When you think about everything that goes into making a big blockbuster movie, you have the director, the actors, the crew, the lighting, the sets, and the cameras. And once you get everything on film you want to make it look and sound good. That’s where you might turn to Blackmagic Design, a company known for making incredible equipment and software used on the majority of Hollywood blockbusters. Grant Petty is the Founder and CEO of Blackmagic Design and shares the story of how the company became a giant by building an oasis for creativity.
About This Episode
Kris: I’m Kristofor Lawson and this is Building a Unicorn, a show exploring what it takes to turn an idea into a globally recognised company.
Kris: When you think about everything that goes into making a big blockbuster movie, you obviously have the director, the actors, all the crew, and then you have the lighting, the sets, and the cameras. And once you get everything on film you want to make it look and sound good. And that’s where you might turn to Blackmagic Design. Blackmagic Design is a company known throughout the TV and movie industries for creating some incredible equipment and software which cost just a fraction of the competition. And their products are used in a large amount of Oscar nominated films, with five of the eight films that were nominated for best picture in 2019 using some Blackmagic Design products.
Kris: And what’s fascinating about this story is Blackmagic Design is an Australian company.
Kris: Grant Petty the CEO and founder of Blackmagic, decided that he didn’t want to go the way of other startups by building a business that just packed up and moved to Silicon Valley or Hollywood. He wanted to build an oasis for creativity in Melbourne. And that oasis now brings in $300 million Australian dollars a year in revenue.
Kris: Grant grew up in regional Victoria in a small town called Numurkah, which is around 30 minutes drive north from the regional centre of Shepparton. And in his early life, his family was not that well off. He lived in housing commission homes provided by the Government, and his Mum was on a pension, but Grant credits that lifestyle for giving him the drive to do his own thing.
Grant Petty: When you live in the housing commission area of a country town, essentially government housing, there was a cluster of government housing in that town, and you are the lowest rung...
Grant Petty: Now what was interesting about the country town is it either crushes you or it doesn't. And I think everybody knows that there's a lot of drug problems in country towns. And I have a feeling the reason I wasn't crushed by it is because I was interested in electronics so I didn't notice the hierarchy that was around me. I mean I should have known that I was at the bottom rung of a dominance hierarchy essentially, if that's probably the correct term for it I think. I should have known that I was nothing and I was supposed to be nothing and I should have just been a labourer or whatever I was supposed to be. But I just didn't know that because I was interested in creating things. I was doing electronics, I was there in the back room with a soldering iron, pulling things apart.
Kris: When did you first become interested in electronics?
Grant Petty: Well, I always have. Apparently when I was a little toddler I got lost and I had a light socket and a screwdriver in my hands and my mom was telling everybody, “He's got a light socket and a screwdriver.” My dad was supposed to be looking after me and he didn't obviously do a good enough job, and I wandered off and I ended up finding him and I still had a light bulb and a light socket and a screwdriver. My mum used to go to the second-hand stores to buy the clothes and I used to go straight for the shelf that had egg beaters and put some light switches and things, there was no electronic shops in a country town.... And the school had a couple of Apple II computers.
Grant Petty: So what you'd then tend to do is you'd do your classes and then recess and lunch time you'd rush and find one of those computers, jump on it and start coding and there was some books in the library...
Grant Petty: I found it strange when people would say, "Look, eff off back to the housing commission where you belong." And I'd look at them and go, "What the hell's wrong with that guy?" Not realising that that's an upstanding member of the community and I'm basically in the housing commission area as trash and I'm supposed to know my place. And I didn't know my place because as far as I was concerned I was coding and doing all those other activities which I just didn't know. And if you look at it there's a lot of people in the world that, that are at their most creative, that actually started off very, very poor and they're at the bottom rung. That's fine. I think the trick is don't notice that there is a hierarchy. Just ignore it. Because we live in a world where we're not animals, we don't have to be the bottom of a hierarchy. You can actually imagine your way out of that. And that's actually what makes us human. So that's where you come from and essentially I never really noticed that hierarchy was there and I still even don't today.
Kris: Grant’s interest in technology deepend. And at one point his dad decided that there were just too many issues and problems in a small country town so the family moved to Shepperton, which by many standards is still fairly small. But it meant that Grant was able to attend a bigger school. And one that surprisingly had a TV studio, a rare thing for schools in Australia, especially in a regional area.
Grant Petty: It had been setup like a decade or something earlier so the gear was really out of date. It wasn't like super sexy. Like the drama teacher that was running it used to say to people, "Oh, they only have this here because it looks good when parents visit." Because it was a really old black and white TVs and things and it was colour but the picture quality was bad. The decks didn't record properly. But that was funny because we got to tinker with it because nobody really cared about it. I think it's funny when you have some piece of technology that no one really cares about then people tinker with it, there was no pressure.
