Customer Experience in Digital Video Production

This transcript has been lightly edited for length and clarity.

Tell us about Blackmagic Design

Grant Petty: We're post-production people. We were working in television and I think what shocked us is really how expensive the equipment was and, really, in some ways, how unpolished it was as far as the quality of how things were built. As computers got more powerful and I started to realize that the desktop publishing tools could really pretty much do a lot better job than what some of the dedicated systems we were buying were, I started to think that it seemed wrong. It seemed like we were paying a lot of money for basically the specialist gear when there were actually other ways of potentially doing it.

We originally started at doing a capture card for computers that we could plug in and had SDI connections, which are the really high-quality video connections. Then I guess we got a culture of just sort of fixing problems and the most urgent problem was trying to get the editing systems lower cost. We paid over a million dollars for our visual effects system back in the '90s, so I felt like computers were getting more powerful and we should take advantage of that. Then one thing rolls into another once you get some customers and they start saying, "Oh, look, I've got a monitoring problem," or I've got a problem here or problem there.

Michael Krigsman: When you started the company, the point was to produce quality equipment that reduces the cost at that time?

Grant Petty: Cost wasn't our main driver. Obviously, we knew anything we did would be a lot of cost if we're using the computer. You'd buy this dedicated box and it had all kinds of chips and things in it. You think you're kind of buying a lot of the same power that the computer already has. Now, there's a computer sitting right there. That's got a lot of processing power. We should take advantage of that.

In many ways, anything we did would have been a lot of cost. Really, high quality was what we were focused on. I think that, in the old days, we got a lot of criticism. People in the industry hated what we were doing, the other manufacturers. I didn't know anything about the manufacturer side of the industry and there was a lot of really weird, creepy, made-up stories about us and things like that.

I didn't realize how really poisonous the manufacturing side was. A bit of a boys' club, really. When I say boys' club, it really almost was a boys' club.

I think that's changed a lot now. I just felt like it was almost an exclusive club. I wanted it to be the creativity that really drove people. I think that the people I liked in the industry were really creative and I wanted to find ways of helping them, so empowering creativity was a thing that really became a theme for what we're doing.

It wasn't really low cost, although, we pretty much knew anything we did would be affordable. As we got better at what we do, that's actually become one of the things we can do. Often, we can bring a lower price to things.

I think it wasn't one of the original goals. Quality was more of the original goal. Yeah, the video quality was the original goal.

Is Blackmagic Design democratizing expensive equipment and software?

Grant Petty: Yeah, I think that's very much the case, which is why I think people were a bit confused when we expanded into other product lines or when we acquired DaVinci. DaVinci originally was a color correction system used by Hollywood. They're still used by more than 80% of the feature films, but it was $350,000 for the minimum system up to $850,000, at the time.

You can download it for free for Mac, Windows, and Linux. It's got editing, audio post-production, visual effects, and everything in it now. It's a very different product, but that surprised people when we originally did that.

It really fit in. The theme that we had was a much broader theme than what most people perceived that we were doing. I think you tend to focus on an area when you first start out. You get better at what you do.

Really, you start a company with just absolute failure, right? You're bad at everything. I think, if you're coming from an industry and you're trying to fix that industry, you want to move out of the industry and a technology if you're using technology to do that. You've got to reinvent yourself. But then you come back in and fix the industry with that.

It takes you a while to get the basics right. Then you start to realize you can broaden back to what you're doing. As long as your original theme is right, I don't think how you do what you do and the way that manifests itself in different kinds of products and technologies is almost somewhat independent of that original core goal, which is still the same today.

Empowering creativity is still a thing that we do. I've tweaked it slightly. Now it's empowering creative freedom because I think there are a lot of forces at play to kind of limit people's freedom, even in product design.

Sometimes, the guys will put a limit in the features. You say, "Look, you've got to back this off a bit. Let people make the product go wrong a bit, like, let the color corrector go too far or let the setting on the camera go too far because then people know the limits."

Don't set the limits based on what your impressions of what someone will do. Give people freedom. Let people go too far and then learn where the boundaries are based on what they're trying to do. Sometimes you'll find people will go past a boundary for a reason, creatively, and that's exciting too.

That's the thing, I think, that I really love about it. We're here as a foundation for what people are going to do and to make our customers look good. We're not here to be heroes of the moment. We realize that the people that use our products are actually fantastically creative and that's what we're here to support, so that original theme has always stayed the same.

Tell us about video industry disruption?

Grant Petty: I hate the word "disruption." What are you actually disrupting? Really, what you're talking about is creativity seen in a bad way.

What we're really doing is just creating interesting new ways of doing things by thinking intensely about problems that people are having. That's not really disruptive, so I've never really liked that term.

To me, the biggest problem, I think, in fact, the TV industry had and I didn't realize it was a wider problem the business actually has, people don't really. You think about it; we're humans. We have the ability to create a world in our minds.

That's one thing that makes us unique. We can predict the future in our mind and then plan. Look at someone who builds a building or a road. They've had an incredibly detailed plan in their minds of what they're going to create. Then they just go off and make it a reality.

