On April 28, 2018, Gravity CEO Dan Price spoke at the Conscious Capitalism Conference in Dallas, Texas, where he was interviewed about his views on employee pay and the role of money in business. Conscious Capitalism is a movement designed to elevate the role of business in society by using the mechanisms of capitalism to create prosperity for everyone. To hear Dan’s full interview with Dev Patnaik, the CEO of Silicon Valley-based strategy and innovation firm Jump Associates, click on the audio file or read the complete transcript below.
Dev Patnaik: We’re going to have a conversation now with one of the most interesting people I’ve met in a long time. Dan Price is the CEO and founder of Gravity Payments, which he founded back in 2004 when he was nineteen in his college dorm room. How many of you could start a credit card processing company in your college dorm room? It’s a fascinating thing. And he’s grown that business to be 200 employees, navigated it through the Great Recession, and then he did something in 2015 which was truly amazing. You see, he had a realization that his own folks couldn’t be truly happy, couldn’t get to that place of grace, if they weren’t making enough money. And he looked and he saw that that baseline would be $70,000. So what he did was he raised the minimum wage of his company to be $70,000. And to financially make it work out, he also then lowered his own salary from a million dollars to $70,000. He got printed up in Fast Company and Inc. and all sorts of places, so you can read about it there. He also got called out in conservative talk radio as being a socialist, and we’ll talk about that as well. But I think what’s been really interesting is to watch him grow from there. So if you want to learn more about the $70,000 minimum wage, there are plenty of places where you can read it. What I’d love for us to find out today is a window into the story and into the mind and into the spirit of an entrepreneur who is a Conscious Capitalist. Please welcome Dan Price.
How are you?
Dan: Good. How are you? Thanks for having me here by the way everybody. I really appreciate it. My first time at this conference and I’m definitely excited to be here.
Dev: So, Dan, I have heard you say that Conscious Capitalism is total BS. So, let’s start there.
Dan: I have a friend, and I was going on a jog with her one time. And she’s somebody that I really look up to, a mentor of mine. Her name is Zeynep Ton. She wrote a book called The Good Jobs Strategy, and a lot of the concepts of Conscious Capitalism are in this book, really well represented. And she was explaining, we were talking about the concept, which is, if you treat your employees great and match great people with a great job underneath a very efficient framework, an operational framework, you will get better business results. And so I said, “Well, Zeynep, wouldn’t it be a good idea to treat your employees well and give them a good job regardless of what the business results were? And let’s say that there was a trade-off where you could get worse business results by treating your team better, wouldn’t it be worth it to do that?” And she said, “Well, no, that’s socialism.” And she said, “You’re not really allowed to do that. The point of business has to be to make more money.” And it’s not that she actually necessarily believed that, but she felt like this label of “socialist” was such a tarnish and so easily applied to so many different people to disrupt what they’re doing and basically push them into the closet.
And I think that the whole idea, part of the idea of Conscious Capitalism as I understand it—I love the conscious part; I’m not so sure about the capitalism part. Because my understanding from hearing about the founding of Conscious Capitalism was it was partly to try to rebrand corporate America. And if you look at the past year, where 87 percent of new wealth created went to the top 1 percent…look folks, we already have enough capitalism. We don’t need an organization to go out there and promote capitalism. And I’ve yet to hear from one person explain to me in a way that I can follow how more capitalism and more kind of unbridled greed and self-interest will solve the problems of the fact that a third of Americans today can’t absorb a normal emergency. And yet there’s a whole bunch of us, and probably most of us in this room, that just by the very nature of the experiences and the privileges we’ve been given and the education that we’ve gotten from that, that we basically have total financial freedom. And it’s a really amazing thing to experience, and yet we are not properly allocating or sharing that with our fellow women, men around us.
Dev: Let me ask you a question. That’s all great but you run a credit card processing company, and you’re telling me that capitalism…Does money matter?