Kris: Yeah it was just sitting there and open for you to explore.
Grant Petty: Yeah, exactly... And then they also got another grant when I was there to build a room full of Apple II's and they had those. So what you had is, I was programming computers one minute, the next minute I'm in the TV studio tinkering around and we used to go there at lunchtime and recess. We'd run a school radio so me and my friends would be putting out a school radio through the speakers.
Kris: Sure. What kind of stuff would you talk about on the school radio?
Grant Petty: Oh, mostly just music and just idiotic stuff. We did some interviews... We wanted to do the school sports but the electronics teacher wouldn't let us take the cable we needed to actually connect the cameras. And he wouldn't let us move the cameras out of the studio to film the school sports. So we did an interview with the school principal about smoking or something like that. And the electronics teacher and someone else and the principal were so happy with us and that it was so good that he basically asked him and finally he let us do it.
Kris: This experience at school taught Grant a lot about the process of creativity. It was a time where he got to experiment and come up with new ideas. He was working on concepts in the TV studio and going to the computer lab to write software. And as it came time to graduate he was already thinking about a move into the TV industry, so he went off to a local TV station to do some work experience.
Grant Petty: ...The audio engineer there was showing me around the facility and he was showing me things like various technologies and I remember looking at this called vertical [or] test signals, which is really an obscure thing but I remember him showing me this and I remember thinking, it just hit me like a lightning bolt when I'm standing there, in front of the equipment rack with all of this gear and it's all lights flashing and I'm thinking, "This is never going to get boring. This is the industry. I've already been doing it and it's interesting, but there's so much more to learn here and I don't think it's ever going to get boring."
Kris: In fact Grant was so taken by the idea of doing TV that he decided to get into the industry and began working at a post production facility in Melbourne. He was mostly doing engineering and it really allowed him to gain a deep understanding of how the industry worked. And after a few years when he was around 23, he decided to make a move to Singapore to work for a production house called VHQ. And it was while working in Singapore as an expat that he really began to notice the possibilities and differences in the global market.
Grant Petty: I saw a different way of thinking, as well. I mean I think if you're young you've got to live in a different country to really understand, I mean there's too much taken for granted. In some ways you actually become trapped by an ideology of your culture. Stepping outside of that just shatters that and you start to realise the differences. So when you're first up there, you're like, "Hey, this is different, this is different, this is different. What's going on?" But then you realise, Oh, actually, you're becoming less inbred, essentially and you're able to think differently.
Kris: Grant was living with an editor he worked with named Peter, and it was the early 90s. This was the time when technology was really starting to explode. But television production was all done on tape - and the technology that made that process work was incredibly expensive.
Grant Petty: We were, I was sharing with an editor, and you know an apartment in Singapore, and we were looking at, you know we were just thinking about what the future would be looking at equipment. And in those days if you bought the wrong gear, you're in big trouble. You had to make sure you bought like the right type of deck because if you didn't buy the right one and everyone else bought something else, you couldn't interchange tapes with them, you had to pay off the damn deck. It was expensive. And these decks were 100 grand or more. So they weren't cheap. Just for one tape machine. The Flame we bought, I think it was well over a million dollars for that. So you had to make pretty clear decisions. If you decided wrong, you were in deep trouble. And it would be the difference when a facility that did well and didn't do well. And as you became more senior in a facility, you realised that that role was partly your responsibility with a few other people.
Grant Petty: So it became a little bit more, you know, you spent a lot of time thinking about what the right decisions might be, testing things and even going to trade shows. But what struck me as strange as that, the friend who'd bought a scanner and it came with a light version of Photoshop and he was sort of like, "Hey, have you seen this?" And I'm like looking at it thinking, shit, this is the same as Paintbox. And Paintbox was, I think, a $70,000 product at the time. It was a rack thing that, worked in, painted into the screen. And I thought, “Geez, this is actually the same.” And it sort of hit me, this was actually more powerful. And it was given away with a scanner.
Kris: Inspired by the early versions of Photoshop, Grant started thinking about how you could apply the same type of technology to the traditional TV production process. He came up with some concepts and started pitching them to people in the industry, and that’s when he noticed the problem.
Grant Petty: Nobody wanted to do it. Then I realised that's because they rely on the fact that equipment cost so much money that they're basically in equipment hire business. That's what they are. The television industry wasn't actually a creative business, it was an equipment hire business. And that sort of struck me. It's like they didn't want to adopt anything, they wanted to buy the most expensive gear they could.