We're really unique in that way that we can do that. We do different things. Every time we want to create a house, we do a different house. Animals just create the same burrow or whatever they do.

In many ways, we've got the ability to recreate the world in our minds. That's not really disruptive unless you're acting like an animal where you pretty much only care about the resources. I own the pond of the food source, and I've got to fight other animals for it.

I think that the TV industry, in some ways, that's what we found was the case. When you've got equipment that's that expensive, that's only the top of the hierarchy that could afford to buy that equipment. I and my friends couldn't afford to use this gear, so what you get is a situation where it becomes a very much property-based world in an industry that's supposed to be creative.

It's actually supposed to be a creative industry. We're supposed to be making entertainment. The people that were doing that, the people who were really good at that were somewhat constrained by needing to work for the guy that had the hot gear. You had to basically work for those guys.

I think that I found that the TV industry, really, it should be the creative people that are driving the change. If I could make the equipment more affordable, it actually made the equipment relevant, in a way. That sounds bad because I'm supposed to be an equipment manufacturer but, essentially, making it more affordable and, also, combined with that, it's easy to use, obviously, because if it's too complicated then you have to have a giant crew.

We were talking about this before we went on air, the fact that you can have quite a tight crew these days and do really complicated live productions from all around the world. It's a double-sided coin. You can't just make something affordable. You've got to finish the product at a higher level and it's got to be much more complete. It can't be too clunky.

Really, that was the core of what we were trying to do. Essentially, I see the creative world as more of a network of people interacting. The more connections people have between each other, the more things that don't exist can come into existence.

That's really what our job is, right? Our job is to be good at making things that don't exist. It's really easy to look at things that do exist and then that's where the disruption term comes in. It's like, "I'm doing this and now this is disrupting things."

It's like, well, yeah; generally, what I'm trying to do is make the industry bigger. I'm trying to add new things that don't exist in the economy, plug them in, and make a bigger world.

I grew up in, essentially, almost poverty: government housing in a country town and it was a very hierarchical world. The Industrial Revolution wasn't a country thing. It was a city thing. It was an urban thing. I've been able to recreate myself and become more wealthy as an individual because of all this creativity.

I think what's interesting is the business world itself has a problem with the same thing. I'm finding, as we're interacting with the business world, I'm horrified at business culture and really how asset-based it is. Even the accounting standards can't cover the value of intellectual property because they can't value something properly unless you trade it. You can't tell how much an hour of coding time from an engineer could be in one product that fails or it could be in 500 products over a 10-year period and return $0.5 billion. How can you value IP? It becomes quite difficult to do.

I think that the business world had the same problem that the TV industry had. I don't see it as disruption. I see it as, actually, the natural state of humans. People are naturally creative. I think business culture can crush that out of people and turn people into machines.

I think the problem is that the word "disruption" has got a much deeper meaning to it. When you use that term, it's a bad term in some ways because you're actually almost dehumanizing something that's actually supposed to be natural for people.

I guess that's a slightly rambling answer, but it's a good question and I've been asked about it a couple of times. I just realized when I first heard the term "disruption" that I just didn't like the term. It's not really celebrating what's great about being a person, being human, and working with other smart people that, when you get together and do something fantastic that doesn't exist.

Michael Krigsman: Well, I guess, from the point of view of, say, your competitors who previously were making equipment that was so expensive and out of the reach of most people that what you did disrupted their business and their ability to make a profit. I guess, from your standpoint, it's about the expression of creativity in different ways. From their standpoint, it's like, "Who the hell is he?"

Grant Petty: I think that's a really valid point, from their point of view, but I think that if they were really listening to their customers, they would've heard the same things we were hearing. We were the customers, right? I was asking manufacturers that. I asked multiple manufacturers, before we even did a camera, if someone could produce a wider, dynamic range, lower cost camera because we wanted to try and get more color.

When we first acquired DaVinci, color correction was a very niche industry. There weren't many people using it. Yeah, so we bought a lower cost version and then we actually decided to really try and get more people doing color correction. We made a free version. We actually, essentially, made the product free.

There's a reason for that. There's essentially a business model for that, which is opposing the sort of cloud model. The whole point was that we thought, "Look. You've got to change things."

We did this because we just sort of pursued the problems that the customers were having. I don't think that anyone else wouldn't have heard the same things. I guess everyone would have heard the same things. Why didn't they do anything about it? They were in a powerful position to be able to do something about it and they did nothing.

I think that is one of the things. I don't know. It's strange. It's hard for me, in some ways, to talk about other companies because I often just scratch my head and I don't know really how they work. But then you see the way the business world works and you kind of get a feeling of what's probably going on. They might be constrained or trapped in the fact that they're locked into some revenue.

We get people talking about strange things like inventory turns. "How many inventory turns do you got?" It's like, "Well, does it matter?"

