One day after announcing an amendment to its SPAC agreement, digital mortgage lender Better.com confirmed today that it is laying off roughly 9% of its nearly 10,000 person staff.
Doing the math, that amounts to about 900 people.
The company declined to comment beyond the following written statement from CFO Kevin Ryan: “A fortress balance sheet and a reduced and focused workforce together set us up to play offense going into a radically evolving homeownership market.”
People familiar with internal happenings in the company, which is set to go public in the near future at a $6.9 billion valuation, told TechCrunch that a few factors drove the decision behind the staff reductions.
For one, the mortgage market is expected to contract pretty significantly after 18 months of rapid expansion driven by historically lower interest rates. Better has been vocal about its desire to build out its purchase experience and move beyond digital lending to help people find and purchase homes. It’s also working to expand value-added offerings like title and homeowner’s insurance as part of its product suite.
Bottom line, the company has “too many people in the wrong places,” according to our sources, who preferred to remain anonymous.
This also appears to be a case of technology replacing human labor. Better’s automation efforts means fewer manual process and a business that is more machine-driven, hence the need for fewer human resources.
The layoffs are primarily taking place in the U.S. and India, the sources said.
On Nov. 30, TechCrunch reported that the company was getting a cash infusion from its backers sooner than expected. Blank-check company Aurora Acquisition Corp. and SoftBank decided to amend the terms of their financing agreement to provide Better with half of the $1.5 billion they committed immediately instead of waiting until the deal closes.
No word on whether the company has been in a cash crunch, but an email from CFO Ryan to employees obtained by TechCrunch revealed that Better would have about $1 billion on its balance sheet by week’s end. It’s possible that the layoffs were a condition to getting that deal approved.
According to the Daily Beast, the layoffs were quick and a big surprise.
The Daily Beast’s Noah Kirsch reported that in the U.S., all affected workers were summoned into a mass webinar on Wednesday, where founder and CEO Vishal Garg “delivered a short speech informing them that they were being terminated.”
After Garg’s speech, the meeting ended abruptly, and the affected employees’ computers automatically shut down, Kirsch also reported.
Reporter’s note: After we published this article, there were reports by employees on social media that the actual percentage of people laid off was 15%. TechCrunch obtained a recording of that video, where CEO Vishal Garg clearly states:
“I come to you with not great news. The market has changed, as you know, and we have to move with it in order to survive so that hopefully, we can continue to thrive and deliver on our mission. This isn’t news that you’re going to want to hear. But ultimately it was my decision. And I wanted you to hear 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. We are laying off about 15% of the company for a number of reasons — the market, efficiency and performances and productivity.”
We reached out to Better.com, and a company spokesman said this in response:
“His talking points were wrong when they were printed out and so he used an incorrect number. The numbers we gave you were correct: North of 900 people, roughly 9% of global workforce.”
Note: Ryan Lawler contributed to this story.