How Better went from a darling of mortgage fintechs to laying off thousands of workers

• Mortgage startup Better thrived during the pandemic. Then came a stunning reversal.
• CEO Vishal Garg fired 900 workers over Zoom in December, shocking employees and sparking criticism.

A few months ago, everything seemed to be looking up for Better, an online mortgage startup based in New York City. Now, after mass layoffs and a stunning fall from grace for both the business and its polarizing CEO, the company is in turmoil.

In 2021, Better was named the best startup in America by LinkedIn for the second consecutive year and was poised to go public at a $6.9 billion valuation. The company quadrupled in size during the pandemic, hiring more than 7,000 people to keep up with booming demand for its mortgage products.

Then came a shocking reversal. In a three-minute Zoom call on December 1, founder and CEO Vishal Garg told 900 employees they were being laid off, "effective immediately." Shortly after that virtual meeting, Garg held a livestreamed town hall with remaining employees in which he described how the company "pissed away $200 million" and warned workers that they would "not be allowed to fail twice," according to a recording obtained by Insider.

The blowback was swift. Videos of Garg's hasty announcement racked up millions of views on YouTube, and widespread criticism of his handling of the layoffs prompted the embattled CEO to take a temporary leave of absence (Garg has since returned to the company).

In recent weeks, rumors of more cuts spread among remaining employees. On Tuesday, those fears were confirmed when the company announced "substantial" staff layoffs, according to an internal email obtained by Insider. Tech Crunch reported that Better is set to lay off an estimated 3,000 employees, or more than a third of its total workforce.

Insider has been closely tracking the rise — and fall — of Better. Here's everything you need to know about how this former startup darling imploded.

Better was once one of America's hottest startups

Garg started Better in 2015 after he went through a difficult mortgage process that cost him a chance to buy a home. The company officially launched in 2016, touting no- or low-fee loans that buyers can secure quickly and entirely online.

Thanks to a frenzied housing market and plummeting interest rates during the pandemic, demand for both refinancings and new mortgages surged. Better's hiring went into overdrive to keep up with booming business, and the company grew by more than 7,000 employees.

Some of the world's biggest financial institutions and investors — including SoftBank, Citigroup, Ally, Goldman Sachs, and Kleiner Perkins — are backing Better. The company was also set to go public through a special purpose acquisition, or SPAC deal, that valued Better at nearly $7 billion.

Keep reading:

• The inside story of how Better quadrupled its workforce during the pandemic and became one of the top startups in America

The first round of mass layoffs happened with almost no warning, and the fallout was nearly as swift

During a virtual town hall with remaining employees after announcing the layoffs, Garg said the cuts should have happened three months prior. The company had lost $100 million in the third quarter of 2021, he said, and "pissed away" $200 million.

"Today, we acknowledge that we overhired and hired the wrong people, and in doing that, we failed," Garg said during the meeting, a recording of which was obtained by Insider. "I failed. I was not disciplined over the last 18 months."

The next week, after being publicly skewered for his handling of the layoffs, Garg apologized to employees in an email. He later took a leave of absence, although he has since returned as CEO. Other top executives have resigned.

The lack of communication around the layoffs left current and former Better employees confused and angry. Meanwhile, class-action lawyers threatened to sue Better for not providing proper notice of the layoffs.

Keep reading:

• A leaked video shows Better CEO Vishal Garg explaining laying off hundreds of people before the holidays: 'We should have done this three months ago'

• Inside Better's week from hell: How America's top startup fell from grace after its Zoom layoffs went viral

• Read the memo Better CEO Vishal Garg sent apologizing that he 'blundered the execution' of mass layoffs at the online-mortgage startup

• Better.com's CEO is 'taking time off effective immediately' after firing 900 employees on Zoom

• Better's top marketing, PR, and communications executives have resigned after mass layoffs at the online-mortgage startup

• Better doubles severance pay for laid-off employees as class-action lawyers mobilize to sue the startup for not giving notice of mass layoffs

• Better CEO Vishal Garg wanted to give laid-off employees only one week of severance pay

• Better is clawing back thousands of dollars in pay from employees it had given time off to 'recharge' and 'refresh' following firing fiasco

Garg's reinstatement as CEO wasn't the end of troubles at the company.

An Insider investigation of Garg's time as CEO found that he had a history of outbursts at the company and a complicated web of interests between different companies he had a direct financial stake in.

Meanwhile, the remaining employees at Better have been worried about more layoffs. Their fears were realized Tuesday, when the company announced "substantial" reductions in workforce.

Better's $6.9 billion SPAC deal has also been delayed, but is apparently still in the works.

Keep reading:

• Vulgar rants and public outbursts: How Better CEO Vishal Garg went from the visionary atop America's best startup to the poster child for bad bosses

• Investors claim Better CEO Vishal Garg misused at least $1.6 million of their funds to finance his own ventures

• Read the memo that Better's board sent to employees welcoming back embattled CEO Vishal Garg and announcing two high-profile board exits

• 2 Better execs just left the company right after controversial CEO Vishal Garg returned

• Employees at Better are on edge again as rumors of even more job cuts swirl

• Mortgage startup Better slashes staff by more than a third as business prospects continue to dim. Some are getting severance before their notice.