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Remember the guy who gave his employees a $70,000 starting salary?

Dittohead not!

Dittohead not!

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His name was Dan Price, and his company was "Gravity."

Remember what was said about how foolish he was, how he was a "socialist", how his business would surely fail?

Well, that was six months ago. Now:

The reaction was tsunamic, with 500 million interactions on social media and NBC's video becoming the most shared in network history. Gravity was flooded with stories from ecstatic workers elsewhere who suddenly got raises from converted bosses who tossed them out like Scrooge after his epiphany—even, in one case, at an apparel factory in Vietnam. Price was cheered at the Aspen Ideas Festival and got an offer from The Apprentice reality-show impresario Mark Burnett to be the new Donald Trump on a show called Billion Dollar Startup. Gravity was inundated with résumés—4,500 in the first week alone—including one from a high-powered 52-year-old Yahoo executive named 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. "I spent many years chasing the money," she says. "Now I'm looking for something fun and meaningful."
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But, after all that, he must be going broke, right?

Six months after Price's announcement, Gravity has defied doubters. Revenue is growing at double the previous rate. Profits have also doubled. Gravity did lose a few customers: Some objected to what seemed like a political statement that put pressure on them to raise their own wages; others feared price hikes or service cutbacks. But media reports suggesting that panicked customers were fleeing have proved false. In fact, Gravity's customer retention rate rose from 91 to 95 percent in the second quarter. Only two employees quit—a nonevent. Jason Haley isn't one of them. He is still an employee, and a better paid one.
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Guess not.

Maybe keeping all of the money at the top isn't such a great business plan. What do you think?

source
 
Dittohead not! said:
Maybe keeping all of the money at the top isn't such a great business plan. What do you think?
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Companies, especially American companies, neither staff nor compensate appropriately. In my work environment, it's an utter struggle to the point where it affects the daily work environment. All because our upper management is tone-deaf, change-adverse, tight-fisted pricks who very obviously care more about servicing the short-term investors, than they do any other stakeholder. It's stressful knowing that I and my reports are all underpaid, while I'm forced to ask them to take on the workloads of 2-3 full time positions.

So if "Gravity" was anything like my work environment, then no, not surprising.
 
Dittohead not! said:
His name was Dan Price, and his company was "Gravity."

Remember what was said about how foolish he was, how he was a "socialist", how his business would surely fail?

Well, that was six months ago. Now:



But, after all that, he must be going broke, right?



Guess not.

Maybe keeping all of the money at the top isn't such a great business plan. What do you think?

source
Click to expand...

I read an article about him last week and his future is not too bright right now. His bottom line has gone down to ~1.3% which is so razor thin that he could bankrupt his company if he's not very careful and very lucky, his brother (who is his business partner) is suing him over this, and many of his employees are not happy due to initially lower paid employees getting HUGE raises and the originally higher paid employees not.

I'll see if I can find the article so you can read it. I did notice that all the left leaning pubs like HuffPo and the like, printed sunny and fluffy articles about him and his company that left out the parts about him mortgaging his house and selling his assets to cover his margin and refinance his company to pay for this failed experiment.

EDIT: I think this may be the one I read: A Company Copes With Backlash Against the Raise That Roared This article has many of the points I read in the article I remember reading, but it may be another article from another publication (for some reason, I think it may have been the WSJ, but this one will do for now).
 
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Actually he is practicing the proper trickle down economics.

:mrgreen:
 
Dittohead not! said:
His name was Dan Price, and his company was "Gravity."

Remember what was said about how foolish he was, how he was a "socialist", how his business would surely fail?

Well, that was six months ago. Now:



But, after all that, he must be going broke, right?



Guess not.

Maybe keeping all of the money at the top isn't such a great business plan. What do you think?

source
Click to expand...

There's a furniture company down in Brazil that the employees chose their own hours, salary, and boss. Its been very successful and in business for 20+ years. I think their model they have is a really good one.

Here an article. 4 Reasons You Should Let Your Team Set its Salaries The company is called Semco out of Brazil.
 
