Millionaire Took Pay Cut To Raise Minimum Wage To $70,000 - Did It Work?

i was making a million dollars a year we had about a third of the employees at the company making about 35 000 per year in order to raise that third to 70 000 i had to lower my pay to 70 000. that story goes viral 500 million interactions on social media with nbc's video becoming the most shared in network's history the new kind of people that style themselves as capitalists they don't believe in competition they believe in using their money and their superior positions of power to stamp out competition either you're a zero which means a non-billionaire you don't matter or you're a one which means you're a billionaire you do matter that's not what i took from the book when he said zero to one that's an exact quote so you're reading skills how do your employees trust you 100 what we do is helping small businesses even if i do turn out to you know go to the dark side this you say someday like we'll all be protected i think taxation is forced i don't think it's choice we have been pushing millions of people into poverty with our system is set up to reward and not tax the people at the very top and instead tax the people at the bottom [Music] my guest today did something a couple years ago that sends shockwaves through the debate for capitalism socialism minimum wage are we paying too much to people are we paying too little here's what he did you may remember the story i guarantee you high odds are against you not having seen his story dan price is an entrepreneur running a successful business he was making at the time 1.1 million dollar your income one of his employees that was making 35 000 all of your income gets pissed off at him says you are making too much money you're not doing it's not fair look what's going on i can't even have a regular life he can't sleep for three days comes back says you know what i'm gonna pay everybody seventy thousand dollars including myself that story goes viral into tsunamic 500 million interactions on social media with nbc's video becoming the most shared in network's history aside from that most read new york times article of the week front page of reddit for two days front page of msm msnbc abc mashable trending article on upworthy buzzfeed twitter for two days facebook i can go on and on he eventually got an offer to uh uh go have his own reality tv show with mark burnett who's the same guy that did apprentice with president trump to be the new donald trump on a show called billion dollar startup with that being said my guest today dan price dan thank you so much for being a guest on valuetainment for having me so i i got to tell you i actually uh uh love the fact that you did this and let me explain to you why from the selfish reason i'll tell you why from the selfish reason i'm all about case studies you know when you go to business school i didn't go to business school but i took a three weeks something that harvard was doing and i went there we read through 100 different case studies and it was great seeing here's what sephora did here's what you know ulta did here's what these guys here's what that guy did and it takes typically a few months if not a few years to find out if that mark you know if that case study worked or not and for you you kind of taught us you know you we're kind of watching to see how you did whether it's the politicians the business folks free enterprise or public now that this has gone by a few years and there's both a lot of good and a lot of controversy behind it and it's all public people can read about it how do you feel about that decision that you made a few years ago yeah i feel good about it for from our standpoint at gravity payments i feel like it's made our company a lot stronger um i'm grateful for it personally it's made my life better as well but i would say on our company it's just made us stronger and i'll give you some some proof points on that so we had prior to the 70 000 living wage announcement we had between zero and two babies born per year amongst the entire team and we've had over 60 in less than six years since the announcement so we had a 10x baby boom we also had a 10x boom in terms of people buying homes for the first time and i feel like that's so critical in some situations especially in a place like seattle where the housing market just goes up and up and up to get that you know get that locked in in terms of having a home that you can control so your rent's not going to be going up endlessly that was huge for us we also had 70 of the people at the company announced that they had paid down debt because a lot of people felt like oh with higher incomes you can get more debt and you can get yourself in a way more trapped and our team did exactly the opposite of that and uh lastly we between doubled and tripled our savings rate that people were using with the company 401k program so people are saving a lot more for retirement so i feel like it's been it's been really successful for us and it's been great to be a part of and do you mind unpacking i mean i just gave like a a brief intro so the audience kind of probably said oh i remember that story maybe yeah i didn't give all the details of the numbers you know walk us through how the math works walk us through when the decision was made just kind of give us the details of it if you don't mind yeah yeah great point great point so so we had about a third of the employees at the company making about 35 000 per year and um in order to raise that third to 70 000 plus um you know a few others that were working at the company that were also under 70 000 per year it was going to cost us about two million dollars which was a hundred percent of our profitability at that time and um you know it was one of these things where it just seemed like like a moral imperative especially because at that time i was making a million dollars a year so i took a million dollar paycheck can i stop you just for example i'm curious so a third of your employees were making thirty five thousand dollars uh thirty five thousand dollars per year did you say another third was making less or they were making uh what was they were they were making so i don't know if it was quite a third but there was probably there was a third that was making more than seventy thousand a year and maybe like close to a third in the middle yeah so a third was making 35 a third was making above 70 000. what percentage was making say above 100 000 above 200 000 at the time oh um you know just a handful of us you know um definitely there were there were there were a handful maybe a dozen at the most but not not more than that okay so that was the thing i'll bring you back to where it was before i interrupted you because i want the audience to hear the whole part of it he said at the time in order for us to bring the dirt to from 35 000 to 70 000 we would have to use our two million dollars of profits that we had it would have been 100 of it and you were making 1.1 million continue from there before i interrupted you please go ahead yeah yeah okay sounds good so um so yeah we we have the third making uh 35 000 here that they were really due to get their pay doubled and at the time we had two about 2 million in profits plus i was making a million dollars per year so it was going to cost us over 2 million a year to make the change so i had to lower my pay to 70 000 so we'd have that savings plus put most of the company's profits at risk to basically pay for the change but what that meant was a third of the people working at the company were not only getting their pay doubled but they were getting paid an amount that was in line with what scientific studies including uh by princeton a 2010 princeton study said if you make less than this amount it's really harming your well-being and so it was important for us as a company to take our responsibility seriously to not have a pay policy to harm people's well-being and so that's why it was i call it a moral imperative meaning it was not something that i felt like we should do it was something i felt like