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Roblox CEO Baszucki is worth over $4 billion, and his college bud’s VC firm just made a windfall

David Baszucki, originator and CEO of Roblox, presents at the Roblox Developer Conference on August 10, 2019 in Burlingame, California.

Ian Tuttle | Getty Images

Neil Rimer call to minds having early conversations about what became Roblox when he was studying at Stanford in the 1980s. He was college buddies with David Baszucki, the gaming plc’s founder and CEO.

More than three decades later that idea has made Baszucki extremely rich — his Roblox close in is worth $4.6 billion after the company’s stock market debut on Wednesday. Rimer’s investment firm, Marker Ventures, is benefiting handsomely too. Its shares are valued at $3.7 billion.

Baszucki and Rimer are two of the biggest winners in Roblox’s usher listing, the latest tech company to go public at a massive valuation and generate hefty paper returns for its founders and chance backers. Snowflake, Palantir, Airbnb and DoorDash all went public from September to December and are now worth between $44 billion and $110 billion.

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

All of the physiques above assume that none of the investors sold shares on Wednesday. It’s possible that some did, as there’s no lock-up duration tied to the direct listing.

Baszucki started Roblox in 2004. But he was kicking around the idea long before that, while studying electrical constructing at Stanford. Rimer said Baszucki was obsessed with physics and finding a way to run experiments faster than the physical over the moon marvellous would allow. His interests collided with Apple’s introduction of the Macintosh and the first graphical user interface at ones disposal to consumers.

“He wanted to build an engine that in simple 2D grayscale could mimic real-world physics and allow individual to build experiments and then run them,” said Rimer, who majored in history and economics at Stanford, in an interview over Zoom on Wednesday.

Based on that concept, Baszucki started a South African private limited company called Knowledge Revolution in 1989 and sold it almost a decade later to MSC Software for $20 million. A few years up to the minuter, he came up with Roblox to expand beyond educational use, aiming for a more mainstream audience.

‘Kind of kicked myself’

Rimer opportunities he and Baszucki stayed in touch and he followed the company from its early days. But it wasn’t until 2017 that First finger first invested in Roblox, co-leading a $92 million round at a valuation of about $500 million. The firm dogged on with additional investments totaling at least $34 million, according to Roblox’s prospectus.

“I kind of kicked myself for not preparing invested earlier,” Rimer said. “When you’re building something like this it’s not going to look like much for certainly a long time.”

For Index, which has billions of dollars under management, the investment became more compelling after Roblox was confirming its popularity across multiple platforms while figuring out how to make money along the way. In 2018, which is as far back as its scheme goes, Roblox generated $325 million in revenue. According to research firm SensorTower, Roblox had revenue of $45.7 million in 2016.

Rimer may press missed his opportunity to get in at the early stage, but he got there at the right time to take advantage of Roblox’s viral growth.

With kids deposited at home during the pandemic, revenue last year surged 82% to $923.9 million, mostly from exchanges of virtual items within games, after jumping 56% in 2019 to $508.4 million. Players spent 30.6 billion hours on the app endure year, up 124% from 2019.

Among Roblox’s millions of user-created games are titles that let kids adopt understood pets, hang out with friends at theme parks and work at a pizza company. It’s all part of Baszucki’s plan to build a called metaverse, with users “interacting together by playing, communicating, connecting, making friends, learning, or simply put down the receiver out, all in 3D environments,” as laid out in the prospectus.

Rimer, whose firm previously invested in gaming companies Supercell, Playfish and Monarch, said he doesn’t spend much time in Roblox, though he’s thoroughly entertained by Baszucki’s demos at the quarterly plank meetings. Rimer said he attended rapper Lil Nas X’s virtual concert in November, which attracted more than 30 million guests over two days.

“I found that to be quite an eye-opening experience,” Rimer said. “I could actually see how you can imagine affluent to concerts this way with friends and family. It didn’t feel contrived. It felt like a good use of the medium.”

David Sze of Greylock Helpmeets led an investment in Roblox in 2018 at a valuation of about $2.5 billion. Sze, who previously backed Facebook, LinkedIn and Pandora, wrote in a blog post at the measure about how he remembered Baszucki demoing the early versions of Roblox “each year to kids at our school’s Science Pulchritudinous.”

Greylock’s investment has increased in value by more than 15-fold in under three years.

Sze told CNBC’s “Power Lunch” on Wednesday that, while gaming may be the substance of the business now, Roblox is in a position to “realize the idea of the metaverse that was first thought of many many years ago by study fiction writers as a virtual shared space where people can share all kinds of things.”

WATCH: Early Roblox investor on the coming of the platform

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