The CEO of Better.com, who fired 900 employees on Zoom and accused them of stealing last week, is now ‘taking time off effective immediately,’ an internal memo has revealed.
In the email, first obtained by Vice, the mortgage lender company’s board of directors told employees Friday morning that Vishal Garg would be taking time off and that the company had hired an outside firm to ‘do a leadership and cultural assessment.’
‘Vishal and the Board wanted to provide Better employees an update given the very regrettable events over the last week,’ the memo reads.
‘Vishal will be taking time off effective immediately… The Board has engaged an independent 3rd party firm to do a leadership and cultural assessment.
‘The recommendations of this assessment will be taken into account to build a long-term sustainable and positive culture at Better,’ it added.
Better.com’s controversial CEO Vishal Garg, 43, is ‘taking time off immediately’ from the firm and is being replaced by CFO Kevin Ryan (right)
Garg had accused staff of being lazy and stealing from the company and warned the remaining workers that they would not be allowed to fail twice
The decision comes after Vishal, 43, sparked controversy for laying off 900 of his employees he dubbed ‘thieves’ through Zoom on December 1, where he told them: ‘If you’re on this call, you are part of the unlucky group that is being laid off.’
The company also named Chief Finance Officer Kevin Ryan as an interim-CEO who ‘will be managing the day-to-day decisions of the company and he will be reporting to the Board.
‘We have much work to do and we hope that everyone can refocus on our customers and support each other to continue to build a great company and a company we can be proud of.’
Better.com did not immediately respond to DailyMail.com’s request for comment.
Garg has faced backlash for his tone deaf method of firing hundreds of employees, a decision he said he stands by, and following the layoffs, he struck an aggressive tone where he accused employees of stealing time and told remaining staff they will not be allowed to fail twice.
‘You will be encouraged to fail once. But not allowed to fail twice. Not meeting deadlines will not be acceptable,’ he said in a digital town hall last week.
Then in a blog post, he attacked the fired employees for being so ‘lazy’ they effectively ‘stole’ from customers.
The father-of-three wrote on professional network Blind: ‘You guys know that at least 250 of the people terminated were working an average of 2 hours a day while clocking 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,’ he added.
Speaking exclusively to DailyMail.com on Friday, Raza Khan, a former business partner of Garg, admitted that he had been ‘shocked’ but not surprised by his Zoom performance, which he described as ‘unfortunate.’
Khan said, ‘I saw someone who hasn’t changed.’ Khan, for one, said that he was unconvinced by Garg’s assertions that he would ‘try not to cry’ while wielding the ax.
He said, ‘I don’t believe I have ever seen him cry…You can’t fake empathy. You either care or you don’t.’
He added, ‘There’s a tremendous amount of psychological impact to anyone if you’re a growth company and you’re marketed as a successful company then suddenly you’re terminated.
‘It’s beyond just the financial impact that you’re facing. There’s also the moment of wondering, Did I deliver? Is there something wrong with me?
‘I want to apologize for the way I handled the layoffs last week,’ a letter from Vishal Garg posted on the Better.com website read. ‘I failed to show the appropriate amount of respect and appreciation for the individuals who were affected and for their contributions to Better’
‘And to just be terminated. It’s beyond just the financial impact that you’re facing. There’s also the moment of wondering, Did I deliver? Is there something wrong with me?
‘And to just be terminated on a Zoom call, I think it opens more kinds of wounds and questions and self-doubt. So I don’t think it was handled very well, absolutely not.’
On Wednesday, Garg then issued a groveling apology for his actions as CEO. ‘I want to apologize for the way I handled the layoffs last week,’ Garg wrote in a letter addressed to employees and later posted on the company’s website.
‘I failed to show the appropriate amount of respect and appreciation for the individuals who were affected and for their contributions to Better.’
‘I own the decision to do the layoffs, but in communicating it I blundered the execution. In doing so, I embarrassed you,’ he added.
He groveled as three of his top executives quit in the wake of the mass-firing, amid claims others are on the verge of resigning too.
His letter continued: ‘I realize that the way I communicated this news made a difficult situation worse. I am deeply sorry and am committed to learning from this situation and doing more to be the leader that you expect me to be.’
‘At Better, your dedication, focus and expertise are essential in the vital work we are doing to unlock the value, joy and opportunity of homeownership for our customers across the country.’