How do you define inventory levels by inventory turns? Really, you probably want an inventory level. There's enough inventory to maintain the supply of a product to your customers on demand as they want them, but not so much that you've got any extra components more than what you need for that task.

Really, that would be how you'd define what your inventory levels should be, but inventory turns is a strange metric. We've got components these days that have got over a year lead time. That's because someone in the manufacturer of those components is thinking about inventory turns instead of thinking about how to actually get us components quicker.

That's really what brought communism down, right? You had food cues in stores because people were waiting for food, but I'm sure their supply chain was incredibly efficient: all centrally managed, all well set up, very efficient. But then, of course, efficiency can be the absolute enemy of customer experience.

These are good questions. They're very complex answers, in some ways, but I always try to come down on the side of what's best for the customer because that's who I used to be. At 3:00 in the morning when something is going wrong, what's the customer going to do about it? I think that's just what drives me.

I don't tend to think about it, like, I don't look at other company's websites. I don't go to their tradeshow booths. I'm just not that interested in other companies in the industry. I'm always just trying to focus on our customer and make our customers happy.

Our joke is that we're trying to blow our customers' minds and that's hard to do because you've got to keep getting better at what you do. Otherwise, you won't impress them. They get used to the things you have and you've got to try and find something else to do that's going to be exciting. That's where I drive all my energy and that's the fun bit.

When you're a kid, did you really care about a 2% market share battle with Coke versus Pepsi? Nobody did. You thought about cool things you wanted to make.

I think, to me, it's healthy, in a mental way, to just not even care about who you compete with and just focus on what you want to do. I reckon, when you're old and you're sitting in that rocking chair, if you're lucky to get old and sit in a rocking chair, you're going to look back and think about all the cool things you made and the amazing adventures you had with all the cool people that you got a chance to work with. I don't think 1% or 2% market share battles are going to be really that exciting to reminisce about.

Michael Krigsman: One of the things I think that is exciting to think about is the fact that we are doing now a live stream. You're in Australia. It's 3:00 in the morning. I'm in Boston, a little more reasonable time of day. But we're doing a live stream at professional video quality levels that, not too long ago, we couldn't do this. Maybe give us just a context of that. Again, I know you don't like the term "disruption" but, from my point of view, it's total disruption of how video is produced.

Grant Petty: At a very high level, I think I'm really quite privileged to the fact that I was an engineer in post-production. I think that it meant that I kind of had the right context to start a company. I think a lot of people start a company because they want to be rich and powerful and it's prestigious. I think that sets you down a path of kind of a hierarchical way of looking at things.

Really, everyone is below you and you're trying to shove as many people in below you as possible to make you feel good. I reckon it's the wrong context.

I think a better way to start a business is to go, "Oh, here's a problem. Maybe I can solve it."

I think, in post-production, that's really what you spend all your time doing as an engineer. I think I was just lucky that I happened to be an engineer working post-production. It turned out that that was the right attitude to have because I really still do the same thing.

I got trade shows and I talk to people. You chat about things. You see a lot of the same people year after year and get a chance to have a conversation and, half the time, apologizing for the fact that you haven't got a chance to do the thing that you talked about last year. All these great conversations you have and then you kind of just get busy fixing things.

You kind of feel like you're still the engineer in television, still helping the guys in the edit suites and on stage and performing look good. My job is to make other people look good, and I reckon I'm lucky that I've always done that and I'm still doing it. I think that's the right attitude to have that from that is all the product invention and things like that.

Obviously, the way I run the business is quite different. It's a very different way of doing it. I think you've just got to get your own brain in the right spot. If you're really doing a business well, everyone is your boss. You're not really, in any way, others' people's boss.

You do have to sort out when things go wrong and you've got to try and be the guy that can kind of add clarity to things and the bigger picture view to things. Really, when you're doing the job right, everyone is your boss and you have to run around and keep up with everyone.

Also, you want to be the dumbest guy in the company too, right? Everyone else is smarter than you. Then you've got a fantastic group of people around you.

I think that all this stuff that we do is really just the fact that we're naturally trying to help. I just keep thinking of people. People in the TV industry work incredibly hard. I don't think people quite realize it.

They think television is glamorous. It kind of looks glamorous on the outside, but it's not. It's hard work and it's fun. I think the people in it love it. There's something about it.

We were talking about color chip charts and how they look nice. I don't know what it is. I was joking about one of my favorite pictures of the moon landing was the shot where the color chip chart was in the shot.

Now, it's not supposed to be. That's not supposed to be a great photo, right? It's supposed to be used to calibrate the camera. But I'm like, "Ooh, look at the color chip chart." There's just something about them that looks nice.

I think people in the TV industry love that industry, but every industry has probably got people that really love it. It could be jewelry or it could be coffee, whatever it might be.

I think that if you're doing it well, it's because you just love it and you want to bring the thing you love to people. You just want everyone to know how wonderful it is.

It's a complex economy with lots of different industries. Nothing really fits everything. I think all the products we do just come from the fact that we just love it.

Our customers aren't businesspeople. They're creative. We have to find ways of helping them make money and be successful financially so they can actually do it as a job.

