Inside the human cost of Better.com’s brutal layoffs • TechCrunch

Digital mortgage lender Better.com continues to lay off staff, and seemingly in as callous a way as possible. Indeed, whereas most companies try to avoid repeated layoffs, the outfit — which gained notoriety by laying off about 900 employees over Zoom on December 1, 2021 — has since been laying off smaller groups very systematically, say sources.

The tactic accomplishes two things. One, it has a disconcerting effect on existing employees, who never know when the axe might fall so begin seeking to leave on their own, enabling Better.com to avoid laying them off and paying out related severance payments.


Secondly, sources say Better.com is navigating around large severance payments by letting go 249 people or fewer at a time. Why that matters: The company’s recent layoffs are believed to have not triggered the WARN Act, which means it would not be required to pay out as much in severance to the affected employees. According to New York state law, by not laying off more than 250 people at a time, Better.com is not required to pay out 90 days’ severance as would have been mandated by the state.

One source said the move is designed to help the company preserve as much cash as possible as it saves it “millions” by not paying out as much severance. In fact, added this person, Better is reportedly at risk of running out of cash by year’s end otherwise.

Asked about some of these allegations, a Better.com spokesperson said that they’re incorrect. Regarding the WARN Act, the spokesperson wrote to TechCrunch: “We do not and have not ever made decisions to avoid legal thresholds. Additionally, WARN has a look-back period to mitigate risk of hypothetical scenarios such as above.”

The spokesperson further denied that Better.com is at risk for running out of cash by year’s end. In a statement, this person wrote: “We just passed $100 billion in loans funded, the first fintech to hit that milestone. We are always evaluating the right size and scope of our teams. We are not just optimizing our workforce, we are proactively growing our engineering, data science, and technology teams to give us more time to spend serving our customers and funding loans faster.”

In the meantime, workers who stayed at the company despite all the goings-on of the past year — only to be laid off with far less in severance pay than those who were laid off before them — feel betrayed. And many of those who were laid off earlier this year have complained about difficulty in collecting unemployment due to the mishandling by Better of reporting wages. (The company said it is “not accurate” that employees are having trouble collecting unemployment.)

In keeping with Better.com’s culture, which current and former employees routinely describe as toxic, the change in severance isn’t the only new development that has hangers-on at the company walking on eggshells.

More recently, some salespeople have found themselves the subject of performance improvement plans, a source told TechCrunch, with unrealistic goals designed to set them up for failure.

On top of that, Better.com — which like many other startups went remote doing the pandemic — recently mandated that employees return to the office for an increasing number of days per week. Some employees believe the move was designed to push people out — in particular those who had moved during the pandemic to other locations or who won’t be able to afford childcare.

Asked about these recent moves, the spokesperson says Better.com says different employees have different options at Better.com, with employees who are hired as either in-office, meaning they are expected to be on-site full time; employees who are hired into “flex” positions, meaning they can work remotely one day a week; and people who are brought aboard on a fully remote basis.

But that’s not all that has current and former employees feeling demoralized. The company recently rolled out a new leave-of-absence policy that significantly reduces the amount of leave for which team members are eligible. A spokesperson told TechCrunch last month that has maneuver was made to “better align” the company with “industry standards.” Yet employees who were on maternity leave, for example, say they were blindsided when they suddenly found out they had to return to work far earlier than expected and would get less paid leave than originally thought.

At any company, decisions have implications. In the case of Better.com, its management of employees has not only come at a huge financial cost but has had long-lasting emotional impacts as well. To get a better understanding of what’s happening on a human level, TechCrunch talked to several former employees of the embattled startup who have been laid off in recent months, as well as current ones impacted by the new leave policy.

Below are the different experiences of the various individuals we spoke to. Everyone we spoke with asked to have their names withheld out of fear of retaliation. 

John

“John” began working at Better in 2021 and recalls being charmed by CEO Vishal Garg upon meeting him. While John had come from a corporate background, he found it refreshing that Vishal was dropping “f bombs” and was just generally “very charismatic.”

John was in sales. At one point he noticed that volume was lower than what was being communicated. For example, the company had lofty expectations and high projections.

In August of 2021, John began to sense that layoffs were coming. He also recalls sales management asking his group to repeatedly call mortgage applicants who had not yet committed to Better as their lender in an effort to convince them to do so.

“In the banking culture, you can’t do that,” he said. “You could see the shady sales tactics where they were trying to squeeze juice out of nothing. People were trying to do their best and nothing seemed to be working.”

