From railroads to Roblox - Designing an AI-first economy
Unbundling and rebundling transform workflows, but also economies
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Traditional publishers in the gaming industry have repeatedly attempted to replicate Roblox.
They launch platforms with familiar ingredients: simplified graphics, accessible scripting tools, creator marketplaces, and virtual currencies. On paper, these efforts should work.
The incumbents control world-class studios, operate at a scale far larger than Roblox, and have the financial resources to fund creator incentives.
Yet, they fail to replicate Roblox’s success.
The challenge lies not in replicating surface features but in replicating the underlying structure.
Roblox is not just another game platform; it is built around a fundamentally different atomic unit of value.
Inverting the logic of gaming
The traditional gaming industry has been structured around the title as the unit of production and monetization.
Studios raise budgets, allocate teams, and measure returns on a title-by-title basis. Incentives throughout the system reinforce the centrality of the title.
Roblox begins from a different unit. It treats the experience block - an environment, an asset, a behavior - as the foundational building block. Blocks can be created quickly, remixed easily, and reused across many contexts.
Once the block becomes the operative unit, the entire system above it reorganizes.
Discovery shifts from promoting titles at launch to recommending flows of activity across many blocks.
Monetization shifts from unit sales to streams of microtransactions within an ongoing economy.
Identity persists across worlds rather than resetting with each new release.
Incumbents cannot simply bolt this model on because their systems assume the title as the atomic unit. Their payout structures, content policies, and discovery algorithms are written for packaged games, not for composable experiences.
Even when they copy the visible features, they remain locked into the economics of the old atom.
Unbundling the atom to create a new system
The unbundling of the game title into experience blocks set off a cascade of effects.
First-order effects - New sources of innovation
First, this unlocks a new source of game experience creation.
Developers assemble experiences from shared libraries, deploy them instantly, and update them continuously.
Avatars and inventories can travel across worlds, making identity portable in a way that the title-based model never allowed.
Second-order effects - New economic logic
At the second level, a market begins to form.
Different types of creators emerge: some focused on world-building, others on scripts, others on avatar skins.
Roblox introduced its virtual currency Robux to enable exchange and designed recommendation systems to optimize for overall time-in-world rather than for the success of individual titles.
The result was an economy where coordination mattered more than production.
Third-order effects - New governance
At the third level, institutional infrastructure changes.
Roblox had to invest in trust and safety operations, enforce age bands, detect fraud, and design payout contracts that stabilized creator income.
Standards for versioning and dependency management became critical for ensuring interoperability across the building blocks.
Roblox’s economy looks less like a traditional game studio and more like a self-contained economy with its own labor force, currency, and governance.
Anyone, from a teenager in their bedroom to a micro-studio, can create and upload building blocks that plug into this economy, coordinated through a few common mechanisms:
Robux acts as the medium of exchange
Creators earn payouts based on time spent and in-game transactions
A marketplace allows buying, selling, and remixing of assets
Governance structures manage trust, safety, and age-appropriate content.
This progression explains why incumbents failed to adapt. Even if they copy the surface-level ‘features’, they are architecturally constrained unless they unbundle their atomic unit - the title - into more foundational building blocks.
Doing that would mean pulling apart their entire business and rebuilding a new one from scratch.
That is the power of an architecturally-native business model.
For more on the idea of an architecturally-native business model, read:
The incumbent architectural lock-in
The inability of incumbents to replicate Roblox lies not in their technical capability but in the lock-ins embedded in their operating model.
The first hurdle is accounting.
Incumbent accounting logic is built around titles. Their revenues, greenlight approvals, and performance metrics all assume the title as the unit of measurement.
The second hurdle is org design.
Their organizational design reinforces this, with teams structured as discrete studios producing individual games on multi-year cycles.
The third hurdle is internal product fiefdoms.
The IP regime privileges ownership and control, making it difficult to accommodate derivative rights and remix culture, and accept interoperability with less successful titles within the same studio.
The fourth hurdle is risk.
Their safety and compliance processes are modeled on batch testing before launch, not on continuous governance of a live marketplace.
The final hurdle is design.
Sunk investments into high-fidelity graphics and immersive engines may create resistance to moving to standardized, low-variance building blocks.
Each of these lock-ins is rational when the title is the atomic unit of value.
Together, they make sense of why incumbents thrived in the previous system.
But when the atom shifts, the very structures that once conferred advantage become obstacles.
To copy Roblox would require breaking these lock-ins simultaneously, which is not simply a matter of launching a new product or platform but of abandoning the entire economic logic on which the incumbent firm is built.
So the next time you hear advice about moving from a product to a platform or about building out user communities, think again about whether your atomic unit allows you that flexibility.
The Roblox way
Roblox’s durability comes from being architecturally native to its chosen atom.
As we noted in last week’s post, four properties define this:
The shift in the atomic unit from the title to the gaming environmental block.
