Following a Zoom Call in which 900 people were fired by the CEO, three top executives from an online mortgage lender resigned. There are more likely to follow.
Vishal Garg, the CEO of Better, on December 1 told nine per cent of the company’s workforce they were losing their jobs – then in a blog post attacked them for being so ‘lazy’ they effectively ‘stole’ from customers.
Garg later apologised, but this has not stopped three of its leaders from quitting. Other members are likely to quit the bank.
The head of public relations, Tanya Gillogley; head of marketing, Melanie Hahn; and vice president of communications, Patrick Lenihan have all handed in their resignations, according to Insider.
A source said that this was the first wave in resignations for The Daily Beast. The company is expecting more.
Garg, aged 43, evicted the entire Diversity, Equity and Inclusion team from the company, which handles complaints regarding racism and sexism at work.
Better.com’s controversial CEO Vishal Garg, 43, fired 900 employees over a Zoom call claiming market fluctuations performance, and productivity. Softbank backed the mortgage lender and it received $750 million in cash last week. This comes after the company announced in May that it would be going public via a Special Purpose Acquisition Company.
Tanya Gillogley (left), the head of PR, and marketing chief Melanie Hahn (right) quit following the December 1 firings
Patrick Lenihan (vice president communications) also resigned following the Zoom call on December 1.
In his three-minute call, Garg told them bluntly: ‘This isn’t news that you’re going to want to hear. This call is for you if you don’t want to be part of the unfortunate group being laid off. You are out of work immediately.
According to him, the market has changed and drastic cuts were necessary to save the company’s $7 billion workforce.
Despite a $750million cash injection that the mortgage company received last Wednesday, these firings occurred.
According to the boss, market efficiency, productivity, performance and market efficiency were also to blame. He added that the company had to move in order to survive.
Later, he apologized via email to employees for not showing the proper amount of appreciation and respect to individuals affected and their contributions to Better.
He said, “I made the decision to layoffs. But I communicated it poorly. You were embarrassed by my actions.
“I’m sorry that this was a bad way to communicate the news.
“I deeply regret the circumstances and will learn from them and do my best to make it right.
Participants on the conference call noticed that their computers at work were starting to crash after the meeting.
One angry worker filmed the call and shared it online, complete with a moment where they cursed at the CEO as he confirmed the mass ‘termination’ of employees from the Manhattan-headquartered mortgage provider.
The unidentified male worker could be heard to say: ‘F**k you dude. Are you f**king kidding me?’
Garg, previously accused of being erratic by workers, then doubled down on that accusation in a harsh blog post, where he criticized his staff for “stealing” through laziness.
On professional network Blind, the father-of-3 wrote: “You know that at most 250 people were working an average time of 2 hours per day while clocking over 8 hours per day in the payroll systems?
“They stole from you, and they robbed from our customers who pay the bill that pays our bills,” he said. “Get educated,” he said.
Fortune interviewed Garg who threatened to strangle a former business partner to the wall and kill him, according court documents. He also confirmed that he made these comments using the anonymous username “uneducated”, but refused to relent.
He stated, “I feel they could have been phrased different, but frankly the sentiment was there.”
It’s not news you want to hear… Garg announced abruptly on the phone that “Your employment here is terminated effective immediately”. “Your employment here has been terminated immediately.”
In his Zoom call, he explained how difficult it was for him firing the staff. He also said that he didn’t want to cry the way he had in the past.
He said, “This marks the second time I have done this in my professional career. I don’t want to stop doing it.”
“The last time that I tried it was when I wept.
“This time I want to be more powerful.
‘We are laying off about 15% of the company for a number of reasons — the market, efficiency and performances and productivity,’ he told workers.
The boss was later incorrected by a company spokesperson who stated that only nine percent of those laid off were actually true.
Garg told Fortune that four weeks ago the firm started reviewing employee productivity data, including missed telephone call rates, number of inbound and outbound calls, employees showing up late to meetings with a customer, and other metrics.
He said, “As we began to slow down the pace of hiring we saw some alarming stats and a lot of our customers weren’t getting the service they deserved from each other’s teammates.”
Garg’s reasoning behind firing workers was also questioned by reports that Garg, the CEO, accused them of being lazy and taking advantage of the company. Workers were reported to have worked two-hour shifts and clock in at 8+.
The staff were shocked by Garg’s move. They also criticized Garg’s threatening call to company executives after the announcement of layoffs. Garg stated that the remaining employees’ performance would be closely watched.
Fortune reported that one employee said, “His tone was extremely severe and threatening.”
Garg was also quoted as saying that two others warned of a “bloodbath” next year.
One source said, “It was very odd.” The comments were very disturbing.
