How Zain Jaffer Grew Vungle to $400 Million In Revenue Before Exiting

Zain Jaffer has an incredible story and shares all the behind-the-scenes details in this interview. You’ll see how he and his co-founder, Jack Smith, grew Vungle to more than $400 million in revenue before selling the company.

His entrepreneurial journey started as a teenager, and his humble beginnings serve as inspiration and motivation for those who have just started their own journey.

Tell us about yourself and your business.

I grew up in an immigrant family in a working-class neighborhood in London. Despite not having the most ideal background, I was gifted with the entrepreneurial bug from a very young age. When I was about 13 years old, I discovered coding and eventually started making money by building and selling websites.

Pretty soon after that, I became one of Google’s top publishers. By 2011, I was working with my friend Jack Smith to develop a company called Vungle, which essentially was an agency producing video ads. We learned about a San Francisco-based incubator that had one spot left, and we decided to go all in and apply. Through luck and ingenuity, we managed to land that last spot, and my co-founder and I packed everything we had and moved to the US to grow Vungle.

To make the long story short, Vungle went on to become one of the first and biggest mobile ad networks, and it eventually reached $400+ million in revenue. In 2019, Blackstone Group acquired Vungle for $780 million. 

At present, I’m focused on investing in technology startups and real estate assets. I do this through my family office, Zain Ventures, and through Blue Field Capital, where I sit as a Partner.

In addition to my business endeavors, I’m also actively involved in philanthropy and giving back to the community. Shortly after our exit, I established the Zain Jaffer Foundation to help causes worldwide. Some of our initiatives include backing climate change documentaries about communities in Nepal and India, funding clean water infrastructure in Africa, and supporting organizations like Moms Against Poverty.

To this day, I’m still figuring out how I can best put my experiences and my platform to use to make a positive impact on the world.

How does your business make money?

Initially, Vungle’s main proposition was creating promotional videos for apps. This was way back in 2011 when screen captures and screen recordings weren’t readily available on mobile devices yet. That was our unique differentiator. We created video ads for apps and sold them to the developers for a one-off engagement. 

When we joined the incubator in the US, we were exposed to the advice and guidance of so many serial entrepreneurs and genius tech veterans. It dawned on us that our product didn’t solve a burning need, and that was a must-have if we wanted to become a unicorn company.

We thought: Yes, we already have the technology to create high-quality video ads for apps. And yes, there’s interest in that among developers who want to use mobile ads to entice new users to their apps. But that alone is not enough to make us a breakthrough company.

Having realized this, we shifted gears and reevaluated our direction. We eventually landed on the idea of establishing this app promotion advertising network. In this model, app developers who want to advertise will pay per install, while app publishers get paid for those installs.

What was your inspiration for starting Vungle?

I was already inclined to experiment with business and tech from a young age. I was always distracted from my studies by big ideas and testing them through small startup ventures. So, I stayed on the path of entrepreneurship through graduation, even when my parents were dissuading me from it and even when I was barely getting by financially. I hopped around a few different ventures before establishing a video production agency.

It was around this time when the app store came out, and mobile was on the rise. This whole industry was exploding with potential. I leaned hard into my tech experiences because I wanted to be part of the mobile revolution.

I thought about what I was already doing and how I could ride the wave, given my current situation. I knew I was already filming promotional videos, so I thought about how to translate those to fit into the mobile ecosystem. And, as they say, the rest is history. 

How and when did you launch Vungle?

We were able to take our new vision of Vungle into its alpha stage in 2012. By May of that year, we secured a $2M seed round funding from major investors, including Google Ventures and AOL Ventures.

By then, we knew we were onto something great. We had to make it work! In June 2012, we pushed with the beta rollout and officially opened our ad network SDK to a wider range of developers.

How much money did you invest to start the business?

I put in everything I had at the time of Vungle’s founding just to get the business to take off. Before joining the incubator and receiving investment funding, we scraped by in any way we could. We were bootstrapping to the extreme. I took out credit card debt to fund our initial projects. When we were still in the UK, our office was the size of a big closet and yet we could hardly pay the rent. It wasn’t an easy time.

Thankfully, joining the incubator put us on the path of so many investors. Although we had to sleep in boardrooms and constantly travel between London and San Francisco, it was well worth it.

On the incubator’s demo day, we secured $200K in investment. In a matter of three weeks, that had blown up into a $2M seed round.

We used that initial funding to perfect our product. Fortunately, we were able to sort the economics of our business model out. All in all, we raised $25.6M of funding over 5 rounds, which ultimately allowed us to scale massively and made the company extremely profitable.