Kris: Grant even pitched the idea to some of the equipment manufacturers and nobody was interested. They kept turning him away.
Grant Petty: And they were just like, "Oh, there's no market for it." And I'm like, "Well that's bizarre because I'd need something like that." So there is a market for it because people like me need it. So I thought I can only go off and do this myself.
Kris: So Grant went away and began designing a product that would allow you to get video in and out of a computer. It was a capture card that was designed to work with Apple’s Quicktime, it allowed you to get your footage in to your Mac so you could then do your post production. He then launched this product along with some business partners under a company he called Digital Voodoo.
Kris: I read that when you were designing those cards initially, like you really cared about the way that they looked.
Grant Petty: Yes. Yeah.
Kris: Well, why was that?
Grant Petty: I think because people were buying essentially a board and if you looked at the time, you'd get a system from a large manufacturer that had the computer, the disc was all set up and even the cables to connect to the deck, the speakers, the monitor, everything. Here I'm expecting someone to buy a card, like literally just a board. I mean I'm selling that to creative people and they look and go, "Oh, that's a weird electronic thing. I don't wanna plug that in."
Grant Petty: So I tried to make it a bit fun and a bit more exciting and a bit more, I don't know it's like, be a bit of a rebel. I made the board red and I put like, there was a carbon layer we put underneath to make the board darker and just tried to make it a bit more nice. We had some nice blinking lights, just to put a little bit of extra effort in to make it nice and fun. Because I was literally saying to somebody, we could go out and buy a $300,000 editing system or we can plug this card in and for a couple thousand dollars do with whatever software was off the shelf. Yeah, you'd think that would be a no brainer, but for a lot of people are like, "Oh well, I'll just go and buy one of these." And that was just it.
Kris: Was it difficult to like get people to cross the line to buy those early cards?
Grant Petty: Not. What I found was yes, the people that existed in the industry, it was. It was almost impossible, like they didn't care. They were already doing well from what they already have. You gotta remember when you do something new, the people that exist in that market have already done well not using your product. So what would they use it? Why would they switch? So what you've got to do is realise you've got to create a new market. So I remember going and demo to various people and what I'd notice is that one or two people from that group at that large facility would break out and do their own facility and then buy our product. So I started doing shows heavily. That was why I didn't meet new people. Obviously if you go to a trade show, you're looking for solutions to things. If they bump into you, then you get a chance to chat to them.
Grant Petty: So I found that was a really good way of getting to people. But, I've realised that I needed to basically construct a whole new industry. That sounds weird to think that, we live in a world where everyone analyses market segments, but I realised well market just is a construct of what exists in it. So you just change what exists in it and the market will change.
Kris: By this time Grant had moved back to Australia because it was pretty expensive to run a product company in Singapore. Whenever he’d try to order anything from the manufacturers they’d ask for orders in the thousands of parts when really he was just a small startup and only wanted 7 or 8. Australia at the time was just a more supportive place to be.
Kris: And Grant’s early capture cards were really embraced by graphic designers to get their video files into a machine and start working with software like After Effects. And by all measures Digital Voodoo was doing quite well and gradually gaining momentum throughout the late 90s. But this is where the journey turned sour.
Grant Petty: Well, I haven't really spoken too much about it because like what's the point? I mean you've got to focus on the future.
Kris: Grant doesn’t like to talk much about his experience at Digital Voodoo, because in 1999 and early 2000, as the DotCom bubble was ready to burst, tension was building inside the company. And part of the problems were created by the style of leadership Grant had implemented. One which was modelled off the TV industry and really favoured empowerment so that people could make their own decisions.
Grant Petty: I give everyone a lot of space, so I expect a lot from people. Working in the TV industry, everyone's, even the TV industry that I felt had problems, the reality is the TV industry also did a lot of things right, I mean it made TV content. And the structure of it was generally, everyone had their role, everybody knew and had the skill that they do, so everyone worked together as a team, but it sort of independently as a team and the job kind of tied everything together.
Grant Petty: What I do is I structure my companies the same way. What that means though is I expect a lot from people, I expect them to be mature, to have their role amongst a bunch of us, and we all get out there and we do the things we need to do and together we're successful and we can come up with new ideas. So I do let people have a bit of, a freedom essentially, a lot of freedom actually. Otherwise, you can't contribute. The problem is sometimes occasionally people turn on you and they don't realise this is not a weakness, it's just a decentralised management approach. My, essentially I take all the management function that's generally centralised in most companies, which is why it becomes overly complex.
Kris: Right, so it’s usually hierarchy sort of structure?
Grant Petty: Yeah, exactly. And that's, what I do is I try to decentralise it where the person sitting at the centre of that, which is essentially me, I guess. I’m in a support role to make sure that everyone has everything they need to actually function.
