Zero-interest rates: just a phase or new era

Most developed markets are at zero effective interest rates. Japan has been under 1% since the 90s, the EU since 2009, and the US from 2009 to 2017 and since the 2020 pandemic. Zero-interest rates disrupt the economy’s traditional transmission mechanisms, eliminating the time value of money. Consumers can now get a 0% interest rate mortgage in Denmark. Last time it happened was in the 1930s during the Great Depression and WWII (see Ray Dalio chart). I will explore two potential explanations: (1) another cycle that repeats the 1930s and (2) a new era in which Capital is plentiful and loses value to Knowledge, the new limiting factor of production.

Ray Dalio Interest rate chart

Another Cycle


Irving Fisher, 1929

In this explanation, the zero interest rate phase would be part of a broader cycle. This cycle is driven by a combination of technological change, inequality, global power transition, political upheaval, and/or other factors. These pressures drive governments to lower interest rates to the minimum to keep the system going without taking painful decisions. Lowering interest rates requires rapid monetary base expansion. At some point, conflicts come to a head as inflation starts to get out of control and decisive interest rate action resumes.

Taking the 1930s as a reference, this could include populist takeovers of governments, wars, asset bubbles, currencies going to zero, and much more. There are undoubtedly uncanny parallels between the 1930s and our current situation. First, we are at a time of extreme inequality between countries and within countries that COVID has exacerbated. Inequality creates social conflict and is triggering populism as the attack on the US Capitol showed. Second, growing geopolitical competition between the US and China has led to trade and technology wars. Third, western governments and Japan are engaged in unprecedented monetary base expansion with debt is growing to previously unseen levels. Fourth, technological change is ready to redefine our social and economic structure.

On top of this, we face climate change and the COVID epidemic, which increases pressure and uncertainty. While at the same time, binds countries together, as neither can be addressed individually.

At the end of the cycle, we can expect “hard” disruptions over the next years to reconfigure our technological, economic, social and geopolitical balance. The consequences can range from minor to tragic. Whatever system comes out of catharsis would again have higher interest rates, allowing us to keep most of our financial mechanisms intact.

A new era


Lord Kelvin, 1895

In this explanation, interest rates have gone to zero as part of a secular trend of increased capital availability. Increased availability has removed it as a limiting resource in developed countries. Knowledge is the new factor of production that is limited and highly rewarded. As Capital superseded Land, Knowledge has superseded Capital. As wealthy landowners lost the central stage to industrialists, banks and asset managers have lost to tech innovators and private equity.

Of course, Capital is not free everywhere—many people, companies, and states have substantial risk profiles and have to pay for that risk. However, supposedly “riskless” assets like the German state, Apple or Danish homeowners don’t pay any interest rates, at least while they behave responsibly.

Knowledge takes many forms. It can be codified in software assets, it can be a business system or business processes, it can be proprietary information, or it can be in the knower’s head. Capital was less tangible than Land, and Knowledge is less tangible than Capital. Making it difficult to evaluate and audit, as balance sheets with exploding intangible assets show. Knowledge is also much more domain-specific and has a higher risk of obsolescence. This makes it difficult to distinguish between “good and bad” Knowledge.

Entrepreneurs with an advantage in the Knowledge factor of production like technology and biotech startups and scale-ups have almost limitless access to funding. They can choose from many potential capital providers that bid up their asset values to the future cash-flows Knowledge will supposedly generate. Big Techs have managed to create a virtuous cycle of Knowledge creating access to data, which they convert into further Knowledge which differentiates them. Customers are paying for Big Tech services which are “free” from a monetary/Capital perspective in terms of data/Knowledge.

Investors with an advantage in the Knowledge factor of production like Private Equities, Venture Capitals or Hedge Funds also have unlimited access to Capital. They are limited only by their capacity to apply Knowledge to the Capital they raise. So they look for ways to gradually expand their scope of activity to maximize the leverage of that Knowledge. This can be seen in exploding assets under management in the largest PE funds like Blackstone, Carlyle and Apollo.

In the new era, interest rates for Capital are permanently lower. Abundant Capital competes for scarce Knowledge, driving prices down. This dynamic can generate a winner-take-all situation driving inequality and reducing opportunity for many. It requires rethinking and rebuilding our economic, financial and social systems.


