BOISE, Idaho (AP) - Gravity Payments, the tech company founded by an Idahoan that gained worldwide attention after offering employees a minimum salary of $70,000, has taken a huge financial hit from the coronavirus pandemic.
The company, based in Seattle with a branch office in Boise, has seen its $4 million in monthly revenues, plummet, the Idaho Statesman reports. With small businesses across the nation struggling because of virus that causes COVID-19, fewer transactions are taking place that require credit card processing from Gravity.
“In a one-week internal from March 10 to March 17, we lost about 50% of our revenue,” founder and CEO Dan Price said by phone. “It was gut-wrenching.”
Without a change in strategy or layoffs, Gravity would have four to six months before it went out of business, Price said.
In response, Price cut his salary to zero. Ten employees volunteered to work for free temporarily, including Chief Operating Officer Tammi Kroll, who earned $275,000. Two dozens others were willing to give up half their paychecks to ensure no one lost their job.
All of Gravity’s 210 workers in Seattle and Boise volunteered to take cuts of 5%, 10%, whatever they could afford, he said. Without the cut in salary expenses, the company would have been forced to lay off 40 workers.
“This was a situation where we didn’t want to do layoffs,” said Price, who grew up between Melba and Marsing in rural Canyon County. “We’re fighting through it and now we have time to recover.”
Gravity has shut down both its Seattle headquarters and its Boise office, which opened on 27th Street in September. Employees are working at home. A hiring freeze has been enacted, the first in more than a decade.
The $2 million in pay cuts will allow the company to cut its expenses in half and buy Gravity time “well into 2021” before facing insolvency. By then, Price hopes, the pandemic will be a thing of the past, and other companies, as well as Gravity, will be back to making money.
He said Gravity could have made up the difference by charging its 13,000 customers higher card processing fees. Gravity charges about 0.3% of merchants’ sales, about half the rate of its competitors, but Price said it wouldn’t feel right to burden them with extra expenses when they were already struggling.
“A voice and a company that’s willing to stick up for the underdogs is needed more right now than at any point in our lifetime,” Price said. “And so we really have to stay true to who we are, we have to stay true to our values.”
Price is confident the nation’s business downturn will give Gravity an opportunity to win new customers.
“It’s a very chaotic moment for us as a company,” Price said. “I think that 10 years from now we’ll look back and this will be the proudest moment of our lifetime.”
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