David Senra: You just said something interesting right before we started recording.

David Baszucki: Yeah.

David Senra: I asked you how old you were when you started Roblox?

David Baszucki: That's right.

David Senra: You told me the age, and then you said, "Oh, there's actually an interesting story and a metaphor there." What did you mean by that?

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

David Senra: It was logical and risky because at the time you were doing this, this was like 2002?

David Baszucki: It very...

David Senra: 2003?

David Baszucki: No one got it back then.

David Senra: Yeah.

David Baszucki: And no one quite thought of it. We had a business plan slide along the way, when we finally raised some angel money, that's actually very accurate to today, and it was a little bit, "What's the history of storytelling and communication?" That history of communication was the mail system, voice, texting, and maybe video. But in sci-fi, everyone was talking about "The Holodeck" and that immersive stuff we would see on "Star Trek." We actually believed it, and that was part of the idea behind starting Roblox. We thought 3D immersive digital stuff would combine communication, being in the same place with storytelling, and the rest. That's kind of how we got our launch. And the other cool thing about the launch is we initially thought it was so fun and cool to work on. Even a four-person lifestyle company at that time was very appealing.

David Senra: Okay, so a four-person lifestyle company. Because the first company you started, you didn't raise any outside capital for, correct?

David Baszucki: Knowledge Revolution got very far without raising any money.

David Senra: And you sold it for what? 20 million, something like that?

David Baszucki: That's exactly right.

David Senra: That's when you took the sabbatical?

David Baszucki: That's correct.

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

David Baszucki: I think logical goes to, what's someone trying to optimize for? Literally, at that time, I had been a CEO, and so in a way, I was optimizing for being another CEO and dropping into CEO-ness when, in fact, a lot of the magic of Knowledge Revolution had been about inventing new stuff. And that was actually for some of the early Knowledge Revolution people and myself, that was actually our superpower. It wasn't, like, just being a CEO thing. So, when I came out of Knowledge Revolution, I actually went and looked at a bunch of CEO jobs that seemed like the logical thing.

David Senra: Wait. Applying to be a CEO of a company you didn't start?

David Baszucki: That's right. What a mistake, right?

David Senra: What's your distinction between, the difference between a founder and a CEO?

David Baszucki: Well, I kind of learned at that time, like, actually, my founder kind of mode, from Knowledge Revolution, I couldn't find a position. Obviously, it was a mistake to be looking for that type of thing. That was much more of a founder...

David Senra: You're a world builder.

David Baszucki: That's right.

David Senra: No way, you're going to jump into somebody else's world.

David Baszucki: What you're describing is literally, like a vision I had one night where I was on this path, and there was this big barrier there. But this path, which was more world-builder, creators, it was like, "Boom, I got it." And that's when Roblox started.

David Senra: Okay, we got to pause here because there's almost like a paradox between you. So, I had dinner with Ho Nam, who's been one of the earliest investors in Roblox.

David Baszucki: Yeah.

David Senra: This guy's been telling me about Roblox for as long as I've known him. I think he's been involved for a decade and a half.

David Baszucki: Yeah.

David Senra: And he's like, "The thing about Dave is if you ask Dave the time, he'll build you a clock." It's one of the most unique descriptions of another human being I've ever heard. So, you're known as this really, essentially, like eccentric genius systems builder. But then I watch your talk at Stanford, and all you're talking about is following your intuition. Can you reconcile those two things for me?

David Baszucki: That's right. They're both very valuable. And so, I would say that early CEO lesson was definitely a sign of not following my intuition. It was like, logically, be another CEO, rather than follow my intuition and build Roblox. I would say combining intuition with tenacity and taking the long view, if those things can coexist, it's super, super powerful. And I think along the way, with Ho, for example, that metaphor of building a clock, it's funny because when we started Roblox, we used to joke, we want to start a perpetual motion machine. And what is a perpetual motion machine? It's something that can keep going, get better and better. That's what kind of the notion of building a cloud 3D UGC system. We keep building that system, creators are going to make more and more amazing content. We can keep tuning the system, and we'll get kind of that perpetual motion machine. And the metaphor of that clock thing is really interesting because if we dive into that, it's harder to build a clock, but if you ask me the time every day for the next 20 years, it's probably easier to build the clock than to tell you the time every day for the next 20 years. And that was part of the thought behind Roblox.

David Senra: I was just on stage at an event with my friend Eric, who's the co-founder and CEO of Ramp. When I looked over to my right, I noticed that on the sleeve of Eric's jacket it said, "We win when our customers win." Ramp is the presenting sponsor of this podcast, and the way that Ramp helps their customers win is by helping you save time, save money, and grow revenue. The median company running on Ramp cuts their expenses by 5%. The median company running on Ramp also grows their revenue by 16%. So, when you're running your business on Ramp and your competitors are not, you have a massive competitive advantage that compounds over time. Ramp is the only all-in-one platform designed to make your finance team faster and happier. Many of the top founders and CEOs I know run their business on Ramp. I run my business on Ramp, and you should too. Go to ramp.com today to learn how they can help your business save time, save money, and grow revenue. That is ramp.com. Okay, let's go back to what you were saying. The idea behind Roblox, you had the sabbatical, you started Roblox. There's four people, you described as like a lifestyle business going into that.

David Baszucki: It's interesting. I think the lifestyle business could be a metaphor for having no expectation and being so excited about the area we were going into. It was like a validation of our intuition. We're going to go do something enormously both fun and something on our business plan, like it could be really big. But it was at the time so fun. I think we're thinking we'd be very satisfied if we could work on this for many years. What happened is it got a life of its own, and it... Just the responsibility got bigger. The second we were live, we could see this thing is going to keep growing.

David Senra: What was the original product?

David Baszucki: There was actually an original product that was an incredible failure. And the original product that was the incredible failure was arguably us knowing... We intuitively knew what the viral product would be. We knew the viral product would be online in the cloud, multiplayer, digital stuff, physically simulated, access anywhere, user creation, and build cool stuff. We kind of knew that. We wanted to get something out sooner. And so, what we tried to get out, which luckily was along that trajectory, was something that was more of a single-player puzzle-builder-type game. We thought, "Oh my gosh, if this puzzle game thing kind of gets viral, that will give us a little bit more runway to build the four Roblox." But as you can imagine, that single-player puzzle-type game is not quite as fun as multiplayer immersive 3D with your avatar, going with your friends, and doing all of these things. So, sure enough, within a couple of weeks of that, we were just like, "Yeah, we knew it. It's not going viral." Like, "What are we going to do?"

David Senra: So, how did you get from the single-player puzzle game to building a platform?

David Baszucki: Just deep breath. Six more months of engineering. Let's go.

David Senra: What does the team look like in the six months? Is it still four people?

David Baszucki: Initially, it was just Erik Cassel and myself, and then John and Matt Dusek were just coming on board. So that decision happened when it was two of us.

David Senra: And you had raised any money?

David Baszucki: Nope. Just having a good time building this thing.

David Senra: And funding it yourself?

David Baszucki: Yeah.

David Senra: You said something very interesting. It's like, "We started this with no expectations." Say more about that.

David Baszucki: After selling Knowledge Revolution and taking my two-year sabbatical, I tried that CEO thing, when I wasn't using my intuition. Then I came back, and the revelation was almost so big. Just like, "Oh, I could work on invention, fun, and inventing Roblox. What a luxury. That is such a fun luxury. I could do that for my whole life." And so, I think that was more coming off of that other linear track, just being so pleased with it. Obviously, the second we started going, a lot of other instincts kicked in, the responsibility, how big can we make this? The second we saw the perpetual motion machine starting to work, that was really interesting.

David Senra: When it was just you, your co-founder, and these two other people, were you using the term "perpetual motion machine?"

David Baszucki: I was using it, yeah.

David Senra: Where did it come from?

David Baszucki: Perpetual motion machines in physics are... Even now, if I go on a short-form video platform, every once in a few months, you can see some crazy mechanical gadget that if you look at it, they'll say, "You know what? The water falls out of here, and that falls out of here, and it's a breakthrough in physics," and the machine will just go forever. That's what a perpetual motion machine is. They've been around for hundreds of years. Obviously, it's physically impossible. You know, thermodynamics, more energy in than out, friction. No perpetual motion machine ever works. But it is kind of this interesting moniker for the notion, "Are you building a system that will have a life on its own? Will it grow on its own?" I think in the context of Roblox, is it something that will organically gather traffic rather than buying traffic? And in that case, the content on Roblox was perpetual. It was made by creators, and the acquisition of users was perpetual, and that it was word of mouth.

