Roblox’s David Baszucki Built the Biggest Playground on Earth

We thought 3D immersive digital stuff would combine communication, being in the same place with storytelling and the rest. That's kind of how we got our launch. And the other cool thing about the launch is we initially thought it was so fun and cool to work on. Even a four-person lifestyle company at that time was very appealing. Okay, so four-person lifestyle company. Because the first company you started, you didn't raise any outside capital for, correct? Knowledge Revolution got very far without raising any money. And you sold it for, what, $20 million? That's exactly right. That's when you took the sabbatical.

That's correct. Explain to me how you knew that you were being logical instead of following your intuition during this sabbatical. What do you mean by logical? I think logical goes to what's someone trying to optimize for? Literally, at that time, I had been a CEO. And so in a way, I was optimizing for being another CEO and dropping into CEO-ness. When, in fact, a lot of the magic of knowledge revolution had been about inventing new stuff. And that was actually, for some of the early knowledge revolution people and myself, that was actually our superpower. It wasn't like just that being a CEO thing.

So when I came out of knowledge revolution, I actually went and looked at a bunch of CEO jobs that seemed like the logical thing. Wait, applying to be a CEO of a company you didn't start? That's right. What a mistake, right? What's your distinction between the difference between a founder and a CEO? Well, I kind of learned at that time. Like, actually, my founder kind of mode from Knowledge Revolution, I couldn't find a position. Obviously, it was a mistake to be looking for that type of thing. That was much more of a founder. You're a world builder. That's right. No way you're going to jump into somebody else's world.

What you're describing is literally like a vision I had one night where like I was on this path and there was like this big barrier there. But this path, which was more world builder creators, it's like, boom, I got it. And that's when Roblox started. Okay, we got to pause here because there's like almost like a paradox between you. So I had dinner with Honam, who's been one of the earliest investors in Roblox. Yeah. This guy's been telling me about Roblox for as long as I've known him. I think he's been involved for, you know, a decade and a half. And he's like, the thing about Dave is if you ask Dave the time, he'll build you a clock.

It's one of the most unique descriptions of another human being I've ever heard. So you're known as this really, you know, essentially like eccentric genius systems builder. But then I watch your talk at Stanford and all you're talking about is following your intuition. Can you reconcile those two things for me? They're both very valuable. And so I would say that early CEO lesson was definitely a sign of not following my intuition. is like logically be another CEO rather than follow my intuition and build Roblox. I would say combining intuition with tenacity and taking the long view, if those things can coexist, it's super, super powerful.

And I think along the way with Ho, for example, that metaphor of building a clock, it's funny because when we started Roblox, we used to joke, we want to start a perpetual motion machine. And what is a perpetual motion machine? It's something that can keep going, get better and better. That's what kind of the notion of building a cloud 3D UGC system. We keep building that system. Creators are going to make more and more amazing content. We can keep tuning the system and we'll get kind of that perpetual motion machine. And the metaphor of that clock thing is really interesting because if we dive into that, it's harder to build a clock.

David BaszuckiBut if you ask me the time every day for the next 20 years, it's probably easier to build the clock than to tell you the time every day for the next 20 years.

And that was part of the thought behind Roblox. I was just on stage at an event with my friend Eric, who's the co-founder and CEO of Ramp. When I looked over to my right, I noticed that on the sleeve of Eric's jacket, it said, we win when our customers win. Ramp is the presenting sponsor of this podcast. and the way that Ramp helps their customers win is by helping you save time, save money, and grow revenue. The median company running on Ramp cuts their expenses by 5%. The median company running on Ramp also grows their revenue by 16%. So when you're running your business on Ramp and your competitors are not, you have a massive competitive advantage that compounds over time.

Ramp is the only all-in-one platform designed to make your finance team faster and happier. Many of the top founders and CEOs I know run their business on Ramp. I run my business on Ramp, and you should too. Go to Ramp.com today to learn how they can help your business save time, save money, and grow revenue. That is Ramp.com. Okay, let's go back to what you were saying. The idea behind Roblox, you had the sabbatical, you start Roblox. There's four people. You described it as like a lifestyle business and going into that? It's interesting. I think the lifestyle business could be a metaphor for having no expectation and being so excited about the area we were going into. It was like a validation of our intuition. We're going to go do something enormously, both fun and something on our business plan like it could be really big but it was at the time so fun we i think we're thinking we'd be very satisfied if we could work on this for many years what happened is it got a life of its own and it it just the responsibility got bigger the second we were live we could see this thing is gonna keep growing what was the the original product there was actually an original product and that was an incredible failure so and the the original product that was the incredible

failure was arguably us knowing we intuitively knew what the viral product would be we we knew the viral product would be online in the cloud multiplayer digital stuff physically simulated access anywhere, user creation, build cool stuff. We kind of knew that. We wanted to get something out sooner. And so what we tried to get out, which luckily was along that trajectory, was something that was more of a single player puzzle builder type game. We thought, oh my gosh, if this puzzle game thing kind of gets viral that will give us a little bit more runway to build the four roblox but as you can imagine that single player puzzle type game is not quite as fun as multiplayer immersive 3d with your avatar going with your friends and doing all of these things so sure enough within like a couple weeks of that we're just like yeah we knew it it's not going viral like what are we gonna do so how do you get from the single player puzzle game to building platform just deep breath six more months of engineering let's go what does the team look like in the six months is it still a full people initially it was just eric castle and myself and then john and matt dusik were just coming on board so that decision happened when it was two

of us and you had raised any money nope just having a good time building this thing and funding it yourself. Yeah. You said something very interesting. He's like, we started this with no expectations. Say more about that. After selling Knowledge Revolution and taking my two year sabbatical, I tried that, you know, that CEO thing when I wasn't using my intuition. Then I came back and the revelation was almost so big, just like, oh, I could work on invention fun and inventing roblox what a luxury that is such a fun luxury i could do that for my whole life and so i think i think that was more coming off of that other linear track just being so pleased with it obviously the second we started going a lot of other instincts kicked in the responsibility how big can we make this that the the second we saw the perpetual motion machine starting to work that was really interesting. When it was just you, your co-founder and these two other people, were you using the term perpetual motion machine? I was using it, yeah. Where'd you come from?

Perpetual motion machines in physics are, even now, if I go on short form video platform, every once in a few months, you can see some crazy mechanical gadget that if you look like, if you look at it, they'll say, you know what, the water falls out of here and that falls out a year and it's a breakthrough in physics and the machine will just go. forever um that's what a perpetual motion machine is they've been around for hundreds of years obviously it's physically impossible you know thermodynamics more energy in than out friction no perpetual motion machine ever works but it is it is kind of this interesting moniker for the notion are you building a system that will have a life on its own will it grow on its own i think in the context of Roblox, is it something that will organically gather traffic rather than buying traffic? And in that case, the content on Roblox was perpetual. It was made by creators and the acquisition of users was perpetual in that it was word of mouth. You're how old when you started Roblox? 20 years ago, roughly. So like early 40s. Very fascinating to me that you're like, I want to build a perpetual motion machine, something that has no end, something that carries on forever.

