S9E4: David Baszucki Says Roblox Is the Future of Communication

0:10Welcome to View from the Top, the podcast. I'm Jeremy Tepper, an MBA student of the class of 2026. And I'm Michael McDowell, a producer at Stanford Graduate School of Business. Jeremy, who's on View from the Top today? Today, we have Dave Baszucki, founder and CEO of Roblox. Dave founded Roblox in the early 2000s. It was an early metaverse. He really had a forward-thinking vision for the world connected online. And today, Roblox is more than a gaming platform. It's a platform used by most American kids to connect and build games. And it's really a digital economy. Right on. So why did this conversation with David Buzuki feel particularly relevant now?

0:56Well, I think first off, Roblox is a platform that is so ubiquitous in gen alpha. Kids between ages 8 and 15 in America are mostly on Roblox. And they're using it not just for gaming, but also to connect with one another, to build, to learn how to code for educational purposes. So it's a really critical platform in the next generation. But I think the second reason is Dave had a really remarkable forward vision. To have imagined this digital economy in 2004 is just remarkable. And he did it with very little capital. And so I think for the next generation of entrepreneurs that are hoping to build something without having to raise a ton of capital and looking 10, 15, 20 years ahead, Dave is this incredible example.

1:45Really interesting. I want you to tell me a little bit about the beginning of the conversation. You showed an image. I'd love it if you could describe it for our listeners who might not be able to see it. Dave graduated from Stanford in 1985, Stanford undergrad. He was an engineering major. And it's a picture of Dave wearing old Ray-Ban Wayfares with kind of like swooped up hair. Looks kind of like he's in Grease the movie or something. It's a great picture and it captures Dave's personality. He's the kind of person who really loves play. And he talked at one point in our interview about how he wanted to run a company that's fun to run because that makes him a better entrepreneur.

2:28So I thought that picture was a great place to start for that reason. Well, I think it was a great way to queue up a fantastic conversation. Are you ready to press play? Let's do it. Press that button. Dave, welcome back to the farm. Thank you for having me. Thanks for being here. Really appreciate it. And all of your prep and all of this. Thank you. Oh, it's an honor to have you here. Yeah. We're really excited for it. I wanted to take you back to where it all started. It's 1985, and this is the James Dean look. Yeah. I think that's the Stanford yearbook in 1985. Yeah. You're majoring in electrical engineering.

3:10That's correct. Yeah. future to be determined. No idea. No idea. That's correct. We had a lot of mechanical engineering and design stuff too. Wow. That was the foundation of the iLab back then. You know, David Kelly, all that. So I took a lot of that too. So I just want to put the audience in this moment for a second. It's 1985, right? First ever internet domain name was registered. Microsoft launched Windows 1.0. Tetris was invented. That's right. And Back to the Future was a movie of the year, Marty McFly. So the look makes sense. Thank you. Yeah, no, Mac had just come out. I had a Mac Plus.

3:53You know, you would switch floppies, dot matrix printing, just right on the edge of a lot of interesting consumer software stuff. Yeah, it was an exciting time, obviously, to be building a company. Did you know at that moment that you were born to be an entrepreneur? Is that where it all started? Not really, although I would say when I went home after my freshman or sophomore year to figure out what to do for this summer, I had no idea what I was going to do that summer. and some other student in my freshman dorm, it's almost like in the graduate where they say plastics, they said window cleaning.

4:35And so someone said window cleaning to me. I went home for that summer. My brother and I spun up this window cleaning business. We just made buck. We went knocking on doors in the evening. We just said, hey, we can come wash all your windows and just worked all summer. So there was a little bit of that, but I would say following the graduation, I actually, I think, encountered a difficult time where, unrelated to the window cleaning, it's like school's fun and you just follow the path and you do this and you do that. And I think when I went to find a job, I was a little lost. Like it just didn't land in my lap in a way.

5:19Yeah. Yeah. So that is really difficult. And a lot of students here are kind of grappling with what they're going to do after their two years here. So we'll get into that a bit. Yeah, yeah, yeah. So you start with the window cleaning company, and then you actually naturally progressed to Knowledge Revolution, the physics software simulation platform. So that's a natural progression. It was, I would say along the way, I tell a lot of young people this, there were two or three years of just the absolute worst jobs in the world. So two years of massive disappointment, arguably myself not figuring out how to go to companies I loved and kind of moseying all around.