The embrace of constraints as design principles. Low-fidelity graphics combined with simplified scripting act as standards that enable interoperability and scale.
The recomposition of systems around the new architecture
The reframing of competition. Roblox competes on coordination i.e. who can orchestrate the most creators, sustain the deepest engagement, and govern the most resilient economy.
We noted these properties with the shift from Adobe to Figma as well, and in explaining why Adobe - structured around the design file - is structurally incapable of replicating the success of Figma - structured around a design element as the atomic unit.
For more on the shift from Adobe to Figma, check out my interview on The Innovation Show below:
By shifting the atom, Figma embraced the constraints of the browser, rebundled collaboration workflows, and reframed competition around design workflow and governance in the enterprise.
The pattern is the same as in gaming: change the atom, adopt its constraints, rebuild the system, and redefine the axis of competition.
But there is also a difference in scope.
Figma rebundled workflows, but Roblox rebundled an entire economy around the new atomic unit.
The same structural forces play out, but in the case of Roblox, they extend beyond workflow into labor markets, currencies, and governance.
Unbundling knowledge work in the age of AI
All of this matters because AI today unbundles knoweledge work into fundamentally new atomic units. I explain this in Chapter 7 of Reshuffle:
Historically, expertise and specialized knowledge were tightly bundled with human labor - to access expertise, you had to hire, train, and manage workers. As a result, organizations paid a premium to access knowledge, and hit bottlenecks when they tried to scale it.
AI changes this. It unbundles expertise from the expert, turning knowledge into a capital asset rather than a labor input. Instead of hiring someone to perform a task, you can now rent the associated capability.
When knowledge is unbundled from human labor and becomes accessible as capital, it gains three essential traits.
It becomes rentable, as you can access it without long-term commitments.
It becomes recombinable, since different forms of expertise can be recombined without the overhead of coordinating across siloed teams.
And it becomes scalable: once a solution is built, it can be deployed repeatedly at near-zero marginal cost, unlike human labor, which scales linearly with cost.
The availability of expertise as building blocks changes productivity, but more importantly, it changes power.
Knowledge workers who once sold their labor can now package and deploy it as a building block. On the other hand, solopreneurs and creators gain leverage by combining these building blocks into new businesses.
The nature of competition also changes as a result.
Capabilities bundled with underlying assets were confined to the boundaries of a specific industry. However, as building blocks, they are now available to be leveraged across various industries. Industry boundaries don’t matter and competition, instead, plays out in connected ecosystems where these building blocks are now available across industry boundaries and success is determined not by what you own, but by how well you assemble and coordinate the building blocks that others provide.
With this unbundling and shift in the atomic unit - from the performance of knowledge work tied to skilled workers to components of knowledge work accessible on-demand - we have the opportunity to rebundle not just new workflows as Figma did, but entirely new economies as Roblox did.
Every time the atomic unit of an industry shifts,
the economy above it reshuffles.
What does it take to create a new economy? - Lessons from the rise of TV programming
In the mid-twentieth century, the movie studio was the unquestioned center of the entertainment economy. Everything revolved around the feature film.
Studios financed production on a per-title basis, distribution schedules were structured around theatrical runs, and revenues were tallied in box office receipts.
The incentives of the system, from star contracts to marketing budgets, all assumed the feature film as the atomic unit of value.
Then television arrived, and changed the atomic unit.
The feature film gave way to the episode.
Much more importantly, the episode enabled the creation of the time slot for TV programming - an entirely new atomic unit, enabling the rise of an entirely new economy.
A film could be two hours long or three; an episode was standardized at twenty-two or forty-four minutes, carved up by advertising breaks. This constraint quickly became the basis for a new economy.
Advertisers could price and buy predictable slots. Writers’ rooms could develop story arcs across serialized episodes. Syndication markets emerged to sell bundles of episodes into different geographies and time zones. The entire structure of incentives reorganized itself around the new atomic unit, unlocking new value flows and new ways in which players could participate.
In fact, it was only with the rise of Netflix that this atomic unit of the programmable time slot got dismantled. Today, TV channels struggle in a Netflix era not because Netflix has better UX or a superior content library but because their entire architecture is structured around an atomic unit - the programmable time slot - that has today become irrelevant.
Ironically, this is also why sports rights have increased in value becuase live sports is the last remaining bastion preserving the logic of the programmable time slot and the entire economy around it.
But that’s a topic for another day…
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Crystallize the framework,
Apply it to today’s business dilemmas, and
Conclude with a diagnostic or a set of questions to think through.
Accordingly, what follows through the rest of today’s post is the following:
Why it is difficult to identify the shift in atomic unit - and what to look for
How new economies get unlocked around a new atomic unit
How the convergence of railroads and telegraph unlocked the modern corporation around a new unit
Designing an AI-native economy
Let’s dig right in…
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