What ever happened to that guy who gave all his employees a $70K minimum wage?

You probably remember the story of Dan Price, the owner of Gravity Payments in Seattle. He’s the guy who decided to give everyone working there a raise to $70K and cut his own pay to the same level in an effort to wipe out income inequality. He became an overnight star on the Left and was making the rounds of all the liberal TV shows. Everybody loved him.

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Yeah, that guy. What ever happened to him? (Slate)

Price isn’t backing down about pay going up. Now he’s going all in. He revealed to Inc. that he has sold all his stocks, emptied his retirement accounts, and mortgaged his two properties—including a $1.2 million home with a view of Puget Sound—and poured the $3 million he raised into Gravity. As majority owner, he is not exactly penniless. But if Gravity fails, so does Price. “Most people live paycheck to paycheck,” he says. “So how come I need 10 years of living expenses set aside and you don’t? That doesn’t make any sense. Having to depend on modest pay is not a bad thing. It will help me stay focused.”

And business owners will stay focused on him. The Dan Price Pay Experiment will either be hailed as a stroke of genius showing that entrepreneurs have underpaid their workforces to their companies’ detriment, or as proof positive that Gravity is being run by a well-intentioned fool.

So far – and I’ll confess I was surprised to learn of it – the company is doing okay. They’ve managed a 95% client retention rate after a few customers bailed shortly after the announcement. Revenue and profits are steady, so as a corporate entity it’s looking healthy, at least on paper. But what of Dan Price himself? He’s basically flushed his own net worth into the company and is in debt personally. And there’s a wolf waiting outside the door in the form of his own brother. He’s brought a lawsuit against Dan to try to force him to buy out his share in the company. The legal fees alone, not to mention cashing out big brother’s chips, could be a crippling blow.

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In terms of the normal rules of business, Price is probably attracting the very best candidates possible for any job openings he has. (Who wouldn’t want to work there?) And well paid people tend to be productive people so things seem to be going swimmingly on that level. But what about Dan himself? Did he start the company to be a charitable operation or a for profit business? He probably expected to be pretty comfortable at this point in his life after realizing such success in the business world. But now he’s in the red and facing possible disaster. So what’s the lesson we should take from this? If Dan fails personally then the company will follow and nobody will have a job, right? Whether he prevails or fails, this story will be a case study in business school for decades to come.

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David Strom 6:00 AM | April 25, 2024
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