6:01And I can remember calling my dad and just not believing how terrible my predicament was. And so after a couple of these jobs, I took some time off and I would say flipped to a different mode, which was intuitive mode. And at that time, it was the Apple II and then the Macintosh and educational software. And I made a much more intuitive mood, just like, I'm going to get into educational software. Wow. So it's obviously an exciting time to be doing that. You co-founded the company with your brother, Greg. And later, Eric Castle joined. That's right. And he would go on to co-found Roblox with you.

6:38That's right. For all the folks here who are thinking about co-founders and starting a company right now, How did you go about that decision to start a company with those two people? So I would say a lot of luck, actually. Like I think the ecosystem today is so much more sophisticated about finding adjacent people and amazing co-founders. On the knowledge revolution side, I wrote the first vision of this thing called interactive physics. It's like an old physics laboratory simulator type thing. and it got some traction. And the way we found Eric is he saw a review in Mac User Magazine, literally.

7:20And he was a physics major at Cornell University, absolutely brilliant. He called me up, he flew out from Cornell, and he joined us. So like literally serendipity. Wow. A little bit of luck, but also some openness to what the world may bring you. Yeah, absolutely. And then he joined us in that company. The vision of that company was educational software. We built this really amazing physics simulation stuff. And for a while it was used with every textbook and all of that. And then we made, I would say typically made a terrible decision because a lot of people like to play with it. And we're talking to all kinds of gaming companies and it was really fun.

8:01But we made more of like, you know, oh, the technology is really good. Let's get into mechanical engineering, which was really, I would say, non-intuitive. Not where our strengths were, where more of our technology was. But that was successful as well. Yeah, suffice it to say, Knowledge Revolution was a big success. Yeah. Without raising any capital, you sold the business for$20 million, and this is in 1998. That's right. What did you learn from that first company building experience that you took forward with you? Well, I learned to, you know, I think one really big picture thing that we learned we could really intuit the customers for the educational software business.

8:51And we were in touch with them. We could understand who they were. We could match the software exactly to these customers. And we arguably could have intuited a continuation of those customers into what Roblox became. but instead of using that intuition we moved into this more once again mechanical engineering things I think we went back to that learning when we you know after we sold it and that kind of led to the genesis of Roblox so I think I think maybe a Stanford biz school thing would be like if you have deep empathy connection with a certain customer like that's extremely valuable yeah that ends up being a huge part of the Roblox story and the connectivity you have with your community.

9:34That's right. Between the two companies, you, your wife, Jan, and your three kids, Jan's here. Yay. Your three kids, I think, aged five, two, and maybe three months at the time. That's right. You picked up and you did a road trip across the country in a mobile home. That's right. Why? I feel like this is one area where we were ahead of our time, right? Like now, in my neighborhood, depending on where you live, I think there are nine sprinter vans in my neighborhood, like little RVs. Like it's getting more and more hip. But I had, we had a lot of relatives in Canada up through Minnesota, all of that.

10:17It was just kind of maybe a palate cleanser after all of that. Like this, what's the most radical thing to do? So got this big 40-foot RV, towed a car, went all over the place. I've always been into that kind of thing. I did a, for a while, I did a stint as a talk radio show host in Santa Cruz for a while. A couple of those, like, things you get out of your system kind of thing. It was like an amazing time. Before you build the multi-billion dollar companies. Yeah, yeah. Yeah, that makes sense. So a lot of the students here today were on this kind of two-year metaphorical road trip ourselves. Not exactly going to Minnesota or hosting a radio show, but we're trying to figure out what's next in our careers.

11:02So what did you learn from that break, and how would you advise folks here on how they think about that? I think I've learned it twice, actually, because I can remember in this terrible time right out of college trying to figure out what I was going to do. and rather than trusting my intuition or whatever, I can remember having a spreadsheet of nine potential careers and then all these metrics reach like, well, if this is it, it's really good for this, but it's not so good for this. It was like a really weird way to try to figure out your career. And then I would say after the selling of Knowledge Revolution, What was really interesting is I got a little bit into this mode of like, yeah, I just deserve to be a CEO of some new hot company kind of thing.