Beaudreaux said:
I read an article about him last week and his future is not too bright right now. His bottom line has gone down to ~1.3% which is so razor thin that he could bankrupt his company if he's not very careful and very lucky, his brother (who is his business partner) is suing him over this, and many of his employees are not happy due to initially lower paid employees getting HUGE raises and the originally higher paid employees not.

I'll see if I can find the article so you can read it. I did notice that all the left leaning pubs like HuffPo and the like, printed sunny and fluffy articles about him and his company that left out the parts about him mortgaging his house and selling his assets to cover his margin and refinance his company to pay for this failed experiment.

EDIT: I think this may be the one I read: A Company Copes With Backlash Against the Raise That Roared This article has many of the points I read in the article I remember reading, but it may be another article from another publication (for some reason, I think it may have been the WSJ, but this one will do for now).
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There are actually a lot of articles dating from 3-6 months ago reporting exactly the sort of doom and gloom you describe.
 
Theres so much more to this story. To claim this as a 'success' is beyond ludicrous. The CEO has taken pay cuts, his own work schedule ahs increased from 60 hrs a week to 80 to make the company minimum, he has had to sell off his stock to ensure solvency, and...get this...

"Raises have already kicked in, with the minimum pay hitting $50,000 in the plan's first phase, Inc reported. The average salary at Gravity was $48,000 before the raises, the Times reported earlier this year."

He is facing financial duress and their employees have received a whopping 2,000 pay raise.

But hey...he got a book deal out of the publicity stunt. So, when it all comes crashing down around his ears he will be a progressive hero AND pretty dang wealthy, even though his company will likely be dissolved.

Things Are Finally Looking Up For CEO Who Set $70,000 Minimum Salary
 
Dittohead not! said:
His name was Dan Price, and his company was "Gravity."

Remember what was said about how foolish he was, how he was a "socialist", how his business would surely fail?

Well, that was six months ago. Now:



But, after all that, he must be going broke, right?



Guess not.

Maybe keeping all of the money at the top isn't such a great business plan. What do you think?

source
Click to expand...

From what I understand of the situation I don't think the company is doing especially well. To be honest I think his fairly arbitrary raise for his employees is going to kill his company off, its simply a matter of time. There are several examples of companies accomplishing what he wants to do with great success without getting hurt in the process. I would suggest he look around a little more.
 
Remember the Seattle CEO Who Raised All Salaries to $70K, Here's What Happened Next...

CEO Raises Salaries to $70K for EVERY Employee, Now has to Rent Out his Own Home to Make Ends Meet

Dan Price, 31, tells the New York Times that things have gotten so bad he’s been forced to rent out his house.
“I’m working as hard as I ever worked to make it work,” he told the Times in a video that shows him sitting on a plastic bucket in the garage of his house. “I’m renting out my house right now to try and make ends meet myself.”
The Times article said Price’s decision ended up costing him a few customers and two of his “most valued” employees, who quit after newer employees ended up with bigger salary hikes than older ones.

Grant Moran, 29, also quit, saying the new pay-scale was disconcerting
“Now the people who were just clocking in and out were making the same as me,” he told the paper. “It shackles high performers to less motivated team members.”
The Times said customers who left were dismayed at what Price did, viewing it as a political statement. Others left fearful Gravity would soon hike fees to pay for salary increases.

Brian Canlis, co-owner of a family restaurant, already worried about how to deal with Seattle’s new minimum wage, told Price the pay raise at Gravity “makes it harder for the rest of us.”

Well, maybe it wasn't such a good idea.
 
Personally, I don't think this example teaches us much about the effects of higher pay for workers. First of all, there was way too much publicity around this event and regardless of the results there are those that will point to it and say that it affected the outcome. I think it contributed in tainting the results, regardless of the outcome. Furthermore, raising wages for workers might in most work environments, result in marginally higher productivity as each employee might lean on others they don't feel are pulling their weight and risk costing them all new found pay grade or people who stay late or work off hours motivated again by the respect and appricaition they feel was given to them, but there comes a point in which your employees can't be productive enough relitive to the profits you're business is pulling in.

There are a few problems.

