Posted on 11/01/2015 7:00:50 AM PST by SeekAndFind
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.
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.
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.
Rush completely lambasted this guy.
I wanna see how this turns out..!!
this story will be a case study in business school for decades to come.
The moral of the story is never learn any more out of the situation than there is to learn.
Whatever happened to Dan Price?>>>>>>>>>>>>
Bankrupt to be.
Amazing what guilt will do to the wealthy these days.
Corporations need CEOs who have economic stability. Price will not be there for long, he hasn’t the personal economic stability to stay.
I suppose Price could always run for federal office as an Obama Democrat? He should be able to line his pockets that way as a crook rather than as a legitimate business man.
I’m glad he’s doing this to himself.
I think his employees will all band together, take paycuts and donate some money to Dan. I’d be interested to find out what the retention stats are for his company.
If he prevails, this story will be a case study in business schools for decades to come.
If he fails, which is more likely in the long run, this story will be used to bash capitalism and Republicans.
Will his employees squander their net worth to rescue ole Dan?
Dumbass.
RE: Bankrupt to be.
The irony of this is that if this happens, ( and I honestly hope it won’t happen ), every employee will have a salary of ZERO in the end, instead of a minimum $70,000.
This has popped up a few times since a stupid article says that they think the company is doing alright, even though the owner has flushed his own finances into the toilet bowl to prop it up.
It is fine that it is his own money or his family’s money this guy is throwing down that conceptual socialistic rathole. (although, there is an angle that he is throwing away money that should be going to a sibling who doesn’t support this stupid approach)
Here something I see as a problem with this scenario: this guy is using his own money and the future of his company to advance socialistic concepts and the utterly moronic concept of “fairness†in wages. To anyone who thinks that “socialism is only governmentâ€, that is fine. But what of it when someone in government like Obama or virtually every person who is a member of his party uses this flawed “experiment in wage fairness†as “proof†that it is possible to run things this way, and references it to get legislation passed. Is it not part and parcel of that process?
If Bernie Sanders points to this farce as proof that his concepts “work†and convinces enough idiot voters to elect him (this is not a stretch by any means) and he then uses Executive Orders to hammer into place things that will work towards establishing this ridiculous model, is what happens at that company not an integral piece of it?
Anyone who buys into this is fooling themselves if they think it can be workable at a level beyond someone who wants to throw his money into it in order to prop it up. This is the equivalent of Bernie Sanders with a printing press for creating currency.
I believe in paying people what they are worth and treating people with respect, but paying two people the same amount of money when one of them neither has to put forth the same effort to earn it, bear the same burden of responsibility, nor expend the same amount of time, energy, and capital to get qualified enough to get to a point of doing a job is not “fairnessâ€. It is extremely disrespectful and unfair towards one of those two people.
In the twisted, socialistic world of “wage fairnessâ€, a person responsible for quality control on pacemakers to be implanted in the chests of sick people would get paid the same pay as a assembly line worker who dropped out of high school to do drugs and live at his parent’s house. If the assembly line worker doesn’t put a bag of desiccant inside the box before it is taped up, does that carry the same assumed risk as the guy who is responsible for quality control?
Laud this guy for throwing away his own money to try to put his money where his mouth is. But anyone who praises the concept of what he is trying to achieve, can fairly have the term “Useful Idiot†applied to them.
One of the things the supporters never mention when discussing his financials is does the moderate profit increase cover the expense increase in payroll.
Since she had to sell all his assets to keep the company afloat, I’m guessing not.
I meant to include the sarcasm tag.
“this story will be a case study in business school for decades to come.”
I don’t think so.
And his brother.
“”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.””
RE: I don’t think so.
Why not? Everyone can learn from other people’s mistakes.
Sounds like he is doing very well for himself.
I would expect that the only reason this company is holding ground is because he basically liquidated all his personal assets and put them into the business. Once he burns through that it’s likely over. You can’t increase your payroll to such a high percentage of your cost without either charging more or adding a huge number of customers. He’s done neither as far as I can tell.
This will be true right up to those positions which SHOULD pay $70K or more. That's the fallacy here - that merely being at a certain level of income is sufficient.
The secretarial positions would be quite attractive, I'm sure.
I wonder why the article didn't mention retention of his top technical employees. (Unless I missed it)
Not in Business schools but in economics departments, the hotbed of pro-marxist thinking today.
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