David Baszucki, Roblox

Summary

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Podcast Summary: David Senra — David Baszucki, Founder of Roblox

Podcast: David Senra Presents (Host: Scicomm Media)
Guest: David Baszucki (Founder & CEO, Roblox)
Date: April 26, 2026

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Episode Overview

In this rich, candid, long-form conversation, Alex Lieberman sits down with David Baszucki, the visionary founder and CEO of Roblox, to explore the philosophy, history, and system-building mindset behind one of the most influential platforms of the digital era. Baszucki opens up about the journey from his early days inventing physics simulation software, to losing and rediscovering his founder's intuition, to systematically constructing a company and a world that turns users into creators—and creators into entrepreneurs. The episode is filled with in-depth anecdotes about building enduring systems, unique reflections on leadership, product, and culture, and forward-looking thinking on AI, safety, and digital economies.

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Key Themes

• Systematic Founder-Mindedness: The difference between being a CEO and being a world-building founder.
• Intuition vs. Logic in Innovation: Finding success by integrating intuitive vision with tenacity and systems thinking.
• Building Self-Sustaining Platforms: How to architect "perpetual motion machines" in digital businesses.
• Viral Loops and Network Effects: Turning users into creators, then into entrepreneurs through compounded incentives.
• Company-as-System: The intentional design of Roblox’s company structure as a set of coordinated "companies within a company."
• Resilience, Focus, and Long-Termism: How discipline, control, and efficiency powered Roblox’s high-leverage growth.
• Safety & Technology Leadership: Investing deeply and early in AI-driven safety, creating a competitive moat.
• Economy & Opportunity: The explosion of Roblox’s creator economy, and how it fosters entrepreneurial spirit.
• Facing Adversity: Reflections on near-death company experiences, key pivots, and avoiding distractions.
• Vision for the Future: The ambition of building immersive, massive, AI-accelerated human co-experience.

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Structured Breakdown & Timestamps

1. Origins & Early Insights

• How Old Were You When You Started Roblox?
  • Baszucki recounts his journey from early physics simulation (Knowledge Revolution Physics) to Roblox.
  • [00:11] “Arguably one could say I started Roblox when I was 2 years old because a lot of this shit really fascinates me.” — David Baszucki
• From Linear Logic to Intuitive Innovation
  • After selling Knowledge Revolution, Baszucki had a "logical" sabbatical and realized the magic was in invention and play, not in chasing CEO titles.
  • [04:29] “What a mistake. Right?” — Baszucki, on applying to be a CEO somewhere else.
  • [04:53] “What you're describing is literally like a vision I had one night...a big barrier there but this path, which was more World builder...boom, I got it.”
• Founder vs CEO
  • On the irreplaceability of founder vision.
  • [05:44] “Combining intuition with tenacity and taking the long view. If those things can coexist, it's super, super powerful.”
  • Metaphor: “If you ask Dave the time, he'll build you a clock.” – Ho Nam (Investor) [05:09], explored by Baszucki as the rationale for building robust, self-sustaining systems.

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2. Starting Roblox & the Power of No Expectations

• Lifestyle Business Mindset, Early Days
  • Initial work as a “four-person lifestyle company” with no external funding.
  • [08:03] "The lifestyle business...a validation of our intuition. We're going to go do something enormously both fun and...it could be really big, but...so fun."
• First Product: Failure to Viral Platform
  • Original product: single-player puzzle game—failed. Pivoted to multiplayer, creator-driven platform.
  • [08:49] “We intuitively knew what the viral product would be...We kind of knew that we wanted to get something out sooner...single-player puzzle builder...Within like a couple weeks...yeah, we knew it. It's not going viral...”
  • [10:15] On the shift to the platform: “Just deep breath, six more months of engineering, let's go.”
• Bootstrapped Growth, Closed-Loop System
  • Bought first users through Google ads: “50 users a day...germination of all of Roblox.”
  • [15:49] “That was the germination of all of Roblox...Four of us go online. There's maybe 20 or 30 people just hanging out in these games...”
  • Transition from user to creator: Pressure to launch Roblox Studio—“closed loop viral system.”
  • [17:41] “Whoa, someone just published something. Look at that...now there's 20 things published...closed loop viral system.”

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3. Viral Loops, Network Effects, and the Social Platform

• Dual Viral Loops
  • Roblox is both a game/creation platform and a social network.
  • [19:04] “Roblox is inherently social in a way that YouTube will never be.” — Lieberman
  • [20:00] “In Roblox, the viral loop is both the quality of the content as well as the users being with each other. So there's both a content viral loop and a communication connection viral loop.” — Baszucki
• Beyond Games: New Co-Experiences
  • Emergence of concerts, music, shopping, collaboration; vision of church and work on platform.
  • [22:03] “Early signs of shopping, early signs of who knows, you know, someday older people are going to go to church on the platform...natural evolution of a communication platform.”
• A Platform Always in Beta
  • [21:59] “Roblox is a very primitive product relative to what will be possible someday.” — Baszucki’s deep humility about state of platform.

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4. Roblox as System & Company Operating Model

• Company as a Set of Autonomous Systems
  • [25:52] Operating System metaphor: “There’s an under layer we call the Roblox operating system...nine separate companies.”
  • Infrastructure, game engine, economy, safety/civility, user-facing/social graph, people systems, etc.
  • [33:09] “We have our core list that goes between 50 and 70 [priorities]...cycle every month or two...We're constantly putting new things in.”
• Single-threaded, Semi-autonomous Groups
  • [31:25] “We call them groups, but...leaders of these groups, we want them to feel that autonomy...”
• Efficiency, Iteration, and Company Structure
  • Staff meets weekly for high-fidelity cross-checks; recursive structure for autonomy & alignment.
  • [79:16] “The infinite iterations would be a complementary value which is get stuff done...continuous iteration, but pointing in the right long direction.”

