Grant Petty, Founder and CEO, Blackmagic Design
“I don’t think CEOs should be able to be CEOs if they can’t code,” says Grant Petty, founder and CEO of Blackmagic Design.
That’s a bold statement, but Petty is a bold guy. Working as an engineer in the television industry, he realized the technology was overpriced. So he started a company that cut costs and put power into the hands of creators.
“Really what I was doing was a protest against the way the TV industry was,” he says.
And soon, Petty began to challenge the status quo of business in general. He runs his company a little differently: There are no spreadsheets, very little planning, and to him, metrics hardly matter.
“In the Western world, business culture becomes so rigid and so inflexible,” he says. “If you’re a creative person, you can get destroyed by that because they don’t allow you to exist.”
Today, Blackmagic Design boasts nearly $300 million in annual revenue and is still 100% bootstrapped. Its technology is used by 80% of modern day feature films. We sat down with Petty to discuss what he’s learned about how to run a meaningful business in the face of opposition.
- How his frustrations with the TV industry inspired him to start Blackmagic
- The story behind Blackmagic’s first product and how he got it off the ground
- The challenges with getting funding and the struggles he faced when he decided to self-fund
- The “wave of hatred” that can come when you try to disrupt an industry
- How long it took to become an industry leader
- How to know when it’s the right time to add a new product to your line
- Balancing his creative side with the operational duties of being CEO
- One common thing that’s destroying creativity in businesses
- Blackmagic’s culture and how it fosters creativity
- What’s next for the company
Full Transcript of Podcast with Grant Petty
Nathan: So the first question I ask everyone that comes on is, how’d you get your job?
Grant: Well, when you found a company yourself, you kind of build the job around you. The job changes over time. I mean, you start off doing everything, but I think that’s one of the things that makes founders do well is that, if you manage to keep hold of it, because it can be tough to hold on, but you sort of know all the tasks required to get something going. As you become more successful you can add extra people.
Nathan: Yeah, so tell me about Blackmagic Design. Incredible company, tier one brand in the industry. Before you started, you were an engineer, and you were frustrated with the TV and film industry. Can you tell us how did this all get conceived? How did it all start?
Grant: Yeah. I mean, I was a television industry engineer, so I think that’s one of the good things. You think about a company’s culture, and here I was working in television companies, and you work in conjunction with other people, so you’re never really doing everything yourself. In many ways you’re working in the back rooms to make sure that the guys in the edit specs look great. Your role in that is part of a team, and I think really, to make a company that’s creative, you’re working with a bunch of people, a complex group of people with different skillsets.
It’s the same model as what I had in television, so in many ways it’s been very comfortable making that transition because I’m … I think the power CEO that commands everybody, that’s really a very old fashioned, capital intensive kind of way of running the company where you have power over people. If you’re running a creative company then it’s actually the other way around. It’s upside down. What you’ve actually got, is you’ve got to serve everyone, not just the customers but also all the people. Your job is to enable everyone else to do their thing and get out of the way and let them do it. So it’s sort of compatible. It’s actually a compatible cultural shift, so it wasn’t that difficult to do it.
Nathan: So you lead from the back, not from the front?
Grant: Yeah, kind of both. You’re running all around the place, making sure everyone’s got everything they need, but also you’ve got to look at the bigger picture, “How’s this all fit together?” I mean, really what I was doing was a protest against the way the TV industry was where everything was extremely expensive, very badly …
Well essentially the problem we have in the TV industry is you’ve got to … It’s electronic media, right, so you’ve got complicated, technical products that people are using to do creative work. So the problem is the people who make those products often con the customers, because they realise they don’t know a thing about them. So they can the most outlandish thing, make the most outlandish statements they want to make out of the … And then sell them for a lot of money, and so I felt like all my friends were being ripped off.
So once you’ve learned all the products and built television facilities and things like that, then you realise after that, that the role is to, how do I go further? How do I take the next step? Well the next step is actually built the products myself, because no one else is building them, and then the job is to fix the things that no one else is fixing and to take the industry where we want to take it.
The TV industry is very wrong. It was, they were ego driven, very capital intensive. I wanted to make it … It was controlled by people who were essentially the … who could get bank loans. It wasn’t controlled by the people doing creative work. What I felt like is if the equipment was cheaper, we could make equipment more affordable. If you could afford to buy that with your wage, you could buy the equipment do the work and just choose that as a medium to work in, then you could do the creative work yourself.
So essentially like what you’re doing here with the cameras and things you have, this is what my dream was. And so you start off by thinking I’ve got to change an industry. The industry’s wrong. Only people from within an industry that can really understand what’s wrong with it. Then you go, “Okay. Let’s change that.” And so that’s what the company’s role’s been, just to fix a whole industry.
And then we have to do everything. We have to fix everything. So the sales channels, I mean I have to learn how all that stuff works. The people, a lot of manufacturers in this industry are extremely hostile and very nasty and commission by sales guys, all this stuff. So it was quite a difficult thing to do. I mean, but you want big goals otherwise it’s not interesting, it’s just a … I mean I’m a market segment guy. I’m like, let’s make the world different. And obviously hope for the better, that was my thing.
Nathan: Tell me Grant, what was the first product? How did you start? And how did you fund? Because this stuff isn’t cheap to produce. Like the prototypes, everything. Talk to me, how the hell did you do this?
Grant: It was difficult. I think, when you start out … I mean, it’s refreshing, you start out 100% incompetent, right? You don’t actually know anything. I’m coming from another industry. Now, I’ve got to build something and how do you do that? You look at it and you go, “Well, I don’t know really what I’m doing, but I do know the thing I need to make.” So you just get going. You just build it.
