Roblox raises $520M at $29.5B valuation | Hacker News Reader

Roblox raises $520M at $29.5B valuation

venturebeat.com

130 pointsImpossible111 comments

And Boston Dynamics just sold for only $1B. Something is not right.

Roblox has more than 150 million monthly active users, and many of them actually spend money on the platform. Boston Dynamics has some very impressive tech demos. I know which I think should be worth more.

If they have 150m active users of which many spend money... why do they need to raise money?

Same reason as any other company needs to raise money - to grow faster than their cashflow will allow. A business having healthy revenue, or even healthy profit, doesn't mean they can afford to achieve their ambitions right now. Raising enables them to do more.

The fact a business is raising money is rarely a sign that they actually need money; companies raise because they want money to do something. Heck, if your company genuinely needs money raising is much harder because there's a real risk of the business failing.

I don't disagree, but for healthy cashflow companies, surely debt is a better option?

I think it has something to do with founders being able to take money "off the table" when they raise a round.

If you're in a tight race against other companies which also raise large sums of money, and in markets where "winner take all" effects happen; then, it might still make sense to raise money.

Normally, though, you are probably right.

Yes I do agree, but surely you'd want to tap out all the debt first before going to equity raises. Very rarely see any debt raised in startups, so quite interesting behaviour.

Companies at late stage also need to raise money to establish valuation. That doesn't seem to be the case here though.

If late stage implies that the founders have already been diluted significantly, why would they would want to be diluted even more? (Assuming they still believe in the future of the company)

Because they believe the extra money will allow them to increase the valuation more than it dilutes them.

I can’t really think of one example really where that actually ended up in favor of the founders. Even Kalanick’s Series D raise at Uber back in 2014 seemed a bit weird, and in retrospective given what happened since...

I imagine for it to be actually net beneficial there would still need to be at least 5x or 10x growth potential and assuming it’s already a unicorn that somehow can’t finance otherwise on favorable terms... would imply a quite unique situation.

The universe isnt going to turn itself into paperclips.

They are pushing to capture older users and create a market place of grittier games to help monatize the mostly younger player base.

They are also pushing to internationalize the product.

If you can do X, then you will imagine X + 1.

Because you might prefer to do some things that cost more money rather sooner than later?

S1 shows China ambitions. Need capital to break into a complete new market.

My thought exactly. If they can’t make enough money on their own with that many users then how can they be valued so high.

My gut still says Boston dynamics

So basically you're saying that a robotics company that periodically ships impressive robot demos should be worth more than a weird video game for kids?

IMO while I tend to agree that achieving what Boston Dynamics did is surely the bigger engineering achievement, that doesn't say much in the company's position in the market.

Also here's a more positive narrative: Why not celebrate that online kids games are now evaluated more than military technology!

>Why not celebrate that online kids games are now evaluated more than military technology!

I am not sure I get your point here. First, boston dynamics is not only for military technology, sure its initial and I think a lot of current funding comes from defense stuff but so did the Internet and early web technology's funding. So if we ignore that spin, the narrative is that online kids game is being valued more than advances in robotics. Now that does not sound positive in many ways.

Yes, valued... on the market... as a company... whose goal is to make money.

Ask any IT pro if they've heard of Boston Dynamics: yes! Do you own any Boston Dynamics products? No.

Ask a normal person if they've heard of Boston Dynamics: no.

Ask a normal person if they've heard of Roblox: yes! Do you own any Roblox products? Yes! My kids love it!

You can't take some highfalutin notion of 'potential progress in engineering' and directly translate it to market value. Market value comes from performance in the market.

Boston Dynamics is not a proxy for advances in robotics. It's a company on the market, and it doesn't have much business. Academic research continues to be valued and thus funded.

>Academic research continues to be valued and thus funded.

Is it though? Do you have a source for that? Now I understand its hard to actually calculate how much funding is going to which field, after all Robotics is an interdisciplinary field if there ever was one. Last year the AI budget in US was around 1Billion and another half billion or so for quantum computing. Those numbers are so small its astounding considering a kids game is valued at 29.5 billion american dollars.

edit: Source for numbers

https://syncedreview.com/2020/08/22/trump-slashes-research-f...