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5. The Perpetual Motion Machine, Virtual Economy & Scaling

• From Fun to Viral Growth to Monetization
  • Launch of “Builders Club” as first revenue, then pivot to virtual economy (Robux).
  • [36:12] “No revenue. Pure fun.”
  • [38:20] “This is organic growth. This is not paid acquisition...just keep working on the system.”
• Scaling User to Creator to Entrepreneur
  • [45:48] “Quality has gone up, up, up...Roblox is really excited because there's a lot of technical people at Roblox.”
• Why Virtual Economy Succeeds—Power Law, Flywheels, & Democratization
  • [43:20] “We basically hit an elegant economy that pretty much scales more than linearly with hours.”
  • [73:05] “The growth rate in bookings per year for creator number 1000...is consistently growing faster than creator number one...That is a flattening of the curve which bodes well for creator thousand.”
  • [77:01] “In a sense, it's an entrepreneur game.”

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6. Control, Efficiency, and Focus

• Hyper-Focused, Disciplined Product Building
  • [51:06] “Roblox used less than $10 million of equity to build their business to cash flow break even. Is that true?”
  • [51:30] “We've always been very good at product management of the surface and always been very good at doing the right minimum viable...eliminating distractions.”
• Selective Integration vs Control
  • [56:00] “I would say it's not just control. I think it's in a way owning our destiny...”
  • [57:29] “There's many components of our stack where we went exactly the opposite way...”
• Perpetual Reinvestment & Cash Management
  • [54:33] “We always made sure we had enough cash along the way...we actually never dipped below that initial $10 million.”

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7. Roblox as Infrastructure Company

• Massive, Complex Tech at Scale
  • [58:47] “Running Roblox behind the scenes is very complicated...3D simulation cheaply is very complicated...we can do a good job.”
  • [60:21] “The Flywheel would be akin to...the early phone system...As the quality of the experiences grows...potentially a lot of growth.”
• Cloud, Edge, and Custom Data Centers
  • [26:51] “We initially liked the idea of building it ourselves...for the scale and cost, we do this very efficiently. All of Roblox runs for less than a penny an hour per user.”

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8. Safety, AI, and Competitive Moats

• Decade-long Investment in Platform Safety
  • [62:41] “It’s the biggest playground in the world...the investments you guys have been making for 7, 8, 10 years around safety and AI way before anybody else was, you're getting so good at it. It's actually a moat...” — Ho Nam, paraphrased
  • [63:05] “[On safety and AI] we've seen this in self driving and we're not going to claim we're self driving, but...it's an enormous opportunity and I think more and more we're starting to say, look, we know what the gold standard for safety is. We're building it.”
• AI for Safety & Experience Acceleration
  • [66:53] “We have seen AI is more consistent over time and scales more than humans. The ability to run every asset, through AI...get better and better at that.”

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9. Creator Economy & Entrepreneurship

• Explosive Growth in Devex, Economic Opportunity
  • [71:40] “Devex is well over a billion bucks a year...the amount of raw money flowing to creators on the platform.”
  • [73:05] “The growth rate in bookings per year for creator number 1000...is consistently growing faster than creator number one.”
• Entrepreneur Simulator
  • [77:01] “In a sense it’s an entrepreneur game.”
  • [77:11] “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, same thing, buy users on Roblox, that whole cycle.”
  • [77:51] “...an entrepreneurship class that kind of connected all the dots. I build this, do this, can see this happening. That could be super educational.”
• Transparency, Creator Ownership, and Platform Role
  • [76:13] On M&A/rollup activity: “There is a market out there. I think if anything, we’re trying to get the message out to our creators...what your game might actually be worth...we want...transparency in the market.”

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10. Threats, Resilience, and Long-term Vision

• Biggest Threat: Complacency
  • [78:09] “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...”
  • [49:36] “We have to run the company almost as if we're imagining a virtual other company...”
• Near Death Experiences
  • [80:13] “There were several [near death experiences]. I think one was the economy thing. Like, if we had not figured that out...that would have been very dicey...”
  • [81:26] On economy hack: “We had to shut down the whole economy for two days, literally. That was somewhat scary.”
• Philosophy: Excessive Long-Term View + Infinite Daily Iteration
  • [79:23] “...one of our values: Take the long view.”
  • [79:48] “The infinite iterations would be a complementary value, which is get stuff done...continuous iteration, but pointing in the right long direction.”

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Notable Quotes

“Combining intuition with tenacity and taking the long view. If those things can coexist, it's super, super powerful.”
— David Baszucki, [05:44]

“We want to start a perpetual motion machine...a system that can keep going, get better and better. Roblox keeps building that system; creators make more and more amazing content.”
— David Baszucki, [06:05]

“It's harder to build the clock. But 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.”
— David Baszucki, [06:42]

“We have a saying in the company like performance is a growth feature. We put an enormous amount of work on raw performance features, scale features, those kind of things. That takes a lot of hubris.”
— David Baszucki, [52:10]

“Roblox is a compounding machine with network effects and a fully functioning economy.”
— Paraphrasing Blake Robbins (cited at [62:12])

“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.”
— David Baszucki, [61:45]

“It's an enormous responsibility. We focus on once again all of the aspects of how [kids] 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.”
— David Baszucki, [65:06]

“Take the long view...get stuff done means continuous iteration, but pointing in the right long direction.”
— David Baszucki, [79:23, 79:48]

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Memorable Moments

• First time launching Roblox Studio and watching the viral growth unfold in real time.
  [17:41]
• The day the moderation (safety) system was born out of necessity, and founders personally handling user moderation.
  [38:56]
• The moment the first paid transactions (“Builders Club”) ticked up on a camping trip.
  [38:36]
• Roblox’s early near-death experiences, including an economy system hack that forced a two-day shutdown.
  [81:26]

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Final Reflections & Tone

Throughout, Baszucki’s tone is open, self-deprecating, endlessly curious, and deeply systems-driven. He references technical detail, philosophical frameworks, metaphors, and practical lessons. The host underscores Baszucki’s reputation as both an eccentric genius and a disciplined, founder-first leader, providing a compelling portrait for entrepreneurs and technologists alike.

