Not a happy early Santa call, but nine-hundred employees at the digital mortgage company Better.com have received an unwanted early Christmas gift: unemployment. The termination announcement was made during a now-viral Zoom call by the company’s founder and CEO, Vishal Garg. But when a CEO fires 900 employees over a zoom call, eye balls will surely be raised. It is therefore not surprising when CNBC reporter Shepard Smith exclaimed, “Whaoh, isn’t that nice!”
About 15 per cent of the company’s employees in the US and India were abruptly laid off as part of the cost-cutting exercise. Vishal Garg, the head of Better.com, can be heard saying this in the video call; a recording of which has not been verified, was widely shared on YouTube.
You Are Fired!
“If you’re on this call, you are part of the unlucky group that is being laid off. Your employment here is terminated. Effective immediately,” Mr Garg can be heard telling the employees.
He began the announcement by saying the market had changed and the company had to move with it in order to survive.
“This isn’t news you are going to want to hear. But ultimately, it was my decision and I wanted you to hear it from me. It’s been a really, really challenging decision to make. This is the second time in my career I’m doing this; and I do not, do not want to do this. The last time I did it, I cried. This time I hope to be stronger,” Mr Garg said.
“We are laying off about 15 per cent of the company,” he added.
The chief executive said all the US-based employees laid off would get four weeks of severance, a month of full benefits and two months of coverup for which the company would pay the premium.
Members of the company’s diversity, equity and inclusion recruiting team were among those who were fired, reported CNN Business.
Accepting it As Failure or a Learning Opportunity
A number of clips of the video call are being shared on social media. In one of them an unseen viewer — seemingly an employee of the company — can be heard expressing their shock at the announcement.
“If you’re willing to accept failure and learn from it, if you’re willing to consider failure as a blessing in disguise and bounce back, you’ve got the potential of harnessing one of the most powerful success forces.”Joseph Sugarman (Author and Entrepreneur)
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“This is not real. Oh my god, I can’t believe this. This is not real. Oh no, this can’t be happening,” the person can be heard saying over the clip.
“Having to conduct layoffs is gut-wrenching, especially this time of year,” the company’s chief financial officer Kevin Ryan said in a statement to CNN.
“However a fortress balance sheet and a reduced and focused workforce, together, set us up to play offence going into a radically evolving homeownership market,” Mr Ryan added.
Sparks of Fire And Controversies
Mr Garg later defended the move in a post on Blind, an anonymous review site, according to Fortune.
“You guys know 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? They were stealing from you and stealing from our customers who pay the bills that pay our bills. Get educated,” Mr Garg wrote under the username “uneducated”.
Mr Garg confirmed to Fortune that he is the person who wrote the post, saying: “I think they could have been phrased differently, but honestly the sentiment is there.”
The outlet reported that Better.com determined who would be laid off by reviewing individual employee data. This includes, client meeting attendance and number of calls made, answered and missed.
While layoffs are an unfortunate reality for countless companies, the Independent newspaper reported that Mr Garg has reportedly been involved in controversy prior to last week’s incident. It is reported that he has a history of insulting his employees. The newspaper also said he has been the subject of numerous fraud and financial misappropriation allegations at his previous companies.
In an email obtained by Forbes magazine in 2020, he wrote to staff: “You are TOO DAMN SLOW. You are a bunch of DUMB DOLPHINS… SO STOP IT. STOP IT. STOP IT RIGHT NOW. YOU ARE EMBARRASSING ME (sic)”.
A Great Investment (Resignation) Season Compared to a Great Re-designation as Unemployed
The CEO earned further ire after it was revealed that the mass termination happened a day after the company was expecting additional investment.
Better.com, founded in 2016, recently received $750m (£566m) in investments – cash infusion from its SPAC backers – and is set to go public. It earlier announced in May it would go public sometime near the turn of the year. The company is preparing to have about $1 billion (£754m) on its balance sheet, CNN reported.
From Startup, to Backend Setbacks And Then Smiley Face Bottom-line
According to the Independent, Mr Garg moved from India to Queens, New York with his family when he was seven years old. During a podcast interview in 2019, Mr Garg claimed his fascination with business started during high school. Then he would purchase CliffNotes and other books to re-sell to his classmates at a markup.
He then claims he moved into reselling thrift store clothes on eBay. The independent newspaper says this claim is almost certainly incorrect, as eBay was founded after he left high school. He also said he enrolled at New York University where he studied finance and international business.
In 2000, Mr Garg and his high school friend and fellow immigrant, Raza Khan, began a private student loan company called MyRichUncle. The site separated itself from other lenders by using algorithms to determine the borrowing terms for interested students.
By 2007, Mr Garg had dropped out of NYU. From startups, and backend setbacks, he was beginning to move forward with his friend. The pair’s company had gone public, becoming one of the largest private student loan companies in the US. The company was eventually purchased by Merrill Lycnh, and later by Bank of America.
Two years later the financial crisis hit; sadly, MyRichUncle found itself forced into Chapter 7 bankruptcy.
Despite the setback, the duo saw opportunity and launched a new project, called EIFC. This used the same technology MyRichUncle used to determine borrowing terms to allow homeowners to identify loans that should have never been approved by the banks. That information could provide them with the tools needed to sue their banks that issued the predatory loans.
Retirement (or layoff) is not the end of life’s journey. Rather it is the beginning of a new.
Practice Turf Before CEO Fires 900 Employees Over Zoom Call?
By 2013, however, things between the pair turned sour. Mr Khan filed a lawsuit claiming that Mr Garg – who oversaw the company’s finances – had not been filing the business’ taxes and that Mr Garg had transferred $3m from the company’s coffers into his personal bank accounts.
The relationship between Mr Garg and his former friend became uglier, with Mr Garg claiming that Mr Khan stole $400,000 – an allegation Mr Khan has denied – and resulting in a deposition during which Mr Garg threatened to “staple [Mr Khan] against a f****** wall and burn him alive.”
Mr Garg later apologised for the comments, but has since called Mr Khan a “total charlatan who used to be my best friend.”
The Birth of a Better Baby
A year after Mr Khan filed the lawsuit, Mr Garg founded Better.com. The new company provides digital mortgage services for prospective homeowners. The company has long been touted as one of the hottest fintech startups of recent years. But by 2019, allegations of financial mismanagement began circulating among the company’s employees.
According to The Daily Beast, employees claimed that Mr Garg had been handing over huge amounts of equity to one of his top lieutenants, Elana Knoller. That this was done in the form of stock options and a monthly $8,000 payment for two homes, among other perks. It was claimed that those benefits did not appear consistent with what other top officers were receiving at the company.
“It’s crazy,” a former senior employee told the outlet. “It’s like a handout. The whole point of options is to incentivize four years of work. This is like handing her cash.”
It is said that Ms Knoller left the company four months after the allegations began circulating and placed on administrative leave for allegedly bullying workers, according to Forbes.
Just like the Fortune, Forbes, CNBC and likely other media houses, The Independent has reached out to Mr Garg and Better.com for comment.
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