we absolutely had to do um had to do how to do had to do and so we came out we made the announcement and as you said there was a lot of initial positive attention but there was also quite a bit of controversy and there were seven or eight big you know in our world felt big story lines about the controversy about it but the biggest one by far was that conservative talk radio host rush limbaugh had come out and said that we were going to fail and he said we would be a case study in mba programs about how socialism does not work because the entire company was going to go out of business and he was predicting this and then when rush limbaugh set out that big firestorm the new york times did a story largely on the fact that rush limbaugh was trying to tank us and uh centered around all of the challenges that we were facing with such a huge backlash in fact the headline in the new york times that was as you said the the top read story of the week was uh was a back was about a backlash the whole headline was about the backlash and then rush limbaugh came out with that and put on his website what rush was right and he said that we were going out of business and he had my picture all of his website saying we were we were going under and so um fortunately though it did become a case study at harvard um that they are teaching right now in fact i heard from a harvard professor an endowed harvard professor just in the last week that he's still teaching the case study and uh and it's been successful it's a case study showing how this sort of thing works and when you pay people more your company is going to be more successful i'd love to see that case study but i think it's also a little too early to get all of it i think it'll take a decade or two to get it but again i am in a selfish way thankful you did it i'm i'm thankful and selfish for you because we're all learning right now believe it or not everybody's learning one person is taking this and everybody else gets to kind of watch and see how this works now i got two questions for you one is more business-wise the other one is philosophical so let's stay on the business side first and then we'll go philosophical on the business end your top-line revenue at the time versus your top line revenue today i mean obviously you've helped people have more sex because you're saying it's 10x how many babies people are having so your employees are definitely happy when they go home they're making babies so kudos to you you're helping increase the population but top line revenue from the moment you made the decision to today how much has it grown uh it's triple okay so three and when was it when you announced it what's the exact date 2015. 2015. so in six years uh your top line has tripled which respect to that your profit yeah and just just to clarify too in our industry how we measure the most important metric that people look at in our industry because there are a few different ways of looking at it is merchant processing volume process so all the 20 000 small businesses that use gravity for their payment processing are processing triple the amount of small business payments acceptance through gravity system as they were in 2015. well the one thing to give you credit this is not a business you did to make money this was a cause driven business because you were not happy about what visa and mastercard were doing to you know the amount of fees they were charging with them yeah you wanted to come i said as much as you guys are paying taxes what visa mastercard is doing is nothing close to what taxes are doing so i i want to make sure the audience knows that you did this for the right reason but your top line revenue has 3x in six years how are you managing your profit margin as an entrepreneur running your business how do you manage that so we get together the whole company which we just did since it was you know um like the start of a new year not too long ago yeah we get together as a whole team and we decide how we're going to determine that you know for the next few years because we kind of do it somewhat on a rolling basis and out of the 200 there's about 55 people that either volunteer or are nominated by their peers to basically make those decisions and then we get together for an entire week uh this year we did it virtually on zoom but we get together for an entire week and we have really long meetings and we go through and we try to figure out how much profit margin do we need to be safe as a company and how much can we invest and you know increase budgets and those sorts of things so we figure it out all together have you come up with a sweet spot is it five percent ebitda is it ten percent ebitda do you have a number for it um you know sometimes we do it it really it depends so much on circumstances but i would say you know um one of the things that we think about is managing for longevity because we don't we don't want to lay anybody off which we never have and we also want to be there for small businesses when times are tough we want to be strong when times are tough and so that that is normally what causes us to say oh you know we we need to be making some profit so that we can you know stay strong and and build up our savings and say 10 what number would you say 5 10 20 well it depends on which number you're talking about because our our business is kind of convoluted and it it it might take a little bit to kind of get into it but basically just to kind of give you like our numbers like we what we process in payments you know is like roughly like 15 billion dollars a year in round numbers and then from that what our small businesses pay to us to process those payments is roughly a little bit less than 300 million dollars and then most of that is interchange that goes to visa and mastercard and that's the money that the card that issued the the the the bank that issued that bank card they get that money and so that takes us down to about like 45 million something like that and then from that you know we try to eke out like a profit of you know four or five million dollars to basically yeah yeah like pay so so it's it's ten percent of the net number or the another way to think of it as like two percent of the gross number just so you know i fully know your business model you're an iso right you're an iso yeah you're i had a merchant account company years ago i'm very familiar with the model how it works uh uh and uh uh so okay so on the top line uh let's just say 45 million you're netting 4 million so that's about 10 what do you guys do with that for do you just sit on it do you wait for other projects does it kind of make the company stronger so if we want to bring more people on how do you guys use that four million yeah basically all of those ways um we we did have a a company approach us in boise and they were called charge it pro and they said well if we sell this company charge it pro to anybody else in your industry or to any investors they're going to lay off our employees and consolidate a lot of that work into a larger company and all those employees in idaho at the time they had 40 employees those employees are going to get laid off and they're going to lose their job and so the owners of that company came to us and said hey you know we really feel like you would be the right ones to like take this on because we know that you all are in it for the long haul and we know you believe in taking care of employees so we can trust you and you're literally the only buyer so you know i don't know like what i have to keep private for them or whatnot but it was a still a substantial amount of money that we needed to pay to like make all that happen and integrate the two companies and then secondarily that company their median wage was 25 000 a year and so we had to triple the pay [Laughter] of over half the employees yeah after the acquisition and whereas like our competitors would be thinking about laying off all those employees we we literally were working on tripling all like half of the employ more than half of the employees pay but that was like an example