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Summary prepared for Scicomm Media podcast listeners seeking a comprehensive grasp of this episode’s insights, strategy, and character—without the interruptions, cold opens, or ad reads.

Transcript

[Alex Lieberman]

You just said something interesting right before we started recording. I asked you how old you were when you started Roblox.

[David Baszucki]

That's right, you told me the age.

[Alex Lieberman]

And then you said, oh, there's actually an interesting story in a metaphor there. What did you mean by that?

[David Baszucki]

So first off, super interesting story because arguably one could say I started Roblox when I was 2 years old because a lot of this shit really fascinates me. But there's an interesting story because before Roblox I had started a company called Knowledge Revolution Physics. Enter you know, educational software simulator. How to learn physics very early. Getting into motion and simulation and all of that. We were in this very unique position with Knowledge Revolution way back in the early days of the Mac in that we had all of these kids, instead of using it to do their physics experiments, they were like starting to build stuff. It was 2D at that time, it was just in the pre Internet time. And so we could see them all trying to build and share their stuff. And so we'd see the oh my gosh, there's going to be a whole new market here. Immersive 3D, multiplayer, playing, working, learning, listening to music, all of that stuff. What happened along the way to the founding of Roblox is in that period after Knowledge Revolution I took a two year sabbatical. In a way I went a little astray. I started going more, almost more logical, okay, I want to start a company and I wasn't thinking about just all of the stuff we learned at Knowledge Revolution. So at about a year in I had a bit of a. It's almost like a vision where I was saying whoa, you can't be logical on this. You have to be intuitive and go back to some of the roots of Knowledge Revolution which was all about fun and about play and about building something very innovative. So instead of this logical track, me and some several people actually from Knowledge Revolution said we're going to do this very unorthodox thing and build this wacky new product, you know, immersive human co experience, multiplayer cloud based creator led ugc. Very illogical, very risky.

[Alex Lieberman]

It was logical and risky because at the time you were doing this, this is like 2002, very 2003.

[David Baszucki]

No one got it back then and no one quite thought of it. We had a business plan slide along the way when we finally raised some angel money that's actually very accurate to today. And it was a little bit. What's the history of storytelling and communication? You know that, that history of communication, those, the mail system Voice texting, maybe video. But in Sci Fi, everyone was talking about the holodeck and that immersive stuff we would see on Star Trek. We actually believed it. And that was part of the idea behind starting Roblox. 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.

[Alex Lieberman]

Okay, so four person lifestyle company, because the first company you started, you didn't raise any outside capital for.

[David Baszucki]

Correct. Knowledge Revolution got very far without raising

[Alex Lieberman]

any money and you sold it for what, 20 million, something like that?

[David Baszucki]

Exactly right.

[Alex Lieberman]

That's when you took the sabbatical.

[David Baszucki]

That's correct.

[Alex Lieberman]

Explain to me why how you knew that you were being logical instead of following your intuition during this sabbatical. What do you mean by logical?

[David Baszucki]

I think logical goes to what are. 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.

[Alex Lieberman]

Wait, applying to be a CEO of a company you didn't start?

[David Baszucki]

That's right. What a mistake. Right?

[Alex Lieberman]

What's your distinction between the difference between a founder and a CEO?

[David Baszucki]

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.

[Alex Lieberman]

That's no way you're going to jump into somebody else's world.

[David Baszucki]

What you're describing is literally like a vision I had one night where like I was on this path and there's like this big barrier there, but this path, which was more World builder creators is like, boom, I got it. And that's when Roblox started.

[Alex Lieberman]

Okay, we gotta pause here because there's like almost like a paradox between you. So I had dinner with Ho Nam, who's been one of the earliest investors in Roblox. Yeah, this guy's been telling me about Roblox for, for as long as I've known him. 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. Some 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

[David Baszucki]

me, they're both very valuable. And so I would say that early CEO lesson was definitely a sign of not following my intuition as, like, logically be another CEO. Rather than follow my intuition and build roadblocks, I would say combine 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 Cloud3D 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 the clock. But 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.

[Sponsor/Host Voice]

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[Alex Lieberman]

to where you were saying the idea behind Roblox. You had the sabbatical, you start Roblox, there's four people you described as like a lifestyle business.

[David Baszucki]

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 going to keep growing.

[Alex Lieberman]

What was the, the original product?

[David Baszucki]

There was actually an original product that was an incredible failure. So. And the original product that was the incredible failure was arguably us knowing. We intuitively knew what the viral product would be. 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 4 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 going to do?

[Alex Lieberman]

So how do you get from the single player puzzle game to building a platform?

[David Baszucki]

Just deep breath, six more months of engineering, let's go.

[Alex Lieberman]

What does the team look like in the six months? Is it still full of people?

[David Baszucki]

Initially it was just Eric Castle and myself, and then John and Matt Dusek were just coming on board. So that decision happened when it was

[Alex Lieberman]

two of us and you had raised any money.