The first product we had was a capture card. It plugged in the computer and it captured high quality video and that. Now, I’m thinking about how to solve problems in the industry. And a friend of mine bought a scanner and had Photoshop with it and I realised, hang on a second, this is a publishing industry tool. It’s more powerful than the Paint systems that we use in television and their dedicated boxes. So, I thought, hang on a second, there is a whole publishing industry there. What’s that like? See, you start looking at magazines and realise there’s colour correction, there’s retouching, there’s design … everything. All this stuff is there.
That world is completely isolated from the TV industry world, which is quite a different industry with different people, but they’re the same. The work they are doing is actually the same. The mediums are different, but there is no reason why you couldn’t use publishing tools in television. That meant basically getting on with computers properly. There had been computer based systems, and we bought our systems over a million dollars on a solid graphics computer. That was extremely expensive. That’s just the same business model with a different thing, instead of it being a big box of custom electronics it’s a giant expensive computer. There’s really no difference to the business model. I realised what we needed to do is change the business of television not just change the products in television.
I’m making a low cost capture card I can plug inside the machine, now any Mac can do it. I mean I had a lot of heat from doing a Mac product, this is the late nineties, right, Apple was in a good position in those days. Everyone was like, are you insane? But at the same time I’m like, yeah but all those engineers were asked to build Windows products when in fact it’s the Mac that the designers are using, so you should tailor the product to the customers.
For some reason, it’s like a basic fundamental problem. Make your product easier to buy, make it desirable, but who are you trying to target? You’re trying to get creative people into the TV industry and empower them, right? So, if you don’t make a product suitable for them, then it’s just idiotic. You’re backing some engineering tool and that doesn’t solve the problem.
The problem is, how do I get a designer to work here in the TV industry, make it more affordable so they can actually build their own businesses. It’s a low cost capture card plugged into a Mac, and then they can use the design tools that they already use.
So this is the kind of thing. As far as the funding part of that question. You sort of approach the banks and things, and you quickly realise that what you’re trying to do you can’t prove is going to succeed. You’re going to change an industry? Who does that? At the time, I was just young, so you didn’t know any better. To me, the industry just seemed wrong so it should be this way. You’re not trying to change anything, you’re just trying to do the thing that works or seems like it should be right.
So you just get to work doing that. The problem is everyone I interacted with, there’s no way in hell they’re going to fund something or help you in any way. In fact, call it the opposite, they continually bring you down all the time. I used to have people coming out where I was working and say all this negative stuff. Did you just come out to say negative stuff? There’s nothing in this conversation- You just sort of think, well this seems so clear to me.
I think it’s the clarity of what you think needs to be done and you just focus on that. So you just spend every cent you have. I remember counting out literally coins to pay my car registration. I remember almost getting a product guy in the post-production company where we were working out the back of, burnt down and the front’s all smashed. The building next door burned down out in South Melbourne and smashed all the fronts. So, you just almost have a product and you get there on Sunday morning, ’cause it burned down Saturday night, and there’s smoke drifting out of the building and you’re like, oh my god what now? Like, what else can go wrong?
It’s amazing the number of things that can go wrong but at the same time you appreciate it when things go well because of all that. So you just have to make it happen. Essentially it’s an evolutionary process. You either make it happen or it won’t exist. If it exists, then you managed to do it, you managed to pull it off.
Nathan: So you started with the capture card and then how did you bring all the products into the fold? You guys do a lot of- like I said, you’re a leader in the space and disrupting the space. How long did it take before you got profitable?
Grant: We were always profitable right from the start.
Nathan: Did you do that strategically?
Grant: Well you contain your costs within your income, if you don’t, you die instantaneously. When you start off nothing, you don’t have credit. So you can’t spend, if you’ve got 10 dollars, you can’t spend 11. You just cannot. It’s not there; it physically isn’t there. I remember a whole week I went one time with almost not eating. I just had rice. I boiled rice and I still had some rice.
I just worked out- I needed to buy some components. The components came in a tray. There were six of them so I could build a run of six boards, five of them were damaged. I had to yell at the supplier. I think I used bad language, and the supplier said, “You didn’t have to use bad language.” I said, “Yes I did have to use bad language ’cause you weren’t going to fix them. You dropped these in your warehouse and damaged the pins.” This was going to screw us up.
It’s incredibly difficult. So you just literally don’t have the money you don’t have. You talk about funding, well what you’re actually doing is you’re funding it from sales, building something and then selling it. It’s maybe not the best thing in the world but it does solve someone’s problem and it does solve their needs.
You know, your mind might be 10 or 20 years ahead of that, but you know that’s the next step. You just do the next step, and you get the money coming it and you just work it through. That’s really the goal. You just have no choice, otherwise you will absolutely fail. You’re starting with failure. What you’re trying to do is find a crack of success in just a wall of failure or funding.
If you can get through that, you just gotta keep hunting until you find the crack and then you just break through and then you’ll pull it off. There’s simply no choice. No one’s going to fund something that’s different to the point where it’s unacceptably different.
What I’ve noticed about the business world, as you would get bigger, is that they don’t handle anything that’s different, they cannot understand. I think one of the problems, it comes down to money. Money’s a tool that people use to interact with each other. You didn’t spend your day hunting for food, neither did I. We do other things and it gives us the money we need to buy good. Money is the tool that we use to interact with each other. You couldn’t have cities and things without it.
It’s great. The problem is when money starts getting made, it’s the centre of everything and then we serve the money. That’s a reversal, money now becomes our master and not our tool and I think that’s as we get bigger we see the business world is obsessed with money and fear and so what happens is, that’s like the term disruption you used which I actually find offensive because, what are you disrupting? You’re disrupting the money.