Did you know the next company that you want to build is going to be the last company you work on? I did. One thing that Ho Nam told me about you is he has unbelievable patience and endurance, and he wants to work on something for the rest of his life. But you knew that in your early 40s. I think I actually knew it in my 20s, and I actually think I knew it even very early on, like when I was programming Apple II stuff. For some reason, I intuitively wanted to build world simulations. Were you playing these games like Civilization? I was more building them. So like when I was hacking up Apple II code, I always wanted to build how do we simulate reality type games.

And then when we built Knowledge Revolution, that was arguably a two-dimensional world simulator. I would say video games have historically been more about how they look. I was pulled to not just how they look but how they function as well and what's like how much fidelity can we get out of it so I was really interested in that when we formed knowledge revolution it was very early in the days of simulating physics on a computer and it was in you know there were papers in SIGGRAPH at the time very early you know algorithms of how you do collisions and all of that kind of stuff that we had to pull that research out to build that knowledge revolution physics simulator and i would say i would say that instinct carried into roblox as well so i would say um when we um sold knowledge revolution and we started roblox i was thinking that immersive 3d physically simulated stuff should have a 20 30 40 50 year trajectory you know what's confusing to me like having that understanding so early and then yet you you fell off your back I think this is really important for people listening.

It's like, you fell off your path for two years. I did. Or it's like the chance that you're going to build something that you can work on for 30, 40, 50 years, this professional motion machine, and that was created by somebody else. Yeah. It's not going to happen. You had to build it from scratch the way you wanted to do it. That's right. Okay, so let's... I got lucky I fell off that and got back on it. Well, goddamn right, you got lucky. I think so. I mean, you definitely made the right decision. So wait, let's go back to... Now you're building, like, we're not going to do this, like, single-player puzzle game.

No, no. We started Roblox, but you knew it was going to be a platform from that point? We did. Okay, so who's making the games? At that point, we had four people. Matt and John joined, Eric and myself. John was a really good game maker. And so then we had a little bit of a warm-up phase where John made a couple of very famous first Roblox games, like Classic Crossroads and Chaos Canyon. They were really pretty fun, and they tested the system. so we had in-house creation the three of us are coding um and then we we had some users starting to play on classic crossroads how are you getting them really interesting i don't know what entrepreneur i heard this from they said look just go buy 50 users a day from google like that's it

David BaszuckiYou can buy them for a buck a buck a user. And so we said, oh, that's a really good idea. Let's go buy 50 users a day. That was the germination of all of Roblox.

If we were able to like reverse engineer the whole social graph tree all the way back to the starting of Roblox, we'd probably see a one month period, you know, times 50 users, times 30, probably see 1,500 users that were saw some ad, like online building game, come try it out, that are the initial social graph of everyone on Roblox. Now in the afternoon, the four of us go online, there's maybe 20 or 30 people just hanging out in these games and we're kind of watching them. We had been making those games with Roblox Studio, which was our creation environment. And we were in a rush. When can we publish the full closed loop system?

The closed loop system is anyone can download Roblox Studio. You can make an experience. You can push it live. There's a page where you can see all of the experiences. You can jump in and start playing that. And that's a, you know, that's a kind of a closed loop perpetual motion machine. So we're just like, hey, we got to get this studio thing out. Like, what's going to happen? We don't know. I hope someone likes it. Blah, blah, blah. We got about 1,500 users. So you go from, you're trying to get them from being users to creators. That's right. And then a few years later, which I want to talk to you about, because people, I don't think many people know that the size of businesses people are building on top of your platform they're big yeah they're they're massive now at this point where we're in the story you're turning your users into creators and it happened very virally so there's a day we were in a little office on chestnut street in menlo park the four of us it's like okay it's one in the afternoon let's push roblox studio live see what happens and then probably around three or four o'clock we started seeing our, whoa, someone has published something. Look at that. Look at that. Oh, someone published

something that other people are playing. Oh, look at that. Oh my gosh. Now there's 20 things published and that has a bunch of people in it. Oh my gosh. And so we went home that night just going, okay, closed loop viral system. Like these are users now that have way more word of mouth than anything we're buying, this system is growing on its own. Why do they have way more word of mouth than anything you're buying? Because they're telling their friends to play the game that they made? They made a game, the variety of the games. All of a sudden there's a hundred different things. It's not the boring stuff we made for the existing users.

I'm seeing something new every minute rather than this boring stuff we made three weeks ago. So new content, breadth of imagination, creators bringing friends, all of those just viral. What do you think when people compare Roblox to YouTube? I think it's interesting. It's a little different. Well, Roblox is inherently social in a way that YouTube will never be. I think there's both consumers and creators, but you hit it exactly right. The comparison, I would say, to YouTube would be a difference between the phone system and reading a magazine. Like reading a magazine on a cloudy day 50 years ago, you can do by yourself.

On the phone system on a cloudy day, you call your friends in the, you know, beaver cleaver 50s and say, hey, what's up? Kind of thing. And so I feel the difference is they're both content platforms. The content in a video platform is typically solo. I'm by myself when I watch YouTube. I don't watch other people. The content in Roblox is really a scaffold for communication and being together. So is this a game platform or is this a social network? We've actually said we have slides in our early business plan showing two viral loops rather than one viral loop. So in YouTube, there's a bit of a content viral loop.

The better the content, the more retentive it is. And they have very thoughtful ways of everyone finding good content. In Roblox, the viral loop is both the quality of the content as well as the users being with each other. So there is both a content viral loop and a communication connection viral loop. I've heard that other platforms, other messaging platforms, actually see you guys as a big threat. Snapchat is one I've heard. because the user behavior on Roblox is, yeah, I can play games with my friends, but it's actually like the use case I've seen is they'll come home from school, your younger users, and when we were kids, we'd get on our bikes and go find the other friends.

They get on Roblox and all their friends are there, but sometimes they're not even playing the games. They're just sending messages to each other. I would say it's interesting what's the utility of messaging, even very visual messaging or ephemeral or non-ephemeral messaging versus immersive 3D. And in a way, I don't think we think of it in terms of how much time doing this versus how much time doing this. I think there's a natural evolution of a wide range of types of platforms. You know, we've seen natural evolution of text, natural evolution of photo type messaging, natural evolution of short form video, these categories.

I think we actually think less about, like, we're comparing with the time of this activity. And I think we're typically saying, how can we increase the quality of this experience? Like, our niche is immersive 3D co-experience. How can we make it better, better, better? We think it's a naturally emerging niche. And I would say we feel the spec of our product has a long way to go. Like, Roblox is a very primitive product relative to what will be possible someday. What other co-experiences besides games take place on the platform now? We have all kinds of organic things popping up. There's arguably, of course, concerts, music.

