A US-based home mortgage and home ownership company’s India origin chief executive officer Vishal Garg fired more than 900 employees over a short Zoom call last week. Garg cited market efficiency, performance and productivity as the reason behind the firings. Among those fired were the diversity, equity and inclusion recruiting team. The layoffs are learnt to have happened primarily in the US and India.
Started in 2014, Better.com works on “improving house mortgaging” and financing by allowing people to apply for loans and financing online, instead of them having to go directly to banks. The company claims to offer loans at fixed and adjustable rates for conventional and jumbo loans for several types of homes without charging any commission.
Over the years, the company has expanded its footprint rapidly, having teamed up with different companies during the process. For example, in 2015, the founders partnered with Avex Funding, a California originator specializing in prime conforming and jumbo mortgages for over 10 years.
In 2016, the company changed its name to Better Mortgage and got $30 million in Series A funding. The same company was also approved as a Fannie Mae seller or servicer. A year later, the company again raised $15 million in Series B funding with Kleiner Perkins Caufield Byers, while again in 2019, the company raised $160 million in Series C funding.
The firings also came close on the heels of the company having raised $750 million in fresh capital from two of its backers, Aurora Acquisition Corporation and SoftBank. The company also plans to go public by the Special Purpose Acquisition Company (SPAC) route soon.
As per the Zoom call, Garg said that lack of market efficiency, performance and productivity was the reason for the people being let go. The company’s chief financial officer Kevin Ryan, in a statement said that, “a fortress balance sheet and a reduced and focused workforce together” was needed to “play offense going into a radically evolving homeownership market”.
Meanwhile, Garg had also accused the employees of “stealing” from their colleagues and customers by being unproductive and only working two hours a day.
The company had hired around 1,100 employees in India following the onset of the pandemic in early 2020. It had announced on-boarding people who were laid off from the hospitality industry. At the time, however, US-based mortgage lending companies were on an aggressive hiring spree globally on account of a surge in demand for mortgage products and subdued interest rates.
During the pandemic, Better.com also paid its employees in India a stipend of Rs 10,000 a month as Covid19 benefit, in addition to paying them for incurring additional expenses for their work-from-home set up. India is home to most of the back-end operations of the company. While the company hasn’t confirmed the geographical break-up of the lay-off, indications are that several people in India were also handed pink slips.
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