The online mortgage lender Better began laying off thousands of employees on Tuesday, with some employees saying they found out they were cut without any advanced notice from the company, including a glitch in the company’s payroll app.
Approximately 3,000 layoffs, which had been anticipated for months, came Tuesday amid intense scrutiny on the company after CEO Vishal Garg laid off an estimated 900 employees in December during a pre-holiday Zoom call that drew attention nationwide.
The company confirmed in an email that it had let go of 35 percent of its workforce, and shared the email that went out to employees at 9:14 a.m. today, but employees reported receiving no advanced notice they were impacted before discovering it on their own.
“As you know, the residential real estate market has been changing rapidly, and our entire industry is facing a dramatic drop in origination volume due to rising interest rates,” said the email from interim president and chief financial officer Kevin Ryan. “It is clear – after careful, comprehensive review – that we will need to do more to ensure a strong path forward for the company and the vital work we are all doing to make homeownership more accessible for everyone.”
TechCrunch first reported the size and scale of today’s layoffs, which they estimated to be in the thousands.
The layoffs come amid a widespread clearing out of the company’s leadership, and as it looks to go public via what is known as a SPAC merger.
The move had been expected, as the pace of lending had dropped at the fastest clip in three years. The Utah-based online brokerage Homie laid off a third of its staff last month.
Ryan said the company attempted to reach out to employees to let them know if they were let go. However, at least one employee said he found out when his severance pay showed up in his bank account prior to any formal announcement.
“Today I found out in the most unusual way that I was being let go from my role at Better,” Wes Bergeron, a sales and people manager, wrote in a LinkedIn post. “I saw a huge deposit going into my account tomorrow and got kinda curious.”
Better didn’t respond to questions about the apparent payroll glitch.
Another employee said she was in a meeting with her manager when she was locked out of her computer.
“I literally was in a meeting with my manager when I was logged out of my computer and unable to log back in,” said another employee, Melanie Grigsby, in a post. “No notice received, email or anything.”
Ryan’s email said employees would receive severance worth 60-80 days’ pay, COBRA health benefits and help finding a new job.
Employees began circulating a spreadsheet with hundreds of names of employees who said they were impacted by the layoffs.
Culture problems amid attempt to go public
If the apparent payroll glitch was widespread, it would mark the second straight bumpy rollout of widespread staff reductions. After the previous round of layoffs, Garg briefly stepped away from the company as its CEO before returning.
That led to widespread fallout, with key members of the team’s leadership began leaving in droves.
One former member of management who left the company this year cited Garg’s approach to leadership as the reason for leaving.
“He’s probably the No. 1 roadblock that we all face,” the person said, asking to remain anonymous to discuss inner workings of the company.
An end-to-end real estate platform backed by SoftBank and other investors, Better had planned to go public during the fourth quarter of 2021 through a SPAC merger with Aurora Acquisition Corp.
But the merger was postponed after the deal terms were revised on Nov. 30, and CEO Vishal Garg fired about 900 Better employees over a Zoom call the next day. An amendment to the merger agreement extended the outside date for calling off the merger from Feb. 12, 2022, to Sept. 30, 2022.
“The sad part is they really felt that keeping him in his role was going to continue and keep our SPAC and IPO fruitful and ongoing,” the employee said. “In the sense if you think about it, we have lost 10 executive director type levels. That’s the crazy part. Saving one person and you’re losing the rest of us.”
The company recently moved to create new executive positions, including that of president, as an apparent first step toward creating a firewall between employees and Garg.
Better is aware that it has issues with its culture. It conducted a review after the previous round of layoffs and found issues that “require improvement, many of which relate to actions taken by the Better Founder and CEO.”
If Better can’t fix what it calls “issues with our culture,” it will struggle to replace a list of departed senior managers that steadily grows, the company said in a filing last month that also shed light on ongoing financial struggles.
