The billionaire slams Australia's obsession with property

The billionaire slams Australia’s obsession with property

“There are many people who actually have good ideas and many people who want to produce. I think what’s depressing is that the business people here are kind of letting it down.”

He targets “insane” accounting standards that favor real estate and mining companies.

“You can’t literally appreciate intellectual property,” he says.

“We have had software since the 1970s. We had computers and software that came into the ecosystem and part of the economy. Rock n roll and TV and radio and all that [were] also IP based companies… people don’t understand, how do you assess these things?

“So if I outsource a code or product to someone and it costs me $1 million, is it worth it? Or if I make $10 million from it, is it worth $10 million? If I use most of this code in another machine, but only spend an extra $100,000 and make $10M on that machine, is it worth $1.1M or $10M? There is simply no way to value intellectual property, and intellectual property has become an important part of our economies.”

The standards follow real estate based companies and as such there are many real estate, retail, agriculture and mining companies.

“So what you actually have now is a whole bunch of people who specialize in regulation and accounting standards running the business.”

Too many people care about looks

Blackmagic Design founder Grant Petty says the Australian business is too short-sighted. Christopher Paulsen

The business in Australia is too short-sighted and class-driven, he says.

“Australia’s economy has fundamental problems. It’s a class system. We have a property-based economy that is obsessed with how people look,” says Mr. Petty from the company’s Melbourne offices.

“I’m just like, wow, that’s amazing. You’ve never built anything like this before [Blackmagic], how would you know? They have just been employed by different companies and know the rules; Knowing the rules doesn’t make you an innovator. That just means you know the rules.

“You know the rules. And if you don’t know the rules like they do, they think you’re unprofessional.

“It’s not really how business should work, maybe that’s how government works, but business doesn’t. Business has to be bold and adventurous, right?”

Mr Petty, 54, who lived on the same Victorian housing commission that Ruslan Kogan called home, admits he “messed up” the unemployment system. After graduating from high school, he immediately applied for unemployment benefits, which were allowed at the time. The cash-funded textbooks and a $78 TAFE enrollment course.

“When you come out of that background and realize that the world you’re in is too fat and too lazy and too slow and too greedy, then you realize what you actually have [the company] is … a very nimble, unrestrained thing,” he says.

Australian taxpayers have had a good return since then, with Blackmagic paying $60 million in income taxes in the last two years alone. The company has more than $3 billion in revenue, with revenue up 47 percent last year to $769 million on net income of $153 million. Mr. Petty is ranked 101st on the Financial Review Rich List with an estimated net worth of $1.38 billion.

Blackmagic technology has been used in films such as men in black and Quickly & furious. His cameras fired Captain Marvel and The Lion King and his production mixers handled sound and visuals for Elton John’s Farewell Yellow Brick Road tour. And there are hordes of YouTubers and social media stars using his gear.

VC and PE ‘Monsters’

Even when outside capital is required, he does everything to keep the “rule followers” out of his company.

“I prefer to be publicly listed where you have a wide range of investors and people who can decide whether they like you or not, then I’d be dealing with a monster,” Mr. Petty says .

Private equity executives “smell nice and wear the right suit” but think its operations are “unprofessional or rough,” while venture capitalists are “monsters” who want to focus on a subscription model.

He’s passionate about keeping his business simple, even if it means paying more taxes. “I know we pay more taxes than we should, the accountants hate it,” he says.

“But if we try to make the company more complicated than it is, then it becomes like a complex system. See space shuttles. They blew up because they were too complicated.

“The trick is to keep the business as simple as possible, even if it means paying an extra $1 million in tax on some R&D thing. Who cares? We can do more than that in one day. So we pay the tax and keep it simple so that the products become our focus and the products are where the really adventurous things happen.”

Hear what it takes to earn a spot on The Australian Financial Review’s Rich Lists in our podcast interview series. How I made it returns for a second season on July 18. Sign in where you podcast, or Apple, Spotify, Google

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