That's starting to get, we're starting to see more and more of that be done organically rather than ourself, you know. So I think Bruno Maro showed up on one of Jandel's games without us organizing it. I'd say that's a good sign of, I actually think Bruno was the peak concurrent of music anywhere on any immersive 3D platform, and it was actually within a game. I think we're early signs of shopping, early signs of who knows, you know, someday older people are going to go to church on the platform. Older people are going to work together on the platform. Older people are going to do other things.

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I still don't think I understand the total like depth and breadth of your vision. So if I come to you and I don't know anything about Roblox and you're the systems designer and I say, okay, explain to me what you have built. Yeah. Take as long as you want with this question. If we had to talk super expansively, I would say, look, there's a continuation on the human development of how we communicate. We said earlier, it's a bit like the holodeck. Right now, the holodeck that we're building is very primitive. It's not photorealistic yet. You don't go inside of it yet. But you do go into a 3D environment, mostly that you can imagine or think about or build.

You can go there with your friends and play hide-and-go-seek. You can play a traditional game. You can be in a fashion show like Dress to Impress. All of the places you go in the holoduck are made by a creator community. We've incorporated an economy into this system. So the vast majority of people who go do that for free. Our creators, though, are very thoughtful and savvy, and they come up with interesting, you know, ways to spend money. So when we go into Dress to Impress and go into a fashion show, there may be something I can buy if I so choose it. And they, in a way, our creators, because they have this platform, are able to innovate new types of things that we think of sometimes as games or experiences.

You know, it's funny that the top hits on Roblox recently have either been fashion, Dress to Impress, or Grow a Garden. You know, it's like, that's pretty cool. Okay, but explain how you built the world, though. Behind the scenes, there's a massive amount of technology in Roblox. Like this is, to make it seem as transparent and easy as it does, there's an underlayer we call the Roblox operating system, which is the company that's then building this Roblox thing. And kind of in line with kind of system thinking, we think of our company as the system. And the company, Roblox is really running almost as if it's nine separate companies.

They are all very well connected. We all get together once a week and connect all these companies together. There is a 3D cloud simulation and tool set company running within Roblox. There is a mini cloud infrastructure company running with 40 data centers and hundreds of thousands of computers. Why did you decide to do that? We initially, we just wanted, we were actually pretty naive. And so rather than going down this cloud path, I would say right when we were starting Roblox, AWS was just starting to be a thing. And S3 was just starting to be a thing. We like the idea initially of building it ourselves. Five years later, I think that's when there's a lot of discussion about this company is all cloud. This company is all build it themselves kind of thing.

we at that point started to see building infra ourselves as being a cost benefit and a scale benefit and so i would say our we were great partners with aws and gcp and others we do burst into those platforms but for at the scale we're working and the cost we're working we do this very efficiently like all of roblox runs for less than a penny an hour for every person around the world and that's super critical um but so so yeah and we can go in deeper but roblox is really nine let's go deeper i want to go back to the nine companies because this is stuff this is Man, before we start recording, I was like, you've got all this crazy shit in your head that happened in any of the podcasts.

We've got to find a way to get it out. So we are, so underneath Roblox, Roblox operating system, it's how we run the company. We have a group of engineers working not on Roblox, but on the Roblox operating system, looking at who are the various teams, how we're organized, how we do all of our things in the company. Hold on, back up, back up. You have a team of engineers working on the Roblox operating system, which is just the operating system on how to run the company. That's correct. The company building the world. That's right. Okay.

David BaszuckiYeah, because running the company efficiently is the most powerful way to then build this vision.

So, Matt, I won't go into the extent we use AI acceleration amongst our creators, but having all of our engineers. Why won't you go into it? I don't want to say anything non-public, but I would say that is right in line with Roblox operating system. How does every engineer, product manager, data scientist, designer work in optimal ways? How does the leader of an individual group, like that game engine cloud thing, how do they actually operate almost like a mini CEO? How do they run that vertical stack? How do they control the types of engineers and product managers, how they compensate them? That's a really big part of how we run our company.

And I'd say that the common thread of what we try to do is have as much autonomy on these groups or companies within, and then simultaneously, horizontally, just continuously try to connect it together. So we have lots of groups who can go and do things very quickly on their own, and then we glue them together constantly. How did you come to the design of the way you have the company operating? There was a pivotal moment a long time at Roblox where we were running it as three horizontal stacks. We were running it as the web stack and the infrastructure stack. And what we would see is, you know, someone's working on a specific feature like the social graph, they would have to go and try to get enough bandwidth out of the web stack and the infra stack and the front end stack.

So there's always a negotiation amongst that, and it was hard to say who is building this social graph. So there was a rotation of that where we said, no, someone is going to be in charge of the whole social graph, user-facing components, web component infra. And all of a sudden, we got a lot of acceleration because they could load balance between all of those pieces. So that lesson's been with us today, and actually it runs recursively. So within our, for example, this one group or company I've been talking about, the Game Engine group, that is subdivided into smaller pieces that also run kind of in that same way.

But essentially, like you created a series like primitives? Yeah, in a way, we're like, we have primitive system for how we run the company recursively from groups to teams to pods. And we've tried to make that somewhat, you know, an accelerant in how we build the business. But the way you think about these nine, you think of them as almost individual companies inside the company? Is that the term used? We call them groups, but the leaders of these groups, we want them to feel that autonomy of as much as possible running a pseudo-autonomous thing that intersects with each other. And, you know, it's almost like we would have a game engine simulation company talking to an infrastructure cloud computing and storage company.

They work with each other. This sits on top of that. But we want as much speed and autonomy in each of these groups. Say more about how this is organized. This is very fascinating. Yeah, yeah, yeah. No, we executive staff meeting. Every Tuesday, we get together four or five hours. Leaders of all these nine companies come together. We go through the things they're working on by themselves, but we go through a lot of times of all of the horizontal things that are bringing them together. What are the horizontal things bringing them together? It's funny, but we track at a ridiculously high level of fidelity, even in our executive staff meeting.

So we, you know, we have probably 50 to 60 things that are core to hitting, you know, the objectives we have this quarter, next quarter, the rest of the year. It's almost like a hand curated list at the company level and group level of things that we think are emblematic as a way of our success. And every week we have all of the key leaders of all of those groups come together and we just go through all that list of 50. So who's in this meeting? It's these nine people, they're reporting directly to you? Some of them report to me, some report to some without, but there's probably, we'll bring in a few other engineers as well.

So there's probably 15 or 18 people in that meeting. And we spend an hour just choo, choo, choo, choo, choo, choo, choo. Well, no, what's the choo, choo, choo, choo? You got to explain that. Key deliverable one through 50. In an hour? It's two minutes. It's like one to two minutes an issue. I just recorded with Evan Spiegel, founder of Snapchat. Yeah. And he was explaining his design meeting. And he says, I forgot, maybe an hour or two hours, I have to listen to the episode back. But he's like, we'll go over hundreds of ideas. And we just go through it really, really, really rapidly. We have our core list that goes between 50 and 70.