11:55Like I just sold this knowledge revolution. But like, well, it's interesting. Not everyone's calling me to be the CEO of this company. Like what's going on? And then I can remember poking around on a few interesting areas that I don't think were completely vision aligned for what I was interested in. Like I was just really interested in 3D simulation, consumer software, all of that kind of stuff. And here I was poking all the way on the periphery of it. And I literally remember I had what I felt like was some vision where what I was doing was just never going to work. And I had to go back to what I was really fascinated with, which was, I would say, an extension of knowledge revolution.

12:42You know, bigger, better, multiplayer, consumer, fun, all of that. And that was a much riskier direction, but it seemed like the direction I had to go. Yeah. You were ahead of your time on the road trip, and then you're ahead of your time in building basically a metaverse, but this is in 2004. So after the sabbatical, you guys launched what was initially a puzzle game called DynaBlocks. That's right. And then you took it down and relaunched it nine months later in what eventually became Roblox. That's right. So for the folks here that are launching their first version of their products, what advice do you have on when to kill it and rebuild?

13:23So a couple good things happened. We had had the knowledge revolution experience, and we realized even with this very simple 2D physics simulator, it was right there in front of us. It's like we got to be cloud, we got to be multiplayer, we got to be 3D, we got to be simulated. We think that's going to be interesting. And from that, we were feeling a little bit like there could be this new category, call it the metaverse, the holodeck, snow crash, you name it. And we were also thinking, you know, if we can build this thing out completely horizontally, get all the aspects of it, it's going to be pretty interesting.

14:01It was a time when we were not alone in these ideas. Second Life was popping out, there.com. There were a lot of these companies trying to figure out what this thing was going to be. And what we did initially is we had this whole version. I said let's do a really subset of it. Let's just do a 3D puzzle thing along that thing because we want to get this live and it's going to take us a long time to get this puzzle thing live and all of that. And so we do the puzzle thing and we invited maybe 100 people and two weeks later, okay, no one's using it. It's like, what do we do? This is very depressing.

14:44Maybe someone says, oh I use it for 15 minutes, sounds great kind of thing. And so then it was a big decision, but I think intuitively we knew that was not the complete product. The complete product had to be multiplayer and people making stuff and people playing in it and all of that. So that was a bit of a time like yeah, honestly, like we knew it, right? Like we've got another nine months here or a year to build this thing. And so we just shut it down, keep going, and relaunch a year later. So if you're not getting the usage, you restart, you rebuild. I think in this case, it's a subtle nuance.

15:28If the big vision is right and you can just see it, we had enough fortitude to say this big vision is absolutely spot on. We're going to suck it up for another 9 to 12 months. And that big vision, just so everybody here can understand what you were imagining in 2003, 2004, it's 3D, it's multiplayer, it's cloud-based. What made it fundamentally different from gaming platforms and social media of that time? Yeah, I think what's really fundamental about this is we felt that, I think even at that time, we felt there's going to be some natural technology evolutions that are just inexorable. This is going to just happen.

16:12And we've seen that before with the telegraph system. We've seen it before with the telephone system. At that time, you know, we're starting to get into text. Video was still, you know, world fair kind of in everyone's imagination. And we were, you know, gaming was starting to get a little bit multiplayer. So we knew, I think, fundamentally that 3D simulation could be a communication platform. This could be a way that people ultimately go to school or work together or those kind of things. And the gaming market was showing some of that technology, but it really wasn't fully user generated. It wasn't just you build whatever you want.

16:50It was very pre-canned. And user generated is really, it means self-service or whatever you build can go live. So we were kind of seeing the combination of that. Self-service, whatever you build can go live. and I think that was a big arguably Second Life was doing that there. We were doing it I think in a much more scalable kind of sustainable way. So I'm trying to put myself in your shoes in 2004, 2005 and you're telling people around you I'm building an online platform for people to build games for other users That's right. And I've got to imagine people are like Dave this is crazy. What are you doing here?

