The boss of a US company radically cut his own salary so that all his employees could live carefree. MeinMMO tells you how things went for the company.
The cover image is an iconic image via Pexels, not Dan Price.
What kind of action was that? Dan Price, the co-founder of a credit card billing company, Gravity Payments, had a radical idea in 2015: Over the next three years, he wanted to increase the salaries of his 120 employees to at least $70,000 per year, the equivalent of about €62,500 at today’s rate.
The minimum wage for all employees increased to $50,000 effective immediately, after which there would be annual raises to reach $70,000.
To implement this measure, Price, who had previously paid himself $1 million, also cut his own salary to $70,000. The aim of the campaign was to offer employees financial security and make them happier.
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Boss was declared a modern-day Robin Hood
This is how things continued for the company: The reaction to Price’s announcement was turbulent: his employees cheered him, and the story also spread quickly on social media. While some celebrated Price as a “modern Robin Hood,” others disparagingly declared him a “socialist.”
However, the daring strategy initially worked: Although two high-ranking employees left the company, Price received thousands of new applications. That included Tammi Kroll, a Yahoo executive who was so inspired by Price that she says she gave up 80-85% of her previous income.
During the year, Gravity boasted an employee retention rate of 91%, well above the industry average of 68%. Customer retention even increased from 91% to 95%. The company also doubled its profits.
For some employees, the raise was life-changing: one was able to have his mother fly to him in Seattle from Puerto Rico, while others were able to start a family.
In 2020, as Gravity suffered from the coronavirus pandemic, employees took pay cuts to avoid layoffs, with some employees later saying the decision was not entirely voluntary. The employees’ salaries were later increased again and they received a refund of the withheld wages.
However, in 2022, Dan Price left the company after charges of sexual assault were brought against him, among other things. The charges were dropped and Price returned to Gravity as CEO in May 2024.
How is the company doing today? In 2024, Price no longer appears to be the “modern Robin Hood” he once became famous as. In interviews in 2022, former employees spoke of a culture of fear due to the boss’s frequent outbursts.
After Gravity suffered a financial setback with Price’s departure, his return in 2024 was described as a strategic move to get the company back on track. However, one employee said, “Gravity as it is right now is no longer for the people… It looks very much like they’re only in it for profit.” (via Seattle Times)
After all, the employees with an annual income of $70,000 were no longer dependent on supposed “hacks”. Because what recently seemed like a cheat for real life to customers of a bank actually turned out to be a scam that is over 100 years old: People thought they had found an “endless money cheat” for real life – but it was just a scam