Roblox quick-and-dirty overview in 10 points:
Weekends are when I spend my time deep diving into companies. To expand my mental models.
Open to comments, feedback, tear ups.
$RBLX
Weekends are when I spend my time deep diving into companies. To expand my mental models.
Open to comments, feedback, tear ups.
$RBLX
1. History:
Idea began in 1989.
Founders David Baszucki and Erik Cassel.
Programmed a 2D simulated physics lab.
To help students understand how cars crash, how to build destructible homes. Stuff like that.
Idea began in 1989.
Founders David Baszucki and Erik Cassel.
Programmed a 2D simulated physics lab.
To help students understand how cars crash, how to build destructible homes. Stuff like that.
2. in 2014 founded Roblox.
Wanted to take this idea to much bigger scale
Focus is on "human co experience" and metaverse - for people to do and experience things together
Wanted to take this idea to much bigger scale
Focus is on "human co experience" and metaverse - for people to do and experience things together
3. Product
3 parts: roblox client, studio, and cloud
3 parts: roblox client, studio, and cloud
3a. Roblox Client: the game client where users experience and play.
Simulates scenarios that they always wondered how it feels like in real life.
Such as escaping from a natural disaster, working in a pizza shop, escaping from prison.
Theses games are called experiences
Simulates scenarios that they always wondered how it feels like in real life.
Such as escaping from a natural disaster, working in a pizza shop, escaping from prison.
Theses games are called experiences
3b. Studio: the place for developers to build and publish experiences for users
3c. Cloud: the infrastructure supporting all of the experiences and tools
3c. Cloud: the infrastructure supporting all of the experiences and tools
4. How they make money: Robux
They sell in game currency known as Robux.
That is the main way they make money.
They sell in game currency known as Robux.
That is the main way they make money.
4b. The majority of experiences on roblox are free for all users to play.
But users can choose to spend robux by purchasing experience enhancements, clothings and skins, accesories etc. to make their avatar more unique
But users can choose to spend robux by purchasing experience enhancements, clothings and skins, accesories etc. to make their avatar more unique
4c. Roblox premium:
Recently they also started a subscription called Roblox premium
users pay a certain amount of $ every month to get access to unique experiences, and exclusive access to certain levels in the games.
They can also buy robux at a slight discounted rate
Recently they also started a subscription called Roblox premium
users pay a certain amount of $ every month to get access to unique experiences, and exclusive access to certain levels in the games.
They can also buy robux at a slight discounted rate
4d. How users buy Robux
Users can buy robux directly via one time purchase.
Or via roblox premium at discounted price
Rate: 1 cent in USD will buy you 80 cents of robux
Users can buy robux directly via one time purchase.
Or via roblox premium at discounted price
Rate: 1 cent in USD will buy you 80 cents of robux
5. 3 types of identities in Roblox
Users: people playing the experiences.
They come with unique avatars and identities. Think "ready player one"
Users: people playing the experiences.
They come with unique avatars and identities. Think "ready player one"
5b. Developers: people who create the experiences and game
They can also sell custom tools and models to help other developers make their experiences/ games.
They can also sell custom tools and models to help other developers make their experiences/ games.
5c. Creators: NOT the same as a developer.
These are people who make avatar items for users.
Stuff like accessories, clothings, skins
These are people who make avatar items for users.
Stuff like accessories, clothings, skins
5d. These roles can be interchangeable.
A user can also be a developer and creator. Which is actually where a lot of their current developers come from.
They started off as kids playing the games and love it so much they become developers.
It's a self sustaining ecosystem.
A user can also be a developer and creator. Which is actually where a lot of their current developers come from.
They started off as kids playing the games and love it so much they become developers.
It's a self sustaining ecosystem.
6. The flywheel they have.
2 parts:
2 sided network effects: UGC - more developers creating experiences lead to more users, which in turn lead to more developers.
All their games are made by users and developers on the platform.
Roblox just supplies the tools needed.
2 parts:
2 sided network effects: UGC - more developers creating experiences lead to more users, which in turn lead to more developers.
All their games are made by users and developers on the platform.
Roblox just supplies the tools needed.
6b. Same sided network effects:
Roblox is a co-experience thing.
People play it together with friends.
So it drives Word of mouth and virality.
There is a pull for the product from customers.
Roblox is a co-experience thing.
People play it together with friends.
