You might expect the offices of Roblox to be a kind of Wonka Chocolate Factory, complete with Everlasting Gobstoppers, Fizzy Lifting Drinks, and Oompa Loompas. After all, the company is run by a CEO who goes by the username “Builderman,” and it rakes in billions of dollars in revenue from a video game fantasy land for children.
But where I’m at, inside the four walls of Roblox’s corporate headquarters, it’s clear this is no chocolate factory. There’s little whimsy, decoration, or indication that the company run here is for kids. Builderman, real name David Baszucki, is a tall, lanky man with thick black glasses instead of a top hat. He did not introduce himself with a somersault.
As it turns out, despite the fact that 56% of Roblox’s customer base is age 16 or younger and 20% of them are under the age of 9, the company wasn’t even founded with kids in mind.
“When we started Roblox, the vision — the long-term vision — was: to what extent could we simulate 3D reality? It takes incredible technical innovation to get there. It’s very different than downloading a game. It’s very different than streaming video. It’s the fabric of the metaverse,” Baszucki told me. In the meantime, “It just so happens, games overlap a lot with reality simulators.”
It also just so happens that Roblox has built a huge business catering to kids. It’s one of the hottest stocks, having garnered significant engagement from the retail trading crowd. Its shares have risen about 200% in the past year, outpacing the S&P 500’s increase of 17% over the same time frame. The company is currently valued at about $80 billion by public investors.
It’s a fast-growing business: this spring, when the platform saw a new peak of 12.5 million concurrent players, a Roblox board member excitedly told me, “That is 173 NFL football stadiums, full, playing Roblox at the same time!” Since then, a spokesperson says, it’s hit 30 million concurrent players. The company pulled in $3.6 billion of revenue last year, growth of 29% from the prior year. It has a goal of capturing 10% of the world’s video game activity; execs figure they’re at 2.4% right now.
Whether it will become a profitable business still remains to be seen. Roblox posted a net loss of $935.4 million last year. It has yet to produce an annual profit — or even a single profitable quarter — since it went public in early 2021.
But investors, Baszucki argues, aren’t focused on net losses or even user metrics. They’re focused on the company’s ability to generate cash. “It does take some accounting understanding to kind of burrow in there and go, ‘Oh my gosh, this company from GAAP accounting is a loss, but they’re generating cash,” he said.
Baszucki says building a successful kids’ game is one way to pay the bills while preparing a grander vision of the metaverse that companies like Meta have tried to build but eventually set aside.
“The spec of the product is, ‘simulate physical reality,’” he said.
For now, that goal remains out of reach. “From a raw computing point of view, the timeline is pretty far out” from being able to mimic the world in a realistic way, Baszucki said, though advances in AI give him hope that he can speed up that timeline.
In the meantime, Roblox’s existing business has become a lightning rod, as critics decry the platform’s economics and say it’s not safe for kids.
“It’s insane monetization of an in-game universe designed for children,” an uncle who plays with his niece and nephew told Sherwood News. Another father wrote that the platform is “a wolf in Minecraft’s clothing” because it “exploits the hard-working community of developers who create content for the game — many of them children” and “it has a suspect record of playing fast and loose with the safety of those children.”
THE PLAYGROUND
To understand Roblox is to envision a frenetic middle school playground where everybody is running around having fun — but put it on the internet, where people often aren’t held accountable for what they say and sometimes aren’t even who they say they are. The chat scroll during a recent Roblox paintball game captures the vibe:
gagabals20: FAT
SH3LLY: did u call me fat?
Mint: i told u pianoa would attack u catnip
Rina: yippee
A3TRO: WOW U ARE SUS
SH3LLY: STOP
zellw5: I hop wants to get Freaky with everyone
Fufu: i want a bath
Mint: do u want a treat piano
IHOP: true
Here’s one streamer’s example of the paintball gameplay:
Roblox is best known as online gaming software for kids; it’s not one game, but rather a social and economic platform that hosts experiences made by independent developers. Last year, 83 million daily average users logged in from computers, consoles, and mobile devices to explore more than 14 million digital games and environments.
Roblox’s current mega hit is “Grow a Garden,” a farming simulator that broke a Guinness record for the most concurrently played video game, with 21.6 million simultaneous users. Other popular games of the moment include “99 Nights in a Forest,” an alien invasion role-playing game, and “Steal A Brainrot,” which I honestly can’t explain.
