This article slings a lot of mud but little of it sticks. The main thrust of their issue is (paraphrasing) "He should have been paid about 470K, not 1.1mil" (before he cut his pay and gave it to his staff).
But in a private business the owners can pay themselves whatever they want as long as all owners agree to it. The lawsuit is likely related to how not all owners agreeing with his 1.1 mil pay packet, and the article is arguing that his decision to cut it and give it away was because he knew the lawsuit was incoming (to head it off, essentially).
They try to raise a lot of other issues (e.g. that he claimed client turnover was 30%, when they claim it is 16% and up, but definitely less than 30%), but much of it comes across as almost petty, like they had one big interesting claim and tried to pad it out with a bunch of minor mis-speaking or other miscellaneous issues.
Ultimately it reads like a hit piece. Really they're just re-hashing the lawsuit and have nothing else to add of value.
The article is not very well written, but the thrust of the article isn't that Price is overpaid (although the authors clearly think he is, and it's a little hard to argue that he wasn't).
The main thrust is that the narrative Price has been putting forward about the nature of the litigation against him is false. The evidence suggests that rather than being sued by his brother because his mass employee raise robbed the brother of profits, the raise was instead a tactic he used to minimize the profits of the company and thus his brother's claims on those profits.
That's because it turns out the lawsuit predates the raises, even though Dan Price denies that, even when confronted by the reporter with evidence to the contrary.
This piece is pretty long for the little bit of new information it provides, so here's what I believe is the nut of the piece:
Dan Price co-owned Gravity with his brother Lucas. Dan Price became famous for raising his employees salaries so that none made under $70,000. Shortly he did that, a story broke that Dan was being sued by his brother Lucas, who was demanding that Dan buy his stake out. Dan and his spokespeople represented to the media that the suit was a reaction to the pay raise, which reduced profits for owners to pay employees.
But it turns out that Dan was served for the lawsuit before the pay raise, and that Dan's legal response to the suit also precedes the raise. It does not seem likely that the lawsuit had anything to do with the raise. It is now plausible (but unproven) that the raise was a tactical reaction to the suit.
Furthermore, Dan Price's ex-wife alleges that Dan was physically violent to her. And, Dan Price's own salary is anomalously high given the details of the company.
I went to high school with this guy, and used his company as a payment processor when I was running a small retail shop. That was about 4 years ago. really did a good job nailing down the small merchant niche by removing dumb fees like 'drop fee' and 'statement fee'
It's been really weird to see everyone's reaction to this thing. Surreal almost. Didn't see Notch get this kind of hate when he shared his bonus with all employees. Perhaps it's because he works in the financial industry?
It is because he is promoting "evil" socialist ideas that go against the very grain of capitalism (essentially sharing the wealth, and sharing the profits).
He's upset a lot of rich and powerful people who don't want their poor underlings to start asking why they aren't benefiting from the company's growth or profit margins.
It would be fine for him to share the profits, if the profits were his to share. The lawsuit seems to be that he was paying himself salary instead of distributing profits to cut out the minority shareholder's from their rightful percentage of profits (turning profits into his own salary).
Then it sounds like to spite his brother (the minority partner) he came up with a self-promoting way to give those profits to other people; and enrich himself through speaking deals, etc. again at the expense of the minority partner.
This guy is not the first person in history to pay his employees well. You're sadly mistaken if you think this guy is some socialist hero to the working class.
He isn't. But he is seen that way by others, and that's why upset THEM. This is more about them and how they perceive it (and the associated media) than about him directly.
>Perhaps it's because he works in the financial industry?
It could be. There is definitely an adversarial relationship between owners and employees (both are competing for the same pie, in most models) and I'm comfortable guessing that many in the finance industry (including the industry media) identify more strongly with owners than employees. If such an identity is stronger, it's more than reasonable to expect that those with that identity will show undue bias towards those who seem to have a similar identity and against those who may be viewed as a type of adversary.
The industry appears to be founded on the idea of all profits flowing to owners. It seems reasonable that the industry would generally reject alternative models with little thought.
With Notch's situation, Mojang feels like a small team of people who built a single video game together (whether or not that's actually the case), so profit-share seems like a reasonable response. Gravity feels like just a "normal" company, a 9-5 white collar desk job, indistinguishable from other ones. Most people can relate to that kind of situation more than an indie game team.
I was going to suggest the same -- I don't think Notch would be doing 24 TV interviews in 3 days, including at Fox, about his company's payroll. I think it wouldn't stick, because he is foreign and the US news-watching public would assume it's just a weird thing that a foreigner might do.