Only time will tell where we end. My opinion is that a combination of both phenomenons is at work. On the one side, we are in the middle of an asset bubble. The “permanently higher plateau” of SPACs, priced for perfection equities and artificially low-interest rates will at some point collapse and force a reckoning. On the other hand, there is much more Capital available, and financial innovation has made Capital more liquid and flexible, and thus less scarce and less rewarded. We should use this abundance of Capital to tackle our time’s challenges, like climate change or inequality. Those that can convince capital holders of differential Knowledge will continue to access Capital with increasing ease and be rewarded for it.

How can we square both conclusions? It is about the difficulty of evaluating Knowledge in a bull run. The long monetary-induced bull market has made critically evaluating Knowledge difficult. Knowledge in companies is swamped by infinite Capital that can be used to fake results (e.g. WeWork). Knowledge in investing is obscured by a market where most investors are getting phenomenal returns just by showing up. Paraphrasing Warren Buffet, once the tide of valuations recedes, we will see who was swimming with relevant Knowledge, and who was taking advantage of the bull market.


3 geopolitical questions for the 2020s

China/US, Climate Change, and inequality are three central geopolitical questions for the 2020s. Please share your answers for these three.

In case you hadn’t noticed, we are living in a time of great uncertainty. We already thought we were living in a time of great uncertainty this time last year, but it was much more significant than we could have imagined. Uncertainty is difficult to predict, so questions become crucial. What are the critical questions for the 2020s? 

I have selected three questions that trigger my curiosity and have tried my best guess to identify potential answers. The best way to predict the future is to shape it, so I have included the answers I hope to achieve by 2030.

Please share your collective intelligence in the comments section.

1.Will the US-China power transition occur, and how will it happen?

The US and China are in a power struggle. Thucydides Trap, Great Power transition, or Cold War 2.0. China has been closing the gap rapidly with the US. And the US is starting to pull all the non-military stops: trade sanctions, technology restrictions to avoid China catching up (most notably in semiconductors), capital markets controls (many Chinese companies delisted in the US), non-military geopolitical clashes (mostly about the south china sea and Taiwan), cyberwar (like the Solar Winds attack, even if it was Russia based in the end). For an in-depth understanding, I recommend the great chapter from Ray Dalio on China-US. His thesis is that these conflicts happen every 100-200 years and take a decade of not military conflict before turning “hot”.

My questions: Will conflict turn “hot”/military? Will China overtake the US? Do we need a global hegemonic power for stability?

Two possible answers with three sub scenarios for the “Cold war”:

  • “Hot war” in which differences boil over to militarily conflict. Given the advances in our capacity to destroy each other, this scenario will be horrible whatever the outcome. However, most US and Chinese citizens haven’t suffered a war in their lifetimes, so they could fall into the “war fever” that lead to WWI.
  • “Cold war” in which conflict stays outside of the military domain, which would be great news. In this scenario, we could see China overtake the US and become the hegemonic power. We could see the US system emerge victorious again, reestablishing dominance and isolating China. Or neither China nor the US achieves supremacy, with the world moving towards a multipolar equilibrium

2. Will we tackle climate change? What will be the consequences?

Wildfires, freak snowstorms, hurricanes, record hottest year every year, the evidence is on the table. I still hope the negationists are right and everything goes back to normal on its own. It seems increasingly improbable. Climate change is the challenge of our lifetimes, and we are failing miserably. COVID has shown that we could reduce emissions drastically if we think it is important enough. We make progress on the edges. We don’t execute the forceful (and expensive) answer that experts claim we need.

My questions: Will we tackle climate change head-on? Or will we boil like the proverbial frog? Will the consequences of warming be “Hollywood apocalypse movie-level”? Or will we continue to watch temperatures increase one decimal at a time?

Three possible answers:

  • We act globally and stop climate change in time. The War against Warming achieves Marshall plan-status in history books. A new zero-impact economy develops.
  • We fail to act, and not much happens. The 2020s go by like the 2010s—calls to action, tentative progress, and increasing temperatures. However, disaster doesn’t materialize. In 2030 we are asking ourselves if we will act in the 2030s.
  • We fail to act, and disaster ensues. The 2020s are going by like the 2010s, but climate disaster strikes. We all wonder how we could be so stupid.