David Senra: You were how old when you started Roblox?

David Baszucki: Twenty years ago, roughly. So, like early 40s.

David Senra: Very fascinating to me that you're like, "I want to build a perpetual motion machine." Something that has no end, something that carries on forever.

David Baszucki: Yeah.

David Senra: Did you know the next company that you want to build is going to be the last company you work on?

David Baszucki: I did.

David Senra: One of the things that Ho Nam told me about you is, like, "He has unbelievable patience and endurance, and he wants to work on something for the rest of his life."

David Baszucki: Yeah. Yeah.

David Senra: But you knew that in your early 40s.

David Baszucki: I think I actually knew it in my 20s because I think... And I actually think I knew it even very early on, like when I was programming Apple II stuff. For some reason, I intuitively wanted to build world simulations and...

David Senra: Were you playing these games like "Civilization?"

David Baszucki: I was more building them. So, when I was hacking up Apple II code, I always wanted to build "How do we simulate reality-type games," and then when we built Knowledge Revolution, that was arguably a two-dimensional world simulator. I would say video games have historically been more about how they look. I was pulled to not just how they look, but how they function as well. And how much fidelity can we get out of it? So, I was really interested in that. When we formed Knowledge Revolution, it was very early in the days of simulating physics on a computer, and there were papers in SIGGRAPH at the time, very early algorithms of how you do collisions and all of that kind of stuff, that we had to pull that research out to build that Knowledge Revolution physics simulator. And I would say that instinct carried into Roblox as well. So, I would say when we sold Knowledge Revolution, and we started Roblox, I was thinking that immersive 3D, physically simulated stuff should have a 20, 30, 40, 50-year trajectory.

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

David Baszucki: Yeah, yeah, yeah. I did.

David Senra: Where it's like, the chance that you're going to build something, that you could work on for 30, 40, 50 years, this perpetual motion machine, and that was created by somebody else.

David Baszucki: Yeah. Yeah.

David Senra: It's not going to happen.

David Baszucki: No.

David Senra: You had to build it from scratch, the way you wanted to do it.

David Baszucki: That's right. That's right.

David Senra: Okay. So let's...

David Baszucki: So, I got lucky, I fell off that and got back on it.

David Senra: Well, goddamn right you got lucky.

David Baszucki: Yeah, I think so.

David Senra: I mean, you definitely made the right decision. So wait, let's go back to... Now you're building like, "We're not going to do this single-player puzzle game."

David Baszucki: No, no.

David Senra: "We started Roblox." You knew it was going to be a platform from that point?

David Baszucki: We did.

David Senra: Okay. So, but who's making the games?

David Baszucki: At that point, we had four people. Matt and John joined Erik and myself. John was a really good game maker, and so then we had a little bit of a warm-up phase, where John made a couple of very famous first Roblox games like "Classic: Crossroads" and "Chaos Canyon." They were really pretty fun, and they tested the system. So we had an in-house creation. The three of us are coding, and then we had some users starting to play on "Classic: Crossroads."

David Senra: How are you getting them?

David Baszucki: Really interesting. I don't know what entrepreneur I heard this from. They said, "Look, just go buy 50 users a day from Google." Like, that's it. "And you can buy them for a buck a user." And so we said, "Oh, that's a really good idea. Let's go buy 50 users a day." That was the germination of all of Roblox. If we were able to reverse engineer the whole social graph tree, all the way back to the starting of Roblox, we'd probably see a one-month period times 50 users times 30 days. Probably see 1,500 users that saw some ad, like "Online building game, come try it out," that are the initial social graph of everyone on Roblox. Now, in the afternoon, the four of us go online. There's maybe 20 or 30 people just hanging out in these games, and we're kind of watching them. We had been making those games with Roblox Studio, which was our creation environment. And we were in a rush. When can we publish the full closed-loop system? The closed-loop system is that anyone can download Roblox Studio. You can make an experience. You can push it live. There's a page where you can see all of the experiences. You can jump in and start playing that, and that's kind of a closed-loop perpetual motion machine. So, we're just like, "Okay, we got to get this Studio thing out. What's going to happen? We don't know. I hope someone likes it," blah, blah, blah. We've got about 1,500 users.

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

David Baszucki: That's right.

David Senra: And then a few years later, which I want to talk to you about, because I don't think many people know, that the size of businesses people are building on top of your platform.

David Baszucki: They're big.

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

David Baszucki: And it happened very virally. So, there's a day, we were in our little office on Chestnut Street in Menlo Park, the four of us. It's like, "Okay, it's one o'clock in the afternoon. Let's push Roblox Studio live, see what happens." And then probably around three or four o'clock, we started seeing our... "Whoa, someone just published something. Look at that." "Oh, someone published something that other people are playing. Oh, look at that." "Oh my gosh, now there's 20 things published, and that has a bunch of people in it. Oh my gosh!" And so, we went home that night, just going, "Okay, closed loop, viral system." These are users now that have way more word of mouth than anything we're buying. This system is growing on its own.

David Senra: Why do they have way more word of mouth than anything you're buying? Because they're telling their friends to play the game that they made?

David Baszucki: They made a game. The variety of the games, all of a sudden there's a 100 different things. It's not the boring stuff we made. For the existing users, I'm seeing something new every minute, rather than this boring stuff we made three weeks ago. So new content, breadth of imagination, creators bringing friends, all of those, just viral.

David Senra: What do you think when people compare Roblox to YouTube?

David Baszucki: I think it's interesting. It's a little different, and I think...

David Senra: Well, Roblox is inherently social in a way that YouTube will never be.

David Baszucki: I think there's both consumers and creators, but you hit it exactly right. The comparison, I would say, to YouTube would be a difference between the phone system and reading a magazine. Like, reading a magazine on a cloudy day 50 years ago, you could do by yourself. On the phone system on a cloudy day, you call your friends in the Beaver Cleaver 50s and say, "Hey, what's up?" kind of thing. And so, I feel the difference is they're both content platforms. The content in a video platform is typically solo.

David Senra: I'm by myself when I watch YouTube.

David Baszucki: That's right.

David Senra: I don't watch it with other people.

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

David Senra: So, is this a game platform or is this a social network?

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

David Senra: What are the two viral loops?

David Baszucki: So in YouTube, there's a bit of a content viral loop. The better the content, the more retentive it is. And they have very thoughtful ways of everyone finding good content.

David Senra: Mm-hmm.

David Baszucki: In Roblox, the viral loop is both the quality of the content as well as the users being with each other. So, there is both a content viral loop and a communication connection viral loop.

David Senra: I've heard that other platforms, other messaging platforms, actually, see you guys as a big threat. Snapchat is one I've heard, because the user behavior on Roblox is, "Yeah, I can play games with my friends." But it's actually, like the use case I've seen is they'll come home from school, your younger users.

David Baszucki: Yeah.

David Senra: And like when we were kids, we'd get on our bikes and go find the other friends.

David Baszucki: That's right.

David Senra: They get on Roblox, and all their friends are there. But sometimes they're not even playing the games. They're just sending messages to each other.

David Baszucki: Yeah. I would say it's interesting what's the utility of messaging, even very visual messaging, or ephemeral or non-ephemeral messaging, is versus immersive 3D. And in a way, I don't think we think of it in terms of how much time doing this versus how much time doing this. I think there's a natural evolution of a wide range of types of platforms. We've seen natural evolution of text, natural evolution of photo type messaging, natural evolution of short form video, these categories. I think we actually think less about, like, we're comparing with the time of this activity, and I think we're typically saying, "How can we increase the quality of this experience?" Our niche is immersive 3D co-experience. How can we make it better, better, better? We think it's a naturally emerging niche, and I would say we feel the spec of our product has a long way to go. Roblox is a very primitive product relative to what will be possible someday.

David Senra: What other co-experiences besides games take place on the platform now?

