Performance work helped Roblox reach break-even on under $10 million

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 50:13

   Now you have this virtual economy. you can see that it's going to scale way better than Builders Club. Honam, again, I want to read this tweet because I've got so much information about you from him. And he says, in the early days of the journey with Roblox, a next-gen Roblox receives $500 million seed round prior to launch. A company was called Improbable. Ho is kind of a spicy guy. He was aptly named.

2. 50:39

   He says, Roblox used less than $10 million of equity to build their business to cash flow breakeven. Is that true? Yes, it is. Okay. And then you've reinvested billions in your history of the free cash flow in the coming decades from that competitor of this vision that you're talking about. That's right. Okay. So, and then his point was 500 million, that seed round of this competitor that died is nothing over the long run.

3. 51:06

   I think they're still around doing military simulation. I think the reason it was 500 million, I think that was at the peak of like, VC, I think it was Masasan or whatever. Oh, God. And that was just, that's the check you get, you know? So sorry, there's no 100 million, there's 500 million. So talk about how you were so efficient, 10 million to get to break even. Yeah. How'd you do that? I think we've always been very good at product management of the surface and always been very good at doing the right minimum viable, you know, walk almost through the space so that do less, take the long view, know where we're going, get a lot of stuff on the way.

4. 51:56

   I do think we're pretty good at eliminating. distractions. So we're, we're kind of going down the right path. And I think we do that pretty well. What are the, some of the distractions that you avoided or eliminated? Oh man, like there's just, um, it's, it takes a lot of hubris to build platform because I think everyone is so fun to build content. Like we all want to build games and stuff and big complicated features. And a lot of times the features our creators need are boring and purely performance-based. And we have a saying in the company, like, performance is a growth feature. And, you know, we put an enormous amount of work on raw performance features, scale features, those kind of things. That takes a lot of hubris so what's a raw performance feature we watch um how long it takes on a wide range of

5. 52:58

   devices when someone clicks i want to play that experience to the time till they're interacting and um the the vision would be video we've come to assume on in video um in short form video i scroll through like we're used to that gaming has traditionally never had that gaming has traditionally like you download or you do this screen you have like this background thing people love um i text you or something let's go try this okay we're in people actually like that without maybe knowing it so we we just made the decision we want to get the time to jump into any roblox game down to zero basically and that's very technically complicated um but we do believe it has long-term growth aspects to us okay so you have this engine that is you're now making money yeah right you are staying focused on just building this perpetual motion machine so you're not going

6. 54:02

   on these other side quests and if i'm understanding what you're saying correctly then if you just limit your investment to things that make the user experience better that will lead to more like money more user growth more money more like you now you have this other like kind of flyable going on very early that's right to figure out basically the line of my questioning is it's like how the hell did you only burn 10 million dollars yeah we got viral very quickly and then we started monetizing very quickly and then you were just very careful what you use the company money for that's right and and we did right we had secondary we went public um there's a certain amount of financial prudence where, um, I think we didn't spend any money, but we, we always made sure we had enough cash along the way. Um, and so, you know, if we, if we raised a secondary round,

7. 54:51

   we might put some padding in there, but we actually never dipped below that initial 10