Expectations kept going up as did the pressures of the job, while the environment became an unfavorable one, John said.

At one point, John began having more visibility into the company’s records and found there were inconsistencies in how Better was managing loan documents, post-closings and HR documents.

“The rumors of people’s unemployment not being paid, I could see it with my own eyes,” he recalls. “We were at the point where no one was around to actually handle all of that, so I was scanning in my own teams’ unemployment documents. That was the first red flag, and compliance-wise, it just doesn’t feel right that I was handling my former boss’s personal layoff documents.”

John says he spent two months clearing out the entire backlog of documents, lawsuits, legal documents and unemployment documents so payroll could do what they needed to do to pay people. “Compliance was blatantly ignored,” he said. John noted that he discovered that some states didn’t have a digital unemployment system, so if the mail was not opened, the person in that state would not get their unemployment. 

At certain times, John would walk the sales floor and hear “misinformation” being given to consumers, as well as witness insurance agents sitting next to the sales floor, which is supposedly illegal. A startup founder who was friends with Garg would also hang out on the floor.

When John repeatedly brought these instances to the attention of higher-ups, he was told “not to worry about it.”

One day in June 2022, he asked about his job security and was told that he was “OK.” The next day he was laid off.

Ironically, after processing dozens, if not hundreds of unemployment forms for former colleagues, when John was laid off, he also had difficulty collecting unemployment.

“Two months later, and I am still waiting…for me to get less severance or less money than people who quit and for my unemployment documents not to get taken care of adds insult to injury,” he told TechCrunch.

John feels the company knowingly did not file appropriate unemployment paperwork, which led to people not getting their payment. 

“It’s unethical at best…I worked harder than anyone and defended the company and did everything I could to fight for employees,” he told TechCrunch.

John also related an instance of a neurodivergent colleague who got a doctor’s note to work from home, but was denied. When asked about this incident, a Better.com spokesperson said: “We believe 100% of medical issues brought to our attention have been accommodated, and we encourage any employee having an issue to contact the People team immediately.”

In John’s view, the move was emblematic of selectiveness and favoritism that included laying off people on maternity leave and medical leave and ignoring ADA accommodations, among other things. Employees were also generally treated as though they were the cause for all of the mismanagement, he said — a sentiment shared by others.

Jane

“Jane,” another employee who spoke with TechCrunch, is among a group recently laid off from her job at Better Mortgage as part of the “re-education of force” that saw the company hire call center workers to replace its sales representatives.

Some of Jane’s friends spoke highly about Better Mortgage, so she interviewed and was hired in 2021.

“I was excited because they’d been hiring more and more people and it felt like it had a really good future,” she recalls about that experience.

She was also excited at the idea of getting into a new industry where she could grow professionally.

Then in December, layoffs began happening. Jane recalls trying to make sense of going to work for a company that was suddenly all over the news, and not in a good way. Work friends were telling Jane that during layoff calls with Better CEO and co-founder Garg, they were getting negative feedback about their work ethic. Jane noted that she felt those insinuations “didn’t jive because I knew these people, and they were very talented.”

The news combined with what her friends were telling her “changed the picture” of the company for Jane, who attended all-hands meetings with Garg who was, in her words, “excited and using all kinds of colorful language to talk about all the amazing things that were going on.” 

“Despite words from leadership designed to put a positive spin on conditions within Better’s mortgage business, many of us employees felt the overhanging uneasiness of working for a company that made headlines for their infamous layoffs,” Jane told TechCrunch. “We felt the uncertainty of near weekly changes to our roles and what seemed like the sabotaging of our income through constant changes and caps on our sales incentive pay.”

There were also meetings where, according to Jane, “we were threatened and told that people were cut because they weren’t working, they were stealing from the company and all of these other accusations. We were told that if we didn’t perform well, we would also be cut. It wasn’t a nice meeting. And this was maybe two months after I started working there.” 

In the spring of this year, Jane said she got word from a friend that there was another leak about layoffs, and that this next round would be bigger than the December round. This also happened to be the round of layoffs when people accidentally found out they were being laid off because they saw severance money information “pending” in their bank account, and when they signed into work that morning, had no access to the company’s Slack and other resources, Jane added. 

Then this summer, she got word that she was among a group being laid off.

At that point in time, being laid off was not the biggest shock for Jane, but rather “the behavior behind it that seemed unprofessional and uncalled for.” 

What was even more upsetting to her was being told by management that those laid off would receive severance that amounted to not even a full month’s salary.