People are creative, people do creative things, that’s what they do. That’s all we were doing when we started out. You’re just doing a lot of creative stuff. You think, this will work out. I’m creative in a focused way that’s going to solve a person’s problem and I’ve got a product hopefully that I’ll be able to build from that creativity and sell to them. I’ve got to build a few at a time and get the money and build another few.
I’m not disrupting anything. I’m trying to survive and I’m trying to solve a problem for people. Disruption’s not the correct word, that’s why I find that word rather confusing or offensive. Because what you’re disrupting is money, but that’s our tool, it’s not our master.
Nathan: So, when was it- how long did it take before you really felt when you got to that stage where it’s- it’s a tipping point. When did you hit that tipping point when things got easier? Our company, media company, 100% bootstrap too. We haven’t raised any capital. We’re not in the hundreds of millions of annual revenue, but in the millions. It doesn’t get easier, I agree, but at the same time you can survive comfortably. When did it get to that stage for you?
Grant: I think there’s probably two steps. I feel like the first step- it’s a good question. I haven’t quite thought about it before because you’re just always focused on the next thing. I think there’s probably two steps of survival. I think the first step is when you can actually pay yourself something.
I remember for years, a few of us were going for years with no money. Or just enough to pay my rent- I remember putting- Shows you how things have changed. Ten dollars for dinner, five dollars for lunch and literally going into a bank- I threw away my ATM card, or cut it up so I didn’t have an ATM. I’d put some money into my account. I’d go to the bank, take out five and ten dollar note each day so that five dollars was for lunch, ten dollars was for dinner. Put them out seven days and my coins I’d put in a bucket.
In the end, on the Sunday I’d see if I could go watch a movie or something with the surplus money. There’s no way you can get dinner for 10 dollars now, but that was what you could do. And that was my budget. You just lived off that for quite a while until you finally get enough revenue. Remember, with us, with paying for parts, say you bring out a new model
Nathan: It’s a very capital intensive business. That’s why I find it so interesting
Grant: And you want to get an engineer, like maybe an extra engineer. I remember one of the first engineers we hired, literally every cent we had we spent on him to pay his wage because engineers aren’t cheap. So we’re getting nothing, we’re giving literally anything we have to our engineer, and you get another one, and another one. You start to keep up with the product changes that you need to do. You’re also trying to buy parts and every time you bring out a new model then you need a huge amount of parts to build those models. You never seem to have enough.
I think the point where you can introduce products, or new products, and also pay yourself I think is the first survival step.
Nathan: How long did that take you? From start-
Grant: Probably a couple of years. Probably a couple of years before I actually could tart paying myself. I think that’s- that’s it.
The second step is much harder and I think that’s- we still haven’t achieved that. That’s where you can sort of take your place in the world, from a point of view of: do people understand what you’re trying to do? In many ways I think we have achieved that, the fact that we’re here talking … It’s like what you find is when you’re trying to do something new, remember this whole disruption thing, you get a wave of hatred. I’m changing the TV industry. Now, in my mind, I’m just allowing a bunch of people to live in an industry who could never do that before. But the people are in it, that have done well, some of them acted very badly.
And I’m … but you don’t understand, you’re the senior people in this industry. The industry’s going to get much bigger and then you guys will be running facilities and doing all sorts of things. You’ve got experience- A lot of the time, you had to make the client happy. The younger guys can operate the tool but you actually know how to do the job and actually- tell the client. That’s what’s happened, people that were in that industry now become the senior people running companies and things like that. I think what happened, you just get that rejection. Waves and waves of rejection from the industry that’s there.
I was trying to empower people to come into it anyway, so you don’t worry about that. There was just waves of this, everything’s going wrong, you might crack, just the worst stuff. Particularly from other manufacturers, of course. And it does happen to a certain degree on some things still. My feeling is once you get through that and once those new product lines and things you’re doing are accepted, that’s kind of the second wave where now everyone goes, okay, the industries changed and you are a major player in it and that makes- gives you- what would you call- some credibility from the point of view that you’re a viable supplier to people.
We supplied all the major broadcast networks around the world, and obviously the feature films and all these other things. So these were some of the last things to come on, maybe that’s where some of the acquisitions have helped, I guess. Maybe it’s a respect based thing where you’re actually able to survive in the market. You credit the market but also it has had some affect on the market that’s there, and people now accept you. I think that’s probably that second stage of survival. When you’re doing your product, people notice it. When you do some new technology, they notice it. The marketing machine gets easier. It’s a complicated long answer, I guess. That’s kind of my feeling; there’s two major steps.
Nathan: And step two, I’m curious, how long do you think that really took? I think in today’s age people just want things now, they want things faster, they’re not prepared- One of my mentors he says to me that, to do anything of true worth and significance, it takes at least seven to ten years. I’m just curious, how long did it take to build Blackmagic Design- be a tier one brand, industry leader- to produce Game of Thrones, all these exceptional films and TV shows. How long did that take, would you say?
Grant: I think that one of the good things about some of these is, of course, when we acquired Southern Acquisitions, as we’ve acquired some companies like DaVinci Resolve, for example, is the one that’s used in Los Angeles for most of the film. So when we acquired their company, we essentially acquired their clients. But of course at the time you get, “Oh my God, you guys have bought them, it’s going to be horribly wrong.” And of course, within a year they realised everyone was super happy and realised what we’d done and we had actually done what we said we would.
It comes down to it, I think products come and go but trust is much longer term. I think he’s right, it does take about seven to ten years. For us it’s different product lines, like one product breeds another. You start with a capture card and then you say, oh we’ve got monitoring problems so let’s solve that. Oh, and now we’ve got a problem with this, let’s solve that. And then we bought DaVinci, wanting to get more people doing colour correction.