where we took on some debt to the seller and so a lot of that profit for a number of years after that went to pay down that like debt to that seller so that's an example and um and then another example would be would be savings and and taxes got it okay that makes sense uh so so going back to uh the question with a business let's stay on business still uh currently right now your org chart if we were to look at your org chart on what it was in 2015 when you announced this versus what it is today i asked you how many people did you have making over 100 000 or 200 000 you said maybe a handful you were making 1.1 did you have anybody as a second uh highest over 200 how many did you have over six figures and what happened to those uh uh c-suite executives that you had yeah so um i believe all of them uh stayed for at least quite a while and i think the majority are still there i mean i'd have to kind of like think through like how many employees you got by the way how many total employees do you have a little under 200 we're we're we're doing a hiring push right now that'll get us over 200. when you say you have to check to see if they're with you did you have any c-suite executives then or you didn't not really i mean well okay yes and no so it's hard to say because a lot of the people that are in kind of top leadership positions at gravity they've been there their whole career they started their career at gravity and so we all kind of work more like as a team and we've had to like get more clarity on things like org chart and everything mostly just for for people from the outside coming in so they can be more comfortable and feel more of a sense of transparency that they understand who to talk to and what's going on but that was very unnatural for us because you know i started building this company when i was 17. i i came from rural idaho i grew up literally down the street from a dump and so i didn't i knew some of those things but i just like the feeling of basically helping small businesses and i really enjoyed that so i did that like 17 18 and 19 then i launched officially gravity at 19 and then it was more just like finding people that liked that just as much as i did and so we were kind of all doing it together so a lot of those folks you know are still at the company and some are in leadership positions some have been in leadership positions but then found that they actually preferred being in a role where they just can help customers directly because that's what originally attracted them to the company so we have people that have been executives at the company that are still at the company that are not executives today and are much happier not you know being in a position that suits what they like to do better so that's why it's like a little bit hard to answer like with precision but i will say that um it also tends to be a bit of a rotating role sometimes and i don't know why this is but we do have a a lot of people at the company who are first-time managers first-time leaders and and and then we have a lot of people at the company who have been in those management leadership positions but found it was not really anything that they enjoyed too much but they wanted to stay at the company as an individual contributor so it's a bit of a a it's a bit of a spaghetti salad for you yeah you know you just took me to a whole different place when i'm thinking about your your business model is how do you sell the vision like when you say hey you know one day we're going to be what one day hey johnny i want you to work on yourself in these areas because one day you're going to be able to what is that well one day i'm gonna be what sell me the vision how do you sell me the vision when i'm in the meeting with you or is it the complete opposite where you say who cares about a nice car who cares about a nice house who cares about having a million and a bank who cares about being rich who cares about going to hawaii who cares about going to europe who cares how do you sell the vision of where the individual is going and where the company is going yeah yeah i i i i hear what you're saying and the way i would think of it is like do you tell somebody that they should want lots of money or do you tell somebody that they should not want lots of money and my answer is i don't tell people what they want they decide what they want and so i don't really i don't it's up to them i know in general what the social science says about human beings which is the way people are motivated at the highest level and the way the the people that make the most important achievements get find their motivation is through internal drive they call in intrinsic motivation as opposed to extrinsic but basically autonomy mastery purpose and social connection are the four strongest motivators on earth but something like money or title or prestige is a much more common motivator because if you're motivated by money or title or prestige or power then you tend to get those things and you tend to use those things to control other people and also just human nature money prestige power those more competitive type motivations they are they're very enticing to people they're alluring to people but they're not as strong in terms of actually causing people to do good work they're short-term positive motivators but in the long term they tend to make people in general not every person there's certainly exceptions but in general they tend to make people kind of miserable and unmotivated and so what we do is instead try to create a platform together whereby all of us myself included can do things that make us feel alive can do things that make us feel meaning and for us what brings us together originally was helping small businesses but secondarily what when we said well why why do we love helping small businesses so much is because we like the little guy we want to help the little guy and that's what motivates us and so can i do what though help the little guy do what because i'm a little guy i started off as a little guy so this is a guy i like blood i grew up in a divorce family i lived at a refugee camp in germany 10 years iran so i was a 1.8 gpa kid i went to the army i was a welfare kid i don't have a four-year degree i don't have a two-year degree i didn't have anything i'm i'm the guy that had a lunch ticket going to school from seventh grade till 12th grade and i've never taken english 101 it's always been esl my entire life i've only taken esl so define what is helping the little guy what is helping the little guy mean to you well so the way we got there was you know these small businesses were obviously being bullied by the system overall by visa and mastercard they set the rates that the small businesses pay and like twice a year they raise the rates on the small businesses and there's no competition it's not like the business can be like okay i'm gonna stop taking visa i'm not i'm gonna stop taking mastercard and so the small businesses basically have to take whatever these big huge companies say that they have to take and it's really wrong and you know in a place like idaho where i grew up you know you see the impact of that on those small businesses far away from that board room in new york city where they decided we can increase our share price by charging these small businesses that can't afford it a bunch of fees for money that we don't need to run our business that we're then going to use to inflate our stock with stock buybacks so that we can pay executive bonuses and so i was seeing that as a 17 year old and there was a coffee shop named moxie java caldwell in caldwell idaho and there was the owner heather hempel she was explaining to me how she was getting screwed over and she didn't necessarily know all the backstory of like how it all works behind that but she was explaining me she was getting screwed over and she introduced me to some of her friends that said the same thing so it's like how do we fight against this how do we hold these big companies accountable but the name of the game right now in business and in big tech and big