EC-1

Digging into the Roblox growth strategy

Posted by | Apps, EC-1, funding, Fundings & Exits, Gaming, Media, Startups, TC, Venture Capital, Video, Virtual reality | No Comments

Could Roblox create a new entertainment and communication category, something it calls “human co-experience”?

When it was a small startup, few observers would have believed in that future. But after 15 years — as told in the origin story of our Roblox EC-1 — the company has accumulated 90 million users and a new $150 million venture funding war chest. It has captured the imagination of America’s youth, and become a startup darling in the entertainment space.

But what, exactly, is human co-experience? Well, it can’t be described precisely — because it’s still an emerging category. “It’s almost like that fable where the nine blind men are touching and describing an elephant.

Everyone has a slightly different view,” says co-founder and CEO Dave Baszucki. In Roblox’s view, co-experience means immersive environments where users play, explore, talk, hang out, and create an identity that’s as thoroughly fleshed out (if not as fleshy) as their offline, real life.

But the next decade at Roblox will also be its most challenging time yet, as it seeks to expand from 90 million users to, potentially, a billion or more. To do so, it needs to pull off two coups.

First, it needs to expand the age range of its players beyond its current tween and teen audience. Second, it must win the international market. Accomplishing both of these will be a puzzle with many moving parts.

What Roblox is today

Lineup All 1

One thing Roblox has done very well is appeal to kids within a certain age range. The company says that a majority of all 9-to-12-year-old children in the United States are on its platform.

Within that youthful segment, Roblox has arguably already created the human co-experience category. Many games are more cooperative than competitive, or have goals that are unclear or don’t seem to matter much. One of Roblox’s most popular games, for instance, is MeepCity, where players can run around and chat in virtual environments like a high school without necessarily interacting with the game mechanics at all.

What else separates these environments from what you can see today on, say, the App Store or Steam? A few characteristics seem common.

For one, the environments look rough. One Robloxian put the company’s relaxed attitude toward looks as “not over-indexing on visual fidelity.”

Roblox games also ignore the design principles now espoused by nearly every game company. Tutorials are infrequent, user interfaces are unpolished, and one gets the sense that KPIs like retention and engagement are not being carefully measured.

That’s similar to how games on platforms like Facebook and the App Store started out, so it seems reasonable to say Roblox is just in a similarly early stage. It is — but it’s also competing directly with mobile games that are more rigorously designed. Over half of its players are on smartphones, where they could have chosen a free game that looks more polished, like Fortnite or Clash of Clans.

The more accurate explanation of why Roblox draws big player numbers is that there’s a gap in the kids entertainment market. So far, only Roblox fills that gap, despite its various shortcomings.

“The amount of unstructured, undirected play has been declining for decades. [Kids] have much more homework, and structured activities like theater after school.

One of the big unmet needs we solve is to give kids a place to have imagination,” explains Craig Donato, Roblox’s chief business officer. “If you play the experiences on our platform, you’re not playing to win. You go into these worlds with people you know and share an experience.”

Games like The Sims tried to do the same, but eventually faded in the children’s demo. Roblox’s trick has been continued growth: it provides kids with an endless array of games that unlock their imagination. But just like we don’t expect adults to have fun with Barbie dolls, it’s unlikely most adults would enjoy Roblox games.

Of course, it would be easy to point at Roblox and laugh off its ambitions to win over people of all ages. That laughter would also be short-sighted.

As David Sze, the Greylock Partners investor who led Roblox’s most recent round, pointed out: “When we invested in Facebook there was a huge amount of pushback that nobody would use it outside college.” Companies that have won over one demographic have a good chance of winning others.

Roblox has also proven its ability to evolve. At one time, the platform’s players were 90 percent male. Now, that’s down to about 60 percent. Roblox now has far more girls playing than the typical game platform.

Evolving to new demographics

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How Roblox avoided the gaming graveyard and grew into a $2.5B company

Posted by | Activision, Apple, Apps, Atlassian, Club-Penguin, Computer games, dave baszucki, David Sze, EC-1, engineering, Facebook, Friendster, funding, Fundings & Exits, fundraising tactics, Gaming, Google, Greylock Partners, Growth, growth tactics, Habbo-Hotel, IMVU, king.com, Kongregate, Mark Zuckerberg, Media, Metaplace, Mojang, MySpace, Roblox, Second-Life, Startups, TC, video games, Virtual reality, Windows | No Comments

There are successful companies that grow fast and garner tons of press. Then there’s Roblox, a company which took at least a decade to hit its stride and has, relative to its current level of success, barely gotten any recognition or attention.

