How Roblox Built a Digital Economy Beneath the Games

0:00In Q4 of last year, it was 35 billion hours, pushing 12 billion hours a month. That's a pretty interesting stat. In Q4 of last year, we were at 150 million daily actives. Global gaming market is emblematic of really a new way of people to communicate. When we think about this market, we think not just gaming, but ultimately what we might call the human co-experience market. Our developer creator earned about a billion and a half on the platform. and it goes pretty deep, like top thousand devs are averaging 1.3 million. The most underrated aspect of Roblox is how much deep tech and theories around economics and theories around systems sit underneath it.

0:45Underneath it, there's enormous technical complexity. There's two ways to think about the acceleration. One is what is the future of a game? And so if I was a user, and infinite AI was available to a user is almost as if we can't imagine what that game would look like. Imagining AI is superpowered in 50 years, what percent of adults work at our jobs a day?

1:21David Baszucki:Are you ready to go? Hopefully we've already been rolling. like we already have some good material yeah we're gonna see how spicy this can get you want what level spice do you like let's go like super uh flaming hot cheeto spice okay did you know that some cheetos products have various levels of spice on the individual chips no yeah and it's a pavlovian response where you don't even know it and you're eating individual chips no and you're hoping one is hotter. And so like you eat three or four and they're not hot. And then you hit one that's hot and it's some weird mental hack that makes the chips viral.

2:04So when you talk about spicy chips, like, yeah.

2:09David Baszucki:Hey, wow. It's like shishito peppers, but it's unpredictable shishitos. Yeah. How did you know that? I don't, I don't know. It's some weird Pavlovian psychology thing. wow okay well let's uh just keep you know the hottest cheeto possible i guess try to keep it hot okay we'll try to bubble a hot cheeto to the top well thanks for having us today great to be here sorcery thank you your campus is huge thank you it's ginormous how many buildings are here so there are five buildings we are sitting uh 20 years ago we would have been watching horse racing like we would have been looking that way and there would have been horses so we're in the the old bay meadows area of san mateo this was a development of five buildings i think we're in four of them right now i would say it's a vestige of what happened in covid where it has some very wise people in the company and weekly executive meetings are we remote forever are we in person And we are very much innovation culture, used to whiteboarding, used to being together.

3:15So we never really said remote forever. We kind of kept it together. And we have almost the vast majority of our people here now.

3:24David Baszucki:How many miles around the campus do you walk a day? Depends on the day, because some days I go for walks for an hour with people. But you guys also come in with a squad. Like even coming through here, I think there's been like 15 people in this room. Oh, really? You like that? Yeah, yeah, yeah. Okay. Now we have like, hey squad, what's going on over there? Now we have a good squad. Yeah. And hopefully, yeah, you can pick up some energy. So as you build out the headquarters, how is that going to facilitate this new development of digital worlds? I know you want and you have a goal of reaching 10 % of global gaming.

4:06That's right. The external goal is 10 % of global gaming. Global gaming is about$200 billion market. So we did$6.8 billion in bookings last year. 10 % would be like 20%. So that'd be a reasonable first step at where we would like to go. But really, I would say the global gaming market is emblematic of really a new way of people to communicate. In a lot of games, people are in, sometimes it's the holodeck almost, you know, a 3D place where they're playing hide and go seek, or they're playing a more traditional sports game or something like that. And so really, when we think about this market, we think not just gaming, but ultimately what we might call the human co-experience market or that sci-fi holodeck type space.

4:53So we need real people, real engineers, real product people, real designers to build this platform out. There's a lot of interesting magnification in our products. So for all of the several thousand people we have here, there are tens, if not hundreds of thousands of people working on Roblox, making a living on the platform. You know, I think there was a stat that came out last year. Our developer creator earned about a billion and a half on the platform. And it goes pretty deep, like top thousand devs are averaging 1.3 million, like real people making a live on living. So it goes way beyond the walls of this building.

5:40David Baszucki:It's insane. When I was going through the numbers and I was getting them checked by your team too, I was like, how is this real? A thousand creators are averaging 1.3 million. That's pretty insane. So when you started Roblox to today, how did you form and how did you think about building the foundation for this digital economy? When we started the company, if you can believe it, we looked at this sci-fi market because before this company, I had an educational, we had an educational software company. We're making educational software for young people to learn how to simulate physics, literally.

