Blackmagic Design founder Grant Petty says he will consider a future listing on the Australian Securities Exchange for his trailblazing digital cinema firm, and has revealed for the first time his father’s decades of alcohol abuse that made him financially conservative in both his personal and business lives.
In a wide-ranging interview with The Australian, Mr Petty – who joined The List of the nation’s 250 richest people last year — also launched a broadside against the local funds management industry, which he said “freaked him out” because of its alleged inability to deal with creative businesses like Blackmagic.
“We might list on the market, but it is not a good time right now and the stockmarket people freak me out. This country is run by 46 dictators who run pension funds. I’ve got to conform my business practices to suit them – otherwise I get sacked. How’s that going to work?” Mr Petty said. He added that he had written the accounting system of Blackmagic – a manufacturer of equipment and software for filmmakers, turning over more than $600m, which he co-founded in a South Melbourne garage in 2001 – to make a potential sharemarket listing process for the firm “more streamlined” and with a more “defined process”.
“That will give us the capability of actually operating in a listed environment much, much better, while also still being creative. So I feel like there’s a solution to reconcile the concerns of being listed – to satisfy shareholders – versus the concerns of actually continuing to innovate and take the customer’s point of view, which is more products and more innovation. And how can you mash those together,” he said.
He added, on the local funds management industry: “Those 46 guys are denying themselves a whole lot of wealth because they don’t know how to deal with creative businesses.”
If the company did list – Blackmagic currently has no external investors outside its founders – Mr Petty said he wanted to make a float “a pitch to mum and dads”.
“Being listed you get the opportunity to make a case to normal people and not have concentrations of power based on wealth,” he said.
“It is probably the eventual end point (of Blackmagic). I don’t think the next two years will be a good time. Covid-19 has made the world more unstable. But I have to find a way of reconciling the business world and our world in a mutually beneficial way. I haven’t quite worked out how to do that. That is the requirement for us to be able to list.”
He said Blackmagic, which is headquartered in Melbourne but has offices in California, Britain, Singapore, Beijing, Tokyo, and Osaka, had generated $4bn over the past two decades for the Australian economy.
“It was just wealth we literally created from thoughts and ideas. We didn’t use any property. We didn’t dig something out of the ground. We just created it from ideas and the Australian government paid for it,” he said, in reference to his attendance at Shepparton’s South Tech and later, Shepparton TAFE in regional Victoria. His family also lived in housing commission communities.
While Blackmagic, he revealed, “easily lost $50m in sales” over the past financial year because of the global component supply shortage, it had doubled down on its investment in engineering.
The firm sacked none of its 1500 member workforce during the pandemic and he said he was “pretty happy compared to what other companies are dealing with right now”.
While there were expectations Blackmagic might reach $750m in revenue in the year to June 30 that has just passed, he said they were “still below” that number.
Instead, he said, the annual revenue to June 30 would be up on 2019-20 when Blackmagic nearly quintupled net profit to $72.7m, off revenue up 38 per cent to $522.6m.
“It is definitely below the previous financial year but above 2020,” he said of the latest result.
It is now corporate folklore that Mr Petty’s parents divorced when he was a teenager and he moved from Pearl Beach in NSW with his mother and brothers to an apartment in a public housing block in Elsternwick, Melbourne.
Given his mother had originally come from the country, they then relocated to a housing commission area in Numurkah near Shepparton and he attended Numurkah High School before moving to Shepparton South Tech.
But Mr Petty, who turned 54 on July 8, now reveals for the first time the painful years that led to his parent’s split.
“You get these horrifying news stories where kids were left in the car out front of the pub. That was our childhood. We lived in the car out the front of the pub waiting for Dad to come out. My mum didn’t have a car so she couldn’t literally even get into town to go get milk or anything like that, because he’d wind up in a pub and he wouldn’t come back for hours,” he said.
But Mr Petty’s father was a complex figure. While highly flawed, he was also intelligent. He was a subscriber to The Economist magazine after moving to Australia from Britain when he was 14.
“It was more than just an alcohol problem. It is almost like a weird lower class thing that somehow permeated. He used to say ‘You don’t realise how much freedom you’ve got in Australia, that you’re not constrained by the same things that you are in Europe.’ And I’m thinking ‘Yeah, but you don’t have to be constrained by those things’,” Mr Petty said.
But his father’s alcoholism meant he spent all the money he earned. The Petty family’s clothes where always second-hand.
