Vungle

How Vungle was born from an ad accidentally auto-playing in a meeting

Jack Smith recounts pivoting at AngelPad: after a recorder app blasted a Coke video during an investor meeting, the team realized they could show 15-second video ads for apps inside other apps. Prospective customers immediately offered $5K-$10K ad spend.

“Opened this like sound recorder app and it started like auto-playing on full volume like some video for Coke. Like we're trying to close it, like what the fuck? But then we actually just thought like, hey, wait a minute, what if we had videos like this but like advertising other games and other apps instead of like Coke stuff?”

Charge for what the advertiser actually wants: CPI, not CPM

Jack explains Vungle was one of the first ad networks to charge cost-per-install instead of CPM. Advertisers don't want impressions or clicks; D2C advertisers want sales, so pricing should map to the buyer's true core metric.

“And so we were one of the first to charge CPI, cost per install. So we were like, hey, it doesn't matter if like 10 people watch the video or like 100,000, just pay us a dollar every time someone installs something. So I think you need to abstract What does the advertiser actually want? They don't want clicks. They don't want impressions. If they're D2C, they want sales. They want revenue.”

Steal thisPrice your product on the buyer's true outcome metric (installs, sales), not vanity proxies like impressions.

Jack Smith sold Vungle to Blackstone for ~$750M in cash

Sam introduces guest Jack Smith, who founded the mobile ad company Vungle and sold it to private-equity giant Blackstone for roughly $750 million in cash, having raised very little.

“But basically he started this company called Vungle, which was sold to Blackstone, the large PE company, for I think $750 million in cash. They had raised a little bit of money, but not a significant amount. It was a wonderful exit.”

Vungle's $750M Blackstone exit

Jack Smith's mobile video ad network Vungle was acquired by private equity firm Blackstone, in a deal rumored to be worth $750 million in cash.

“Private equity firm Blackstone is set to acquire Vungle for an undisclosed sum that is hotly rumored to be $750 million US dollars in cash.”

Vungle: $300M+ revenue on only $25M raised

Shaan notes Vungle was doing north of $300 million in revenue despite raising only about $25 million, a small amount by Silicon Valley standards for an ad network.

“About $25 million they raised and they're doing, you know, north of $300 million in revenue.”

Vungle was born from an annoying Coke ad interrupting a meeting recording

Vungle's video-ad idea came when a loud Verizon/Coke video ad blared while Jack tried to record a meeting. The insight: replace the brand ad with a 15-second trailer for another mobile game — and app developers immediately offered $5K-$10K to be first in line.

“We opened the app and then this crazy Verizon or Coke video ad started playing really loudly and we couldn't mute. And it was really annoying. But then we thought like, oh, wait a minute. Wait a minute, instead of advertising like Coke or something, why don't we have the video advertising a different game?”

Naivety as an edge: charge per-user, not CPM

Knowing nothing about advertising let Vungle see it through the customer's eyes: app developers wanted users, not impressions. So instead of the industry-standard CPM, Vungle charged ~$2 per actual user acquired — a massive differentiator born of ignorance.

“So just pay us like $2 for every user we get you. It doesn't matter if we get you a user after they see your video once or like 100,000 times. We're just going to charge you based on how many users we get you. And then that again was a massive differentiator for us. And it became because we were naive.”

Steal thisReprice against the customer's true desired outcome instead of inheriting the industry's default billing unit.

Blackstone buys Vungle for a rumored $750M in cash

Jack Smith co-founded mobile ad network Vungle, which private equity firm Blackstone acquired for a price rumored to be $750 million in cash.

“Private equity firm Blackstone is set to acquire Vungle for an undisclosed sum that is hotly rumored to be $750 million US in cash.”

Vungle hit $300M+ revenue on only $25M raised

Vungle grew into an ad network doing north of $300 million in revenue while raising only about $25 million by Silicon Valley standards.

“about $25 million they raised, and they're doing, you know, north of $300 million in revenue”

How Vungle's real idea was found by selling 6 landing pages in a week

Two weeks before demo day with a doomed app-store idea, Jack and his co-founder built crappy landing pages for 6 different ideas and tried to sell each in a day; only when they pitched 15-second video 'movie trailers' for apps did developers throw $5K-$10K at a nonexistent product.

“And so roughly 2 weeks before the demo day, what we did is we just came up with like 6 different business ideas related to this idea of how can app developers get users. And we spent like half an hour each, like creating a super crappy landing page for each one. And basically we just spent a day trying to actually sell each idea.”

Steal thisValidate ideas by trying to actually sell each one with a throwaway landing page in a single day—real money beats compliments.

Cure the cancer, not the itch

An investor's advice that shaped Vungle: don't build something that merely scratches a customer's itch (a nice-to-have they'll shrug off if it vanishes); build something that cures their cancer—a must-have. Video ads delivered real users; blog placements were just an itch.

“He said, don't create a business where you're curing your customer's itch. Like, if you don't exist, they're like, oh, well, it's just an itch, it doesn't matter. Like, your antidote for my itch is nice, but, you know, whatever. He's like, create something where it cures your customer's cancer.”

Steal thisBuild painkillers, not vitamins—solve a problem the customer would be desperate to fix, not a nice-to-have.

Naivete as an edge: charge per user, not CPM

Because they knew nothing about advertising, Vungle ignored the industry-standard CPM (cost per 1,000 views) and instead charged app developers per user acquired—aligning price with what customers actually wanted. The naivete that an investor mocked became their biggest differentiator.

“So at the time, the industry standard for mobile advertising was it was charged on a CPM basis. Cost per mille. And that means cost per 1,000 people that view an advertisement, whether that's a banner or a video. So it was like, let's say, like $2 per 1,000 people that see your ad.”

Steal thisPrice on the outcome the customer actually wants (users acquired), not the legacy industry metric everyone defaults to.