Kris: You're trying to empower your staff to-
Grant Petty: Exactly. To make sure they really if you're running a coal mine, you talk about moving decision making closer to the coalface, but that's not good enough. If you're running a coal mine, why would you make a decision in the board like in a board meeting or something when you can actually go into the mine and ask the guy that's actually digging and say, "Look, can you make this decision because you know more about what's actually happening right here." And then he does go, "Well, I don't know kind of what decisions is the right one." You say, "Well, what do you need to know?"
Grant Petty: So the trick is make sure the guy at the coalface is actually doing the function; he's the one that knows more than that guy, so he should make the decision, but he needs extra information to sort of understand the context of what he's working in. So everyone has to have more information around them about what they're actually doing, why they're doing it. Like why, so there's a lot more conversations, but occasionally people turn on you and they think you're weak because they think this is a, this is whole-
Kris: So is that what happened?
Grant Petty: Yeah, I came, I did 13 trade shows in one year because I was trying to build channels and so I'm out there doing the trade shows, and the products are barely working. Every time a new computer would come out, they'd just break, not realising that the accountant is actually white-anting and basically trashing. And I came back and realised that everyone basically hated my guts and they were doing whatever they wanted-
Kris: Right. So they like trash talking you behind your back?
Grant Petty: Oh yeah, like vicious, vicious stuff. Like kind of making up all kinds of accusations and emailing people saying, “I'm going to do all these crazy things and if I did crazy things, that'd be terrible. Not that we're saying Grant would do crazy things” like what is that? How do you defend against that? I realised what they'd done is they got themselves worked up into this, let's do over Grant. They said, I walked out. I'm just like, I'm not doing this, I'm not killing myself. 13 shows in one year, 12 of them international shows, consistently jet lagged to try and build channels, try to build relationships with customers, build up the brand, and I can barely keep the company. You know, I'm spending each day in engineering trying to get the products limping along, meanwhile at night I'm trying to respond to customers and on support issues and things. Seven hours, you know, seven days a week, 16 hour days minimum, and I'm tired. I'm just, this is it. I'm not being treated like this, so I just walked out.
Grant Petty: And I think that's an important thing. You need to understand, too many people make compromises in business. And my philosophy's always been, I'll give everyone all the freedom they need, I'll give them all the support they need, but don't make the mistake of thinking I'm weak. What I'm doing is decentralising part of the function of the big group to you. Now, if you can't handle it, that's your problem, not mine. So immediately the shutters go down. So the minute I realised someone turns on me, it's okay, I've got to push that person out of my life because you can't spend your life with those people around you. They're poison.
Grant Petty: And unfortunately, if someone wants to self actualize by pushing you down, that's not anything to do with me, that's sure. So I think people find-
Kris: So you made the decision to walk?
Grant Petty: I walked. I'm out. I walked out. (inaudible)
Kris: So they didn't push you out, you were like, no, I need to be in a better environment?
Grant Petty: Yes. I said I'm out of here. I thought I'm not going to be treated like this. And I remember that night beforehand and said, I'm thinking, I was up all night literally thinking about it, thinking, okay, I've got to sack the accountant, he's got to go. I can't talk this through. I tried to talk it through with them and they just weren't even looking at me. And when people don't look at you in your eye, they're so caught up in their own bullshit. And I haven't really spoken about this before, but I thought okay, I've got to sack the accountant so if they won't let me sack him, because I'm not a dominant shareholder, then I can't stay here because I can't have this guy in the place. This place is doomed.
Grant Petty: And so I said, they wouldn't support me, so I'm like, "Okay, that's it. Then I'm out of here." Resigned and left.
Kris: And coming up after the break, how the failure of Digital Voodoo led Grant down a path to build the global giant that is Blackmagic Design.
Kris: This is Building A Unicorn, I’m Kristofor Lawson.
Kris: After Grant left Digital Voodoo back in early 2000 he spent a bit of time recovering. And in 2001 he was ready to give it all another shot. Grant was still a shareholder of Digital Voodoo and he just assumed it would continue to do well. So he started Blackmagic Design as a way to build a smart server-type product that would be the next step in the chain alongside the capture cards.
Grant Petty: I thought, well if these products were in the market, what I'll do is the next step I'll build a product that actually dependent on those types of products because that's what's going to happen. If I've built a company that's got a card that brings video out of a computer that's going to change, you know, design and stuff, but I'm still a shareholder of that business. So what can I build that actually goes on top of that?