[David Baszucki]

Nope. Just having a good time building this

[Alex Lieberman]

thing and funding yourself. Yeah, you said something very interesting. It's like we started this with no expectations. Say more about that.

[David Baszucki]

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 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? The second we saw the perpetual motion machine starting to work, the that was really interesting when it was just you,

[Alex Lieberman]

your co founder and these two other people. Were you using the term perpetual motion machine?

[David Baszucki]

I was using it, yeah.

[Alex Lieberman]

Where'd you come from?

[David Baszucki]

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 of here and it's a breakthrough in physics and the machine will just go forever. 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, 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.

[Alex Lieberman]

You're how old when you started Roblox?

[David Baszucki]

20 years ago? Roughly. So like early 40s.

[Alex Lieberman]

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?

[David Baszucki]

I did.

[Alex Lieberman]

One thing that Ho Nam told me about you is like 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?

[David Baszucki]

I think I actually knew it in my 20s because I think, 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.

[Alex Lieberman]

And you know, were you playing these games like Civilization?

[David Baszucki]

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, 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, I would say that instinct carried into Roblox as well. So, so I would say when we 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.

[Alex Lieberman]

You know what's confusing to me like having that understanding so early and then yet you, you fell off your. I think this is really important for people listening. It's like you fell off your path for two years.

[David Baszucki]

I did.

[Alex Lieberman]

Where it's like the chance that you're going to build something that you can work on for 30, 40, 50 years. Just a 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.

[David Baszucki]

That's right. Okay, so I got, I got lucky, I fell off that and got back on it.

[Alex Lieberman]

Well, God damn right you got lucky.

[David Baszucki]

I think so.

[Alex Lieberman]

I mean you made, definitely made the right decision. So wait, let's go back to you. Now you're building like we're not going to do this like single player puzzle game. We started Roblox but who's create. You knew it was going to be a platform from that point.

[David Baszucki]

We did.

[Alex Lieberman]

Okay, so who's making the games at that point?

[David Baszucki]

We had four people. Matt and John joined Eric and myself. John was a really good game maker. And so then we had, we had a little bit of a warm up phase where John made a couple 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 and then we had some users starting to play on classic Crossroads.

[Alex Lieberman]

How are you getting them?

[David Baszucki]

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. And you 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 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 1500 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, we're just like, we got to get the studio thing out. Like what's going to happen? We don't know, I hope someone likes it, blah, blah, blah. We got about 1500 users.

[Alex Lieberman]

So you go from, you're trying to get them from, from being users to creators.

[David Baszucki]

That's right.

[Alex Lieberman]

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.

[David Baszucki]

They're big.

[Alex Lieberman]

Yeah, they're, they're massive. Now at this point where we're in the story, you're turning your users into creators.

[David Baszucki]

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 just 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.

[Alex Lieberman]

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.

[David Baszucki]

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. 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.

[Alex Lieberman]

What do you think when people Compare Roblox to YouTube?

[David Baszucki]

I think it's interesting. It's a little different. And I think, well, your Roblox is

[Alex Lieberman]

inherently social in a way that YouTube will never be.

[David Baszucki]

I think there are. 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 and 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.

[Alex Lieberman]

I'm by myself when I watch YouTube. I don't watch with other people.

[David Baszucki]

The content in Roblox is really a scaffold for communication and being together.

[Alex Lieberman]

So is this a game platform or is this a social network?

[David Baszucki]

We've actually said we have slides in our early business plan showing two viral loops rather than one viral loop.

[Alex Lieberman]

What are the two viral loops?

[David Baszucki]

So in YouTube, there's a bit of a content viral loop. The better the content, the more retentive it is. And they, you know, they. 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's both a content viral loop and a communication connection viral loop.

[Alex Lieberman]

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 essentially like the use case I've seen is they'll come home from school, your younger users and where they like when we were kids we'd like get on our bikes and like 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.

[David Baszucki]

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, 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.

[Alex Lieberman]

What other co experiences besides games take place on the platform?

[David Baszucki]

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 ourselves, you know. So I think Bruno Maru showed up on one of Jindel'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. I think the natural evolution of a communication platform is what are the ways people use a communication platform.

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[Alex Lieberman]

dot I still don't think I understand the total, like depth and breadth of your vision. So if, 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.

[David Baszucki]

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 could 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, can be in a fashion show like Dress to Impress. All of the places you go in the holodeck 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 thought 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, 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.

[Alex Lieberman]

Okay, but explain how you built the world though.

[David Baszucki]

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 under layer 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.

[Alex Lieberman]

Why did you decide to do that?

[David Baszucki]

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's all cloud, this company's 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 we're 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. But so, so yeah, and we can go in deeper. But Roblox is really nine.

[Alex Lieberman]

Let's go deeper. I want to go back to the nine companies because this is stuff. This is what I meant before we started recording. I was like, you got all this crazy shit in your head that haven't heard in any of the podcasts. We've got to find a way to get it out.

[David Baszucki]

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.

[Alex Lieberman]

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.

[David Baszucki]

That's correct.

[Alex Lieberman]

Company building the world.

[David Baszucki]

That's right.

[Alex Lieberman]

Okay.

[David Baszucki]

Yup. 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.

[Alex Lieberman]

Why won't you go into it?

[David Baszucki]

I don't want to say anything non public, but I would say like that is right in line with Roblox operating system. How does every engineer, product manager, data scientist, designer work in optimal ways? How do, 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.

[Alex Lieberman]

How did you come to the design of the way you have the company operating?

[David Baszucki]

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, if 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 infrastack 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.

[Alex Lieberman]

Essentially like you created a series of like primitives.