Why has Roblox’s story gone mostly untold? One reason is that it emerged from a whole generation of gaming portals and platforms. Some, like King.com, got lucky or pivoted their business. Others by and large failed.

Once companies like Facebook, Apple and Google got to the gaming scene, it just looked like a bad idea to try to build your own platform — and thus not worth talking about. Added to that, founder and CEO Dave Baszucki seems uninterested in press.

But overall, the problem has been that Roblox just seemed like an insignificant story for many, many years. The company had millions of users, sure. So did any number of popular games. In its early days, Roblox even looked like Minecraft, a game that was released long after Roblox went live, but that grew much, much faster.

Yet here we are today: Roblox now claims that half of all American children aged 9-12 are on its platform. It has jumped to 90 million monthly unique users and is poised to go international, potentially multiplying that number. And it’s unique. Essentially all other distribution services offering games through a portal have eventually fizzled, aside from some distant cousins like Steam.

This is the story of how Roblox not only survived, but built a thriving platform.

Seeds of an idea

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(Photo by Steve Jennings/Getty Images for TechCrunch)

Before Roblox, there was Knowledge Revolution, a company that made teaching software. While designed to allow students to simulate physics experiments, perhaps predictably, they also treated it like a game.

“The fun seemed to be in building your own experiment,” says Baszucki. “When people were playing it and we went into schools and labs, they were all making car crashes and buildings fall down, making really funny stuff.” Provided with a sandbox, kids didn’t just make dry experiments about mass or velocity — they made games, or experiences they could show off to friends for a laugh.

Knowledge Revolution was founded in 1989, by Dave Baszucki and his brother Greg (who didn’t later co-found Roblox, but is now on its board). Nearly a decade later, it was acquired for $20 million by MSC Software, which made professional simulation tools. Dave continued there for another four years before leaving to become an angel investor.

Baszucki put money into Friendster, a company that pre-dated Facebook and MySpace in the social networking category. That investment seeded another piece of the idea for Roblox. Taken together, the legacy of Knowledge Revolution and Friendster were the two key components undergirding Roblox: a physics sandbox with strong creation tools, and a social graph.

Baszucki himself is a third piece of the puzzle. Part of an older set of entrepreneurs, which might be called the Steve Jobs generation, Baszucki’s archetype seems closer to Mr. Rogers than Jobs himself: unfailingly polite and enthusiastic, never claiming superior insight, and preferring to pass credit for his accomplishments on to others. In conversation, he shows interests both central and tangential to Roblox, like virtual environments, games, education, digital identity and the future of tech. Somewhere in this heady mix, the idea of Roblox came about.

The first release

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Nine lessons on how Niantic reached a $4B valuation

Posted by | Apps, augmented reality, best practices, Customer Service, EC-1, Gaming, harry potter, harry potter wizards unite, john hanke, Mobile, niantic, Phil Keslin, pokemon, Pokémon Go, product, scaling, social networks, Startups, TC, user growth, Virtual reality | No Comments

We’ve captured much of Niantic’s ongoing story in the first three parts of our EC-1, from its beginnings as an “entrepreneurial lab” within Google, to its spin-out as an independent company and the launch of Pokémon GO, to its ongoing focus on becoming a platform for others to build augmented reality products upon.

It’s not an origin story that serves as an easily replicable blueprint — but if we zoom out a bit, what’s to be learned?

A few key themes stuck with me as I researched Niantic’s story so far. Some of them – like the challenges involved with moving millions of users around the real world – are unique to this new augmented reality that Niantic is helping to create. Others – like that scaling is damned hard – are well-understood startup norms, but interesting to see from the perspective of an experienced team dealing with a product launch that went from zero to 100 real quick.

The reading time for this article is 21 minutes (5,125 words).

Build on top of what works best

Everything Niantic has built so far is an evolution of what the team had built before it. Each major step on Niantic’s path has a clear footprint that precedes it; a chunk of DNA that proved advantageous, and is carried along into the next thing.

Looking back, it’s a cycle we can see play out on repeat: build a thing, identify what works about it, trim the extra bits, then build a new thing from that foundation.

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Harry Potter, the Platform, and the Future of Niantic

Posted by | Apps, AR, augmented reality, DigiLens, EC-1, Escher Reality, Gaming, geolocation, harry potter, harry potter wizards unite, john hanke, matrix mill, Mobile, niantic, Phil Keslin, Pokémon Go, Startups, TC, Virtual reality, VR | No Comments

What is Niantic? If they recognize the name, most people would rightly tell you it’s a company that makes mobile games, like Pokémon GO, or Ingress, or Harry Potter: Wizards Unite.

