Roblox CEO David Baszucki on the company’s Wall Street debut

Roblox CEO David Baszucki on the company’s Wall Street debut

Roblox CEO David Baszucki joined “Squawk Box” on Wednesday ahead of the company’s direct listing on the NYSE to discuss the company’s outlook and some investors’ concerns surrounding a potentially slowdown for the kids’ video game company once the pandemic comes to an end. For access to live and exclusive video from CNBC subscribe to CNBC PRO:

Ethan Gawronski was about 10 years old when he discovered Roblox. He dove into its games, mostly to socialize with other kids.

Now, at age 20, Gawronski has his own Roblox game that he works on full time with his girlfriend, Elle Deppe. The couple, who met on the app, earned more than $49,000 in the past month from their action game, Bad Business, by selling outfits and weapons players can use to make their characters look cooler and perform better.

“In private developer communities, there were people that were making stupid amounts of money and we thought we could do that,” said Deppe, who’s also 20, in a recent interview.

Bad Business is among the millions of user-created games on Roblox, the kids’ entertainment set to go public on Wednesday after being valued at $29.5 billion in January. The company has built one of the top-grossing apps for Apple and Google devices by turning youthful users into game creators without forcing them to learn complicated coding. The company rewards developers by sharing 30% of the revenue from virtual purchases.

Roblox said in the latest update to its prospectus that it paid developers $328.7 million last year, up almost 200% from 2019. That far outpaced the company’s sales growth of 82% last year, when it booked $923.9 million in total revenue.

More than 1,250 developers earned at least $10,000 in the digital currency Robux, which can be converted to cash. Over 300 earned $100,000 or more.

Roblox is telling prospective shareholders to get comfortable with its hefty payouts. In its investor presentation last week, the company said it plans to shell out even more to creators to incentive higher-quality content and fund bigger teams of engineers, designers, artists and producers.

“What used to be a hobby has become a job for an individual person, and now is more and more becoming the foundation for large, incredibly creative studios who are emerging on our platform,” said CEO David Baszucki, who founded Roblox in 2004.

On Tuesday, the New York Stock Stock Exchange set a reference price for Roblox’s direct listing of $45 a share, which is the same price investors paid in January. However, the reference price does not necessarily indicate where the stock will open on Wednesday, when shares will trade publicly for the first time.

Gawronski dropped out of college last semester after taking two years of courses at Grand Valley State University, where he switched majors multiple times. Deppe finished her two-year associate’s degree in Portland, Oregon, and decided that was enough. They’ve been living together since last year in an apartment in Grand Rapids, Michigan.

The couple met in person for the first time in 2017 at a Roblox developer conference. They soon started working together and were invited into an accelerator program at Roblox two years later, at the company’s campus in San Mateo, California. That’s where they started building Bad Business.

“The goal of the accelerator program for us was to build something that was profitable enough to move in together,” said Gawronski, adding that monthly revenue is up about 30% since September. “It was a bit of a gamble but it worked out.”

Gawronski and Deppe have been updating the game every week or so with new weapons, maps and other features. Along the way, they’ve been able to add another full-time employee and eight contractors.

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