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

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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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Kids’ gaming platform Roblox raises $150M

Posted by | david baszucki, David Sze, disrupt sf 2018, funding, Gaming, Greylock Partners, Roblox, Social, Startups, Tiger Global Management | No Comments

Roblox, which allows kids to create 3D worlds and games, has raised an additional $150 million in funding.

The company didn’t disclose its valuation in the announcement, but a source with knowledge of the deal told us that it valued Roblox at more than $2.5 billion — the price that Microsoft paid to acquire Minecraft four years ago.

“This is a big year for us that fortifies the dream,” said co-founder and CEO David Baszucki .

Earlier this year, Roblox announced that it had become cash-flow positive, and Baszucki told me the company remains “extremely profitable.” So why raise more money?

“First and foremost, the reason to fundraise is to have a war chest, to have a buffer, to have the opportunity to do acquisitions, to have a strong balance sheet as we grow internationally,” he said.

In order to support that growth, Baszucki said Roblox will be opening offices in some regions like China (“most likely with a partner that hasn’t been announced yet”), but it also requires building out infrastructure like local language and local payment support.

Roblox Developers Conferen

Roblox has now raised a total of $185 million in equity funding. The new round was led by Greylock Partners and Tiger Global, with participation from existing investors Altos Ventures, Index Ventures, Meritech Capital Partners and others.

Greylock’s David Sze has had big successes in both gaming and social media, having backed Facebook, LinkedIn, SGN and others. But he said Roblox is the first company he’s seen to “unify those two together on a platform in a magical kind of way.”

Apparently, Sze has known Baszucki for a long time — their kids went to the same school, and Sze remembered Baszucki bringing an early version of Roblox to the science fair. Gaming companies can be a risky investment, because their business relies on creating new hits, but Sze said Roblox is different.

“They aren’t making the games,” Sze said. “They’re letting the long tail of developers develop all the games on the platform, they’re let users decide what the successes are. It’s much more like a YouTube or much more like an Apple with the App Store.”

In a blog post about the funding, Sze even suggested that some of the next big gaming franchises could emerge from the Roblox platform, a prediction he repeated in our interview

“I’d be surprised if there aren’t some huge, high quality games that aren’t originated on Roblox in the next three-to-five years,” he said.

Roblox says it now has more than 70 million monthly active users, with more than 4 million creators who have built more than 40 million-plus experiences.

Of course, having a big platform with lots of user-generated content also creates risks — as illustrated in a recent incident where characters mimed gang raping a young girl’s avatar. (Roblox said a single server had been hacked, allowing users to upload code that violated the company’s rules.)

Asked whether these risks gave him any pause, Sze said, “User protection, user safety, all the aspects of having of having youth on your platform, it takes those things extremely seriously.”

“Are we perfect? No,” he said. “But I can tell you from inside the company that it’s an incredibly high priority. They’ve already done lots of things to help protect and make the user experience the best, and they have a list of stuff that they’re already working on.”

I’ll be interviewing Baszucki on-stage at Disrupt SF this afternoon, so stay tuned to TechCrunch (or come on out to the event!) for more on the funding and his future plans.

This story has been updated with the corrected amount for Roblox’s total funding.

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Mammoth Media, the startup behind chat fiction app Yarn, raises $13M

Posted by | Entertainment, Greylock Partners, Mammoth Media, Mobile, science inc., Startups, TC | No Comments

Hack'd Mammoth Media has raised a $13 million Series A funding to create what it calls “entertainment experiences for the mobile-first generation.” Mammoth is not the first startup to pitch itself as reinventing entertainment for smartphones, but for the most part, that message has come from gaming companies. Co-founder and CEO Benoit Vatere said he wanted to take the mobile-centric… Read More

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