Executive Director Roblox is worth $ 4.6 billion and the Index package is worth $ 3.7 billion

Neil Rimer remembers having early conversations about what Roblox became when he studied at Stanford in the 1980s. He was a college friend of David Baszucki, the founder and CEO of the gaming company.

More than three decades later, the idea has made Baszucki extremely wealthy – his $ 4.6 billion Roblox stake after the company’s stock market debut on Wednesday. Rimer’s investment firm, Index Ventures, also benefits greatly. Its shares are valued at $ 3.7 billion.

Baszucki and Rimer are two of the biggest winners in the direct listing of Roblox, the latest technology company to go public on a massive valuation and generate strong paper returns for founders and risk takers. Snowflake, Palantir, Airbnb and DoorDash went public from September to December and are now worth between $ 44 billion and $ 110 billion.

Roblox’s largest external partner is Altos Ventures, which owns shares worth $ 8.1 billion, followed by Meritech Capital at $ 3.8 billion and then Index. Tiger Global controls a $ 2.8 billion stake and First Round Capital shares are worth $ 2.3 billion. The CEO’s brother, Gregory, is on the board and holds a $ 1.1 billion stake.

All of the above figures assume that none of the investors sold shares on Wednesday. Some may have done so because there is no lock period related to direct listing.

Baszucki started Roblox in 2004. But he came up with an idea long before, while studying electrical engineering at Stanford. Rimer said Baszucki is obsessed with physics and that he finds a way to run experiments faster than the physical world would allow. His interests clashed with Apple’s introduction of the Macintosh and the first graphical user interface available to consumers.

“He wanted to build an engine that, on a simple 2D gray scale, could mimic real-world physics and allow people to build experiments and then run them,” said Rimer, who specializes in history and economics at Stanford. , in an interview with Zoom on Wednesday.

Based on this concept, Baszucki founded a company called Knowledge Revolution in 1989 and sold it almost a decade later to MSC Software for $ 20 million. A few years later, he came up with Roblox to expand beyond educational use, targeting a wider audience.

Rimer says he and Baszucki stayed in touch and have been following the company since its inception. But it wasn’t until 2017 that Index first invested in Roblox, leading a $ 92 million round to a valuation of about $ 500 million. The company continued with additional investments totaling at least $ 34 million, according to the Roblox prospectus.

“I kind of hit it off because I didn’t invest earlier,” Rimer said. “When you build something like that, it won’t look too long.”

For Index, which manages billions of dollars, the investment became more convincing after Roblox proved its popularity on several platforms, while learning how to make money along the way. In 2018, which is still in the prospectus, Roblox generated revenues of $ 325 million. According to research firm SensorTower, Roblox had revenue of $ 45.7 million in 2016.

Rimer may have missed the opportunity to enter the early stages, but he got there at the right time to take advantage of Roblox’s viral growth.

With children stuck at home during the pandemic, revenue last year rose 82% to $ 923.9 million, mainly from virtual gaming sales in games, after rising 56% in 2019 to $ 508.4 million of dollars. Players spent 30.6 billion hours on the app last year, up 124% from 2019.

Among the millions of games created by Roblox users are titles that allow children to adopt virtual pets, hang out with friends at theme parks, and work for a pizza company. It’s all part of Baszucki’s plan to build a so-called metavers, with users “interacting together by playing, communicating, connecting, making friends, learning or simply spending time, all in 3D environments.” as presented in the prospectus.

Rimer, whose firm has previously invested in gaming companies Supercell, Playfish and King, said he does not spend much time in Roblox, although he is fully distracted by Baszucki’s demonstrations at quarterly board meetings. Rimer said he attended rapper Lil Nas X’s virtual concert in November, which drew more than 30 million visitors over two days.

“I found this to be a fairly open experience,” Rimer said. “In fact, I could see how you can imagine going to concerts like this with friends and family. It didn’t feel invented. It felt like a good use of the environment.”

David Sze of Greylock Partners led an investment in Roblox in 2018 to a valuation of approximately $ 2.5 billion. Sze, who previously supported Facebook, LinkedIn and Pandora, wrote in a blog post at the time about how he remembered Baszucki by presenting early versions of Roblox “every year to children at our school’s Science Fair.”

Greylock’s investment has increased more than 15 times in less than three years.

Sze told CNBC’s Power Lunch on Wednesday that while games could be the core of the business now, Roblox is able to “realize the idea of ​​the metaverse that science fiction writers first thought of many years ago.” common virtual where people can share all sorts of things. “

CLOCK: Roblox early investor in the future of the platform