I think what you're neglecting here is that narratives are just subjective viewpoints. There's no one true narrative.

And my point with choosing a THAT narrative was to put the headline into a positive light: More money towards kids games than military tech! Hooray!

Apart from that, there's of course a very logical argument too. Which is that a digital economy like Roblox is a novelty. That means it's difficult to evaluate and often it's evaluated by its potential.

The economics for robots on the other hand are drastically different. They'll have to be researched, developed, built, and maintained. Whereas for any software: You write it once and copy it for "free" to as many customers as you want.

Anyways, anyone is free to pick and chose their narrative according to their liking.

I think that is a very weird way to look at it. I think we are using the word narrative differently. I used it as the "story" which fits all known facts. Cherry picking facts can lead to false narratives. Now my read that boston dynamics is a signal to indicate robotics advances may be wrong, after all I know very little about the industry, but then my narrative is also wrong. There are true and false narratives.

Sometimes, when I look at my "smart" robot vacuum cleaner repeatedly banging his head against my table, I think that this poor creature would deserve some of the behavioral innovations that video game characters got.

The crazier comparison is to other gaming companies. $30G is more than the market cap of Take Two (think GTA V). It's about Ubisoft + Capcom + Square Enix + Sega combined.

And presumably the people who just invested half a billion at $30G expect it to go significantly up from that after the company goes public.

But it's pretty clear that Ubisoft + Capcom + Square Enix + Sega are the dinosaurs. They haven't had reasonable growth in sometimes decades. They have never even approached 150 million players, never mind on a sustained monthly basis.

Man that statement makes me feel old, but Sega is the biggest, their growth happened in the previous century, decades ago.

Sega genesis, which I'm randomly assuming was the best selling product of this group of companies, got to about 30 million players. Nowhere near 700 million revenue. To put it mildly, this was not something they could sustain.

So I have little doubt that Roblox is indeed worth more than the sum of these companies. I don't like the games either, sort of a second life but for kindergarten, but clearly they are commanding more success in the market than those companies.

>Nowhere near 700 million revenue.

Ubisoft alone makes more than $2 billion in revenue per year.

edit: Square-Enix is another $2.3 billion in revenue. Capcom is around $700 million per year. And Sega is even more at $3.4 billion per year.

Do you know who Ubisoft are?

They are huge, own many studios and their sales are orders of magnitude higher than the Genesis, which is an odd assumption to make.

An Ubisoft badge is a warning label that says you should avoid buying this new game.

They may have made decent stuff 15 years ago, but now they make pretty garbage.

Come up with a clear path to $ within X years and you could be the next buyer of Boston Dynamics too. I want the cool robot company to be worth more than the online game company too but revenue is what drives these things.

I'm sure BD could make more money if they exclusively signed military contracts. But I'm sure that's not what a lot of people here would want either.

Roblox has a product that people pay for.

Boston Dynamics has a handful of YouTube videos.

This is true in a very real sense, plus Boston dynamics has been bought and sold with some regularity, indicating there seems to some obstacles monetizing the tech.

And, for me, the major impact of those YouTube videos has been the adorable parody of a robot and its robodog: https://youtu.be/y3RIHnK0_NE

On the other hand, Away luggage raised $100 million relatively recently.

I have an Away carry-on and it’s nice, but no technical wonder.

Surely Roblox’ platform’s sophistication, reach, and financial potential are orders of magnitude higher than.. a suitcase.

Away luggage raised $100 million at $1.4B valuation. Which is nuts.

Hardware is hard. Margins and expansion is so different.

Building real things is hard and expensive. Building software, sure it’s hard, but it’s nowhere near as hard.

In a world where Tesla is worth over 700B, it makes sense

Tesla valuation makes sense to me.

They control the market of expensive electric cars that sell like hot cakes. And they will for many years.

They build robotic factories at incredible rates.

They have a great solar roof business.

They have a great battery business. They innovate battery tech.

They have a truck and a semi and a model Y coming out.

