It's one thing to lay off workers when the going gets tough. It's another thing entirely to trash their work ethic while you do it. Vishal Garg, the CEO of Better.com, did the latter. With the company's merger with a SPAC fast approaching, the IPO's viability is in question.
SPACs can—and do—fail. Will the Better.com SPAC fail or will Garg be able to pull himself out of the trenches?
CEO Vishal Garg blasted Better.com employees amid mass Zoom layoff.
Garg, who founded Better.com in 2016 and continues to serve as the brand's chief executive, made a bold move ahead of the company's planned SPAC merger.
In a Zoom call, Garg unexpectedly laid off 900 employees—but that's not all. Fortune reported that he also slammed nearly a quarter of those workers. He wrote in a post, "At least 250 of the people terminated were working an average of two hours a day while clocking in eight hours plus a day in the payroll system."
When asked about his statement, which he admitted to writing in a Blind message, Garg responded, "I think they could have been phrased differently, but honestly the sentiment is there."
Garg said that "Better 2.0" will have a "leaner, meaner, hungrier workforce" and that management will be watching workers much more closely and posing stricter deadlines moving forward.
What's next for the Better.com SPAC?
About a week prior to the layoff debacle, Better.com landed a $750 million cash infusion from existing investors Aurora Acquisition Corp. (the blank-check firm planning to take Better.com public) and SoftBank.
This value is half of the $1.5 billion set aside for Better.com upon the merger finalization, but the company's investors decided to infuse half of the capital early.
Reportedly, this move could fuel growth faster and help Better.com achieve a $1 billion balance sheet almost immediately. "With this new structure the company will fortify our balance sheet and position us as extremely well capitalized in a tough mortgage market. Surviving is winning and capital ensures survival," wrote Better.com's chief financial officer Kevin Ryan.
Better.com is still poised to go public at a book value of $6.9 billion, although it isn't clear if the team is sticking to its end-of-year plans.
Will the Better.com SPAC fail?
SPACs aren't final until the merger actually happens. Usually, a definitive agreement means that you're in the clear, but unforeseen circumstances can always happen. Past SPACs that failed to merge include TGI Fridays, CEC Entertainment, and Akazoo.
Even if a SPAC does merge, there isn't a guarantee that its stock will succeed. By the third quarter of 2021, 97 percent of 300+ pre-merger SPAC deals were already trading below their $10 starting price.
Such is the case with Aurora Acquisition Corp. (NASDAQ:AURC), Better.com's SPAC, which is trading 3.96 percent lower than its debut price as of Dec. 7.
The Better.com SPAC deal is tied with a definitive agreement and backers have already given the company 50 percent of promised capital. While the SPAC is likely to merge, there isn't a promising that the stock's value will sustain in a skeptical market.
Garg's added controversy surely doesn't help his case, especially if laid-off workers come forward with unflattering stories about company culture. Since Garg never provided evidence of his claims, questions will likely abound regarding his legitimacy.