I had to Google "notch bonus" to find out what you were talking about. Maybe when you don't have a press campaign accompanying things it flies under the radar and seems more sincere.
Man, with the way the sharks have been in the water around this guy, you'd think he was running Theranos or something. So what if he was initially overpaid, and so what if the lawsuit predated the decision? The domestic violence allegations are another matter, but still, if he's guilty of that does that mean that his employees have to give half their salaries back to him just to appease the Ayn Rand acolytes?
He might have had selfish motivations, and he might be a bad guy. But neither of those things changes the fact that he did an experiment with giving employees equal salaries, and that experiment had positive results on the company.
I think sharks are circling because people have a zeal for debunking the idea that someone is selfless. If you Google it, you can even find people who criticize Mother Theresa for having secret, selfish ulterior motives.
I personally believe people who help others always get something out of it (even if it's just private satisfaction), and that's OK. A good act is a good act, regardless of the internal thoughts that triggered it.
People criticise mother theresa because she believed that suffering was a gift from god and because of that she didn't allow pain medication to be used in her "hospices". And her hospices didn't separate the curable from the untreatable, so a bunch of people died needlessly.
That's very interesting! I haven't seen that specific (and horrifying) criticism.
What I've seen was from Christopher Hitchens, who said that she wasn't a "good" person because her primary motivation was to proselytize, as she believed Jesus instructed her to do.
My comment was creating an analogy between those two: Dan Price doing something awesome for his employees because of a lawsuit is something like Mother Theresa serving the poor because she believed it was how she would have a good afterlife.
I don't know if either of those motivations are true. It's impossible to know someone's motivations with certainty. That's why I think an action and its consequences are the thing to focus on.
If it's true, as the article says, that Dan Price is creating the cult of Dan Price (a do-gooder-CEO kind of thing), great! Even if he's just some narcissist who wants people to love him, I'm happy that another wealthy person is pursuing some form of humanitarianism. All the really "good" people might be narcissists, for all we know!
The pay raise made it easy for Gravity to recruit, but the retention benefits are unclear (some employees left due to the raise). It does not appear to have improved customer retention. It's unclear whether the raise was a net positive for the company.
The subtext of the story is that the raise was an unqualified win for one person, though: Dan Price.
You could actually make a decent comparison between Gravity and companies appeasing Wall Street by juicing quarterly earnings or buying back stock. If Gravity is spending an inordinate amount on employee pay and it's not accompanied by corresponding growth... well we all know what happens then.
Ayn Rand would have been pleased that a CEO decided what was a fair deal between the company and its employees, based on whatever reason they decided was important to the success of the company.
S/he means people who believe that society and individuals are better off serving themselves without any concern for the well-being of others.
If this experiment, of giving up a bunch of profit (and his own pay), were to succeed and make the company more profitable, it would undermine the idea that selfishness is the best way to serve yourself.
Possibly more confusing, but have you played BioShock? It's kind of an Objectivism Pitfalls for Dummies.
Ayn Rand founded/advocated a strong, determined branch of Libertarianism called Objectivism. In an over-generalizing nutshell, it's a philosophy, often economic, of individual freedoms over community needs (a strong negative over-reaction to bad socialism).
Good point, and one that is lost in a lot of modern political discourse. I once had some very cool discussions with a (very) early fan of Objectivism, when it was more a religion than a economic philosophy, and his perspective on what the modern Libertarian Thinktanks have done to co-opt Objectivism was fascinating. Unfortunately for him, although the economics adherents have lost a lot of the nuance of the original Rand vision in addition to the stronger religious views, they certainly haven't fallen that far from the tree and have kept the religious sort of fervent devotion to their version of its ideals.
Objectivists argue about what branch of normative ethics it is. I like to see it as a branch of Consequentialism, like a cousin of Utilitarianism, except where the utility function is not what outcome is best for the greater good, but what outcome is best for the self. They tend to believe that what is best for the self is by definition best for everyone.
Debates usually get hung up on Tragedy of the Commons, and whether it actually exists as a meaningful concept or whether it can always be solved via private property ownership.
Bioshock isn't really a critique of Objectivism. Part of Ayn Rand's philosophy as demonstrated in her books is that charity and philanthropy are used as PR stunts to cover up some nefarious deeds, like Bernie Madoff donating millions of other people's money to charity.
The first half of the game sets up the Founder Capitalist Figure as villan, and the second half portrays him as victim to a Bootlegger/Baptist Figure. I haven't read her stuff, but I seem to recall this plot being closer to a re-enactment, based second hand descriptions of the books. The later games do a somewhat better job though.
