Dan Price, Gravity Payments CEO, joins Yahoo Finance’s Julie Hyman to discuss his company, and how its weather the coronavirus pandemic without having to lay off a single employee.
JULIE HYMAN: But when faced with the prospect of potentially cutting costs, cutting employees earlier this year, Dan Price, the CEO of Gravity Payments, went to his employees and asked them what they thought he should do, and Dan is joining us now. So, Dan, how did this all go down earlier this year, and kind of what did you learn through the process?
DAN PRICE: Yeah, well, Julie, when we implemented the $70,000 minimum wage in 2015, Rush Limbaugh and Fox News and a lot of prominent voices came out and said that we would fail as a result and we'd have to do layoffs. So we took that into account, and our team came together. And we always said, well, we're going to plan for what we heard was the worst recession of our lifetime, 2008, where small businesses lost 20% of their revenue and we, as a result, lost 20% of our revenue.
But when the pandemic hit, we were planning for that 20% to be prepared for the worst crisis that we were told we would ever face in our lifetime, and what we found was small businesses lost 55% of their revenue in March and April of this year. So we found ourselves completely unprepared. We were losing $1.5 million a month, and we were faced with a very difficult decision-- potentially go out of business, do layoffs-- which, of course, would destroy everything we stand for-- or increase prices to small businesses, as a lot of our competitors were doing. And our employees said, no, we're not going to do that, and that put us in a situation where we weren't really sure where to turn.
JULIE HYMAN: And so you turned to your employees themselves, right? And you said, you know, what are we going to do from here? Obviously you were left with a really difficult decision.
DAN PRICE: Yeah, I mean, the idea that they threw out there just sounded kind of Utopian because people said, well, let's have anonymous, so that there's no pressure, individual actions by employees where they can either go out and get new clients, help our existing clients get reopened-- most importantly because that's the whole point of our business is to help small businesses with their payment processing. Or, alternatively, people can decide during the pandemic to pick what their pay is going to be, and it'll be completely anonymous. There will be a spreadsheet where you'll be able to see the individual actions but in an anonymized way where it doesn't tie to anybody's identity.
So I heard that and of course thought, you know, that's not going to work because everybody's going to think somebody else is going to step up to the table. And when I saw the spreadsheet and the way everyone had filled it in, I bawled my eyes out, and it was one of the most humbling moments of my entire life because what I found was our employees had, in many cases, volunteered to work completely without pay. We had 30 people ask to take a 50% pay cut.
And, you know, they were saying they wanted to protect their fellow employees. They wanted to protect our community small businesses.
I don't think this is because I'm some kind of great leader, as some people say. That's not true. It's really about our employees that wanted to take care of each other and their small businesses, and that allowed us to extend our runway from just a few months to more like a year and have enough time to get all of those small businesses reopened with the right technology for social distancing. And that allowed us to recover our revenue to the point where, in September, we felt comfortable enough not only lifting everybody's pay back to where it was previously but also paying everybody back for the big sacrifice they had made at such a risky time to be making such a big sacrifice.
JULIE HYMAN: Amazing. It's really an amazing story. And we have to leave it there right now, but I would love to check back in with you and talk to you about what you are hearing from your small-business clients now and your employees.
Thank you so much. Really appreciate it. Dan Price joining us there of Gravity Payments. He's the CEO. All the best to you, Dan, in the new year.
DAN PRICE: Thanks, Julie. Happy New Year.