David Baszucki: We have all kinds of organic things popping up. There's arguably, of course, concerts, music. We're starting to see more and more of that being done organically rather than ourselves. So, I think Bruno Mars showed up on one of Jandel's games without us organizing it. I'd say that's a good sign of... I actually think Bruno was the peak concurrent of music anywhere on any immersive 3D platform, and it was actually within a game. I think we're early signs of shopping, early signs of, who knows? You know, someday older people are going to go to church on the platform. Older people are going to work together on the platform. Older people are going to do other things. I think the natural evolution of a communication platform is what are the ways people use a communication platform?

David Senra: One of my all-time favorite quotes is from the book "Zero to One." It says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas." This is exactly what AppLovin has done with their new advertising platform, Axon. Axon is the most powerful advertising platform in a generation. Axon allows you to capture undivided attention. Axon ads are full-screen videos that are watched for an average of 35 seconds, a retention that blows other ad platforms out of the water. And you can launch in minutes. You set the goal, and Axon achieves it. No complex setup, no expertise needed. And Axon scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, scaled to hundreds of thousands of dollars of spend per day, and increased their revenue by millions. And most advertisers aren't even thinking about this channel yet. Less than 1% of advertisers have access to Axon, so you want to get started quickly. And you can do that by going to axon.ai/senra. That is axon.ai/senra. I still don't think I understand the total depth and breadth of your vision. So, if I come to you, and I don't know anything about Roblox, and you're the Systems Designer, and I say, "Okay, explain to me what you have built."

David Baszucki: Yeah.

David Senra: Take as long as you want with this question.

David Baszucki: If we had to talk super expansively, I would say, look, there's a continuation on the human development of how we communicate. We said earlier, it's a bit like the "Holodeck." Right now, the Holodeck that we're building is very primitive. It's not photorealistic yet. You don't go inside of it yet. But you do go into a 3D environment, mostly that you could imagine, or think about, or build. You can go there with your friends and play "Hide-and-Seek." You can play a traditional game. You can be in a fashion show like "Dress to Impress." All of the places you go in the Holodeck are made by a creator community. We've incorporated an economy into this system, so the vast majority of people who go do that for free. Our creators, though, are very thoughtful and savvy, and they come up with interesting ways to spend money. So when we go into "Dress to Impress" and go into a fashion show, there may be something I can buy, if I so choose it. And they, in a way, are creators because they have this platform, are able to innovate new types of things that we think of sometimes as games or experiences. You know, it's funny that the top hits on Roblox recently have either been "Fashion Famous", "Dress to Impress," or "Grow a Garden." It's like, that's pretty cool.

David Senra: Okay, but explain how you built the world, though.

David Baszucki: Behind the scenes, there's a massive amount of technology in Roblox.

David Senra: Mm-hmm.

David Baszucki: To make it seem as transparent and easy as it does, there's an underlayer, we call the "Roblox Operating System," which is the company that's then building this Roblox thing. And kind of in line with systems thinking, we think of our company as the system, and the company Roblox is really running almost as if it's nine separate companies. They are all very well connected. We all get together once a week and connect all these companies together. There is a 3D cloud simulation and toolset company running within Roblox. There is a mini cloud infrastructure company running with 40 data centers and hundreds of thousands of computers, all of...

David Senra: Why'd you decide to do that?

David Baszucki: Initially, we were actually pretty naive, and so rather than going down this cloud path, I would say, right when we were starting Roblox, AWS was just starting to be a thing, and S3 was just starting to be a thing. We liked the idea initially of building it ourselves. Five years later, I think that's when there's a lot of discussion about, "This company's all-cloud. This company's all 'Build-it-themselves' kind of thing." We, at that point, started to see building infra ourselves as being a cost-benefit and a scale-benefit. And so I would say, we're great partners with AWS, and GCP, and others. We do burst into those platforms. But at the scale we're working and the cost we're working, we do this very efficiently. All of Roblox runs for less than a penny an hour, for every person around the world. And that's super critical. So yeah, we can go in deeper, but Roblox is really nine...

David Senra: Let's go deeper. I want to go back to the nine companies because this is stuff...

David Baszucki: Yeah.

David Senra: This is what I meant before we started recording. I was like, "You got all this crazy shit in your head that I haven't heard in any of the podcasts."

David Baszucki: Yeah, yeah, yeah.

David Senra: "We've got to find a way to get it out."

David Baszucki: So underneath Roblox, Roblox Operating System, it's how we run the company. We have a group of engineers working not on Roblox, but on the Roblox Operating System, looking at who are the various teams, how we're organized, how we do all of our things in the company.

David Senra: Hold on, back up, back up. You have a team of engineers working on the Roblox Operating System, which is just the Operating System on how to run the company, the company building the world.

David Baszucki: That's correct.

David Baszucki: That's right.

David Senra: Okay.

David Baszucki: Yeah. Because running the company efficiently is the most powerful way to then build this vision. So, I won't go into the extent we use AI acceleration amongst our creators, but having all of our engineers...

David Senra: Why won't you go into it?

David Baszucki: I don't want to say anything non-public, but I would say that is right in line with Roblox operating system. How does every engineer, product manager, data scientist, designer work in optimal ways? How does the leader of an individual group, like that game engine cloud thing, how do they actually operate almost like a mini CEO? How do they run that vertical stack? How do they control the types of engineers and product managers, how they compensate them? That's a really big part of how we run our company. And I'd say that the common thread of what we try to do is have as much autonomy on these groups or companies within, and then simultaneously, horizontally, just continuously try to connect it together. So, we have lots of groups who can go and do things very quickly on their own, and then we glue them together constantly.

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

David Baszucki: There was a pivotal moment a long time at Roblox where we were running it as three horizontal stacks. We were running it as the web stack and the infrastructure stack, and what we would see is someone's working on a specific feature, like the social graph, they would have to go and try to get enough bandwidth out of the web stack and the infra stack, and the front-end stack. So there's always a negotiation amongst that, and it was hard to say who is building the social graph. So, there was a rotation of that where we said, "No, someone is going to be in charge of the whole social graph, user-facing components, web component infra," and all of a sudden, we got a lot of acceleration because they could load balance between all of those pieces. So, that lesson has been with us today, and actually, it runs recursively. So, within our, for example, this one group or company I've been talking about, the game engine group, that is subdivided into smaller pieces that also run kind of in that same way.

David Senra: But essentially, you created a series of primitives?

David Baszucki: Yeah, in a way. We're like, we have a primitive system for how we run the company recursively from groups to teams to pods, and we've tried to make that somewhat an accelerant in how we build the business.

David Senra: But the way you think about these nine, you think of them as almost individual companies inside the company? Is that the term you use?

David Baszucki: We call them groups, but the leaders of these groups, we want them to feel that autonomy of as much as possible, running a pseudo-autonomous thing that intersects with each other. And it's almost like we would have a game engine simulation company talking to an infrastructure cloud computing and storage company. They work with each other. This sits on top of that. But we want as much speed and autonomy in each of these groups.

David Senra: Say more about how this is organized. This is very fascinating.

David Baszucki: Yeah, yeah, yeah. No, we... Executive staff meeting every Tuesday. We get together four or five hours. Leaders of all these nine companies come together. We go through the things they're working on by themselves, but we go through a lot of times of all of the horizontal things that are bringing them together.

David Senra: What are the horizontal things bringing them together?

David Baszucki: It's funny, but we track at a ridiculously high level of fidelity even in our executive staff meetings. So we have probably fifty to sixty things that are core to hitting the objectives we have this quarter, next quarter, the rest of the year. It's almost like a hand-curated list at the company level and group level of things that we think are emblematic as a way of our success. And every week, we have all of the key leaders of all of those groups come together, and we just go through all that list of 50.

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

David Baszucki: Some of them report to me, some report to some without, but there's probably a... We'll bring in a few other engineers as well, so there's probably 15 or 18 people in that meeting. And we spend an hour just choo, choo, choo, choo, choo, choo, choo.

David Senra: Well, no, what's the choo, choo, choo, choo? You've got to explain that.

David Baszucki: Key deliverable one through 50. Like, this key-

David Senra: In an hour?

David Baszucki: It's two minutes. It's like one to two minutes an issue.

David Senra: Oh, I just recorded with Evan Spiegel, founder of Snapchat.