We understand what it does, only the higher end facilities could really do it properly. Oh but the camera’s not up to it, digital film cameras are really expensive. Cheap video cameras, they’re cheap, but they clip everything off and you can’t do much creatively with the image. What do you do, that breeds cameras. Each product line you move into, you get a wall of hostility. Some people, like for cameras for example, some people have just bought a camera, that’s all they are. Really they aren’t inclined to be working into the TV industry if they’ve bought a camera.
When you suddenly make those cameras more affordable, you’re not concerned about that guy; you’re concerned about the people you’re going to allow to get into the TV industry or the film industry. But of course the old guard, some of them can be quite feral. It takes time before people realise “Oh no, these guys are making good product,” and everything. Often your first product, it serves a very niche sort of task and it’s not like the best product ever. You’ve can’t go from zero to a thousand kilometres an hour, instantaneously. You’ve got to step through a few steps. We found a few things that we could fix and sort out before we broadened what we’re doing
Nathan: Start to build a real suite-
Grant: Yeah, and you let the customers pull you along a little bit as well, but it does take time. You get walls of hostility but some people love you and over time, more people love you and the walls of hostility start to fade away. Until then, you’ve got people now pulling you in different directions- more collaborative and you go to a show now and you meet out with people you’ve seen before and you chat and talk about different things. It’s funny when I go to a trade show and you’ve actually got to sell some of these to someone because they just want to know about a product, and I’m like, oh but I really wanted to just have a chat.
That’s what you’re doing. You do find now that you’re sort of accepted. It does take a long time. Each product line for us is different. We can introduce a new product line to sort something out and suddenly we get this wall of hostility but everything else is humming along nicely. We’ve got these overlapping seven to ten year timelines kind of happening simultaneously depending on what we’re doing.
Nathan: I see. Talk to me around- When do you know when to try and solve that next thing or add the next line- product line, or add the next SKU? That can be quite cost intensive but then also it’s fun, and I think as a creative yourself it can get really fun to just create this new thing and do this and do that, but sometimes you can lose focus and the traction that you built with this one, and you’ve got this new one, and this one’s going down.
You’ve done this for a long time, what piece of advice would you share there and how you’ve navigated between knowing when to launch this new product line or knowing when to get this one right?
Grant: You’ve got to try and- a climate of education and try to eliminate fear. The fundamental difficulty I always have is to do anything great needs more than one person. The problem is, each one of those people has to be different to each other. You can’t have five of the same person. You’ve gotta have a software engineer, hardware engineer, industrial design now- Industrial design alone has got and then there’s mechanical, thermal, AMC, you got all these different types of people. People who just do finish- the finishers. The surface finishers and things like that. The CAD guys, all those.
You can have- for a product we could have 150 people working on a product depending what it is even more, and so, how do you get all of those people to work together without killing each other? The worst thing is, the better they are, the more disconnected from they are as far as their perspectives. You see it in the broad economy as economies get bigger, more complex- How’s a hairdresser understand what a mining magnate’s dealing with or a graphic designer understand what an accountant’s dealing with? They’re just such different industries.
As everyone gets better at what they’re doing, people move apart. So, the difficult is how do you get all these people working together, and the trick is to try and get- to do that. If you can try and do amazing products, products that are a little bit beyond what everyone can do. Not in a killer way, but in a way that’s actually a bit of a stretch in an exciting way, too, and think, “Wow, this product’s actually quite exciting.”
People get excited about that product but they also understand that they need each other because I need a great user interface on that product so, that software guy is quite active. The user interface guy has done such good work, and the user interface guy is like, amazed that he’s made an amazing interface you animate by writing code behind it. I think the trick is trying to do extraordinary things if you can and at the same time try and get all of these people working together and create a system that’s as flexible as possible if things don’t quite work the right way, be able to change in real time.
Nothing- we try to eliminate all planning here as far as-
Grant: Yeah because planning is rigid. So what you want to do is be capability biassed. Try things, improve your capabilities, and then go okay, what’s next? Then you can respond extremely quickly. So the long term planning is people’s skills and the capabilities we have. And some of the systems and processes, you know we consume over a million products a day. That’s not something that you do without systems. But your systems are designed to back flexibility. Then you can instantaneously move on something really quickly.
That means that nobody’s being bogged down with process as far as defining what they do. They’re completely free to do what needs to be done to make things the way they need to go. But the systems are there to support them in that; not to control them. That’s a different way of thinking, and it’s not very common. We’re swamped with data and spreadsheets and all this crap, we don’t use any of that stuff.
We don’t do market research, we don’t do any of this stuff. We just- you talk to someone. They’re a person, they’re not a spreadsheet cell or a big data thing. They’re a person. I think one of the problems that we’ve got these days, is that people are trying to turn everyone into data. They’re people, just see people as people and then you’ll work out what to do with them.
People will amaze you. I think that we’re in a somewhat dictatorial environment, software engineers and other people like that are creating algorithms that control people. People talk about artificial intelligence and how it could be horrible. That’s what we have now. We have large bureaucracies and companies and government who use data to decide what policies are …control people.
That’s the worst possible situation. Because nobody’s seen for who they are, and that’s why people are getting antsy and protesting. Maybe artificial intelligence will actually save us because you can have artificial intelligence actually knowing you, versus just you being a bunch of data by something. I think you ought to see people for what they are and then move quickly, we ought to have- everything is designed to support people; to change direction, change things quickly.
We never blame anyone for- if something goes wrong, people didn’t come to work wanting to do things wrong. I have met some very, very bad people, who did literally come to work to do the most destructive damage they possibly can, but they’re extremely rare. When it comes down- people will impress you. Have faith in people, trust people. Empower them, make sure the people are actually making decisions, there’s no hierarchy above them. Make all your systems back what they need to do, and let them go, get out of their way. They’ll blow your minds, people will absolutely amaze you. People are incredible. Let them be incredible.