companies in big wall street is captured in the work of peter thiel the book zero to one where he wrote competitionists for losers so what the new kind of people that style themselves as capitalists actually believe they don't believe in competition they believe in using their money and their superior positions of power to stamp out competition and the entire economy is starting to line up with that philosophy and you see it in the book zero to one you thought that yeah i was saying in the book that's not what i took from the book when he said zero to one well he he's he that says an exact quote so your reading skills may be where you know that i know that but i think what he was trying to say is have you read blue ocean strategy yeah yeah i think that's the direction where he was going like create a market where there is no competition like you know where you're where you're going into a place where you're the you know first one to go out there and do it you don't have anybody else to compete against versus go destroy everybody and dominate the entire market well well that's what theo was talking about let's look at the weight of the evidence to see if what your your your posit is correct or mine so he made two other big points the two biggest points in the book actually that contextualized the statement number one if you really want to be significant if you really want to matter you need to be a billionaire that was his first point in the book and that's very much in line with zero to one it's binary what he means by that do you know what he means let me let let me finish and then and then i'll and then i'll see what yeah i do know what he means i think i do tell me yeah yeah either you're a zero which means a non-billionaire you don't matter or you're a one which means you're a billionaire you do matter that's the ideology that regular people all over are seeing and it's one thing for us to say well i want to keep that intact because i want to get there i want to climb that ladder but if you look at the social mobility statistics that are out there right now having a ladder like that isn't climbable and here's why it's his second point so that's his first thesis point but he has two parallel theses in that book how do you become a billionaire how do you become somebody that matters he asks that question and he says that the only way to become a billionaire is to have a monopoly and the reason why is because if you have a monopoly you can act with impunity there's no accountability and he uses softer language than that but if you think about the implication you can lay off employees with no consequences you can go be like uber eats and you can get cardi b and dana carvey to do some kind of wayne's world commercial and spend 10 million dollars at the same time that your business model is trying to extract maximum value from local businesses and you do a commercial claiming that you're helping local businesses at the same time you're laying off employees at the same time you're paying huge executive bonuses and at the same time that you're buying out competitors i mean this is what people on reddit that some people would call or crazy think of as late stage capitalism because it's like where can you actually take things after this like where do you go next and basically since the 1970s or the 1980s so much of our success in business has been about squeezing people about exploiting workers that's been the that's been around the economy but now it's becoming just more and more scammy throughout and if you think about your own life just when you go out and live your life how many scams are you subjected to on a daily weekly or monthly basis now or how many times are you kind of slightly mistreated and it could be little things like getting the text to lose a hundred pounds with a diet pill i'm looking at you you definitely should not lose 100 pounds that would be a bad thing it could be the the scam phone call claiming to be social security administration it could be it could be the fact that you know you used to check into a hotel and whatever price they told you the price was was the actual price and now there's a 50 resort fee or you go into an airline and you can pay yeah the rate that they advertise but to do it you're going to sit in the middle seat by the bathroom and so so much more of our economy now is designed to extract maximum resources engineer use those resources to marshal to marshall you know engineering capabilities and then engineering a space away from competition or away from actual even customers i mean we have examples of businesses like uber eats that will claim that they're advertising for a local company and then be redirecting that company's customers to a different company and it's a complete scam and it's legal and so going back to peter thiel with his second point of how do you become a billionaire he said the only way to do it really is to become a monopoly so that you can act with impunity so what i'm sharing to you about heather and other people like you that didn't start out from much they're being held down more than you realize by this system that we're all supporting and yeah it's true that we have individual examples like yourself that show the way and show wow somebody can be successful but what those examples do and i'll i'll actually point the finger at myself more than anybody else but what those examples do is they kind of lie to us they make us think that the system does promote and allow people to get ahead when actually the fact that that we get held up you and i get held up on pedestals proves the opposite it proves that we are the exception and it proves that most people don't reach that and just for myself you know you pointed out how 500 million people had seen my story and how people were so enthusiastic about it how low is the bar when somebody who basically says the people actually creating the value should get it they should have autonomy and we should work together to help small businesses gets that kind of attention how much does that prove how low the bar is because everything that i did you can't find a single thing i did that a nice eight-year-old wouldn't do let me know and yet that was the response yeah so i think it shows everything about where we are right now no i think i think the reason why that story went viral is because the younger generation reloads relates to a ton and they're coming out of college and they're more in the state of rich people are bad people capitalism sucks because that's what the university is doing that's what they're teaching them and then all of a sudden they see a story like you and they're gonna share the hell out of it and i'm glad it got the exposure because we need to have this discussion here's my question for you your company is doing four million a year okay net four four and a half million years what the number is let's just say four and a half million a year ten percent is the number let's say that just so you know ten percent is relatively what the average merchant account company does it's about it it's a very small margin merchant account is not big margins you don't make a lot of profit on merchant accounts there are some that abuse it back in the days and the 90s where they would sell the equipment for financing if you remember for 199 well you weren't around at that time but they would sell it for 199 36 month period and people were making money but nowadays machines are generally free it's more on the fees that people play around okay so you're making the same amount of profits that the average merchant account company is making are you the 100 owner of the company or is the company shared with everybody the equity i own the company okay so so if you own 100 the company that means you're probably worth 100 to 200 million dollars because in in the world of merchant account the x is higher you know it's a 20 to 40 x type of a number you and i know this would you would you feel confident or comfortable giving your 200 employees a half a percent of your company to make it fair that everybody owns a piece