Roblox: David Baszucki

We had some people play it. Uh, but we knew within a week, oh my gosh, this is Not gonna go viral. We have a lot more work to do. And Eric and I had to say, Okay, we've got another nine months

where we're gonna have to buckle down I mean at times this has been the hardest thing I could ever imagine. There's been times when We've all thought, Oh my gosh, this is the hardest thing we've ever done. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements.

they built. Guy Raz, and on the show today, how David Bazuki pivoted from making physics software into creating Roblox. A virtual gaming platform with more than 200 million monthly users. A few months ago I was going through emails on my laptop. A nosy eleven year old

Also my youngest son was looking over my shoulder when he shrieked out Daddy, you have an email from David Bazuki. How do you know who David Bazuki is, I asked. Daddy, he replied.

Everyone knows David Bazuki, he's the founder of Roblox. Needless to say. A few weeks later When I interviewed David Bazuki I had an in studio guest by my side.

Hi. How are you? Good, how are you? I'm David and I'm in Roblox headquarters right now. This is a Okay, it turns out lots of kids know who David Bazuki is. Біз хіт авор да со мнір. It's estimated that in the United States. Three out of four children between nine and twelve years old.

play Roblox. I know, insane, right? I just wanted to Ask Um Who is your favorite character out of them all, like Builderman?

Mr. Robot. Um who are the others? Tennis. Yeah, we've kind of taken this approach. It's almost as if I don't have a million children, but if I had

A million children, I would love them all. And we've we've got to be. Roblox is a platform where you can play millions of different games that are set in virtual worlds. Or you can create your own games. Now, if you've never seen it, the characters or avatars look a little like Lego figures running through an infinite number of worlds, many of which look like cities. In some games, for example, you have to escape from jail, or you can adopt a pet and even take care of it. Inside these worlds, you can spend and even earn money a currency called Robux. To buy Robux, you have to use real currency. Dollars, euros, yen, whatever.

And it's how David Bazuki's company has grown into a publicly traded company with a market cap of over$5 billion. Roblox was actually launched in 2006, and by 2016, about 10 to 15 million people were playing on the platform each month. But then came COVID. and millions of children had no way to play with their friends or interact. Except on Roblox

They could. And the company saw a massive spike in growth starting in March of 2020. Today, hundreds of brands like Nike, Gucci, and Chipotle have built out worlds within Roblox where they even sell virtual products. And world famous artists like Lil Nas X have even held live concerts inside a Roblox virtual world. It's a taste of what the larger metaverse may one day look like. A world that

Like it or not. most of us will take part in in some way. But when David Bazuki first set out to start a business, He wasn't thinking about game playing for entertainment. His first company was in educational software.

And more specifically. It was software for physics students. The concept wasn't scalable, so David and his business partner, Eric Castle. Shifted their focus towards a different concept. one that would eventually morph into Roblox.

David grew up in Chicago and in rural Minnesota. He always loved math and science, and in particular. He loved building simple computer games. I built asteroid type games and there was a way to

um in a primitive way go to Radio Shack and buy these knob potentiometers and wire them up to the Apple II and build a primitive game controller. And I I can remember having my siblings come down and play this cheesy space invader game I made, but have these, you know, knobby controllers. It really was inspirational to me. And how did you I mean, this is a this is obviously there's no internet or Wikipedia. I mean they were

Physical manuals that you could buy like sort of trade publications, I guess. Is is that how you learned how to write the language? Yeah. Th this was a really early formative time. You would go down to your local PC store They would have a lot of plastic envelopes with what is the current cool programs of the day, and then buy a bunch of magazines, buy the Apple II manuals, and that collection of information, none of it online.

Was enough to figure it out. there were in in that time there were magazines that would list a program and if you if you wanted to, you would read the magazine and type the whole program in. Um, to g learn things as well. I was primarily trying to write in assembly language, but through all these manuals and stuff I figured it out. Wow. So it's not not surprising that you you decided to study computer science when you went to Stanford.

in the early eighties. Um what did that what does that mean? I mean Uh w I mean, presumably getting to Stanford there were computer labs and It was probably a a a million times more sophisticated than what you had access to in Minnesota. Yeah, in the early eighties, this is when the early Fairchild and Texas Instruments and all of these Intel type companies were just getting going. Yeah.

And as part of the core electrical engineering curriculum at Stanford There was actually a course on how a transistor works, the smallest component of these ICs at the time that were, you know, the early sixty five oh two or Intel eighty eighty eight ship. At the time you would go into a facility called lots at Stanford. These were all time shared. Very primitive black and white terminals programming in Pascal.

really very early um in kind of how you would learn computer science. Alright, so it sounds like you were You you were committed to

To doing something around this emerging technology, right? I mean y you graduate in nineteen eighty five It's still unusual. you know, not unusual, but less common, right, for people to have P Cs in their homes, although it's starting out and this is sort of the beginning of the clon P C clone wars. You get the compacts and the uh HPs and the other brands that are starting to emerge.

