At 32 years-old, Dan Price had it good. He’d started the credit card processing company, Gravity Payments, with his brother in his college dorm room when he was 19 years old. While there were plenty of lean years by the time he was 30, Gravity Payments was doing just fine. His client base was nationwide and had 120 people working for him. His own salary was $1.1 million a year. Not bad at all.
He started the company after playing in a Christian rock back—Straight Forword—and seeing what was happening to small businesses and the bars his band played in. They were being gouged by the fees they were paying for processing credit cards, as well as being ignored by the companies servicing them. Price figured he could do it for less money and give the customers better service and attention.
The Encounter
One afternoon, a lunchtime encounter an employee changed all that his perspective. Gravity Payments is based in Seattle, Washington, one of the more expensive cities to live in in America. The employee let Price have it over his salary while he was doing all the work in the trenches, and barely able to survive.
It set Dan to thinking. How could he do better? How could he help his employees so they didn’t have to struggle so hard to pay the bills while he was salting away money to protect himself against another crash or recession? In 2012 he’d given everyone a 20% pay raise that was supposed to be a one-time thing, but that still wasn’t enough.
The Announcement
Finally after more pondering, introspection talking with friends and number-crunching he came up with his revolutionary idea—some have called it socialism, radio commentator Rush Limbaugh, among them—he would pay everyone in his company $70,000, and he would cut his own salary to help fund it, taking only $70,000 himself. He made the announcement on April 13, 2015, inviting NBC and the New York Times to the press conference.
There have been some who have tut-tutted what he’s done. There are valid points to many of the concerns people have raised. Price himself acknowledges that this is uncharted territory and he shares many of the concerns people have expressed. (While many people focus on the 70k minimum, that doesn’t mean that everyone at the company is making only $70,000 a year. Some are making more. That’s just the minimum.)
This isn’t the first time he’s done something revolutionary for his people. A couple years earlier, they instituted a policy of unlimited paid vacation for his employees, and actually saw very little increase in the amount of vacation time requested.
The Results
As a business man, and numbers man, Price looks at this as an investment in his people. By giving them a wage that allows them to live with a little less pressure financially in expensive Seattle, he feels they’ll be more effective at their jobs and happier in them as well.
It’s an investment he feels will ultimately pay off. Even his own salary reduction to only $70k is not a permanent thing. As business and profits grow, Price says eventually his own salary will increase again, but the minimum will stay.
Yes, there was some negative backlash as some long-time employees left, feeling they weren’t being treated fairly, given all the time an energy they’d poured into the company that point. But Price’s move seems to be paying off. The company has hired at least 30 new employees since the announcement. They’ve been inundated with tens of thousands of resumes from people wanting to work for them. Some of the new employees have left higher-paying jobs to come work for a company that is trying to be more values-driven in how they conduct business. Employee retention has also increased.
At first some of Gravity’s original clients left, fearing an increase in their rates to cover the pay raise at the company, but Price had crunched the numbers several times, knew he could do it without charging his customers more. But since then, business has boomed, with profits nearly doubling. Just as people are now seeking out Gravity Payments as a company they want to work for, many companies want to work with them to support their efforts.
Price’s example seems to be having an impact on other companies as well. Some have speculated that the notoriously tight-fisted Wal-Mart may have raised pay because of Price’s actions.
Dan Price put a face one of the problems with the current economy, where executives are being showered with bonuses and pay raises in an economy that hasn’t seen an increase in wages in real dollars in a long time. He robbed from himself, and has made himself a modern-day, high-tech Robin Hood.
For all these reasons, we’ve made Dan Price the first entry into the list of Trusted CEOs.