3. Will we tackle inequality within societies?

We are at the peak of inequality in developed societies. Only reached previously in the late 1920s. Inequality has been widely chronicled. My personal favorite is Thomas Piketty’s Capital in the Twentieth Century. Inequality is not only unfair but also incredibly damaging to the stability and productivity growth of societies. Rich people tend to spend on non-productive luxuries. Getting rid of inequality is very difficult. Last time it took a world war, taxes, devaluation, and landmark investments in education. The problem is widespread, but the US is the poster child with necessities like education and healthcare outrunning income growth by a large margin. Inequality is already driving populism, social unrest, and public debt.

My questions: Will we reduce inequality within developed societies to drive stability and productivity? Will we make broad-based investments to prepare workers for the digital transition? Or will we try to control unrest through “panes et circenses” (smartphones and VR)?

Three possible answers:

  • The digital dividend equalizes the playing field and triggers a new broad-based wealth creation and productivity wave that regenerates the middle class.
  • VR anesthetics and Universal Basic Income serve to distract those with less income and wealth, “Panem et circenses.”. It creates uneasy stability without accelerating productivity.
  • Populist take-over, as the inequality gap, continues to widen, and populist politicians achieve dominant representation and eventually take over.

My desired outcome

The China/US war never turns hot. The global crusade/jihad on Climate Change and inequality with all countries and global citizens on the same side supersedes it. Governments marshall global resources to invest in a green productive system and free universal high-quality education and healthcare. 2030 dawns with a carbon-neutral multipolar planet with opportunity for everyone.


DMA and DSA: Reclaiming European Digital Sovereignty

The EU Comission has put out two new laws, the Digital Markets Act and Digital Services Act, with the potential to reclaim Digital Sovereignty. This is a critical step to accelerate productivity growth, allow European tech companies a level playing field to compete, and ensure citizens and institutions in Europe stay in control of their own destinies.

After the events of Jan 7th 2021, the most powerful country in the world has had to convince private company CEOs to stop a threat to their institutional order. The US Congress didn’t turn to the CIA or the FBI or the US Army, it rather asked the CEO of Twitter, Facebook, and AWS to ban Donald Trump and friendly apps from its platforms. While it is difficult to wish they had done otherwise, this represents the clearest call-to-arms for digital sovereignty. Power was not in the hand of the citizens, it was in the hands of company CEOs.

COVID has shown that the world is digital to a large extent and it is only getting more so. Countries need to exercise sovereignty over their digital space, much like it is exercised over physical space. If not countries will be digital colonies of the private companies that exercise that sovereignty or the foreign powers that control them. Europe today is mostly a digital colony of the US-based Big Tech companies.

As with the colonies of old, being a digital colony will hurt your citizens in a variety of ways. Digital colonialism hurts innovation and productivity, as the digital overlords allow only what is in their own interest. It also precludes local companies from accessing opportunities in the digital space, opportunity is for the colonialists only. Finally, it limits individuals’ digital freedoms and rights, it is the colonialists to decide. The EU needs to act to address it. At the same time, regulation is always tricky. Heavy-handed regulation can hurt consumers and investment at the same time.

The EU Commission has put out two bold new regulations to reclaim European Digital Sovereignty. Digital Markets Act, focused on platforms, and Digital Services Act focused on services. On paper they both strike a great balance that could free European citizens to access productivity, opportunity, and freedom.

Digital Markets Act (DMA)

The DMA targets large digital platforms in most arenas (ad marketplaces, search engines, social networks, app stores, online intermediation, mobile messaging, video sharing, operating systems, cloud computing, etc…), and the natural monopolies they constitute. It forces these platforms to be interoperable through APIs without discriminating against third parties. It also sets out ground rules for how to manage data, including workable access to data and ensuring customer data portability. Finally, it protects customers’ and users’ freedoms, forbidding limits to the ability to choose or avoid any services and to contract outside the platform. Enforcement has teeth with fines of up to 10% of revenues and structural remedies if needed.

