In 2015, this CEO did something "insane":
He cut his $1.1M salary to $70K and raised EVERY employee's pay to at least $70K.
- Wall Street called him a "socialist"
- Rush Limbaugh said he'll go bankrupt
- Harvard said it was impossible
But what happened next shocked everyone:🧵
Dan Price wasn't some trust fund kid.
He started Gravity Payments in his college dorm room at 19, helping small businesses with credit card processing.
By 2014, the company was doing well - $150M revenue, growing 15% annually.
But Price had a problem...
An employee approached him on a smoke break, clearly frustrated.
When Price asked what was wrong, Haley EXPLODED about how little he was making - just $35,000 a year.
"I began wondering what my friend would have to make so she wouldn't worry about a $200 rent hike," Price said.
Price discovered research by Daniel Kahneman showing:
While income above $75,000 didn't increase daily happiness, people were "decidedly unhappier" the less they earned below that threshold.
That's when he made his radical decision...
April 13, 2015:
With The New York Times and NBC News watching, Price announced he was cutting his $1.1M salary to $70K and raising everyone else's pay to at least $70K over three years.
About 70 employees got raises, with 30 DOUBLING their salaries.
The internet went WILD.
The backlash was immediate and brutal.
- Rush Limbaugh called him a socialist
- Some clients accused him of communist motives
- Two employees quit in protest
- Business "experts" predicted bankruptcy within months
Everyone thought he'd lost his mind.
But something amazing happened instead...
- Revenue started growing at DOUBLE the previous rate
- Customer retention rose from 91% to 95%
- Employee retention hit 91% (industry average: 68%)
- Company processed $10.2B in 2018 vs $3.4B in 2014
The "experts" were wrong.
The human impact was even more powerful:
- 10x more employees bought homes or had kids
- 70% paid down debt
- 401(k) contributions grew 155%
As one employee said: "We're not only just living, we're able to thrive."
Price was lives.
Then came the ultimate test: COVID-19.
Gravity lost 55% of its business in March 2020.
Price thought they had 4 months before bankruptcy.
But here's what happened next...
During an all-hands meeting, 98% of employees VOLUNTEERED to take temporary pay cuts to avoid layoffs.
They surrendered nearly half a million dollars a month from their salaries.
Some offered entire paychecks.
The company not only survived but repaid every penny of lost wages.
By 2021, the results were undeniable.
- Revenue tripled since 2015
- Workforce doubled to 240 employees
- Minimum wage raised to $80,000 by 2022
- Harvard now uses Gravity as a business case study
The "socialist experiment" became a capitalist success story.
The secret wasn't just higher pay - it was loyalty.
"Our turnover rate was cut in half, so when you have employees staying twice as long, their knowledge of how to help customers skyrocketed."
Happy employees = happy customers = higher profits
Simple math the "experts" missed.
As Price put it:
"I've been shouting from the rooftops like, 'This works!' and zero big companies are following suit because the system values having the highest return with the lowest risk."
The business world was too scared to try something different.
The controversial part?
Price's personal story took a dark turn in 2022 when he resigned amid assault allegations (which he denies).
But Gravity continues thriving under new leadership, proving the model works beyond any individual.
Key lessons that shook the business world:
1. Employee investment ≠ lower profits
2. Loyalty beats talent acquisition costs
3. Financial security drives performance
4. Sometimes "socialist" ideas just work
5. Conventional wisdom isn't always wise
Dan Price proved something revolutionary:
You DON'T have to choose between profit and people.
The businesses that get this will dominate the next decade.
Those that don't will keep wondering why their "best practices" keep failing them.
The most powerful takeaway?
Price didn't just change salaries - he changed an entire industry's thinking about human capital.
Sometimes the most "radical" business decision is simply treating people like... people.
And sometimes, that's exactly what makes you rich.
Founders:
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A bit about me:
I'm Ricardo.
Business owner who loves to talk about exciting and inspirational stories.
My goal?
Work with great founders and inspire others to become one.
Follow @Ric_RTP to never miss out on future content on business & success.
Great things ahead.
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