SEATTLE -- The CEO of Seattle-based Gravity Payments and several of his employees are slashing their salaries to $0 to try to prevent layoffs over the coronavirus crisis.
The same CEO, Dan Price, became somewhat famous five years ago this week for slashing his $1.1 million salary to $70,000 to guarantee a $70,000 minimum wage for his workers.
The company employs about 200 people and went from making a half-million dollars in profit each month to losing $1.5 million each month over a decline in business, according to Price. Gravity Payments facilitates low-cost credit card transactions for about 20,000 small businesses and was facing the same dismal climate as its customers.
"It looked like the 'right thing to do' for a company like us would be to lay off 30 to 50 percent of the team, which would mean 60 to 100 people losing their jobs at a historically bad time to be unemployed, and I just didn't want that to happen," Price said.
He turned to his employees to brainstorm a solution. What they came up with floored him.
"I was just blown away to have 10 people say they wanted to work entirely for free, between two and three dozen people say that they wanted to give up the majority of their pay to keep us going and keep us supporting small businesses," Price said. "I feel completely overwhelmed and confused and out of sorts that our team would come up with that type of a solution."
It inspired Price to slash his own salary from $70,000 to $0, and his chief operating officer went from $275,000 to $0.
In all, the majority of employees volunteered to slash between 10 and 100 percent of their paychecks, pledging around $400,000 for the next month, about 20 percent of the total payroll. The personal sacrifices made by his employees means not a single person is losing their job right now.
He admits he doesn't know how long they can pull it off and he knows their strategy is not what they teach in business school, but it's the strategy he can stomach for the long run, however long that run lasts.
"I've been in business for 17 years," he said. "I believe that we can make a greater positive difference in the next 16 months right now than we could in the last 16 years combined, or the next 16 years. So I'm focused on the difference we can make, not the amount of time that we'll be in business.
"Just staying alive is not a worthy enterprise to go after. Making a difference, helping small businesses get through this, and fighting for the survival of our community-based small businesses matters to me so much that if I go down, I'm going to go down swinging."