Enjoy access to a free NMLS renewal class when you attend an in-person event.
- The firm confirmed layoffs on Wednesday, stating about 900 people were affected.
- The Daily Beast reported that the mortgage startup had a “wildly temperamental founder” and when the company decided to lay off 10% of its workforces, “it did so in brutal fashion.”
- Layoffs were primarily in the U.S. and India, but they came as a complete surprise following Better’s rapid nationwide expansion.
- Better’s automation efforts mean fewer manual processes and more machine-driven business, replacing the need for human labor.
Better.com, the digital mortgage firm, cut 9% of its global workforce, including some employees in Charlotte, NC. The firm confirmed layoffs on Wednesday, stating about 900 people were affected.
The news comes one day after announcing an amendment to its SPAC Agreement, allowing companies Aurora Acquisition Corp. and SoftBank to provide Better with half of the $1.15 billion they committed immediately, instead of waiting until the deal closed. This would bolster the company’s balance sheet before they plan to go public in the near future at $6.9 billion in valuation.
Better.com spokesperson declined to give details, according to multiple sources, but issued a statement from CFO Kevin Ryan: "A fortress balance sheet and a reduced and focused workforce together set us up to play offense going into a radically evolving homeownership market."
However, the Daily Beast reported that the mortgage startup had a “wildly temperamental founder” and when the company decided to lay off 9% of its workforces, “it did so in brutal fashion.”
In the U.S., all affected workers were reportedly summoned into a mass webinar on Wednesday, when the billionaire founder and CEO Vishal Garg delivered a brief speech informing them of their termination.
Demi Clark, reported leader of the Better.com Charlotte office, estimates that up to 200 local employees were let go. Executives shared the news within 15 minutes via a Zoom call, Clark reported to The Business Journal. She confirmed that employees did receive a severance package as well.
“They dumped us like trash,” another now-former employee told the Daily Beast. “We were there since the beginning and worked hard for the company and for our roles.”
After Garg’s speech the meeting quickly ended, employees’ computers automatically shut down, sources told the Daily Beast, and those staffers who were unable to attend the last-minute meeting were left scrambling to figure out why their devices had stopped working. Some employees were also on vacation at the time, and did not know that they’d been laid off.
According to a TechCrunch report, layoffs were primarily in the U.S. and India, but they came as a complete surprise following Better’s rapid nationwide expansion. Charlotte comprises 10% of Better’s workforce, and gained 1,001 local employees in less than three years after opening the office. At the time, CEO Vishal Garg pledged to hire at least 1,000 local employees in five years.
"The Covid bump that helped sustain legacy players in the industry over the past 18 months is fading, and we expect a large number of our competitors to scale back their automation and vertical integration efforts. This is exactly the time for us to lean in and accelerate our customer-focused product innovation and grow our B2B business, which we believe provides us with greater defensibility in a tougher mortgage market," Garg said in a statement.
Better.com said it has funded more than $45 billion in loan volume to date and has grown market share by 100% since 2020. However, the market is expected to contract quite significantly after 18 months of rapid expansion driven by historically low interest rates. At the same time, the company plans to expand their purchase business and move beyond digital lending to help people find and purchase homes. They also planned to make value-added offerings like title and homeowners insurance as part of its product suite – and, apparently, they won’t need more labor to achieve this.
An anonymous source told TechCrunch that the company has “too many people in the wrong places.” In other words, Better’s automation efforts mean fewer manual processes and more machine-driven business, replacing the need for human labor.
Clark noted that leaders had known for a couple of months that operational cuts would be necessary with the SPAC deal. Still, she hopes the remaining team will be able to rebuild and continue to be successful.