David Baszucki: Yeah.

David Senra: And he was explaining his design meeting. And he says, I forgot maybe an hour or two hours. I have to listen to the episode back, but he's like, "We'll go over hundreds of ideas."

David Baszucki: Yeah.

David Senra: "And we just go through it really, really, really rapidly."

David Baszucki: We have our core list that goes between 50 and 70. They cycle every month or two or three or four. We're constantly putting new things in.

David Senra: How do you keep track of all this?

David Baszucki: We have a pretty good office of CEO team. We have the Roblox operating system. It's got some software in there. My office has StratOps people, senior people who kind of work with me to do this on the side, so it's very real-time.

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

David Baszucki: Yeah.

David Senra: What are the three other ones?

David Baszucki: We publicly talk about all of them. So I would say there's a people systems company that actually builds the Roblox operating system and has all of our recruiting and people and performance management stuff. There's an infrastructure company, and that's running our 40 data centers and all of our compute and bandwidth. Persistence, they're building out cool persistence systems as well. Game engine, simulation tooling, and Roblox Studio sitting in a group or a company. There is a group called the economy group. It's literally all of the things around how we have Roblox, how we monetize, how we collect money, the ledger, all of that. There's a very large group, arguably the largest safety and civility group, engineering, product, policy, and live ops under a single-threaded leader, Chief Safety Officer Matt, who can just run that whole thing and make decisions. There is a user-facing group that is all involved with social graph, virality the various apps we have for having Roblox run in different places. So, there's a wide range of these user groups.

David Senra: Do all nine of these companies have the single-threaded leader?

David Baszucki: Some of them are still matrixed. Many of them are single-threaded. We do have some leaders that have engineering under two of them, so it's not absolutely perfect. And some of these, these are better run by maybe a product person than an eng person. But generally, there's one or two leaders for each of these groups that we know exactly who it is.

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

David Baszucki: I think so, yeah.

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

David Baszucki: No.

David Senra: All right. So let's go back. This is very fascinating. Essentially, you've designed a system, which is your company, to design another system, which is the platform that you're building.

David Baszucki: That's right. That's right. That's exactly right.

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

David Baszucki: That's right.

David Senra: But there's no economy there. There's no Robux.

David Baszucki: Pure fun. Pure fun.

David Senra: Okay. And there's no revenue of the company at the time?

David Baszucki: No revenue. Pure fun.

David Senra: Okay, so what is... Taking it back to your decisions, you're seeing this like, "Oh, we're onto something. This is going to work." What's your next thought?

David Baszucki: So then what starts happening is Roblox started a persistently viral mode. Like we could track the growth day by day, week by week, it's like this is organic growth. This is not paid acquisition. It's just like we're sitting back and watching that. The fun started being there. It's just like 10 concurrent, 100 concurrent, 1,000 concurrent, 10,000 concurrent. Creations are getting better. We know everything we do with Roblox Studio, the better Roblox Studio gets, the more viral it is. The better the game engine is, the more viral it is. Very early on, to Eric's credit, I think literally on week three or week four in the afternoon, when now we're sitting there, we know the names of a lot of these people. There's hundreds of people. Eric said, "We need to build the first safety moderation system." And John and Matt and I all look at it and say, "You're right. He's right. Oh my gosh. Like, we've got to get on this thing." So along the way, we build a moderation system. We have user reporting, all of that. For a long time, Matt and Eric and John, and myself, we were the moderators. We would switch off, so we got to get a vibe of that. And so this keeps marching on, and then finally we say, "Okay, how can we start making some money on this thing?" It's growing. We have costs, all of that. Interestingly enough, this is another example of we had a big intuition around virtual economy. We said, "We can get this out a little faster if we build this club membership thing." At that time, Club Penguin had a club membership. Can we just charge people five bucks a month for something? So we worked on that for a while. And so, we had this thing called Builders Club. It was kind of fun. We started monetizing. Exact same thing as when we started. We had this really fun moment where I was on a camping trip, and I could check in how many people are buying Builders Club every day. First day it was five, and then it was four, then it was six, then it was three, then it was eight, then it was fifteen. So we're like, "Okay, we're monetizing. This is great." And so, Builders Club keeps going, and then for about a year or two, because it was working so well, wow, it's just all viral growth. Viral Builders Club is starting to work. Let's just keep working on the system, making it better and better. It was interesting, though, just like in the early days when we started the puzzle game and then said, "Finally, the market has shown us that's not the ultimate system. Let's build what we really believe," something very similar happened with the Builders Club. And we entered this interesting period where user growth was going like this, but revenue and bookings was kind of going like this. And so what that meant is Builders Club was getting a little old and stale, and for the wider range of users, it was really not the right thing. And in retrospect, it's funny because when we started the company, we used taglines like, "You make the game." And that's a really good early tagline. It's aspirational. Everyone's making games on Roblox. It's definitely not the reality of a billion users. And among a billion users, communication for many people would be very important without having to make a game. There's a lot of people that just want to show up and play something.

David Senra: Yeah, I think, right now you said you... The last number I saw, you have like, I don't know, 150 million daily active users or something.

David Baszucki: That's right.

David Senra: About 140, whatever the last public number was.

David Baszucki: Roughly, yeah.

David Senra: Out of those 150, how many are building games? The 150 million.

David Baszucki: I don't know if we give out our latest Roblox Studio numbers, but it's definitely a lot of people, but it's not 10 million.

David Senra: A small percentage.

David Baszucki: It's one or two million. And I would say the good news is that vision may actually return because I do think over time with AI acceleration and all of the things we're working on, just like maybe in the very early days of video or YouTube, was mostly consumptive. There was a little bit of this early creation. And then with short-form video, I think we much more... Everyone's starting to make videos. I do think there's that potential for something like Roblox.

David Senra: Yeah, especially if they can do it in natural language now.

David Baszucki: Exactly. So, along the way, we kind of had this revelation that, while maybe the way reason Builders Club is getting tired is not everyone wants to be a builder. A lot of people just want to have a lot of fun. And so we had also a big intuitive vision. What would really be cool, another perpetual motion machine, is virtual economy. And people spend money, they buy Robux. If we can allow the creators to figure out all the different ways someone might buy Robux without hurting their experience or making it any less fun, then a small portion of users will buy some Robux. They'll spend it in the game. The creator will accumulate those Robux in their Roblox Robux bank account. They'll cash them out for real money, and that should create another perpetual motion loop. Interestingly enough, we actually had a lot of board discussions like, "Is that a good idea or not?" And the board came around. I was probably the biggest pusher of it because I believe some people who were hobbyists would then be able to go and earn a living. Like, you could go from hobbyist to earning a living on Roblox if you could do this. So we did that, very similar to the Roblox Studio situation. We had a full closed-loop system. And the closed-loop system means I'm a creator, I can make a game or an experience. You can buy something extra for Robux, could be a flashlight for something. As a user, I can go buy some Robux with a credit card. I can buy that. And also, from a discovery standpoint, we started showing top games where people are spending Robux. So, same thing, within about an hour or two of going live, oh my gosh, that's the top game where people are spending Robux. More people went into that.

David Senra: And that's going to scale with user growth in a way that the Builders Club would never.

David Baszucki: Yeah. And what we basically hit is an elegant economy that pretty much scales more than linearly with hours, basically. And what we have found, still optimizing generally for engagement and retention, not for money, is that developer incentive to balance engagement and money. If everyone needs to spend money to have fun, your game isn't viral. So creators have kind of figured that out, and so that's been another perpetual motion machine.

David Senra: Deel will help your business hire, pay, and manage any worker anywhere in the world. Deel is the best company in the world at building infrastructure for global hiring. Deel is one platform for payroll, HR, benefits, and device management across 150 countries. Deel gets you everything you need to run a high-performing global workforce on a single AI-native platform. From first offer to final off-boarding, Deel handles the complexity so you can stay focused on your business. The best founders and operators in the world have one thing in common. They control as much of their business as possible, and the founders of Deel do exactly this. When you use Deel, you aren't using a third-party payroll processor or a messy network of in-country providers. Deel built and owns the rails. That means faster speed, better service, and total accountability. The founder of ElevenLabs, who I use to make transcripts for this podcast, has a great description of the value that Deel can give your company. He said, "We built ElevenLabs to break down language and communication barriers. With Deel enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories, and ideas to every corner of the world." Deel is trusted by over 40,000 customers and growing fast. Learn how they can help your business by going to deel.com/senra. That is deel.com/senra. You launched this second perpetual motion machine, this virtual economy, this currency, a virtual economy, how many years into Roblox?

