Better.com’s CEO apologizes, but the fallout continues
Vishal Garg, CEO of Better.com
In the span of three minutes, 900 Better.com employees were fired via Zoom by the company’s CEO Vishal Garg last week.
“If you’re on this call, you are part of the unlucky group,” Garg said nonchalantly in a video that was leaked to the internet. “Your employment is terminated effective immediately.”
A day after the layoffs, the CEO publicly claimed that the company’s former employees were “stealing” from the company and its customers by being unproductive. Garg alleged that the terminated employees worked an average of two hours per day.
The blowback from the industry has been immense, with many mortgage executives questioning the ethics of firing employees just weeks before the holidays. Some lenders have moved to publicly extend an olive branch to former Better employees, offering to bring them on board, while others have created a fund to provide financial aid to those laid off.
A leaked email shows that Garg issued a mea culpa on Tuesday to his team, apologizing for the way that he handled the layoffs.
“I failed to show the appropriate amount of respect and appreciation for the individuals who were affected and for their contributions to Better,” Garg said. “I own the decision to do the layoffs, but in communicating it I blundered the execution. In doing so, I embarrassed you.”
In response to the PR nightmare, members of Better’s communications team, including head of public relations Tanya Hayre Gillogley, head of marketing Melanie Hahn, and vice president of communications Patrick Lenihan, all submitted resignations this week, according to a source familiar with the matter. All three employees declined to comment.
It also looks like Better’s plans of going public via SPAC in the fourth quarter of 2021 will likely get pushed to next year.
The reason stems from a recent amendment to a financing agreement between Better’s SPAC partner, blank-check firm Aurora Acquisition Corp. and venture capital company SoftBank.
Last Tuesday, Better said that the new agreement would inject $750 million of a total $1.5 billion in committed funding to Better immediately, while the remaining $750 million will be distributed to the company in the form of a convertible note at Better’s option within 45 days after the closing of Better’s merger with Aurora.
The amendments to the transaction do not change the implied equity value for Better of approximately $6.9 billion, the company said.
The original financing agreement stipulated that SoftBank would dole out up to $1.78 billion to the company, of which $950 million would have been used to purchase shares from existing Better stockholders.
An employee with knowledge of the matter said that since the deal terms were revised, this will delay Better’s aspirations of going public until January 2022. They also noted that delaying going public will give Better time to extinguish blowback stemming from the layoffs.
As reported previously, another source with direct knowledge of Better’s plans to go public said last week that it would be virtually impossible for Better to go public before the end of the year.
“The S-4 hasn’t been declared effective and once it is, you’re probably four weeks at least until the vote and closing,” the source said.
Meanwhile, the 9% of employees terminated by Garg – who has a history of controversial behavior – are garnering support, with tech companies, lenders and headhunters advertising jobs and their desire to help on Linkedin.
Paul Hindman, managing director of Grid Origination Services, noted in an email that given the broad range of visibility that Garg created, the rally to support these folks is unlike anything that he’s ever seen.
“I’ll leave you with this: I wouldn’t be surprised if some of these folks formed a new company across the street…its happened before,” Hindman said.
Furthermore, Amy Spurling, CEO of HR software company Compt, said in a statement that a company “can’t claim to be dedicated to building an inclusive and diverse workplace and then unceremoniously cut the entire DE&I team on a group call.”
She added, “The Zoom call layoff wasn’t the worst part to me. When you’re fully distributed, you don’t have another choice really. I give him credit for being the one to have the conversation actually. What is inexcusable is the purported reason as to why he did the layoffs — that 900 people were lazy and only working 2 hours per day. “
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