Nathan: So when it comes to- I’m curious, let’s say- Let’s say there is no planning, how do you know what product line? You just let people kind of- you build teams, exceptional teams-
Grant: We have a product plan but it’s literally less than a page, it has to be less than a page. Most of that is actually the video standards it supports. Pretty clear what a product is, there’s a person who’s responsible for that product. They are the product plan. Not a document. One of the problems that happens with planning is that document becomes the product, not the product itself. We work- we’ve got OEMs and we’ve worked with other companies and they have sometimes elaborate plans. But they always fail. The problem is complexity. Complexity has bugs hidden in it, anything with complexity had bugs in it and a plan is actually generally complex.
So, simplify that down to literally a very small amount, you go, what are we building here? Do we know what we’re building? Okay, your responsibility is to know what it is we’re building. You interact with anyone you need to know or talk with and you become the human plan, you’re the person who takes the spirit of that product with you. You’re the person who has to help it, mother hen it. Like a child, right? You are actually constructing this product. So, that’s the way we do it, a person’s responsible for that product and we have a very short definition of what it is but generally it’s the person.
Sometimes we’ll do something more elaborate. Like we’re building a control panel which I think is behind me, we had to sort of work what controls we want on it. So we thought about all the controls we’d like to have, we put them in a priority order and then worked out how many could we fit, and okay, that’s the stuff that goes in. So we did that kind of thing. Obviously, the systems and builds and materials and parts, and all these other things. But not this elaborate, complex plan. We know what we’re building, let’s just get to build- work and do it. And then let the guys be free to do it. And then changes around, it’ll change around a bit and we just keep discussing it. It’s lots and lots of conversations, but no, very, very minimal structure that control people’s actions.
That’s what were talking about, we’re talking about systems that support people’s productivity and what they need to do but don’t control their actions, otherwise they’ll automatically do things and that’s one way you hire people. You hire people for their brain. People are creative, right? We’re the only species that can creative things. Well, you got monkeys poking sticks at things, that’s not really creativity. You can’t moneterize a stick and a monkey. Well, maybe you can, circuses do it. When it comes down to it, we are creative and that’s what makes us unique as a species so you’ve got to foster that. Also, it’s much more dignified as way for people to treat each other, too. And it’s fun.
Nathan: Yeah, that’s what it’s all about, right, just having fun. Doing work you’re passionate about and just having fun.
Grant Petty: It’s really fun-
Nathan: So, tell me … You’ve done seven acquisitions, and where were- You don’t have to talk me through all of them. How big now is Blackmagic Design and the company? How many staff?
Grant: We’ve got a thousand staff, I think. Around the world. There’s only about 350 here. We’ve got engineering facilities in America. Multiple. Singapore. UK. And Japan, and also we’ve got, Sal’s office is in different countries. It’s quite spread out, factories in different places. We’ve got three factories. It’s all spread out a bit. You go where people are. So, you never intended it to get this big, but at same time, you’re always blown away by the people…it’s funny when you’re sitting in a meeting and you’re talking about some problem, you do tend to try and describe the world and what we need to be doing in forms of problems, not solutions, ’cause otherwise you can’t use other people’s brains.
But when you see people rip into a problem and start discussing stuff, that’s like sometimes it’s shocking. When you realise the talent you have in a room, it’s quite surprising. That’s what’s fun about it because you don’t actually know what’s going to happen when you come in to work everyday. But you know there’s a whole bunch of things we’re going to try and struggle with and tackle what’s going to happen but… Everything we’re doing is really a foundation for the next things that we’re doing, so what we’re doing now is so important because it’s going to allow us into the next thing. So everyone in this company is essential. Most people in the company are actually working on the future; working on things that will will be, not so much day to day.
Nathan: Maintain the status quo.
Grant: Yeah, we try to minimise the number of people in day to day, again, planning. THat’s somewhat automated, and then simplified down. You have less bureaucrats doing bureaucracy type things which control people’s actions. It’s more like the few people actually supporting what we’re doing and then most people working on the future. That’s how I define how creative we are. If you’re doing something on the future then you’re actually contributing something creative which will have benefits. If you’re just doing day to day spreadsheet work, like I hate spreadsheets because they’re just so immediate. They divide people. Spreadsheets- everyone has their own bit of data that’s different to someone else’s and it’s- divides people and it’s the present and it’s immediately out of date once you’ve finished it. Whereas, it also indicates you have failures in your systems, you have to- people have to use spreadsheets to get around. That’s the- just trying to keep ut all in the future all the time.
Nathan: So when it comes to- I find it quite interesting, you’re very, very passionate about being creative but you’re still CEO of the company and there is a lot of kind of operational stuff that maybe you’re not- is it safe to say you’re probably not as passionate about the operational side of things, or?
Grant: Well, you’ve got to organise yourself. The company’s fully automated and it runs on software that I’ve written. So I’ve personally written all the software that runs the company itself. That way we don’t have to have a whole lot of operational people. So I know exactly what the operations are because it’s running through my code.
Nathan: Sorry, what do you mean by that? I don’t understand.
Grant: Well, everything. If reseller orders a product from us, or a customer orders some products, it immediately flows into the factory and if they don’t ever stop, they’ll build it. So within five minutes, they could actually be building a product that just got ordered before a sales office even knows. And that product is built, it’ll automatically order all the parts for it. We could be shipping stuff in containers or air freight or wherever. Like this whole system is running on code that I’ve written. You know intimately what’s going on. And you can adapt, by running code ahead of some change you need to be doing. It can be a little slow sometimes, if you’re busy and there’s a- bit to do. A lot of these things you just tweak and change things.