They cycle every month or two or three or four. We're constantly putting new things in. How do you keep track of all this? We have a pretty good office of CEO team. We have the Roblox operating system. It's got some software in there. My office has, you know, StratOps people, senior people who kind of work with me to do this on the side. So it's very real time. Okay. Can you say more about these nine separate companies? I think you just described two of them. Yeah, we publicly talk about all of them. So I would say there's a people systems company that actually builds the Roblox operating system and has all of our recruiting and people and performance management stuff.

there's an infrastructure company and that's running like our 40 data centers and all of our compute and bandwidth persistence they're building out cool persistence systems as well game engine simulation tooling and roblox studio sitting in a group or a company there is a group called the economy group it's literally all of the things around how we have robux how we monetize how we um you know collect money the ledger all of that there's a very large group arguably the largest safety and civility group engineering product policy and live ops under a single threaded leader chief safety officer matt who can just run that whole thing and make decisions there is a user facing group that is all involved with social graph virality the various apps we have for having Roblox run in different places.

So it's like a wide range of these user groups. Do all nine of these companies have the single-threaded leader? Some of them are still matrixed. Many of them are single-threaded. We do have some leaders that have engineering under two of them, so it's not absolutely perfect. And in some of these, these are better run by maybe a product person than an eng person. But generally, there's one or two leaders for each of these groups that we know exactly who it is. Do you think that'll be the case a year from now? I think so, yeah. Okay, so you don't see the need to change that. No. All right, so let's go back.

This is very fascinating. Essentially, you've designed a system. That's right. Which is your company to design another system, which is the platform that you're building. That's exactly right. I still don't understand the jump. So… It's been like a couple hours of letting people start building their own game. So now you're turning users back into creators. That's right. But there's no economy there. There's no Roblox. Pure fun. Pure fun. And you're not, there's no revenue of the company at the time? No revenue. Pure fun. Okay, so what is, taking back to your decisions, you're saying it's like, oh, we're onto something.

This is going to work. What's your next thought? So then what starts happening is Roblox started a persistently viral mode. Like we could track the growth day by day, week by week. It's like, this is organic growth. This is not paid acquisition. It's just like we're sitting back and watching that. We then, the fun started being there. It's just like 10 concurrent, 100 concurrent, 1,000 concurrent, 10,000 concurrent. Creations are getting better. We know everything we do with Roblox Studio, the better Roblox Studio gets, the more viral it is the better the game engine is the more viral it is very early on to Eric's credit I think literally on week three or week four in the afternoon when we're now we're sitting there we know the names of a lot of these people there's hundreds of people Eric said we need to build the first safety moderation system and and john and matt and i'll look at it and say you're right he's right oh my gosh like we got to get on this thing so along the way we build like a moderation system we have user reporting all of that for a long time matt and um eric and john and myself we were the moderators like we would switch off so we got to get a vibe of that And so this keeps marching on. And then finally we say, OK, how can we start making some money on this thing? It's growing. We have costs, all of that. Interestingly enough, this is another example of we had a big intuition around virtual economy.

We said, we can get this out a little faster if we build this club membership thing. At that time, Club Penguin had a club membership. Can we just charge people five bucks a month or something? So we worked on that for a while. And so we had this thing called Builders Club. It was kind of fun. We started monetizing. Exact same thing as when we started. We had this really fun moment where I was on a camping trip. and um i could i could check in how many people are buying builders club every day first day it was five and then it was four then it was six then it was three then it was eight then it was 15 so we're like okay we're monetizing this is great um and so um builders club keeps going and then for about a year or two um because it was working so well wow it's just all viral growth viral builders club is starting to work. Let's just keep working on the system, making it better and better. It was interesting though, just like in the early days when we started the puzzle game and then said, finally, the market has shown us that's not the ultimate system. Let's build what we really believe. Something very similar happened with the builders club. And we entered this interesting period where user growth was going like this, but revenue and bookings was kind of

going like this. And so what that meant is Builders Club was getting a little old and stale. And for the wider range of users, it was really not the right thing. And in retrospect, it's funny because when we started the company, we used taglines like, you make the game. And that's a really good early tagline, it's ask inspirational, everyone's making games on Roblox. It's definitely not the reality of, you know, a billion users. And in a billion users, communication for many people would be very important without having to make a game, you know? There's a lot of people that just want to show up and play something.

Yeah, I think right now you said, the last number I saw, you have like, I don't know, 150 million daily active users or something, 140, whatever the last public number was. Out of those 150, how many are building games? 150 million. I don't know if we give out our latest Roblox Studio numbers, but it's definitely a lot of people, but it's not 10 million. It's one or 2 million. And I would say the good news is that vision may actually return because I do think over time with AI acceleration and all of the things we're working on, just like maybe in the very early days of video or YouTube, was mostly consumptive.

There was a little bit of this early, you know, creation. And then with short form video, I think we've much more, everyone's starting to make videos. I do think there's that potential for something like Roblox. Yeah, especially if they can do it in natural language. Exactly. So along the way, we kind of had this revelation that while maybe the way Reason Builders Club is getting tired is not everyone wants to be a builder. A lot of people just want to have a lot of fun.

David BaszuckiAnd so we had had also a big intuitive vision, what would really be cool, another perpetual motion machine is virtual economy. And people spend money, they buy Robux. If we can allow the creators to figure out all the different ways someone might buy Robux without hurting their experience or making it any less fun, then a small portion of users will buy some Robux.

they'll spend it in the game the creator will accumulate those robux and their roblox robux bank account they'll cash them out for real money and that should create another perpetual motion loop interestingly enough we actually had a lot of board discussions like is that a good idea or not and the um the board came around like i i was probably the biggest pusher of it because I believe some people who were hobbyists would then be able to go and earn a living. Like you could go from hobbyists to earning a living on Roblox if you could do this. So we did that very similar to the Roblox studio situation.

We had a full closed loop system and the closed loop system means I'm a creator. I can make a game or an experience. You can buy something extra for Robux. Could be a flashlight. for something as a user i can go buy some robux with a credit card i can buy that um and also from a discovery standpoint we started showing top games where people are spending robux so same thing within about an hour or two going live oh my gosh that's the top game where people are spending roblox or robux more people went into that and that's going to scale with user growth in a way that the builders caught would never.

