If you don’t know the story of Dan Price, you haven’t been paying attention. Price, who owns a credit card processing company called Gravity, cut his pay by one million dollars in April 2015 and instituted a minimum annual salary of $70,000 company-wide. Price based the salary on research showing $70,000 is the point at which people truly reach middle class bliss.
Since publicly announcing his plan last year, Price has become both a media darling and devil — celebrated as a business revolutionary, for giving capitalism a soul, and as a self-serving attention-seeker. He’s also currently embroiled in lawsuits with his brother and former business partner.
But during his talk at South by Southwest (SXSW) Interactive, What I Learned from My Million Dollar Pay Cut, Price glossed over the controversy and instead focused on the thoughts and feelings that led him to seek not just a living wage, but a life-building wage for his employees.
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The Timeline: How It All Started
Priced provided a lengthy description of his formative upbringing. How he started a successful high school rock band; how he realized he was better at running the business-end of the band than actually playing bass and singing; and how he most connected with the small business owners and entrepreneurs during the band’s gigs across the U.S.
One coffee shop owner, in particular, who confided in Price about the exorbitant fees she was charged for credit card processing (her business’ fourth largest expense) led him to contact the credit card processor and negotiate a better fee for the coffee shop owner.
The World of Credit Card Processing
That experience led Price to embroil himself in the world of credit card processing. In the mid-2000s he started his own processing company in Seattle, seeking to provide fairer treatment and superior customer service to small business owners.
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But as his company grew, and overcame a multitude of challenges that nearly bankrupted him, Price says he began to lose sight of the original reason he started the company: to help people. “I was proud, arrogant and afraid,” he says. “And how do we act when we’re arrogant and afraid? Most often, irrationally.”
Though he initially wouldn’t admit it, especially to himself, Price says the influence of the prevailing business culture and the fellow CEOs he interacted with led him to believe that his employees should be thankful to him for their meager wages (“market rates,” he justified) and that his exorbitant personal compensation was entirely self-earned.
“Wow, I made all these sacrifices and worked really hard so you could keep your job, and I’m getting beat up over it,” he told an employee who confronted him about the company’s low wages. “I acted like a complete victim,” he says.
The $1,000,000 “Ah ha” Moment
“We should all hike,” Price told the audience as he wound toward the ah-ha moment in which he instituted a $70,000 minimum salary. On a long walk in the outdoors with a close friend who was deeply concerned about a $200 monthly rent increase, Price wondered if his employees felt the same type of daily financial insecurity. Though he’d already been increasing wages by 15 percent per year over the previous three years, he decided on the hike do something previously un-thought of in the traditional business community.
“She was smart, and a hard worker, why was she struggling?” Price wondered, and then continued. “The people that I work with, I say they’re my partners, that I care about them, that they’re helping me fulfill my dream of providing fair and affordable credit card processing. But was I lying? It was a hard and scary question for me that I didn’t know the answer to.”
When he announced the $70,000 minimum salary, Price made the most of what he claims was completely unexpected publicity. He appeared on every major nightly and morning news show, and was the number one news story across aggregation sites globally.
A year into the experiment, Price says Gravity’s vital signs are healthy, and very promising in terms of sustainability and growth. But, he says, the $70,000 minimum wage, more broadly, is about more than just compensating his employees fairly.
“I’m part of a movement in business. Moving away from trying to make every last dollar for yourself and your shareholders,” Price says. “The future of business is about making a difference, making an impact. That’s the shift I want to dedicate my entire career to. It’s a huge wave that’s coming. The message we’re sending is to either convert to this way of thinking, or we’re going to kill you in the market place.”
In his final pitch to the audience, Price calls on the crowd, business owners or not, to not function as automatons to the establishment: “You are an entrepreneur and you are a CEO, you are the CEO of your life,” he says.
"You cannot trust anyone else to be the CEO of your life and career. It has to be you." -@DanPriceSeattle
— GravityPayments (@GravityPymts) March 15, 2016
“You can’t trust anyone to take that position from you. As a CEO you have to be accountable for what you do and what you know. If you know it’s wrong, even if directed by a boss, you cannot do it.”
Price continues, saying, “Be honest: If there’s a hard truth, if you have to tell someone about the realities of their business, you need to be honest about that. I’m pushing in that direction, I’m trying to find that. That’s the thing that gives me the energy and the drive to keep going.”