Disclaimer: you should always do your own research. This is not investment advice, just sharing my thoughts based on digging deep into the business with some other smart folks.
I think Roblox is going to be a generational business. Key reasons:
- Has a built-in economy
- Insane viral loops
- Free cash flow is off the chain
- Growing rapidly and monetizing well
- De-risked China
Let's walk through each.
1. Economy
Roblox monetizes by selling "Robux," an in-game currency. Players use Robux to pay for new experiences or avatar gear.
Like these dope swords, glasses, or hairstyles. This is pretty radical — its a true economy that Roblox controls (and that sees high volume).
2. Virality
Roblox is fundamentally social. It is not just a place to play games, it's the place you meet and make friends.
Virality is similar to a social network. You invite your friends to join you.
The upshot: $RBLX owns the social graph for a generation.
3. FCF
Roblox has great free cash flow.
Why? An example...
- A player buys $100 of Robux
- They spend it on "Mario's Trill Hat" for their avatar
- Mario keeps my earnings in Robux
- Mario spends it on Jon's "Dope Headress"
Roblox has that $100 but hasn't had to pay it out.
4. FCF/Float
This basically gives Roblox a "float." @gilbert does a great job summarizing this.
Asia makes up 48% of the world's gamers. It's important for Roblox to try and own China.
Good thing they partnered with Tencent. In December, Roblox secured licenses to operate in the country.
Huge.
7. Bear case?
This has been a fairly effervescent thread. That's a reflection of how I feel about the company, but there are always risks.
Would you want to hear the bear case?
Net/net:
This is an IPO worth watching. Even if it doesn't make sense to invest on the day, I think Roblox has every opportunity to be a business on the scale of $FB with enough time.
In August of last year, shortly after going full-time, I decided The Generalist needed a permanent home. Something that captured the vision for all the great things I thought would come out of this community.
I set to work.
You can hear more about building the new site in the tweets below. Of course, if you’re excited to jump straight in, and become a member, you can do so here.
Diller started out in the mailroom of William Morris after dropping out of UCLA. He rose through the ranks, serving as the assistant to legendary exec Elton Rule.
One of Diller's innovations was the "ABC Movie of the Week," the made-for-TV movie.
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Over time, Diller established himself as a force in the traditional entertainment industry.
He served as CEO of Paramount, producing hits like 'Taxi,' 'Grease,' and 'Indiana Jones.'
As CEO of Fox, he greenlit 'The Simpsons.' Mr Burn's appearance was based on Diller.
My most frequent (and hilarious) collaborator. Thank you for always been game to jump into the mix on some random initiative, and for bringing the heat, time after time.
The @MrBeastYT Burger phenomenon makes an opportunity very clear.
Impromptu RFS: Drop Kitchen
- Network of existing restaurants with excess capacity
- Backend plugs into consistent wholesale supply
- Distribution (solo app + via existing networks)
- Power tools for influencers
Rationale/benefit for restaurants...
- You're a local taco restaurant
- You have fixed costs
- Demand is inconsistent
- You could make a solid burger with specific instruction
Increase top-line by helping serving new demand. Could even add "prepared by X."
Rationale/benefit for creators...
- Access massive distribution (surpassing ghost kitchens)
- Collaborate with local business
- Plug into existing networks
- Added tooling specifically for creators (below)
- Insane revenue growth (+226% YTD)
- Expected valuation of $32B
- Highly-capitalized with $2.5B raised
- Exceptional management, led by Tony Xu
- Fierce competitive dynamics could cause trouble
- Concerns over market
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Beginnings.
It all starts with Tony Xu. His family emigrated from China when he was 5. His mother worked in restaurants. He gained an understanding of the business at a young age.