. And they’re also facing more competition from Apple. Apple has their own ad platform now.” Foroughi notes that AppLovin also works with these companies and downplays the competitive nature of these “frenemy” relationships.

It could also well be the case, that with all the hue and cry over the potentially monopolistic practices by the Silicon Valley behemoths, it might be in the best interests of the tech giants for a company like AppLovin to be out there thriving.

In the meantime, Foroughi, who has five kids under the age of 10, keeps on trying to grow his business and make the American dream come true. From the Iraniain Revolution, to Cal Berkeley, to the trade war with China, to Silicon Valley unicorn, Adam Foroughi’s life arc has had a most unusual trajectory. And a most American one at that.

Andy Serwer is editor-in-chief of Yahoo Finance.

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