yeah i think that's a good idea so we've we've had a lot of internal discussions about that over the years and i'm open to it um the the reason why it hasn't happened so far is there's a there's a belief amongst the team that if you kind of buy into the shareholder supremacy model that you're kind of pitching me right now and the idea that shareholders um should maximize like what they get which is kind of what your question is predicated on if we have shareholders then we will have to behave in that way as the concern and i think that there is a legal defense and a legal basis to say that no that's not the case but it could be tricky especially if somebody is in a situation where if we started acting in accordance with these principles that you and i disagree on about peter thiel where i don't want to do that i don't believe in screwing people over i don't believe in screwing over those small businesses you didn't say screw people over peter thiel never said screwing people oh well peter thiel said a monopoly and to have a monopoly you and i both know in order to have a monopoly you need the government to do monopoly he never said screw people over to be a billionaire that's not his words but i do know what you're saying you said number one is to matter is to be a billionaire and then you know the other part when you said is to have a monopoly yeah he did say that and i recall on the books i've read it multiple times yeah well and that informs what he meant when he said competition is for losers because in his mind loser and non-billionaire are basically the same they're very close no you you just said right now to screw people over like peter thiel said i want to make sure i differentiate those two because i don't remember him saying make your money by screwing people over that's just your belief system that you think screwing people over well i don't think it's that much of a leap okay so let me go back to the question i asked the question i asked you you thought i was asking it from the standpoint of maximizing the shareholder profits that's not what happened yeah so the way the way we the way we run the company the the it's not worth that much no no that's not what i was asking about my question was more or less about if you if you feel everyone's making 70k and you're making 70k why not share the equity company with everybody why own 100 of it because you're sitting there worth a couple hundred million why not have them have a few hundred thousand dollars of net worth added to them yeah so it's because the the the the shares currently like we're not public like so the shares aren't you can't like go sell them you know what i mean oh but you can give a uh a stock options where the individual can invest over a five year period and there are a lot of people that work for companies who are not public that give shares that allows the individual to build up their network because right now your employees don't have a high net worth you do so although you are being very noble on the area of giving everybody a 70 000 salary i'm thinking if you're gonna go that why not go fully and give everybody a piece of the company so it's equally shared with everyone expect because if you do that then that takes the case study again remember i'm coming from a selfish place because i want to see how this thing works long term on the case study so if you did 200 employees get a half a percent and you put a five-year vessel period that they have to stay there would you consider doing that yeah absolutely i think it's a great idea but i'll say i'm not sure that i'm really able to to connect with you or explain to you like like what some of the danger and downside would be to doing it but i still think it it's a it's it's something good that we need to consider either way yeah but i think but i think that it's so hard i think i could be wrong but i think it's so hard because we're so deep in the system the economic system it's so hard i think for somebody that's like working at that deep level in the system to understand a world divorced from shareholder supremacy and i think that i think that if you could understand like a a world other than shareholder supremacy i think it would make the way that you're thinking through and analyzing an issue very different yeah the only way i'm thinking about it is i'm thinking about it in a way of uh hey this is the amount of money that came in why don't we take the money that came to la district county and let's get the money to do so if you have equity you because you you're you're in a very you're very well let me try to explain it to you i i feel like i feel like you're i feel like you really want to understand so let me try really hard to explain it to you i don't think i want to understand let me explain to my question i think you got to understand my question here's my question my question isn't like i run a comment we don't think that way right so you're saying how come you guys don't think the way i think no and i'm like i don't think the way you think i don't exactly what you think yeah so i don't know how to answer the question then what i'm saying to you is if you're worth 200 million why don't you give equal amount of shares to your employees so they also i'm not worth 200 million say 100 million whatever i'm not worth 100 million i asked you earlier if you're doing four and a half million ebitda they pay you 20 to 40 percent that's about 100 million dollar network no it no it isn't how is it not ok if a person wanted to buy if i if i were to right now you're a pretty transparent guy that's what made you unique what made you unique is the fact that you were willing to be transparent you were very much about my income's 1.1 yeah yeah i mean i would love to explain it to you i don't know if i'm going to be able to but i'll try if you want i'm all ears tell us okay so currently the way the economy works as i understand it is the the most important thing that drives the companies is this thing that this guy milton friedman came up with right shareholder value and basically the companies are currently run in general with what's going to enhance the stock price at some time horizon and then the the there's something that the compensation experts do called alignment incentive alignment and basically what they do is they take those stock price targets and things that the corporation wants to achieve like a higher stock price and they set up incentives for the executives and employees and stuff like that so that it creates what the what the experts call alignment between the shareholders who are kind of set up as the pr primary beneficiary of the of the scheme and it creates a harmonious it purports to create a harmonious relationship between them and quote unquote management or top executives so that they'll be aligned so that the executives when they have to make a really tough decision that's going to prop up the stock price that incentive is designed to make sure that the executives make the decision that's good for the shareholders good for the stock price and the value the multiples that you talked about are predicated on having a management team that and and a setup of a company that's run in this matter if you took the exact same metrics but you told shareholders they can never lay off employees ever if you took the exact same metrics and you told employees you can never raise customer prices in a way that's an unjustifiable money grab if you told the investors they were no longer allowed to do those things and they wouldn't be able to expect any type of liquidity event from the company really ever but not on any specific time horizon and they couldn't create it then the value of those shares would be depressed significantly and it would basically create a situation where it was a fraction the company would be worth in that scenario a fraction of what it's otherwise worth so in a world in a world where we're planning to join this kind of scam that everybody can see that i think you may you know you may be bought into a little bit if we if we decide that we're willing to