[David Baszucki]

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

[Alex Lieberman]

think about these nine, you think of them as almost individual companies inside the company. Is that the term used?

[David Baszucki]

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.

[Alex Lieberman]

Say more about how this is organized. This is very fascinating.

[David Baszucki]

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.

[Alex Lieberman]

What are the horizontal things bringing them together?

[David Baszucki]

It's funny, but we track at a like a ridiculously high level of fidelity even in our executive staff meeting. So we have probably 50 to 60 things that are core to hitting 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.

[Alex Lieberman]

So who's in this meeting? It's these nine people. They're reporting directly to you.

[David Baszucki]

Some of them report to me, some report to some with. With out. 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.

[Alex Lieberman]

Well, no, what's the. You gotta explain that key.

[David Baszucki]

Deliverable one through 50 like this in an hour. It's two minutes. It's like one to two minutes.

[Alex Lieberman]

An issue I just recorded with Evan Spiegel, founder of Snapchat.

[David Baszucki]

Yeah.

[Alex Lieberman]

And he was explaining his design meeting and he says, I forgot, maybe an hour or two hours. 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.

[David Baszucki]

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.

[Alex Lieberman]

How do you keep track of.

[David Baszucki]

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.

[Alex Lieberman]

Okay, can you say more about these nine separate companies? I think you just described two of them.

[David Baszucki]

Yeah, we publicly talk about all of them. So I would say there's, 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, 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 liveops 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.

[Alex Lieberman]

Do all nine of these companies have the single threaded leader?

[David Baszucki]

Some of them are still matrixed, many of them are single threaded. We do have some leaders that run 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.

[Alex Lieberman]

Do you think that'll be the case a year from now?

[David Baszucki]

I think so, yeah.

[Alex Lieberman]

Okay, so you don't see the need to change that?

[David Baszucki]

No.

[Alex Lieberman]

All right, so let's go back. This is very fascinating. Essentially you're, you've designed a system that's your company to design another system which is.

[David Baszucki]

Right.

[Alex Lieberman]

Platform that you're building.

[David Baszucki]

That's exactly right.

[Alex Lieberman]

I still don't understand the jump. So within like a couple hours of letting people start building their own game. So now you're turning users back into creators.

[David Baszucki]

That's right.

[Alex Lieberman]

But there's no economy there. There's no Roblox pure fun. And you're not, there's no revenue of the company at the time.

[David Baszucki]

No revenue. Pure fun.

[Alex Lieberman]

Okay, so what is taking back to your decisions? You're seeing this like oh, we're onto something. This is going to work. What's your next thought?

[David Baszucki]

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 fund started being there. It's just like 10 concurrent, 100 concurrent. Thousand 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 John and Matt and I all 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 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, okay, 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 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. And so Builders Club keeps going. And then for about a year or two, 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 use taglines like you make the game. And that's a really good early tagline. It's aspirational. 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.

[Alex Lieberman]

Yeah, I think you right now you said last time 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.

[David Baszucki]

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 1 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 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, especially if they can

[Alex Lieberman]

do it in natural language.

[David Baszucki]

Exactly. So along the way we kind of had this revelation that, well, 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. And 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 in Their Roblox. Roblox 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, the board came around like 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 hobbyist 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. 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 of going live. Oh my gosh, that's the top game where people are spending Robux. More people went into that and that's

[Alex Lieberman]

going to scale with user growth in a way that the Builders Club would never.

[David Baszucki]

And what we basically hit is an elegant economy that pretty much scales more than linearly with hours, basically. And what we have found without 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. So creators have kind of figured that out. And so that's been another perpetual motion machine.

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[Alex Lieberman]

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[Alex Lieberman]

you launched this second perpetual motion machine, this virtual economy, this currency. A virtual economy. How many years into Roblox?

[David Baszucki]

Very early on, it's gotta be 15 years ago.

[Alex Lieberman]

Okay, so you've been building this economy for 15 years.

[David Baszucki]

That's right.

[Alex Lieberman]

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'm making more money. I can also. It has to increase the quality of the games.

[David Baszucki]

Quality has gone up, up, up. I would say quality is 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 60Hz display. That's a pretty mature technology relative to maybe black and white movies with no sound 100 years ago. In the video space. In the video co immersion space. We're not there yet. We're really excited because there's a lot of technical people at Roblox who I think the ultimate specific is to video what human co experience can be, which is huge crowds of people, 10,000 people.

[Alex Lieberman]

Realistic.

[David Baszucki]

Photo real.

[Alex Lieberman]

Yeah, because right now the games look shitty.

[David Baszucki]

We believe we're going to get to photo real.

[Alex Lieberman]

I'm not obviously insulting you.

[David Baszucki]

We believe we're going to get to photo real.

[Alex Lieberman]

Isn't it crazy how far you've gotten? You hit on something about deep in our nature.

[David Baszucki]

That's right.

[Alex Lieberman]

The fact that you don't want to do things alone, you don't want to shop alone, you don't play games alone.

[David Baszucki]

The bones of the platform are very interesting. And I think it's almost like, you know, 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.

[Alex Lieberman]

I just, 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.

[David Baszucki]

We got pretty Far with black and white, no sound with these.

[Alex Lieberman]

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?

[David Baszucki]

Can you imagine 10,000 simultaneous users photorealistic on a 2 gig Android device?

[Alex Lieberman]

What's the most concurrent users? You said Bruno Mars was the most you've ever had on the platform or

[David Baszucki]

no, I think there's two types of concurrency. So in 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.

[Alex Lieberman]

This is why you keep saying that it's like a little secret that Roblox is actually an infrastructure company.