And they promised a cheap electric car.

to be fair I still have no real idea what the use case for all of these Boston Dynamic robots is, primarily they seem to make funny Youtube content with them to be honest.

Take the 'Spot' robot. It costs 75k and can carry 14kg of weight. For that cash you can hire a human who is way smarter and can carry much more for like, a fraction of that price.

It is more to do with volumes of product, hardware is costly and the margins are thin if targeting less than 1000 per year. The problem is the product is not versatile to be adopted in a more general sense. The Engineering accomplishment of the company are great, but it does not have a broad enough market and hence reflected in the cost of the product. Similarly, you can compare that to technical books and why they cost so much as the expected sales volumes are not high enough unlike a fictional character book, prime example Harry Potter, it also became a big screen hit with fans.

Hiring cheap human labor in the US costs (for minimum wage) $36 to $40k per year.

So according to [1] spot costs 1 year of a decent-wage employee or 2 years of a minimum wage employee. And of course that's disregarding that spot will happily pull nighttime duty, work on weekends, Christmas, and will happily walk into a chemical plant risking his life for you ...

[1] https://beebole.com/blog/how-to-calculate-the-real-cost-of-a...

The problem with Boston Dynamic's robots imo isn't the cost versus a human but the cost versus a simpler and cheaper yet just as capable (if not more capable) wheeled robot.

I have a very hard time coming up with applications where the walking capability is useful. On the other hand the space wasted to put all this technology could be used for more batteries, a sturdier body to carry heaviers weights, etc.

The advantage of legs is for use in environments set up for humans with working legs. Things like a normal flight of stairs, walking over a moderate sized gap in the floor, etc.

Those sorts of things can be a real pain for wheeled robots (things like stair climbing wheel assemblies, and just larger wheels can overcome some of these, but have their own downsides), while spot has no issues handling them.

If you can design the environment to fit the needs of the robots, then sure wheeled or even on-rails will likely be a better choice (less expensive, greater load, etc) But for retrofitting robots into existing environments without totally reconfiguring them legs can be rather useful.

The question is are there enough such circumstances that Boston Dynamics can actually make reasonable amounts of money? I'm not sure. It is possible there are some fields with a lot of killer applications for such robots, but few spring to mind.

But that human has rights and can't work 24 hours a day...

neither can the robot, I think it lasts 90 minutes or so. And employers don't mind human rights if it's still cheaper than the machine

The point of BD is to build robots that can move like humans in conditions that would kill a human.

Humans usually charge quite a lot for suicide missions.

A counter way of looking at it: kids today are the Boston Dynamics of tomorrow. Roblox is selling pickaxes.

Walking robots are great, but they aren't actually very practical. I wouldn't be suprised if the majority of their sales are to rich people who just want to have a robot dog as a status symbol/toy.

For variable terrain, legged robots have advantages over tracks or wheels. That doesn't preclude some—even a large number—being sold as luxury items, but it doesn't mean they aren't more practical in some circumstances.

Mincraft/Mojang only sold for $2.5B if that's any help

Roblox is beating Minecraft in MAUs. Roblox is also a platform.

How so? How much revenue does Boston Dynamics generate?

How much profit has Roblox made?

Roblox is a platform, Boston Dynamics is not. Boston Dynamics in Roblox can exist.

While $29.5B is a crazy valuation we should not underestimate the powerhouse that Roblox is. It's not just some random overhyped fad. It's dominating the younger demographics right now with no signs of stopping.

I think younger demographics are an overhyped fad, tech companies are just becoming long arms of the financial sector

Roblox was released like 15 years ago. I don't think it is a fad. When users grow out of it there will be new young users to take their place.

> long arms of the financial sector

Not familiar with this phrasing. I tried to google it but didn't turn up something I could understand. Care to explain?

Maybe he is hinting at TINA ( There Is No Alternative ).

nearly every parent I know, including myself, has sunk a bunch of money into "robux", none have sunk any money into boston dynamics robots.

What are BD's sales?

That's more than the value of Take-Two, and nearly the value of EA.

Take-Two's Q revenue is nearly 4x Roblox.

The big diff is that roblox is a platform and has more room to grow.