How did you find your first few clients or customers?

Our product could only work if app developers, our target market, agree to integrate our tech into their app’s source code. This would allow us to show ads on their game. The problem with this is that if the source code breaks, the whole app breaks. Naturally, they didn’t want to take this huge risk by working with us and exposing their source code over on an unproven advertising model.

You can imagine how difficult it was to land our first clients because of this. Here’s how we approached the challenge: I personally signed up and played our key target client’s games. I played until I got to their top ten leaderboards, and my username would be on their rankings. My username would be “FromVungle_Please_Call_Us” or something in the same vein. 

Then, we would email them, telling them about our positive experience with their app, showing screenshots of our progress in the game, and so on. We disarmed them with genuine feedback, and we were able to leverage those conversations to land our first clients. This was so effective that some of them eventually became our friends outside the business.

I would share this takeaway as a tip for founders: remember that you shouldn’t view your first customer as a sales process. Most startups will not have the reputation that a big company does, so it’s unlikely that you can hack it with just the old scratched-up sales pitch.

Landing your first customer will be an intense research process. You have to know and understand your customer’s psyche. Embrace the challenge and find creative ways to connect with them to win them over.

What was your first year in business like?

Now that I look back on it, it feels like a blur. But I remember how it felt like an endless succession of challenges during that time. After we raised our first funding from investors, we immediately felt tremendous pressure to shape the product.

We worked day in and out, seven days a week. I’ll admit that it was not a healthy dynamic, but during that first year of building Vungle, there was virtually no life outside of work for my co-founder and me.

On top of that, there was also this incurable feeling of fear and anxiety. I had worries like: What if this product doesn’t work? What if the unit economics don’t work? What if we have an unprofitable model? There were a lot of sleepless nights because I knew this was a once-in-a-lifetime shot for us at a venture of this scale.

So, we wanted to launch ASAP. We had no luxury of waiting because the mobile app market was growing so quickly, and we had to move fast if we wanted to capitalize on that growth. We hired many engineers with the intention of getting to market quickly.

Our financials after the first funding round were rough because the unit economics just didn’t work. During our first year, we became dangerously close to running out of money. We only had about six months of runway left. I realized that at that stage, we had to fail hard and fast.

We increased our spending and took on more losses on the unit economics to hopefully show more revenue. Fortunately, this strategy worked. A few weeks later, we raised our next round and we started snowballing into success after success.

What strategies did you use to grow Vungle?

We had a few different strategies across the entire business to stimulate consistent growth. I’ll talk about the three important pillars we focused on.

First, our financing strategy: we created as much opportunity for future rounds of funding. We felt this was important because we knew we would need cash or capital to scale even further. Even when we were already making revenue and the business was profitable, we made sure to have financing options on the table.

From this mindset, we took investor relations seriously. We kept existing investors abreast of our developments. We stayed warm with bank connections — this kind of effort, even when we didn’t require the funding. So, every six months or so, we were receiving a financing offer, whether from a bank or a VC. It gave us options in case we ever needed funding in a pinch.

The second crucial element for our success is our hiring strategy. We understood the importance of a strong talent pool very early on because we saw firsthand how big an impact attrition could make on our progress. If even just one engineer from our development team left, we risked delaying our launch and depleting our funding.

So, we created an executive role called VP of Talent. This was revolutionary during that time because it wasn’t something startups did yet. Other companies at our scale mostly relied on external recruiters. Instead, we decided to build an in-house recruiting team. This way, we always had a steady pipeline of well-matched candidates available if we needed to fill a role. The result: we deployed quickly and had a team full of people aligned with our vision and values.

Lastly, and probably the most important: our product strategy. Our mindset of “move fast and break things” applied to everything but the final product. On this aspect, we allowed ourselves to be slow and deliberate. We spent a lot of time on QA to ensure our code worked properly. We made sure our tech is always well-tested and well-developed. 

We did an alpha or soft launch before ever considering a public rollout. After the rollout, we prioritized troubleshooting and bug-fixing. This was key to the growth of our client base because we earned their trust through the quality of our technology and the responsiveness of our team.

Tell us about your team.

It started with just my co-founder and me. After moving to the US, we immediately began hiring key roles. Some of the employees who became key to our success came from those early rounds of hiring.

Ben Bear, one of the first salespeople we hired, brought so much professionalism and sales skills to the table. He was instrumental in bringing us from zero to 10M+ revenue, and he went on to become our VP of Sales. Ben eventually became the CEO of Spin, and he recently launched his startup called BuildCasa, which I was all too happy to invest in.