Nathan: Well, that’s interesting. So then, would you say that you spend most of your time speaking to your team? Just doing kind of visionary stuff, looking at the new products and just doing fun stuff. Mainly- not mainly, yeah, sounds like-
Grant: To a certain degree, like if you know you- you can do a spreadsheet to work something out for example and it might take you couple hours to do. Meanwhile it’s been two days on code to do the same function but then you’ve automated and that will work forever. And as you scale, it scales up with you. I think that- in the future, and this really applies to the very young people. Like there’s kids in school now learning how to code. I don’t think CEOs should be able to be CEOs unless they can code.
If you can’t code, you can’t think. You can’t understand systems, and you can’t understand complexities. So it just becomes an ego, dominance hierarchy type thing, where you’re just trying to control people and make them make you wealthy and powerful. That’s not the future of business. The future of business is actually people, again in fact what business was supposed to be, collections of people making things beyond what one person. You have a cluster of brains and they’re able to do something that’s beyond the capabilities of individuals. That’s what business is really supposed to be. That funds itself, because it’s that result of those teams of people hopefully makes money.
Unfortunately, the power that pulled us back to a land based, sort of animalistic based economy is always there. It’s always very strong. You can never refute the truth of owning land and making income from it. Where the creative thing is actually failing you, it’s not even Industrial Revolution kind of enabled. When machines started making products, design also became an industry.
I think everyone underestimated what happened during the Industrial Revolution. To me that’s also when design kicked off because the machines make the products, now the craftsmanship is actually in the design of the products which are then massed produced so they all have them. It’s quite a simple model. The intangible bit appeared at the same time as the tangible bit which is the factory. So I think what’s interesting is no one’s really understood that. So to me, it’s all about creativity.
If I need to do something new, okay, it’ll take me two days to do some code to do it, but what I end up having is something that scales with me and it’s there forever versus a spreadsheet that’s pretty much dead the minute I finished it. So that’s the future of business, that’s the way things will work. You don’t really need to build an artificial intelligence to run a company. If you can think through what an artificial intelligence would decide to do and then just do what it would decide to do, it’s not that hard. We’re all so intelligent. We’re not stupid.
So just, understand what intelligence is, try to make a company intelligent and then think about what you need to be doing. What would an artificial intelligence decide to do if it was running a business? Then just write a code to do that. And then it’ll happen. And then you get the benefits of artificial intelligence without all the hassle of- thousands of engineers trying to create something that thinks and it’s probably just going to try and kill you anyway. What’s the point? You’re just arguing with- like kids do. I’ve already created kids, they argue with you- last thing I need is some all powerful robot thing with laser eyes coming at me. I’ve enough things to deal with.
So, really- that’s the thing. You need- people need to be better- CEOs don’t really have to know much. I think the thing about CEOs which I find interesting is- or the business world… and this a theory and it sounds somewhat pessimistic I suppose but they seem to be a bunch of people that know the rules. They don’t seem to be able to create anything. If you question the rules, they think you don’t know what you’re talking about. So nothing can be changed, everything’s rigid.
130 years ago, China was very rigid society and then Europeans come foiling along and destroy the country. And then, what happened to China was disgraceful but it was the rigidity and the thinking there that caused problems with them being able to adapt to what was going on. And they went through years of hell, a lot of people got killed and all kinds of chaos. Now they’ve got a very flexible thinking and they burned up the industrial world in a very short period of time. I don’t think anyone’s really understood, this is not just a cheap way there’s a whole new way of thinking, a flexibility of thinking.
A focus on actually the product and all these sort of healthy ways of thinking about things. And that’s created large success for them and there’s stuff to be learned and I think everyone says, no, just dismissing it as just a cheap…but the same thing happened in Japan. In the nineties, where people were…hang on, they revolutionised a whole bunch of manufacturing prices and things like that. And then people learned from that. I think there’s a lot to learn from different cultures.
What I find now in the Western world is that business cultures become so rigid and so inflexible and that’s like- I joke and say, business people are so rigid in the way they think, they seem to be able to move data around but they’re not able to compute. It’s like they’re not- like they’re unable- they’re not complete people. If you question the rules, then obviously you don’t know. It’s a strange world of hardcore rules, and the rules get more complex all the time. And they’ mastered that, so they have their position in their dominance hierarchy that- a power based on understanding the way things work. If you’re a creative person ten you can get destroyed by that because they don’t allow you to exist.
And so the question for me, is a healthy society one in which multiple people can be creative and they can succeed and they can exist as being different but also be productive? Like, how many cultures can you have in a country? Is it just the business culture, the way it works? And if you’re not part of it, you get destroyed by it? ‘Cause I’ve seen a hostility coming at me from the business world that’s unexplainable.
Nathan: A hostility, how-
Grant: The hostility, it’s almost like violence to what we’re doing. People would be surprised by it. But within no time, they’re criticising heavily what we’re doing-
Nathan: Like what, what are they saying?
Grant: Well it’s complex, mostly it’s in simple terms- it seems to be very metrics driven. Profit, square forward, gross margins, all these things- all these sort of metrics. But you know in communism systems, they killed tens of millions of people because some dude who was powerfully connected within an office somewhere deciding based on metrics what the farming policy should be and meanwhile on the ground it didn’t work, and thousands of people- millions of people died. And we’ve kind of got the same thing, the finance markets just simplify all these companies down to a bunch of metrics. They increase the complexity of the accounting standards to give them more information, what they think is giving them more information.
What they’re actually doing is destroying the creativity in businesses because everyone’s terrified to make the metrics look bad so they game the metrics. So you see scandals all the time when people get- there’s a scandal. Well, what do you think if you focus on just metrics, people are going to try to hit the metrics but then what they’re doing is gaming the metrics. You force them to do that. So you get a systems failure. That’s what the global financial crisis was, it was a systems failure.