Um people are starting to have them. In their homes, but still pre Windows, right? So it's still like DOS and He had app he had the of course Apple Mac, which made things easier. But but for people at PCs it was still complicated, right? Big floppy discs. What was your thinking in nineteen eighty five? What do you remember when you graduated thinking, All right, this is what I'm gonna do? I remember thinking the Mac is cooler than the PC because it had that Windows operating system.

And by nineteen eighty five, the very earliest versions of the Mac We're coming out. with everything on floppy drive and we can remember those times when using a Mac was listening to that drive, you know, all That kind of stuff. Yeah.

Also, though, I was kind of unsophisticated. In how to find my career. And so I think I ended up having a couple jobs That were not super fun. All local local jobs. Yeah, local jobs. I spent the first three years, um, after school

Really Yeah, I I can remember and and this is maybe career advice for a lot of people when you're Twenty, twenty-three, twenty-four, twenty five, your your career is not over if your first few jobs aren't that fun and exciting, like The life is long and there's a lot of good things to to learn. But

You know, I I kind of spent that first two or three years saying this this isn't it. I'm still not doing what is super interesting to me. Do you remember what what they were? I mean were they Were they engineering jobs? They were both engineering jobs. One was at a company that made telephone equipment and I was a digital line card designer. And I was very frustrated. that I was not getting to design as much as I want. I I wanted to build stuff.

And I was getting very frustrated. Right, because when you're in your early twenties you want to rush into things and it's natural. I I I remember feeling like I was in a hurry. And and it's a natural feeling. Yeah. Absolutely. Uh I felt yeah, I can remember calling my dad and in in the second job just saying, Oh my gosh, my like oh my gosh, it's all

Terrible, my career's over, what am I gonna do? And I can remember it in my dad saying, Hey You're pretty young. You got a lot ahead of you, so just you know, don't get so upset about all this. So I guess around nineteen eighty nine, you you were probably twenty six, twenty seven. you decide to start your own business. um a a software company, which uh w we'll get into

With your brother Greg. Um you called it knowledge revolution, which is I'm I'm not not judging you at all, but it's kind of a boring name. Um not no no judgment, but it is but what what was it? What what was the idea that you had? I was gonna take two or three months off and decompress after my two difficult jobs and We were right in the hardcore

educational computing transition from Apple II to Macintosh. A lot of schools still had Apple Is. A lot of schools were starting to get Macs. And I I immerse myself in the educational software market, physics, math, history Play with everything. And It it's interesting when you immerse in something from the outside

It always looks shiny and mature, but as I got into it. I started looking at the physics software market And at that time the physics software market Eva very awesome, a lot of stuff going on, but Typically

ten, fifty pre-made simulations to t help animate and visualize classic physics things. I started going, Oh my gosh, wouldn't this be cool If instead of these things being pre canned This is more like a physics construction set. And wouldn't it be cool if you could build

all of these things from one simple system Um students could do it, you could model textbook experiments. That was the genesis of the idea for this product called interactive physics. And the company knowledge revolution. So this is nineteen eighty nine and I'm thinking, God, Ed Tech, I mean this is like a nascent space, but I guess schools probably were

Right, they were among the first um to invest in computers and software because they had to prepare students for the future. I'm trying to remember what what what educational software was in nineteen eighty nine, nineteen ninety,'cause this is pre CD ROM. It's pretty primitive. Yeah. It was organ trail. It was learning typing.

It it was at a time when schools all around the world were s were putting in computer labs. A lot of students didn't have them at home. U it was kind of this genesis time, both for educational software and Apple as well. So you were I mean you were so young, twenty six, twenty seven, but but d did you see I mean, were you looking at this as like this is a big opportunity or were you looking at it like

You know, I know how to make software and I like physics and I think I can make something cool. I think it's the latter. Um it's it's kinda interesting. I I can remember hanging out um with various people and my dad and sharing this idea I was very uh unsophisticated from a business or a market size. I just wanted to build this physics stuff.

I think I I remember this pivot piv pivotal meeting where One of my dad's friends said, Okay, let's look at interactive physics, these are the number of schools, blah, blah, blah. I think the m annual market for this. is a million dollars a year. And That was kinda depressing to me because I thought the idea was so big and so creative.

And and I went forward regardless. What's interesting is maybe five or six years later the market for interactive physics was about a million dollars a year. So it's nothing. Yeah. But um We had to do some fundamental work to get a physics simulator running on a Macintosh plus. This is collision detection, this is Newtonian physics, this is all of that.

