Why Gravity Employees Bought Their CEO a $90,000 Tesla
And what you can learn from it.
July 13, 2016, was a very special day for Dan Price, the CEO of Gravity Payments. Because on that day, his employees bought him his dream car — a blue Tesla Model S. It was a surprise gift from his employees.
“Shocked. Disbelief. Gravity employees pitched in and saved up for the past six months and bought me a brand new Tesla. Still in shock,” Dan twitted in the very next day.
But, wait a minute!
Why on earth would the employees of any company buy their boss a $90,000 car? What has Dan Price done for his employees? What’s the story?
What is Gravity Payments, anyway?
Gravity Payments is a Seattle-based credit card processing company co-founded in 2004 by Dan Price and his brother Lucas Price. At that time, Dan was only 20. But he put his heart and soul into the company and worked tremendously hard to grow the business.
In his own words, “Throughout my teens and throughout my twenties, I was working like 16hr, 17hr days building this company.”
And the hard work paid off.
By 2008, Gravity Payments became the largest credit card processor in Washington with over 15,000 clients, making Dan Price a young millionaire.
The employees at Gravity were also getting a standard pay package and other facilities. Moreover, in 2013, Dan increased pay for all employees earning less than $100,000 a year by 20%. Not only that, employees were allowed to have unlimited paid time off.
Everything was going fine until Dan noticed something different.
The incidents that changed Dan’s mindset
One day, Dan went on a hike with one of his friends and found out that his friend was struggling financially despite being an Army veteran and working a full-time job.
When asked, she told Dan that the cost of living in Seattle was getting higher and higher. So she was struggling to meet ends meet with the salary she got.
This conversation struck Dan directly into his heart because his employees at Gravity were getting much lower salaries than his friend. Dan was burning inside and trying to figure out how he could pay his employees more.
Another incident at his office made Dan think about his employees from a whole different angle.
One day, Dan found a McDonald’s training handbook on the desk of an employee named Rosita. Being surprised, Dan asked her the next day about it. Rosita revealed a shocking truth. She burst into tears and confessed that in addition to working at Gravity, she was doing a full-time job at McDonald’s to make ends meet. And she hid that from Dan, fearing that it might cost her job.
Dan listened to Rosita with empathy. Finally, he asked Rosita how much salary raise she needed to quit her second job. When she came up with a number, Dan raised her salary so that she could leave her second job and focus more here at Gravity. Rosita became surprised and forever grateful for this.
That incident was an eye-opener for Dan. He was so shocked, realizing that many of his employees were struggling to maintain a good work-life balance while he was getting over 1 million dollars a year.
Dan decided to end this huge income inequality.
$70K/year to all employees? — Oh, Dan! You are crazy!!!
On April 13, 2015, Dan Price did something unthinkable.
He announced that over the next three years, he would pay each of his employees at least $70K per year. It was a massive minimum wage raise and out of everyone’s wildest dream. More than a third of Gravity employees found their salaries double.
What’s crazier about that was Dan cut his own salary by 94% (from $1,100,000 to only $70,000), listed his houses on Airbnb, and gave up his stocks and savings only to ensure this new minimum wage for his employees.
This news went like wildfire, and the whole world started talking about it. But not all that talks were sweet. Dan had to face some really harsh criticism coming from different directions.
Fox News labeled him as ‘socialist’ saying, it’s gonna fail. Some called him the Lunatic of all lunatics. Many even called Dan’s announcement a publicity stunt.
Talk show host Rush Limbaugh reacted by saying, — “I hope this company is a case study in MBA programs on how socialism does not work because it’s gonna fail.”
The criticism went so out of the roof that Dan’s worried friends told him that he could stay with them if things did not work out.
What’s more surprising is that, just two weeks before Dan’s $70K minimum wage announcement, his brother Lucas filed a lawsuit accusing Dan of violating Lucas’ rights as a minority shareholder of Gravity Payments.
