This story appears in the April/May 2022 issue of Forbes Magazine.
All of 2020 and half of 2021, I was working until 2 a.m. every day because I was writing the code that runs the company,” says Grant Petty, CEO and founder of Blackmagic Design.
The 53-year-old billionaire isn’t kidding. He despises outsourcing, so he literally writes all the SQL programs that run internal processes at his 1,500-employee, $576 million (revenue) Melbourne, Australia-based company. He’s also known for starring in hour-long instructional videos for Blackmagic products like the Ursa Mini Pro 12K digital cinema camera. When the pandemic struck, Blackmagic (which manufactures all 209 of its products itself, unheard-of in the hardware business unless your name is Samsung or Sony) needed to share parts among its three factories in Australia, Singapore and Indonesia. Rather than hire someone, or even delegate the task internally, Petty rewrote the workflow software connecting inventory databases.
“People see it as a weakness that I write the code myself,” he says, arguing that, to the contrary, Blackmagic averted the logjam many companies encountered trying to reconfigure their supply chains during Covid because they were dependent on outside consultants and software vendors. “I think we’ve got a huge problem with outsourcing in the Western world.”
If clubbiness, opaque accounting and exorbitant costs epitomize companies in Hollywood’s ecosystem, then Petty and his defiant, do-it-yourself approach make Blackmagic Design a tear-down-the-walls revolutionary. His 21-year-old business is best known for making low-cost professional cinema cameras, electronic switchers and other specialized gear used in television and film production. It also makes free software known as DaVinci Resolve, used for color grading, special effects and to edit video and audio.
Blackmagic’s products are behind some big-budget, Oscar-nominated flicks such as Don’t Look Up and Spider-Man: No Way Home, but its primary customers are YouTubers and budget-conscious independent filmmakers. Over the past couple years, that market exploded as lockdowns caused a surge in demand for professional-quality home equipment.
Backlot Magic: Scores of films use Blackmagic’s inexpensive gear and software, including the Oscar-nominated ‘Power of the Dog’ and ‘SpiderMan: No Way Home.’
POWER OF THE DOG/KRISTY GRIFFIN/NETFLIX/EVERETT COLLECTION; SPIDER-MAN: NO WAY HOME/SONY PICTURES/MARVEL ENTERTAINMENT/EVERETT COLLECTION
“I must have recommended their systems to hundreds of drum teachers during the pandemic,” says Jim Toscano, a New York City drumming instructor who uses Blackmagic’s $1,300 ATEM Mini Extreme switcher, connected to seven video cameras trained on his drum kit, to teach students in real time. “Musicians were floundering and looking to do online teaching.”
In 2020, film school dropout Julian Terry, 31, used his Blackmagic camera to shoot Don’t Peek, a six-minute horror film set in his L.A. bedroom. Some 4.5 million YouTube views later, he has been hired to direct a $10 million feature based on his short. “The Blackmagic Pocket 4k that I shot Don’t Peek with was cheaper than my iPhone,” he says.
Other big buyers during the pandemic, according to Petty, were television networks looking to equip their work-from-home staffers.
For the year ending June 30, 2021, Blackmagic’s revenue nearly doubled from 2019, to $576 million, and its profits grew tenfold, to $113 million. Given its rapid growth and today’s heady tech valuations, debt-free Blackmagic could fetch $3 billion as a public company, making Petty and cofounder Doug Clarke, who each own 36%, billionaires on paper.
“Valuations are crazy. We haven’t done any acquisitions for a couple years because everyone’s gone nuts,” snorts Petty in a thick Aussie accent. “We all know that the tech business is mostly a con game. You live a nice lifestyle as a tech mogul while you’re going for rounds of funding until the whole thing gets dumped on the stock market and you can sell out. Then you run around with a business card that says ‘serial entrepreneur.’”
Petty developed his outsize shoulder chip growing up poor in rural Australia after his father, an engineer, split from his mother, an artist and nurse, and the family moved into public housing.