If we wanted to fire a cannonball Five hundred yards away at a certain angle and velocity. Be if any student would do that in interactive physics, they'd draw it, they'd track it, they'd watch it. And so the utility was really broad. Uh but as we got that figured out

That interactive physics product, even though a small market really swept through the physics education market and got to the point where all the physics textbooks were linked to it. They had a lot of example sets. It was being used Very widely, really. Mm-hmm. And so

the order started coming in. Um, we would fulfill them. We had people that helped fulfill them and we we essentially cash flowed that business. And and I guess you you know, at this point it was It was pretty much just you and and Greg who were working on it. But then From what I understand there was a guy named Eric Castle.

uh who reached out to you and and wound up joining your team and and he was apparently a really good programmer, right, just out of college. But but how d how did he find you guys? How did he know who you were? He saw

Us and knowledge revolution. In all there is a big community of Macintosh magazines, so Mac Plus, Mac user. And we won a bunch of awards, best educational software, best teaching software. So that's where he heard about us. Um Eric will will feature

prominently in the founding of Roblox, and we'll talk about that in in a bit. But Between you and Eric and your brother Greg. Um, what were you all doing? Was Eric focused on on sort of the The the technology side and did you kind of move away and focus more on the business side or was it your brother or were you all doing all those things? Eric and I

Predominantly coding. Greg Predominantly marketing and selling. when it was time to go to all of these shows or work with the community at that point we would drive or fly and you know go to all of these conventions.

I I can remember one National Association of Science teacher shows where we had a booth, there was an Apple booth. And it was really hard work. I think this is a four day show where my brother and I ran both of those booths pretty much eight hours a day for four days. But that's kinda how we got the word out, demoing live to people. Hm. But but this was I mean you were going

after a very, very specific slice of people or like a tribe of That's right. And so I I I I guess I I read at a certain point you sort of realize that that if you wanted to grow that business you would have to

pivot right and then and I guess that pivot was you you sort of built a three D computer assisted like design product for uh for like engineers, mechanical engineers, people who wanted to to see How something's gonna work before it's built. That's right. And we entered

A whole new market. A whole new type of customer, um Kodak, Xerox, Ford, People making mechanical things. where our product, which was called Working Model, which I I love that name, it it really described what we were trying to do. Um, way back then when this wasn't widely available, you could simulate how that elliptical trainer would work, you could simulate the car suspension, uh

You could simulate the camera shutter mechanism. And so we built a pretty substantial business around that. Uh We were partners with all of the three D design software at the time. And that's how we that's how we ultimately built Knowledge Revolution to the point where it was acquired by another company.

Alright, so Ten years a little less than ten years after you founded it. uh the company was acquired. By the way, at its peak, how many employees did you have? We were in downtown San Mateo. At our peak, we probably had forty employees and we were I think we were doing six million a year when we were acquired.

So and and did you ever hit profitability? We were profitable the whole time because we were bootstrapping the company as we went. Alright, so uh acquired by another company uh reportedly for about twenty million dollars. That's right. In in nineteen ninety eight, so great outcome. um for everyone and uh and and this company that acquired you is called MSC software. So presumably under that deal you went to go work for them for a little

For some time. Yes, I went to work for them for two years. Um and and and could you have I mean at that point were you did you feel Like you could retire? I mean were you I I don't I mean were you w at that point f financially sort of independent

I think I was right on the edge, and I think um You know, if we were conservative and managed our money properly, I think we for sure could've. Um And so I I I was for a while thinking maybe I will be

Retired. Um, but at the same time I I think as I kind of after that was sold and after the two years Um working there I went into a two year sabbatical mode. Which more over time more and more

Got me itchy to do something else. And I guess I guess we should mention that a at this point you were married. In fact I think you you also had kids, right? You had 'Cause you you had kids. In pretty close succession, right? You had like three kids all under the age of four at that point, right? Yeah, after I left MSC software and started thinking what we were gonna do.

We rented a motorhome for three months and went on a round the USA trip for three months with those three little kids. It was an awesome Break after all of that stuff. Really well remembered. Uh And then came back and

did a few other things, but I started getting itchy. Uh about a year into this. Right, okay. So you knew that really ultimately You had to start something d you had to start something again. That's right. That was what

what you kinda landed on. And and when you when you kinda came to that conclusion, had you already been talking to Two Eric. Castle and And your brother Greg or or others who had worked with you at Knowledge Revolution? about what you could do? Like did you start to like

call people up and say, Hey, let's get the band back together. D do you remember what what you were doing? Yeah, there was an early experimentation phase. Where I had a rough idea of what I was interested in. I was interested in The idea of a simulation on top of which people could build puzzles or scenarios.

And the idea of unlike a knowledge revolution where we had to be really accurate. in what we built'cause people were designing stuff. I was very interested in the notion could we make something that's very scalable so it can do a lot of things. But not be perfectly accurate.

And I started down the the route of making this simulator More as a puzzle. experience rather than an immersive avatar type experience. And that's where Eric um joined me and we started working on this together.

All right, so let's go back to two thousand four,'cause this is really the early outlines of what would become Roblox. But you know, at the time I'm thinking There were some I mean this is still

You know, early internet. Um and most people had dial up and There were things like I think like Second Life and Sim City, right? Th those were already out there. At the time. That's right. Um

They had all to some extent built these systems that Would you know, bring people together in immersive three D environments. uh well we were in the midst of the very early phases of what we were doing, which was more this super scalable physics.

Puzzle system. We had some people play it. Uh, but we knew within a week, oh my gosh, this is not gonna go viral. We have a lot more work to do. And Eric and I had to say, Okay, we've got another nine months or ten months.