In that light, he is absolutely buying the loyalty of his employees, and being a private company, we really have no idea how sustainable the system really is. Worse, these things are path dependent. Getting a raise from 28k->32k will feel a lot different than going from 28k->70k->32k, even though the end state is the same. This is the sort of thing that can wreck companies.
I wonder if such a jump is actually bad for people. Many would allow lifestyle bloat and have difficulty going back down to market value when they transfer jobs.
He's parading around as an altruistic person when the evidence seems to suggest he's not. Many people argued that giving arbitrary raises is a bad way to run a business and probably unsustainable. If the raises were given for reasons besides he claimed, it gives much more credence to those arguments.
It matters very little if he is on the whole "a good person" (I make no claim one way or the other). What is interesting to most including myself is how his 70k minimum salary works for the company.
That act alone, whatever the reason, is likely a "good" thing in that he is sacrificing his own income to help others less fortunate for himself. If there are ulterior motives, or if he has had a lifetime of bad deeds until now I'm not terribly interested.
Can't say for certain without seeing the financials but having the real reason for pay increases raises red flags for me. I view it as a short-term gamble that could potentially lead to future layoffs/bankruptcy. In a worst case scenario, would it still be okay to you if the pay increases were granted because of personal circumstance and later led to people losing their jobs?
I agree that a CEO's decision based on personal issues is bad for a company. For Gravity specifically, is there evidence that it extends beyond this one issue?
And, in the context of this one issue at Gravity, it seems to have been a good move (at least what's been made public).
Pretty much every long-standing, famous CEO has done something for a personal reason (Jobs' personal vendetta against Samsung/Android for "ripping off" iOS is an example). That doesn't mean most of their decisions are personal, or that they can't run a company incredibly well.
Jobs' personal vendetta can easily be interpreted as public theatrics for business reasons. Making a business decision because you are personally getting sued is completely different.
Let me frame it this way. Let's say I was working there and thought I was getting underpaid. I started interviewing, found a job paying 65k, and was about to take it. There's some grand announcement about how everyone will get 70k and I decide, great, I'll stay. Had I been provided with what looks to be the real reason behind the raise, I may have elected to jump ship for less money.
I don't know how to write this comment in a short time span without coming across as a snarky a-hole but seriously, why are such piss-poor writers allowed to write for such serious publications? where the hell are editors and what are they doing? when did it become acceptable to hit 'publish' on such a shoddy amateurish article?
This is a bit off topic, but I see this bafflement over the general decline in editing quality a lot. It's really not so surprising given the way the news landscape has changed in the last couple decades.
Editing is expensive[1]. The internet ripped the heart out of the print news business. Accordingly, editing has been cut back drastically pretty much across the board in response to increasingly tight budgets.
[1] Much more expensive than one might assume without having experienced the process. Coordinating among multiple people plus the back and forth iterative process that editing generates adds a lot of overhead to the writing process. Self editing is much faster (and therefore cheaper), but you get blind to errors that would jump out at someone else, and so errors slip through much more readily. Plus, other people are capable of challenging your assumptions in a way that you just aren't capable of since you aren't even always aware of your own assumptions.
Source: I've written informally at the margins for a reasonably, but not tremendously, high trafficked niche blog, and have participated a little in both edited and self-edited articles from both the writing and editing side. This was never industrial strength editing, so I imagine the cost to actual news outlets with higher standards is a lot higher than I have experienced.
The CEO just sounds desperate for attention, as if he's a cult leader. Seriously, planks during meetings? I'd quit right then and there. Just sounds like an immature person that just wants to start a business because he'll get to implement all these quirky, utopic policies.
Also, just very low emotional intelligence for not thinking about the people who got paid highly and deserved it. You didn't hire robots - you hired human beings with real emotions.
Let's say I'm a college graduate (with accompanying student loan debt) and you're a high school grad. We both get jobs at the same company and you're paid 40k while I'm paid 60k. If we both get raises to 70k, I am still stuck with my student loan debt while getting paid the same as someone who did not need to spend years in school or take on student debt.
Because of the reasons listed in my original post. If I had to sacrifice time and money to graduate from college to qualify for a job and an arbitrary raise provides the same compensation to someone who does not have a college degree, it devalues my degree. On top of that, besides the degree getting devalued, I still have the original student debt amount.
Except that happens all the time, you just don't know about it. This is what its all about - transparency and disclosure. If you keep the first guy in the dark (as 98% of corporations do), he doesn't feel "bad" enough to get out and you trim some cash on both.
