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The CEO Paying Everyone $70,000 Salaries Has Something to Hide
- jisaacstone 11y agoI 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?
- whatok 11y agoI 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.
- Someone1234 11y agoIt 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. Essentially he upset the status quo.
- zymhan 11y agoThis 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.
- Someone1234 11y agoHe 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.
- cpwright 11y agoIt 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.
- jsprogrammer 11y ago>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.
- lifeformed 11y agoWith 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.
- peppage 11y agoDo you think America vs Sweden has anything to do with it?
- DaveWalk 11y agoI 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.
- orliesaurus 11y agotl;dr anyone?
- soperj 11y agoIt'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.
- asdfologist 11y agoTL;DR: he raised the salaries after he was sued for overpaying himself.
- lingben 11y agoThank you :) 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? sigh
- grossvogel 11y ago"Bloomberg Businessweek" does sound like the name of a serious publication...
- shawn-furyan 11y agoThis 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.
- wahsd 11y agoWas 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.
- guiomie 11y agoI'd say the pictures are kinda creepy.
- zymhan 11y ago> 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.
- jonknee 11y agoWhy? He was also the majority shareholder.
- zymhan 11y agoBecause taking 50% of the money your company has to invest in itself as pay seems awfully selfish and short-sighted.
- jonknee 11y ago50% 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.
- crpatino 11y agoNot 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.
- jonknee 11y agoBut since he is the majority stockholder it makes perfect sense. It's his money one way or the other.
- tunesmith 11y agoMan, 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?
- whatok 11y agoHe'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.
- smt88 11y agoI'm not sure I understand. How does his motivation for giving the raises have an effect on whether this is a good way to run a business or whether it's sustainable?
- whatok 11y agoBecause businesses are usually run with the business in mind; not the CEO's personal lawsuits.
- smt88 11y agoI 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.
- eljimmy 11y agoI read about 60% of that article and had to stop. It felt like I was reading some sort of pseudo-soap opera script.
- deelowe 11y agoI read the whole thing, but I agree, this style of journalistic writing can't end soon enough.
- grp 11y agoYep, it seems to me that it's only an ad (hidden in the last paragraph) for the book about that salary thing. Basically, this guy want to use the Paris Hilton Syndrom to growth. I'll be famous coz I'm rich coz I'm famous coz...
- aswanson 11y agoThe plank meeting idea seems good.
- brianlweiner 11y agoI can't imagine being forced to 'plank' during an office meeting.
- adharmad 11y agoThe Twentieth century motor company
- littletimmy 11y agoI'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.
- AznHisoka 11y agoThe 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.
- drewrv 11y agoMaybe I suck at emotional intelligence, but why would a highly paid employee be upset that lower paid employees are getting a raise?
- eemikula 11y agoThe 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.
- whatok 11y agoLet'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.
- rjvir 11y agoBut why would the other person's salary affect you?
- whatok 11y agoBecause 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.
- sageikosa 11y agoI stopped at the plank during meetings bit...
- Someone1234 11y agoThis 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.
- zymhan 11y ago> 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). That is not what the article is saying at all. It says that he initiated this pay raise after being sued because he payed himself too much.
- sophacles 11y agoThere is literally no difference between gp and what you are saying.
- tptacek 11y agoThe 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.
- jonknee 11y agoWell 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).
- thebokehwokeh2 11y agoTL;DR: This is a run of the mill hit piece. Save yourself the trouble and don't waste your time reading this drivel.
- tptacek 11y agoThis 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. That's pretty much it.
- whatok 11y agoThank you for writing what I was too lazy to do.
- sowhatquestion 11y agoThe 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.
- timbuckley 11y agoProbably 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.
- sowhatquestion 11y agoI don't see the rest of the article being treated with this level of skepticism.
- et2o 11y agoWell this is a hit piece.
- et2o 11y agoWell this is a hit piece.
- theworstshill 11y agoIts 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.
- Overtonwindow 11y agoWhy 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.