What amazes me is that- they don’t understand but a world where it seemed to be okay to let somebody in the older industry, so to speak, disappear, that the very thing we now need which is new types of creativity, is not able to really able to grow within the structures that we have because they’re quite hostile to people who try to do things in a different way. So while you can get- you see success stories of start-ups who get funding and everything like that. They’re notably very, very compatible with the way people will fund.
Whatever happens if you do something that is not understood. How well would you get funding for something that people can’t understand? You don’t. It simply doesn’t happen. So unless you bootstrap it, and you have enormous fanaticism to get that going and it’s crushed. So what you have is new industries can’t blossom to replace the old industries, so you eventually just get more employed people and more industry support. In the end the government has to step in. You kind of evolve into somewhat complicated mash-up communist thing that doesn’t really kind of work, and just becomes a mess and everyone’s at each other, everyone’s fighting and complaining. Prime Ministers get flipped out every five minutes.
As a fighting based world, that we don’t really feel like we’re part of. But you can see there’s a hostility from that world all the time that’s constantly surrounding us. So how we survive going forward is based on well we can sort of cater to that world. It’s a very confusing strange world that seems to be based a lot of the opposite principles to what we focus on as some of our core principles.
Nathan: Can you tell me- I find it quite interesting the way you see the world, and obviously, you must have some- tell me about the unique principles that your company runs off, Blackmagic Design. Also around the culture around how you- how people do their best work.
Grant: I think that- There’s so many principles
Nathan Chan: Some core ones, if you-
Grant: You know the differences of opinion- I remember I was talking with some MBA guy, I’m not fans of MBA; MBA education is too simplistic and it’s not really very sophisticated. It’s a very pop culture-y kind of thing. Very data driven. Very profit efficiency driven, but that’s all because of the opposite of our customer’s needs. A good example, someone will say- ask a question about your inventory and how many months of inventory, and “Oh, that’s x number of inventory terms a year, that’s really great,” and I’m like, really?
I just found it so strange that someone would think that inventory terms as being a parameter that’s a desirable metric for the business. To me, the level of inventory that I want is just enough to make sure that I can deliver immediately to customers because I have stock, but I’m just running out of some things. If I’m not just running out of some things, I don’t know what the minimum is.
So what I’m looking for is a floor that’s just enough stock but just occasionally running out of product so I know that I know that I’m not overstocked. If I was never running out product, I might be overstocked at some point, not knowing quite where I am. If I’m running out of product a lot, then that means I’m under-stocked. If products and parts, mostly it’s parts because we turn them into product. There’s a point where I’m mostly almost always in stock, sometimes not quite, that’s the right level of inventory.
It’s based on being able to supply a product immediately as customers later on demand. So how quickly can I fulfil what a customer needs, then I get the opportunity sale of actually having a product and someone needs some- a product and they can buy it from me. That to me, is the correct inventory level. That’s more complex than just a “nine terms a year” kind of thing. That’s the world’s- that’s their metrics. That’s the way they work.
So what happens of course, they end up trying to run your inventory terms up so you de-stock. They’ve seen that with our supplies. We have 52 products, a lot of parts, sorry. Our customers want products in real time, they want it today. So we have to manage that and make sure we can build products today. Even when it’s a year lay time on a part. So now they’ve done that because they’ve done two things. One is- when they build their inventory and say well we’ll just wait for customers to order it and they’ve got the best inventory terms because we literally don’t have any.
But then what they also do is, they realise well how am I able to build a factory ’cause it will save money. If then they get the capacity, then they can raise our prices. So we’ll actually make more money by spending no money, but then everyone else just has to suffer the fact that all the parts prices go up and we can’t get enough. And lay time is brought out to 52 or 54 weeks. You get this calamity that actually ends up happening and the customers are treated terribly. But they go, “Oh the metrics look great.”
So this is the difficulty that we have- we’re living in a world where is metrics and here we are trying to be creative and trying to make customers happy. And you see the dysfunction everywhere. You go and sit on a tram or a train and you realise the decisions that have been made- the trains are the same speed that they were a hundred years ago. Why? I mean these trains can go faster. Nobody cares. Nobody actually has sat there and gone, oh we’re going to make a code- they’re just administering it, working out the least they can spend to make the most amount of money.
There’s no pride in what they’re doing. Don’t care. So it’s just the least system they can possibly do. We own the trains- what are you going to do? You’re going to have to use them. They just have to be good enough to be critically not savaged but otherwise we’ll do the least amount we can possibly do. That’s the world we live in. People are pissed about that, they’re getting really sick of it. They’re wanting more but the system is so dysfunctional.
No one’s really at fault; there’s no demon here. Everyone loves to blame- Donald Trump or something like that. It’s the system, it’s the way they work together. The tools we use, the way we interact with each other. We have to become more sophisticated and think deeper abut what we’re actually really doing. Not just trying to pull everything out of the system we can- the least input, and in the end you just get minimal of everything. We’re burning up our past and our history and consuming it up and we’re not building anything. That’s the difficulty, you know?
Nathan: Can you tell me just a little bit about the culture and what you’ve tried to design to really foster creativity within the organisation?
Grant: I think what we try to do is we try to be product-centric not hierarchy based
Nathan: So you guys are pretty flat?
Grant: There are people in different roles but we do- we don’t have any meetings unless we need to work something out. There’s- no one wants to be sitting around boring- and it also wastes people’s time
Nathan: So here’s no work
Grant: We just all wander from group to group and it’s all the campus here. We couldn’t- we didn’t have the ecosystem around us to support us so we’ve created that. There’s a bit of marketing and photography, and translators even, and engineers and PCV guys, and industrial designers, and everything all here in different buildings. We can walk from building to building and interact with the people we need to do. That’s what we do, we spend a costly amount of time meeting around between different groups, walking up to people chatting. And we’re all doing that. So we don’t need to really meet. Sometimes we do, and not very often. It just wastes people time.
