Gravity Payments

Gravity Payments, Inc.
Company typePrivate
FoundedSeattle, Washington, February 2004 (2004-02)
HeadquartersBallard,
Seattle, Washington
,
United States
Key people
Dan Price, co-founder
ProductsCredit card processing
Number of employees
240
Websitewww.gravitypayments.com

Gravity Payments is a credit card processing and financial services company. It was founded in 2004 by Lucas and Dan Price. The company is headquartered in the Ballard neighborhood of Seattle, Washington and employs 240 people.[1] As of November 2021, Dan Price is the only shareholder and the only member of the board of directors.[2]

The company received media attention in 2015 when CEO Dan Price announced that his employees at the Seattle office would receive a minimum salary of $70,000.[3] In September 2019, Price issued an additional increase of $10,000 to all employees in the Boise office, with salaries increasing every year until 2023, when it would reach $70,000.[4] In August 2022, the company's minimum salary was $80,000 per year.[1]

History

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Gravity Payments was co-founded in February 2004 by brothers Lucas and Dan Price. By June 2008, the company was the largest credit card processor in Washington, and the 70th-ranked nationally.[5]

In 2013, Dan increased pay for all employees earning less than $100,000 by 20%,[6] as a response to the lapse of the Middle Class Tax Relief and Job Creation Act of 2012.[7] The company also provides unlimited paid time off to employees.[8] Repeated pay increases resulted in "surprising" productivity jump from 30% to 40%, as did overall company profits. The company faced harsh criticism from Fox News and Rush Limbaugh who said he hoped the company would become "a case study in MBA programs on how socialism does not work, because it's gonna fail".[6]

In April 2015, Dan announced that over the next three years, the company would raise the pay of all employees to at least $70,000 per year, stating this was the minimum needed to secure them from financial hardship when hit by unexpected expenses.[9][10] Price, who previously paid himself a $1 million yearly salary, cut his own salary down to $70,000 to partially cover the increased pay for employees.[3][11] The change lost the company two long-standing employees due to the flat payment structure.[11][12] Price quoted Daniel Kahneman's research on salaries as inspiration.[6]

In October 2015, Dan was sued by Lucas over claims that Dan received excessive compensation and that he had been working against Lucas' interests.[13][14][15] Dan prevailed in the case in July 2016 and was awarded attorney's fees and other expenses incurred from the lawsuit.[16][17][18][19]

The company processed $3.4 billion in payments in 2014 and $10.2 billion in 2018.[17]

In 2015 it had 91% employee retention rate (with industry average of 68%). Customer retention rate increased from 91% to 95% and company profits have doubled.[6]

In 2020, the company was making $4 million per month in revenue but faced a drop of 55% in card processing fees as a result of the COVID-19 pandemic. The company said that employees proposed voluntary pay cuts to preserve employment,[20] although 10 employees later told The Seattle Times that employees were given a choice to take a pay cut or face layoffs, and those who opposed the pay cut felt ostracized.[21] As of August 2020, layoffs had been avoided and workers' salaries had been restored, with the company paying back the salaries lost from the pay cuts.[22]

Dan Price, who had pleaded not guilty to misdemeanor charges of assault and reckless driving in May 2022, resigned as Gravity's CEO on August 17. Tammi Kroll, the company's chief operating officer, replaced him.[1][23] The charges were dismissed in 2023.[24] In May 2024, Price announced that he had returned to Gravity "in a new role advising and assisting the CEO on strategy."[25]

