Dave Baszucki on Roblox, Teen Entrepreneurs, and the Future of Play

**Tyler Cowen** (0:04)
Conversations with Tyler is produced by the Mercatus Center at George Mason University, bridging the gap between academic ideas and real world problems. Learn more at mercatus.org. For a full transcript of every conversation enhanced with helpful links, visit conversationswithtyler.com.
Hello, everyone, and welcome back to Conversations with Tyler. Today, I am here chatting with David Baszucki, who is co-founder and CEO of Roblox, which is one of the world's largest and fastest growing games platforms. David, welcome.

**Dave Baszucki** (0:42)
Tyler, thanks for having me on. It's great to be here.

**Tyler Cowen** (0:45)
So Roblox, what is it you all do to help create teenage millionaires?

**Dave Baszucki** (0:49)
Well, the focus isn't creating teenage millionaires, and at the same time, there are some teenage millionaires. Roblox was founded really with the vision of creating a platform where people could play and connect, where all of the content, all of the games, all of the experiences, whether it's hide and go seek, or a fashion game, or growing a garden, is 100 percent created by the user community. You could call it self-service, you could call it UGC.
What's really interesting about UGC content when creators and the community are making content, is they can come up with all kinds of interesting and novel ways for people to play together. Now, we started with two people a while ago, but year by year Roblox has emerged to have millions of people every day playing together. As you correctly noted, some of those creators now who build the content on Roblox have become millionaires. They've evolved from hobbyists to small studios to larger studios. We have now a lot of people all around the world really making a living, building the content for the millions of players on the platform.

**Tyler Cowen** (2:11)
So they get a share of your revenue for a game they build.

**Dave Baszucki** (2:14)
That's exactly right.

**Tyler Cowen** (2:16)
Your revenue comes from people paying to put their games on your platform, right?

**Dave Baszucki** (2:21)
The revenue has evolved in stages. It's a fun economic story, really, the progression of how the Roblox economy has evolved. The first fun thing to think about is the vast majority of the players on our platform are not spending any money. They're coming, they're playing for free, they're having great experiences with their friend. But Roblox runs not just on UGC content or content created by all of these millions of creators, but literally a virtual economy, economy with a currency called Robux, a wide range of games and experiences where for those users who choose to, they can spend Robux in the experience.
And when they spend Robux in the experience, that creator can then cash those Robux out for real money. And so it's a bit of a virtuous economy cycle. The creators are extremely creative in how they build their economies. They want all of their creations to be fun for everyone who's playing for free, which is the vast majority of everyone. And at the same time, they do want to make a living and fund jobs and fund their studios. So they come up with amazingly creative ways to do it. Very early on in the place called Workout, a pizza place, you could buy a motor scooter. So if you wanted to get around the world more quickly, you could use some Robux, buy a motor scooter and get around more quickly. And so now we just see a vast array of incredibly innovative ways for creators to sell things within their experience.

**Tyler Cowen** (4:09)
So is the future of your revenue basically going to be ads?

**Dave Baszucki** (4:13)
No.

**Tyler Cowen** (4:14)
But you have ads as a source of revenue, right?

**Dave Baszucki** (4:16)
It's a relatively small source of our revenue right now. It's so small that on our earnings call, we don't call it out. The vast majority of our revenue, which is growing very rapidly, is players purchasing Robux. They can buy them with a gift card, they can buy them on their iPhone, they can buy them in a store, they can go to a website to buy these Robux, and then using them in experiences created by our creators, if they so choose. And once again, this is a subset of our users who've decided to go buy that. So by and large, the majority of Roblox is running on a virtual economy.

**Tyler Cowen** (4:59)
But given the incredible number of eyeballs you have, why can't you make really a lot of money selling ads?

**Dave Baszucki** (5:05)
I feel we have to be thoughtful about what the future of advertising is in a platform like Roblox. We have chosen, unlike maybe other platforms, for example, short form video or other video platforms, to not put advertising in front of every user. We actually did an experiment very early in our founding where we experimented with something called pre-roll advertising, where everyone who played a Roblox game got a little short video. We actually decided to pull it out, and we decided to pull it out because we really wanted to focus on the fun and the user experience. By and large, our virtual economy has grown so well that we haven't been compelled to really ever consider it. Really, the two areas where we're looking at advertising, the first is a lot of our creators who make a new creation, would like to boost and get more people to visit that place.