The argument usually goes that some people deserve to be paid more than others based on more specialized skills, more experience, etc. That it's unfair to be paid the same as someone who's doing a more entry-level position than yourself.
This is not my argument, but it's what I've been told when I've had this discussion before.
"Gravity staffers plank during meetings to encourage each other to speak quickly."
> Seriously, planks during meetings?
Sounds like an idea formed by people who don't really know how to run a business, and are looking for new and creative ways to get attention in the media.
The salary thing may be in the same category, and time will tell if the formula works well for the employees, or cuts their future total income short if the company can't keep momentum.
I would probably quit too. During a planking session. Grubbing around on the floor is no way to hold a meeting.
> Gravity’s 2014 profit was $2.2 million, Price adds.
> At private companies with sales like Gravity’s total revenue, salary and bonus for the top quartile of CEOs is $710,000, according to Chief Executive magazine’s annual compensation survey. At companies with sales like Gravity’s net revenue, the top quartile pay falls to about $373,000. At companies with a similar number of employees as Gravity, the top quartile of CEOs makes $470,000 in salary and bonus. The CEO of JetPay, a publicly traded competitor that processes a similar volume as Gravity, received $355,000 in 2014.
$1.1 million on CEO salary sounds ridiculous given a $2.2m profit.
Not if he were the managing partner (and majoritary owner).
But agreed. If this were a public company, stockholders would probably be very unhappy that half of their earnings are being poached by some profesional executive with no skin in the game.
Glad you posted that, I knew something was clearly out of whack with his compensation just based on revenue alone it did not make sense.
The article tries to paint an elaborate picture, but ultimately fails on all counts to point out the most basic problem with this story and that might have shed additional light on his motivations.
50% of the profit after business expenses... There are tons of small businesses run this way, nothing especially wrong with it. You can do things differently when you control the shares instead of a bunch of VCs who want to pump it up so they can exit big or go home early.
Well that was a waste of words. The tl;dr seems to be he used to pay himself a lot (which he has told everyone), now he pays a lot of people more than before (which he has told everyone), is stressed out that his brother is suing him (which he told everyone) and likes publicity (which is obvious).
I'd be skeptical of this piece. There's been one hit piece after another against this guy from the conservative/business media. It is possibly that he's a shady character, but it is also possible that some people are Really upset at him establishing a pay floor of $70k a year.
We should suspend judgment until we have further evidence.
The stuff about him overpaying himself is bad enough, but why isn't anyone talking about his ex-wife's allegations at the end of this piece? (Charitable interpretation: people didn't make it that far bc this thing is so poorly written.) Anyway, she's about to go on the record in a very public way (TED talk) claiming he hit her and "waterboarded" her. It's despicable in its own right if true, and it points to a larger pattern of dishonesty.
Probably because they are allegations. If they are found true he should and will be punished. But until then, he is innocent until proven guilty. I don't see the point in a witch hunt.
Why do we always have to tear people down for doing something good? Who cares their motivations, reasons, or response? I give the guy credit for doing something radical that improves peoples lives. I don't care about what Dan Price may or may not be getting out of this. I'm more interested in the experiment itself, and the employees. To me this is nothing more than a hit piece.
It's a hit piece.
Basically the lawsuit from his brother seems to have come about before the pay hike for employees.
Also put a smattering of he beat his ex-wife in at the end, but we have no real evidence.
Its incredible how hard the sharks are trying to discredit this guy. I recall reading about Gravity on marketwatch several months ago, comments were full of expletives and certainty that the company would go bankrupt. Dumbasses.
The benefits are obvious to anyone with half a brain - significantly better retention, a large pool of motivated applicants to choose from, and more companies doing business with them (mostly based on the ethics "brand"). The guy got first mover advantage here. Good for him.
Was anyone else caught off guard by the sexy yoga ball pose?
Edit: Someone else says it's a hit piece, makes sense that the picture seems off if it is some filthy animal squandering the internet's time on savagery.
But in a private business the owners can pay themselves whatever they want as long as all owners agree to it. The lawsuit is likely related to how not all owners agreeing with his 1.1 mil pay packet, and the article is arguing that his decision to cut it and give it away was because he knew the lawsuit was incoming (to head it off, essentially).
They try to raise a lot of other issues (e.g. that he claimed client turnover was 30%, when they claim it is 16% and up, but definitely less than 30%), but much of it comes across as almost petty, like they had one big interesting claim and tried to pad it out with a bunch of minor mis-speaking or other miscellaneous issues.
Ultimately it reads like a hit piece. Really they're just re-hashing the lawsuit and have nothing else to add of value.