Better.com’s morale and SPAC merger success in question after CEO’s unruly comments
Good morning, Term Sheeters.
Last week was a rather tumultuous one for SoftBank and Novator-backed Better.com and its employees. The mortgage startup’s founder and CEO, Vishal Garg, summoned more than 900 staffers to a Zoom call last Wed. and announced they were being let go. In a subsequent companywide call, he told remaining employees he should have done that three months ago and warned them their productivity was being eyed.
A slew of existing and laid off workers turned to the anonymous professional networking app, Blind, to air some concerns over the terminations and how they were handled. That’s when Garg decided to chime in himself under the username “uneducated.” (Garg confirmed it was him posting in an interview with me late Friday night).
Some of his comments got a little unruly. For example, “Email me directly and we will pay you to leave early so we don’t sit here waiting for you to show up with your end of the work that needs to be done, and then get left holding the bag” or, in reference to 250 of the individuals laid off that he alleges only worked two hours a day, “They were stealing from you and stealing from our customers who pay the bills that pay our bills. Get educated.”
For Garg’s part, he told me he stands by his comments on Blind last week (“I think they could have been phrased differently, but honestly the sentiment is there,” he said.) The layoffs were unfortunate but necessary: The company has been hiring really quickly as it scales, and some people just weren’t pulling their weight, he said.
To be sure, the mortgage market has slowed since the pandemic-induced housing boom. Current and ex-employees told me that the number of loan applications coming in that they were working on had dropped recently. Better does offer competitive salaries and benefits, such as free lunches, unlimited vacation, and 20 weeks paid parental leave, which can be costly. Better is planning to go public via a SPAC merger before the end of the year in a deal that will value the company at around $6.9 billion: Analysts will likely be eyeballing how successful the company is at managing its expenses.
But employees and ex-staffers argue that even some of the top performing workers on their teams were impacted, and they weren’t thrilled by comments by Garg that seemed to rub salt in a wound or insult employees who said they had been getting positive feedback before getting terminated.
Strong personalities and charisma can be a founder’s greatest assets, but we’ve seen all too often how they can just as easily become glaring liabilities: In the past few years alone, Ozy Media’s Carlos Watson, WeWork’s Adam Neumann, and Uber’s Travis Kalanick come immediately to mind.
With Garg at the helm, Better has seen incredible success, ballooning into a 9,000 employee organization since it was founded in 2016. Net revenue at the company nearly hit $680 million in the first half of this year—up from only $237 million for the same period in 2020.
But company morale is low, and three current employees told me they are having second thoughts about the company and whether Garg is someone they want to work for.
“It’s great that they’re making home ownership easier for people, but at what cost?” one employee says.
A personal note from me: You may have noticed my name before in this newsletter, as I’ve been curating the IPO and SPAC section each day and occasionally filling in for Lucinda on her days off. Now you’re stuck with me as the full-time writer of Term Sheet. I’m excited to be here and carry this newsletter into its next iteration. Please reach out and say hello! Let me know what you like, or what you don’t. What are the trends to watch right now in the venture capital world? I’d love to hear from you.
And as for pitches to the deals section below, I’ve put together what I hope will be a useful guide. You can find that here.
See you tomorrow,
- Genesys, a Daly City, Calif.-based customer experience cloud company, raised $580 million in funding led by Salesforce Ventures and was joined by investors including ServiceNow Ventures, Zoom Video Communications, BlackRock funds, and D1 Capital Partners.
- ServiceTrade, a Durham, N.C.-based commercial service contractor software platform, raised $85 million led by JMI Equity and was joined by investors including Frontier Growth and Bull City Venture Partners.
- Nearside, a San Francisco-based small business checking account company, raised $58 million in Series B funding led by Valar Ventures and was joined by investors including Kleiner Perkins, Foundation Capital, Abstract Ventures, CAA founder Michael Ovitz, Eventbrite co-founder Kevin Hartz, and others.
- Sense, a San Francisco, Calif.-based recruiting and talent communication platform, raised $50 million in Series D funding led by SoftBank Group.
- Stacked, a Chicago-based crypto robo advisor, raised $35 million in Series A funding co-led by Alameda Research and Mirana Ventures and was joined by investors including Fidelity International Strategic Ventures, DRW Venture Capital, Alumni Ventures, and Jump Capital.
- Kasada, a New York-based automated threat and bot attack prevention company, raised $23 million in Series C funding led by StepStone Group and was joined by investors including Ten Eleven Ventures, Main Sequence Ventures, Reinventure, Our Innovation Fund, and Turnbull & Partners.
- Stride Funding, a Dallas, Tex.-based educational funding platform for students, raised $12 million in Series A funding led by Firework Ventures, and was joined by investors including Juvo Ventures, Graham Holdings, GSV Ventures, Slow Ventures, and Sinai Ventures.
- Nabla Bio, an Allston, Mass.-based antibody design company, raised $11 million in seed funding co-led by Khosla Ventures and Zetta Venture Partners, and was joined by investors including Fifty Years and Cantos Ventures.
- Tamatem Games, an Amman, Jordan-based mobile games publisher, raised $11 million in Series B funding led by KRAFTON and was joined by investors including Venture Souq and Endeavor Catalyst.
- Vinehealth, a London-based data science and behavioral science digital application, raised $5.5m in seed funding led by Talis Capital and was joined by investors including Playfair Capital and Ascension.
- BBS Network, a decentralized Web3 public network, raised $1.5 million in seed funding led by Binance Labs.
- American Pacific Group acquired Fellers, a Tulsa-based vinyl wrap supply distributor. Financial terms were not disclosed.
- A Charger Investment Partners affiliate acquired PerTronix, a San Dimas, Calif.-based, automotive product designer and manufacturer. Financial terms were not disclosed.
- Discount Tire agreed to acquire Tire Rack, a South Bend, Ind.-based passenger vehicle and light truck accessory supplier. Financial terms were not disclosed.
- Sunstone Partners acquired a majority stake in Vcheck Global, a Los Angeles-based background check and due diligence investigation services company. Financial terms were not disclosed.
- Berkshire Partners invested in Tango, a Dallas, Tex.-based workplace management software company. Financial terms were not disclosed.
- Fortive agreed to acquire Provation Medical, a Minneapolis, Minn.-based hospital software company, from Clearlake Capital Group for nearly $1.4 billion in short-term debt and cash.
- Knight-Swift Transportation Holdings acquired RAC MME Holdings, the holding company of Bismarck, N.D.-based truckload career agency Midwest Motor Express and West Fargo, N.D.-based Midnite Express, from Red Arts Capital for $150 million in cash.
- A.P. Moller Holding, which owns Maersk, agreed to acquire Unilabs, a Switzerland-based medical diagnostic services company, from Apax Partners. Financial terms were not disclosed.
- Carlyle Group acquired a minority stake in Resonetics, a Nashua, N.H.-based micro-manufacturing services company, from GTCR.
- Credit Agricole Assurances agreed to buy a 49% stake in the green energy business of Edison, a Milan, Italy-based energy operator.
- Pinterest acquired Vochi, a video creation and editing app. Financial terms were not disclosed.
- SenseTime Group, a Chinese artificial intelligence company, plans to raise as much as $768 million in its Hong Kong IPO, per Bloomberg. SoftBank backs the firm.
- EuroChem Group, a Russian fertilizer company, is weighing an IPO in the country, according to Bloomberg.
Pappas Capital, a Durham, N.C.-based venture capital firm, promoted Cookie Yu and Gilbert Kinsey to principal.