History people: Is Dan Price (CEO of Gravity) doing what Henry Ford did?

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JulianTrueFlynn

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Posted this on Reddit too.

I know Henry Ford gained a lot of public praise for giving employees a 'livable wage'. Was this proven to be a PR campaign by Ford (like raised their pay for one of the benefits of getting PR from it)? Any documents I dug up said Ford didn't start PR until 1933 (which I believe is after all of this):

https://books.google.com/books?id=S...Aw#v=onepage&q=henry ford pr campaign&f=false

This might have been a very clever move (if planned) because it separated him from Carnegie, Rockefeller, J.P. Morgan who were all facing scrutiny from the public.

This seems very similar to what Dan Price is doing now with giving employees 70k minimum salary. Is it proven that Henry Ford did a PR campaign for being the 'different CEO'?
 


I'd say no it's not the same as Ford exactly although potentially similar. What Ford did might have been a publicity stunt but it also just made business sense. Factories that paid rock bottom wages had all sorts of problems and high turnover. Paying more fixed that problem big time.

But think about the industry Gravity is in. They are a merchant middle-man that sells a product that's exactly the same as many other companies. The large players buy up the smaller players all the time to get the customers. Because of the nature of the business and the identical nature of the product this industry has this happen quite a bit.

The price of an acquisition is going to almost entirely based on the total revenue in fees from the customer base.

So if this guy is planning on selling his business anytime soon this is a great way to set himself up for that. Lowering his salary or taking profit to increase salaries isn't going to change the sale price. However if they gain a bunch of new customers the sale price will increase. This increase will likely be much more substantial in the final sale vs money lost now.
 
miketpowell said:
I'd say no it's not the same as Ford exactly although potentially similar. What Ford did might have been a publicity stunt but it also just made business sense. Factories that paid rock bottom wages had all sorts of problems and high turnover. Paying more fixed that problem big time.

But think about the industry Gravity is in. They are a merchant middle-man that sells a product that's exactly the same as many other companies. The large players buy up the smaller players all the time to get the customers. Because of the nature of the business and the identical nature of the product this industry has this happen quite a bit.

The price of an acquisition is going to almost entirely based on the total revenue in fees from the customer base.

So if this guy is planning on selling his business anytime soon this is a great way to set himself up for that. Lowering his salary or taking profit to increase salaries isn't going to change the sale price. However if they gain a bunch of new customers the sale price will increase. This increase will likely be much more substantial in the final sale vs money lost now.
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This is the most informative and well thought out post wickedfire has seen in the last 45 days.
 
miketpowell said:
I'd say no it's not the same as Ford exactly although potentially similar. What Ford did might have been a publicity stunt but it also just made business sense. Factories that paid rock bottom wages had all sorts of problems and high turnover. Paying more fixed that problem big time.

But think about the industry Gravity is in. They are a merchant middle-man that sells a product that's exactly the same as many other companies. The large players buy up the smaller players all the time to get the customers. Because of the nature of the business and the identical nature of the product this industry has this happen quite a bit.

The price of an acquisition is going to almost entirely based on the total revenue in fees from the customer base.

So if this guy is planning on selling his business anytime soon this is a great way to set himself up for that. Lowering his salary or taking profit to increase salaries isn't going to change the sale price. However if they gain a bunch of new customers the sale price will increase. This increase will likely be much more substantial in the final sale vs money lost now.
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Yup, I was trying not to seem bias on whether it's good or not. Just saying if it's similar in regards of changing public's perception of a CEO/being viewed as the 'good CEO'. I can't find any documents supporting that it was a PR move on Ford.

This seems like a very obvious PR move on Gravity's part of course for reasons you stated.

Note to people reading too. If you haven't seen 'Men Who Built America' on Netflix (by History Channel) it's great for diving into this stuff and was meant for entrepreneurs.

Edit: and if this was a PR move at the time for Ford his reasons like you said are different than Gravity's. Ford if I had to summarize it quickly would be more towards separating himself from the emerging antitrust laws/bad public perception. Also of course, this was supposed to be a car cheap enough for the working man, and him supporting that demographic (by showboating he pays factory workers a lot) would boost sales.
 
miketpowell said:
Factories that paid rock bottom wages had all sorts of problems and high turnover. Paying more fixed that problem big time.
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no-way-o.gif
 
miketpowell said:
What Ford did might have been a publicity stunt
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How is this not a publicity stunt? Exactly what you said is exactly why this is a publicity stunt. He is in a business as a middle man, this gets him more exposure which leads to more clients.
 
clear said:
How is this not a publicity stunt? Exactly what you said is exactly why this is a publicity stunt. He is in a business as a middle man, this gets him more exposure which leads to more clients.
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I believe you misread his statement (or I'm not following yours):

  • Ford = Henry Ford [Ford Motors]
  • Dan = Dan Price [Gravity]

What Gravity/Dan did was a clear PR move, they paid for the exposure/press releases. The question here is if Ford did his as a PR move — which I can't find documents supporting, only documents like the one above saying no it was not.

