Vishal Garg, the founder who controversially fired 900 employees on a Zoom call just days before Christmas, has been ousted from his position as chief executive of Better Home & Finance.
The board of the online mortgage lender voted unanimously to remove Garg on August 3 and appoint Daniel Lewis in his place. Garg is now fighting to be reinstated to the top executive position.
Garg told CNN that he was pushed out just as he was about to turn the struggling company around. He claims that Lewis, a hedge fund manager who had been acting as an advisor, deceived him into handing over control of the firm.
Mass Zoom firing
Garg made international headlines in December 2021 when he abruptly laid off a significant portion of his workforce. The video conferencing platform had become ubiquitous for corporate meetings during the pandemic shift to remote work, and Garg used it to deliver the news simultaneously to hundreds of staff.
"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. Your employment here is terminated effective immediately," Garg said during the blunt meeting.
He later apologized for the incident, admitting he had failed "to show the appropriate amount of respect and appreciation for the individuals who were affected." The mass firing caused severe reputational damage to the online mortgage lender, a company built on simplifying the home buying and refinancing process.
Financial downturn
The company subsequently faced a whistleblower lawsuit, which was later dropped, as well as an investigation by the Securities and Exchange Commission. The federal regulatory agency, which oversees United States financial markets, ultimately found no wrongdoing.
Despite avoiding regulatory action, Better Home & Finance suffered a severe downturn. The firm was valued at $8 billion during a refinancing boom driven by the global coronavirus pandemic, when central banks slashed interest rates and mortgage rates hit historic lows.
By 2023, the stock price had cratered by 93 percent. Annual sales plummeted from $1.5 billion in 2021 to just $70 million that year. The market value of the company now stands at just $300 million.
Turnaround claims
Garg insists that the company was on the verge of a successful turnaround when he was unceremoniously replaced. He said the firm is on pace to deliver $200 million in sales this year.
He attributed this projected success to the use of artificial intelligence models to process mortgages quickly. He also pointed to a new partnership with Neo Home Loans, which he said halved loan origination costs and doubled productivity.
Major technology and finance firms including Intuit, the financial software giant, Coinbase, the cryptocurrency exchange, and OpenAI, the artificial intelligence research organization, have partnered with Better Home & Finance this year to power their own mortgage services. The company has also developed a strong home equity line of credit business.
"We're winning," Garg insisted. "We've tripled loan volume. We're close to profitability. We were at the five-yard line after taking the ball all the way down the field from the other side."
Leadership change
Garg acknowledged that the infamous Zoom layoffs severely damaged the reputation of the company. However, he claimed that Lewis usurped the chief executive position by convincing the board that the founder did not push employees hard enough.
Garg said Lewis approached him about six months ago with ideas for saving money and improving profitability.
Lewis spent months serving as an advisor and convinced Garg to give him a seat on the board. He was officially brought onto the board on July 27.
Just one week later, Lewis persuaded the other directors to remove Garg and name himself as the replacement.
"[Lewis'] thoughts about cost-saving were good," Garg said. "His ideas about innovation were not."
He bemoaned that the company was close to a turnaround when Lewis came in and claimed he could have done better.
"It's not about me," the now-fired chief executive claimed. "I care about delivering savings to people and helping them live the American Dream. So when shareholders said, 'You need to take a back seat,' I complied."
Reinstatement campaign
The founder now believes Lewis "hoodwinked" him into becoming the new chief executive.
"I suspect he always wanted to become CEO," Garg said, arguing that the board made a mistake.
Garg continues to sit on the board and claims he has enough votes to force a special hearing. He says several investors have contacted him to urge him to reclaim his job.
He has hired attorney Alex Spiro to represent him in his quest to retake power. Spiro sent a letter to the board last week demanding that it reinstate Garg as chief executive.
In the letter, Garg offered to work for a salary of $1 a year until the company becomes profitable, after which he would transition out of the role.
He also demanded the resignation of all directors except for himself, Michael Farello and Hugh Frater, proposing to work alongside a newly constituted board.
"It's an acknowledgement that I've been doing this for 10 years, but execution hasn't been perfect," Garg said of his efforts to once again become the chief executive.
Company response
Better Home & Finance has publicly rejected the campaign. The company demanded that Garg abandon his efforts, according to a report by MPAMAG.
The company noted that Garg was removed by a unanimous vote taken without his participation. It described his attempt to reverse the decision as a "costly and distracting campaign."
Shares in the company have plummeted 45 percent since Lewis took over, although they were already down more than 16 percent this year prior to the announcement of Garg's departure.
In a statement to the Daily Mail, Spiro said his client's "primary focus has always been about making homeownership more accessible to Americans."
The attorney highlighted the recent 45 percent drop in the stock price. He urged the board to "select the best long-term CEO for Better so Vishal may move into a role where he can continue driving the American dream for more Americans while having new leadership to lead the company towards its full potential."
The Daily Mail has reached out to Better Home & Finance for comment.
