Better.com's Zoom Layoff: A Corporate Communications Failure

Better.com's Zoom layoff is a corporate communications failure: on December 1, 2021, CEO Vishal Garg told about 900 employees, roughly 9% of the company, they were fired on one video call with no individual notice. Garg later said he had blundered the execution. The company's SPAC listing slipped, three marketing and PR executives left, and shares fell more than 90% at the 2023 debut.

Better.com is a digital mortgage lender founded by Garg. Its SPAC partner was Aurora Acquisition Corp., a special purpose acquisition company, which is a listed shell that takes a private company public through a merger. The case matters because the layoff itself was a business decision, while the damage came from how it was delivered.

What happened on the Better.com Zoom call?

Garg fired about 900 Better.com employees on a Zoom webinar on December 1, 2021, according to CNN Wire reporting. The call was short. Garg opened by telling attendees they were part of the "unlucky group" being laid off, then said an HR email would follow with benefits and severance.

Only the employees being let go were invited to the call, per SFGate reporting. FinTech Futures reported that US employees were offered one month of pay and two months of health coverage, and that staff in India were also affected.

Garg said on the call that the cut was 15% of the workforce. The company later clarified it was 9%, as reported by TechCrunch and republished by McClatchy. A leader who gets his own headcount wrong in the announcement gives critics a second story.

Why did the layoff become a crisis?

The layoff became a crisis because the delivery, the timing and the stated reasons all pointed the same way. Garg gave "market efficiency, performance and productivity" as reasons, and CNN Wire reported that Fortune later said he accused the fired employees of stealing by working about two hours a day.

The timing made it worse. The call came weeks before the holidays, one day after Better.com revised the terms of its SPAC deal, and days after the company, valued at $7 billion, received a $750 million cash infusion per Forbes. Readers compared the cash with the firings.

Garg also had a prior record. Al Jazeera reported that Forbes had obtained an earlier staff email in which Garg told employees they were "TOO DAMN SLOW." The Zoom recording confirmed a pattern journalists had already described.

How did Better.com respond?

Better.com responded with an apology letter, a leave of absence and a return to the CEO role within about six weeks. The apology was weak because of who received it and what it admitted.

Garg posted a letter on Better.com saying he owned the layoff decision but not the delivery. CBS News noted the letter was addressed to remaining employees, not to the people who lost their jobs.

On December 10, the board told staff Garg was taking time off, according to National Mortgage News, citing Vice. Aurora's December 27 SEC filing said Garg remained CEO. Inman reported in January 2022 that the board welcomed him back after a break to work with an executive coach.

What did the failure cost Better.com?

The documented costs were a delayed listing, departures from the communications team and a poor market debut. The table below lists each event with its source.

Aurora had expected to finalize the merger by the end of 2021. It closed in August 2023. The share price collapse had several causes, including the 2023 mortgage rate environment and the company's losses, so the Zoom call is one factor and not the only one.

How should a company announce layoffs instead?

A company should announce layoffs through a manager or small-group conversation first, with the written terms delivered at the same time. Better.com's own apology conceded that the way Garg communicated the news made a difficult situation worse, per FinTech Futures.

The same sequencing logic applies to any first statement in a crisis. See the five crisis communications failure patterns that repeat, the corporate apology campaigns that worked, and the planning steps in how to build a crisis communications plan. Companies preparing a layoff announcement can also see how 5WPR's crisis communications practice approaches leadership statements and spokesperson preparation.

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