“Even the scout uniform I had was given to me by lost and found because we couldn’t afford any other stuff. So my mum was so focused on just literally trying to keep the family running. Dad often wasn’t there,” he said.
He recalls he and his siblings had to get out of bed at 6am each morning when he was young to push his father’s bombed-out Toyota Crown sedan down the driveway to get it started just so he could get to work. Mr Petty now owns a Tesla.
“I now definitely try and make sure I do things at a high quality level – like I’m obsessed with quality. Pushing your dad’s car down the driveway as a kid, that’s a pure quality problem. He hadn’t focused on that issue. He just let it run to the absolute worst state a car could possibly be in, where it almost doesn’t even operate as a car anymore. Yet he was paid well,” he said.
Mr Petty said he was actually relieved when his parents divorced. “As a teenager, I started to get really frustrated with the idiotic antics of him becoming drunk and stuff. Mum and I would sit on the front porch and talk. They had their break-ups and then getting back together before the final break-up,” he said.
“I told my mum, before it happened, to get rid of this guy. He’s an idiot. Mum did get rid of him eventually.”
Then when he was in his 20s, Mr Petty said, his father – who lived in a caravan for a number of years before he moved into a pub in Port Melbourne, where his son would often catch up with him after work in the early days of Blackmagic – would ask him for money.
“I had to get tough,” he said. “Every kid has to set some sort of boundaries.”
His father passed away in 2015 when he was in his early 70s after suffering a stroke. As well as being an alcoholic, he was also a chain smoker.
Growing up, Mr Petty said he will never forget going to four different schools in one year in 1978.
It is one of the reasons he and his wife, Indonesian-born Jessie, decided to have children later in life after he had turned 40. They now have a twin boy and girl, aged 13, and a girl aged 9 who he jokes “runs the house”.
He said he and his wife “killed themselves” to get a four-bedroom home in Melbourne’s bayside Albert Park “because I wanted to make sure that once the kids started school, they could stay at that same school their entire school life”. “I definitely make sure that I’m financially conservative. I’ve seen what it’s like when your parents basically spend every cent they have and everything is running at the absolute lowest level it can,” he said.
“So I’m much more conservative when it comes to business financially. That’s what all the coding I do is. It is basically to manage all the numbers and stuff that go through the business. I don’t actually write codes for the products, I write them for managing the company. Because I am just super, super-concerned that the business itself is quite conservative. I do that in my personal life as well. Because I just worry about pushing things to the edge the way my dad did.”
He stresses he has no chip on his shoulder from growing up in housing commission estates.
“I was an electronics nerd, not too socially aware. I was focused on electronics, the world was what it was. No one told me what to do, there was no predefined path. There is a lot more freedom in a lot of ways,” he said.
“If you had a chip on your shoulder and someone told you you had a chip, that would be the worst thing if you had anger. You are going to cut off any path to mentors … I never got that vibe from my parents. You are just looking to the future and the future is more freedom.”
The year 2021 brought Mr Petty unprecedented fame when he debuted on The List, with his 36 per cent stake in Blackmagic valued at $615m.
While he said fame had given his firm invaluable publicity, he described his fellow tech entrepreneurs on The List as a group of “nerds, weirdos and creatives who have done something different”.
“They have survived the community around them from destroying them. That list is just full of strange people who have just not done what they were supposed to do,” he said.
But he is wary of his and his firm’s presence on the list causing any form of vanity.
He constantly reminds his staff of Apple founder Steve Job’s failed decision for a time to wear a bow tie and suit to conform with corporate norms.
“Business people do spend time thinking about power and thinking about running hierarchies of power. If you are an engineer, that’s not the way you think,” he said.
“I have to make sure we don’t start making decisions based on being on that list. It has to be decisions based on what is best for our five to 10-year future. We need to keep investing in what we are doing.”
He reveals that when he debuted on The List, he actually made fun of being a rich-lister with both his staff and children.
“The guys in the office said ‘Wow you are on the rich list’. I replied ‘It is just amazing, it is really nice to be rich, I can’t wait to try fish’,” he said with a wry smile.
He reveals his wife and children have recently moved to a slightly bigger house in Albert Park “because otherwise we would have had to renovate the old one”.
“I tell my kids all the time, If you are learning something new every day, you get smarter,” he said.
“But if you don’t learn something new, every day you just get older.”
DAMON KITNEY
COLUMNIST