‘I couldn’t be more grateful for all you are accomplishing for the customers we serve. We will talk more at our upcoming All Hands meeting about what to expect for the year ahead. I hope you’ll join me for the discussion.’
Tanya Gillogley (left), the head of PR, and marketing chief Melanie Hahn (right) quit following the December 1 firings
The vice president of communications, Patrick Lenihan, also resigned after the December 1 Zoom call
‘We are also taking fast steps to make sure we are very transparent and aligned as a company on the goals for 2022, the metrics that matter most, and how we can all work together even better to serve our customers and achieve our mission.’
‘I believe in you, I believe in Better, and I believe that working together we can make homeownership better together,’ the letter concluded.
Garg got rid of the company’s entire diversity, equity and inclusion team, which deals with complaints about racism and sexism in the workplace and three senior executives have since voluntarily resigned.
The head of public relations, Tanya Gillogley; head of marketing, Melanie Hahn; and vice president of communications, Patrick Lenihan have all handed in their resignations, according to Insider.
‘This is a first wave of resignations, and the company expects more,’ a source told The Daily Beast.
In his three-minute call where he fired the employees, he said that the ‘market has changed’ – meaning savage cuts to the $7 billion company’s workforce were needed to avert disaster.
The firings came despite a $750 million cash infusion the mortgage company received last week.
The boss also said market efficiency, performance, and productivity were to blame for the firings, adding that it was necessary for the company to ‘move in order to survive.’
He later apologized in an email to staff, admitting he ‘failed to show the appropriate amount of respect and appreciation for individuals who are affected and for their contributions to Better.’
He added: ‘I own the decision to do the layoffs, but in communicating I blundered the execution. In doing so, I embarrassed you.
‘I realize that the way I communicated this news made a difficult situation worse.
‘I am deeply sorry and am committed to learning from the situation and doing more to be the leader that you expect me to be.’
Those on the call found their company-owned computers beginning to shut down after the meeting.
One angry worker filmed the call and shared it online, complete with a moment where they cursed at the CEO as he confirmed the mass ‘termination’ of employees from the Manhattan-headquartered mortgage provider.
The unidentified male worker could be heard to say: ‘F**k you dude. Are you f**king kidding me?’
Speaking to Fortune, Garg – who once threatened to staple a former business partner to a wall and burn him alive, according to court documents – confirmed he had made the comments under the anonymous username ‘uneducated’, but refused to back down.
‘I think they could have been phrased differently, but honestly the sentiment is there,’ he said.
Earlier, he described in his Zoom call how hard it was for him to fire the staff and how he hoped he would not cry as he had done in the past.
‘This is the second time in my career I’m doing this and I do not do not want to do this,’ he said.
‘The last time I did it, I cried.
‘This time, I hope to be stronger.
‘We are laying off about 15% of the company for a number of reasons — the market, efficiency and performances and productivity,’ he told workers.
This isn’t news that you’re going to want to hear…If you’re on this call, you are part of the unlucky group that is being laid off,’ Garg abruptly announced on the call. ‘Your employment here is terminated effective immediately’
A firm spokesman later corrected the boss’s figure, and said that the actual proportion of staff who’d been laid off was nine per cent.
Garg told Fortune that four weeks ago the firm started reviewing employee productivity data, including missed telephone call rates, number of inbound and outbound calls, employees showing up late to meetings with a customer, and other metrics.
‘As we started to slow down our pace of hiring, we saw some alarming statistics and a number of our customers were not getting the service that they deserved from our teammates,’ he said.
Garg’s rationale behind the firings was further debunked by reports that the CEO accused workers of being unproductive and stealing from the company by working two hours and clocking 8+
Staff said they were stunned by the move and criticized Garg for another ‘threatening’ companywide call he held after the layoffs were announced, saying that the performance of remaining employees would be closely monitored.
‘His tone was extremely harsh and threatening,’ one employee told Fortune.
Two others said that Garg warned next year would be a ‘bloodbath.’
‘It was just very strange,’ said one of the sources. ‘The comments were disturbing.’
Garg told Fortune that he did not threaten staff and that ‘there is no additional watching taking place,’ aside from that which is already required by the regulator.
However, he did admit the firm was looking more at productivity data.
He said his ‘bloodbath’ comment had been taken out of context and was a broader reference to the mortgage market.
Better, which offers pre-approval on a mortgage in minutes, saw its share price soar during the pandemic as the saturated home buying market, coupled with low interest rates, saw thousands of new customers looking for fast ways to get a loan.