The paintball game mentioned above looks pretty much how you’d expect: Lego-style avatars running through a chunky, polygonal neighborhood clutching green popguns and scanning for enemies. It’s essentially a first-person shooter skinned over to appeal to kids. The chat runs constantly alongside the gameplay. Roblox is platform agnostic, so gamers can play on their laptops, tablets, or gaming consoles like Xbox and PlayStation.
A screenshot of Roblox’s popular “Grow a Garden” game. (Sherwood News)
“People were doing stuff for fun and building games for fun, for social cred. All of a sudden, they could make money on it.”
The economic engine inside the game, revolving around a digital currency called Robux, is powerful. Using Roblox’s creator studio, developers — amateurs at home, professional game developers, or corporate brands and agencies — can make a game or experience and monetize it in several ways. They can charge for admission, put immersive ads into the experience, allow players to buy upgrades, or simply collect payouts based on the time premium users spend playing a game.
There’s also a digital marketplace where creators can use Roblox’s tools to design their own items, like clothing and accessories for avatars, and sell them. In 2024, developers and creators of digital items earned $922.8 million in fees on the platform.
“Dave said, ‘Look, I think we’ve got to figure out a way where other people can build content and make money on that content,’” Baszucki’s brother, Greg, a longtime collaborator and a member of Roblox’s board, told me. “That was a big step function. People were doing stuff for fun and building games for fun, for social cred. All of a sudden, they could make money on it, and the moment they made money on it, then everybody just started to pay more attention.”
This approach to monetization wasn’t an obvious decision. Games and platforms with their own currencies have succeeded, but also suffered problems ranging from inflation and speculation to money laundering and economic exploitation. Other online games — notably “Minecraft,” a child-focused open-world building game with similarities to Roblox — eschewed secondary markets for items and in-game microtransactions.
For David Baszucki, monetizing the platform was a question of survival.
“We could see user growth in hours growing faster than revenue, which is a very dangerous sign, because it means you could get really big and still not be able to hire more people,” he said of Roblox’s early days. “We need creators participating; we need creators to earn a living on it. It was a little contentious, because we were [asking], should Roblox be a hobby, or should people make a living on Roblox?”
BUILDERMAN’S BEGINNINGS
Baszucki, who has four children with his wife, author Jan Ellison, grew up in Chicago and Minnesota with the kind of free-roaming outdoor childhood of hazy golden-age recollection — “model rockets and dirt bikes,” he said.
He was a techie from the outset: his father, a successful telephone system distributor, bought one of the earliest Macs from Apple. Baszucki coded his own “Space Invaders”-style game for it, even building his own controller. He repaired and sold motorcycles and tried to win his state’s Quiz Bowl championship.
“It was an environment that balanced safety and freedom at the same time,” he said of his upbringing.
Then, as computers were changing the world, with elementary students learning art from “Kid Pix,” geography from “Where in the World Is Carmen San Diego?” and history from “Oregon Trail,” the Baszucki brothers entered the orbit of student software.
In 1989, they started Knowledge Revolution, a company that developed a program called Interactive Physics. It let students conduct experiments with pulleys and other simple machines, demonstrating Newtonian principles digitally and replacing the lab bench with a computer screen.
Roblox CEO David Baszucki sits between other Roblox employees during a lunch meeting in 2017. (Liz Hafalia/Getty Images)
“When we started in educational software… the metaphor was pretty straightforward. We’re trying to simulate a physics laboratory on the computer, and we need objects and ropes and springs,” David Baszucki said.
Selling their program to educators at teachers conferences was one thing, but the brothers’ simulator ended up working so well that they could target a more lucrative market: engineers working to design real products.
Knowledge Revolution developed a new program, Working Model, that was one of the first computer-aided engineering tools available on PC instead of expensive Unix or Silicon Graphics workstations.
With that, Baszucki got his first major exit. A leading company in the field, MSC Software, bought Knowledge Revolution for $20 million in 1998 and installed Baszucki, then 35 years old, as an executive.