David Baszucki: Very early on. It's got to be 15 years ago.

David Senra: Okay.

David Baszucki: Ten, fifteen years.

David Senra: So you've been building this economy for 15 years.

David Baszucki: That's right.

David Senra: Is there another flywheel where it's like, okay, I was making games for fun. I'm a user. You turn me into a creator. That was all fun. Now you're turning me from a creator into an entrepreneur. Therefore, now I make more money. I can also... It has to increase the quality of the games.

David Baszucki: Quality's gone up, up, up. I would say quality is ultimately going to be limited not just by the creativity of our developers, but I also feel an interesting thing about Roblox is in the video space, the camera, the display, they're getting pretty refined, like 4K camera, 4K 60Hz display.

David Senra: Yeah.

David Baszucki: That's a pretty mature technology relative to maybe black and white movies with no sound 100 years ago. In the video space, in the video co-immersion space, we're not there yet. We're really excited because there's a lot of technical people at Roblox who I think the ultimate spec is to video what human co-experience can be, which is huge crowds of people, 10,000 people...

David Senra: But realistic?

David Baszucki: Photoreal.

David Senra: Yeah, because right now the games look shitty.

David Baszucki: We believe we're going to get to photoreal.

David Senra: I'm not obviously insulting you.

David Baszucki: We believe we're going to get to photoreal.

David Senra: Yeah. But isn't it crazy how far you've gotten? You hit on something deep in our nature.

David Baszucki: That's right.

David Senra: The fact that you don't want to do things alone.

David Baszucki: That's right.

David Senra: You don't want to shop alone.

David Baszucki: The core bones of the platform are very interesting.

David Senra: You don't play games alone.

David Baszucki: And I think it's almost like... Roblox is very sophisticated, very technically complicated, but in a way, that's the same traction one would've gotten on that early black and white movie in a movie hall without any sound and some text between the scenes.

David Senra: I just thought of something. The fact that you got this far with... Because the kids don't care what the game looks like. They just want to hang out with other people.

David Baszucki: We got pretty far with black and white no sound movies.

David Senra: If I was in your position, I'd feel very confident investing and continuing to reinvest into this platform, given how far you got. Could you imagine how big the platform could be if it's photorealistic?

David Baszucki: Can you imagine 10,000 simultaneous users photorealistic on a two-gig Android device?

David Senra: What's the most concurrent users? You said that Bruno Mars was the most you've ever had on the platform, or no?

David Baszucki: I think there's two types of concurrency. So on Bruno Mars, we're talking 20 million people. But those are sharded amongst copies of experiences. When we say the technical goal is, say, 10,000, that's in a basketball arena. And so, running 10,000 concurrent people is really technically complicated. They may be all around the world trying to get together, and so when we say concurrency, it's in the exact same environment where you can see and hear every single person.

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

David Baszucki: That's right.

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

David Baszucki: I would say part of the job being interesting and fun is I think we have a reasonable idea of how we're going to get there. And so, no timeframe, not saying when Roblox will get 10,000 user photorealistic, all of that, but I think technically we have a reasonable idea of how we're going to get there. That's kind of exciting.

David Senra: And very hard to compete with.

David Baszucki: We run the company in a way... It's interesting. I mean, we've been in many crazy times, right? We've been in the PC revolution, the web revolution, mobile revolution, crypto revolution, AI acceleration revolution. We have to run the company almost as if we're imagining a virtual other company who really loves this space. So we have an imaginary competitor. So we literally think about running the company that way.

David Senra: Michael Dell said this exact same thing on this podcast, where I think five years, he stood up, and he's like, "There's a company that's going to compete in every single area we're in. They're going to be doing it faster, better than us. They're going to be using this technology."

David Baszucki: That's right.

David Senra: And he goes, "And we're going to be that company."

David Baszucki: That's right.

David Senra: And he believes in even if you don't have a crisis, you make a crisis.

David Baszucki: We have to look over here at that imaginary company and then be that company.

David Senra: Very similar to how Dell thinks. I just did this episode on Elon, and he said the same thing. He's like, "Even when it looks like we're going to win, I always assume that we're losing."

David Baszucki: That's right.

David Senra: Keep that mentality. I want to go back to okay, so you stumbled in, now we're a couple years into Roblox's history. Now you have this virtual economy. You can see that it's going to scale way better than Builders Club. Ho Nam, again, I want to read this tweet because I've got so much information about you from him. And he says, "In the early days of the journey with Roblox, a next-gen Roblox receives 500 million dollars seed round prior to launch. Company was called Improbable." Ho is kind of a spicy guy, so he was aptly named.

David Baszucki: Yeah, yeah, yeah.

David Senra: He says, "Roblox used less than 10 million dollars of equity to build their business to cash flow breakeven." Is that true?

David Baszucki: Yes, it is.

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

David Baszucki: That's right. That's right.

David Senra: Okay. So, and then his point was 500 million, that seed round of this competitor that died is nothing over the long run.

David Baszucki: I think they're still around doing military simulation. I think the reason it was 500 million I think that was at the peak of VC Ma... I think it was Masa Son or whatever.

David Senra: Oh, God.

David Baszucki: And that was just, that's the check you get.

David Senra: Yeah.

David Baszucki: So sorry, there's no 100 million, there's 500 million.

David Senra: So talk about how you were so efficient, 10 million to get to breakeven.

David Baszucki: Yeah.

David Senra: How'd you do that?

David Baszucki: I think we've always been very good at product management of the surface and always been very good at doing the right minimum viable walk almost through the space, so that do less, take the long view, know where we're going, get a lot of stuff on the way. I do think we're pretty good at eliminating distractions, so we're kind of going down the right path. And I think we do that pretty well.

David Senra: What are some of the distractions that you avoided or eliminated?

David Baszucki: Oh, man. Like, there's just... It takes a lot of hubris to build platform because I think everyone... It's so fun to build content. Like, we all want to build games and stuff and big complicated features, and a lot of times, the features our creators need are boring and purely performance-based. And we have a saying in the company, performance is a growth feature. And we put an enormous amount of work on raw performance features, scale features, those kind of things. That takes a lot of hubris.

David Senra: What's a raw performance feature?

David Baszucki: We watch how long it takes on a wide range of devices when someone clicks, "I want to play that experience," to the time till they're interacting. And the vision would be video... We've come to assume in short-form video, I can just scroll through, like choo, choo, choo, choo. We're used to that. Gaming has traditionally never had that. Gaming has traditionally, you download, or you do this.

David Senra: Loading screen.

David Baszucki: You could have this background thing. People love... I text you or something, "Let's go try this." Choong. "Okay, we're in." People actually like that without maybe knowing it. So, we just made the decision, we want to get the time to jump into any Roblox game down to zero, basically, and that's very technically complicated, but we do believe it has long-term growth aspects to us.

David Senra: Okay, so you have this engine that is, you're now making money.

David Baszucki: Yeah.

David Senra: Right? You are staying focused on just building this perpetual motion machine.

David Baszucki: That's right.

David Senra: So you're not going on these other side quests. And if I'm understanding what you're saying correctly, then if you just limit your investment to things that make the user experience better, that will lead to more user growth, more money, more... Now you have this other kind of flywheel going on very early.

David Baszucki: That's right.

David Senra: I'm trying to figure out... Basically, the line of my questioning is just, how the hell did you only burn 10 million dollars?

David Baszucki: Yeah. We got viral very quickly, and then we started monetizing very quickly.

David Senra: And then you were just very careful what you used the company money for?

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

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

David Baszucki: With some of the VCs we talked to, we definitely... In that sense, I think we did a really good job intuitively connecting with go-long VCs. We got very fortunate, whether it was Altos or Greylock or Index or others, that in a way, we got VCs, I think, who could risk it all, who could not like, "Oh my gosh, this is one of my first deals. What am I going to do?" That could really go along with us, and I think that was very helpful.