It has added 2,000 employees since Covid struck and was on target to bring in $800 million in revenue this year, according to The Information.
And despite the lay-offs it still has 9,000 staff across the US, India and the UK.
Garg told Fortune that the firm’s board and investors were ‘totally supportive’ about the job cuts and they way they were handled. He refused to say which board members or investors offered their support.
Two current employees and an ex-aide told the site that Garg was renowned for being ‘erratic’ on Better’s internal Slack messaging system and in company meetings.
‘If you are not interested in working hard,’ he wrote in one Slack message, ‘you need to find another place to show up everyday.’
The CEO is said to be demanding of his staff, right down to the smallest details.
Office managers were criticized for failing to keep the mini fridges filled with water from Fiji or Perrier.
Garg also insisted on bottles of Gerolsteiner, his sparkling beverage of choice, according to Forbes.
‘Why do we have biscotti here like this??’ he once demanded from office managers.
In one furious email obtained by Forbes, he wrote: ‘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.’
Better’s headquarters is 44,000 square feet of office space on the 59th floor of 3 World Trade Center in Manhattan
In August, The Daily Beast reported that one of his closest executives, Elana Knoller, was given stocks potentially worth tens of millions of dollars, $8,000 per month for two homes and other perks.
Knoller was eventually placed on administrative leave for bullying.
The Daily Beast also reported that Garg told a former business partner that he was ‘going to staple him against a f**king wall and burn him alive.’
It comes as Better, which featured in the Forbes Fintech Top 50, hopes to go public before the end of the year.
It received $1.5 billion in debt and convertible notes earlier this week ahead of its planned debut.
Better, which is backed by Softbank, received a $750 million cash infusion last week, after announcing in May it was going public through a Special Purpose Acquisition Company (SPAC). The company now has a valuation of $7.7 billion.
Born in India, Garg moved to Queens when he was seven and went to Manhattan’s renowned Stuyvesant High School.
He showed an early business mindset, buying CliffsNotes and books which he sold to fellow students for a profit.
‘My superpower, I think, I was good at math and good at, like, being able to spot an opportunity,’ Garg said in a podcast in 2019.
Another teenage venture was buying clothes in thrift stores and then selling them for more on eBay.
However, a Better spokesman later confirmed this was not true because eBay wasn’t founded until after Garg left school.
He went on to study at New York University where he would meet his future business partner Raza Khan.
They founded online student loan provider MyRichUncle in 2000.
The business started with just a $30,000 investment and by 2007 had ballooned into a publicly traded company that handled more than $300 million worth of loans, making it one of the largest private loan providers in the US.
The financial crisis forced the company into a bankruptcy liquidation in 2007.
But the crash brought about by subprime mortgages inspired Khan and Garg to look into a new lending market.
Building on their algorithms developed at MyRichUncle, they set up a company called EIFC, which could identify toxic mortgages.
It was designed to help investors identify improperly issued mortgages to sue banks who were selling bad loans.
Although the early signs were promising, Khan told Forbes he noticed inconsistencies in the finances.
In 2013, he sued Garg claiming that the firm’s taxes had not been properly filed and that Garg had moved $3 million to his personal bank accounts.
The pair have since been involved in a protracted legal battle.
According to court documents, during one hearing in December 2019, Garg turned to Khan and said that he was ‘going to staple him against a f***ing wall and burn him alive.’
Garg later apologized during the deposition for letting his ’emotions run out of control.’
A Better spokesman told Forbes in 2020: ‘Lawsuits are an unfortunate fact of life for successful startups and their CEOs.’
He singled out Khan as a ‘very litigious former friend and business partner.’
The story of how Garg founded Better paints a brighter picture.
Garg told Forbes how he and his wife were still renting while she was pregnant with their second child.
‘We ended up losing a place that we wanted to buy to an all-cash buyer, because our mortgage process was so long and inefficient,’ he said.
Garg founded Better in 2014 with the concept to cut down the process and offer ‘pre-approval on your mobile phone in about 3 minutes.’
It would also skip the traditional borrower-paid fees, making it cheaper for consumers.
Once issued, Better would sell the mortgages to lenders like Fannie Mae, Freddie Mac and Wells Fargo.
The concept has turned out to be a massive hit, perhaps no more so than during the pandemic as millennials sought to get onto the property ladder while saving thousands of dollar by working from home.