The sub-question here is also if Gravity mirrored this to Ford (no way we can prove this of course). Either way if you think there's a lot of parallels it's interesting to view history repeat itself.
 
This is why I love WickedFire!

It's the only group of people that are on the same page and understand what's going on.

But to add onto what's already been said, here's a principle I try to live by: If you can make more money by being a good person, then fucking do it.


Edit: Here's my post from the other thread if anyone's interested in Dan Price's mindset:

KennyPowers said:
Genius marketing.

He did the same thing back in 2013. The government increased the payroll tax by 2%, so he increased the salary of all employees by 2%. What followed was a shitton of press coverage, and likely a huge upswing in customers.

Now, he's spending a couple million, but in exchange getting a workforce that's motivated, a shitton of goodwill (for a future IPO), and a shitton of new customers.

Well played. Well fucking played.
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This should clarify the misconception of Ford's wage increase:

At the time, workers could count on about $2.25 per day, for which they worked nine-hour shifts. It was pretty good money in those days, but the toll was too much for many to bear. Ford’s turnover rate was very high. In 1913, Ford hired more than 52,000 men to keep a workforce of only 14,000. New workers required a costly break-in period, making matters worse for the company. Also, some men simply walked away from the line to quit and look for a job elsewhere. Then the line stopped and production of cars halted. The increased cost and delayed production kept Ford from selling his cars at the low price he wanted. Drastic measures were necessary if he was to keep up this production.
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...

The $5-a-day rate was about half pay and half bonus. The bonus came with character requirements and was enforced by the Socialization Organization. This was a committee that would visit the employees’ homes to ensure that they were doing things the “American way.” They were supposed to avoid social ills such as gambling and drinking. They were to learn English, and many (primarily the recent immigrants) had to attend classes to become “Americanized.” Women were not eligible for the bonus unless they were single and supporting the family. Also, men were not eligible if their wives worked outside the home.
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The Story of Henry Ford's $5 a Day Wages: It's Not What You Think - Forbes
 
clear said:
How is this not a publicity stunt? Exactly what you said is exactly why this is a publicity stunt. He is in a business as a middle man, this gets him more exposure which leads to more clients.
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Since folks here read the first couple of chapters of Confessions of a Media Manipulator, they think every event is a publicity stunt in one way or another.
 
There was another guy a few years ago who divided the company into stocks and gave the shares to the employees when he retired.
Grocer, 70, gives stores to his employees

“My employees are largely responsible for any success I've had, and they deserve to get some of the benefits of that," Lueken told the Star Tribune. "You can't always take. You also have to give back."

The amount of shares each employee receives will be based on length of service and salary.
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And then he retired and traveled the world, no PR stunt, just generous.
 
charlesmartel said:
This idiocy is not working out so well:

http://www.nytimes.com/2015/08/02/b...klash-against-the-raise-that-roared.html?_r=2
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Good article.

I'm interested in how things at Gravity will play out in a few years. You'd think $70k/year for low level staff would increase retention and improve their morale. Whether that turns out to be the case won't be clear for awhile. Nor will Price's decision on his company's financial health (lawsuit notwithstanding).

Good move or bad move, at least it was his decision rather than a government mandate. :)
 
clear said:
How is this not a publicity stunt? Exactly what you said is exactly why this is a publicity stunt. He is in a business as a middle man, this gets him more exposure which leads to more clients.
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I agree with you - I was saying what Gravity did was a publicity stunt. What I said *might* have been a publicity stunt was what Ford did but it also made business sense.

As we can see now from the fall out here, it didn't exactly make business sense the way he did it. Raising a bunch of 40kish employees to 70k while also raising high performing key employees from 65kish to 70k is just incredibly stupid. I didn't even think the guy could be this dumb and just assumed 70k was the new "minimum" and plenty of people got boosted above that.

This is a great case study though in that what you pay someone is far and away from the only thing in determining how happy someone is. Because if someone goes from 65k to 70k when they weren't expecting it but they still are pissed off and decide to quit shows how powerful motivators are besides money. A sense of "fairness" is far more important to some people.
 
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