Is there a good way to follow companies that have announced plans to IPO so that you can buy initial shares besides a Google alert?

If you don't have a relationship with the IPO's underwriter, you're not buying IPO shares. You're buying shares from the people who bought IPO shares.

This is absolutely untrue. Most legacy brokerages (Fidelity et al) will allow you to place orders for IPO shares. It's highly likely you won't get much and possibly none as the hot ones are often very oversubscribed, but it's very possible.

Call your rep and ask.

My gut feeling after seeing this question on HN and watching how crazy robinhood users are getting over IPOs, makes me very scared for future returns.

It seems we’re sufficiently far enough into the future that the the largest cohort of investors is too young to remember the late 90s.

And this doesn’t have to end in a crash. Could just be a decade of lost returns going forward as we’ve pulled all the gains from the future into the present.

They switched to a direct listing so you can just buy on the opening market.

The google search term here is "IPO calendar". Each exchange maintains lists, so it can help to add "nasdaq" or "nyse", etc.

Here you go: https://sec.report/Form/S-1

Wait I'm confused. When did roblox turn from a janky lego clone from the neopets era into something worth 11 figures? Do they have some sort of massive international userbase or hit mobile app I'm not aware of? That's nearly half that of Blizzard of WoW fame.

Every kid I know plays Roblox. It’s probably more popular then Minecraft in the 14 and under crowd.

Over half of us kids are playing it. There are millions of user created games and worlds.

But why?

It was a fine game when I last played it 10 years. What have they added that make it so good?

My older nephew plays FortNite, the younger plays Roblox. Best as I can tell, they're social hubs, serving the same function as the MUDs my generation (dial-up BBS) played. The actual gaming parts are just the backdrop, like nightclub themes (jazz, EDM, rock).

A buddy of mine cofounded FlowPlay. Surprisingly popular, but nothing like Roblox. Pretty much same idea. Users keep going back to hang out with their friends.

I've read that Roblox also has a thriving eco system of third party developers. Something that MineCraft, SecondLife, and other 3D/VR MUDs/MMORPGs didn't quite crack.

So Roblox gets that sweet flywheel effect. Like an in-game Steam (app) store.

Since my nephews cannot and will not use lame adult phones or chat apps, I installed both Roblox and FortNite, their preferred chat clients. I've never actually played any of the content.

I think the other comments cover it well. It's a social hub with a lot of freedom. You can find knockoffs of many mainstream games and many more creative originals. You can find places to build houses, run obstacle courses, role play jobs, play hide and seek. Lots of creativity kicking around. You and your friends can transverse the multiverse together and explore, or go off on your own. It makes me think of a low fi early version of the kind of world described in ready player one and other sci-fi novels. Just wish they had better support for their users getting hacked. I know a young lady who lost everything recently to a hack and can get no response from the company to help.

It’s a great question. I think probably:

- it’s very social and online first, kids can play with each other online seamlessly

- it’s simple. Most games you join and do silly kid stuff.

- there’s endless freedom to create new games and experiences

- a strong YouTube presence with popular you tubers that get kids excited to try different things.

Roblox is an extremely robust modding platform and they allow modders to make money. There are entire commercial studios who build games withn Roblox.

No they just had a shit load of marketing and the whole social network effect of it caused it to escalate.

It's still a janky as fuck attention grabbing upsell platform. Like an ultra-capitalist minecraft. My kids don't use it - they got bored quickly.

People everywhere on the internet are going crazy about Roblox IPO. I initially thought about gambling a small amount of money with Roblox when they go public. But I start to question if it would be even wise for me to put money in Roblox. It just feels its too good to be true as everyone mentions that they're gonna buy the stock. What do you folks' think?

What’s the long term game here? I don’t see it. On the other hand Minecraft keeps on giving, they’re shipping on more platforms, they’re creating swag, Other games, series, etc. I’m pretty sure we’ll see some theme park based on Minecraft at some point. So here’s that. Maybe roblox is on the same path.

Roblox is incredible in some ways. I have 4 step-kids, and during the first UK lockdown, 3 of them played regularly in roblox with me (I don't live with them, and didn't see them for 3 months).