Kris: Now I’m going to skip over a few of the details here. But as Grant began the process of building a new business, his former partners over at Digital Voodoo really didn’t really like what he was doing, and Grant says there were some dodgy business practices going on at the company. There was also a bit of a public fight happening between the two business - there are actually posts and statements online about this incident from way back in 2002 and 2003 - but Grant’s partners eventually ran the company into the ground.
Grant Petty: I thought, okay, wow, they're not just attacking me as a guy running the place, they're also trying to actually destroy the wealth that I have in the shareholding in the company, so I have to go off and do something else.
Grant Petty: In fact, I'm going to get back into it because it looks like I'm going to need some money to fight these guys. And I was still sending legal letter threats and things like that, so I thought if it hasn't gone away, like leaving, hasn't gone away. And I realised at the time what was going on, they couldn't run it, they had to shrink it because they didn't understand what it was doing. So by shrinking it though, you can't just start to run something and shrink it and make that that's a good thing. They've got to blame someone for the fact that it's shrinking even though they can understand it being as big as what it was, which it wasn't that big. But they've got a shrink it because they're not that bright.
Grant Petty: So what they end up doing is continuing to trash you after they're gone because that's the point. You've got to shrink something because you don't understand it, but you gotta blame someone else for the fact that it's shrinking. So that's why I kept getting the threats. So what I realised is that I still haven't really escaped this, I'm going to have to actually fight them because it's legal letters and stuff coming through. So I've gotta get onto something I know. So I thought, okay, screw it, I'm going to get back into this because I know it, I know what I'm doing, they'd already had a couple of engineers leave because they weren't impressed with what they're doing. So I thought let's start up something else, and that became Blackmagic Design.
Kris: When you start any business - one of the first things you need to consider is equity. Grant started Blackmagic with two other employees and despite being the founder decided to split the equity between them.
Grant Petty: And people think that's insane, but the great thing is if I own the majority of this company, it wouldn't be as exciting. I wouldn't find the kind of creative pressure. You've gotta still perform and do well and I think that not only that, you can't offer anyone anything when we first started out. You've got nothing to offer. Often you don't even have the competent staff. It's not like if I was doing it now, you'd have more ability to maybe not do that, but I just thought it was a fair thing to do because we've all got to put time in.
Grant Petty: You know, when I grew up in a country town, the sky is huge, the area was flat, you're out in the middle of a field or paddock or a desert. And that's the way the world looks to I think someone who's creative; there's a blankness, there's a non existence of anything. I mean if you're trying to create something doesn't exist, then there is nothing. It's a blankness. You start with essentially a blank slate. You're out in the desert by yourself and it's barren out there and it's desolate and isolated. So what you have to do is you have to essentially create something. You've got to create your own little oasis.
Kris: So how did you decide which people to bring in at the start?
Grant Petty: Well, obviously people that you need to, survive.
Kris: So you were just looking around and you were looking around and saying, well, I need this role, I need this role, I need this role?
Grant Petty: To a certain degree. But in the first role, in the first go of it, I picked the wrong people. And the second go, I picked the right people because I knew more and I could able to. But you've got to get something that can function. I mean you're literally out in the desert, you're thirsty, you're hungry, whatever. So you've gotta get, you've gotta assemble some people the way to function and then you add people. And so what you're really doing is you're creating your own oasis. It's very different and the rules are different. It's based on whatever the creative construct or the creative environment that you're essentially doing. But it is a movement and it's a construct of people and as you grow, that oasis gets bigger and bigger. But it's sort of tenuous because it is based on creativity, your own barren ground, essentially the way to think about it. So the creativity is what holds it together and the creativity is what gives it value and gives it life.
Kris: After a year or so of hard work Grant was ready to release Blackmagic Design’s first product in November of 2002. It was called the Blackmagic DeckLink and Grant was using all the connections he’d established in the industry to quickly get the word out.
Kris: Was it like an instant success or?
Grant Petty: Yeah it was, actually. It went really well. I was surprised, look, I knew a lot of people and I'd also obviously I'd met a lot of people when I was travelling and doing a lot of trade shows. So I organised it with a few friends to do some distribution for us, the people I knew. We also do consumer stock right from day one, so they didn't have the cost of that, but we kind of manage that. But what was interesting is, I had an interview with, I can't remember what the podcast was at the time, and it was a live, actually, interview. So I called in and it was live streamed and I actually announced the product on their, on their, thing.
Grant Petty: So they had a bunch of people listening so we got a bunch of people who heard about it. And also we got a bunch of dealers who wanted to take the product on and so it sort of went from there. And it was a good product and we had a product that actually, we'd worked on pretty hard. And it was pretty good. And so, we had done some innovation at the time, which made it lower cost and had real time effects and other things like that. So we'll actually did quite well at the time and it started selling it. It was just enough money to help us self fund the whole thing.