“It seems that Better can legally do this, although they set precedent through past layoffs for severance of at least two to three months,” Jane added. When she was let go, Jane says she “was told that ‘the company is doing really bad’ and ‘they’re bleeding money,’ which is not what they were [previously] telling us. They were telling us that there was a way to turn this around.”

Jennifer

“Jennifer” is a Better.com employee who went on maternity leave earlier this year. In August, the company sent out an email notifying all workers that its leave policy was changing, and would impact those already on leave as well as those planning to take leave.

“I survived layoffs throughout my whole pregnancy and thought to myself, ‘I just need to get through leave and I’d be safe,’” she told TechCrunch.

While Jennifer was not laid off like others she knew who were on leave for various reasons and lost their jobs last month, she was still impacted in a way she never expected.

Her leave went from 12 weeks paid to four weeks paid. Previously, it was 12 weeks paid with an additional eight weeks unpaid.

“So my leave got cut two months short, and now I’m no longer being paid,” she said.

Panicked as she had not yet lined up childcare, Jennifer said she tried to appeal to the HR team to try to negotiate her remaining leave.

“I got a robot generic response,” she recalls. “They could not care less.” Others who tried to reach out to Garg directly shared that they got no response, according to Jennifer.

To add insult to injury, while workers’ benefits were being cut and people were being laid off left and right, with no mention of “upper management or executives having had the slightest pay cut, or even suggestions of that,” Jennifer said.

Meanwhile, the back-to-office mandate will also be a problem once Jennifer’s leave is up. She wasn’t expecting to have to look for childcare so early and is not sure she can afford it if she has to go back to the office multiple days per week.

“First, people had to go in once a week, and they kept upping it,” she said. “If you don’t go in, you get flagged. If they flag you a certain amount, then you’re let go.”

“This is clearly a way to get rid of people without paying severance,” Jennifer added. “We’re all not stupid. We know that’s what they’re doing.”

Meanwhile, during her time there, Jennifer shares that she never got a raise.

“Instead of giving actual raises, they gave out shares,” she said. “And they’re worth little to nothing at this point.” 

Jennifer admits that she is actively looking for another job, and believes that almost everyone remaining at the company is, too.

“Better was a company I was super proud to work for at first,” she told TechCrunch. “And now it’s extremely embarrassing to work for.”

James

“James” started at Better.com in spring of 2021, thinking that he was “joining the darling of NYC tech.”

Having sat not far from Garg’s desk, James — like many — witnessed the CEO at “peak happiness and full charisma.” When the executive wasn’t upbeat, he was “profusely sweating and screaming,” James recalls.

During his time at the company, things took a turn for the worse, and James said he “tried to ride it through.”

He ended up being among a group of employees who were recently laid off and who received just two weeks’ severance.

In his view, the company is working to diversify its revenue streams in an attempt to save the business. For example, it recently announced that it partnered with Palantir, reported HousingWire, “to create a proprietary loan platform that it says will enable Fannie Mae, Freddie Mac and mortgage investors to make ‘richer and deeper data-driven mortgage capital allocation decisions.’”

To James, and others TechCrunch has talked to in the past, Better opting to license its platform to the rest of the industry “should have been what it was doing” all along. The company’s underlying technology, James maintains, is good. But Better bet too much on — and overhired during — the refinancing craze (which Garg himself admitted in a leaked video) and is now paying the price.

“Better made terrible bets on the refi market, and it made up 90% of revenue,” James said. “As soon as rates increased, everything dried up. The company was left purchasing mortgages, which is still a developing part of the business.”

The fact that people are still funding their home purchases with Better Mortgage, in James’ view, is “baffling.”

“If they’re starting the process now, it’s possible that in a couple of months’ time, the company can’t even fund the loan,” he said.

Feeling the pressure, Better.com has been pushing its sales teams to keep closing deals. As a result, it has seen several sales directors come and go over the last six months, with some getting fired and others resigning, according to James.

“The company has had unreasonable expectations despite an unprecedented increase in interest rates,” James told TechCrunch. “Vishal [Garg] was unwilling to acknowledge that and wind down things as he should.”

At its peak late last year, Better had about 10,000 employees. When he was laid off weeks ago, James estimates the company had around 2,400 workers on its payroll. He projects that it needs to get down to 500 employees to make up for the loss in business.

“Better had a burn rate that was well over $2 million a day, with around $500 million in cash as of August,” James projects. “If the company doesn’t get new financing by the end of the year, the likelihood of it becoming insolvent, or selling itself off, is very high.”

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