Dan Price on Being Authentic and Providing Opportunities for Your Team

Dan Price, founder and CEO, Gravity Payments

At the beginning of April, Dan Price, founder and CEO of Gravity Payments in Seattle, announced that he was raising the minimum salary at his 120-person payment processing company to $70,000. Most of the money for these raises will come from cutting Dan’s salary from $1 million to $70,000 per year as well. The rest will come out of the $2.2 million the company expects to earn in profit this year.

We sat down with Dan to see what has happened in the last month since his announcement.

Your announcement has been all over the news and social media. It got more coverage than you anticipated. Do you feel a lot of pressure?
I wouldn’t use the word pressure, but I do feel a responsibility to do the best I can for Gravity, as a team and independent businesses that we represent. I feel a responsibility to be open to different ideas and a dialogue. I also have a responsibility to make this pay increase work and to enable the people on my team who really want it to work. 

Let’s talk more about the factors that influenced you to make the decision. 
The (2010 Princeton University) study was part of it. (The study showed that a salary of $75,000 per year is the ideal benchmark for happiness.) But it was also just anecdotal evidence around Seattle. The day that I decided, I went on a hike with a friend who makes $40,000 per year. Her rent was going up and it was going to present a financial hardship fro her. It seemed wrong that someone as hard working and intelligent as her would have a financial hardship over a small rent increase.

Before making the decision, I determined that the team members who would be subjected to the raise actually deserved it. I also knew that the company deserved to have those people, and that our clients deserved to work with them. These factors together helped me make that decision.

What results have you seen so far?
We’re so early, but it definitely gave us an emotional lift. I’m always worried about what’s going to happen on the backside of that lift because usually there’s an S-curve to this type of deal, but the team has been extremely supportive and we’re working as a team really well right now. I don’t think we’ll know the full impact for several months, if not year or two.

We have had new clients approach us because they like what we’re doing and think we’ll be able to serve them better given the team that we have. Most importantly our existing clients have been overwhelmingly positive about it. They were my top concern in making this decision. I thought maybe it would be misconstrued and they might think I wasn’t spending their money wisely, but that hasn’t been the case. Their support has been very meaningful to me.

What would you say to people who say you’re setting the bar too high?
I would tell them to tell their teams that Dan’s first employee was only paid $24,000 per year and has been basically underpaid his entire career with Dan, but that same employee now makes a six-figure income. It’s really more about the opportunities you can provide your team and the long-term trajectory. Don’t focus so much on the pay; focus on the opportunity. As a leader, maybe you could pay somebody more or give them an extra hour of mentorship. The latter will have a greater impact over the long-term. 

What does authenticity in leadership mean to you?
To me part of authenticity is being willing to take a risk for being who you are. Certainly this decision is not without risk. The authentic thing to do was to go through with the decision, even though there was huge temptation every single day to give up on it.

I actually think about a business owner in Nampa named Kevin who owns Flying M. He couldn’t afford to do what I just did, but I know that he would if he could. Part of my responsibility in being authentic was that I could do this, so I had to. Being authentic means you do everything that you can to represent your beliefs. We all have a responsibility to do the best we can with what we have. You only get to live once so you might as well give it your best shot.

What is your philosophy on leadership? Has it changed since you started your company?
I started Gravity Payments with a focus on helping others, and that one simple thing has made all the difference in our success. It’s our moral imperative as leaders to do the best we can for everybody around us, and by taking care of others, in return they’ll take care of you.
 
Another philosophy I believe in is to be the CEO of your own life. That’s one belief every team member at Gravity practices. Sometimes people get confused about what that means. It means we value challenges and struggles, and we don’t want things to come easy. We want to push ourselves to do and be better for ourselves and for our clients. If we do that, we’ll create an existence truly meant to serve others. That’s what makes Gravity Payments unique in the sense we don’t do the things the easy way. You are completely empowered and solely responsible to carve your own path not just at Gravity Payments, but in your own life.
 
What do you think are the most important leadership traits?
One of the most important leadership traits is to be honest and authentic. Be very straightforward with your clients or your team about everything from expectations to realities to limitations. It’s better for everybody involved if you’re up front from the beginning. We’re not the best fit for everyone in every moment, but what we’re looking to build is mutually beneficial relationships both parties can prosper from in the long run.
 
Be a great listener. Ask good questions, take good notes, and be empathetic to your team and your clients. You have two ears and one mouth for a reason.
 
Be open to change. Change is constant. Without change, most of us would be incompetent and irrelevant in a fairly short period of time. At any given moment, you’re never standing still. You’re either moving forward or you're moving backward. Personal learning, growth, and change is an imperative and will absolutely position you to be the best you can be for your team and clients. Never maintain the status quo.
 
Have you learned anything about leadership in the past few months? If so, what?
Going back to my philosophy on leadership, one thing I've learned is that it’s on us as business leaders to do what is right. Among other things, that was a key factor in my decision to raise the minimum wage to $70,000 at Gravity. I had people walk me through how difficult it is to live on an income well above the minimum wage. With rent increases, student loans, bills, and other things you don’t expect in life, it has become increasingly unaffordable to get by. Those things would just eat at me, so I decided of all the social issues, this was one where I could make a difference and better the lives of those around me. I knew it was the right thing to do by my team who consistently sacrifice so much to help our clients. They cancel Friday night dates, stay over at our clients' businesses to make sure their systems are running properly, and take phone calls at all hours of the night for clients in emergencies. I wanted to enable more of that type of activity, but realized the payoff wasn't so great for them. So, I decided to take action. 

Have you been surprised about the negative reactions to your announcement? 
With everything in life, there will be those who disagree with your decisions. I can appreciate that everyone is entitled to their own opinion. I’m more surprised by how many positive reactions we've had. Over 500 million have voiced their opinion through different channels in overwhelming support of this decision, kind words, and many who are hoping to do something similar at their companies. 
 
With this change we’re going to have different challenges, but income inequality is getting bigger and bigger to the point where people are proposing government solutions. It’s a sign of failure that we didn't self-regulate and didn't self-govern. If we step up and take more of these problems seriously, there will be less of a need for government and politics to be involved. I wanted to find a practical solution to solve the problem. I don't care about the credit. Our goal was just to inspire people to create a far-reaching change in the way society thinks about income inequality. I took my bold move and I'm hoping others will realize you can pay a living wage and not only survive, but thrive.