Dan Price was only 12 years old when he began the accidental training he would eventually need to launch one of the region’s most surprisingly successful companies right here in Interbay.
The training began back in Nampa, Idaho, by playing bass guitar for the rock band he started called Straight Forward, a fitting title as the company he would launch in Interbay, Gravity Payments, depended largely upon transparency to succeed.
Price played in the band and as he got older and the band got better, he became the negotiator for gigs. He spoke with owners of bars, coffee shops and clubs and from those involved conversations, found out what they needed, how they subsisted. He learned that a business’s key expenditures were on goods, labor, overhead and credit card processing costs–in that order. He also realized that the more people he could get to come to shows, the more the club owners would invite Straight Forward back–regardless of how the music sounded. However, it did sound good.
Straight Forward began playing larger venues and well beyond the confines of Nampa. Price, then 16, was freelancing as a business consultant, advising companies that they could save as much as two-thirds on their credit-card processing costs. And he was still attending Nampa Christian High School. As debit card use continued to rise, so greater became the need for businesses to accommodate debit-card-using customers. Price facilitated that change for little businesses in Nampa and beyond.
After high school, he moved to Seattle where he further developed his consulting company while getting a music degree at Seattle Pacific University. By 2004 he started Gravity Payments. There were hundreds of similar companies already in place and starting up all over the country. They processed and vouched for the transactions occurring at these companies and would charge a small fee in return. This is where Price found a way to set Gravity apart from other similar processing companies.
“We did a billing model that would let customers see how much gross profit Gravity was making – right on the statement,” Price said from a conference room decorated with framed clippings from business publications that recognized Gravity’s success and that Price was barely in his 20s. “It built a lot of trust.”
He would explain to clients why processing fees were sometimes so high and that bigger firms needed a way to recoup all the money they spent on advertising.
Price made cold calls, laying it all out there for potential clients and they started warming up to the idea. Now, seven years later, Gravity has 7,000 customers nationwide and 55 employees (40 in Seattle). It is processing more than $2 billion in transaction costs annually and, despite 2010’s lackluster economy, grossed $50 million. The company has grown every year, though in 2008 it almost capsized.
When the housing market crashed, businesses began collapsing, too. Credit card usage was down 20 percent.
“All of our revenue is linked to that,” Price said. “So, out of nowhere, we lose 20 percent of our business.”
Price took an 80-percent pay cut and began cold-calling for new clients in Queen Anne (where he lives) and in Magnolia. He would make calls to retail companies, coffee shops and bars to drum up more business. He pored over 1,200 pages of legal documents for a crucial customer, Synergy Data, in New York. The key client was going bankrupt and he organized a committee of clients and customers that would vouch for the company, to keep it going under new ownership. He did the same for a Bellevue-based furniture company that went under. It went bankrupt and Gravity refunded $250,000 to furniture customers who used their credit cards to buy furniture that would no longer be available.
“Now we always budget for an economic nose dive,” Price said. “We’re always prepared.” He makes sure the company has 20 percent of its operating budget socked away to buffer any sudden economic downfall.
Price’s tenacity and transparency has won him some fans, enough to get him nominated and then to actually win the Small Business Administration’s 2010 Small-Business Person of the Year. He flew to Washington D.C. late last year where President Barack Obama personally handed Price the Small Business Administration award.
[[In-content Ad]]