Vishal Garg feels duped.
“He hoodwinked me,” the just-ousted Better Home & Finance CEO said about Daniel Lewis, the man who replaced him last week. “He said he liked the company’s strategy. He praised us on X and used that to get on our board and win our confidences.”
Garg, who made headlines for laying off 900 employees on a company Zoom just before the 2021 holiday season, says he was fired on August 3 just as he brought the company to the precipice of success.
Better has been through a lot with Garg at the helm over the past several years. During the pandemic-fueled refinancing boom when mortgage rates were below 3%, the company held an $8 billion valuation. Today, with an imploded refi business and rates closing in on 7%, the AI mortgage company’s market value stands at just $300 million.
Toss in a leave of absence after the embarrassing Zoom layoff fiasco, a whistleblower lawsuit (it was dropped), an investigation from the Securities and Exchange Commission (nothing came of it), a disastrous 2023 SPAC merger that sent the company’s stock cratering 93% and years of mounting losses … it’s a minor miracle that Garg lasted this long as CEO.
But Garg says he was just about to deliver on the company’s unlikely turnaround.
After its core refinancing business went belly up, Better’s annual sales plummeted from $1.5 billion in 2021 to $70 million in 2023. This year, the company is on pace to deliver $200 million in sales, he said.
It bounced back by training AI models to quickly process mortgages — a task that would normally take dozens of people several days to accomplish. It partnered with Neo Home Loans, which doubled productivity and reduced loan origination costs by 50%, Garg claims. Impressed with the results, Intuit, Coinbase and OpenAI partnered with Better this year to power their mortgage services. The company also developed a strong home equity line of credit business.
“We’re winning. We’ve tripled loan volume. We’re close to profitability,” Garg said. “We were at the 5-yard line after taking the ball all the way down the field from the other side.”
Garg acknowledges he’s “hard-nosed” and the famous Zoom layoffs severely damaged the company’s reputation — a mistake he knows will continue to haunt him. But as criticized as Garg has been for placing near-impossible demands on the company and its employees, he said Lewis convinced the board he didn’t push hard enough.
Better and Lewis did not respond to a request for comment. On August 4, Lewis posted on X, “There was never a $BETR without @vishal_better. That demands respect.”
Lewis, a hedge fund manager with a mixed track record of success, approached Garg six months ago with thoughts about cost savings and good ideas about delivering profitability, Garg says.
“(Lewis’) thoughts about cost savings were good. His ideas about innovation were not,” Garg argued. “It’s so much easier when we’re this close for someone to come in and say that they could have done better.”
Lewis was brought on to the board on July 27. A week later, he had convinced the other directors to oust Garg as CEO and name himself as Garg’s replacement.
“It’s not about me,” Garg said. “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.”
But Garg says he believes Lewis hadn’t been forthcoming about his intentions over the past several months, as he advised Garg and convinced him to give him a board seat.
“I suspect he always wanted to become CEO,” said Garg. “The board made a mistake.”
Investors appear to agree with Garg. The stock has fallen 45% since Lewis took over as CEO. (The stock had been down more than 16% this year before Garg’s departure was announced.)
In the week since Garg stepped aside (but remained on the board) he says a number of horrified investors reached out to plead with him to take his CEO job back. Armed with Class B shares with special voting powers — his own and from a group of committed early investors — Garg says he has the votes to win.
He has retained high-powered lawyer Alex Spiro, partner at Quinn Emanuel, to represent him, and he sent a letter to the board on Monday demanding it return him as CEO. He says he’ll work for $1 a year until he returns the company to profitability, and he’ll transition out of the CEO role afterward.
“It’s an acknowledgment that I’ve been doing this for 10 years, but execution hasn’t been perfect,” Garg said. “I hope it gets resolved. I think the future still remains very bright for Better.”