The mass layoffs at digital mortgage lender Better.com have reportedly started, according to employees and other sources at the company, and affected workers are finding out by seeing a severance check in their Workday account — the company’s payroll app.
The layoffs were meant to be announced by the company on March 9, but one employee — who wishes to remain anonymous due to fear of repercussions — told TechCrunch that “they accidentally rolled out the severance payslips too early.” Better.com execs reportedly planned the layoffs for March 8 but moved the date to March 9 when news of the initial date leaked.
Apparently, when execs realized their mistake, they deleted the checks from some people’s Workday accounts. According to the employee, the severance checks arrived without any additional communication from the company.
The employee told me:
Better Layoffs have started. Severance showing in our Workday app (which is payroll) as of 12 AM respective time zones. No email, no call, nothing. This was handled disgustingly.
The employee — who had an inkling that the cuts were coming — added: “Leadership remained absolutely silent, never acknowledged anything in regards to layoffs. They still haven’t.”
An estimated 3,000 of the company’s 8,000 employees in the U.S. and India are being let go. TechCrunch had heard the number affected would be 4,000, or half of the company. But the number ended up being “just over 3,000,” according to a Better.com spokesperson, who confirmed the figure on the afternoon of March 8 and shared a link to the e-mail that CFO Kevin Ryan ended up sending to employees on the matter after the payroll blip.
In that e-mail to employees, Ryan wrote that the company “had to adjust to volatility in the interest rate environment and refinancing market.”
He added: “Unfortunately, that means we must take the difficult step of streamlining our operations further and reducing our workforce in both the U.S. and India in a substantial way.”
Ryan also said that the company would not be enforcing existing non-compete provisions but that non-disclosure provisions would remain in effect.
“This has not been an easy few months, and I want to express my sincere thanks to every member of the Better team for your hard work and focus,” he added. “Our strongest days lie ahead.”
It is notable that the missive came from Ryan and not CEO Vishal Garg, who suffered severe backlash after laying off 900 employees during a Zoom meeting in early December in what many considered to be a cold and callous manner. The video went viral globally and Garg was vilified not only for the way he notified employees, but for what employees described as verbally abusive behavior.
According to employees at the company, an email notifying staff that “current market conditions” had led to Better.com “arriving at a mass layoff” was to be sent on the morning of March 9. Then, later that morning, an email of affected managers would be sent to “safe managers” so they could take over the management of remaining team members. Impacted employees would then be notified via email. Soon after, an all-hands meeting was planned for those who escaped layoffs.
Anyone laid off is supposed to receive correspondence to their personal email with instructions on how to return Better property.
The majority of impacted employees are said to be in sales and operations; in particular, most of the refinance teams are being let go. Staff told TechCrunch that a list of potential layoff candidates circulated in recent weeks, but that the specific employees were only finalized in the last few days, mainly based on “business need and Nov-Jan performance.”
The severance package is reportedly 60 to 80 days’ pay.
The antics of CEO and co-founder Garg — which included insulting staff and investors and, as mentioned above, a reported history of verbal abuse — likely played a role in the latest decision. With the interest market changing dramatically, Better.com had to transition to be more of a “purchase” business, or one that helped people with new loans. The hit to its reputation has apparently made it more challenging for Better.com to attract new customers.
Macroeconomic factors have also had a negative impact on the company’s business. Higher interest rates, which led to a large drop in demand for re-financings, led to the original layoffs in December. Interest rates continue to increase. Rising inflation is not helping matters.
The way the original layoffs were handled in December led to a series of events for the company, including the resignation of the company’s VP of communications, Patrick Lenihan; head of public relations, Tanya Gillogley; and head of marketing, Melanie Hahn. Their departures were the first of many executive departures that would take place over the next few months. Garg then “apologized” for “blundering” the mass layoff before taking a month-long “break.”
The company has raised just over $900 million since its 2016 inception, $500 million of which came from SoftBank in an April 2021 round that valued Better.com at $6 billion. Just before the first round of layoffs was announced, CFO Kevin Ryan on November 30, 2021, said in an internal email that Better.com would have $1 billion on its balance sheet by week’s end.
This article was updated post-publication to include further details. Natasha Mascarenhas contributed to this story.
My weekly fintech newsletter is launching soon! Sign up here to get it in your inbox.