Dan: The way that I got started was I was in a rock band in Nampa, Idaho, and I was a musician. And the coffee house that basically supported our band by giving us a venue—a place to sell our merchandise, promote everything—it was like the cultural center of our band—the coffee shop owner was being taken advantage of by her credit card processor. And she was explaining to me how it was so opaque, that everybody else was going to do the same thing. And so, to me, what resonated is, can I get in here somehow—and at the time I wasn’t 19, I was 17—can I get in here somehow and stick up for my friend Heather that owned Moxie Java coffee shop in Caldwell, Idaho, a tiny town in Idaho? And so I just got on the phone and started fighting with everybody, which clearly I’m good at, I apologize already.
But, you know, I didn’t choose to be in credit card processing. I chose to try to try to help an independent business owner. And I think what we’ve done as a society is really stack the deck in the favor of the rich and powerful, and I would say chief among it would be big corporations and executives and investors—people with a lot of money. We’ve stacked the deck in favor of those people. And what I saw—I wouldn’t have been able to explain it at the time this way—but what I saw was basically an independent business owner, Heather, who was struggling, working sixteen hours a day doing everything she could to succeed. And I saw this really rich and powerful group of Visa, MasterCard, banks, taking money from Heather. And I just said, “Well, if I can spend the rest of my life trying to help people like Heather, I know I would have a really fun, great life that I would enjoy a lot.”
Dev: Now, for me, I spend a lot of time with CEOs and whatever they’re in—they make some like obscure middleware software thing—and they’re like, “Oh, obscure middleware software’s awesome! It’s life changing.”
Dan: Haha. It is.
Dev: Your product? Awesome? Amazing? Life changing?
Dan: So I would say our product today totally sucks. And I would say the price of our product completely sucks even worse than our product does. I’m talking about my own company now.
Dev: You’re selling them, I can see.
Dan: In the last fifteen years that I’ve had the company, I think we’ve taken the product and the pricing and the fairness that’s in this situation for our clients from being really, really, really bad to just really, really bad. And that’s very demoralizing after spending fifteen years of my life trying to work to build this company. But you know the commitment is to try to make things more fair and stick up for the little gal or guy because businesses pay way too much on credit card processing. It disproportionately hurts your independent, maybe mom-and-pop but even up to a couple hundred employees, even up to a little bit larger than that, because these big banks and institutions have an army of lawyers and lobbyists to allow them to act basically as a monopoly and target independent businesses, and so that limits us so far. And it sounds like an excuse of like how can we actually make this better? But it’s like okay, well I’m 33, and I hope I can get there by the time I’m fifty, sixty, seventy years old. Maybe blockchain is the answer. I don’t know, but I know I’m going to get there before I reach the end of my career.
Dev: I think people were astounded that you lowered your salary from a million dollars to $70,000. But I’m sure people were also wondering “What the hell were you doing making a million dollars?”
Dan: You ask really good questions, Dev. So, I will tell you that what I told myself, the story I was telling myself about the fact that I was making a million dollars, was two things. One, the company was kind of at the time really dependent on me. If I had a good month, if I was doing a good job at work, the company did really well. If I took a vacation, the company did poorly. And so obviously that reflects poorly on me as a leader and having a decentralized organization. But this is, you know, earlier in my career and I wasn’t as good at that at the time. I needed a lot of development in that area. And so there was a concern amongst myself and the other people at the company that, hey, we don’t want to have a single point of failure, even if that’s Dan. Dan’s very committed, but he could wake up tomorrow and not want to come to work. Something could happen to him. So we got a big key man insurance policy, and we also started to work toward building up my pay to a place where we felt like—and it was my brother and I primarily that were working through this together—but where my brother and felt like, hey, we could go replace, not Dan as a person, but the actual work Dan is doing with a CEO and maybe a couple other positions.
So that was part of it. The other part, that’s really nice for us, is the money I made, I stuck in a savings account. I didn’t go out and invest it, and I’m not, from what you heard, I’m very skeptical of the financial system, so I wasn’t going to go out and create this diversified portfolio of assets. And so I literally put the money in a bank account, which is slightly better than putting it under your mattress, and it’s really a play of, if we ever get in trouble, if someone really big and bad comes after us and tries to kill us, having this money outside the corporate vale gives me a really nice negotiating tool to either lend or invest it back and keep the company going.