The devil will be in the details of regulation and enforcement, but the DMA looks promising. It resembles telco regulation, focusing on non-discriminatory access and portability that converted telcos into “neutral rails”. It achieved great service, strong customer choice, low cost, and an opening to build on top. Of course, telco regulation also hobbled the telco service provider and equipment sectors, some of the most promising tech European champions. It also gave the tech field to the US OTT players, as the European digital market was still fragmented.

An effective DMA would turn the platforms into “neutral APIs” and ensure data portability across services. This could create a new “tech boom” of local startups and innovative large companies building on top of the “neutral APIs”. Comparable to the alternative carrier boom of the 1990s/2000s and the recent Fintech boom accelerated by PSD2 regulation. The need to shift to a more protocol-like open tech ecosystem has been pointed out even by US technologists like Fred Wilson and Ben Thompson.

Digital Services Act (DSA)

The DSA targets digital services and products to ensure the legality, traceability, transparency, and effective safeguards for online transactions. The DSA extends the eCommerce act to all types of digital services and to create a Europe-wide regulation.

The DSA will create a more level playing field between digital and physical services and products. Subjecting both to the same customer protection and transparency requirements. It also discriminates based on size. Making sure that the largest digital service and product sellers don’t use their scale to overpower smaller rivals.

Most importantly, the DSA aspires to armonize regulation across Europe. Striking at the heart of the fragmentation that has made it difficult for European companies to scale, and has made the European market much less attractive than what it size warrants.

Europe-wide Open Market for Digital Platforms and Services

If the DMA and the DSA work out as intended, Europe will reclaim Digital Sovereignity through a Europe-wide and open market for digital platforms and services.

Europe-wide. The DMA and DSA preclude countries from regulating further, creating an effective European-wide market. Given the EU is one of the three largest economies in the world, the EU digital market would be one of the important global pools. Participating in the EU market would be a must for any player, and EU rules would be adopted as the de-facto standard. At the same time, European companies will not start with their individual country as a market, but rather be able to access a global scale market from the start. This will eliminate the current gap vs. US and Chinese companies.

Open. The DMA will force the unbundling of the current monopolistic “walled gardens” that have emerged. An unbundled market focused on protocols and APIs will create a new wave of opportunity for startups. Faster innovation and practicable niches will be enabled, opening up the current “winner-take-all” markets to a broader range of actors.

The combination of a Europe-wide and Open market for Digital Platforms and Services could be transformational for Europe. On the one hand, the opening up of the innovation floodgates should trigger a wave of productivity growth. On the other, the European digital companies will be allowed to grow and become global leaders. Most importantly European citizens and institutions will recover control over their destiny. Moving from digital colonies to digital sovereign again.


2021 Predictions – Bubble burst and Europe Digital Sovereignty

Nine predictions for 2021 from tech to finance. #1 the big tech/SPAC/bitcoin bubble unwinds.

After a momentous 2020, 2021 will represent a pullback in many dimensions such as tech valuations, cloud/eCommerce/telework penetration, and Asian vs. Europe/USA growth. Not because the trends have reverted, but rather because 2020 pushed them forward so dramatically that they will revert slightly to the trend line. Simultaneously, other areas like COVID, Big Tech regulatory action, Cyber, and Europe’s role will see a significant change. Finally, we will have to wait another year for the next iPhone moment and substantive action on our time’s problems.

Three trends will pull back after accelerating in 2020. Not because the underlying trend has stopped, but instead because COVID accelerated them far beyond the trendline.