[David Baszucki]

That's right.

[Alex Lieberman]

Okay. You have not yet figured out how to create the technology to go with, to do what you're describing, what you want to do, correct. And that's what you're doing every day.

[David Baszucki]

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 timeframe, 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

[Alex Lieberman]

going to get there.

[David Baszucki]

That's kind of exciting and very hard to compete with. We run the company in a way it's interesting. I mean we're in a, 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. 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.

[Alex Lieberman]

Michael Dell said the exact same thing on this podcast where, you know, I think five years he, he stood up and he's like, you know, there's a company that's going to be doing, going to compete in every single area we're in. They're going to be doing, they're going to be faster, better than us doing this technology. And he goes, and we're going to be that company.

[David Baszucki]

That's right.

[Alex Lieberman]

He believes in like even if you don't have a crisis. You make a crisis.

[David Baszucki]

We, we have to, we have to look over here at that imaginary company.

[Alex Lieberman]

And very similar to how Dell things. 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. You know, keep that mentality. I want to go back to like, okay, so you, you stumbled in there were a couple of years into Roblox's history. Now you have this, 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, you know, 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 received $500 million seed round prior to launch. Company was called Improbable. HO is kind of a spicy guy.

[David Baszucki]

Yeah, yeah, yeah.

[Alex Lieberman]

He was aptly named. Roblox used less than $10 million of equity to build their business to cash flow break even. Is that true?

[David Baszucki]

Yes, it is.

[Alex Lieberman]

Okay. And then you reinvested billions in your history of the free cash flow in the coming deck, in the coming decades from that competitor of this vision that you're talking about.

[David Baszucki]

That's right.

[Alex Lieberman]

Okay, so. And then his point was 500 million. That seed round of this competitor that died is nothing over the long run.

[David Baszucki]

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.

[Alex Lieberman]

Oh, God.

[David Baszucki]

And that was just. That's the check you get. Yeah. You know, so sorry, there's no 100 million, there's 5 million.

[Alex Lieberman]

So talk about how you were so efficient. 10 million to get to break even.

[David Baszucki]

Yeah.

[Alex Lieberman]

How'd you do that?

[David Baszucki]

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.

[Alex Lieberman]

What are the. Some of the distractions that you avoided are eliminated.

[David Baszucki]

Oh, man. Like there's just. It's. It takes a lot of hubris to build platform because I think everyone 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 we put an enormous amount of work on raw performance features, scale features, those kind of things. That takes a lot of hubris.

[Alex Lieberman]

So what's a raw performance feature?

[David Baszucki]

We watch 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 the vision would be video. We've come to assume on, in video. In short form video I can just scroll through. Like we're used to that. Gaming has traditionally never had that. Gaming has traditionally like you download or you do this loading screen, you have like this background thing people love. 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. But we do believe it has long term growth aspects to us.

[Alex Lieberman]

Okay, so you have this engine that is, you're now making money, 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 now you have this other kind of flywheel going on very early.

[David Baszucki]

That's right.

[Alex Lieberman]

Trying to figure out. Basically the line of my questioning is it's like, how the hell did you only burn $10 million?

[David Baszucki]

Yeah, we got viral very quickly and then we started monetizing very quickly.

[Alex Lieberman]

And then you were just very careful what you used the company money for.

[David Baszucki]

That's right. And we did. Right. We had secondary, we went public. There's a certain amount of financial prudence where I think we didn't spend any money, but we, we always made sure we had enough cash along the way. And so, you know, if we, if we raise a secondary round, we might put some padding in there. But we actually never dipped below that initial 10 million.

[Alex Lieberman]

I heard from Ho and I think other people like you were very careful raising money. It was almost like they had to slowly commit. You kept saying no, no, no, no.

[David Baszucki]

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 Golong vcs. And we got very fortunate, whether it was Altos or Greylock or Index or others, that in a way we got VCs. I think who could risk it all? Who could not like, oh my gosh, this is one of my first deals. What are we going to do? You know, could really go along with us. And I think that was very helpful.

[Alex Lieberman]

So why was it important? What you were just worried about solution. Like what was. Are you a control freak?

[David Baszucki]

In some areas, I think yes. Like hopefully in other areas, not.

[Alex Lieberman]

No, but you 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 flow.

[David Baszucki]

I think there's areas of my life where hopefully, like I've decided not we're talking about work, but for Roblox, 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.

[Alex Lieberman]

Yeah, but the only way you own your destiny is if you maintain control.

[David Baszucki]

Right, Exactly. So data center cost, performance, control. Yes.

[Alex Lieberman]

What other areas of the business are

[David Baszucki]

you like that with our game engine, for example, we said we always imagined we need a multiplayer 3D immersive engine and that does 10% of everything really well. Early on, it's like, you should use that game engine. You should use that game engine. Said, no, that's like a critical core part of our whole platform. We have to build that ourselves.

[Alex Lieberman]

I think you just like building things we do. Like go back to your description. Like I built an operating system, I built the company and then I built the operating system. Operate the company.

[David Baszucki]

Yeah. It's interesting because we. We're going to be building some other interesting things that, that we just decided on.

[Alex Lieberman]

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 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?

[David Baszucki]

There might be like a thought around efficiency, growth.

[Alex Lieberman]

Because you can control your destiny.

[David Baszucki]

That's right. Okay. 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 very. 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.

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[Alex Lieberman]

let's go back to this idea that I've heard you say a few times, and I want to understand more deeply that the dirty little secret of roblox is that we're actually an infrastructure company.

[David Baszucki]

That's right.

[Alex Lieberman]

Okay, explain this.

