You're totally missing the point of what I'm saying.
They are putting themselves at a significant competitive disadvantage by incurring a drastically higher yearly operating expense, expenses which their competitors (in a very saturated market) don't have. They were already operating at <1% margins, and this cuts into that even more.
Dan's bet is that they can make up for this by the PR and goodwill they are getting from this story, but in credit card processing, fractions of percentages matter to the customer.
His prices are not changing, only exec compensation is being significantly impacted in a rebalancing of worth. Arguably the PR and motivational impacts should also be non trivial.
My biggest concern would be the normalising effect. If i'm a successful salesperson and it was announced that my 69k salary was going up to 70k - but so was the [lowest paid role; no disrespect intended]? I'd probably slide towards feeling undervalued despite it still being in line with market rates.
My only other concern would be the implicit pressure to outsource some services over time. I know my company gets around paying london living wage by declaring that contractors do our catering so they aren't responsible for the wages paid to catering.
It's still a cool thing done for good reasons and I hope it works out.
Let's take off our HN Goggles with +5 Cynicism enchantment for a moment! What if this CEO feels a bond toward his team, and feels a desire inside his heart to help his employees conquer their dreams?
It doesnt have to make the business more money, all it has to do is alleviate the concerns and worries in his employees that make their lives hard, and if he has a work force full of happy fulfilled people, I bet THAT is how he will measure the success of this.
I don't think competitors figure into this much at all, this is inwardly focused. This is about strengthening the whole team, starting with the weakest financial link.
It's amazing how much you are being misinterpreted. No one is saying that customers will leave Gravity because they pay clients more. BUT, what is keeping competitors from lowering prices to the point that Gravity cannot compete without either cutting salaries or running a loss?
They are putting themselves at a significant competitive disadvantage by incurring a drastically higher yearly operating expense, expenses which their competitors (in a very saturated market) don't have. They were already operating at <1% margins, and this cuts into that even more.
Dan's bet is that they can make up for this by the PR and goodwill they are getting from this story, but in credit card processing, fractions of percentages matter to the customer.