  1. The Big Bubble unwinds. Tech markets, SPACs, and bitcoin are all seeing unparalleled bull markets. The underlying thesis is very similar for all. The government is printing money like crazy and driving interest rates to zero. Investors need a safe asset against inflation with good returns. Tech is the future, so tech is safe at any price. It also appreciates double digits, so it is too good an investment to pass on. We have seen this story before: real estate (several times), tech (2001), synthetic CDOs (2008), investment trusts (1929), portfolio insurance (1989), Nifty Fifty (the early 1970s), Tulips (the 1630s). The outcome is always the same. Once appreciation stops, investors get second thoughts and start selling. Once prices fall, the asset class is not safe, so the whole investment thesis collapses. Tech, especially SaaS, is undoubtedly very valuable. However, nothing is worth buying at any price. CISCO went public in 1990 at a $224 million valuation. With the internet, it became clear it was going to be a lot more valuable. Markets took it to over $500 billion in 2001, an x2000. Now, 20 years later, it is worth ~$200 billion, an x1000. CISCO was much more valuable, just not that last x2 valuable (small detail for the people who lost 80% of their investments from 2000 to 2002).
  2. Cloud, eCommerce, and telework stall. COVID has turbocharged cloud, eCommerce, and Telework. As things return to normal, there will be a slight pullback in 2021 vs. 2020. Still, the genie is out of the bottle, and we can expect tremendous growth over the next decade, just not next year.
  3. The West grows faster than Asia. Europe and the US have done a terrible job of controlling the pandemic when compared to Asia. Consequently, they have had significant GDP declines. The flip side is that in 2021 growth will seem faster in Europe and the US vs. Asia as they go back to normal. It is a blip. Asia will continue to outperform for the rest of the decade.

Other changes have started in 2020 and will shape 2021, transforming how we live and see the world.

  1. COVID goes away. With vaccines available, COVID will go away in 2021. Things will return to normal quickly. No one was wearing a mask or social distancing in 1920. No one will, at the end of 2021, with the pandemic under control.
  2. Big Tech on the back foot strategically. Big Tech’s reckoning has started. It will take several years, but the stage is set. Regulation and anti-trust action will level the playing field. No single industry or group of companies can be allowed to dominate the world. Governments have managed to avoid it since the railroad robber barons in the 1880s. Big Tech will not be any different. It is still difficult to picture a world in which Big Tech won’t control everything, but it is a matter of time.
  3. Cyber is considered weapons-grade serious. The US government hack through Solar Winds is the equivalent of a digital Pearl Harbor. We can expect a severe reaction across the world. Cyber is the new equivalent of panzer warfare and needs to be taken seriously at the highest government levels.
  4. Europe finds its footing. With Brexit behind it, we can expect Europe to regain the initiative. France and Germany seem aligned to push the union forward. The Digital Markets and Services Acts are great places to start, with strong obligations to create a level playing field in the digital domain. Regaining digital sovereignty, rekindling economic opportunity, and managing the migration crisis should be the priorities.

Two of the things I would very much like to happen won’t happen for another year.

  1. No iPhone moment. Since the tenth anniversary of the iPhone, pundits have been waiting for the next iPhone moment in tech. The next change of platform. Is it AR glasses? Ready Player One-style VR? Apple’s autonomous car? Quantum computing? Cryptokittens? It will happen in the 2020s, just not in 2021. I am intrigued to see what that turns out to be.
  2. No substantive action on climate change, inequality, or cloud democracy. The clock is ticking, but acting is too complicated. Only a real crisis will put our most significant challenges at the center. COVID has shown us that we can tackle them, but trying to play the ostrich and see if they disappear by themselves is too appealing.
Reflections and Predictions

2020 – The end of the beginning


















Roblox IPO – Not for noobs

You might not know Roblox, but most 8 to 16-year-olds do. More than 30 million of them log in daily, about 150 million monthly, more than Minecraft or Fortnite. The Roblox S1 reveals a surprisingly complex company, with revenue recognized over two years, and the Apple/Google tax representing its biggest cost category. Can Roblox grow its users substantially tapping the 24+ segment and APAC? Can it achieve tech style profitability even with the robber-barons controlling the railroads? That will determine if the right price is $15 or $100 per share.

What is Roblox?

Roblox is a unique gaming company. It is not a publisher like Activision Blizzard or Electronic Arts because it has only one title, the namesake Roblox which is not a game is more of a platform. However, it is not a platform like Unity, which is targeted at hard-core developers and is behind many mobile and PC games. It is not precisely like Epic Games, which combines platform (Unreal Engine) and game (Fortnite). However, lately, Epic has been trying to turn Fortnite into a kind of user-generated Roblox. It has similarity to Minecraft, especially around customization and user-generated content, but goes far beyond.