First, that feeling wears off and has to be "refreshed" every so often. There comes a point at which that new salary becomes the norm. The other thing is that pay raises for employees benefit business best when most if not all businesses are doing it.

The whole thing feels like a glorified publicity stunt or a man afflicted with chronic altruism, though I would not claim to know his motives or ailments.

In summation, capitalism runs on sales. Any plan to increase sales significantly better be matched with a plan to increase sales.
 
csbrown28 said:
Personally, I don't think this example teaches us much about the effects of higher pay for workers. First of all, there was way too much publicity around this event and regardless of the results there are those that will point to it and say that it affected the outcome. I think it contributed in tainting the results, regardless of the outcome. Furthermore, raising wages for workers might in most work environments, result in marginally higher productivity as each employee might lean on others they don't feel are pulling their weight and risk costing them all new found pay grade or people who stay late or work off hours motivated again by the respect and appricaition they feel was given to them, but there comes a point in which your employees can't be productive enough relitive to the profits you're business is pulling in.

There are a few problems.

First, that feeling wears off and has to be "refreshed" every so often. There comes a point at which that new salary becomes the norm. The other thing is that pay raises for employees benefit business best when most if not all businesses are doing it.

The whole thing feels like a glorified publicity stunt or a man afflicted with chronic altruism, though I would not claim to know his motives or ailments.

In summation, capitalism runs on sales. Any plan to increase sales significantly better be matched with a plan to increase sales.
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So what you are really saying is.. because you promise the world, doesn't mean you can give it? He paid many of employees good wages for the **** business model he runs (3rd party to transactions). Then he decided to "double" down and lost talented workers. Now is working on razor thin margins.
 
Dittohead not! said:
Maybe keeping all of the money at the top isn't such a great business plan. What do you think?
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If your business plan in not great, Republican capitalism bankrupts you at the hands of someone with a better plan.
 
James972 said:
If your business plan in not great, Republican capitalism bankrupts you at the hands of someone with a better plan.
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Unless, of course, you have enough lobbyists in Washington to get your business subsidized.
 
Dittohead not! said:
Unless, of course, you have enough lobbyists in Washington to get your business subsidized.
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Republican capitalism precludes lobbyists but Democrats support power in Washington which naturally attracts lobbyists. Do you understand?
 
Dittohead not! said:
Unless, of course, you have enough lobbyists in Washington to get your business subsidized.
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if you have lobbyists in Washington you don't have Republican Capitalism, you have liberalism, fascism, socialism, crony fascism. Do you understand?
 
James972 said:
Republican capitalism precludes lobbyists but Democrats support power in Washington which naturally attracts lobbyists. Do you understand?
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James, James! What color is the sky in your world? Republicans don't support lobbyists and power in Washington?

Here in this parallel universe, Republicans are just as much involved in lobbying as Democrats are.
 
Dittohead not! said:
James, James! What color is the sky in your world? Republicans don't support lobbyists and power in Washington?

Here in this parallel universe, Republicans are just as much involved in lobbying as Democrats are.
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conservatives have wanted limited govt since jefferson; liberals the exact opposite. more govt means more lobby. Got it now?
 
James972 said:
conservatives have wanted limited govt since jefferson; liberals the exact opposite. more govt means more lobby. Got it now?
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I do, I do!

You live in a really interesting parallel universe, one in which Republicans are actually in favor of limited government, and therefore don't listen to lobbyists! I'll bet that, in your world, when the Republicans were in charge of government they actually didn't expand it, and all those lobbyists went home. What a fascinating world!
 
James972 said:
conservatives have wanted limited govt since jefferson; liberals the exact opposite. more govt means more lobby. Got it now?
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That was the definition of a Republican. However, actions speak louder than words and I don't believe it's true anymore, nor has it been for quite some time. I've given up the "R" after my name because that is not who they are. Now I'm forced to say "We have a big government. Both sides are making it bigger. Which bigger government better aligns with my views?" -- I became a realist. And I'm independent now. The Republicans have made false promises and have grown our government just as much as the liberals.
 
Anthony60 said:
Remember the Seattle CEO Who Raised All Salaries to $70K, Here's What Happened Next...