It's all caught up in that. It's all a very broad philosophy and, of course, a lot of technology, chips, circuit boards, and code. It's a complex thing, but that's what makes it fun.

I remember when I was a kid. I was a teenager, and I went to the local TV station and did a work experience program. We spent a week at the TV station pretty much just cleaning up and helping out.

One of the engineers was showing me around. It was actually vertical interval test signals, funny enough, which is really obscure, out of date technology. I remember looking at that and thinking, "Wow, this industry is never going to get boring," and still today isn't.

Here we are doing a live stream in the morning, but it's just not a boring industry. I think, if you love an industry, I think you'll find that it's never boring because something about it just gels with you and it becomes, spiritually, part of who you are. That just means that we're out there making as many products as we can to help people in any way we can.

How do you stay connected to your customers?

Grant Petty: You've got all these metrics and data. I think that basically turns people into numbers and it's inhuman. It's dehumanizing. My feeling is, just have conversations. Just hang out with your customers and have conversations with them.

I think people shove technology in the way of things too much. Just have a great conversation.

I was in San Jose a couple of weeks ago. We were walking along the street. We caught up with some customers. They're like, "Hey, do you want to come out for dinner?" I'm like, "Yeah, cool," and we went out and just had dinner.

Just catch up with your customers, hang out with them, and chat. You can reinvent the wheel just by having conversations face-to-face. You take the customer spirit in all those conversations you have.

We love launching products in the U.S. because I think the great thing about U.S. customers is, they just do almost a brain dump of who they are and what they're doing. You take those conversations with you. They're in your mind the whole time.

Every decision you make, you're constantly thinking, "Would that go down well?" I think, just having the spirit of your customers with you and it helps that we were a customer, of course, because you've got the foundation right. You just want to find a way of capturing your customer, and it's not a technology that's going to do it.

These technologies become fads. You just look at the workflows and realize what people are doing.

Like cloud computing. It's just a fancy way of renting software and turning the software business into a property business. Software is supposed to be a really creative business, and so you kind of penalize your customers because the more a customer uses you.

If you think about it, if you're using a piece of software, you're generally using that software to create something. The things you're creating are your intellectual property. Now, if you can't pay that company every month and the software shuts down, you now lose access to all the creative work you've created. Your entire IP, your personal intellectual property base is now inaccessible because you failed to stump up the money every month.

The cloud software thing, the cloud computing is really just a fancy way of saying SQL servers, really, and the offsite processing. The cloud licensing for software, I think, it's just really bad, particularly in this industry because it's a creative industry. Your entire life's work can be now tied up in a bit of software that deactivates or the manufacturer decides to stop supporting that version.

Everyone has got an old computer somewhere that's got old files on it that they can access with an old piece of software. I am worried about the archive of the creative work that's being done in this industry because you might find, in 20 years' time, it's completely inaccessible because the cloud-based software is all shut down.

I always worry a lot about fad technologies. Because we're Davinci and we're high end, we often have to do everything. You've got to do VR. You've got to do 3D. You've got to do all these technologies. You just have to. You've got no choice.

Your customers are doing it; you've got to do it. Whether you really think it's going to set the world on fire or whether you think it's going to be a bit of a niche technology, we really just have to do them all. We've got no choice.

I do think that people obsess too much about technology. Really, you kind of look at the broader picture and go, "What are people actually trying to do? What are their actual problems?"

Make sure you just have lots of conversations and capture people's spirits. Carry them around with you and make sure every decision you make is compatible with that customer-centric point of view because you can't take your customers for granted. They're the ones that have given you everything. They've given you life, so you've got to make sure that all your success will be built on doing better things for those customers.

I think there are too many people now that try to manage customers or manipulate them into positions that they're not probably in their best interest. I just don't think that's going to hold up well in the modern world. People are wiser. They know that these things aren't quite right. They'll go along with it for a while and then sort of reality it's not great.

I think it's a bit of a philosophy thing and probably not quite the right way to answer that question, but I just have some strong feeling about really how people make decisions and where technologies really fit in the bigger picture.

How do you make investment choices when developing new products and features?

Grant Petty: In many ways, what we're actually really doing here is a knowledge competition. We're trying to know more than what we did. We're trying to push ourselves, and it's a competition not with others but with ourselves.

Really, what do we not know? Well, let's push ourselves to find out. Where are those boundaries?

Often you get people inside going, "Oh, this went wrong," or, "That went wrong." It's like, "Yeah, but we didn't know that that was going to happen." This is normal. It's actually normal. I'd be really worried if nothing was going wrong or we weren't finding a system breaking because we were trying to do this.

Like I was saying; I was up twice this week until 3:00 in the morning. I was rewriting some software that had all those components because some products that we're doing have got different profiles than the software was originally written for. The software has got quite old and it's complex. You just rip into the problem, solve it, and learn things.

To get onto that point about specifics to do with what actual products we do or what we invest in, again, it really comes back to the kind of customers. What are they really struggling with?