Most people don’t want to be in the meeting so just don’t have them unless it’s something to work out. Sometimes you need to get a group together but most of the time- it’s busy- you got a bit of paper and you’re all drawing something or trying to work it out. Get out of people’s way. Make sure that we support them and just let them do things, let them take things to where they might need to go. You hear a lot of people talk about moving decision making in a…so to speak. Well, why do that? There’s a guy at the …, who’s actually working at the …, give him enough information that he needs to let him make the decision, because he knows. Make sure your job is to give him the bigger picture so he understands how his interactions or what he’s doing in effect, is to the rest of the company, and the rest of the group. So then he has more awareness.
I’ve never met anyone that can’t understand- well, some people have got bad intentions but most of the time I’ve met people, everyone understands, people are smart. They’re not- I don’t subscribe to this kind of thing oh, well those people aren’t as smart as those people. If they understand the human language, of some kind, they can understand what you’re telling them. And everyone can work as a group, I think there’s energy in that group. It’s a fundamental thing, and we’ll never get it right. We’re human. And we’ll never get it perfect. It’s just some people who, culturally, will be different, just won’t fit in. We’re big enough now to move people around if they’re not fitting in with some people. Do great occasionally from time to time. You’ve just got to keep trying, at least if you keep trying- You can’t beanbag, you’re just not good yet at something. You’ve just got to keep trying and hope that whatever problems you suffer from you can learn from. And hopefully reduce that… and be a better person in the future.
As I said, my kids, if you’re learning something every day, then tomorrow you’re smarter. If you’re not learning something new every day, then tomorrow you’re just older. I think that, if it’s all fundamentally about learning, we’ll work it out. We’re all a bunch of smart people. We’ll work it out.
Nathan: Awesome. We have to work towards wrapping up, Grant. Couple of last questions. What’s kind of exciting to you that you guys are working on to further- I won’t say the word disrupt, I don’t want to insult you- make a dent, perhaps, in this industry? And where’s the best place people can find out more about yourself and Blackmagic Design and your guys’ work?
Grant: As far as what’s coming out, I think what I’m mostly focused on is- Obviously there’s certain products that we’re working on all the time. I think in many ways the longer term planning is what all we don’t know, what do we need to kind of learn, how we learn it- often we push ourselves a bit on something to learn it. So that’s a long term thing. What’s going to happen in the future? What do we need to be ready for as far as what do we need to know? What things would we like to try that we might never have even assumed we could.
Often people say, oh we should do this product, and I’m like unless it’s really- it can add something to it. There’s no point doing it. I don’t like to make products that just market- battle. I don’t like Coke versus Pepsi sort of stuff. I want to do something interesting.
Nathan: You want the superior, you want the far superior product
Grant: And you do get a lot of people in the company, ah, let’s bash this product. What for? Even if someone’s been nasty to us- it just doesn’t make- what’s the point of that? We don’t want to waste out time with industry gossip-based products. Let’s do something interesting. But you do… sometimes a bunch of ideas and you think, oh actually this would be pretty cool now. Maybe we should do this. But my feeling is, what’s the things we don’t know. That’s really where I’m focused- what is it I don’t know, what do I need to confront myself with, and then learn from it? These are the things that we tend to do.
I think about that with a lot of the staff here. What can we do that’s a step up, that we could try, that we haven’t done before. I think that’s in many ways the thread for the longer term thinking is, what do we need to be in the future. What might we need to be in the future? How do we kind of confront some stuff to learn that now? So we can get to that future. At that point, the products just became things that are possible because of what you’re able to do. It’s the foundation of what you’re able to do, how smart you are in different things, and what kind of team you have, that delivers all the products you want to be able to do.
So the better you are, the better the products will be. That’s the path. That’s what we’re really thinking about in a broader view, this product stuff and technologies. But really, the big, broad vision is like what do we need to be better at? Which is bad; everybody want to see the powerful CEO that walks in with a firm handshake and rides a horse or something and has a giant moustache. I’m not quite sure how it works. My thinking is, what’s the worst of who I am? What’s the baddest, weakest bits, how do I think about that? What’s the bits that are wrong? And you just keep working away at removing that. And that’s what you do when you start. When you start, you start with nothing. So there’s so much stuff to do- be better. I don’t think you can actually do anything great unless you start with failure. You have to start with nothing otherwise you don’t get it. And you don’t know what the problems are to work. I would have hate to have come out of a say- formal business school and you just see everything as a bunch of metrics or something. Much more better, much more gritty to actually- really focus in on the things you don’t know and what you aren’t capable of doing. Then work the hours. I’m glad I never got spoonfed, I’d rather learn all these lessons the hard way. So that’s really, I think, the bigger picture of what I’m always thinking about.
Nathan: Amazing. And, where’s the best place people can find out more about Blackmagic Design?
Grant: Well, you can just sort of Google Blackmagic Design. But we have- obviously a website with a lot of product information on cameras and DaVinci colour correction switches and all kinds of other product lines that do television work. So if you’re interested in toiling…definitely check it out. Or if- we also have DaVinci Resolve which you can actually download for free. We actually have a paid version of the product. We also have a lot of hardware products that work around it. That’s how we make money to run that same- that means you can actually get it for free. So if you’re starting out in television, definitely download it and check it out so you can do editing, colour correction, and audio- now visual effects in it. That’s pretty exciting. So there’s no excuse not to get going, if you- your medium or business of choice is television. Go for it, that’s my feeling.
Nathan: Amazing, thank you so much for your time, Grant. I really appreciate it, mate. Great conversation.
Key Resources From Our Interview With Grant Petty
- Visit the Blackmagic Design website