Gravity Payments

Gravity Payments is a credit card processing and financial services company. The company was founded in February, 2004 by brothers Lucas and Dan Price. The company is headquartered in the Ballard neighborhood of Seattle, Washington and employs over 100 people.

Gravity Payments
Private
FoundedSeattle, Washington, February 2004 (2004-02)
FounderDan Price, Lucas Price 
HeadquartersBallard,
Seattle, Washington
,
United States
Key people
Dan Price, Co-Founder and CEO
ProductsCredit card processing
Number of employees
100-200
Websitewww.gravitypayments.com

The company received media attention in 2015 when CEO Dan Price announced that all employees would receive a minimum salary of $70,000.[1] 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.[2]

History

Gravity Payments was co-founded in February 2004 by Lucas and Dan Price. [3] By June 2008, the company was the largest credit card processor in Washington, with over 15,000 clients country-wide.[3]

In 2013, Dan Price increased pay for all employees earning less than $100,000 by 2%, as a response to the lapse of the Middle Class Tax Relief and Job Creation Act of 2012.[4] The company also provides unlimited paid time off to employees.[5] 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 multimillionaire Rush Limbaugh who said "socialism does not work, because it's gonna fail".[6]

In April 2015, Dan Price 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.[7][8] 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.[1][9] The change lost the company two long-standing employees due to the flat payment structure.[9][10] Price quoted Daniel Kahneman research on salaries as one of influencing factors.[6]

In October 2015, Dan Price was sued by his brother and co-founder Lucas Price over claims that Dan received excessive compensation and that he had been working against Lucas' interests.[11][12][13] Dan prevailed in the case on July 8, 2016 and was awarded attorney's fees and other expenses incurred from the lawsuit.[14][15][16][17]

The company processed $3.4 billion in payments in 2014 and $10.2 billion in 2018.[18] 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 $4m per month in revenue but faced drop of 55% in card processing fees as result of the COVID-19 pandemics and introduced pay cuts while preserving employment.[19]

References
  1. "One Company's New Minimum Wage: $70,000 a Year". NY Times. 2015-04-13. Retrieved 2015-01-21.
  2. "CEO Dan Price, Who Surprised Employees with $70K Minimum Salary, Feels 'Relieved and Proud'". PEOPLE.com. Retrieved 2019-11-20.
  3. Burton, Lynsi (June 22, 2008). "Credit him with business savvy". Seattle Post-Intelligencer.
  4. Grunbaum, Rani (January 5, 2013). "Seattle company gives 2% raises to make up for pay tax". Seattle Times.
  5. Volastro, Anthony (February 17, 2004). "Unlimited paid vacation: Too good to be true?". CNBC.
  6. Keegan, Paul (2015-10-21). "Here's What Really Happened at That Company That Set a $70,000 Minimum Wage". Inc.com. Retrieved 2020-05-19.
  7. "Remember That Company With the $70K Minimum Wage? 5 Years On, the Results Suggest More Businesses Should Follow Suit". Inc.com. 2020-03-09.
  8. "The boss who put everyone on 70K". BBC News. 2020-02-28.
  9. Cohen, Patrica (2015-07-31). "A Company Copes With Backlash Against the Raise That Roared". The New York Times. Retrieved 2015-08-20.
  10. Millward, David (2015-08-02). "CEO counting cost of £45,000 minimum wage decision". The Daily Telegraph. Retrieved 2015-08-20.
  11. Elkins, Kathleen. "The Gravity Payments CEO who raised all his employees' salaries to $70,000 may have been motivated by brother's lawsuit". Business Insider. Retrieved 2019-10-11.
  12. Keegan, Paul (2016-04-06). "Exclusive: New Developments in Lawsuit Against Gravity Payments Founder Dan Price". Inc.com. Retrieved 2019-10-11.
  13. "Brother sues Dan Price, Gravity Payments CEO, after $70,000 minimum wage policy". www.bizjournals.com. Retrieved 2019-10-11.
  14. Bishop, Todd (2016-07-08). "Dan Price, the '$70k CEO,' prevails in lawsuit filed by his brother and Gravity Payments co-owner". Geekwire. Retrieved 2016-07-21.
  15. Kristof, Nicholas (2019-03-30). "Opinion | The $70,000-a-Year Minimum Wage". The New York Times. ISSN 0362-4331. Retrieved 2019-10-11.
  16. Keegan, Paul (2016-07-08). "Gravity Payments' Dan Price Wins Court Battle With His Brother". Inc.com. Retrieved 2019-10-11.
  17. "Bloomberg - Are you a robot?". www.bloomberg.com. Retrieved 2019-10-11.
  18. Kristof, Nicholas (30 March 2019). "Opinion - The $70,000-a-Year Minimum Wage" – via NYTimes.com.
  19. "Gravity Payments employees volunteer to take pay cut as revenue drops 50% during COVID-19 crisis". GeekWire. 2020-03-31. Retrieved 2020-05-19.
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