So it drives Word of mouth and virality.
There is a pull for the product from customers.
7. How developers and creators make $$
4 ways:
i) sales of experiences to users
ii) engagement based payouts: paid based on amount of time that premium subscribers spend in their experiences.
This incentivizes them to make their games engaging and keep people on the platform
4 ways:
i) sales of experiences to users
ii) engagement based payouts: paid based on amount of time that premium subscribers spend in their experiences.
This incentivizes them to make their games engaging and keep people on the platform
7b.
iii) sale of tools between developers.
Essentially developers can make tools for other developers to use too.
These tools are sold on the Roblox studio marketplace
iv) sales of items and skins through the avatar marketplace (this is for creators)
iii) sale of tools between developers.
Essentially developers can make tools for other developers to use too.
These tools are sold on the Roblox studio marketplace
iv) sales of items and skins through the avatar marketplace (this is for creators)
8. Developers and creators earn in Robux
They are allowed to convert their earned Robux into USD through the Developer Exchange Program.
They must fulfill certain criteria before they are allowed to join the program (eg. member of roblox premium, >100k earned in robux)
They are allowed to convert their earned Robux into USD through the Developer Exchange Program.
They must fulfill certain criteria before they are allowed to join the program (eg. member of roblox premium, >100k earned in robux)
8b.
Exchange rate for conversion:
1 robux can be converted to 0.0035 of USD
Exchange rate for conversion:
1 robux can be converted to 0.0035 of USD
8c. Roblox also retains a % of every transaction that happens on the platform
Developers receive 70% of the robux spent on their experiences
also when other developers buy the tools created by them on the studio marketplace, they also receive 70% of the robux that was paid
Developers receive 70% of the robux spent on their experiences
also when other developers buy the tools created by them on the studio marketplace, they also receive 70% of the robux that was paid
8d. Creators get 30% of the robux spent for their items that appear in the avatar marketplace
Developers and creators do not always cash out their robux for USD.
Developers and creators do not always cash out their robux for USD.
8e. they can choose to reinvest their robux into developer tools
Or pay for ads within roblox to promote their experiences to more users
Or spend it on accesorries just like any other user
(it's a self sustaining ecosystem where the user is also the developer)
Or pay for ads within roblox to promote their experiences to more users
Or spend it on accesorries just like any other user
(it's a self sustaining ecosystem where the user is also the developer)
9. Plans for growth
i. platform extension - make experience better, more features
ii. age demographic expansion - appeal to older age groups, as many of their audience is still below the age of 13 years old, though they are expanding upwards
i. platform extension - make experience better, more features
ii. age demographic expansion - appeal to older age groups, as many of their audience is still below the age of 13 years old, though they are expanding upwards
9b.
iii) international reach to other countries beyond USA, including China
iv) monetization - recently introduced subscription called roblox premium, to lower the barrier for free users to start becoming paying users
iii) international reach to other countries beyond USA, including China
iv) monetization - recently introduced subscription called roblox premium, to lower the barrier for free users to start becoming paying users
10. Partnership
In Feb 2019, they entered into a JV agreement with Songhua, an affiliate of Tencent Holdings
This is to mainly take Roblox into the Chinese market.
This agreement gives Roblox 51% stake in Roblox China Holding Corp.
In Feb 2019, they entered into a JV agreement with Songhua, an affiliate of Tencent Holdings
This is to mainly take Roblox into the Chinese market.
This agreement gives Roblox 51% stake in Roblox China Holding Corp.
That's it.
My research is still in preliminary stage.
Most of this is taken from the S1.
I read a company's annual filings to get a feel for the business, before deciding whether I want to spend more time on it.
If I don't, at least I walk away with a new business model.
My research is still in preliminary stage.
Most of this is taken from the S1.
I read a company's annual filings to get a feel for the business, before deciding whether I want to spend more time on it.
If I don't, at least I walk away with a new business model.
If you like this, follow me here at @heymaxkoh
I write about how I achieved financial freedom before age 30 by investing in great companies.
Also checkout this thread of my top investing ideas from Twitter that helped me multiply my 6 figure portfolio
I write about how I achieved financial freedom before age 30 by investing in great companies.
Also checkout this thread of my top investing ideas from Twitter that helped me multiply my 6 figure portfolio
https://twitter.com/heymaxkoh/status/1442866121766432777?s=20
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