Kris: So it did well from the start, but at what point did you realise that these products and the culture that you were building was creating something that was actually going to be really big?
Grant Petty: That's an interesting question. A really interesting question because a few distributors I knew who said that. They said, "You know, this is going to be really big." I'm like, "Really?" I hadn't even thought of that. Like you just look at a whole bunch of problems and you go, "I've got to solve this problem, solve that problem." It's like, Oh gee, it's getting big. Like it's not something, I think it's not something you really focus on. You're really focused on building that oasis. And that is a platform for, solving problems and you're really just thinking about the problems that people are having and going, "Well, how do I solve that?" If you do it well then, you know, you'll hopefully do well financially. You got to make sure the products aren't loss making and things like that. You gotta have, you gotta be organised but you do hope that these big things you're trying to do will actually benefit people and they can see the value in it and then they'll go off and take those products and do amazing things themselves.
Kris: Blackmagic Design now have 10 offices around the world. Some of them they opened because they needed better distribution pipeline and others they acquired through the purchase of other companies. And the very first deal they made was for a company called DaVinci.
Kris: Why did you decide to acquire DaVinci?
Grant Petty: At the time that it had come up, they were in trouble, serious financial trouble. It was the middle of the global financial crisis. We didn't have any debt and we hadn't used any funding to build the place, so we had enormous creative freedom on how we really ran our company. And we saw DaVinci as potentially being an interesting opportunity if we could fix it. It needed fixing and so we, bought a bunch of senior people over there and we really pulled the company apart to see how it worked. And I remember spending the whole week just looking at it thinking, I don't think this can be fixed, I think it's really far gone. But then on the final day, actually we were at the Kennedy Space Centre, funny enough, and we're looking around Kennedy Space Centre and I'm sitting there thinking, actually, the funny thing is, they're good at things we're not good at and we're good at things they're not good at… I think everyone's been super happy with how it went down and we've managed to grow it and now it's one of the main, apps and it’s doing so much.
Kris: Yeah, it's like one of your main offerings, right?
Grant Petty: Yeah, it's been really, really good. And there's a bunch of really smart guys there and girls that do all that, that software. And we've got some, I mean just, it's been a really exciting product line. I mean it's radically changed from what it was. I mean, remember the DaVinci was a $350,000 system, the top system was $850,000. So I mean that was what it was. We bought it out on a Mac for a thousand dollars. And now in fact there's a free version, it's extremely powerful.
Grant Petty: My theory about DaVinci, there's all these cloud models and things like that. I don't like the cloud model because it basically penalises people for being loyal. If you have to pay a cloud licences, you gotta pay, you're essentially renting your software. If you don't keep paying every month, the software shuts down and you basically can’t open up your projects.
Grant Petty: But our feeling or my feeling on that is that if you can download the software for free, it means you can actually get started and that's the best expression of the motto of our company, which is empowering creativity. In fact, I've changed it to empowering creative freedom because there's a thing happening in software and computing these days where it's become a centralised thing again. I think the computer industry has forgotten about the spirit behind when they were setup. Personal computers were about distributing computing power to individual people. Now it's become a centralization of your data and you're the product, not the product you're actually buying. So it's flipped and now become the most draconian nightmare thing you could possibly imagine.
Grant Petty: So, I don’t, I think the computer industry has lost its way. User interfaces have become difficult to use. It's bizarre. And so, I've changed our motto to empowering creative freedom, so we remember that every decision we make in our products are to enhance the freedom people have to be creative.
Kris: And now you've got products in a range of different categories. You produce some incredibly, incredibly high quality camera equipment that comes at a very low ticket price compared to some of the competition and you're competing against big companies like, companies like Red, which have these super expensive equipment and your equipment is often like a fifth of the price of some of those.
Grant Petty: Yeah, I don't really see it as being competing against it. What I see, again, you're creating an oasis. If I ever think like that, “Oh I'm gonna do this thing and I'm competing with someone else” that's the dominance hierarchy way of thinking. Remember I'm out in the desert, constructing something new.
Grant Petty: So when I create a product, you notice that our products actually really kind of don't compete directly with other products. They're different. And what they're actually doing is they've, maybe URSA broadcast is actually a broadcast camera because we needed to have one and that was literally $200,000 for a fibre based camera chain is insane, ours is 10. I mean I just couldn't understand why that was. So it's just a problem we had to solve. So in that way, I guess that is a bit, you know.
Kris: To the user, your competition like when they're looking at, well which camera system do I buy Blackmagic or?