Fortune was told by Garg that he didn’t threaten his staff, and that “no additional monitoring is taking place” other than that required by the regulator.
But he admitted that his firm looked more closely at productivity data.
His ‘bloodbath” comment was taken out of context, and was in a wider reference to the mortgage industry.
Better, which offers pre-approval on a mortgage in minutes, saw its share price soar during the pandemic as the saturated home buying market, coupled with low interest rates, saw thousands of new customers looking for fast ways to get a loan.
According to The Information, it has hired 2,000 additional employees since Covid’s inception and is on track to generate $800 million this year.
Even with the lay-offs, it has still 9,000 employees in the US and India.
Fortune quoted Garg as saying that investors and members of the firm were supportive of job cuts. He declined to reveal the names of investors or board members who supported Garg’s comments.
A former aide and two current employees told the site Garg’s reputation for acting erratic in Better’s Slack messaging system, as well as during company meetings, was evidenced by an ex-aide.
In one Slack message, he stated that “if you’re not interested in hard work,” he said.
It is reported that the CEO has high standards and demands of his staff.
Managers of offices were criticised for not keeping mini refrigerators stocked with Perrier or Fiji water.
Garg also insisted on bottles of Gerolsteiner, his sparkling beverage of choice, according to Forbes.
“Why are we having biscotti like that?” A few years ago, he demanded that office managers make biscotti as he wanted.
Forbes received one email in which he wrote the following: “You’re TOO DAMN SLOW. Your brain is a collection of DUMB DOLPHINS… STOP IT. STOP IT. STOP IT. I’M EMBARRASSED by YOU.
Better’s headquarters is 44,000 square feet of office space on the 59th floor of 3 World Trade Center in Manhattan
In August, The Daily Beast reported that one of his closest executives, Elana Knoller received stocks worth potentially tens to millions of dollars and $8,000 per months for two homes, as well as other perks.
Knoller was finally placed on administrative leaves for bullying.
The Daily Beast also reported that Garg told a former business partner that he was ‘going to staple him against a f**king wall and burn him alive.’
Better featured in Forbes Fintech Top 50 and hopes to be public by the end of this year.
The company received $1.5 billion of convertible notes and debt earlier in the week before its planned debut.
Softbank backed Better has received a $750m cash injection last week. This comes after it announced in May that it would go public as a Special Purpose Acquisition Company. Now, the company is valued at $7.7 million.
Garg, who was born in India, moved to Queens as a seven-year-old and attended Manhattan’s renowned Stuyvesant High School.
Early in his career, he was a businessman and bought CliffsNotes as well as books that he later sold to students.
Garg revealed that his superpower is math.
Teenagers also tried thrift shopping and later selling their clothes on eBay.
But a Better spokesperson confirmed that it was false because eBay didn’t exist until Garg had graduated.
He went on to study at New York University where he would meet his future business partner Raza Khan.
In 2000, they founded MyRichUncle online student loan company.
It began with a $30,000 initial investment. By 2007, the company was a publicly traded corporation that had handled over $300 million in loans. This made it the US’s largest private lender.
In 2007, the financial crisis led to the liquidation of the company.
Khan and Garg were inspired by the subprime mortgage crash to explore a new market for lending.
Based on the algorithms they developed at MyRichUncle and a number of other companies, they created EIFC to identify toxic mortgages.
The tool is designed to identify mortgages not correctly issued and to allow investors to sue bad banks that sold them.
Khan said that although the initial signs looked promising, Forbes noticed some inconsistencies regarding the finances.
He sued Garg in 2013, alleging that Garg’s tax returns were not properly filed, and that Garg moved $3,000,000 to his personal bank account.
Since then, the pair has been embroiled in an extensive legal dispute.
According to court documents, during one hearing in December 2019, Garg turned to Khan and said that he was ‘going to staple him against a f***ing wall and burn him alive.’
Garg apologized later during deposition that he had let his emotions run amok.
Forbes 2020, A Better spokesperson stated that law suits are a common occurrence for CEOs of successful startups.
Khan was named by him as an ex-friend and former business associate who is’very litigious’.
Better is brighter because of the story Garg told.
Forbes was told by Garg that he and his wife rented while he was pregnant with their second baby.
“We lost the place we were trying to buy because of our lengthy and inefficient mortgage process,” he stated.
Garg started Better in 2014 to streamline the approval process. Better offers pre-approval for your phone within 3 minutes.
The traditional fees owed by borrowers would be eliminated, which makes it more affordable for consumers.
Better will sell mortgages once they are issued to lenders such as Fannie Mae, Freddie Mac, and Wells Fargo.
This concept is a huge hit. Perhaps not more than in the recent pandemic when millennials tried to climb the ladder of property while also saving thousands by working remotely.