But I think that the biggest thing that you hear in all this—the principle—is how do I perpetuate this goal and survive? Because I have so many people working to try to kill our company—and it makes sense because the whole reason for starting the company was to try and kill a bunch of other companies—and so how can we really make sure that we have the cash, resources, what have you, structure, to survive all those blows and make it through to that long-term vision of trying to make credit card processing fair?
Dev: So money is something for you. It’s not the status thing that it is for some people. But what is it doing for you? It’s like a safety thing.
Dan: So, I love my job. I love the people I work with. I like the setup I have, and I think it’s because we have what Dan Pink, my friend, calls, you know, that whole like “purpose,” we have autonomy, and then we’re working toward kind of this sense of mastery. And so it’s a really fun, motivating place to be, and I want to utilize money as a way to serve those ends.
But one of the things that I think we get confused about in general is non-linearity. We think a little bit is good, a little bit more is better, a little bit more is better. At some point, you reach a saturation and more isn’t better. And that’s the way I feel about money. And I also feel that way—you know, I’ve heard one of the founders of this organization talk about how our economic freedom index went from number 1 to number three and then down to number sixteen—it’s not a linear thing. It’s not like the absolute most freedom of economics promotes the absolute most freedom of people. And I think we got that wrong, and I think this organization largely got that wrong. And what I would say is what we should focus on is not freedom for money or computers, but freedom for people. And our current understanding of capitalism is creating a prison, is creating slavery for people. And so, yes, I need enough money to accomplish the goals to pay the bills, and after that…to be honest with you, Dev, I don’t think money actually exists in any kind of real way. It’s part of our imagination. It only exists because of the social contract.
Dev: I’ve never heard of a credit card company who tells you money is imaginary.
Dan: Money is just a social contract. And the purpose of money in my view is to buy things. I know that might sound crazy. I think that we’ve convinced ourselves that the purpose of money is to feed insecurity or to compete or to feel a sense of cultural significance and maybe sex appeal? And that’s not actually what money was supposed to do.
Dev: You talk about money and insecurity. Tell me about insecurity for you. There’s no way that you navigated your company through the Great Recession without knowing that fear, without knowing that insecurity.
Dan: Yeah. Going through the Great Recession, we went through three big events. One, we lost twenty percent of our revenue when we weren’t making money, and we have no outside funding and very little savings at the time. We had our most important, most critical vendor go bankrupt and implicate us in their bankruptcy in a way where they were going to try to seize all of our assets. And then we had a very large customer go bankrupt, and they were charging all these credit cards for furniture but not ordering the furniture. And then they’re like “Oh, that’s great. Gravity will pay you back. Just charge back your credit card. We’re going to go bankrupt.” And we were on the hook for it.
And, I know we’re short on time, so I won’t go into detail on all of those, but the net of it was, I was under so much pressure I could barely handle it, like I was gonna crack. And the way I got through that was by laying in my bed at night and closing my eyes and imagining how wonderful it would be to lose everything. Because I thought about the learning experience that I would have from that loss, seeing it go away. I also thought about the learning experience that, at the time, my forty or fifty colleagues could have and how, at that size, I could really work with them and makes sure that it allowed them to learn and take a step forward in their career instead of backwards. And then I thought about our clients, about how we could try to arm them with the type of information that we had to try to keep the concept and the fight going without us necessarily being in the industry as we were at the time, and how probably the ashes, the phoenix that came up out of the ashes, would actually be better and more powerful and make more sense with a fresh start.
And so really the only way that I was able to get through that pressure and what looked like an inevitability that we would go out of business is trying to see the good and appreciate and love the idea of losing what I had instead of trying to hang onto it. But that’s hard to do.
Dev: Ladies and gentlemen, Dan Price.
Dan: Thanks for having me.