Grant Petty: That's not what I'm constructing. So I'm constructing essentially something that's trying to create something new. So what I'll tend to do is look at the problem we're trying to solve and go, okay, what are we trying to solve here? How do we construct a solution to that? So I'm not at any point really thinking about how that's going to compete with other people in that dominance hierarchy way, I'm just trying to solve a problem and I'm trying to make a product that can exist.
Kris: What have you screwed up? Like as-
Grant Petty: Tonnes. I mean, you screw everything up. I mean, that's the point. What are you actually trying to do is constantly put yourself in a position to do a product that you don't know how to do. So then everything screws up and you go, okay, well now, what do we break? Well, everything. So how do we put it all back together or fix it? And that's the bits that we focus on. I mean, how else can you tell where to draw your attention? It's like there's a manufacturing process that people always get wrong. And, it's called one piece flow, where what you do is each person in the production line basically only does one piece and they put that piece that their finished aside and they don't do anymore until that next person down the train has picked that item up and moved it.
Grant Petty: Now every time you implement that, everyone goes, "Oh, but everyone's sitting around." Yes, that's the point. The point is you've exposed the bottleneck. You've picked a process, it's not supposed to be perfect. What it's supposed to do is expose where the problems are, and the problem is that guy, that guy's working constantly and everyone else is sitting around. So you take that guy's job, you break it into two tasks and you've removed the bottleneck and everything's flowing quite nicely, and it's moving quite smoothly. That's what a new product is to us. If we do a new product and it's difficult, well what you're actually doing is breaking all the stuff you don't know and you get a chance to learn it and everyone does and they'll go to make sure that the culture and the company allows us to do that.
Kris: Do you own the whole production chain?
Grant Petty: Yes, everything. We even do translation in-house, so we do all these things in-house, so we have that flexibility. So if something's not working, you just stop and fix it and then move on. But if you've got the type of business that's set up that literally if something goes wrong is a nightmare, then you politicise the chance to learn. You can't learn anymore because you've got to do so much planning to ensure nothing goes wrong.
Grant Petty: Well, you want to let things go wrong, you can expect that things will go wrong. So it was like an aircraft design,right. An aircraft design has got multiple levels of redundancy, it's expected that something's going to break... You've got to lay your business to be like that. You've got to lay out multiple levels of protection so a mistake doesn't destroy you or cost you huge amounts of money. Then people can learn from those mistakes and the mistakes become interesting.
Grant Petty: Like I found a bunch of accounting issues that slowed down how quickly we could actually get consulted accounts in the company. I thought, well, I can see the problem here, and I rewrote the whole accounting system to do that. And the amount of innovation in that is fantastic, and if I hadn't had seen that problem because I want real time accounting.
Kris: So you've designed your own accounting system?
Grant Petty: Yeah. I write all the software that runs the company.
Kris: Right. Really?
Grant Petty: Yeah, because what else are you gonna do? CEO job is not that busy. I mean I could create work by like having meetings and yelling at people and running around and doing stupid stuff, but it's really, I mean, there's not much to do. If the people are smart and you've distributed the management, there's not that much left. You mostly got to be the guy that connects everyone together and supports people?
Kris: Right. So you're sitting around as the CEO, I'm a bit bored, I'm just going to rewrite our own accounting software or?
Grant Petty: Yeah, I write up some code. There's a bit more work in doing that because obviously that's a multiyear project, but the fun bits are the little things you're write where you go home at night and go, “It'd be really cool if I could do a tool to calculate data or do this other thing.” And you knock that out in the night and you come in next morning and go, "Oh, I did this thing and it's really cool."
Grant Petty: Like last night we had a problem where there's so many purchase orders put in one other person's tools for doing all the advertising buying that it was slowing down to update the list. I'm like, oh, because that's my task last night, still optimise the code that generates the least and I got it working from, and it slows down to over 100 seconds to stop that list, I've got it down to two seconds because I just read all of the code. It's like these things, when a tool starts getting busy, it changes a bit and sometimes slows down. That was my little task for last night. So you do these little things that are, fun like a little satisfying things where you feel like you contributed, you know. But that's what your role is to support everyone.
Kris: Blackmagic Design now has around 350 employees in their Melbourne headquarters and more than one thousand staff worldwide. They have a campus in Port Melbourne with many different buildings, and like all good tech companies they’ve even got their own chef and the staff can get free food whenever they want.
Kris: What's it like managing a big company like that now? I mean a thousand people is a lot different from having a small team. And I imagine when you started you probably, I don't know if you were picturing having, you know, a thousand employees-
Grant Petty: Yeah. No, yeah, no it's true, you know, it's-
Kris: What's that like?