If you look at the original pocket camera we did, that did certain things. We wanted to do a better one, but it took a few years to get our knowledge levels right. We didn't want to make it out of metal. The new Pocket Cinema Camera 4K uses a kind of carbon fiber polycarbonate material. We needed, basically, to be better at what we were doing to really reinvent that product line to get it better.

There are products I've had to wait ten years to be able to do because you think, "Oh, it'd be really good if you could do this." Sometimes, you wonder whether someone else will do it. Then you realize one day it's actually you doing it. I think, if you're just constantly thinking in terms of how to be smarter, what things don't you need, and trying to hunt down those things, then you kind of focus on the problems the customers are having.

We would never have done cameras if we hadn't bought DaVinci Resolve, but we needed cameras that had a wide, dynamic range because, with the video camera, the black is all kind of there and the white part of the image is all there. There is nothing really above the white. There's nothing really below the black. If you want to make the image look more like a feature film, you really can't do it. There's nothing there.

We needed something with a wide, dynamic range, which means it had detail below the black level and detail above the white level so you could pull it around, manipulate it, and make it basically look like a feature film. That's really the thing that kind of got us going in cameras. Our early cameras were really pretty much just that.

As they've evolved, we've interlaid more conventional camera features. Now we've got a whole lot of really high-end digital film camera features in a really affordable product.

It's like an adventure, really. It's almost like going on sort of a long walk and just learning things along the way. Maybe it's like a mine and you're constantly chipping away at the coalface looking for the next lump of value there. The things behind the coalface, you don't know what's there, what's behind it. You could strike gold. What is there?

I think that's kind of the way I treat it. I don't try to do really long-term plans, but I do have long-term views of things we don't know or we're not good at that we need to get better at. It's very broad in some ways. Then suddenly you realize one day, "Oh, God. We could actually do this," and it all suddenly comes together and condenses into a product pretty quickly.

I think, also, we have our own manufacturing, so we don't have a huge crisis if a product doesn't sell. We can try things because of that. If it sells, it sells. If it doesn't, it doesn't. If it doesn't sell very well, we don't make many. It gives us an ability and we learn from that.

Our original studio cameras, for example, we did a studio camera. The high-end guys knew exactly what it was. They wanted a different lens mount, but they knew exactly what it was. The low-end guys that we did it for didn't know what talkback, tally, camera control, and all these things were. They just didn't know what they were, so it took a long time for those customers to learn that.

We changed the marketing a bit. We took out some stuff that the camera didn't need. Cut it down in price a bit. Now, that camera sells okay.

Originally, you could say it was almost a failure, but then it got better over time. Now, over the lifespan of the product, it's done well.

I think that everything is an adventure. You shouldn't get too stressed about any specific thing because, ultimately, really, what you're going to do is learn from it all. I think then people feel more comfortable to actually take creative risks with products, which you want. You want people to invent things or come up with things that don't exist, but you don't take any business risks.

On the business side of things, we're extremely conservative. We've got no investment to start the company. We've got a little bit of an overdraft but, for years, we didn't even have that. We just don't have debt. The original shareholders still own all the company, so we really keep it extremely conservative on the business side so that we can actually be a bit more adventurous on the product side.

It's quite a large, overriding kind of thing. It's not just the product. It's a much broader kind of thing you've got to deal with. It's an ecosystem, essentially, that you're dealing with. That sort of lets you do the things.

Sorry, it's not a great answer, I suppose, because it was probably a sharper answer about specifics. It is quite a complicated, broad kind of problem when you're making decisions on what products you're going to do. Sometimes it's just driven by the guys in-house who just want to do certain things or take products in certain directions and you've really just got to let them do that and support them on it. There are so many different angles that define how a product evolves.

Is there a link between customer experience and employee experience?

Grant Petty: When you think about it, the company itself has got a lot of specialists, like we've got engineers, hardware and software engineers. They really have never worked in television before. But you've also got product managers like if you look at our production switches. The product manager is a guy who is a live production switcher guy. I haven't used the right job title, but he does live switching, and so you've really got to have a balance.

There is a respect there because he'll have respect for the engineering guys because they're gifted when it comes to software, hardware engineering, industrial design. You've got thermal guys. You've got all kinds of people, AMC, specialists for testing, compliance, standards, all these kind of people involved. He's in awe of all these guys but, at the same time, they're in awe of him because he switched the Olympics and things like that.

I think, if you try to do great things then I think everyone respects each other. If you've got a software engineer and a user interface designer, and you're trying to do new things, they both respect each other because the user interface designer looks at the software engineer and goes, "Wow. You actually made my menu work." The software engineer goes, "Wow, that menu looks really cool now that I've got it working. Look how nice it looks."

They both have respect for each other, but you've got to be pushing the edge a little bit. Otherwise, they settle in. You don't want that. I don't think the customers want it either.