Before exiting Vungle, our employee count was 200+ across several offices in seven countries. At that point, our happy problem was managing so many people across different continents. There’s a lot of transformation, not just of processes, but of problems and solutions that come with growing from a team of two to a company of two hundred plus. It goes to show how unpredictable and supercharged the startup experience could be.

What are your future plans?

Building Vungle allowed me to fulfill so many aspirations. More than anything, it helped me prove that my entrepreneurial bug would lead to great things. Vungle itself — now part of Liftoff — has evolved massively after the acquisition by Blackstone, and I’m always cheered when I hear about their milestones despite not being part of the company any longer.

After exiting Vungle, I’ve shifted gears and started investing in myself. I explored new ventures, and real estate became core to my post-startup journey. At present, I work through my family office, Zain Ventures, and Blue Field Capital to invest in real estate properties, especially ones that help create more equitable housing. 

I’ve also reflected on the legacy I want to build, and this inspired my mission to help the next generation of aspiring founders. I actively invest in startups through my VC at Blue Field Capital. I also sit on the board of a few of these startups to mentor and help worthy founders on their journey. In some way, I guess I do it to also pay forward all of the support and mentorship that my team and I benefited from during our early years.

On the other side, I also want to have a legacy of contributing to solving bigger social issues. That’s why I founded the Zain Jaffer Foundation, where I course my philanthropic initiatives. 

What are your favorite books, blogs, podcasts, or YouTube channels?

My current favorite read is Blitzscaling by Reid Hoffman and Chris Yeh. I would recommend it to any entrepreneur who dreams of building a business that can go global. I think it’s fascinating because it gives the reader an understanding of the VC mindset, which is important if you want to secure funding (which you undoubtedly will need).

At the same time, it presents a few scary and uncomfortable concepts for growth, which I would say is not going to be ideal or even possible for 99% of companies. But the 1% who can manage it will for sure be the ones to rise to the top. It’s a very worthy read!

What was the turning point when you knew your business was successful?

When our early clients started coming to us to ask “Is this real?” in reference to the checks they were receiving for using our network to run advertisements on their apps. Many of our clients started making more money from ads than anything else.

We had clients who initially ran their apps as paid on the App Store, but when they saw the earning potential we could offer, they agreed to our suggestion of making their apps free and showing ads to generate money.

This was about nine months before our public rollout, and already, we were beating our forecasts and plan by 2X or 3X. That’s when we knew without a doubt that Vungle was going to go big.

What advice do you have for other entrepreneurs?

You’ve got to pair your persistence with patience and vice versa. 

Sure, persistence and grit are necessary qualities if you’re an entrepreneur. However, some entrepreneurs get discouraged or frustrated after a few months or a couple of years if they don’t see their hard work paying off.

What they fail to understand is that patience should also be part of the equation. Like it or not, you’ll be playing the long game, and that sometimes means putting in consistent effort only to reap the rewards five or ten years down the line.

So many facets of building a business require your time and resources; this is where your patience will also be tested. The flip side of the coin is that patience isn’t just sitting around doing nothing while waiting for results. Patience, in this case, should be a very active process. That’s where your persistence during “waiting times” must come in.

Remember, success is more a marathon than a race. Persistence and patience are key to a strong foundation for success.

What is your favorite quote?

“Failure is not final.” I always share this adage whenever I’m asked for a favorite quote because I think it’s such an important lesson to learn early, especially if you’re an entrepreneur. You’ve got to understand that failing is inevitable.

At some point, you’re going to get turned down, you’re going to make major mistakes, and you’re going to face what you believe is your limit. When that happens, stay the course no matter how difficult it might be.

In most cases, the deepest setbacks are the best launchpads for your biggest breakthroughs.

If you had to start from scratch, where would you begin?

I think I got it pretty much right the first time by following my curiosity to explore the world of tech very early on. If I had a do-over, I would probably zero in on that further and formally study emerging technologies. We all know now that new tech will shape and dictate the future. During my time as a founder, we had the early inklings of this revolution, but it was not this fast-paced and disruptive yet.

If I were just a budding founder in this day and age, I think technical prowess in areas like computing, data science, and AI would be crucial to succeed.

When building Vungle, we were the underdog of the incubator because we had the disadvantage of not coming from tech degrees. Imagine how much harder it would be if that was the case in this era.

Everything — by that I mean all sectors across every industry around the globe — will soon (if they are not already) hinge growth, even mere existence, on tech. That’s why I think technical skills in tech will be my starting point if I have to start over from scratch.