David Senra: So why was it important? You were just worried about dilution? Are you a control freak?

David Baszucki: In some areas, probably yes.

David Senra: Yeah, I think you... Yeah. The more-

David Baszucki: Hopefully in other areas, not.

David Senra: No, but you're pretty vertically integrated.

David Baszucki: Yeah.

David Senra: You like to control everything. You build its own data centers, your rendering systems, your AI creation tools. You're funded by operating cash flow.

David Baszucki: I think there's areas of my life where hopefully I've decided not to.

David Senra: We're talking about work

David Baszucki: But for Roblox, knowing what we're building, and I would say it's not just control. I think in a way, owning our destiny in a way. So I would say building data centers is-

David Senra: Yeah, but the only way you own your destiny is if you maintain control, right?

David Baszucki: Exactly. So data center cost, performance, control, yes.

David Senra: What other areas of the business are you like that with?

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

David Senra: I think you just like building things.

David Baszucki: We do like that, too.

David Senra: It's like, to go back to your description, "I built an operating system."

David Baszucki: That's right.

David Senra: Like, "I built the company, and then I built the operating system to operate the company."

David Baszucki: Yeah, we do. Yeah, it's interesting because we're going to be building some other interesting things that we just decided on.

David Senra: Oh, of course, but do you see where I'm going with this? It's like, I want to tie that natural inclination or propensity you have for, we're going to call it control, for the time being, to also being very careful not only how much money you raised, but who you raised it from. Is there a connection there?

David Baszucki: Yeah. Yeah. There might be a thought around efficiency, growth, control.

David Senra: Because you can control your destiny.

David Baszucki: That's right.

David Senra: Okay.

David Baszucki: And there's many components of our stack where we went exactly the opposite way, and we said, "We don't need to control that." In the game engine business 15, 20 years ago, what audio system are you going to use? We'll use FMOD. Everyone uses it. We'll plug it in. So we don't build everything. When we feel we can plug that thing in and use it, we'll go that way.

David Senra: Brian Halligan founded HubSpot 20 years ago, and he has this line about AI that I keep thinking about. He said, "Most companies are using AI to make their teams more productive, but the companies that will thrive make the company itself the intelligence." And that is exactly what HubSpot does. HubSpot gives you AI that works, AI that actually knows your customers and your business. Your AI needs to know what you know, your actual customer conversations, your sales history, what worked last quarter and what didn't. HubSpot connects AI to your real customer data, so when it writes an email, it knows this customer asked about pricing three weeks ago, it knows what campaign brought them in, and it knows that they already contacted support twice this month, and that's when you start seeing actual results. Visit hubspot.com to learn more. That's hubspot.com. Let's go back to this idea that I've heard you say a few times, and I want to understand more deeply, the dirty little secret of Roblox is that we're actually an infrastructure company.

David Baszucki: That's right.

David Senra: Okay, explain this.

David Baszucki: I mean, running Roblox, behind the scenes, is very complicated. So, when "Grow a Garden" hits 20 million people at the same time, there's a lot going on there. That's 20 million people all around the world. They're playing on a phone, a tablet, a computer, iOS, Android, PC, Mac, Xbox, PlayStation, Meta Quest. They are running translated versions of that experience. They are hitting very quickly on Roblox bandwidth. They are connecting to data centers in Poland or in Singapore or in Brazil. They are connecting to our core databases as well. And running that is very interestingly complex. Running a 3D simulation cheaply is very complicated. I said a penny an hour. So, that is part of why our infrastructure costs are not crazy, is we can do a good job in even some countries that don't monetize very well. So, we have core data centers, edge data centers, and we're running a lot of our own CPUs and GPUs all around that. That's what allows us to do that.

David Senra: And you started this from the very beginning of the company.

David Baszucki: We did, yeah.

David Senra: Okay.

David Baszucki: Like, the very beginning of Roblox was running on one giant server that was right over there in my office.

David Senra: Can you describe what you see as the flywheel of the world that you built?

David Baszucki: I think the flywheel would be akin to saying what's the flywheel hopefully of the early phone system. Like, way back in that day when AT&T comes out with the phone system, and there's probably some time where only 5% of people in America had a phone. But imagine the virality of going over to your neighbors, see them making a phone call across town. "Oh my gosh, I want to do that too. Look at that." And so, when we look at the phone system, it most likely grew pretty virally. There's some early adopters, they're probably really expensive, but over time, everyone saw that. And so, I think that's how we see Roblox going a bit. There's a lot of word of mouth. As the quality of the experiences grows on the platform, I think we can see correlation in growth there. And so, if we can technically support what we ultimately think should be on the platform, I think there's potentially a lot of growth there.

David Senra: Blake Robbins is a friend of mine. He hangs out on the edge of the internet. He always finds these weird things for me, and he's the biggest Roblox bull that I've ever come across.

David Baszucki: Mm-hmm.

David Senra: This is the way he describes it. I'm curious if you agree with this. "More creators brings more games. More games brings more players. More players spend more Robux. More spending attracts more creators."

David Baszucki: If we're ruthlessly pushing forward the quality of our technology stack, our economy stack, our safety stack. So, I would say, I think what he's saying is if we walked away from Roblox right now and just kept the lights on, it's possible we would keep growing for a while. But that, at the same time, would be very, very dangerous and something we would never contemplate.

David Senra: Yeah, the way he described it to me is that Roblox is a compounding machine with network effects and a fully functioning economy.

David Baszucki: Yeah. We don't know what that full effect is. We'd never claim that we could walk away and all of that. But I do think simultaneously we know what we believe is technically possible, and we're literally racing to build that.

David Senra: You mentioned safety a few times. Ho Nam, when we had dinner to prep for this, he said something interesting, that you have been... Essentially, it's the biggest playground in the world, right? One way to think about this.

David Baszucki: That's right.

David Senra: Biggest playground in the world. Obviously, it's the safest playground in the world, but it's also huge, so there's going to be some kind of issues that come up. But he actually was saying the investments you guys have been making for seven, eight, ten years around safety and AI way before anybody else was, you're getting so good at it, it's actually a moat.

David Baszucki: Oh.

David Senra: Because over time, it's going to get safer and safer.

David Baszucki: That's really beautiful that he said that. We've seen this in self-driving, and we're not going to claim we're self-driving, but in self-driving, say self-driving ends up being 40 times safer than the average human. When there is a self-driving incident in the news, you don't hear that. It's just like, "Ah, self-driving, ah," kind of thing. I do believe the pressure we get, in a good way, from the media, from this, from that, is an incredible motivator for that moat.

David Senra: Yeah.

David Baszucki: The vast majority of what we've done on safety and civility, we've done on our own, kind of in a visionary way. I'd say age check, we made the call on our own. It's not because of laws or anything like that. But the ultimate mode and the ultimate belief of what is going to be possible, we're going to know the age of everyone. We have AI systems watching content, watching communication. We're banding things. We're not sharing images, all of that. It's an enormous opportunity, and I think more and more, we're starting to say, "Look, we know what the gold standard for safety is. We're building it. We're pretty far along." We're actually starting now to see other companies say, "Oh, maybe we should do what Roblox has done," or seeing more and more governments say, "We like where you're going with this. This is really cool." So, I'm really optimistic about having this force of innovation in what we're doing there.

David Senra: Okay, but is this something that you've been building and compounding since your co-founder...

David Baszucki: All the way since we built the first moderation system.

David Senra: Like the first year or two into that?

David Baszucki: That's right.

David Senra: Okay.

David Baszucki: That's right.

David Senra: Explain what... I don't know if you can talk about this publicly. Like, what have you built to make it so safe?

David Baszucki: I think we have seen AI as more consistent over time and scales more than humans, and so the ability to run every asset, everything on the platform through AI, all content, image, everything everyone's building, everything everyone's saying, and just get better and better and better at that, it's just been an enormous thing. And so, when we... You know, part of AI is very much the human-facing thing, like, "Oh, I've got an AI prompt," or, "I can do all of that." Behind the scenes, though, at Roblox for many, many years, we were pushing very early AI, BERT models, primitive type models to drive safety. So, I do believe it's a mode, and I do believe we've done something very unique in that. What's going on out there right now is we're very upfront. We do have people under 13 on our platform. It's an enormous responsibility. We focus on, once again, all of the aspects of how they play and learn and do things, but that's very different than being some other platform that says, "Oh, yeah, it's okay. No one's under 13. We're good." And so, I do think long-term leaning in and being part of that is an enormous capability.