participate in that scam and just to just to have the rubber meet the road for you because i think this one will really land with you i had a gentleman come up to me who i've known for for close to two decades been a mentor of mine been a ceo of multiple successful companies in our industry and run multi multiple multi-billion dollar companies in our industry and he came up to me and said dan i could come join gravity or somebody like me and i could turn this into a multi-billion dollar company within a few years because if we unwound this and that you know like not doing layoffs in the pandemic when our competitor toast used it as an excuse to laugh 50 of their employees when their value is going from five billion to eight billion dollars not doing a hundred dollar uh price increase in the pandemic to small businesses like our competitor heartland that's owned by global payments a public company these are the the playbooks and the models in our industry and the value that you're putting out there is it is based on the idea that you're going to play ball in this way and ob was saying that and i was like you know what i don't think the world needs another billionaire and i don't even know that the world needs like a whole lot more like multi-millionaires out there i think what we need is a company that's willing to stick up for what's right stick stick up for these principles and the way we run the organization currently when we get together and make decisions is we do it as if shareholders don't exist so we we consider shareholders at zero when we're considering how to run the company all of a sudden if we create the type of incentive alignment that somebody who's like a hardcore capitalist like an unapologetic unapologetic capitalist would yeah would would would try to get us to do are we still going to run the company in the same way after that right and the answer to that is maybe not and i would like to think that we're all such good people that we would turn away from the opportunity to make more money to stick up for what's right to stick up for our values but currently we just do it by basically taking all of that money and and basically considering it to be money that's really most rightfully you know uh considered uh as an asset for clients small businesses employees how can we use these resources to help and all of a sudden if we created that kind of incentive alignment structure it would it would really take us and make us less of what we are and more of what companies that you're used to seeing i gotta tell you i understand what you're saying i listen to every word you said very good explanation i understand philosophically where you stand where it's hey pat i don't think my company is what you think it is because if i were to sell it which i never will i would have to go by the new buyers guidelines of having to sell in the future which i wouldn't want which means a person that would buy today i don't think the margin is going to be 20 to 40 times which i wouldn't agree to but still you're 100 owner and this is the risk where i see and i want to kind of tell you this and and try to destroy my argument say you're you're you're a fool you have no clue what the hell you're talking about destroy do whatever you want to do with it because i want to i want to kind of get your perspective so if i work for you and i'm one of your 70 000 your employees at the 200 that's doing 45 million top line revenue that the company is keeping four and a half percent four and a half million ten percent net profit and which you own a hundred percent of i have to almost believe you are jesus or god or somebody of such power to trust a hundred percent that you will never flip i have to almost trust you 100 which then you become like a god figure and that's a lot of pressure yeah because most people who are human beings like you and i i'm not sure if you've tried to walk on water i've tried many times i fail every single time maybe you have i can't so then then i have to sit there and say why do i don't trust 100 how do your employees trust you 100 percent do they kind of see you as a god or how how do they see you like a prophet how do your employees see you yeah well a couple things um because i want to i want to answer your question very specifically about us but then i want to make a broader point about how i think it relates to your you know you and and other people out there and people watching us right now so i think it just shows again my main point about how low the bar is because we assume and frankly pretty much correctly so that everybody out there that has ownership and power and those sorts of things is going to flip and basically trade the things that matter in life which are relationships care love trust integrity for the things that don't matter in life uh or don't matter as much once you have enough so money really matters it buys happiness but it doesn't buy happiness once you're making a 100 or 150 or 200 000 a year it doesn't buy happiness certainly when you're making three or four hundred thousand a year if you make more than that that's not in general for most people going to help them and so we assume that we are all so greedy and power hungry and that might be a safe assumption that might be a safe assumption and that might be a safe assumption about me but if it is then what we need to do is so clear we need to have a very high tax rate with wealthy people and we need to set rules because soon with ai and robotics and all that being private we're going to have these private armies of security we're going to have these people that control a level of power over all of us and when you think about automation when you think about the fact that so many jobs are going to be eliminated something like ubi universal basic income these are the types of uh solutions that we need to institute and what i'll say is here's here's my big failing here's where i really do think i failed i've allowed myself to become an excuse for the current system and perpetuating the status quo because people can point at my story and say hey this guy came from very humble beginnings grew up in idaho look at what he did but the reality is you're exactly right because zero big companies have followed suit and as a result we have we have been pushing millions of people into poverty with our system as set up to basically reward and not tax the people at the very top the millionaires and billionaires and instead be predatory scammy and tax the people at the bottom so if we all work together in unison with one voice to reverse that system that's really our last line of defe of of protection overall and in my company we should institute some of those rules so that even if i do turn out to you know go to the dark side as you say someday like we'll all be protected yeah so a couple things one i agree i think we do need a flat tax it sounds like you're pitching a flat tax right now where everybody gets taxed the same exactly i'm pitching i'm pitching over 10 million i would be super comfortable with a 50 60 or even 70 percent maybe even 80 90 tax rate i think we need to get the where has that worked dan what what countries has a 70 80 90 tax rate ever worked the united states for one when we implemented this in the in the 40s and 50s we had two periods in a row that were about a decade at each where median incomes doubled after we did it so it's worked right here in the united states but currently it's working very well in places like costa rica in denmark in norway 90 over over a huge amount yes yeah yeah but i think you're not talking about income you're talking about the elizabeth warren if you're worth over 50 million that's a wealth tax you're talking about i think we need gold i think we need both let me go back to this so yeah i think uh one on them trusting you 100 i think you ought to consider giving 100 of your equity to all your employees i think you ought to consider doing that and then also writing you down and saying in the constitution before i give the shares to you if we ever sell and anybody who buys the company has