What you actually have is, I see an IP business and a creative business as being a network of people. That network is constantly the links are changing. In fact, you have supernodes. It's very much like network theory in computing, so you kind of have supernodes with more connections. In fact, sometimes the more connections you have, the more knowledgeable you can be because you get more flows of knowledge and information coming through. But you've got to be careful not to overload yourself.

Those links include customers. When you go to a tradeshow, all these links are being created to customers and we're all connecting and talking backward and forwards. Really, that's why the hierarchy is so hostile to innovation because people are below you or above you, and it's just not the right way to think.

I think of it as just the fact that we've got all these kinds of links between people and a lot of those people are outside the company. They're inside the company. You just become a giant group of people who are just trying to make the industry better because there's mutual benefit.

We'll do well economically. We'll make money, and that money can be used to build other products and to have more capability. The customers get a chance to grow businesses and support themselves in the industry that they love, so it becomes a very mutually beneficial thing.

You've just got to stop people. You've got to stop the psychopath coming in and trying to turn it into a hierarchy. I think that's always a danger.

Really, in many ways, it's just the fact that we're all just linked to each other. I do think that we have customers in-house. I was a customer. All the product managers were customers. We really have in-house customers, but that's why we spend all the money.

We don't go to trade shows to sell products. You can look at that online. You don't need to find out about our latest camera or DaVinci update at a tradeshow. What you're really doing when you're going to a tradeshow is to have conversations with people, and that's why we do the tradeshows to have these conversations.

It's what we take away from a tradeshow that is more valuable than what, in some ways, the customers do. The people do want to ask you questions, come along, and have a conversation, but we get a lot out of those shows.

You've got to get in front of people. You've just got to get out there, get in front of people, and have great conversations. Metrics don't do it. Really, maintain and make connections to people that you're trying to solve problems for. Again, it's a bit of a broad answer, I suppose, but that's kind of how I see it as how it all works.

How do you measure customer value?

Grant Petty: I think, ultimately, probably the way we all do, which is essentially sales. You do look at the sales numbers and go, this is selling well. That means you're probably delivering some good value. You get a chance to talk to customers and you can see the reaction.

If we launch a product at a tradeshow, you can get the reaction and get a real quick vibe on how the product is being perceived by people. I think that really is the very core of what you're trying to do. You are always trying to think about value. That's why that question before about low cost, it wasn't really the goal.

In some ways, you really are focused on creating value for people. What is that value? Well, can I build something that people can actually make a lot of money off?

In some ways, the most value that I cherish are products that I've bought in the past. You know when you have a product and you use the hell out of it. By the time you're getting ready to replace it, it's so worn out. You look back and you go, "Well, I've really done a lot of stuff with that product." I think that, to me, is a great perception of value.

That's what you'd hope your products do for people. They just work and they work and they work. A few years later, you get the new one because you want the new feature or a nicer industrial design, but you really work that product to death. That to me is great value.

The great thing for us is that our customers really, essentially, are making money from video, right? We can often see that we've got to make their business succeed, so it's a great way of looking at that and going, "Well, the value of this product is really how much they can make from it, as far as income." I'm actually thinking about my customers' businesses more than I am just about what the product features are.

Consumer products and things are much harder because you've got, now, perceived value because the consumer is not trying to make money from it; they're just using it to enjoy it or just having it. Whereas, I think one of the great things for us that makes it easier for us is, is this product going to make money for our customers and will they be able to make a living off of it? If it's got all the features they need, then it is. It's going to do that task.

We had a live production switcher and we put a Fairlight audio mixer in it. It had a compressor, limiter, six-band parametric EQ, and all these kind of audio features because you know, by building it in, you don't have to worry about having a separate audio mixer being carted around because it's built into the switcher. You know that people need to do treatment to their audio, so it's something that will help them out. It'll give a higher professional production value, color correction in the cameras, so you can actually remote control the color.

There are all these things you're thinking about. If I could solve that problem, their production values will go up. The work they do will look better. Their own work will be perceived with more value, so you really are somewhat a value chain and your job is to make other people create value in the work they do as well.

Like making DaVinci free and people can download it now, and you can edit and everything, of course, but the color correction side of it, you can now get sort of digital feature film quality with something you can shoot $1,300. You can shoot on that and color correct that. If you're talented enough, you can color correct it and actually make a feature film quality result. That's highly valuable for that customer to do that.

If they offer that service to their corporate client, for example, they can bring feature film quality to a corporate viewer, which is going to add a huge amount of value for them individually. It's really easy for us to define value in the product because we can actually see what effect and impact it has on our customers creating value for their customers. That's one great thing about building, essentially, products that people use for their businesses. I think it's quite easy to identify what the value in your product is because your customers are creating value for themselves for their clients. You don't need to use metrics for that in that regard because you can just see it.

Michael Krigsman: It's pretty interesting. You define the value and the features in terms of your customers' business model, actually, from what you were saying.

Grant Petty: Yes, exactly, because really that's what they're trying to do. Customers are creative, right? Look at the DaVinci business model for us. It's free and you can edit, color correct, do post-production, and all that stuff. You can download it for free right now. We do have a paid version, which has got some licenses in it, collaboration, and a bunch of high-tech features for lens corrections and really complex stuff that Hollywood use.

