Roblox went public via a direct listing on the New York Stock Exchange on Wednesday, with shares surging 43% to $64.50 on their debut, and valuing the company at more than $40 billion.
The video game platform provider's direct listing comes after a blockbuster year, with the number of users growing 122% during the first nine months of 2020. In an interview with Protocol, Roblox Chief Business Officer Craig Donato predicted that growth will decelerate as the pandemic subsides, but that the company will ultimately be able to retain and grow its user base with concerts, events and even work-related use cases that go beyond just video games.
The interview has been edited for clarity and brevity.
The market has been a bit of a roller coaster over the past couple of days, especially for tech stocks. How do you feel about going public in this environment?
One of our cultural values is to take the long view and focus on where we'll be in a few years. We aren't overly focused on what happens in the first few days. It's more about where this all nets out a few years from now. So we're not really getting caught up in the whole roller coaster aspect of it all.
The last time we spoke, you told me Roblox wasn't ready to go public. That was just nine months ago. What changed?
We certainly have done a lot of growing up in the last nine months. COVID really accelerated our business in a lot of different ways. Obviously, it's a horrific time for people all over the world. But we felt very proud of being able to be a place that people could stay socially connected with their friends and host birthday parties. [The pandemic] also brought a lot of creators onto our platform. It very much advanced our business model.
Prior to COVID, there was clearly a long secular shift going on for people, especially the younger generation, doing more things online together. But as people sheltered in place, it really significantly advanced that. We hosted a concert in November with Lil Nas X that over 30 million people attended, one of the largest concerts ever hosted. That would have happened on Roblox anyway, but it probably would have happened a few years from now. It really accelerated a lot of timelines. So it made sense for us to move forward with a direct listing.
What lessons did you take away from that massive Lil Nas X event?
First, we will be doing more concerts, and concerts are these big events. We're also doing smaller launch parties. So we've done [some] with Ava Max and Why Don't We, where these artists come on, play their new songs and they get to interact with their fans. They're smaller, easier to do.
When we think about where Roblox is going, it's not just about play. We're a medium of shared experiences. We want to provide opportunities for people to share and consume music together, share and consume video entertainment together, have more educational experiences together, even work together. During COVID, our company started having our town hall meetings in Roblox, we had our company Christmas party in Roblox.
As we start to see a light at the end of the tunnel in terms of the pandemic, how will that affect Roblox?
We'll see a reduction in year-over-year growth rates just because we saw such a big peak. But all those new users, all those new creators, fuel network effects. [They will] invite their friends to play [and] create more content, which attracts a bigger audience.
Now that Roblox is a public company, what do you want to focus on for the rest of the year?
For us, there [are] three main growth factors. One is to expand internationally. We're rolling out machine translation, which automatically dynamically translates all the experiences into 10 or 12, 13 different languages. Second is continuing to help expand the demographics in our platform. We are doing all sorts of things to enable creators to build experiences that are more tailored towards older users. And then last but not least, the thing that I'm most excited about is investing in these new use cases. Enabling people to consume entertainment together, like concerts, to have educational experiences, even work-related experiences.
Why did Roblox choose a direct listing over a traditional IPO?
We're a big believer in systems and markets. We have our own economy, our own currency. We really like the fact that the direct listing model uses market-based principles to more effectively match supply with demand. The consequence of that is that it enables us to treat all investors equally, [including] both large investors and small retail investors. That was really, really appealing to us.