David Senra: Something came to mind when you said, now other companies are looking at what we've done in this, and they're like, "Hey, I want some of that too." Would you ever sell this kind of technology to other companies?

David Baszucki: I think it's worth thinking about. I believe we will end up with the best AI tech for text, for voice, maybe for video, doing a wide range of safety things, either monitoring for critical harms, flagging, adjusting, all of that. It's not unreasonable to think we might do that. We've already started open sourcing some of our stuff, so there's a consortium actually with some various companies involved in safety. We've open sourced one of our voice models. We've open sourced one of our sentinel models, so we are starting to go in a way down that path.

David Senra: So, the majority of the revenue that Roblox makes now just comes from this platform, this virtual economy, this world outside, correct?

David Baszucki: That's right.

David Senra: But you'd have to have a million of these giant model companies coming and wanting to train their data because you have 12, 14 billion... What's the hours a month?

David Baszucki: It makes it so simple, right? Like we're...

David Senra: But how many hours of...

David Baszucki: 13 billion plus a month.

David Senra: So, 13 billion of actual people interacting. What does this data set look like?

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

David Senra: That's what I was going to ask.

David Baszucki: Never, ever, ever, ever. For several reasons. One is, just from a values thing of respecting the community. Can you imagine like what kind of whacked out decision that would be?

David Senra: Yeah.

David Baszucki: Roblox is selling their 3D user data. We would never do that. Also, I believe, over time, that this data is going to be very interesting data to, for example, imagine a future where a creator wants to make a really beautiful Roblox game and have a bunch of agents working all night long, iterative, Wiggum's loops, recoding, testing, recoding, testing. Imagine just like we do with code now, a creator wanted to do their whole game that way.

David Senra: So, wait, go back to you guys are buying 50 users a day from Google. Now, if you're building a game on your platform, you can actually use real data from actual users on Roblox to test what you're building?

David Baszucki: There's a level of indirection there. I would say the...

David Senra: What's the indirection?

David Baszucki: The level of indirection is making amazing NPCs that look and behave and act like humans by training on that data for our users. So, what we'd like to be able is you're building your cool experience. You want 10,000 virtual testers. You want to describe how they act, what they do, and put those into your experience and use that to test overnight.

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

David Baszucki: I feel like I can't predict the stock market, obviously.

David Senra: No, yeah, okay.

David Baszucki: And I think, though, ultimately, it's showing... I think the future for many companies is... We're in a time right now where raw user growth and engagement growth is mixing with a lot of factors. I think technical excellence, continued innovation, having people understanding where we're going with this, I mean, there's just going to be more and more of that, so I'm optimistic.

David Senra: And you see AI as a giant tailwind for you guys.

David Baszucki: It's an interesting time, right? Like, it's a really interesting time. People are questioning all types of different types of companies, what companies are going to grow twice as fast, what companies are going to... This happened. For us, it's so many areas. It's not just making games better and faster. It's increasing quality, time to market of experiences. And I do think ultimately AI will power some of what we've said around our ultimate spec.

David Senra: Are there completely AI-generated games already on the platform?

David Baszucki: I would say we're getting close, and I'd say, right now, Roblox Studio is starting to embed a pile of AI-capable type functionality. The beauty, though, that we have all of our Roblox cloud open to MCP server and all of that stuff, now we're just seeing devs push at this with AI coding tools and creator tools and start to create that flywheel.

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

David Baszucki: Absolutely. Absolutely.

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

David Baszucki: Yeah, yeah. I mean, DevX is well over a billion bucks a year. That's the amount and that's the amount of raw money flowing to creators on the platform.

David Senra: Explain to people what DevX is.

David Baszucki: I'd say it's a really interesting time because in the midst of AI, throughout the game industry as a whole, there's been a lot of maybe legitimate concern about a lot of creative people of having AI displace what they do. The thing we've said is we believe that money flowing to creators is going to increase, not decrease. And so, that's pretty good news. If that money flowing to the Roblox creative community is increasing, we should see even more opportunity for creators. We've also seen something really interesting. Top creators on Roblox are making 10s and 20s and 50s of millions of dollars. Like, these are pretty serious...

David Senra: I heard some of them are making that a month.

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

David Senra: They say that.

David Baszucki: Okay.

David Senra: I don't know if it's true, but I heard three kids in the middle of nowhere making 25 million dollars a month.

David Baszucki: I won't confirm or deny, but I would say one thing when you hear that as a measure of platform health is if we look at the year-on-year growth rate of creator 1, 10, 100 and 1,000, creator 1,000 year on year is consistently growing faster than creator number one.

David Senra: Wait, say that again.

David Baszucki: The curve is even flattening more. The growth rate in bookings per year for creator number 1,000, ranked by how much they're making, they are growing faster than creator number one.

David Senra: How?

David Baszucki: Curve is flattening, wider use around the world, more opportunity for vertical content, more opportunity for some content for older people, so that is a flattening of the curve, which bodes well for creator 1,000.

David Senra: What does the long tail look like at the very end? They're making a couple hundred bucks a month? Like, what is that, 10 dollars a month?

David Baszucki: I think the top 1,000 is on average making a million bucks.

David Senra: I heard it's higher than that. I think it's 1.3 million.

David Baszucki: Okay. Okay. And then I think as we go beyond, though, that curve goes way out to creator 10,000 beyond, where there's significant money being made out on that part of the curve.

David Senra: Do you see a world... Think about how in the last decade and a half, when you ask people what they wanted to be when they grow up, the YouTuber wasn't even on there 15 years ago.

David Baszucki: Yeah.

David Senra: Now it's always in the top five or three or whatever the case is. If you do have this perpetual motion machine, you keep going, and I think once people understand the size of the business that they could build on this, and they have a love for what they're doing. You're usually only really great if you actually love it. I think being a Roblox creator could displace being a YouTube creator.

David Baszucki: Who knows? I do...

David Senra: Why'd you make that noise? There was...

David Baszucki: Because I...

David Senra: Before you said, "Who knows?" What was that noise?

David Baszucki: It's funny because I get these short-form videos in various platforms of really cool Roblox creators living in this giant studio, driving these cool cars, doing short-form video about how cool it is to be a Roblox creator. I think what they're saying is, if you do this, there is the potential to make a great business.

David Senra: So, what do you guys do to foster that message or foster the size of the businesses that can be built?

David Baszucki: It's pretty viral. People know. I think what we're trying to do is create, literally, like you said, the technical infrastructure so more and more of them can bring their ideas to reality. We've said publicly we want to get to 10% of global gaming on the platform. I think that means taking that black-and-white film projector and turning it into a 4k projector in the gaming world. So, we think a lot about the responsibility of building the platform for them.

David Senra: So, the more photorealistic that it gets, the wider the market gets.

David Baszucki: I think, in many dimensions, concurrency, performance, cost, photorealism, ease of creation, AI acceleration and creation, all of those things help bring ideas to reality.

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

David Baszucki: I'd say it's load-balanced, actually. So, I think one of the good things we've done is, if I looked at that mix, and I looked at where our engineers are working, it's not like everyone is working on that one thing. We've got a balance of those things that are pushing forward.

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

David Baszucki: There is a market out there. I think if anything, we're trying to get the message out to our creators, like, our DevRel team can help you assess what your game might actually be worth because a lot of them are worth a lot of money.

David Senra: The platform itself has never tried to buy any of them?

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

David Senra: Have you seen people being taken advantage of?

David Baszucki: Not really. I've seen amazing actually profit sharing, revenue sharing, things that have really worked out for buyer and whatever. But I do think, over time, we want there to be a lot of kind of transparency in that.

David Senra: It's almost like you've built a game to play entrepreneur, and you turn them into real entrepreneurs.

David Baszucki: In a sense, it's an entrepreneur game.

David Senra: Yeah, if I wanted to teach a ninth grader about entrepreneurship, Roblox might be the best place to start.