According to their S1, Roblox is a platform in the emerging “human co-experience” category, centered around user-generated content, that draws inspiration from gaming, entertainment, social media, and toys, which “some refer to our category as the metaverse.” Having watched my daughters play Roblox assiduously, I agree with their definition (and my daughters do too).

Roblox is a two-sided platform between creators (of games, events, social media, objects, and much more) and gamers who enjoy that content. The Robox platform’s magic is that it is low-code to start (e.g., my ten-year-old has created a zombie smashing game that my five-year-old plays), but can be extended and built into a full-fledged game (e.g., Bloxburg, Adoptme, Jailbreak). Players can customize their avatar and take it to the different games bringing their friends along and making new ones. Simultaneously, a universe of social media stars has emerged around Roblox, creating a community and a shared content. Roblox, in some sense, has similarities to Youtube, Instagram, or Tiktok as it has made it very easy to create and share games for others to play. In contrast, traditional platforms like Unity or Unreal require professional developers and designers.

Roblox makes money by selling its internal currency, Robux, and a premium subscription feature that allows for cheaper Robux purchases. Robux, in turn, power the whole of the Roblox economy. Players use Robux to buy content and power-ups in games and buy Roblox generated, and creator developed objects for avatars. Creators make Robux from these in-game sales, which can are used for their own gaming or converted back into cash. Robux have been selling at about 1 cent, while creators can convert them back at 0,35 cents.

The platforms’ golden virtuous cycle is already alive and kicking. More players come to play the experiences, which brings more creators who can monetize their creativity. Around this, a community of players and influencers create a conversation that makes the latest game (e.g., Piggy’s latest chapter) or experience (e.g., the Bloxy awards 7th edition) relevant to everyone. Roblox look-alikes are trying better graphics (e.g., Crayta, now in Google Stadia), but it doesn’t seem very easy for them to overcome Roblox’s scale advantage. Roblox low-grade graphics make game creation easier and expand the potential device population that can support the games.

Roblox also has a strong focus on safety. The transfer of Roblox is limited to actual transactions to avoid scams or hacking. Interactions in Roblox seem safe, thanks to an extensive safety staff worldwide.

Roblox performance

According to the S-1, Roblox has reached a substantial scale already. It has over 30 million Daily Active Users (DAUs) and has close to 20 million “experiences” (games and similar). These DAUs have brought in $1.2B in bookings in the first nine months of 2020, about $55 per DAU and year. Both DAUs and monetization have grown considerably (~x3 in bookings and close to x2 in DAUs). The pandemic has accelerated adoption, but the latest quarter shows the gains seem to have consolidated (8.7 billion hours in Q3 vs. 8.6 billion in Q2).

Roblox spends bookings in the following way. Close to 30% go to pay the “railroad tax” that Google and Apple charge for mobile transactions. The second category is creator payouts, which are now at 17% (over $200M). Roblox claims that its key priority is to accelerate creator payouts to power its golden virtuous cycle. The third is compensation at 14%, with technical infrastructure at 8% and other at 4%. Roblox already has reached a 30% margin on its Robux bookings.

The GAAP picture of all of this is tricky to understand. Roblox recognizes revenue and associated costs over the next 23 months after the purchase. Consequently, revenue lags bookings, and under GAAP, Roblox still recognizes losses. However, its cash dynamic is exceptionally positive, with $345M positive operating cash flow over the last nine months. Roblox doesn’t need the money from the IPO. It is going public to give its shareholders liquidity.

Roblox potential

Roblox’s potential depends on its revenue potential and profitability. Let us take profitability first. Roblox is already at 30% of bookings. ~45-50% of its revenues are payments to Google and Apple and payments for creators. We can expect those to stay constant, as Roblox has pledged it will give creators any improvements it achieves with Google and Apple. The other 20-25% of costs are employees, infrastructure, and general expenses. These costs would benefit from improved operational leverage and could be potentially reduced to at least the 15-20% range, if not further. Consequently, we could consider a bull case of 40% margin (45%+15%) and a bear case of staying at 30% (50%+20%).

Estimating topline potential is far trickier. It depends on the user base and revenue per user. Current revenue per user is about $50-55 per DAU per year, far higher in the US & Canada (>$100). However, the cohort curves shared in the S1 show that Roblox is getting much better at monetizing across regions. We could consider 2030 bookings per DAU at $12/month, in line with best practices like WoW subscribers. $12/month/DAU would take the current 5 cents per hour to 15 cents per hour, still very cheap entertainment.