And what we basically hit is an elegant, you know, economy that pretty much scales more than linearly with ours, basically. And what we have found without, you know, still optimizing generally for engagement and retention, not for money, is that developer incentive to balance engagement and money. If everyone needs to spend money to have fun, your game isn't viral um so creators have kind of figured that out and so that's been another perpetual motion machine deal will help your business hire pay and manage any worker anywhere in the world. Deal is the best company in the world at building infrastructure for global hiring. Deal is one platform for payroll, HR, benefits, and device management across 150 countries. Deal gets you everything you need to run a high-performing global workforce on a single AI-native platform. From first offer to final offboarding, Deal handles the complexity so you can stay focused on your business. The best founders and operators in the world have one thing in common. They control as much of their business as possible. And the founders of Deal do exactly this. When you use Deal, you aren't using a third-party payroll processor or a messy network of in-country providers. Deal built and owns the

rails. That means faster speed, better service, and total accountability. The founder of Eleven Labs, who I use to make transcripts for this podcast, has a great description of the value that Deal can give your company. He said, we built ElevenLabs to break down language and communication barriers. With Deal enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories, and ideas to every corner of the world. Deal is trusted by over 40,000 customers and growing fast. Learn how they can help your business by going to deal.com forward slash Senra. That is deal.com forward slash Senra. You launched this second perpetual motion machine, this virtual economy, this currency a virtual economy how many years into roblox very early on it's got to be 15 years ago okay so you've been building this economy for 15 years that's right is there some another flywheel where it's like okay i was making games for fun i'm a user you turn me into a creator that was all fun now you're turning me from a creator into an entrepreneur therefore now i have i make more money i can also it has to increase the quality of the games quality's gone up up up i would say

quality is um ultimately going to be limited not just by the creativity of our developers but i also feel an interesting thing about roblox is in the video space the camera the display they're getting pretty refined like 4k camera 4k 60 hertz display that's a pretty mature technology relative to maybe you know black and white movies with no sound 100 years ago in the video space in the video co-ex you know co-immersion space we're not there yet like um we're really excited because there's a lot of technical people at roblox who i think the ultimate spec is to video what human co-experience can be which is huge crowds of people 10 000 people realistic uh photoreal yeah because right now the games look shitty we we believe we're going to get to photoreal i'm not obviously insulting you we believe we're going to get to photoreal isn't it crazy how far you've gotten like you hit on something about you know deep in our nature that's the fact that you don't want to do things alone you don't want to shop alone the core bones of the platform are very interesting and i think it's it's almost like um you know So, Roblox is very sophisticated, very technically complicated, but in a way, that's the same traction one would have gotten

on that early, you know, black and white movie in a movie hall without any sound and, like, some text between the scenes. I just saw something. So, you, the fact that you got this far with, because the kids don't care what the game looks like. They just want to hang out with other people. We got pretty far with black and white, no sound movies. But I would, if I was in your position, I'd feel very confident investing and continuing to reinvest into this platform, given how far you got? Could you imagine how big the platform could be if it's photorealistic? Can you imagine 10,000 simultaneous users photorealistic on a 2 gig Android device?

What's the most concurrent users? You said Bruno Mars was the most you've ever had on the platform? I think there's two types of concurrency. Bruno Mars, we're talking 20 million people, but those are sharded amongst copies of experiences. When we say the technical goal is, say, 10,000, that's in a basketball arena. And so running 10,000 concurrent people is really technically complicated. They may be all around the world trying to get together. And so when we say concurrency, it's in the exact same environment where you can see and hear every single person. This is why you keep saying that it's like a little secret that Roblox is actually an infrastructure company?

That's right. Okay. You have not yet figured out how to create the technology to do what you're describing, what you want to do, correct? And that's what you're doing every day? I would say part of the job being interesting and fun is I think we have a reasonable idea of how we're going to get there. And so no time frame, not saying when Roblox will get 10,000 user, photorealistic, all of that. But I think technically we have a reasonable idea of how we're going to get there. That's kind of exciting. And very hard to compete with. We run the company in a way, it's interesting. I mean, we've been in many crazy times, right?

We've been in the PC revolution, the web revolution, mobile revolution, crypto revolution, AI acceleration revolution. solution we have to run the company almost as if we're imagining a virtual other company who really loves this space so we have like an imaginary competitor so we we literally think about running the company that way michael dell said this exact same thing on this podcast um where you know i think five years he's he's stood up and he's like you know there's a company that's going to be doing uh going to compete in every single area we're in uh they're going to be doing They're going to be faster, better than us.

They're going to be this technology. And he goes, and we're going to be that company. That's right. And he believes in like, even if you don't have a crisis, you make a crisis. We have to look over here at that imaginary company and then be that company. Very similar to how Dell thinks. I just did this episode on Elon and he said the same thing. He's like, even when it looks like we're going to win, I always assume that we're losing. He wants to keep that mentality. I want to go back to like, okay, so you stumbled in. There were a couple of years into Roblox's history. 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. 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. 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.

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

David Baszuckitimes 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 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 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, we might put some padding in there, but we actually never dipped below that initial 10 million. I heard from Ho and I think other people, like you, you, you were very careful when we were raising money. It was almost like they had to slowly commit. You kept saying no, no no no with with some of the vcs we talked to we definitely in that sense i think we did a really good job intuitively connecting with go long vcs and we really we we got very fortunate whether it was um altos or graylock or index or others that in a way we got uh vcs i think who could risk it

all, who could not like, oh my gosh, that's one of my first deals, like, what are we going to do? You know, could really go along with us. And I think that was very helpful. So why was it important? You were just worried about dilution? Like, what was, are you a control freak? In some areas, probably, yes. Hopefully in other areas, not. No, but you're pretty vertically integrated. You like to control everything. You build its own data centers, your rendering systems, your AI creation tools. You're funded by operating cash. I think there's areas of my life where hopefully, like, I've decided not.

We're talking about work. But for roadblocks, knowing what we're building, and I would say it's not just control. I think it's, in a way, owning our destiny, in a way. So I would say building data centers is— Yeah, but the only way you own your destiny is if you maintain control, right? Exactly. So data center cost, performance, control, yes. What other areas of the business are you like that with? Our game engine, for example, we always imagined we need a multiplayer 3D immersive engine that does 10% of everything really well. Early on, it's like, you should use that game engine. You should use that game engine.

We said, no, that's like a critical core part of our whole platform. We have to build that ourselves. I think you just like building things. We do like that. It's like, go back to your description, like, I built an operating system. I built the company and then I built the operating system too. operate the company. Yeah. It's interesting because we, um, we're going to be building some other interesting things that we just decided on. Oh, of course. But did you, do you see where I'm going with this? It's like, I want to tie that natural inclination or propensity you have for, we're going to call it control for the time being to also being very careful, not only how much money you raised, but who you raised it from. Is there a connection there? There might be like a thought around efficiency, growth. Because Because you can control your destiny.

That's right. And there's many components of our stack where we went exactly the opposite way. And we said, we don't need to control that. Like in the game engine business 15, 20 years ago, like what audio system are you going to use? We'll use FMOD. Everyone use it. We'll plug it in. So we don't build everything. Like when we feel we can plug that thing in and use it, we'll go that way. Brian Halligan founded HubSpot 20 years ago. And he has this line about AI that I keep thinking about. He said most companies are using AI to make their teams more productive, but the companies that will thrive make the company itself the intelligence.