Baszucki left in 2002, after the peak of the internet bubble, for a short career detour as the radio host of debate show called “Freedom Talk” that took on topics like legalized gambling, California’s then-current power crisis, and reparations. But Baszucki kept a hand in tech as an investor, and at a 2002 conference he met a man named Jonathan Abrams who told him about a “weird social thing” he was coding.
So Baszucki logged on to Abrams’ project, Friendster, when there were just a few hundred other users. Seeing his own friend group mapped was “freaking mind-blowing,” he said.
He invested in Friendster, which also helped seed the idea of his next company. It would build on his previous efforts to simulate reality but, he said, “we saw it borrowing from social connection… We’re saying, look, there’s a confluence of these things — communication, creation — coming together in this new category.”
THE RISE OF ROBLOX
Roblox began in 2004 with Baszucki and another Knowledge Revolution veteran, Erik Cassel, coding together in an office above a Menlo Park laundromat for a year and a half. Baszucki built the real-time physics engine, and Cassel built the infrastructure to allow anyone online to use it.
Testing out the software, Baszucki adopted the moniker Builderman as his username.
“The first thing I saw was like a tower, and then we knocked over the tower,” said Greg Baszucki, who founded his own company and eventually became a venture capitalist. He and his father provided the startup capital, alongside investors whom Greg jokingly calls the “Minnesota Mafia”: friends who knew their father and backed his sons’ businesses. What would eventually become Roblox was released to the public in 2006 as an online, open-world sandbox.
Roblox’s home page.
In case you haven’t played one lately, modern video games are pretty dang cool. Powerful processors and graphics cards, new coding techniques, and human artistry (yes, that still matters) help create immersive worlds for all kinds of competition.
When you log on to Roblox, it is… not that. It doesn’t have the reality-simulating chops of games like “Red Dead Redemption 2” or “The Legend of Zelda: Tears of the Kingdom.” The experience feels like a step down.
Roblox’s limitations stem from needing to function on iPhones and gaming PCs alike, so there’s limited reliance on GPUs and processing power. Adding support for mobile users was a key moment in the Roblox story, and one that some in the company opposed. But Baszucki “saw that we need to be everywhere,” his brother told me, and forced the decision through in 2012.
Now, 80% of Roblox’s users are on mobile.
After launching, the platform grew in fits and starts over the next decade, but the pandemic was rocket fuel. Shut-in kids flocked to it, and investors did, too: Roblox sat in the center of a Venn diagram between the peaking metaverse hype cycle and the meme stock boom.
It went public via a direct listing in March 2021. At the end of its first day of trading, it had a market cap north of $38 billion.
SHORT INTEREST
After a volatile start — the stock began trading around $70, surged to above $130 by November 2021, then fell to below $40 by March 2022 — Roblox shares settled in at just under $50.
Then in October, short-selling firm Hindenburg Research released a report saying the user metrics Roblox gives to investors were overblown. It also brought criticisms of children’s well-being on Roblox into the spotlight again, highlighting the nasty reality that anyone can be on the platform, including predators.
Lawsuits and press reports have detailed adults soliciting sexual materials, or worse, from children on Roblox, even as the company’s safety team works to prevent that. The day I went to speak with Baszucki in February, a 13-year-old sued the company in California civil court, alleging that it was negligent in building the platform, where the plaintiff was the victim of a sexual predator. Roblox has denied any wrongdoing in court documents and didn’t comment on the pending litigation.
Roblox also rebutted the Hindenburg report, insisting that trust and safety are its top priorities and that spending on the infrastructure to provide those is growing. “Roblox got started, even from day 1, as the vision of an immersive, safe, and civil reality simulator,” Baszucki said.
Last November, the company rolled out new features that give parents more access to their children’s accounts, add content filters, and restrict communications for users under 13. Soon after, users on a Roblox subreddit who said they were 11 years old were complaining about how they couldn’t get access to their favorite chat features without their parents becoming verified with a government ID and authorizing their preferences.
Managing a community this large and diverse by relying on human moderators seems impossible, but increasingly competent software powered by AI models allows Roblox to do so at scale.
Chief Safety Officer Matt Kaufman says that every single text message on the platform — and most other content — is analyzed and moderated by AI in real time. The technology to provide the same service for voice chat still isn’t cost-effective (hence the new age restrictions), but the company flags inappropriate content within 15 seconds and has made its software open-source in an effort to improve it.