Where we're gonna have to buckle down really make this multiplayer, avatar based, uh co-reality. If we wanna get the that virality, which was really our vision all along. It was just almost a realization there were no shortcuts to doing that. So We shut that puzzle down and went back to work again for another nine months.

And we come back in just a moment. How David and Eric create the virtual world of their dreams, but how it doesn't take off until they add one irresistible feature. virtual money. Stay with us, I'm Guy Raz, and you're listening to How I Build This. Hey, welcome back to How I Built This. I'm Guy Raz.

So it's around 2003, and David realizes he's working on an idea that has no legs. People are not going to flock to a site where they just get to solve a bunch of puzzles. So he and Eric spend about a year working on something much more interactive. with multiple players and avatars and cool spaces to hang out. And they start with a name. Dynablocks. But eventually

Call it Roblox. When you sign up, you're gonna join one specific place. where there may be six to twenty people uh rolling around uh bumping into each other in a place called Crossroads, which was our very first three D place. And what did that look like? It was like a it was like a street or a town? Yeah, it was imagine um maybe a space the size of two football fields, um, side by side. And then in each of the four quadrants, imagine

In one there was a castle, in one there was a little area where you could put things together and In one there was a little cave that you could go into and And that was the very first version of Roblox that started this virality. So the idea it was You'd log in and then you'd have a character.

Maybe and then and then you would see other characters moving around which were actually connected to real humans through the internet somewhere else. And you could Uh and and initially it was not it was just like It was you you could talk to them and and chat with them, but But really was still about

Building. Structures. It was really about hanging out with people. Chatting with people. the fun of feeling as if we're in a physical environment. So

Oh, let's go over here and stack some blocks up and see what we can build. Ooh, let's put a fun little time bomb over here and watch this thing fall down. On us. But it was actually really social. And Eric and I, and then soon John, and then soon Matt, and then Keith

We'd spend a lot of time hanging out. meeting these people and chatting with them. And in those early days We probably knew half of the Two or three hundred people on Roblox and we were in there every day chatting with them. What would you like to see? What can we make better?

So it's interesting to me because you were I mean, you were committed to creating like physics uh This sort of physics.

software and then these kind of puzzles and games. So Clearly there was a this kind of educational component to what you sort of were passionate about, but it seems like early on you were kind of moving in a different direction, saying, you know, actually let's just make a place where people can hang out. That's right. We we carried the theme of the physics forward.

In that We wanted the world. where people would hang out as much as possible to be like the real world. because then interesting cool things would happen if a building was leaning over And we pulled out one of the supports, the building would fall down.

Or the early cars on Roblox, if th those were really had axles and motors. So if we pull the wheel off the car. It would scrape along on the ground. That Simulate the real world became this foundation on top of which we said, Okay, now let's get more social avatar Hangout?

Um On top of that foundation. So I'm I'm c I'm curious, I mean in in that first kind of year, year and a half, and it was just you and Eric kind of Designing this. coding it.

Did either of you have a a background in like design because you were creating a world with graphics and characters and We didn't. There were a lot of people we met in those days that It's too primitive, too crude, not gonna be fun.

games have to be this and that that we really Um gently ignored respectfully. There there was also a notion that function and making this work so well Um is so important to us that we're comfortable leaning in on programmer art. To the point that the blocky Roblox Avatar

Um that is now just one of many, many avatar shapes. Right. Um if you analyze it. is actually very uh one by two by one. on the arms the torso is two by two by one thick The legs are one by one by one, so that classic Roblox Avatar is really just an extension of us

Putting some simple um blocks together to get that going. I know this might be a very sensitive question, but I've checked and you've never been sued by Lego, but I know that people must have said hey they kinda look like Lego characters. Yeah, I think in the early days We We stayed away from the

Exact Lego form factor. We we just said let's go simple one by two by one. But there was for sure some sensitivity when using, for example, yellow in the avatars, which is this classic Lego look. They were very gracious with us though and and I think we were able to work out okay, yeah, we'll we'll make the defaults this way, we'll we'll try to remove any confusion whatsoever that this has anything to do with Lego. Uh here here's what I'm wondering about too, which is

You were already in your early forties. And I think uh Eric was Um And when I think of like video game developers, I think of younger people. I think of people in their twenties and thirties, not

and and and I'm I I'm ca I'm trying to be careful to say this'cause there's nothing wrong with being in your forties, but but were any any of your friends or colleagues or people you knew Was it even like You're doing what? You're making Cartoons?

It's interesting I think your doing what thing maybe lasted for fifteen years because I think Because Roblox has always been under the radar a bit and been used by younger people. It hasn't really surfaced into pop culture, you know, maybe in the last two to three years. Yeah. So I do think I'll um

A lot of friends thought that. I actually thought in a beneficial way my kids might have thought that as well up until the last two or three years where it's Oh yeah, dad's working on this video game thing. What I think it gave us was the notion that we're really building platform and system and technology. We're really not building the game.