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Let's go back to this idea that I've heard you say a few times, and I want to understand more deeply. The dirty little secret of Roblox is that we're actually an infrastructure company. That's right. Okay, explain this. I mean, running Roblox behind the scenes is very complicated. So when, you know, Grow a Garden hits 20 million people at the same time, there's a lot going on there. That's 20 million people all around the world. They're playing on a phone, a tablet, a computer, iOS, Android, PC, Mac, Xbox, PlayStation, MetaQuest. They are running translated versions of that experience. they are hitting very quickly on Roblox bandwidth.

They are connecting to data centers in Poland or in Singapore or in Brazil. They are connecting to our core databases as well. And running that is very interestingly complex. Running a 3D simulation cheaply is very complicated. I said a penny an hour. So that is part of why our infrastructure costs are not crazy, is we can do a good job in even some countries that don't monetize very well. So we have core data centers, edge data centers. It's, we're running a lot of our own CPUs and GPUs all around that. That's what allows us to do that. And you started this from the very beginning of the company?

We did, yeah. Okay. Like the very beginning of Roblox was running on one giant server. It was like right over there in my office. Can you describe what you see as the flywheel of the world that you built? I think the flywheel would be akin to saying, what's the flywheel, hopefully, of the early phone system? Like way back in that day when AT&T comes out with the phone system and there's probably some time where only 5% of people in America had a phone. But imagine the virality of going over to your neighbors, see them making a phone call across town. Oh my gosh, I want to do that too. Look at that.

And so, you know, when we look at the phone system, it most likely grew pretty virally. Like there's some early adopters, they're probably really expensive. But over time, everyone saw that. And so I think that's how we see Roblox going a bit. There's a lot of word of mouth. As the quality of the experiences grows on the platform, I think we can see correlation in growth there. And so if we can technically support what we ultimately think should be on the platform, I think there's potentially a lot of growth there. Blake Robbins is a friend of mine. He hangs out on the edge of the internet. He always finds these like weird things for me.

And he's the biggest Roblox bull that I've ever come across. This is the way he describes it. I'm curious if you agree with this. More creators brings more games. More games brings more players. More players spend more Roblox. More spending attracts more creators. If we're ruthlessly pushing forward the quality of our technology stack, our economy stack, our safety stack. So I would say, I think what he's saying is if we walked away from Roblox right now and just kept the lights on, it's possible we would keep growing for a while. But that at the same time would be very, very dangerous and something we would never contemplate.

Yeah, the way he described to me is that Roblox is a compounding machine with network effects and a fully functioning economy. Yeah, yeah, yeah. I think we would, we see, we don't know what that full effect is. We'd never claim that we could walk away and all of that. But I do think simultaneously, we know what we believe is technically possible. And we're literally racing to build that. You mentioned safety a few times. Ho Nam, when we had dinner to prep for this, he said something interesting that you have been, essentially, it's the biggest playground in the world, right? One way to think about this.

Biggest playground in the world. Obviously, it's the safest playground in the world, but it's also huge. So there's going to be some kind of, you know, issues that come up. but he actually was saying like the investments you guys have been making for seven eight ten years around safety and ai way before anybody else was you're getting so good at it it's it's actually a moat because over time it's going to get safer and safer that's really beautiful that he said that you know we um we've seen this in self-driving and we're not going to claim we're self-driving but in self-driving say self-driving ends up being 40 times safer than the average human when there is a self-driving incident in the news you don't hear that it's just like self-driving kind of thing i do believe um the the pressure we get in a good way from the media from this from that is an incredible um motivator for that moat we the vast majority of what we've done on safety and civility we've done on our own kind of in a visionary way i'd say age check we We made the call on our own.

It's not because of laws or anything like that, but the ultimate mode and the ultimate belief of what is going to be possible. We're going to know the age of everyone, we have AI. systems, watching content, watching communication, we're banding things, we're not sharing images, all of that. It's an enormous opportunity. And I think we, more and more, you know, we're starting to say, look, we know what the gold standard for safety is. We're building it. We're pretty far along. We're actually starting now to see other companies say, oh, maybe we should do what Roblox has done. Or seeing more and more governments say, we like where you're going with this, like, this is really cool.

So I'm really optimistic about, you know, having this force of innovation and what we're doing there. Okay, but is this something that you've been building and compounding since your co-founder? All the way since we built the first moderation system. Like the first year or two into that. Okay, explain what, like, can you, I don't know if you can talk about this publicly, like what have you built to make it? I think we have seen AI as more consistent over time and scales more than humans and so the ability to run every asset everything on the platform through ai all content image everything everyone's building everything everyone's saying it just get better and better and better at that it's just been an enormous thing and and so when we you know the part of ai is is very much the human facing thing like oh i've got an ai prompt or i

David Baszuckican do all of that. Behind the scenes, though, at Roblox, for many, many years, we were pushing very early AI, BERT models, primitive-type models, to drive safety. So I do believe it's a mode,

and I do believe we've done something very unique in that what's going on out there right now is we're very upfront. Like, we do have people under 13 on our platform. It's an enormous responsibility. We focus on, once again, all of the aspects of how they play and learn and do things. But that's very different than being some other platform that says, oh yeah, it's okay. No one's under 13. We're good. And so I do think long-term leaning in and being part of that is an enormous capability. Something came to mind when you said, you know, now other companies are looking at what we've done in this and like, hey, I want some of that too. Would you ever sell this kind of technology to other companies? I think it's worth thinking about. Like I believe we will end up with the best AI tech for text, for voice, maybe for video, doing a wide range of safety things, either monitoring for critical harms, flagging, adjusting, all of that. It's not unreasonable to think we might do that. We've already started open sourcing some of our stuff.

So there's a consortium actually with some various companies involved in safety. We've open sourced one of our voice models. We've open sourced one of our Sentinel models. So we are starting to go in a way down that path. So the majority of the revenue that Roblox makes now just comes from this platform, this virtual economy, this world. That's right. But you have to have a million of these giant model companies coming and wanting to train their data because you have 12, 14 billion. What's the hours of a month? It makes it so simple, right? But how many hours of 13 billion plus a month? So 13 billion of actual people interacting.

Like, what does this data set look like? So there's a lot of data sets out there that are in video coupled with ASDW. You know, it's just like a human interaction model. What's cool is because we're running this 3D simulator and we're running it on our own cloud. and all of the experiences and games are running somewhat on the same simulator, we have really interesting data. We have 3D location of everything. We have how people are trying to move around with their avatar. We have obviously what... They're texting and typing in a privacy-safe way. But what's fun about it is we would, of course, never sell that data.

That's what I was going to ask. Never, ever, ever, ever. For several reasons. One is just from a values thing of respecting the community. Can you imagine, like, what kind of whacked-out decision that would be? Roblox is selling their 3D user data. We would never do that. Also, I believe over time that this data is going to be very interesting data to, for example, imagine a future where a creator wants to make a really beautiful Roblox game and have a bunch of agents working all night long, iterative, Wiggins, loops, recoding, testing, recoding, testing. Imagine just like we do with code now, a creator wanted to do their whole game that way.