References

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  1. ^ a b c Soper, Taylor (August 17, 2022). "'$70,000 CEO' Dan Price resigns as chief of Gravity Payments after assault allegations". GeekWire. Retrieved August 17, 2022.
  2. ^ Weise, Karen (August 18, 2022). "Social Media Was a C.E.O.'s Bullhorn, and How He Lured Women". The New York Times. Archived from the original on August 18, 2022. Retrieved August 18, 2022.
  3. ^ a b Cohen, Patricia (April 13, 2015). "One Company's New Minimum Wage: $70,000 a Year". The New York Times. Archived from the original on April 14, 2015. Retrieved 2015-01-21.
  4. ^ Hahn, Jason Duaine (November 7, 2019). "CEO Dan Price, Who Surprised Employees with $70K Minimum Salary, Feels 'Relieved and Proud'". People. Archived from the original on November 13, 2019. Retrieved November 20, 2019.
  5. ^ Burton, Lynsi (June 22, 2008). "Credit him with business savvy". Seattle Post-Intelligencer. Hearst Communications. Archived from the original on September 27, 2019. Retrieved April 14, 2021.
  6. ^ a b c d Keegan, Paul (October 21, 2015). "Here's What Really Happened at That Company That Set a $70,000 Minimum Wage". Inc. Archived from the original on 2020-05-29. Retrieved May 19, 2020.
  7. ^ "U.S. to pay for Mastro defense". The Seattle Times. January 5, 2013. Archived from the original on April 14, 2021. Retrieved April 14, 2021.
  8. ^ Volastro, Anthony (February 17, 2004). "Unlimited paid vacation: Too good to be true?". CNBC. Archived from the original on July 2, 2015. Retrieved April 14, 2021.
  9. ^ Stillman, Jessica (March 9, 2020). "Remember That Company With the $70K Minimum Wage? 5 Years On, the Results Suggest More Businesses Should Follow Suit". Inc. Archived from the original on April 13, 2021. Retrieved April 14, 2021.
  10. ^ Hegarty, Stephanie (February 28, 2020). "The boss who put everyone on 70K". BBC News. Archived from the original on April 16, 2021. Retrieved April 14, 2021.
  11. ^ a b Cohen, Patrica (July 31, 2015). "A Company Copes With Backlash Against the Raise That Roared". The New York Times. Archived from the original on August 7, 2015. Retrieved August 20, 2015.
  12. ^ Millward, David (August 2, 2015). "CEO counting cost of £45,000 minimum wage decision". The Daily Telegraph. Archived from the original on August 18, 2015. Retrieved August 20, 2015.
  13. ^ Elkins, Kathleen (December 2, 2015). "The Gravity Payments CEO who raised all his employees' salaries to $70,000 may have been motivated by brother's lawsuit". Business Insider. Archived from the original on October 11, 2019. Retrieved October 11, 2019.
  14. ^ Keegan, Paul (April 6, 2016). "Exclusive: New Developments in Lawsuit Against Gravity Payments Founder Dan Price". Inc. Archived from the original on October 11, 2019. Retrieved October 11, 2019.
  15. ^ Parkhurst, Emily (July 21, 2015). "Brother sues Dan Price, Gravity Payments CEO, after $70,000 minimum wage policy". The Business Journals. American City Business Journals. Archived from the original on November 12, 2020. Retrieved October 11, 2019.
  16. ^ Bishop, Todd (2016-07-08). "Dan Price, the '$70k CEO,' prevails in lawsuit filed by his brother and Gravity Payments co-owner". GeekWire. Archived from the original on July 10, 2016. Retrieved July 21, 2016.
  17. ^ a b Kristof, Nicholas (2019-03-30). "The $70,000-a-Year Minimum Wage". The New York Times. ISSN 0362-4331. Archived from the original on October 9, 2019. Retrieved October 11, 2019.
  18. ^ Keegan, Paul (July 8, 2016). "Gravity Payments' Dan Price Wins Court Battle With His Brother". Inc. Archived from the original on October 11, 2019. Retrieved November 11, 2019.
  19. ^ Reise, Karen (December 1, 2015). Biuso, Emily (ed.). "The CEO Paying Everyone $70,000 Salaries Has Something to Hide". Bloomberg Businessweek. Produced by Emily Engelman and Justin McLean. Archived from the original on October 11, 2019. Retrieved October 11, 2019.
  20. ^ Schlosser, Kurt (March 31, 2020). "Gravity Payments employees volunteer to take pay cut as revenue drops 50% during COVID-19 crisis". GeekWire. Archived from the original on June 18, 2020. Retrieved May 19, 2020.
  21. ^ Rosenblatt, Lauren (December 25, 2022). "Seattle celebrity CEO Dan Price's rise and fall at Gravity Payments". The Seattle Times. Retrieved December 28, 2022.
  22. ^ Sowell, John (August 20, 2020). "He employs 50 Boise workers. They took pay cuts to avoid layoffs. The choice paid off". Idaho Statesman. Archived from the original on April 22, 2021. Retrieved March 8, 2021.
  23. ^ marketing (2023-03-28). "Meet Our CEO Tammi Kroll". Gravity Payments. Retrieved 2024-05-09.
  24. ^ https://twitter.com/DanPriceSeattle/status/1648720224341090304 [bare URL]
  25. ^ Rosenblatt, Lauren (29 May 2024). "Seattle celebrity CEO Dan Price is back nearly 2 years after resigning". The Seattle Times. Retrieved 30 October 2024.
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