And it it gave us a little bit of the humility that we we very early on do that this has to be about the creators on the platform, not us. We um we want them to be famous, not us. Um And so I think that that mirrored more to Eric and my Yeah, specialty which is let's just build great technology.

Right. So As you were kind of testing this out, right, and as it became clear that It was going to be this kind of social platform with avatars where you could you know buildings would

collapse if you pulled out a brick or you could build things. I mін did you s it? As As an educational tool? Did you see it as something that I mean

Did you see it as something that could be you know, turned into a a tool like that. H how were you thinking? Did you see this a a game? A video game? a massive online, you know, multiplayer game. Even even early on, there was a bit of a thesis that if we could mirror and m really couple

raw three D cloud based. We we used to call it digital stuff, simulated stuff in the cloud. That this is such a fundamental technology that on top of it People would play, someday they'd go to school or do simulations, they might work together. It was the notion that this was gonna be a universal type technology. That happened uh really early on.

And then we released Roblox Studio. Um and the second we release Roblox Studio. It was one of those days where you go, Oh my gosh, this is gonna be absolutely amazing. We cannot believe In a couple days, this early community at that time of five hundred or a thousand people.

have all downloaded Roblox Studio and we're seeing creations better than Anything we can do. It's just such a fun experience when When you think that that's gonna happen and then you see it actually happen. Because Roblox Studio basically allowed

users to to create their own games on and sort of experiences on the platform. Um and And I think you this ha this isn't like two thousand six when you when you launched that. But um Uh, and you you know, you a as you say, you attracted users I think within five or six months you had But fifteen thousand users.

Pretty good. probably not enough yet to You know. Hang up your cleats. so to speak, but but pretty good. You're you're sort of getting some uh adoption.

Did you start to notice early on that most of the people who were using it were kids? The the early Roblox demographic Was going viral amongst kids and we r reintroduce Roblox Studio Within a month

We were all working on our very first safety civility system. We could see that everyone, you know, from a range from twelve to eighteen on the platform. So so we did know that,'cause we were hanging out with all of them. One of the one of the things that

I know about'cause I've got a a children's Uh m media company that I'm a partner in and we make a kids podcast called Wow on the World. Well including other shows, is there's something called Kappa. uh which is a um uh a law that requires um

companies it's an online privacy act. You basically have to protect the privacy of kids. who are I think under the age of thirteen, um can't can't collect uh information about them. Uh and and you had to kind of Uh become Kliant.

right away, I guess. Was that a i in response to this to the fact that you h you were attracting so many young users or was it Uh Did you know you were gonna have to do that? We knew very early on

That To be Kappa compliant. we would have to under optimize our advertising, which is actually the first monetization thing we ever did. Um W what kappa means is w part of it is you're not tracking kids and in those days

the revenue you would make on advertising was much higher If you would use advertising sources that were tracking the user and doing all kinds of backend stuff. So very early on we were crimping our revenue. On that first advertising model. I mean, I wonder what your bef I know you've you ra you only went to raise money in two thousand nine. It wasn't much. You raised A little over two two million dollars, but before that time in the in the sort of

Yeah. What were your big biggest expenses. Presumably you didn't have to p spend money on developers'cause it was you and Eric. But yeah office rent.

But you'd serve space. How are you financing it? We financed by a range of an angel investors. Friend and family did the first round. Um Friends of myself, friend of my brother, friend of my dad's

They got in at a really interesting time in the company relative to where we are Right now. And that took us through to our first V C round with Altos Ventures a while later. But yeah, we got pretty far on a small angel round.

So And and I mean am I right? Two about two million dollars is that But you raised? Uh I don't remember exactly, but I I think we got very far with two million We then went on for a couple of V C rounds, but

Ultimately the total amount of money that went into the company to get to the point of profit was about nine million dollars. Wow. And everything we've raised since then is either cash and it's sitting on our balance sheet. Or it's been used for very early employees to offer some small amount of liquidity. But yeah, we got to where we are on nine million bucks. When when were you and Eric able to hire Some people.

We were in an office in Menlo Park and right around this time when Roblox Studio was going live. Um We hired our first two employees, John and Matt. And then I can remember moving to Redwood City we had ten to twelve to fourteen people. Um that went up to sixteen. Then we w moved to downtown San Mateo. So from then on it was Yeah, build out the team.

Right. So I mean th let's talk about the business model at this point in two thousand six, two thousand seven. How are you going to make money? What was the business model? We had to really figure that out. And we went through multiple iterations. We started Putting just a few advertisements that were kid compliant. on the Roblox homepage.

We did not feel good about that. We then moved to a club membership. It was called Builders Club. Which was You know, if you're in builders club, you get some extra cool stuff, you get multiple places to build on. Yeah. But we quickly well not quickly, but over time realized that wasn't gonna scale. And then that led ultimately to our virtual economy, which is robux and developer exchange and and that engine that powers everything.