6:17And when they were playing with this software, in addition to trying to learn physics, they were trying to build stuff. They were building cars and they were building buildings and all of that. So when that company was sold and me and some of the founders of that company started looking at this gaming market, we started to imagine this new category, really. It's that sci-fi holodeck category. It has elements of UGC. YouTube was coming online, so UGC was big. Gaming was starting to show what multiplayer 3D was about. Social networking was coming online. So we literally have a business plan from 20 years ago with a slide that if we were to pull it out today, it'd be pretty viable.

7:05It'd be like talking about this category, arguably not as ambitious on the size of what this category could be, but that exact same vision. And we, you know, now we're working to that literally that same vision. We are, you know, at 6.8 billion in bookings. we're literally under 4 % of the global gaming market. The power of providing a platform where all these other creators can work on it and make a living is very powerful. Get a super broad tale of content. They try to make everything new types of games. So it's really an interesting play. It's a fun company to run.

7:45David Baszucki:As you think about this as a CEO, what are the metrics that you use to measure and what are you trying to hit other than the 10 % goal? Yeah, I would say it's interesting because I would say our company, there's various types of companies out there and I'd say all the way on one end, there's almost pure imagination vision companies like a Walt Disney. And on the other end, it's just pure metrics driven growth companies. We do like to be a bit in the middle on this and I think drive the company both by vision. Like we're literally inventing partially the future of how games are made and how do people hang out?

8:27Do they use the phone or do they text or do they video or do they go, you know, play grow a garden together on Roblox? Like what is the future of communication? So there's invention aspect and a metrics aspect. I would say some of the metrics we look at are literally raw engagement time. So I think in Q4 of last year, it was 35 billion hours. So that's pushing 12 billion hours a month. That's a pretty interesting stat. I think in Q4 of last year, we were at just sub 150 million daily actives, which is a lot of people as well. So I would say those are the two we kind of watch.

9:07David Baszucki:What do you think the most underrated aspect of Roblox is given that? I think the most underrated aspect of Roblox is arguably how much deep tech and theories around economics and theories around systems sit underneath it. And so when someone sees Steal of Brain Rock or, you know, 99 Nights or Adopt Me and just says, oh, that's really fun. Like, I want to go play that. Underneath it, there's enormous technical complexity. There's tooling. So a creator could open Roblox Studio and make a game. There's the viral aspect of, you know, initially a hobbyist would start building something. and then they would grow to be a big studio and start hiring a lot of people.

10:02There's a cloud aspect to it. We run on our own cloud. It's super efficient, super cost effective. We have 40 plus data centers all around the world. We have hundreds of thousands of servers. At peak times, when Roblox is hitting 20 or 30 or even more million people, that's a lot of compute complexity. There are over 400 AI models, many of which we built our own running on this. So behind that, you know, very spontaneous, let's just go play something together. There's a lot of deep tech. There's a lot of also systems theory. Like we've had to design an economy. We've had to design thoughtful search and discovery.

10:51We've had to design thoughtful systems. There's a lot of that too.

10:54David Baszucki:One thing that I was really surprised by, by even doing this video stuff was like how much data it consumes and how much file sharing and that kind of thing. But also the usage from gaming is just astronomical. To your point, like you just have a tremendous amount of data centers. Have any of the AI companies come to you for advice? Well, I would say it's really interesting, right? Because we're arguably in one of the biggest transformative times in history. and we have LLMs, we have text-based models, we now multimodal, we have image, we're getting into video, we're getting into interactive videos.

11:31And now I would say people are starting to think about, okay, how do we train robots? How do we train what's called NPCs or non-player characters in video games? Now there's a little bit of people are starting to wake up and look at the video game space and think about all the data there. The classical thing right now is rather than just trying to find video data, people are trying to find video data with ASDW or user interaction so that you can try to marry the video data with those kinds of things. And what's interesting about the data on Roblox, the 35 billion hours of data, it's not just video data.

12:13It's literally 3D positions. It's what avatars are doing. It's what they're looking at. It's literally data that ultimately can and does allow us to reconstruct anything that's ever happened. And that's very valuable data. So I would say everyone's starting to think about this video game data for sure.

12:34David Baszucki:And what's been your strategic positioning for AI with all this? I think our strategic positioning, we have several. And in addition to all of the models that are existing on our platform, I think there's two ways to think about the acceleration. One is, what is the future of a game? And so if I was a user and infinite AI was available to a user, it's almost as if we can't imagine what that game would look like. You know, in the movie Inception, when they go down to level three or something, they're like a dream architect and they walk around and they say, fold the road over and do this kind of stuff.