The point is, most people come at television from just a general interest point of view, from a creativity point of view. Really, I know they could make a living from it. Say you're 17 or 15 and you're kind of interested in television or you're just sort of interested in it. You're interested in it creatively. You might want to tinker with some tools, find out what you can do, and learn. You can download DaVinci for free and do that.

Now, bizarre enough, if you get good at it and you start to work out that you can do color correction and you can do these tasks, you might get a few people ask, "Oh, can you do my wedding? Can you do this? Can you do that?" Before you know it, you're actually making money.

The point is, I don't think anyone in the TV industry really thinks of themselves as a businessperson. They think of themselves as a creative. But the business will actually help them fund their lifestyle in television.

In fact, that's something I think that millennials are always getting bagged at. Older generations love complaining. It is one of the great things about getting old is you can just complain about everything, but they love complaining about younger generations.

I think one thing I really found that the millennials do very, very well is they've somehow reconciled. The TV industry came along in the '60s and the baby boomers went a bit nuts, but that was a big intellectual property based industry, music and television, that was added onto the economy. It became a large IP in most parts of the economy.

Now, as I said to someone recently, "If you land on the moon, you also have to have Jerry Springer," right? There's the good and the bad of intellectual property based parts of the economy, but I think that what you've seen now with all the social media, the online streaming, and your show is that that's also a large addition to the economy and it's an IP part. It's an intellectual property industry plugged into the economy.

I think millennials are quite good at reconciling the creativity and the need to make money to fund it so I can actually do this for a living. I think Gen X, my generation, tended to sort of extend our adolescence a bit and put back having kids and things like that. I think the younger generation are really good at reconciling both at the same time, which is actually what you want to do. You want to be able to do your creative thing, the thing you love doing and enjoy, but find a way of making some money from it so you can actually sustain it as a life; this is the thing you can actually do. I think that's the trick.

If you look back at DaVinci, hopefully, the customers make money and they, essentially, realize that they're a business. They realize that they're actually making some money. Then they can come along and buy a control panel from us, the color correction, or maybe a camera or something else and, at that point, we get paid.

Really, our goal, our design goal for DaVinci is to find ways of actually getting people to find a way of making money because they're going to be able to download it for free, learn, tinker, try out things, and then, hopefully, we've got to find a way for them to actually earn some money from that. Then they can buy things from us, and that's where we get a return. It's a more healthy business model for us because it forces us to find ways of making people successful.

Now, we're doing that already on the Hollywood side where most of the feature films use DaVinci, so we're already doing that and the postproduction industry worldwide use it. What about new people that are coming in as well? Also, these large facilities need raw talent too. They need new people because they're growing and expanding. The market is much bigger than it used to be. Then it becomes a win/win.

You can see that, every product we do, we're trying to find ways of, how do we help make people successful? Then, hopefully, they'll give us success back, but we can't just demand from people continuously or from the moment that we meet them. We've got to do something for them to help them get going so that we can add new people in the industry.

I've never tried to do Coke versus Pepsi and steal business from other people. What I've tried to do is do new things that didn't exist and add them onto the TV industry itself and make the industry itself bigger. Then you're not really fighting with people.

I don't really want to fight. I want to create stuff. What you really want to do is just find the things you're not good at, make new things, and make an industry bigger. That's what our customers are trying to do as well. Ultimately, the whole thing just gets a lot bigger and there is a lot more business for everyone.

Michael Krigsman: Well, I can tell you, when it comes to DaVinci, that software, I think it's so great. It certainly helps us make better videos.

We're out of time, but just very quickly, before we go, can you tell us very briefly where is Blackmagic Design going and, if you want to share, again, just very briefly because we're pretty much past time here, where video production is going? If you want to give us a sneak peek just between the two of us, not that there's anybody else listening [Laughter]--

Grant Petty: [Laughter]

Michael Krigsman: --of your upcoming products and features, you can do that too.

Grant Petty: Well, it's always hard doing that because we sometimes do get those questions. Look, we sometimes make mistakes and announce things before we've been really ready to do that because you do get that constant conflict, like, "Well, where are you heading with things? I need a heads up because I'm planning. It's a business. I'm planning things."

You try to sometimes announce things, but then you realize one chip goes wrong or something doesn't fit and it's delayed six months. Then everyone is super angry. You kind of go, "I shouldn't have done that." We've literally even had products on a booth that has to be pulled off a booth because, at the very last minute, we realized that some television didn't work properly with the product or whatever.

It's quite unpredictable. I think that's the thing that shocked me. I think, from a TV industry point of view, I haven't realized, on the equipment side of things, how somewhat chaotic it is from the point of view of really how complex it is to get a product to market and how unpredictable it is that some products that we didn't think would take very long took a lot longer. Products that we thought would be really complex were quite quick. It's always quite hard to actually talk about stuff that hasn't been announced yet because you don't quite know really what's going to land and so that's always a difficult thing.