But we we did go through multiple iterations of trying to figure out what's really the system that's gonna power Roblox as it grows. Right, because as you You know, sort of b Began to think about this model that would eventually become your model, which was Robux, where basically people could

by this virtual currency. If someone were to ask you at the time, hey, You know, Dave, what can I do with these robots? What can I buy with it? W what would you have said? I would say that what you can buy is almost anything the creators on the platform can imagine. So You know, work at a pizza place, you can go buy a cool scooter. Uh if you go into bird simulator, you could say, Hey, I wanna be an eagle

sooner than You know, living my life as a sparrow. Uh In some experiences they would have their own coins that you could buy and clothing. It it was really a full on economy and it is to this day of whatever the creators in their experience can think of.

So basically it was from the from Once the studio was created. it became a platform like for people to kind of

m be I guess for lack of a better word, to become their own entrepreneurs. I mean they would they could uh b Offer products. For sale. Virtual products. And uh and then the the model would be that

Uh you guys would get a percentage, you get a cut of every sale. That's right. And the more flexibility we gave them the more we were Just as with the content, we're really

creatively inspired by their th their inventions on how to monetize as well. And and all of our creators are always Balancing they wanted bigger crowds on their platform. So if there's too much friction, that would slow down their growth. So they all figured out

How to make immersive things that the vast majority of people use without spending any virtual currency and and even to this day You know, it's only a small portion of the people on our platform who buy Robux every month, um, and we do quite well on that. Even early on the developers figured that out and um have always balanced kind of growth and engagement with monetization.

Right. I remember we interviewed um the founders of Riot Games uh about a year ago or so on the show and You know, they did it they had a similar model where you could buy things in League of Legends. And At that time, in two thousand seven, eight, I mean Was it har was it hard like

The was it hard to kinda make that argument to people like hey, you can buy things in the game. W I mean w were people at that time saying, but it's not real. It's not real stock. What am I buying? I mean, was that I I would think that would have been the the pushback.

We Th there was a time in Roblox history where we were growing very rapidly on users and hours and all of that was good. But we had a really it was kind of a difficult time where users were growing, but monetization was going the other direction. And we we did maybe the first wave of our response is did we break something? Did we do we need to tune something?

What's a spreadsheet of the fifty little tune-up? Um that we can do. And those were not successful. And it was is a little bit scary. We knew in the back of our minds that

Well, there's this really big system thing, and what that would mean is we have we take our virtual currency The developers themselves can Bring it into their experience in any way they want. We will then cash out those developers. And so we

Not knowing whether it would work or not. But having a lot of intuition That it felt right. And that we we sure think it's gonna work and everyone we talk to think it's really cool.

And then we had a a day similar to Rob when we launched Roblox Studio. Where we turned this on And within two or three days we had that same feeling just Oh my gosh, problem solved. Mm.

So Those are the big things that are hard to build that that power these types of systems. When you mean one of the One of the best things about uh about having kids uh you know as as customers is that they talk to other kids about it, right? And the and they're

at school or uh, you know, on sports teams or whatever, and they talk about things and this is this is how Does our toys get popular, or paw patrol or like these huge kind of uh generational brands. become huge because ki or or even brands that aren't generational but just get huge for a w a year or two, it's because kids are playing with them. Bakugan, name you name, whatever it might be.

Um Is that what was happening? I mean, were you spending money on marketing? At that point, on advertising? We had some interesting learnings along the way and We we received some really good advice from many people

That Paid acquisition is a great way to test things, but there's a third way that some platforms grow, which is creative virality and I think in the mid two thousands this was all about Well, invite a friend or push this link here. Right. We tried some of that stuff and spent some engineering on it, but we quickly saw the the raw virality from

product quality was stronger than that. So we had to develop that muscle really of viral growth. Um We we've done experiments along the way with paid acquisition to maybe accelerate here or there, but By and large, everything on Roblox has been viral.

It was kids talking to other kids and teachers talking to other teens. On the playground, um Metcalf's law when The more people in the network, the more powerful the network. Then we always wondered if that's wow, there's a few people in the classroom they're chatting about it. Now we're now they're gonna invite more people. When we come back in just a moment.

How Roblox continues to grow, but how the team is suddenly tested. in a way that nobody could have predicted. Stay with us, I'm Guy Raz, and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Raz. So it's early two thousand thirteen and Roblox has grown to about seven million users a month.

And as it gains popularity, It has to contend with the not so pleasant behavior of some of those users. So Before we go on, I'm just gonna bring my son Bram. back into the mix here for just a moment because he's a regular on Roblox. And uh David. Uh Bram has a quick another quick question for you.

I just wanted to ask um Well not really asked, just say I think in the games there should be like a monitor because there's so many people who say really weird stuff in the game. Yeah.

It it's kinda interesting'cause we have a lot of filters and you see the hashtags and all of those kind of things when we block those people. 'Cause we really try to keep this a safe and civil environment. But more and more the that monitoring is getting really really good and really really automated. So it's something we're working on all the time. Right now we just end up blocking a lot of words.