David Baszucki: That's right. You could literally teach them how to use AI coding tools, come up with a crazy idea, get it live. On Roblox now, they could buy traffic. They could spend 50 dollars, same thing, buy users on Roblox, that whole cycle.

David Senra: Yeah, I'd be very interested in that because when I talked to Tobi Lütke, the founder of Shopify, he said something interesting.

David Baszucki: Yeah.

David Senra: He thought his job is to create more entrepreneurs. That's the way he looks at what he's doing.

David Baszucki: I think that's right. I think that's right.

David Senra: Yeah, I think it's more important than ever, especially with young people. If you look at their empathy or they're way more attracted to socialistic ideas than I think your generation was and definitely my generation was, especially in America.

David Baszucki: That's right. It would be fun to imagine an entrepreneurship class that kind of connected all the dots. I build this, do this, can see this happening. That could be super educational.

David Senra: What's your biggest threat that would inhibit you from building what you want to build? You're describing this long-term...

David Baszucki: I actually feel the biggest threat would be not imagining that competitive company and not building what we think that competitive company is. So, the biggest threat could be complacency rather than we can see what's technically possible, let's build that.

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

David Baszucki: Now and then, I would say given the speed at which we think some stuff's happening. Actually, it's interesting, the whole history of the company has arguably been a motion from quarterly things, monthly, weekly, daily. The whole pace of our company, I think, has just been a historical acceleration of the pacing of the company.

David Senra: The pacing at which you move?

David Baszucki: Pacing at which we make decisions, pacing at which we gently adjust without swinging the tiller widely, the speed at which we check in, the speed at which we track things. It's gotten faster over time.

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

David Baszucki: That's actually one of our values, take the long view.

David Senra: Okay. Well, so 25 years ago, 20 years ago, you're like, "This is going to be the last company that I'm going to work on." So, therefore, you even said, I think early in the conversation, it's 30, 40, 50 year kind of view.

David Baszucki: Yeah.

David Senra: So, an excessively long, longest view in the room, basically. So, I think about this with infinite number of daily iterations towards what you're trying to build.

David Baszucki: Yeah.

David Senra: A combination of those two?

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

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

David Baszucki: Mm-hmm.

David Senra: We haven't talked about that at all.

David Baszucki: There were several. I think one was the economy thing. If we had not figured that out, that would've been very dicey.

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

David Baszucki: There were. Second Life.

David Senra: Second Life.

David Baszucki: There.com.

David Senra: Yeah.

David Baszucki: All of that stuff.

David Senra: So, were you taking ideas from that as well?

David Baszucki: There.com and Second Life, they really were early and in parallel to us. In a way, they were so early and so parallel, they made these very big visionary things. Second Life's architecture was contiguous Earth kind of thing, which had some issues around scaling because in a contiguous Earth type situation, which is just the way the real world makes, there's only one copy of that roller coaster, and when 30 people want to go on that roller coaster, no more can go. So, I think we were a lot more practical around scale. We're just like, "No, man, if there's a 100,000 copies of that roller coaster, we're going to figure out how to route people to that, so we could have 10 million people riding the roller coaster." But there were a lot of early visions out there, I would say, at the same time, for sure.

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

David Baszucki: We had a lot of fun going on the platform. We're just like, whoa, everyone's having fun building this viral stuff. Would we distort it if people could make money? But the idea that, look, in the traditional game market, you have studios with hundreds of people. We could probably get better quality if we nudged in that direction. Other near-death or rough things is our economy got hacked once, so we had to shut down the whole economy for two days, literally. That was somewhat scary, and the reason is we had just been so early, moving so fast that the way our economy was working right now wasn't like double entry bookkeeping and journaling and all of that, and we had no flow control anywhere in the economy. So, this was a famous economy hack very early in the days of Roblox, where the second the economy was hacked, money could bounce from place to place very quickly. We caught it pretty quickly, and we just said, "Shut everything down." We had to shut Roblox down for a while, then bring it back up without the economy on. Luckily, we caught it pretty quickly, and only a small portion of the money had moved around. But we had to run for several days with no economic activity.

David Senra: Were you already a public company when this was happening?

David Baszucki: No. No.

David Senra: Okay.

David Baszucki: Whoa. No, no, no. The SEC does some really good stuff, and I would say some of the good stuff, if we go through a lot of the controls in the SEC, those were things we did 15 years ago, as far as this economy and backups and all of that.

David Senra: When you were designing this, were there any like books you were reading or were there any examples? So, you're like, "Okay, I'm going to take an economy that I see functioning well in the real world and just make the virtual version." How did you even come up with the set of rules that you had?

David Baszucki: I would say all four of us founders were very into high integrity systems, like what's the amount of float in the economy, how much currency we have. Do you trade it and not trade it? We saw very early on in our economy, we had something really interesting. In the early days of video games, people would have multiple currencies, and we had something that in retrospect the Roblox community really loves, but isn't really a good idea, I don't think, and that is a participation-based currency called Tickets, as well as a money-backed currency called Robux. The thing that comes out is when you have a participation-based currency, you get one ticket for every day you log in. That's really not a very good way to have people log into your system. It's much better if they just love chatting with their friends or playing games. The other thing is any currency that a user can get from work or log in will immediately be botted now. And so we could see people trying to bot that currency all day long, and we had to ultimately get rid of it. So, we had some good learnings with that. But ultimately, our current economy, as I've said, is kind of scaled better than linear with user engagement.

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

David Baszucki: That's right.

David Senra: How long has that been going on?

David Baszucki: It's just started, pretty recent. But if you go onto the Roblox homepage, you can see some of the experiences say "sponsored" right now. We have a long-term vision of what percent that is. But it's actually really helpful because most of our discovery, primarily organic, we've been very transparent with discovery. And so, one of the things that Roblox creators like is we share all of the signals of what's boosting something. It's almost as if we were YouTube or TikTok or Reels saying, "Here's all the factors that bring you up here." But for some creators who want to do that entrepreneurial experience, buy 50 users, very early, their game isn't viral yet, they can use that sponsored thing just like when we bought traffic from Google.

David Senra: I got one more question for you.

David Baszucki: Okay.

David Senra: We're almost out of time.

David Baszucki: Yeah.

David Senra: Out of time. Are you jumping up? You want to leave already?

David Baszucki: No, I'm stretching because I want to give an expansive answer.

David Senra: Okay. I was like... Oh. Why do things like this? Why are you doing podcasts?

David Baszucki: I do feel there's a lot of depth to the way we run the company, that podcast is the format to get it out. And I love podcasts. In today's media, if I know who the podcast is, that's all I need to find great content. I like podcasts because it's typically not edited. It's not showing up in a discovery mechanism. So, I feel it's one of the truest forms of media.

David Senra: Okay. I'm glad you used the word depth, because what I want to do, since we're out of time now, I want to run this back, as much as you want, maybe every six months or something like that.

David Baszucki: Yeah, yeah, yeah.

David Senra: Because I do these selfishly. I'm obsessed with making podcasts, but I'm obsessed with entrepreneurs, and I want to know...

David Baszucki: Yeah.

David Senra: Something Tobi Lütke said to me that I thought was fascinating. He's just like, "There's not one right way to do something in a company." There's probably like a hundred right ways.

David Baszucki: Yeah. That's right.

David Senra: And you have to figure out what makes sense for the context you're in, and then who you are as the founder, and what you're trying to accomplish. And I have a better understanding of you, way better understanding than when we started the conversation, even though I've listened to every single interview you've done.

David Baszucki: Yeah.

David Senra: Your company is very misunderstood, and there's not a lot about you as a person, and yet I find these people that I respect their opinion very much, and I'm like, "This guy is special, and the way he's building his company is interesting." And I still feel like I just scratched the surface.

David Baszucki: I'll take that as a compliment.

David Senra: You should take it as a compliment. You built something amazing.

David Baszucki: Thank you. Thank you.

David Senra: So, thank you very much for the time. I hope you accept the future invitation, and every time we have this conversation, just peel one more layer of the onion of what you're building and why you're doing it.

David Baszucki: Great.

David Senra: I think it'd be very fascinating.

David Baszucki: It'd be fun to peel another layer. Thank you.

David Senra: All right, perfect. Thanks, man. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review, and make sure you listen to my other podcast, Founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.