Will Better.com founder Vishal Garg return as CEO
December 13, 2021
Unusual for most business stories, a video of Vishal Garg, founder and Chief Executive of New York based Better.Com, has been widely broadcast around the World, including by the BBC. It has also attracted millions of viewers on YouTube. The video shows Garg, 44-years-old, telling 900 employees of his company in the U.S. and India, on a Zoom call on December 1, that they were “part of the unlucky group that is being laid off. Your employment here is terminated effective immediately… The last time I did it, I cried; this time, I hope to be stronger.””
Better says its mission is “making homeownership simpler, faster and…more accessible for all Americans.” It offers a one-stop digital platform to homebuyers to shop for a mortgage loan, buy home title insurance and homeowner insurance, as well as find real estate brokers. The platform offers tools, calculators, and educational information to assist home buyers with their decisions. Better has about 8,000 employees, according to its LinkedIn page.
Three senior managers resigned from Better after Garg’s firing of employees via a Zoom call, which occurred just on the eve of the festive annual holiday season. The action was also widely criticized by the media and by millions on social media. Last week, in a note he sent to employees, Garg stated, “I want to apologize for the way I handled the layoffs last week…I failed to show the appropriate amount of respect and appreciation for the individuals who were affected.”
Last week, the media also reported about other actions by Garg. Following the layoffs via Zoom, he told the remaining employees via a digital town hall, that “You will be encouraged to fail once. But not allowed to fail twice. Not meeting deadlines will not be acceptable,” according to Vice.
Later, in an anonymous post on the social media forum Blind, Garg alleged that “at least 250 of the people terminated were working an average of 2 hours a day while clocking in 8 hours+ a day in the payroll system,” essentially “stealing” from customers and the company, according to Fortune.
In April, in a letter to some investors in Better, Garg disagreed with three major investors over the path to its listing as a public company. According to Vice, in an email, he called Howard Newman, of Pine Book Partners, "sewage" and an "ingrate and a thug and a miserable miser."
"You are a bunch of DUMB DOLPHINS (who)…get caught in nets and eaten by Sharks,” Garg stated in an email sent to staff last year, Forbes reported.
In September, for the second year in a row, LinkedIn ranked Better as the top U.S. startup. Better was also listed as one of the best online mortgage lenders in 2021 by Forbes.
Better is pursuing a massive market given that home ownership is a major pillar of the U.S. economy. In 2020, 6.5 million homes were sold and mortgage loans, borrowed by homeowners to fund the homes, are valued at more than $15 trillion. The market for mortgages and title and home insurance is dominated by long-established banks, home insurance providers and other competitors.
In 2020, Better’s home loan volume was $24.2 billion, a four-fold increase from 2019. It’s revenue in 2020 was $876 million, a nine-fold rise from 2019; net income in 2020 was $172 million compared to a net loss of $68 million in 2019. In May, Better announced plans to go public by merging with a special purpose acquisition vehicle, which would value the company at $6.9 billion, when the merger closes. SoftBank Group, run by the Japanese billionaire Masayoshi Son, owns 9% of Better.
The idea for Better mortgage began in 2012 “when my wife and I applied for our first mortgage and got to experience firsthand the inefficient processes, outdated technology, and general frustration that have characterized this industry for decades,” Garg writes in a blog on the company’s site.
Former business partners have alleged in litigation, filed against Garg, that “their money and technology may have been used to launch” Better, according to The Daily Beast.
Garg is the founding partner of One Zero Capital, an investment company focused on consumer finance, technology, and digital marketing businesses. At age 21, he started MyRichUncle, a private lender of student loans in the U.S. In 2005, it went public, was later acquired by Merrill Lynch and eventually shut down. Earlier, he was an analyst in the Mergers & Acquisition department at Morgan Stanley.
Garg was raised in Queens, New York City, by immigrant parents from India. He is a graduate of Stuyvesant High School, a free city-run school. He earned a B.S. in finance from New York University. Garg, his wife and their 3 children live in New York City.
Last year, Garg received $300,000 in salary and a cash bonus of $25 million. He owns 22% of the company, with an estimated value of $1.3 billion.
In May 2021, Garg led Better in donating roughly $2 million to 38 New York City schools to buy laptops, ipads, wifi hotspots, books and uniforms. The city’s “public schools and its amazing teachers gave me so much, from knowledge, mentorship, love and care. So, I decided to step up in this time of need to help these kids, teachers,” Garg said. There are no details about whether Better donated the funds as well as on how much, if any, was a personal donation from Garg.
In a letter to some investors, this April, Garg disagreed with three major investors over the path to listing Better as a public company. According to Vice, he called Howard Newman, of Pine Book Partners, "sewage" and an "ingrate and a thug and a miserable miser."
In 2019, in a legal deposition, according to the The Daily Beast, Garg told a former business partner—the best man at his wedding—that he was “going to staple him against a f… wall and burn him alive.” Garg later apologized.
Due to the lawsuits, Morgan Stanley reportedly decided to stop working on Better’s initial public offering. And Goldman Sachs sold much of its stake in Better, declining to comment on why, The Beast reported.
Last week, Better.com’s board of directors reportedly asked Garg to go on leave as CEO. Calling the events of the past week “very regrettable,” the board hired an outside firm to assess its culture and leadership. According to The Wall Street Journal, “The recommendations of this assessment will be taken into account to build a long-term sustainable and positive culture at Better.” So, the question now is will the board ask Garg to continue as the CEO or resign?