So we go back to you guys are buying 50 users a day from Google. Now, if you're building a game on your platform, you can actually use real, like the data from actual users on Roblox to test what you're building? There's a level of indirection there, I would say. What's the indirection? The level of indirection is making amazing NPCs that look and behave and act like humans by training on that data for our users. So what we'd like to be able is you're building your cool experience. You want 10,000 virtual testers. You want to describe how they act, what they do, and put those into your experience and use that to test overnight.

I like that idea a lot. That's very interesting. Your stock seems to be like all over the place sometimes. Why do you think like you have these huge Roblox bulls or it's like this is a compounding machine. And then what do you think is like most misunderstood about what you're building? Why wouldn't this keep getting bigger and more valuable in the future? I feel like I can't predict the stock market. No, I don't care. And I think ultimately, you know, it's showing, I think the future for many companies is like we're in a time right now where raw user growth and engagement growth is mixing with a lot of factors.

I think technical excellence, continued innovation, having people understanding where we're going with this. I mean, there's just going to be more and more of that. So I'm optimistic. And you see AI as a giant tailwind for you guys. It's an interesting time, right? Like, it's a really interesting time. People are questioning all types of different types of companies. What companies are going to grow twice as fast? What companies are going to this happen? For us, it's so many areas. It's not just making games better and faster. It's increasing quality, time-to-market of experiences. And I do think ultimately AI will power some of what we've said around our ultimate spec.

Are there completely AI-generated games already on the platform? I would say we're getting close. And I'd say right now, Roblox Studio is starting to embed a pile of AI-capable-type functionality. The beauty, though, that we have all of our Roblox cloud open to MCP server and all of that stuff. Now we're just seeing devs push at this with AI coding tools and creator tools and start to create that flywheel. And these can be relatively small teams, even individuals that make wildly popular games, correct? Absolutely. So let's get something, I don't even know how long it's taken me, why it's taken me so long to get into this part, because this is the part I'm actually most fascinated with, is the size of the businesses that people are building on the platform.

I mean, Devex is well over a billion bucks a year, you know, that's the amount of raw money flowing to creators on the platform. It's really been, I'd say it's a really interesting time because in the midst of AI, throughout the game industry as a whole, there's been a lot of, you know, maybe. legitimate concern about a lot of creative people of having AI displace what they do. The thing we've said is we believe that money flowing to creators is going to increase, not decrease. And so that's pretty good news. If that money flowing to the Roblox creative community is increasing, we should see even more opportunity for creators. We've also seen something really interesting you know top creators on roblox are making 10s and 20s and 50s of millions of dollars like these are pretty i heard some of them are making that a month uh i don't know i can't say that but i would say they say that i don't know if it's true i heard three kids in the middle of nowhere making 25 million dollars a month i won't confirm or deny but i would say like one thing when you hear that as a measure of platform health is if we look at the year-on-year

David Baszuckigrowth rate of creator one, 10, 100, and 1,000, creator 1,000 year-on-year is consistently growing faster than creator number one. Wait, say that again?

The curve is even flattening more. The growth rate in bookings per year for creator number 1,000, ranked by how much they're making, they are growing faster than creator number one. How? Curve is flattening, wider use around the world, more opportunity for vertical content, more opportunity for some content for older people. So that is a flattening of the curve, which bodes well for creator 1,000. What does the long tail look like at the very end? They're making a couple hundred bucks a month? Like, what is that? $10 a month? I think the top 1,000 is on average making a million bucks. I heard it's higher than that.

I think it's like 1.3 million. Okay. And then I think as we go beyond, though, that curve, goes way out to creator 10 000 beyond where there's significant money being made out on that part of the curve do you see a world you think about how like in the last like decade and a half you know like when you ask people what they wanted to be when they grow up like the the youtuber wasn't even on there you know 15 years ago now it's like always in the top you know five or three whatever cases if you do have this perpetual motion machine you keep going and i think once people understand the size of the business that they could build on this and they have a love for what they're doing you know you're usually only really great if you actually love it like i think being a roblox creator would could displace being a youtube creator who knows i do why do you make that noise there's because who knows what was that noise it's funny because i get these i get these short form videos in various platforms of really cool roblox creators living in like this giant studio driving these cool cars doing short form video about how cool it is to be a roblox creator i think what they're saying is if you do this there is the potential

to make a great business so what do you guys do to foster like that message or foster the the size of the businesses that can be built that's pretty viral people know i think what we're trying to do is create the tech literally like you said the technical infrastructure so more and more of them can bring their ideas to reality like um we've said publicly we want to get to 10 percent of of global gaming on the platform. I think that means taking that black and white film projector and turning it into a 4K projector in the gaming world. So, you know, we think a lot about the responsibility of building the platform for them.

So the more photorealistic that it gets, the wider the market gets. I think in many dimensions, concurrency, performance, cost, photorealism, ease of creation, AI acceleration and creation, all of those things help bring ideas to reality. But out of all of those, what is the most important you would think? I'd say it's load balanced, actually. So I think one of the good things we've done is if I looked at that mix and I looked at Our engineers are working, it's not like everyone is working on that one thing. We've got a balance of those things that are pushing forward. Do you have funds coming in and trying to buy up these games and like rolling them up?

There is a market out there. I think if anything, we're trying to get the message out to our creators. Like our DevRel team can help you assess what your game might actually be worth because a lot of them are worth a lot of money. The platform itself has never tried to buy any of it. We never have. I think what we want, though, is some transparency in the market. So, you know, early creators can actually know what kind of a gem they're sitting on. Have you seen people being taken advantage of? Not really. I've seen, like, amazing, actually, profit sharing, revenue sharing, like, things that have really worked out for buyer and whatever.

But I do think over time we want there to be a lot of kind of transparency in that. It's almost like you built a game to play entrepreneur and you turn them into real entrepreneurs. In a sense, it's an entrepreneur game. Yeah, if I wanted to teach like a, you know, a ninth grader about, you know, entrepreneurship, like Roblox might be the best place to start. You could literally teach them how to use AI coding tools, come up with a crazy idea, get it live. On Roblox now, they could buy traffic. They could spend $50. dollars um same thing buy users on roblox that whole cycle yeah i'd be very interested in that because when i talked to toby luke the founder of shopify um he said something interesting like he thought you know his job is to create more entrepreneurs like that's the way he looks at i think that's right i think yeah i think it's more important than ever especially with young people if you look at like their empathy or their like uh they're way more attractive like socialistic ideas you know than then i think like your generation was and definitely my generation was especially in you know in america it would be fun to imagine an entrepreneurship class that kind of connected all the dots i build this do this can see this happening that could be super

educational what's your biggest threat to that would inhibit you from building what you want to build like what you're describing i actually i actually feel the biggest threat would be not imagining that competitive company and not building what we think that competitive company is. So the biggest threat could be complacency rather than we can see what's technically possible. Let's build that. How often does this imaginary company come up inside the discussions you're having in your real company? Now and then, I would say given the speed at which we think some stuff's happening. Actually, it's interesting, the whole history of the company has arguably been a motion from quarterly things, monthly, weekly, daily.