13:12Or in Westworld, sometime on TV, they've got like an AI console and they design things. I think that's all going to be possible. And so users are going to be more and more designing in game, designing clothing, designing their own worlds by talking about it, not by using 3D tools. So I think there's this whole, we don't quite know where gaming can go if users have infinite AI. On the creator side, it's really interesting right now because we're just starting to see the very early edge of what's the future of coding. And coding is a somewhat mature environment when it comes to the operating system or the C compiler or the JavaScript system.

13:58And so because of that, you go through the whole stack of all these coding tools that are coming on right now. We're just starting to seem to get better and better. Argentic loops running overnight, iteration, and all the stories we hear about, stories that blow everyone's mind. like I built this in a week or I built this in a day, we see that same thing is going to happen to the much more complex thing of building a video game. And building a game is super complicated because it's got art. It's got what is interesting for people. What is fun? It's hard to define. Is it fun or not? So there's a bit of art.

14:42It's got a big mix of 3D assets and code and 3D experiences and people building cities out of 3D tools and all of that.

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16:26David Baszucki:Are you worried at all about rogue autonomous agents and bots and sort of threats because of AI into the whole world that you built? Yeah, it's almost as if when someone's designing a system like this and you think one thinks about what are all the ways we would protect against rogue bots in a virtual world, which of course should happen, right? If we can imagine AI bots with a prompt from a developer going to do interesting things, what we're optimistic about is the ability in parallel, unrelated to those bots, to literally ultimately be able to scan everything in real time that's happening on Roblox.

17:12And so really AI is just as good for monitoring protection, safety, and civility as it is for making robots. so i think we're going to be in pretty good shape there but when you talk about rogue bots the um and having amazingly high quality npcs there's a there's all kinds of edgy things to think about there's like the sci-fi stuff of what's our principle about npcs probably they're always identified. Like if you, if you and I are in a virtual space, it probably makes sense. We just always say that's an NPC, like have any kind of environment where we would allow NPCs to impersonate people. So I think that's a principle you'll see.

18:02I think we will have the ability for people if they so choose to have a doppelganger NPC that could like be their agentic proxy, go out and do some stuff for them if they want it to, which will be interesting. I think from a developer testing of a new game, like say a creator wants to, they have a brand new game. I'd like to test it with a thousand users. And it's hard to find those thousand users. They may use NPCs to test their game. So there's just like a huge opportunity for that.

18:39David Baszucki:Yeah, it's really exciting. Yeah. film gaming sci-fi has always kind of been the place to go to to imagine the future like it's all about imagination so when you built out roblox and as you build out the future of roblox what are your personal inspirations and where do you pull from that kind of stuff is it certain movies? Is it sci-fi? Where are you getting your inspiration? I love sci-fi movies. I like the ones that are the most realistic, actually. So it's really hard, I think, to make a good realistic sci-fi movie. I was trying to get my kids to watch 2001 A Space Odyssey. Like, it's so slow.

19:26It goes whatever. But it holds up so well today. Just like, oh my gosh, I can't believe they made that in the 60s and 70s so I do take a little inspiration from the realism of that and it's interesting that the held computer in that movie is actually was viewed at the time of that movie as just like unbelievable and now I think that's pretty much a solved problem I think the um the example I think for sci-fi that I believe will happen is any kind of holodeck or simulated environment type thing so star trek they use the holodeck all the time they go in there communicate with the holodeck see other people in that feels completely realistic and i think that's where we're going with our technology we've said publicly like there's still a lot of work to do here to have 10 000 people photorealistic simulation of a rock concert looks like film you're with your friends you can dance or you can chat so that's that's where we see this going and that i think that really ends up being not just a gaming technology communication entertainment co-working type technology vr and ar these different types and even all the glasses that

20:53David Baszucki:have come out have have been big promises but they haven't really existed yet and i remember even during covid people were doing these online concerts and they kind of like yeah and then they went away but i know that you're having a huge emphasis in sports and entertainment now so i think bruno mars that got like 12 million views i think it was way more than that like it was guinness book of world record type simultaneous that was in steal a brain rot which is like a really good collab, which was just recent. So I would say those types of concerts are continuing to blossom. I would say every major sport league is on the platform right now.