Mm can I just can I just piggyback on that for a sec, David, because When you first started to to like do this kind of monitoring, right, early on. It it it must have been more like a cat and mouse game, right? Like People doing things that We're not

what you intended them to do. I mean you put a bunch of kids in in a room together and and eventually some of those kids are gonna start Beating the heck out of each other, you know. That that's exactly right. I remember when it was the four of us

We all ran the moderation system. So we were on the front lines acting as moderators. And as we went We were constantly building in, you know Any image that's ever uploaded, any sound that's ever uploaded needs to go by human moderators. Uh the tension that

For many creative developers uh who are very brilliant, very smart, and very creative. It's actually fun to push on Roblox and see, oh my gosh, what can I get away with? And it's it's an area where we Continue to you know, go even further and get even better to this day, but it it really started in that first month.

How did you and Eric. work together. You know, you're partners in this, but but I mean I'm assuming he had a

probably strong views and you had strong views and There were things that maybe you want to try or things that he w he do would you did you argue or or was it Was it just easy? Some areas super easy and some of the um core areas of

Even inside Roblox today, the way we run the in memory database, uh, the way we do networking, these are these are still foundational things that Eric put together. Other areas we did disagree on, and one was That very first Roblox Avatar which became the Roblox blocky classic Avatar. We had a lot of debate. Eric thought

Oh my gosh, this is Still too rough. We need better looking avatars. But we came together with the notion it's better to sh you know get this live and get it in users' hands as long as it's safe and robust and see what the feedback is. rather than spend, you know, another five or six months getting better avatars. That has That's something we always came together and I think

in general we were very aligned on this initial architecture. We would We were probably whiteboarding an hour a day as we would go, so we were able to build things very quickly. You know, generally the alignment was really high. So the the the the business is growing, clear in it and you could see where it's it's headed. And um

Meantime. Uh Eric. Had been battling. um cancer and quite an aggressive cancer for

a few years and and um and unfortunately succumbed to it in in early twenty thirteen. Um when that happened, I mean he was the main Right. I mean he he had he had sort of built The back end of

of this thing. Um Aside from I'm sure everybody being devastated, what did it mean for For Roblox. You know, he had a cancer that was basically not curable. he knew he had, you know, between one and

three years I think at the time, I forget exactly It's just like, oh my goodness, so What was interesting with Eric was Um in the midst of that He took a few weeks off and with his family.

But then didn't change anything. It w it was almost a testament to What we were doing together was his optimal life style which W made me really open my eyes a bit. So

Eric kept working for quite a while. We all knew he was battling cancer. I tried to make it very easy, you know, hey Eric, if you want to chill out, we got this. Um He's like no no no like I this I'm enjoying this. But it was a little scary.

Um I'm very th you know, so thankful for Eric because He was almost a template for our values. He really helped me in my understanding of what great technical talent looks like just working so closely with him and

seeing solving from a vision standpoint rather than a tactical standpoint. Was Absolutely amazing. And in a way There is also a

A motivation to me. In that After Eric had passed, um Maybe in addition to other things that would motivate me, I I had a huge motivation to want to make Roblox true to his vision almost.

But it was very powerful. Alright, so You've got this. This platform, a lot of users and pandemic hits.

And And you begin to see Very rapidly. This explosive growth. Like Like

Triple digit. Growth, right? Um W were you anticipating that? I mean, did you in in March of twenty twenty, when the world kinda shut down, that the WHO declared a pandemic Uh

Did you know that that was gonna happen? No. No. It was it was really kind of A week or two in we were so busy

Okay, how are we gonna work remotely And then as we started settling into remote work uh things settled down. I think it was April and we looked at our numbers and it was almost like, Oh my gosh, this is a interesting byproduct of this pandemic. Look at these user numbers. We gotta figure out how to scale and start making sure we have enough servers and

All of that kind of stuff because This might be a go in a weird direction that we weren't expecting. But all in all I th I I think we did really well during that last two years Probably

Yeah, I wanna guess half the company has been hired in that last year. Or two, which is amazing. Um and and as we're starting to come back to our office, it's it's great to meet all of these people. So

As you um You know. You you become this. Massive gathering place. For

Kids. at home, stuck at home during the pandemic. Um predictably and and and I think I think predictably is the right word. Uh what ha what comes with that is more Scrutiny.

Uh rightfully so. And uh and also more uh challenges around some of the content that is is being discovered. It's is it you know I think there's an assumption that many of us have that like

a company that has user generated content can really control it. Like you can just build in algorithms or systems that can automatically um Eliminate it. Uh because you know, you're smart people and you

You should Automatically. Eliminate content that's objectionable or offensive or

scary or dangerous for kids. Um first of all, is that Is that possible? I think that We're always Balancing

You know, when a new creator comes on the platform and they're at a computer tech camp. Can they s share that creation immediately with their friend? We're always balancing does the average person on Roblox ever run a across any Bad content. And so we're always balancing the kind of the control we put on that user generated thing.

