Vishal Garg, the Indian-American founder of mortgage technology company Better Home & Finance, has been removed as chief executive nearly five years after he became widely known for dismissing about 900 employees during a short Zoom call.
Garg was ousted by Better’s board on August 3 and replaced by investor Daniel Lewis. The leadership change has now turned into a wider battle over control of the company, with Garg challenging the board’s decision and seeking to return as CEO.
The episode has created an unusual reversal for Garg. In December 2021, he became the face of one of the most widely criticised mass layoffs of the pandemic era after informing around 900 employees that they were losing their jobs during a video call shortly before Christmas. The manner in which the layoffs were announced triggered widespread criticism of his leadership style and corporate culture.
Five years later, Garg himself is at the centre of a leadership crisis at the company he founded.
Better said its board had unanimously voted to terminate Garg, with Garg being the only director to oppose the decision. According to the termination notice cited in reports, directors had concerns about his judgment, temperament and credibility. The company also pointed to financial and governance problems during his tenure.
One issue cited by the company was the delay in filing quarterly financial statements. Better has also faced significant financial pressure, with its share price falling sharply from the levels associated with its earlier growth period. The company has reported substantial losses, adding to pressure on its leadership and strategy.
Better’s troubles are a sharp contrast to its position during the pandemic-era housing boom. The digital mortgage lender benefited from strong demand for refinancing and home loans when interest rates were low. At one point, the company was valued at around $7 billion, turning Garg into one of the more prominent figures in the fintech and mortgage technology sector.
The environment changed dramatically as US interest rates rose and mortgage refinancing activity weakened. Better subsequently struggled to maintain the growth levels that had supported its earlier valuation. The company also went public through a merger with a special purpose acquisition company, or SPAC, but its market value later fell substantially.
Garg, however, has rejected the idea that his removal was simply the result of poor business performance. He has accused Lewis, the executive who replaced him, of misleading him about his intentions.
According to reports, Garg said Lewis initially approached him with suggestions on reducing costs and improving profitability. Lewis subsequently joined Better’s board on July 27. Within about a week, the board removed Garg and appointed Lewis as his replacement. Garg has described the sequence of events as a betrayal and said he believed Lewis had gained his confidence before moving against him.
Lewis has previously praised Garg and Better’s strategy publicly, adding another layer to the dispute. Garg is now attempting to rally shareholders and challenge the current board structure.
The former CEO has proposed an extraordinary comeback. He has indicated that he is prepared to return as CEO for an annual salary of just $1 until the company becomes profitable, as part of his effort to regain control.
Garg has also sought changes to Better’s board. His group has been pushing to remove several directors and restore earlier corporate governance arrangements. Recent filings show that entities associated with Garg control about 13.7% of Better’s voting stock, although his campaign has sought support from other shareholders.
Better has pushed back against Garg’s campaign, describing his efforts to regain control as a challenge to the company and disputing his claims about shareholder support. The company has argued that Garg does not have sufficient backing to carry out what it characterises as an attempt to reshape the board.
The boardroom dispute is unfolding against a difficult financial backdrop. Better’s business has been hit by the broader slowdown in mortgage activity, while the company has attempted to reduce costs and improve its operations. The leadership change reflects the pressure facing fintech companies that expanded rapidly during the low-interest-rate period and later struggled as market conditions changed.
Garg’s controversial management history has also remained part of the discussion surrounding Better. The 2021 Zoom layoffs became a defining moment in his public image. The company later acknowledged that negative publicity surrounding workforce reductions and Garg’s leadership style had affected employee morale, management stability and the company’s reputation.
Garg took a temporary break from the company after the 2021 backlash and later returned. At the time, Better’s board said he had reflected on his management style and undergone executive coaching.
The company subsequently went through additional rounds of layoffs as the mortgage market weakened. These workforce reductions added to the perception that Better was struggling to adjust to a tougher business environment.
The latest development has therefore brought Garg’s journey at Better full circle. The founder who once made headlines for announcing mass layoffs over a Zoom call is now fighting a board decision that has removed him from the company he built.