Like the whole pace of our company, I think, has just been a historical acceleration of the pacing of the company. The pacing at which you move? Pacing at which we make decisions, pacing at which we gently adjust without like swinging the tiller widely, the speed at which we check in, the speed at which we track things, it's gotten faster over time. So the way I would think about what you've been telling me is you have this excessively long view. The fact that almost 25 years ago, you're like- That's actually one of our values, take the long view. Okay. Well, so 25 years ago, 20 years ago, this is going to be the last company that I'm going to work on. So therefore, you even said, I think early in the conversation, it's 30, 40, 50 year kind of view. So an excessively long, longest view in the room, basically. So we think about this with infinite number of daily iterations towards what you're trying to build yeah a combination of those two totally the infinite iterations would be a complementary value which is get stuff done and so we we say get stuff done means continuous iteration but pointing in the right long direction so something we haven't talked about but i think i heard you speak uh i think

this you said this in your stanford talk which i thought was interesting that there was multiple like near-death experiences or almost death experiences of robux we haven't talked about that at all there were several i think um one was the economy thing like if we had not figured that out that would have been very dicey looking back now i mean you were obsessed with science fiction there were all these other like virtual economies right at the time second life second life there.com Yeah. All of that stuff. So were you taking ideas from that as well? There.com and Second Life, they really were early and in parallel to us.

In a way, they were so early and so parallel, they made these very big visionary things. You know, Second Life's architecture was contiguous earth kind of thing, which had some issues around scaling because in a contiguous earth type situation, which is just the way the real world makes there's only one copy of that roller coaster and when 30 people want to go on that roller coaster no more can go so we i think we were a lot more practical around scale where it's like no man if there's if there's a hundred thousand copies of that roller coaster we're going to figure out how to route people to that so we could have 10 million people riding the roller coaster but there are a lot of early early visions out there i would say at the same time for sure what was the argument from the the opposing board members to to doing the economy we had a lot of fun going on the platform like we're just like oh everyone's having fun building you know this viral stuff would we distort it if people could make money and but the idea the idea that look in the traditional game market you have studios with hundreds of people like we could probably get better quality if we nudged in that direction Other near death or rough things is our economy got hacked once. So we had to like shut down the whole economy for two days. Literally, that was somewhat scary. And the reason is we had just been so early moving so fast that the way our economy was working right now wasn't like double entry bookkeeping and journaling and all of that.

and we had no flow control anywhere in the economy. So this was a famous economy hack very early in the days of Roblox where the second the economy was hacked, money could bounce from place to place very quickly.

David BaszuckiWe caught it pretty quickly and we just said, shut everything down.

We had to shut Roblox down for a while then bring it back up without the economy on. Luckily, we caught it pretty quickly and only a small portion of the money had moved around. But we had to run for several days with no economic activity. Were you already a public company when this was happening? No. No, no, no. The SEC does some really good stuff. And I would say some of the good stuff, if we go through a lot of the controls in the SEC, those were things we did 15 years ago, you know, as far as this economy and backups and all of that. When you were designing this, were there any, like, books you were reading or, like, were there any examples?

You're like, OK, I'm going to take an economy that I see functioning well in the real world and just make the virtual version. How did you even come up with the set of rules that you had? I would say all four of us founders were very into high integrity systems, like what's the amount of float in the economy? How much currency we have? Do you trade it and not trade it? We saw very early on in our economy, we had something really interesting in the early days of video games. people would have multiple currencies and we had something that in retrospect the roblox community really loves but isn't really a good idea i don't think and that is a a participation-based currency called tickets as well as a money-backed currency called robux we the the thing that comes out is when you have a participant.

It's a patient-based currency. You get one ticket for every day you log in. That's really not a very good way to have people log into your system. You know, it's much better. They just love chatting with their friends or playing games. The other thing is any currency that a user can get from work or log in will immediately be bought it now. And so we could see people trying to bought that currency all day long, and we had to ultimately get rid of it um so we had some good learnings with that but ultimately our current economy it has you know as i've said is kind of scaled better than linear with user engagement you mentioned there's an advertising business inside of roblox that's right how long has that been going on it's just started pretty recent but if you go onto the roblox home page you can see some of the experiences say sponsored right now we have a long-term vision of what percent that is But it's actually really helpful because most of our discovery, primarily organic, we've been very transparent with discovery.

And so one of the things that Roblox creators like is we share all of the signals of what's boosting something. It's almost as if we were YouTube or TikTok or Reel saying, here's all the factors that, you know, bring you up here. But for some creators who want to do that entrepreneurial experience, buy 50 users very early, their game isn't viral yet. They can use that sponsored thing, just like when we bought traffic from Google. I got one more question for you. Okay. We're almost out of time. We're out of time. Are you jumping up? Do you want to leave already? No, I'm stretching. Okay. I want to give an expansive answer.

Why do things like this? Why are you doing podcasts? I do feel there's a lot of depth to the way we run the company. That podcast is the format to get it out. And I love podcasts. In today's media, if I know who the podcast is, like, that's all I need to find great content. I like podcasts because it's typically not edited. It's not showing up in a discovery mechanism. So I feel it's one of the truest forms of media. Okay, I'm glad you used the word depth because what I want to do is if we're out of time now, I want to run this back as much as you want maybe every six months or something like that because I do these selfishly.

I'm obsessed with making podcasts, but I'm obsessed with entrepreneurs and I want to know something Toby Luque said to me that I thought was fascinating. He's just like, there's not one right way to do something in a company. There's probably like a hundred right ways. That's right. And you have to figure out like what makes sense for the context you're in and then who you are as the founder and like what you're trying to accomplish. And I have a better understanding of you, way better understanding than when we started the conversation, even though I've listened to every single interview you've done.

Your company is very misunderstood and there's not a lot about you as a person. And yet I find these people that I respect their opinion very much. And like this guy is special and the way he's building his company is interesting. And I'm still, I feel like I just like scratched. I'll take that as a compliment. moon. You should take it as a compliment. You built something amazing. Thank you. So thank you very much for the time. I hope you accept the invitation, the future invitation. And every time we have this conversation, just like peel one more layer of the onion of like what you're building and why you're doing it. I think it'd be very fascinating. It'd be fun to peel another layer. All right. Perfect. Thanks, man. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review and make sure you listen to my other podcast founders for almost a decade. I've obsessively read over 400 biographies of History's Greatest Entrepreneurs, searching for ideas that you can use in your work.

Most of the guests you hear on this show first found me through Founders.