In terms of users, there are 36M average DAUs in Q3 2020. A bull case could take it to x7 over the next decade, to over 200M average DAUs, around 800-900M MAUs. This scale is only reachable in a 1.5B+ addressable market and with dominant market reach. This requires Roblox to expand successfully in two ways:

  • Demographics. Currently, demographics are pretty concentrated. More than half are in the core Roblox user group of 7-13. According to the S-1, Roblox is managing to expand effectively in the 13-24 user group. Roblox’s key challenge is that the 7-24 demographic in medium and high-income countries will stagnate over the next decade. Getting to over 200M average DAUs would require to break into the 24+ demographic to expand their addressable market beyond 1 billion people. Roblox just acquired the assets and critical talent of Imbellus, a gaming developer for learning and evaluation. Imbellus has famously developed Mckinsey’s gamified interviewing first round. The Imbellus acquisition could extend the platform beyond the 24-year range and the pure gaming use case. 
  • Geographically, Roblox has a similar presence in Europe and North America (~65% between the two), with 25% in the Rest of the World and only 15% in APAC. All regions are growing between 60-90%. However, APAC is a relatively underpenetrated region. Roblox is working on this with increased penetration in Korea and a partnership with Tencent in China. Getting to 200M+ DAUs would require an at-scale APAC presence.

Putting together all the pieces in terms of potential would take Roblox to the $25-30B bookings range with approximate cash conversion of those bookings of $10-15B by 2030. This size would be a 15-20x potential growth from today.

Roblox valuation

Rumors point to a Roblox valuation in the $8 billion range, double its last private market valuation at $4B. If this were to be accurate, it would look like a bargain. With a potential 2020 operating cash flow of over $500M, a 20x multiple would already support a $10B valuation based on current cash flow generation. If you believe Roblox is a platform and not a game and given its current growth rates and competitive moats, this would be a very attractive valuation.

A bull case takes us far beyond this. Starting with the 2030 $10-15B cash flow generation potential and a 15-20x EV multiple, we could be talking about a ~$200B valuation for Roblox in 2030 if everything pans out. Bringing it back to today at 10% cost of capital, we could justify a $50-70B valuation today.

CNBC put forward a middle of the road scenario comparing Roblox to Unity, which is already public and has more than doubled since its stockmarket debut some months ago. It puts Roblox at $37B valuation.

If we assume the offering brings the number of shares to ~600M (about 20% dilution on the current ~500M), the base value would be a $15 share price range, CNBC would be at about $60, while the bull case would take us to $100.

Roblox is relatively unknown in a category that is still not familiar to investors. Its accounting is complex, and there is no clarity on its addressable market. Even relatively sophisticated investors like Jason Calacanis fail to see it as a platform. Consequently, it is difficult to see investors piling on to this one and elevating it to its bull scenario as it has happened with Snowflake. Roblox could be a slow burn that gradually builds value as its incredible growth potential plays out over time.

From the Roblox perspective, this would make it smart to do a small raise, given they don’t require the cash infusion. Enough to create liquidity and free-float, but as little dilution as possible at an arguably low valuation.


Beware of the Siren’s Song of trending technologies




The basics are straightforward:



  1. # Cloud/virtual servers vs. # physical servers
  2. # microservices with APIs vs. # of monolith applications
  3. # agile teams vs. # waterfall projects
  4. % of zero-touch customer interactions
  5. % of zero-touch back-office operations
  7. % of employees with citizen developer capabilities



Victory against the Virus: Andrà tutto bene










Neurogamification, Tech and Business

Google Stadia: Technically solid, Commercially dead


Cloud Gaming





We will now look at Stadia on these three elements

Streaming Technology: Very Good






User interface: Very Good




Commercial and Business model: Very Poor







Inteligent Processes, Tech and Business, Telco

Telco Digital Opportunity


Digital Services: optimizing the topline







Digital processes: improved efficiency and customer experience





Digital networks: a programmable and open source asset base





Some scale and plenty of collaboration


