Better.com Lays Off 9% of Staff Before IPO

Better.com Announces Workforce Reduction

Following the announcement of an amendment to its special purpose acquisition company (SPAC) agreement, digital mortgage lender Better.com has confirmed a reduction in its workforce, impacting approximately 9% of its nearly 10,000 employees.

Layoff Numbers and Company Statement

This reduction equates to roughly 900 positions within the organization. The company opted not to provide further commentary beyond a statement released by CFO Kevin Ryan.

Ryan stated: “A robust balance sheet, coupled with a streamlined and focused workforce, positions us to capitalize on opportunities within a rapidly changing homeownership landscape.”

Factors Driving the Decision

Sources with knowledge of the company’s internal operations, which is preparing to become a public entity with a $6.9 billion valuation, indicated several factors contributed to this decision.

A significant contraction in the mortgage market is anticipated following a period of 18 months characterized by substantial growth fueled by historically low interest rates is a key driver. Better.com has publicly expressed its ambition to enhance its home purchase experience and broaden its services beyond digital lending, aiming to assist customers in locating and acquiring homes.

Strategic Realignment and Automation

The company is also focused on expanding its portfolio of value-added services, including title insurance and homeowner’s insurance. According to sources who requested anonymity, the company had “an excess of personnel in unsuitable roles.”

Furthermore, the implementation of automation technologies is reducing the need for manual processes, resulting in a more machine-driven operation and, consequently, a decreased requirement for human resources.

Geographic Impact and Funding

The layoffs are primarily affecting employees in the United States and India. On November 30th, it was reported that Better.com was receiving a cash infusion from its investors ahead of schedule.

Aurora Acquisition Corp., a blank-check company, and SoftBank agreed to modify the terms of their financing agreement, providing Better.com with half of the committed $1.5 billion immediately, rather than waiting for the deal to finalize.

Financial Considerations

While there is no confirmation of a cash flow issue, an email from CFO Ryan to employees, obtained by TechCrunch, revealed that Better.com projected a balance of approximately $1 billion by the end of the week. It is plausible that the layoffs were a prerequisite for securing this funding.

Abrupt Implementation of Layoffs

Reports from the Daily Beast suggest the layoffs were executed swiftly and unexpectedly. Noah Kirsch of the Daily Beast reported that affected U.S. employees were notified during a mass webinar led by founder and CEO Vishal Garg, who informed them of their termination.

Following Garg’s announcement, the meeting concluded abruptly, and the computers of the impacted employees were automatically shut down.

Discrepancy in Layoff Percentage

Reporter’s note: Subsequent to the initial publication of this article, reports surfaced on social media from employees indicating a layoff percentage of 15%. A recording of the video conference obtained by TechCrunch features CEO Vishal Garg stating:

“I am delivering difficult news. As you are aware, the market has shifted, and we must adapt to ensure our survival and continued success in fulfilling our mission. This is not welcome news, but it was my decision. I wanted to communicate this directly to you. Making this decision has been incredibly challenging, and it is the second time I have had to do so in my career. I hope to demonstrate greater resilience this time. We are reducing our workforce by approximately 15% due to market conditions, efficiency concerns, and performance considerations.”

Company Response to Percentage Discrepancy

In response to these reports, a company spokesperson stated: “The figures initially provided were inaccurate, and the CEO referenced an incorrect number during the announcement. The numbers we initially shared with you – over 900 employees, representing roughly 9% of the global workforce – were correct.”

Note: Ryan Lawler contributed to this report.