“I remember being told to ‘F off back to the housing commission where you belong,’” Petty says of his middle-school years, when he taught himself to code on an Apple II. “But I had an obsession with electronics, so I was sitting at the bottom of the hierarchy thinking, hey, nobody knows this stuff.”
“Cloud licensors are like slumlords. You have to keep buying from me and the more you’re loyal, the more you’ll get penalized. It’s like your dog does something nice and you beat it with a stick.”
After earning a certificate in electronics from a technical college in 1991, he wound up working in Singapore at a TV postproduction house where he maintained pricey A/V equipment that his employer needed to rent for $1,000 an hour.
“I realized the class system I saw in my country town also happened in the TV industry. It wasn’t really a creative industry,’’ says Petty, noting how prohibitively expensive and exclusive the business was. Determined to build affordable equipment, he initially focused on capture cards that would allow TV creatives and filmmakers to transfer video onto personal computers for editing, rather than using bespoke machines costing hundreds of thousands of dollars.
In 2001, Petty and software engineer Clarke founded Blackmagic. Less than two years later they introduced DeckLink, a $995 Mac-compatible card that could process uncompressed high-definition video. Their closest competitor was charging around $10,000.
Petty didn’t stop at video capture cards. In 2009 Blackmagic purchased the assets of daVinci Systems, an ailing developer of color-grading hardware and software that it sold to Hollywood postproduction houses at prices ranging from $350,000 to $850,000 per unit. “We felt we could potentially make it a software product and bring it to the Mac platform where the creative people could use it,” Petty says. “When you go after people who are hungry and make those people more powerful, you realize the fundamental thing you are offering is freedom.”
A year later he delivered on his promise. He brought out a software-only product (now called DaVinci Resolve) priced at just $995. After another year, he made it a free download.
“Cloud licensors are like slumlords,” he gripes, referring to competitors Adobe and Avid. “You have to keep buying from me and the more you’re loyal, the more you’ll get penalized. It’s like your dog does something nice and you beat it with a stick.”
Despite the fact that Blackmagic’s software is now free, converting professional video editors accustomed to other legacy programs is a slow process. While DaVinci Resolve dominates in color correction, it is far behind Adobe’s Premiere Pro and Avid in video editing. Its digital cinema cameras, whose prices start as low as $1,000 and go to $6,000, may have a better chance of gaining share against industry leaders such as Arri, Sony and Red, whose gear can cost upward of $95,000.
“Arri’s Alexa is kind of the gold standard, and there is a general snobbiness about them,” says cinematographer John Brawley from the Miami set of Bad Monkey, an Apple TV+ series starring Vince Vaughn. Brawley is shooting on an Arri Alexa Mini LF, which costs $60,000, along with Blackmagic’s most expensive 12K camera, which retails for $6,000. “I would bring [Blackmagic cameras] out, and often there would be grumbling and eye-rolling from the crew. But by the end of the show half of them are buying their own cameras. Blackmagic gives me 90% of an Alexa for 10% of the price.”
Cost savings are a big advantage as filmmakers increasingly use visual effects in their movies. Listen to Sam Nicholson, an Emmy-winning visual effects supervisor known for his work on The Walking Dead, ER and Star Trek. His firm, Stargate Studios, is using Blackmagic cameras to film ocean backdrops for HBO Max’s pirate comedy Our Flag Means Death, starring Rhys Darby and Taika Waititi.
“If you’re going to put nine cameras on a rig, you must have at least ten cameras on location. If those cameras are Alexas, you’re talking about $500,000. The studio is not gonna pay,” says Nicholson, noting that Our Flag’s turquoise ocean scenes were shot in Puerto Rico, color-corrected on set using DaVinci Resolve software and streamed at 20k resolution on a 160-foot-wide LED screen surrounding the actors during filming on a soundstage in Burbank, California.
“How do you effectively virtualize reality?” he asks. “It takes a lot of cameras and a lot of data. Blackmagic and its entire ecosystem solve a lot of those problems.”