CEO Raises Salaries to $70K for EVERY Employee, Now has to Rent Out his Own Home to Make Ends Meet

Dan Price, 31, tells the New York Times that things have gotten so bad he’s been forced to rent out his house.
“I’m working as hard as I ever worked to make it work,” he told the Times in a video that shows him sitting on a plastic bucket in the garage of his house. “I’m renting out my house right now to try and make ends meet myself.”
The Times article said Price’s decision ended up costing him a few customers and two of his “most valued” employees, who quit after newer employees ended up with bigger salary hikes than older ones.

Grant Moran, 29, also quit, saying the new pay-scale was disconcerting
“Now the people who were just clocking in and out were making the same as me,” he told the paper. “It shackles high performers to less motivated team members.”
The Times said customers who left were dismayed at what Price did, viewing it as a political statement. Others left fearful Gravity would soon hike fees to pay for salary increases.

Brian Canlis, co-owner of a family restaurant, already worried about how to deal with Seattle’s new minimum wage, told Price the pay raise at Gravity “makes it harder for the rest of us.”

Well, maybe it wasn't such a good idea.
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Why hasn't anyone noted that this Young Cons rant was published only 4 months after Gravity Payments raised employee salaries - August 1, 2015

A more recent piece on the company has a somewhat different take on the subject
This company raised minimum wage to $70,000 — and it helped business

Some proclaimed Price “The Best Boss in America,” but in protest of the minimum wage policy, some higher paid employees quit, and a few clients dropped the company’s service. Conservative talk show host Rush Limbaugh predicted Price’s downfall.

RUSH LIMBAUGH: This is pure, unadulterated socialism, which has never worked. That’s why I hope this company is a case study in M.B.A. programs on how socialism doesn’t work, because it’s going to fail.
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Turns out, Harvard Business School did study Price for class discussion. It found the 70-thousand dollar minimum wage announcement generated not only a flood of job applicants, but many new clients. And, as for Limbaugh’s prediction about Price’s company?

In fact, Gravity Payments now reports company revenue has grown by 75 percent, and its number of new clients has risen 67 percent.

PROF. MICHAEL WHEELER: Some of their success might be attributed to increased productivity on the part of the workers, who feel respected and understand they are going to have a hard time finding another job that pays so well, but it also has generated a lot of publicity, and that has been good in terms of pulling in business.
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The difficulty in analyzing something like this is it is tough to tell what the root cause for the success of a company is. Is it the pay scale itself that is effective? Is it the publicity? Is it the fact that it likely gathers and retains employees and customers who share similar beliefs? Is it the added motivation knowing they are working for a greater purpose? Is it related to the margin of competitive difference in that particular marketplace? The list of potential confounding variables is long and just because it works in this particular instance doesn't mean it will work all the time or even much of the time.

I can see how the CEO both could have struggled with the transition at the time yet be successful long term with the strategy as organizational changes like that rarely are easy for both the company and its people.
 
The guy did this because research shows that once you hit around $70k, gains on income give diminishing returns on happiness.

Therefore, one of the most important indicators of success would be the happiness of his employees, rather than the performance of the business (although, of course, the business will have to stay afloat in order to provide those wages). Yet nobody is really tracking that?

The entire point of this move was to improve gross happiness, not gross revenue. So why are we still judging things by revenue?
 
Nilly said:
The entire point of this move was to improve gross happiness, not gross revenue. So why are we still judging things by revenue?
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because companies that pay too much go bankrupt at the hands of competitors who don't.
 
Dittohead not! said:
You live in a really interesting parallel universe, one in which Republicans are actually in favor of limited government,
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which is why they proposed 30 Balanced Budget Amendments and Democrats killed every one, why they sign the Pledge and Democrats don't, and why 100% of Republicans voted against Obamacare, and why Republicans will kill Obamacare now that they control govt!! Sorry to rock your world!
 
fredmertzz said:
The Republicans have made false promises and have grown our government just as much as the liberals.
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I can explain it to you. Politicians promise what they want to do, not what they can do in a divided govt that does not support what they want to do. Make sense now?
 
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