But no one at Niantic really seems to box it up as a mobile gaming company. Making these games is a big part of what the company does, yes, but the games are part of a bigger picture: they are a springboard, a place to figure out the constraints of what they can do with augmented reality today, and to figure out how to build the tech that moves it forward. Niantic wants to wrap their learnings back into a platform upon which others can build their own AR products, be it games or something else. And they want to be ready for whatever comes after smartphones.

Niantic is a bet on augmented reality becoming more and more a part of our lives; when that happens, they want to be the company that powers it.

This is Part 3 of our EC-1 series on Niantic, looking at its past, present, and potential future. You can find Part 1 here and Part 2 here. The reading time for this article is 24 minutes (6,050 words)

The platform play

After the absurd launch of Pokémon GO, everyone wanted a piece of the AR pie. Niantic got more pitches than they could take on, I’m told, as rights holders big and small reached out to see if the company might build something with their IP or franchise.

But Niantic couldn’t build it all. From art, to audio, to even just thinking up new gameplay mechanics, each game or project they took on would require a mountain of resources. What if they focused on letting these other companies build these sorts of things themselves?

That’s the idea behind Niantic’s Real World Platform. This platform is a key part of Niantic’s game plan moving forward, with the company having as many people working on the platform as it has on its marquee money maker, Pokémon GO.

There are tons of pieces that go into making things like GO or Ingress, and Niantic has spent the better part of the last decade figuring out how to make them all fit together. They’ve built the core engine that powers the games and, after a bumpy start with Pokémon GO’s launch, figured out how to scale it to hundreds of millions of users around the world. They’ve put considerable work into figuring out how to detect cheaters and spoofers and give them the boot. They’ve built a social layer, with systems like friendships and trade. They’ve already amassed that real-world location data that proved so challenging back when it was building Field Trip, with all of those real-world points of interest that now serve as portals and Pokéstops.

Niantic could help other companies with real-world events, too. That might seem funny after the mess that was the first Pokémon GO Fest (as detailed in Part II). But Niantic turned around, went back to the same city the next year, and pulled it off. That experience — that battle-testing — is valuable. Meanwhile, the company has pulled off countless huge Ingress events, and a number of Pokémon GO side events calledSafari Zones.” CTO Phil Keslin confirmed to me that event management is planned as part of the platform offering.

As Niantic builds new tech — like, say, more advanced AR or faster ways to sync AR experiences between devices — it’ll all get rolled into the platform. With each problem they solve, the platform offering would grow.

But first they need to prove that there’s a platform to stand on.

Harry Potter: Wizards Unite

Niantic’s platform, as it exists today, is the result of years of building their own games. It’s the collection of tools they’ve built and rebuilt along the way, and that already powers Ingress Prime and Pokémon GO. But to prove itself as a platform company, Niantic needs to show that they can do it again. That they can take these engines, these tools, and, working with another team, use them for something new.

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The definitive Niantic reading guide

Posted by | Apps, augmented reality, Book Review, Cloud, Collaborative Consumption, Developer, EC-1, funding, Gaming, Google, google cloud, harry potter, ingress, john hanke, mobile gaming, niantic, Niantic Labs, Pokémon Go, reading guide, Social, Startups, TC, Venture Capital, Virtual reality | No Comments

In just a few years, Niantic has evolved from internal side project into an independent industry trailblazer. Having reached tremendous scale in such a short period of time, Niantic acts as a poignant crash course for founders and company builders. As our EC-1 deep-dive into the company shows, lessons from the team’s experience building the Niantic’s product offering remain just as fresh as painful flashbacks to the problems encountered along the way.

As we did for our Patreon EC-1, we’ve poured through every analysis we could find on Niantic and have compiled a supplemental list of resources and readings that are particularly useful for getting up to speed on the company.

Reading time for this article is about 9.5 minutes. It is part of the Extra Crunch EC-1 on Niantic. Feature illustration by Bryce Durbin / TechCrunch.

I. Background: The Story of Niantic

Google-Incubated Niantic, Maker of Ingress, Stepping Out on Its Own | August 2015 | In August of 2015, Niantic announced that it would spin out from Google and become an independent company. As discussed in WSJ’s coverage of the news, Niantic looked at the spin out as a way to accelerate growth and collaborate with the broader entertainment ecosystem.

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