Alexandra Walsh, the attorney who filed the lawsuit in February on behalf of the 13-year-old, is also leading a class-action suit against Roblox on behalf of parents who she says were defrauded by the company’s claims of creating a safe space for children. She says there are still too many loopholes that the company could address, including the ability of adults to pose as children. Notably, while chats are monitored on the platform, Roblox also partners with Discord, the digital communication platform, in ways that Walsh says are pernicious enough that she included it as a defendant in the class-action litigation.
Roblox headquarters in California (Getty Images)
“To this day, your child may very well come across a feature that says, ‘Want to have a private chat on my Discord server?’ These predators, you know, they sort of befriend the kids… and then they lure them into these encrypted conversations through these Discord links,” she said.
Roblox says it doesn’t allow non-Roblox link sharing in chats. Still, partnering with Discord, an enormously popular app with teens, gives Roblox access to older users and a “cool” factor.
The interaction between monetization and safety kept popping up as I reported out this story. Just over a million daily users pay for the game, according to Roblox’s disclosures, with the other 87 million or so just along for the ride. “Probably well over 90% of the kids on our platform” play for free, Baszucki told me.
Parents of Roblox users fret about addiction and their kids’ desire for Robux to spend on digital goods. Many allegations of predatory behavior on the platform involve some kind of economic relationship at the start.
Still, as explosive as the allegations in Hindenburg’s report were, it barely moved Roblox’s stock. The company’s next quarterly report beat expectations and shares surged. If Hindenburg still owned its Roblox short positions at that point, the rise was painful. And shares have been on a tear practically ever since. (Hindenburg shut down in January, with its founder saying, “The plan has been to wind up after we finished the pipeline of ideas we were working on.”)
“IT JUST NEVER STOPS FOR THEM.”
Roblox executives told me they don’t tweak the platform’s incentives to maximize user spending. But the independent developers making games on the platform clearly do. One father told me he saw his child playing a game that involved tapping a flower repeatedly to make it grow — the lowest-effort path imaginable to capturing a child’s attention long enough for Roblox to reward the developer for time spent on the platform.
Some longtime Roblox users said that even as the games have improved, the experience has gotten worse; an initial golden era of community-developed games succumbed to the temptation of monetization.
Logan Galloway started playing the game regularly in 2013 when they were 9 years old, after being introduced by their uncle. Galloway was enticed by the free games and social interaction with family members and friends from school.
As Galloway grew older, they noticed a shift in the player base and the games, with more of them designed to create a bare minimum of monetizable engagement — “time wasters” that target younger kids. “Roblox used to be way less, I’ll say, exploitative,” they said. “Now it’s incredibly exploitative.”
A 20-year-old college student today, Galloway hasn’t played the game regularly in the past few years. They outgrew it as much as anything else, but they also wonder if parents really understand it. Galloway said they wouldn’t let their future child play the game until they were a teenager.
“It’s definitely a social-media platform,” Galloway told me. “I don’t think parents in general really realize that, or take into account that the platform doesn’t just have young children, but preteens, teenagers, and adults.”
Baszucki says Roblox is “less a game than a 3D social platform where you and your friends can pretend to be in different places.” With the long-term goal of reality simulation still a long way off, Roblox is working to hold on to a customer base that’s constantly aging away from the game — just 19% of Roblox users are over 25.
“It’s insane monetization of an in-game universe designed for children.”
Currently, the company is segmenting its platform so adults can find ways to spend more time there. Kaufman, the chief safety officer, says his 19-year-old son still hangs out on the game, using it as a “scaffolding for social interaction.”
For kids, the picture remains complicated. Last month, the company rolled out new tools for users ages 13 to 17, who Roblox says can now verify their ages with video selfies and chat with other teens with less moderation. Still, they can only add adults they’ve met in real life to their friends list.
I asked Tony Diaz, the parent of two sons aged 10 and 8, whether kids’ interactions online are that much different than they are in person.
“1,000% different, because it’s digital,” he said. When it came to childhood drama before the internet, kids could “leave that at the schoolyard, leave that in the park, come home from school. Now they’re still interacting — it just never stops for them.”
Tim Fernholz is a journalist in Oakland, California. He is the author of “Rocket Billionaires: Elon Musk, Jeff Bezos, and the New Space Race.”