[David Baszucki]

I mean, running Roblox behind the scenes is very complicated. So when Grow a Garden hits 20 million people, at the same time, there's a lot going 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 Meta Quest. 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. And even some countries that don't monetize very well. So we have core data centers, edge data centers, and we're running a lot of our own CPUs and GPUs all around that. That's what allows us to do that.

[Alex Lieberman]

And you started this from the very beginning of the company.

[David Baszucki]

We did, yeah. Okay. Like, the very beginning of roblox was running on one giant server that was like, right over there in my office.

[Alex Lieberman]

Can you describe what you see is the flywheel of the world that you've built?

[David Baszucki]

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. 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.

[Alex Lieberman]

Blake Robbins is a friend of mine. He hangs out on the edge of the Internet. He always finds these 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 Robux. More spending attracts more creators.

[David Baszucki]

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.

[Alex Lieberman]

The way he described to me is that Roblox is a compounding machine with network effects and a fully functioning economy.

[David Baszucki]

Yeah, yeah, yeah, I think we would. 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.

[Alex Lieberman]

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.

[David Baszucki]

Right.

[Alex Lieberman]

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 issues that come up. But he actually was Saying the investments you guys have been making for 7, 8, 10 years around safety and AI way before anybody else was, you're getting so good at it. It's actually a moat because over time it's going to get safer and safer.

[David Baszucki]

That's really beautiful that he said that. 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 the pressure we get in a good way from the media, from this, from that is an incredible motivator for that moat. The vast majority of what we've done on safety and stability, we've done on our own, kind of in a visionary way, I'd say age check. 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 more and more 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 it. Roblox has done. We're seeing more and more governments say we like where you're going with this, like this is really cool. So I'm, I'm really optimistic about, you know, having this force of innovation and what we're doing there.

[Alex Lieberman]

Okay, but is this something that you've been building and compounding since your co

[David Baszucki]

founder, all the way since we built

[Alex Lieberman]

the first moderation system, like the first year into that.

[David Baszucki]

Okay, that's right.

[Alex Lieberman]

Explain what, like can you, I don't know if you can talk about this publicly. Like what have you built to make it?

[David Baszucki]

I, I think we have seen AI is 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 so when we, you know, part of AI is, is very much the human facing thing, like oh, I've got an AI prompt or I can 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.

[Alex Lieberman]

Something came to mind when you said, 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?

[David Baszucki]

I think it's worth thinking about. 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.

[Alex Lieberman]

So the majority of the revenue that Roblox makes now just comes from this platform, this virtual economy, this world. Correct. 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 a month?

[David Baszucki]

It makes it so simple, right? Like we're how many hours of 13 billion plus a month?

[Alex Lieberman]

So 13 billion of actual people interacting. Like, what does this data set look like?

[David Baszucki]

So there's a lot of data sets out there that are video coupled with asdw. 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.

[Alex Lieberman]

That's what I was going to ask.

[David Baszucki]

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, this can 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 wiggums, loops, recoding, testing, recoding, testing. Imagine just like we do with code now. Creator wanted to do their whole game that way.

[Alex Lieberman]

So 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.

[David Baszucki]

There's a level of indirection there, I would say the.

[Alex Lieberman]

What's the indirection?

[David Baszucki]

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.

[Alex Lieberman]

I like that idea a lot. That's very interesting. Your stock still seems to be all over the place sometimes. Why do you think you have these huge Roblox bulls? Or just like this is a compounding machine and then what do you think is most misunderstood about what you're building? Why wouldn't this keep getting bigger and more valuable in the future?

[David Baszucki]

I feel like I can't predict the stock market. No, I don't.

[Alex Lieberman]

Yeah, okay.

[David Baszucki]

And I think though, 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.

[Alex Lieberman]

And you see AI is a giant tailwind for you guys.

[David Baszucki]

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 said around our ultimate spec.

[Alex Lieberman]

Are there completely AI generated games already on the platform?

[David Baszucki]

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 like push at this with AI coding tools and creator tools and start to create that flywheel.

[Alex Lieberman]

And these can be relatively small teams, even individuals that make wildly popular games, correct?

[David Baszucki]

Absolutely.

[Alex Lieberman]

So let's get something. I don't even know how long it's taken me why it's taking me so long to get into this part, because this is the part I'm actually most fascinated is the size of the businesses that people are building on the platform.

[David Baszucki]

I mean Devex is well over a billion bucks a year. You know, that's the amount explain to people what devex and 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 logic, 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 tens and twenties and fifties of millions of dollars. Like these are pretty serious.

[Alex Lieberman]

I hear some of them are making that a month.

[David Baszucki]

I can't say that, but I would say they're making.

[Alex Lieberman]

They say that. I don't know if it's true. I heard three kids in the middle of nowhere making 20, 25 million dollars a month.

[David Baszucki]

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 growth rate of Creator 1:10, 101,000. Creator thousand year on year is consistently growing faster than creator number one.

[Alex Lieberman]

Wait, say it again.

[David Baszucki]

The curve is even flattening more. The growth rate in bookings per year for creator number 1000 ranked by how much they're making, they're 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 thousand.

[Alex Lieberman]

What does the long tail look like at the very end? They're making a couple hundred bucks a month. What is that, $10 a month?

[David Baszucki]

I think the top thousand is on average making a million bucks.

[Alex Lieberman]

I heard it's higher than that. I think it's like 1.3.

[David Baszucki]

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.

[Alex Lieberman]

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 or whatever the case is. 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 could displace being a YouTube creator.

[David Baszucki]

Who knows? I do.

[Alex Lieberman]

Why'd you make that noise before we said who knows? What was that noise?