to be agreeing to the constitution the profits goes to you but you cannot philosophically change the following bylaws so if i'm coming to buy i may not pay you 40x but i'll pay 10x and all the employees that own some of the shares they'll get profit so i think you ought to consider giving out your let me but let me just say if you end up coming to work at gravity payments at any point your opinion on this will will it already matters and i'll already listen what you say and think about it but if you worked at gravity and you wanted to talk to employees about this idea and see like do you have support i'd be super excited about it by the way i'd love to come talk to your employees i'm being that serious with you i'd love to but i mean you have to be working there for a while first and gain their credibility if you want me you you don't want me to talk to your 200 employees it wouldn't be good you don't want no no i wouldn't i wouldn't mind it's just i have to yeah no but i think i think that there's such a disconnect with how you see the world than how we see the world that i feel like in order for your message to really land i feel like there's a certain amount of like i'm dangerous you see for me i like to talk to guys i don't think you're dangerous i see i don't think you are either but you yeah so the one thing that i i can say almost everybody that i know who has strong opinions about the opposing side they also make assumptions you've made a lot of assumptions you yourself even in this recording if you go back and listen to it you've made the assumptions of whether how wealthy people are how billionaires are whether you've said people that make over three hundred thousand dollars they're not as happy as i would assume i said in general this the science proves that no no no so an assumption let me let me parse this out for you so an assumption would be to say about one person as an individual yeah but the scientific studies say this is true for people in general you can't pull out one person from that that would be an assumption i'm going to call the assumption cops to come and audit both of us i want to say to all the assumptions cops out there to all the assumptions cops if i made assumptions comment below give me the minute if dan made assumptions hold us accountable put it below i'm willing to say if i made assumptions as long as my buddy dan is also willing to commit to if he made assumptions and everybody can do that survey and we'll talk about that you and i afterwards so so then question for you i'm i'm very curious in the way you were raised how's your relationship right now with your family how are you with mom dad your brother your sister how's the family relationships oh i mean i i don't want to get into that too much just to protect everyone's privacy but i love my family so much and i'm so grateful for them the reason why i say that is because of one thing that's so interesting about you you were a bible memorization competition in fifth and sixth grade i mean that's crazy to me dan like i have a hard time remembering john 3 16. you're talking about memorizing bibles he was raised as a conservative christian family where he and his siblings took turns walking waking at 5 a.m to make breakfast before bible readings you know and i mean are you still do you still subscribe to any of the christian evangelical philosophies or no i would say my belief about those things is um is a constant uh growth and the way i would the way i would uh answer specifically is like there was a actually a christian pastor that i was talking to one time and i said paul and i wrote about this in my book so it's it's out there but i said paul like don't you lose sleep worrying if maybe this stuff isn't true and he said no i never lose sleep over that and i was like why like i'm like so worried about it you know what i mean and he was like dan i just i focus on growing and opening up my mind and trying to learn everything i can but our beliefs evolve so fast and even christianity means something totally different today than it did 20 years ago and so his his philosophy which i i to you christianity means something different than 20 years ago or to the world i would say to the world there's the contours have evolved in the last 20 years assumption that could be categorically an assumption right there we found one right there dan how is it an assumption you're assuming it's different 20 in the last 20 years what's changed in the last 20 years with christianity i'm curious well um you're speaking to 25 or eight years so just just assume i'm being serious with you yeah the 25 year atheist right well that might explain why it's coming across differently than i intend because you know growing up studying theology for an hour every day which i did for a long time and in particular christian theology which is where i spent the majority of my time the the the kind of what we call the canon of christianity like the center of christianity most christian scholars believe that it's a combination of things including tradition including culture and the apostle paul who's one of the most famous authors in the bible or supposed authors depending on what you believe there the apostle paul when he would write letters to different churches he would tell one church something that i think is inexcusable but you know i'll just use an example he would say like oh with this follow these sets of rules and then for another church he'd say follow these sets rules and peter came who was you know the high apostle to jesus and peter came and he and paul was leading this church where he wasn't following all the rules about what you can eat and what you can eat and paul was explaining to peter that he believes that christianity is it's an interaction between their faith and the culture and the people of that day does that make sense and so he was explaining to peter how like those things and peter and him had a fight and this was going to be a big problem you have your two most powerful leaders in your church and they're having uh like a a knockout fight and peter had a dream where there was a big cloth and it tore and this was the most important cloth in the world and there were all these animals that paul was saying they could eat that all of a sudden peter had this sense from his dream that they were okay now so that was like a moment like in the canon of christianity where like the the the religion evolves but i mean most i don't want to say all but the vast majority of theologians and the vast majority indeed of christian theologians specifically it it they this is just an accepted fact for them that the church is constantly kind of changing because initially it was like an oral tradition where things would be passed down from generation to generation and now you can have a situation where you know the bible still holds up as the most talked about issue caring for those who don't have enough making sure people's basic needs are met that's the top issue in the bible it's the top sin that's discussed people not having their basic needs met and it's the top positive thing that's discussed in the bible people having those basic needs met and equality is part of that discussion but sometimes some of the more divisive and political issues of the day end up being the one that the church grapples with more and and so the church sometimes has a situation where you know the bible didn't change so the bible's still talking about feeding people that are hungry but the church may be talking about any number of issues that are a little bit more of like the hot button issues of the day and the and the things evolve so the most the largest christian church in the world is the roman catholic church and for example they had something called vatican ii where they said oh now we're not going to do our services in latin anymore we're going to do them in the local language so to say that like the church has evolved over the last 20 years for somebody with my background it doesn't sound like an assumption but i can understand where you're saying it it does come