Grant Petty: Its, .if your philosophy is right, I think it's fine. I think if you just decentralised the management, then I think it's fine. It's exciting because there's so much more going on. And like I was saying before, like the reason I do coding is because what else are you going to at three in the morning when you wake up with an idea and you think, well, I can't even talk to anyone, they're all asleep. I'll do some code. So these little projects, you just knock one over in the night and ah, that's really cool. And you get back to sleep. And go, ah, I did a kick ass thing. Yeah, there's a bit of that.
Grant Petty: But I think that it's not as boring when there's more people. You can obviously do a bigger trade show booth, you can show off more of the products, you can launch a product, there's more customers who are going to notice it, and there's lots of exciting stuff happening all the time. So for me, I find it quite exciting.
Grant Petty: It's a bit of an adrenaline rush. It's probably a bit, it's a bit of a drug actually because you think there's so much stuff going on. It's a lot of stuff going on, it's quite complex. A lot of people that have come in and have a hard time getting their head around it, but at the same time it's very exciting. I mean, it doesn't, you know, I think if I was just a CEO of an asset based business, I don't know what I'd do, I'd be really bored. In this place there's so much stuff going on that it's really interesting. There's always something new to think about and there's so many things going on. There's so many exciting, incredibly smart people working here. That your minds blown almost every day. So to me it just gets more exciting as it gets bigger.
Kris: So you've built this big company and you've got a thousand people, you've got offices around the world, you're making 300 million Australian in revenue every year and your technology is used all around the world in big productions from Star Wars to Avengers, Game of Thrones, et Cetera. When you look at how far that you've come and where Blackmagic is now, what do you feel?
Grant Petty: I think I would be, like, shocked. I mean the Christmas party is a shock... But I think the best description would be, just blown away. I'm blown away by the ability to work with the people that I work with. They're just so incredibly smart. And so really probably the basic feeling is just, the metric of the money thing doesn't really impressed me. Because to me it just feels like capability, you know, like that income we can use it to do great things with. It's that, it's more like, it's like the sock drawer. It's just the socks in it are the interesting bit, the drawers like, well that's functionally. The money is sort of functional. It's the thing, it's the human element, that's the thing that really. And I'm shocked by it all the time, everyday I'm shocked by something someone's come up with or something that they're doing… and it's a fun feeling to think that you're helping, everything you can possibly do is about helping to keep that team together and to do some amazing things.
Kris: If there was one piece of advice that you could give to people from everything that you've learned, what would it be?
Grant Petty: Oh, that's probably pretty easy. I mean there's obviously a couple of things, but I think the first thing would be understand your motivations for doing something. If you wanted to start a business, for example, and be an entrepreneur, so to speak, why? Are you doing it because you want to be powerful and rich, and if you are, that's not the right decision. The amount of work involved in this is so much, and just when you think you can't go any harder it does, that unless you really are trying to do something profound and important and something that is much deeper than that, then you're just going to be one of these guys that builds up something and then sells it and just like, well, that's fine.
Grant Petty: Look, if you want to be that guy, that's nice, but you really want something, I think if you're going to do this properly, you've got to have a some sort of profound thing, you've got to be kind of pissed off at the world about something. Something's wrong, there's an injustice, so I gotta solve that. Create a product or do something that's creative. Make something that doesn't exist.
Grant Petty: Find something you really get your teeth into, something profound, something you can enjoy doing, and something that's got some longevity in it. So that years later when you've put all that hard work, and you can look back in go, "We really did some cool things, and it was important." And from that you'll get a level of satisfaction that feels like you've actually had a life well spent.
Grant Petty: So I think you've got to underpin any business you're trying to create with something really profound you want to change. And make sure you are actually trying to change something, otherwise you're just another hamburger joint... Can you look back when you're 80 years old and rocking chair and look back and go, oh wow? And probably the second bit of one point five, is look at someone old, look at a 60 year old or 70 year old and find out what they're doing and look at the ones that are doing well versus the ones that aren't. Because if you're 20 or you're 19 or 15 even, look at the people that are doing old and find out the ones that are doing well and find out what it is and why they're doing well. Which ones are happy, not the ones that might be rich or poor, which ones are happy and interesting. They're probably still busy with something that's got creative challenges.
Grant Petty: It doesn't matter how old you are, if you can keep doing it, keep doing it for as long as you can, but look ahead, see where your destination is and your destination is to be old and essentially retired. So have a look at those people and go, which ones are doing well and which ones aren't? And you can then sort of look up to that and go, okay, I can see what they're doing and I can see which jobs they've essentially got some longevity to them. Because there's a lot of jobs that people choose nowadays that really are not going to be possible to do when you're 30 or 40. So you do need to be somewhat, make some intelligent decisions, but that's if you're younger. But that will be my prime advice do something that has meaning.