17:32So how did you continue to forge on despite the doubters? This was very different than the puzzle game. There were a lot of doubters because we were much more into let's build the whole horizontal product out, which is cloud. We're going to use S3 that just came online. We're going to have a development environment. We're going to have all these clients. We're going to have all of that stuff. And we had a little bit of the philosophy. Everything's going to be very rough, but we're going to get the complete product to feel it out. So you are right. Everyone we would talk to or show it to, this looks like crap, or this is like, no, or it's got to be prettier, or all of that.

18:12But something really magical happened, and that is the day we launched the ability for people to create stuff, and at that time we maybe had one or 200 users, we just knew we had hit virality. So after all of those other experiences, we knew probably within four hours, just like, okay. In four hours, you could just see it. That's right. I would say we had had an earlier slightly viral period where we would buy users and we had maybe 500 users on the platform and we would talk to them. That was going pretty good. But then when we launched user-created content and self-publishing, we saw within four hours just creation, creation, creation, creation.

18:58There were four of us in an office, and we kind of like that night knew. Okay. Wow. Yeah. So it's four of you in an office in Menlo Park. That's right. Maybe actually let's fast forward a few years. It's now maybe 2007. Yeah. And Roblox usage is up. You've seen that virality. But the economy is starting to show some signs of weakness. And you guys are starting to think about monetization in a more thoughtful way. That's right. So that was, I think I've heard you say that's a near-death moment for the company. That was one of several, right? So that would be a moment. Do you want to go through all of them?

19:35Well, no, that, I mean, that's one of the times as an entrepreneur where I can remember saying relative to everything else I've done in my life, this is the hardest thing ever. Like, this is so hard. but at the same time I can remember we had a problem where users was growing like that but dollars per user was going like that so dollars was flat so users is going up dollars is flat that means you're spending more in infrastructure all of that so that's a bad situation and so I think we did what the traditional response would be the traditional response is, what did we break? Or, oh my gosh, there's so many ideas we can do to improve monetization.

20:26We have a list of 50 of them. And so we did that initial, what's the bang for the buck of all the 50? Let's figure out everything that's broken. Behind the scenes, I would say just like the starting when we finally hit the complete product, we actually somewhat knew that the big thing is virtual economy. And the big thing is let's build a perpetual motion machine where creators can earn money and sell stuff and all of that. But that would seem like a little too hard. And so we actually didn't consider it. We spent three or four months churning on all this stuff. But sure enough, four months later, just like it's not getting better.

21:05We've done like 15 or 20 of these things. And then it's like, okay, you're right. We've got to go do this big thing. But then that clarity, it kind of put a skip in our step. It's just like we're giving up on all of the things we broke. We're giving up on all the tactical stuff. We're just going to go hardcore and build this full virtual economy as fast as we can. It had to be a complete product, right? Digital currency, developers having the flexibility to sell things for currency, users having the ability to buy currency, developers having the ability to cash out on the currency and some search and discovery acceleration so that, whoa, some of the devs who are making money get more visibility.

21:49So we kind of felt it was like some closed loop operational amplifier. If we had all of these pieces, it might just go viral again. And sure enough, just like when we had introduced Roblox Studio for the content, we put all these five components, like everyone's talking about them, we're going to launch. And then And in probably four hours, we said, yeah, it's going to work. Because every dev just says, oh my gosh, I could make a living. I'm going to put some, I'm going to sell a flashlight in my game, or I'm going to sell a motor scooter or something. They started bubbling to our discovery system.

22:27Users started buying the virtual currency. It's just like, wow. So we kind of relived that lesson all over again. So it's one of the toughest moments, clearly, but it's also this moment of tremendous resilience, and it builds this muscle at Roblox to do the hard thing first. That's right. And you guys start generating revenue in a big way, but still, over the coming decade or so, you guys face wave after wave of would-be Roblox killers. So that's Minecraft, that's Fortnite. That's right. So what did you decide to do and critically what not to do as each competitor emerged? Yeah, I can remember.

