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.
In our capitalism-hating society most people don’t understand why the business owner makes the most money.
It’s because he takes on all the risk.
Little libs think it’s unfair for the guy who put his money and heart and soul into the business to make lots more than the employees but the employees have not invested their money, only their time and effort.
This guy might be doing what he thinks is noble but his hard work and fortune will be all for naught in the long run. He will be lucky to get a job with one of his competitors after his business goes under.
I went back to receiving half.
I tried lots of the nice guy management stuff.
I brought a group of the employees in each month and we went over the financial reports. I let them ask questions at the end. Here is how the questions went every month.
“Why are you spending so much on advertising? You could use some of that money to give me a raise.”
Every month.
I gave up after about six months.
Every employee thinks they can run the place better than the GM.
Dan Price - ill will generator
LOL
So don’t read it a second time.
That you might very well subscribe to this socialist approach and post on FR is is your business. But I can’t control what you read on here.
 “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.â€
This is his business plan - assuage misplaced personal guilt.
Sorry. That was my mistake. I was rude to jump on you there.
I didn’t explain my second posting...I was getting the strange characters which I was experimenting with the post by changing them.
Sorry.
That is true. Every time you hear one of these “fair wage” idiots stand up and spout off, it is well to keep in mind that truism that they all know better.
These asshats all think the wealth comes from the hands of the worker, not the person who thought up the whole thing and put their time and money on the line to make it happen.
If the money comes from the hands of the workers, why don’t some of these socialist no-loads begin some businesses on behalf of their fellow man, and give them equal say in how it has been run?
Know why they don’t? Three reasons:
1.) They are full of hot air, afraid to risk their own money (this guy is an extremely rare exception) and lazy to boot.
2.) They don’t have the knowledge or resources
3.) It has been tried, over, and over, and over again, with the same disastrous results, because it simply cannot work with an artificial infusion of capital from the government (what they all really want, but without asking the question “where does government money come from) or from a useful idiot like the owner.
How does this not dis-incentivize the best-and-brightest?
That, sir, is the nut of the issue. This whole farce is contrary to human behavior, and they want to be the social experiment that proves it isn't.
That has always been one of the main reasons capitalism and conservatism appeal to me. I have always felt that in the case of capitalism, it works because it leverages human behavior as it exists, not how we wish it exists.
And I had always assumed conservatism took human nature into account and made allowances for it as part of the ideological guidelines. Liberalism and socialism do not do either of these things, and continually fail. But like some siren song, their ranks of zombies are populated by fresh, ignorant, and starry-eyed recruits to the cause who always think they will be the ones to do it "right".
The way for an owner to grow a business is to cut back on his own personal consumption expenditure and save more, in order to reinvest it back into the business as productive expenditure. The productive expenditure can then be divided between demand for labor and demand for capital goods.
If a business owner does not wish to pay market level money wage rates,then he can use the following steps:
1) Choose a desired rate of profit on capital to aim for.
Then, productive expenditure = (profit - (the product of sales revenues times rate of profit))/rate of profit.
2) Estimate the outlays necessary for increasing the value of assets. This is net investment.
Then, productive expenditure = net investment + prior costs.
3) Adjust 1) and 2) until the productive expenditures are the same.Then, productive expenditure = amount that needs to be saved out of sales revenues.This is savings.
4) Then, sales revenues - savings = personal consumption expenditure. That is what the owner can spend on himself.
5) Estimate the demand for capital goods needed for current operations.Then, productive expenditure - demand for capital goods = demand for labor.This is what is available for payroll of employees.
There’s one big lie that jumps out. He mortgaged a 1.2 million dollar home. His income is $70,000 a year. He doesn’t qualify for a mortgage.
Imagine this guy going on shark tank. That’s all you need to think about.
There was a time I worked at a medical manufactory. I was in a position, the employees entrance, that enabled me to see that the majority of employees were miserable upon arrival at work.
Thinking along the lines of you are what you eat, you reap what you sow and degrees of separation just might not be limited to acquaintances I began to consider the possibility that all those bad vibrations entering the buildings might be leaving the buildings with the heart related end products. So for the sake of people with clogging arteries everywhere I started smiling and offering pleasantries to just about everyone coming to work.
After a week or so there was a marked improvement in the employee's facial arrangement; smiles were showing up by the car load. As Christmas approached I was inundated with tamales and other traditional Christmas spirits I was more familiar with. Unexpected but sincerely appreciated.
I have no proof the changed attitude of the employees made the end product any better but for awhile I had a more positive influence on their attitudes, and I chose to believe, on the company productivity than most of the foremen in the joint.
Money and it's honest application for compensation of an employee's time and skill is a powerful and important part of sustaining a free society but in people's hearts a little sharing of humanity with each other is the energy that binds that society together.
My point being is Socialism, to it's core, denies the human quality. For all the socialist's high faLOOTing airs of concern for equality for their fellow man, woman, animal, mineral and watt expanded for comfort and the unfair distribution of dollars they blame for life's disparities it is important to remember that behind all their intent is an eventual criminal industry.
They should all be encouraged to depart from any society seeking a healthy and productive existence.
An article some weeks ago mentioned that he lost some top employees when he went the “fairness” route originally.
Post 49 - on the money, every word.
As Mark Levin said in “Ameritopia” - that utopians (liberals) mis-apprehend human nature.
Bingo.
He will attract employees who are worth less than 70k and repel employees who are worth more than 70k.
I see. No apology necessary :]
I am getting those characters, too. It makes it hard to read.
As long as he’s using his own money, he can do as he wishes.
And that short term only lasts until the next time they are miserable, which usually doesn't last long.
I'm not sure I'd want to work there. It seems kind of collectivist. It might attract the best, but it will attract chuckleheads, too, and YOU'RE going to have to do their work for them! Plus, if the CEO makes the same as you do, how can you hope to progress with the company?
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