21:35Like NFL universe is doing super well. And I would say the, when you go backwards to the VR, AR goggles, like we're in a really interesting time, actually. Like those Google glass goggles came out like 10 years ago.

21:49David Baszucki:Do you think they're going to work now? Like they didn't work then. When are they going to work? I think they're going to start to work. I think it's going to be AR before VR. I think it's going to be just speaker, microphone, camera, a little heads up display. I think the challenge is you need battery and a processor. So it's maybe a phone. And so I would say there's many entrants in the space. There's the behemoths, Google and Apple. They happen to have a phone as well. They have others, Snap and Meta, that are trying to do that without the phone and many others. But I do think it's ultimately going to come to pass.

22:28David Baszucki:And one of the other emphasis that you have been putting on, you've been focused on 4D. So how have you been thinking about as you build out these different kinds of yeah so 4d is what we use um there's a lot of right now work in generating worlds with ai and worlds um to become games typically have to have multiple people in them have interactive environments games are a lot more fun if i push on a door and like the door opens or i have a car and i can jump in the car with a friend and drive around um so those are objects that in addition to 3d we typically call how they would look in the real world 4d we it's kind of a name we made up and other people use it now we think of that as a functional thing or like in the real world we're used to things that we can interact with it's super interesting in that since the very first day we started building roblox for some reason And we were really into having all of the objects in the world be functional.

23:35And from the very first day we made Roblox, when we started making cars in Roblox, they were actually running in a simulator. Like the wheel was on an axle. There was like a power to the wheel. And in those days, there wasn't as much of that in gaming. what it made happen is that when the car would fall like a wheel would fall off the car it would do what you would expect it to do it's just not like some hacky gaming objects like yeah the wheel fell off the car you can have emergent behavior so we have been i would say 4d from the start and that would be both simulated objects objects with code inside of them so when people on roblox copy and paste, you know, anything, a wheelbarrow, a car, a building, the function tends to be built into that.

24:28David Baszucki:I think most of the audience might know Roblox from their children or from their friends. You have quite the demographic of young individuals. How did you get that mainstay with this demographic? And how do you stay relevant through generations? I think staying relevant is super hard, right? Like who knows what is gaming for young people? And who knows what's the future of gaming? There's a certain robustness to building platform that is very powerful and arguably follows a very simple specification that I believe can create more resilience for the relevancy. And so our spec for building Roblox since day one is pretty simple.

25:20You know, thousands of people, ultimately photorealistic, real time around the world, safely communicating, text and voice communication, avatar of whoever they want. That's a very resilient spec, very technically difficult. but because it's almost like the spec for roblox the the parallel would be in the video space specs pretty simple like go from 2k to 4k pixels have stereo audio at high res and then whatever comes through on that video you could say is what's relevant right now so there's a little bit of a notion that the more powerful the spec is in capturing simulation of multiple people in the real world, the more whatever the trend is in gaming.

26:08And I think what we're going to see in gaming coupled with that spec is the ability. One other thing behind the scenes, people probably don't realize we work super hard at going from game experience to game as quickly as possible. No one notices it. You know, they everyone on Roblox is assuming, oh, I'm playing this. I'm playing this now i'm playing this like half a second but everyone has come to expect that from short form video and youtube so everyone you know part of being relevant is actually technology young people um now expect video to load every two seconds like most gaming architectures are not designed to do that but i think we could imagine that will be the expectation of young people is the viral factor uh so the viral factor is also huge right so um roblox has primarily grown virally viral means word of mouth sharing links um i was just at gdc the game developers conference last night i was talking to some representatives from one of the big four um short form video platforms and they said a third of the gaming content on their platform is roblox content so um so by having users and influencers share interesting things that that does create a lot of viral hole on the platform i think being viral is essential to a platform like roblox and when traders make something really big and interesting whether it's dressed to impress grow a garden adopt me five years ago that does create like viral influencer pull and people come and try it out.

27:57David Baszucki:Maybe this is more of a philosophical question. Oh yeah, I like that. Because you're exposed to building economies, building games, building like pretty much like careers for people because they're making a tremendous amount of money off this platform. What have you learned about human behavior? I'd say I'm pretty optimistic about human behavior so what i i would say one thing i've learned is um enormous responsibility of um having all these people making a living having 150 million people play like that's an enormous responsibility um one of our values is respect the community and and really early on we would share with employees, like just imagine one young person who lost their Robux, like how big of a thing that is.