Better.com CEO Vishal Garg Steps Back Amidst 'Fear' Leadership Claims

Better.com CEO Vishal Garg Steps Back Amidst Controversy

Recent developments indicate that the conduct of Vishal Garg, CEO of Better.com, is now having repercussions.

This morning, the Better board of directors informed employees via email that Garg would be taking a leave of absence, commencing immediately, following “deeply regrettable incidents” that transpired during the previous week.

Crisis Management and Emerging Details

According to an employee who requested anonymity, this decision followed the digital mortgage company’s engagement of a crisis management firm earlier in the week. For those closely monitoring the situation – spanning the past week, and indeed the past year – this action was anticipated.

Further details concerning the executive’s behavior have surfaced, including emails revealed this week where Garg harshly criticized his investors, as reported by Vice. While his use of harsh language towards employees was already known, the treatment of investors presented a new level of concern.

The board’s email to employees stated that CFO Kevin Ryan would assume the responsibilities of CEO during this interim period. It also announced the engagement of “an independent third-party firm to conduct a leadership and cultural assessment.” The findings will be used to “establish a sustainable, positive culture at Better” in the long term.

Skepticism and Concerns About Cultural Change

However, some believe this response may be insufficient and come too late. TechCrunch has interviewed numerous current and former employees who express doubt that a deeply ingrained toxic culture can be swiftly rectified.

These employees characterized the CEO’s “apology” – issued after the resignations of the heads of PR, marketing, and communications – as insincere damage control.

One employee shared that she had been contemplating resignation prior to the recent events, but these developments ultimately prompted her decision to leave.

She described Garg as a leader who “governs through fear,” stating, “Nothing was ever considered adequate.” He allegedly threatened employees to increase their work rate and efficiency, without providing clear expectations or outlining potential consequences.

Increased Pressure and Financial Challenges

The pressure reportedly intensified in recent months as the company experienced a downturn due to declining refinance volumes.

“The market shift wasn’t unexpected,” the employee explained. “However, the company’s projections underestimated the speed of the change.” She also noted increased anxiety following the SoftBank investment and the impending SPAC transaction, suggesting greater transparency regarding overhiring in the previous year would have been beneficial.

Last week, the company reduced its workforce by 9%, just one day after securing a $750 million cash infusion as part of a revised SPAC agreement. While layoffs via Zoom are becoming increasingly common, the manner in which Better conducted them drew criticism even from casual observers.

Sudden Policy Changes and Financial Disclosures

Another indication of internal disruption was the company’s abrupt shift back to in-person work, despite previously embracing a remote-first model. This change caused confusion, particularly for employees who had already relocated and purchased homes in different cities.

In mid-November, HousingWire reported preliminary results from Better’s SPAC partner, Aurora Acquisition Corp., indicating an anticipated net loss of $85 million to $100 million in the third quarter. The forecast for the fourth quarter, as detailed in an S-4 filing with the U.S. Securities and Exchange Commission, appeared even less favorable.

Executive Compensation and Employee Experiences

These financial challenges emerged after Garg received a $25 million cash bonus in 2020. The S4 filing stated: “In 2020, following a request for equity-based compensation, our CEO was granted a one-time discretionary bonus of $25.0 million, as determined by the Board based on his 2020 performance.”

Meanwhile, a former employee reported that remaining colleagues were asked to accept pay cuts and forgo bonuses. She further stated that, during the pandemic, remote customer-facing employees were required to clock in for breaks precisely at 15 and 30 minutes.

“Even a one-minute overrun resulted in reprimands from managers,” she told TechCrunch. “Some team members even faced direct criticism from senior managers regarding this issue.”

Questionable Growth Opportunities

The same employee also challenged Better’s portrayal as a fintech company offering ample growth opportunities.

“Better promoted itself as a dynamic fintech startup where individuals seeking advancement could thrive. This proved to be inaccurate,” she said. “Opportunities for growth, salary increases, and interdepartmental collaboration were limited. Managers prioritized sales above all else, leaving little room for career progression. We were essentially trained to aggressively pursue rate locks from customers, regardless of their intentions.”

Better did not immediately respond to an emailed request for comment.