So, what did happen after all of these crazy events?
Then, the magic happened!
Gravity had over 100 employees at that time. But Dan kept his employees ahead of profits by taking this insane risk. And when someone dares to do that, magic happens.
The salary-raise made significant changes in the employees’ life within a short time. Here is what happened —
- Most of the employees paid their debts.
- Many shifted to new homes close to the office.
- Homes bought by the staff increased.
- Babies had by staff grew.
- Employees became enthusiastic, committed, and more efficient.
Dan was happy to see his employees happy. Interestingly, to pay his own bills, Dan downsized his life. He sold his second home and left his millionaire lifestyle only to invest all in his people.
Dan said, “I don’t miss anything about the millionaire lifestyle. Money buys happiness when you climb out of poverty. But going from well-off to very well-off won’t make you happier. Doing what you believe is right will.”
He added, “Most people live paycheck to paycheck. 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.”
What do you think? How many CEOs are ready to do that for their employees? I hope — not many.
It’s time to pay back and say ‘Thank You’
Witnessing the sacrifice Dan made for them, the employees at Gravity Payments wanted to thank him. So, one of the Gravity support team members, Alyssa O’Neal, came up with a brilliant idea.
Alyssa knew that Dan loved Tesla. So she talked to other employees, and eventually, they decided to save up and buy Dan his dream car.
They saved up for the past six months, and on July 13, 2016, they got their blue Tesla Model S from a Tesla dealer in Seattle.
When the car arrived at Gravity, some employees kept Dan busy with meetings. Then Alyssa told Dan that they had a gift for him outside.
Dan came out of the office with all the other employees behind. And then he saw a brand new blue Tesla waiting for him. He was stunned by this huge surprise. He was in utter disbelief.
Dan hugged everyone with tears in his eyes.
There was an appreciation card attached to the car that read —
Dan:
Thank you for always putting the team before yourself. This gift is our way of showing how much your sacrifice means to us.
— The Gravity Payments Team.
If you want, you can see the whole video here. It’s lovely, emotional, and fantastic!
Dan proved all typical CEOs and his critics wrong
Dan took the stress away from his employees’ life by giving them enough money to live a balanced life. Consequently, they became happier than ever before and did their best for the company.
It significantly improved their productivity as well.
In the last six years, the company grew beyond expectations. The client base got doubled, the revenue tripled, the employee turnover rates reduced by half, and the headcount increased by 70%.
Do you know what the employees did during the tough time of the pandemic when Gravity Payments came extremely close to going out of business? 98% of employees took a voluntary pay cut and saved the company. That’s another inspiring story that we will discuss some other day.
And if you are still wondering about the lawsuit by Lucas Price, here you go. On July 8, 2016, a judge ruled that Dan had not breached the contract in question.
Later, in a Facebook post, Dan wrote that his love for his brother is unconditional, and he would never take for granted the valuable role Lucas played in creating the company.
Parting thoughts
Now, let me ask you — what did you learn from this story?
It’s a story about putting people ahead of profits. It’s a story about investing in your people, showing empathy, and spreading love — and it’s a story about what’s possible when you are willing to become a good CEO — not a typical one.
Let’s wrap it up with a tweet from Dan.
On April 23, 2021, after six years of that historic min wage raise, he wrote on Twitter —
“6 years ago today I raised my company’s min wage to $70k. Fox News called me a socialist whose employees would be on bread lines. Since then our revenue tripled, we’re a Harvard Business School case study & our employees had a 10x boom in homes bought. Always invest in people.”
I hope you’ve got your lesson, don’t you?
Thank you for reading.
Sources: Inc., The Seattle Times, The Kelly Clarkson Show, Twitter, Huffington Post, CBS News, Wikipedia, Gravity Payments.
New to Medium?? Unlock thousands of AWESOME stories only for $5/mo. and OUTSHINE others — Click Me.
If you want to read more of my writings, do check out the following articles.
