The Cost of Instituting a $70,000 Minimum Salary

Many of us know about Gravity Payments. It is a payment processing company that seems innocuous at first, until you learn that its CEO, Dan Price, has instituted a company-wide $70,000 minimum salary. He reported making this change in order to increase the happiness of his employees and make a difference in their lives. His decision got a lot of press coverage, and reactions ranged from astounded, to favorable, to downright angry.  

Unfortunately, Price’s brother was one of the angry ones. Lucas Price ended up suing him, alleging that he had set aside too much profit for himself in the beginning. There was no indication as to whether the lawsuit had to do with the minimum wage increase, and, if anything, this lawsuit made Price more favorable in the public eye. Despite losing some employees who believed the wage increase was not fair to those with more experience, Price and Gravity Payments seemed to be doing well. New job applicants came pouring in and new hires were not difficult to come by.

However, Gravity Payments may still be in jeopardy. An article in Bloomberg Business reports that Dan Price may not be the altruistic CEO he’s made himself out to be. Through a series of interviews, Price’s story about raising the minimum wage went from sweet to sour, as he failed to respond to allegations that put him in a bad light. For example, Lucas’s lawsuit was filed before the minimum wage increased. This means that the lawsuit could not have been in response to the new minimum wage, which begs the question of if Price really was overpaying himself at the onset of Gravity Payments. Was his initial high salary not reflective of what the company was making overall? More importantly, was the minimum wage increase in response to Price’s knowledge of the lawsuit?

Of course, this leaves us to wonder if it matters in the business world if Price paid himself too much initially. Whether or not the claim is true, his company is still paying all employees at least $70,000 dollars. The motivation behind his decision is irrelevant.

However, it seems as if we should not ignore a CEO’s character while promoting a company based on his actions. If Gravity Payments itself was the focal point of the press, Price’s character may not matter, but Price is thriving from his wage decision. He has a great deal of money, a large amount of good press, and a book about his wage experiment on the way. That is a large amount of success for a man who may have abused company money (not to mention has abuse allegations against him by his ex-wife.)

What will the outcome of the trial between Price and his brother mean for Gravity Payments? We will have to wait to see. We can only be sure that the wage increase blew this case wide open. All in all, I would suggest taking Price’s character with a grain of salt for now.

Marketing on a Personal Level

The new film in the Star Wars franchise, The Force Awakens, is all anyone in the movie world can talk about. It is highly anticipated by fans of the franchise, so much so that tickets to its premiere were sold out within seconds of being put online. There is an opportunity here that is rare for newly released films. Some would think that marketing for the film is unnecessary, since the Star Wars series already has an enormous fanbase. Disney, however, saw things differently. Instead of taking a lazy approach to marketing for The Force Awakens, it and other companies decided to try a different tactic to spread word about the movie, and sell related products.

These companies realized that many people have a personal infatuation with Star Wars. A number of fans grew up watching the series, buying the Star Wars merchandise, and reenacting scenes with plastic, light-up lightsabers. Of course, there was a setback in the fanbase when George Lucas released the prequel films, but the new movie has remedied that by bringing back the beloved actors/characters from the original films.

Disney took over for George Lucas and brought back the fans by releasing hints about how this new film will connect with the originals, and old fans who have since grown up were drawn back in immediately.

Star Wars is very much a household name, and companies selling its products, such as Walmart, have seized this as a unique marketing opportunity. They have reignited the sales of their Star Wars merchandise by marketing the franchise to families and people reminiscing about their childhood. The franchise is being marketed as a real-life Toy Story - as something that will make adults regress into the carefree children they once were, with lightsabers and X-Wing fighter ships.

This approach to marketing has spread across companies selling Star Wars related products. New commercials are popping up whose sole purpose is to induce nostalgia in fans of the franchise that yearn to go back to the wonder of their childhood. For example, there are advertisements in which parents are passing their knowledge of the Light Side and the Dark Side to their children.

It is almost terrifying how effective these tactics are in making people further invested in The Force Awakens but, hey, that’s good marketing, right?

Being able to take an already-existing fan base and grow it beyond even its generation shows that these companies know what they’re doing. An effective campaign makes its target audience feel emotions that draw them closer to what is being sold. In terms of Star Wars, many companies have done just that.

To read more about how companies are marketing Star Wars, check out this article by The Week.

Social Media and Marketing

In the fast-paced world of modern marketing, social media is the cornerstone of any good campaign. Overnight, the face of business changed. The effect was so rapid and powerful, a rift has been opened between those able to understand these modern tools, and older businesses stuck in their ways. The market of 50 years ago is gone, and as Bob Dylan famously said, “the times they are a changing.”

Businesses resistant to social media feel that they no longer need additional business to continue functioning. That the advent of social media is little more than a passing fad. This couldn’t be further from the truth as nearly everything we do is handled over one social media platform or another.

As a small company curating a group of loyal clients over social media will not only create a base of consistent business but will start building a powerful brand among people who are active on the medium. A blogger who supports your brand will fight for you, support you, and spread the word of your good works among circles and groups.

Many industries are struggling against a tremendous learning curve. With new and useful technologies being released every day, many struggle to keep their head above the rising tide of social media. However, choosing to ignore the importance of social media in marketing is like a drowning man choosing to ignore the water he sinks in.

The power to connect with your customers like never before, combined with the possibility to receive free product feedback and customer input is possibly the best resource that has ever been made available for small businesses. If used correctly, social media is a launchpad that can take your company to places otherwise impossible to reach.

For more information from Pennington Capital, click here.

Volkswagen in Trouble?

investors are troubled after Volkswagen’s poor performance in the market. After a series of mistakes, chief among them being Volkswagen’s dubious trickery involving the American emissions rules, has the company in hot water with the government and economy. Coming on the heels of their diesel “defeat devices” scandal, Volkswagen has never suffered this much negative PR, and the market’s reaction mirrors the decline in public opinion.

Volkswagen stock plummeted 20% in the European morning markets. In the U.S, the entire line of diesel products was halted to be sure no further fines would be levied against the company. Still reeling from the $900 million settlement with General Motors over ignition switch defects, Volkswagen’s public image is suffering. Once the world’s biggest car manufacturer, analysts suggest that The Curse of The World’s Biggest Carmakers is very real and has now set upon Volkswagen at the height of their success.

Though silly to some, every car company that’s held the coveted spot as #1 in the industry has inevitably fallen victim to themselves. GM once ruled over this spot as the highest seller. For decades, they reigned over all other car companies, and then 2009 brought bankruptcy and a need for a federal bailout. After supplanting GM the year prior, Toyota enjoyed their time in the coveted spot right up until its collapse due in part to poor management from chief executive Akio Toyodo.

Many market analysts are viewing Volkswagen’s crisis as their turn in the grinder. Every large company is expected to receive negative press by virtue of being so public, and if there’s a silver lining Volkswagen is clinging to, it’s that their mistake didn’t cost any lives. Both GM and Toyota faced scandals that carried a weighty human cost, an inexcusable and unforgivable act in the eyes of many consumers. Though little can be said for how the case will turn out, Volkswagen is hopeful that by quickly addressing their wrongdoings, they can erase the smudge on their public image. For more on the subject, click here.