Dan Price’s decision to set a $70,000 minimum salary for his employees seems to be working so far, but a pending lawsuit with his brother and business partner Lucas Price could “ruin” Gravity Payments.
Those are a few tidbits from a new Inc. magazine cover story, which profiles the Seattle entrepreneur who gained worldwide fame and attention after boosting salaries of employees to a minimum of $70,000 in April.
The article, which describes Price as a “hip, 31-year-old entrepreneur with the shoulder-length hair and Brad Pitt looks,” notes that revenue and profit have doubled at the credit card processing company since Price made his salary announcement six months ago. Gravity’s customer retention rate also rose from 91 to 95 percent while the company received 4,500 resumes in the week following the announcement. Two employees have quit, while the company has added people like former Yahoo exec Tammi Kroll who “was so inspired by Price that she quit her job and in September went to work for Gravity at what she insisted would be an 80-85 percent pay cut,” according to Inc.
But the decision has forced Price to sell all his stocks, empty his retirement accounts, and mortgage two properties as he cuts his own salary from $1.1 million to $70,000 over the next three years. In a New York Times article published in July, Price also said he is renting out his house to “make ends meet.”
“Most people live paycheck to paycheck,” Price told Inc. “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.”
The Inc. story also touches on a pending lawsuit between Price and his brother, Lucas, who alleges that the Gravity Payments CEO “improperly used his majority control of the company to pay himself excessive compensation” prior to the change.
The disagreement between the brothers dates back several years, to long before Dan Price made international news with his announcement of Gravity Payments’ new salary structure, according to the timeline laid out in Lucas Price’s complaint.
Inc.’s Paul Keegan describes the lawsuit as “the biggest threat to Price’s company” given the heavy legal costs that Price estimates will reach $1 million by the time the suit is heard this May.
“I will do anything to help Lucas reach his financial goals,” Price told Inc., “as long as it doesn’t lead to price increases to our merchants, decreases in services to them, pay cuts, or other types of cutbacks to our investments in our team.”