23:08So the good news is when Minecraft came out, for example, we had in the pipeline and behind the scenes arguably five to eight really big technical innovations. Like we were thinking out of the box on this. We were thinking auto sharding in the cloud. We were thinking multi-device. We were thinking super stable APIs. We were thinking BuildIt. We were thinking Lua language. We were thinking abstraction. We were thinking coming mobile. They were all kind of bubbling under the surface. But then, yes, sure enough, when Minecraft came out of the woods, just like, right? And we kind of lived through, I would say, a two to five year Minecraft craze, just like that was there.

23:52But behind the scenes, you know, their pipeline of innovation was nothing like ours. We had an experience four weeks ago that 25 million people at the same time were playing. And that was all based on a sharded cloud super pipeline. Really infrastructure abstraction in a way and augmentation with our infra so we could burst into the cloud as well. But they weren't doing any of that sharding kind of stuff. They split their platform. They had like a Java edition and a Windows thing. We thought it was all developers, all stable APIs, like the DOS prompt kind of thing. So we knew we had that coming.

24:38We knew we were going to try to run the same thing on mobile as PC. So sure enough, like, you know, behind the scenes, all of that innovation came to play. And then the same story actually happened with Fortnite probably four or five years ago. Fortnite came out of the blue Epic software just to be this giant gaming platform. in the same thing. Like, whoa, this isn't fair. Like, how come that thing's so big all of a sudden? Like, we're working really hard. But also, arguably, once again, a beautiful product. In the spirit of doing less more, arguably really hard to manage both a C++ engine, a store, a product called Fortnite, like trying to do all of these at the one time, whereas we were just 100 % all in on this kind of single platform.

25:29So I think over time that focus for us and a lot of innovation once again brought us to where we are. Yeah, you guys really doubled down on infrastructure, and I know concurrency and your ability to serve concurrent users only continues to grow. That's right. You outlasted each of the fads, and I want to just contextualize what a global behemoth Roblox is today. Almost 400 million monthly users, billions of hours spent on the platform each quarter. Three out of every four American kids between the ages 9 and 12 plays Roblox regularly. So at this scale, you're in a different league. You're competing for attention now with Meta, TikTok, YouTube.

26:14So how do you balance competing for attention with this societal concern around screen time? in particular for young kids? Yeah, so that's really interesting. And one way to put it in context from all of our investors out there is the global gaming market's about$190 billion market. We're probably running 3 % of that through Roblox. So it gives a sense of the potential scale here and what the opportunity is as well. A couple thoughts on this. in the midst of COVID, something really interesting happened. We had had this vision that we're not really a solo consumption platform. We're not really an image sharing platform.

26:58We really are arguably the future of the phone system or the future of how you stay in touch with someone else. And just like there's once the phone system, someday there'll be the holodeck. We saw a little of that in the midst of COVID when people were not able to play outside or go see their friends, a lot of parents discovered Roblox as like the holodeck to stay connected in COVID. That was really a playing out of the thesis, I would say. And it's a little bit, I think, a differentiator between what you might call a communication platform or a solo consumption platform or an image sharing platform.

27:36There's some pretty cool advantages of the communication platform. I think when I was in high school, we had the phone, right? And on a rainy day, we could call people up. So there's a little bit more of a social engagement aspect to that. I think there's a little bit of a STEM, art, design, production, business kind of aspect to that. But I would say at the same time, I mean, I've gotten clipped in certain news things, like by the BBC, where I said every parent should decide on their own screen time. And like, how could you say that, Dave Buzuki? But we really do believe that. And I think we think we'll work with parents to be at this great communication platform, which is, I think, a little different.

28:21Yeah, I think it's a very fair point. Not all screen time is created equal. And the types of activities kids are doing on Roblox is maybe a bit different. I want to keep going on this child user and particularly safety challenge that you guys are addressing right now. So 11 days ago, the Texas Attorney General filed a lawsuit against Roblox. And in that lawsuit, he claims, quote, Roblox markets itself as a safe digital space of creativity, but in reality, it has become a breeding ground for predators. This is one of the few lawsuits the company is facing. So when engagement and safety pull in different directions, which way do you go?