With yes, our ability to make sure there's virtually no bad content on the platform. So It is a balance. We we have made the decision not to filter Every single um Roblox creation through

A day of moderation. At the same time, we constantly get better um through algorithmic, social, human review. And and right now where we're at is It's very, very, very infrequent. that anyone on our platform runs into

Intentionally bad content. So I wanna I mean this is sort of a a question that you might think is is weird or puzzling or or or or you know, or maybe not. But Um

I'm I'm I I I don't think anyone listening to the show will be surprised to know that I'm not a gamer. I don't play games and I Um, and I don't watch a lot of stuff. Right. And I think part of it is I Well not part of it is f I need to be outside.

I'm in the studio a lot, you know. And There's a lot of con you know, there's a lot of talk around the metaverse. that we're we're we're moving into this future where That is

how social interaction will be and that it will feel More and more real. And I've I've even seen you sort of quoted Saying Things like that.

And I don't know, I I read some of that stuff and I'm not not picking on you, but I read it and I think Really? Is is that really Where we're headed and is that healthy for us? It doesn't seem like we were we were emerged from the savannas of Africa to

to live in a virtual world. I just I just don't think it's It's where we We're supposed to be headed. Yeah.

I share your sentiments and at the same time I tend to be pretty optimistic. I'm optimistic that people over time will balance texting and phone. and video and three D as ways to connect. And I'm I'm c I'm optimistic. You know, in schools, um, there'll be a balanced amount of reading about history or using immersive three D

technology to go to ancient history And I'm I'm I'm kind of optimistic that the dystopian Matrix in the VAT, um type that's your world. is hopefully a long, long way off, and we'll see a a really lovely, more balanced use of this technology that we would use as a utility and society will come up with a good balance on

You took the company public. uh in twenty twenty one. You're so now a publicly traded company you are on. You do quarterly earnings reports and your financials are uh open to scrutiny, um The company uh if you you know, one measure of of of value in a company is a market cap. It's not the best, but

Right now it's about twenty two billion dollars. It's Amazing, right? It's um Made. mm several people very wealthy, including you. But you also have to contend with a

stock price that sometimes is really high and is really low and as a as of this recording it's It's close to its fifty two week low, and I know it's just a stock price, but Uh, you know. Does that stress you out? Do you You mean r you you know, you are running a public company.

Do you and everybody says no, I don't worry about the stock price, of course. But I mean How can you not worry about it when there are millions of shareholders out there? Does it doesn't it stress you out at all? I it it's this interesting mix where

We we have these shareholders. We used to have our VCs, then our employees And our angels and now we have people all around the world, so we have this amazing responsibility for them. At the same time We

I mean, it's pretty fun to run this company. We have three billion of cash in the bank. We generate cash. We have strong values and amazing people. And so we we keep coming back to for our shareholders, we have to keep having this vision of the future and Just that we did five years and ten years ago. Have those five or six or seven really hard

platform strategic things. that we've got that this f this funny feeling that if we do this they're gonna amplify and multiply in multiple ways. And that's just really fun. Dave, when you think about um where you where you are, where you start and where you are. I mean you know, you you

We're gonna do okay. You were a really good uh engineering student, you were into programming really early and and went to Stanford and and were in the Silicon Valley area sort of before the the kind of the internet explosion. So you were at the right place at the right time. And you were probably gonna I mean, I would have bet on you when you were eighteen. I would have been like, Yeah, thank you he's gonna do fine. But but I wonder how much of what did happen

You know. twenty three billion dollar company and You know. Maybe even more.

uh in the future. How much of of that do you attribute to just how hard you worked and and and you know, your skill and intelligence and how much do you think has to do with luck? Yeah, I think there was some luck.

In H having the capability both financially and where I was to be able to go with my intuition. I I think Yeah, my my intuition j um pulled me towards interactive physics. And when we were running Knowledge Revolution, we would always Chat about what's the next

So I'm I'm pretty fortunate in having that time to take that time off and to start hacking around. And then I would say at the same time I mean at times this has been the hardest thing I could ever imagine. This is there's been times when We've all thought, oh my gosh, this is the hardest thing we've ever done. This is really difficult.

So it's been a balance we've seen both sides of that, really. It's David Bazuki, founder and CEO of Roblox. David. Thanks so much for your time. Hey, thank you for just such a thoughtful, wonderful framing of the questions it's been it's time has flown right by and I've really enjoyed being with you.

Bram, do you have any any last question? For David before we go. Um If somebody told you

Like twenty five years ago that Dyna blocks. We Turn into like one of the biggest games in the world. Oh my gosh. When we started Roblox, we

We had both a really big vision of what we were gonna try to build But we never had such an imagination. We never thought that when we started. Thanks so much for listening to the show this week. This episode was produced by Carrie Thompson with music composed by Ramteen Ara Bluey. It was edited by Neva Grant with research help from Margaret Sereno. Our production staff also includes JC Howard, Casey Herman, Liz Metzger.

Alex Chung, Josh Lash, Sam Paulson, Katherine Cypher, Elaine Coates, John Isabella, Chris Massini, and Carla Estevez. I'm Guy Raz and you've been listening. to how I built this.

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