Some of the games are immense - full on theme parks, weird physics games, movie tie-ins, "total wipeout" physical games, all sorts. There was a really accurate Natural History museum at one point. It's so incredibly diverse, that it's hard to get a real handle on it unless you play it.

It seems to have got real traction with some of the kids in terms of the effort they put into programming their games, and hopefully it'll be a gateway to programming for some of them.

I think kids spend too much time playing games, but Roblox is pretty good, and they even make an effort to censor the chat - which can never be 100% but it's better than a lot of places.

FTR I've played minecraft with them a lot too, but the issue is that ends up being a fighting game ones the boys' hormones kick in (sadly!)

I was into Minecraft before, and now launched a somewhat successful game on Roblox. I don't think the games are really comparable at all, about the only similarity is the blocky look of the characters, and even that is changing soon, as skeletal animation was just launched.

If I had to compare to something, I'd say it's like Unity, except with their own app store from which you can instantly launch games/experiences, and with cross-platform multiplayer taken for granted.

What I love most about Roblox is how the community is leaving behind a lot of the old game tropes and coming up with completely new things, as a lot of the game makers are kids. Turns out most games don't have to involve shooting anything.

I was taken completely aback when I saw the variety of (minecraft-based) games that are on hypixel.net. Maybe I should check out roblox. I looked a couple months ago but couldn't get the installer working in the first few minutes and bounced.

What's your game?

Roblox is a platform and an exchange.

While Minecraft has sort-of become a platform too, with people doing custom servers etc., Roblox is explicitly built to facilitate being a middleman skimming percentages of people buying and selling digital assets and game passes.

The marketplace added to the Bedrock edition of Minecraft is a baby step in that direction, but nowhere near as flexible.

Minecraft has their own characters and stories. Like other people have said here, Roblox is a platform to build characters and stories to sell.

Roblox is definitely on the same path.

https://www.crunchbase.com/organization/roblox/company_finan...

Just thought of downloading the game to understand what all this valuation is about, but the reviews in the iOS App Store are so so fake, it stopped me right there from installing it.

Reviews for this app will definitely be kinda weird... it's all UGC targeted at children so a lot of reviews will be written by children, probably about the games on there (even though there are technically infinitely many game possibilities- anyone can make one).

Definitely an interesting platform, for sure.

Fake -- or merely the usual clueless fankids?

Roblox's main demographic is children. Most of the reviews will be from people who are still quite new to proper writing, cut them some slack haha

Congrats Roblox! Now start paying kids to make your games, set up a USD/RBX free exchange, and watch that valuation skyrocket even further ;)

They paid community game creators over $100 million last year: https://corp.roblox.com/2019/08/roblox-developers-set-earn-1...

Not sure if this was sarcasm but that's almost exactly what they do and have been doing for years

are they not profitable after 10+ years? why are they still raising money?

And they still can't make it work on Linux, even in Wine.

progress is being made though: https://github.com/roblox-linux-wrapper/roblox-linux-wrapper...

Thanks to Proton work, VMProtect hurdle has been passed and the new issue is in regards to the challenge packets that the game sends at start.

Nice. But with that kind of money they can make a proper Linux client already.

You've got to consider how tiny of a market share Linux has in the "adult" world, then remember Roblox is mainly played by kids. How many kids do you think are using Linux? To Roblox, porting to Linux would be absolutely worthless. Not saying I don't wish it was on Linux too, but it really does seem completely pointless for them.

Incidentally, minecraft runs fine on Linux.

but aren't they trying to retire the java version?

I'm not a very regular player, but from what I understand, the Java version is the most popular by the "enthusiast" community. At least the people I know that are very into the game still use Java for modding purposes and more extensive server options (also because of mods).

Yep, if you run a Minecraft server you are most likely using the Java version with a wrapper such as Spigot (or one of its forks)

Hard to say for sure without being inside the org, but from the outside that doesn't really seem to be the case to me. Most gameplay features appear first in snapshot releases of Java edition.

Why can’t they IPO... I want in.

At this point, Roblox has to be a money laundering operation.

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