across to you like an assumption no just to me is to say it's changed 20 years it could in your eyes and your lens but to others it may be the same it is today as it is 20 years ago 40 years ago but by the way everything you said it's a level of skepticism i have myself who sits there and looks at it i was raised in a similar kind of an environment a christian family in iran where we got a bombed 167 times in a day i'm wondering if god really loves why are we getting bombed 160 so i had a lot of my own challenges when i went about it but thank you for sharing that you know when you say uh uh the the basic uh needs being met i fully agree i think the part about it that it's by choice not by force one of the challenges i see happening too many times with men with us and you obviously you're you're smart you're you're a processor i'm very curious about the way you think we may not agree on on a lot of things but i really enjoyed this conversation i think the challenge that happens with god with people about 12 years ago i started adding one thing to my affirmation list and it was stop trying to be god that job's already taken you're not god let somebody else do that you don't need to do that i think too often man uh uh and woman we try to act like god to force our philosophies upon others and i think taxation is force i don't think it's choice and it drives a lot of the energy innovators insane when it's not by choice the last thing you know you know they asked jesus about that in the bible so they said because there was a debate at that time and they they went to jesus and they said jesus help us solve this debate because you have half the people saying taxation is theft taxation is force which i think is what you believe i think by force it is yeah i do and then on the other side they were like well you know it's really bad if we don't pay taxes because look at what happens and so there was a group of people called the zealots who were basically saying don't pay taxes they were trying to get everyone to not pay taxes i don't think we don't pay tax just so you know i'm not yeah yeah i know i know it's a third i'm a third i'm a third is where i'm at just so you know so jesus said well let me see that coin that you have your money who's on it you know what they said caesar i've heard this a million times yep and so the the idea that we have a financial system is something that is owned and protected by the common good so we've gone to war for it i i don't i don't defend us going to war for it in in every circumstance obviously and that's a whole other topic that i you know don't like war in general but you know people have been drafted in our history and then also if you look at you know what happened with native americans when we came here if you look at you know the history of slavery and how we got it's really hard with all of that context to think oh this money all belongs to me and i should be able to keep how much i want because i know the history of how how this became the way it is and i think the responsibility that's there is to do things like pay high taxes so that that money can go back to making some of those injustices trying to right some of those wrongs and i can't we can't look we can't go back and change what you live through as a kid right now we can't but what we can do is we can create hopefully a future where fewer people will will be exposed to that because that is that's heartbreaking that you went through that if we did an audit on your money last year what percentage your money was given to charity oh i i i i think charities like uh especially on the top end is kind of a a pr scam for billionaires no no no i'm not talking about billy i'm talking about you specifically i'm talking about like you what portion did you give to charity or or how much money did you contribute with time and money last year 2020 oh i'm i'm not i i'm not i i don't want to sign up for an audit with you i might i mean i might like do that if i thought about it question the only reason i'm asking that question is because yeah typically the people that impose being the most noble don't do a lot of it themselves and and that is a form of judgment and what i mean by judgment by that is let the other person sit there and make their own decisions when you're talking about the money side i fully agree i didn't sit there and see all those events that happened where uh great i grew up in a family where my my dad was a 99 cent store cashier i don't know what it is to be well i've never lived in a house i've lived in an apartment one bedroom we don't have a clue what it is to have money growing up as a kid so i understand what it is to be that person last part of this interview again this is probably going to go down as my top 10 favorite interviews of all time talking to you sincerely i want you to know this sincerely and the reason why one i applaud you that you agreed to do this interview kudos to salute to you for willing to do this because a lot of people say no and uh secondly to be able to willing to have that discourse i think the audience one today i think who won today is the audience that's sitting there saying okay this was great can we have more of this and we're still laughing enjoying each other's company and we're probably going to get off and having a relationship together last part totally i'm going to give you a name uh tell me what comes to mind and if you want to pass just say pass you don't have to say anything but if i put a name out there tell me the first word that comes to mind uh milton friedman shareholder okay adam smith uh misunderstood karl marx um direction okay uh elon musk sad your favorite peter thiel anger bernie sanders um consistency i agree he is for decades aoc um future tag bill gates i'll pass i i there's a word but i it's going to take me like an hour to come up with what it is fair enough basils um the worst really okay biden please did you say please like pleasing everybody okay and last but not least no no i didn't need it that way i meant i'm like saying please bro oh okay i got it okay like please i gotta leave i got it please and then last but not least donald trump um who okay fair enough well uh uh uh for the audience if you've stayed with us the entire time which i think many of you have because this was very interesting the book worth it is a book that our friend here dan price wrote how a million dollar pay cut and a 70 million minimum wage revealed a better way of doing business his book came out last year you can go order on amazon we're going to put the links below and to get a hold of him if you want to give him any feedback if you cut any part that he made any assumptions or i did let us know on twitter his handle we're going to put up right next to him and my handle is going to be right next to me send us a message and tell us what you took away from this interview dan price thank you so much for your time i really enjoyed it thanks pat really nice to be with you you got it buddy so if you enjoyed today's interview i want to hear your thoughts there's a lot of different discourse debate philosophy some of you guys that follow him are probably here trashing this video i want to hear it all if you agree with me disagree with me agree with them disagree with them comment below and if you enjoyed this interview some tells me you're also going to enjoy my interview with professor leading socialist professor according to forbes magazine richard wolff another one but we had a great time debating click over to watch that with that being said thanks for watching everybody take care bye

Channel: Valuetainment

Views: 142,207

Rating: 4.9084897 out of 5

Keywords: Entrepreneur, Entrepreneurs, Entrepreneurship, Entrepreneur Motivation, Entrepreneur Advice, Startup Entrepreneurs, valuetainment, patrick bet david, Dan price, Reforming capitalism, Why everyone in my company makes $70K, Paying everyone the same, How entrepreneurship works, Peter Thiel, Capitalism is bad, Why capitalism is failing

Id: X7XZlFnqnBU

Length: 70min 26sec (4226 seconds)

Published: Fri Apr 09 2021