Just in general, I think that there's an overriding thing. I see the company; it's a future direction. Obviously, we've got to interact with the business world more and find ways. Like, we're hidden from the business world, really, in many ways. We can't do that forever. Really, trying to find a way.

The business world just seems so--oh, God. I wouldn't say--superficial. It's really the wrong word. I've seen businesspeople who will not look at anything beyond the accounts of the company and they think they can look at the accounts and understand everything about a business.

IP businesses are generating IP. They're spending a lot of their income actually building an IP base of intellectual property, which then is used to create products.

I think what's interesting is, really, I think that's the area we're mostly focused on is how to interact with that world so that world doesn't destroy us because the TV industry is notorious for companies that have got caught up in the business world and then been just decelerated in a big way from that experience. I think that's a big area to work on.

Obviously, there's tons of various technology and things. We just introduced 8K and some things like that. We're having a lot of fun with that. The reception from those products has been really, really good.

Really, in some ways, you get longer-term things, which are sort of more broad of, like, which things don't we know? What things do we have to be better at? Then you've got much more shorter-term things, which are specific products that come from some longer-term intellectual property based work.

There are really kind of three streams, in a way. There are the general things that we've got to tackle that we don't know. There's various technology that we're working on that will then be able to be used in various other products, which are sort of more short-term, the actual products themselves because, once you've got the IP, you can then create things that you couldn't do before.

I don't know. It's probably a bit of a non-answer. Sorry, it was a bit all over the place. It's been like that.

Michael Krigsman: [Laughter]

Grant Petty: Product development is kind of like that. You're kind of drifting all over the place. Then things sharpen up suddenly and become a product. It's like they condense, essentially, into a product.

Sometimes you don't really know. One minute you're saying, "No, no, we can never do that." Two weeks later, you're like, "Oh, my God. Actually, hang on a second. We can!" Sometimes we surprise ourselves with what we're even able to do.

I've always thought that a healthy culture would be that anyone could come along and say, "Hey, I was thinking about this. What do you think?" Then, suddenly, the whole company changes direction because it's such a good idea, and it doesn't matter who it is. That's a healthy way to be.

It can create changes in direction. You've got no idea what's going to happen. You can come into work and, by the end of the day, you go home and think, "Well, that was an interesting day," and everything is different now. I think that's an exciting company because you don't know what's going to happen in the future because you can see things, opportunities that come up.

Michael Krigsman: Fair enough. We are definitely past the time, out of time, but I just have to tell you. Marc Canter, who was the founder of MacroMind and Macromedia Director and who is Wikipedia page says that he has been called the Godfather of Multimedia asks the question, "Are you aware of Jon Husband and the notion of wirearchy?" I guess he was listening to their hierarchy discussion earlier.

Grant Petty: No, I haven't. I think I've heard the term, but I don't know really what it is. We try to come up with a model, I think, that you can throw everything that's happening in the world at your model and you think, "This sort of works." A good example is left versus right politics. Everyone is at each other.

Particularly outside of the U.S., you get a lot of people going, "Oh, my God, the U.S." It's like, "Yeah, but that's a democracy." Democracies are noisy. Democracies aren't supposed to be neat. They're supposed to be noisy. People are actually debating stuff, they're discussing things, and they don't like each other's answers.

Really, I see left and right of politics, the answers, they both, unfortunately, are right, but they don't actually have the answers individually. They actually perfectly plug together. If they could come together, actually orient themselves right, and come together, they would actually have the answers.

Bizarre enough, the answer is, left and right tend to fight over property. They're fighting over what exists. The answer is to create things that don't.

I think that's the great thing about the Industrial Revolution. The Industrial Revolution wasn't about Draconian factories and stuff. That was the old world money creating those factories.

What I saw was, the Industrial Revolution was about design. Now the craftsman didn't make the product and design it. Someone else manufactured it. That meant that you actually now had a design industry that just cared about product design and the machines would build it. That was a fascinating change.

I think what it meant is that, for the first time, you could create products and elevate yourself out of poverty without taking someone else's land. I didn't have to raise an army and fight the local landlord to get wealthier. I grew up in poverty, so I've been able to create products and actually move up and improve my life. To me, that's a fantastic thing.

It's only been around for a couple of hundred years. This is not a new thing. You have to be quite mature to be able to do that.

I think, to me, the creativity is actually the answer. We've got to all focus on creating new things that don't exist to grow an economy and make the economy bigger. Otherwise, all we have is inflation tricks. We can just devalue money and things like that and just increase the debt pool to try and make it look like we're growing.

That's the problem with GDP growth. It's a symptom metric. We probably should be focused on creative output. What's the gross creative production of an economy? Then you would find the things that would actually cause growth. Whereas, the moment they're focused on the result. You can get growth anyway if you just want to measure how big things are because you can just increase the debt pool or just deflate the money.

I think that, to me, the creativity model seems to work because it doesn't involve people stealing things from each other or fighting each other. We can actually be human versus animals.