[David Baszucki]

It's funny because 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.

[Alex Lieberman]

So what do you guys do to foster that message or foster the size

[David Baszucki]

of the businesses that can be built? It'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 we've said publicly, we want to get to 10% 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 we think a lot about the responsibility of building the platform for them.

[Alex Lieberman]

So the more photorealistic that it gets, the wider the market gets.

[David Baszucki]

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.

[Alex Lieberman]

But out of all of those, what is the most important you would think?

[David Baszucki]

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 where 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.

[Alex Lieberman]

Do you have funds coming in and trying to buy up these games and like rolling them up?

[David Baszucki]

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.

[Alex Lieberman]

Platform itself has never tried to buy any of it.

[David Baszucki]

We never have. I think what we want though, some transparency in the market. So, you know, early creators can actually know what kind of a gem they're sitting on.

[Alex Lieberman]

Have you seen people being taken advantage of?

[David Baszucki]

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.

[Alex Lieberman]

It's almost like you built a game to play entrepreneur and you turn them into a real entrepreneur.

[David Baszucki]

In a sense, it's an entrepreneur game.

[Alex Lieberman]

Yeah. If I wanted to teach like a, a, you know, a ninth grader about, you know, entrepreneurship like Roblox might be the best place to start.

[David Baszucki]

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, same thing, buy users on Roblox that whole cycle.

[Alex Lieberman]

Yeah, I'd be very interested in that because when I talked to Toby Luque, the founder of Shopify, he said something interesting like he thought, you know, his job is to create more entrepreneurs. Like that's the way he looked at what he think. It's more important than ever, especially with young people. If you look at like their empathy or their, like they're way more attracted to like socialistic ideas, you know, than, than I think like your generation was and definitely my generation was especially in, you know, in America.

[David Baszucki]

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.

[Alex Lieberman]

What's your biggest threat to that would inhibit you from Building what you want to build, like what you're describing.

[David Baszucki]

That's 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.

[Alex Lieberman]

How often does this imaginary company come up inside the discussions you're having in your real company?

[David Baszucki]

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 emotion 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.

[Alex Lieberman]

The pacing at which you move, pacing

[David Baszucki]

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.

[Alex Lieberman]

So the way I would think about what you've been telling me is you have this excessively long view. The fact that 20, almost 25 years

[David Baszucki]

ago, you're like, that's actually one of our values. Take the long view.

[Alex Lieberman]

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 is 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.

[David Baszucki]

Totally. The infinite iterations would be a complementary value which is get stuff done. And so we say get stuff done means continuous iteration, but pointing in the right long direction.

[Alex Lieberman]

So something we haven't talked about, but I think I heard you speak. I think you said this in your Stanford talk, which I thought was interesting, that there was multiple near death experiences or almost death experiences of Roblox. We haven't talked about that at all.

[David Baszucki]

There were several, I think. One was the economy thing. Like if we had not figured that out, that would have been very dicey.

[Alex Lieberman]

Looking back now, I mean, you were obsessed with science fiction. There were all these other like virtual economies right at the time.

[David Baszucki]

Second Life, Second Life, their dot com. Yeah, all of that stuff.

[Alex Lieberman]

So were you taking ideas from that as well?

[David Baszucki]

Their.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 100,000 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.

[Alex Lieberman]

What was the argument from the opposing board members to doing the economy?

[David Baszucki]

We had a lot of fun going on the platform. Like, we're just like, whoa, 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 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 is 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. We 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.

[Alex Lieberman]

Were you already a public company when this happened? Yeah. No, no, no.

[David Baszucki]

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 on the SEC, those were things we did 15 years ago. As far as this economy and backups and all of that.

[Alex Lieberman]

When you were designing this, were there any books you were reading or were there any examples? You're like, okay, 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, with the set of rules that you have?

[David Baszucki]

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 participation 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 login will immediately be bought it now. And so we just, we could see people trying to bought that currency all day long and we had to ultimately get rid of it. So we had some good learnings with that. But ultimately our current economy, as I said, is kind of stuck. Scaled better than linear with user engagement.

[Alex Lieberman]

You mentioned there's an advertising business inside of Roblox.

[David Baszucki]

That's right.

[Alex Lieberman]

How long has that been going on?

[David Baszucki]

It's just started pretty recent. But if you go onto the Roblox homepage, 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 YouTuber TikTok or Reels 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, like when we bought traffic from Google.

[Alex Lieberman]

I got one more question for you. Okay, we're almost out of town ahead of time. Are you jumping up? You want to leave already?

[David Baszucki]

No, I'm stretching. I want to give an expansive answer.

[Alex Lieberman]

Why do things like this? Why are you doing podcasts?

[David Baszucki]

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.

[Alex Lieberman]

Okay, I'm glad you use the word depth, because what I want to do, since we're out of time now, I want to run this back as much as you want me to be every six months or something like that, because I do these selfishly. Like, I'm obsessed with making podcasts, but, like, I'm obsessed with entrepreneurs. And I want to know, like, something Toby Luque said to me that I thought was fascinating. It's just, like, there's not, like, one right way to do something in a company. There's probably, like, a hundred right ways.

[David Baszucki]

That's right.

[Alex Lieberman]

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 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.

[David Baszucki]

I'll take that as a compliment.

[Alex Lieberman]

You should take it as a compliment. You build something amazing.

[David Baszucki]

Thank you.

[Alex Lieberman]

So thank you very much for the time. I hope you accept the imitate 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.

[David Baszucki]

It'd be fun to peel another layer. All right, perfect.

[Alex Lieberman]

Thanks, man. I hope you enjoyed this episode.

[Sponsor/Host Voice]

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.