Better.com CEO Vishal Garg says he is personally liable for $750M SoftBank loan

https://techcrunch.com/2022/05/13/better-com-ceo-vishal-garg-750m-cash-infusion-from-softbank/

by boeingUH60 • 4 years ago

114 48 4 years ago

HWR_14• 4 years ago

Given that the CEO is probably worth nowhere near $750MM absent his founders stock, isn't this just him just leaning into a binary outcome? Either Better.com can pay off the loan in 5 years or it's gone broke by the and he gives up his share in bankruptcy. I mean, it cuts out the "just squeaking by" option as him having to give up all his equity in something that was worth hundreds of millions is a big kick in the teeth, but what are the odds Better.com defaults and the stock is worth anything?

dh5• 4 years ago

A quick search shows Garg's net worth is ~4B. Despite previous actions he deserves some amount of respect IMO for putting his own money on the line here.

PaywallBuster2• 4 years ago

Could be based on the valuation of the company based on the latest funding round

Which could be tanking as we speak

I don't see any news of the SPAC merge to have succeeded (estimated for Q4 21)

and this article shows they just laid off 1/3 of staff

https://therealdeal.com/2022/03/15/future-city-better-coms-t...

ilrwbwrkhv• 4 years ago

The good ol' Elon Musk strategy

ekianjo• 4 years ago

net worth is ~4B

net worth is not the same as liquidity

snypher• 4 years ago

Hard to respect when losing $750m would still leave you a billionaire.

PaywallBuster2• 4 years ago

Sounds like a good bet!

sfmike• 4 years ago

Is he better ?

rendall• 4 years ago

I don't understand the context. Why is this a big deal? Why would 90% of the employees bail?

in3d• 4 years ago

That’s the guy who fired a bunch of people over Zoom a few months ago. Financial issues mainly, here is some context: https://techcrunch.com/2022/02/18/better-com-loses-more-seni...

agent13• 4 years ago

He did 3 separate mass zoom firings in a span of 6 months.

andrew_• 4 years ago

and what's wild is that they were on a hiring spree leading right up to that moment. I was heavily recruited by six different people there who seemingly knew none of their colleagues. I received the last message the morning of the infamous zoom call, then, crickets. Not that I was entertaining the positions being offered, only that regular messaging literally fell off a cliff from those recruiters internal to Better.

pknomad• 4 years ago

Probably because Better.com went through poorly-executed layoffs.

yardie• 4 years ago

Because no one wants to start the day thinking every Zoom meeting is the one they’ll fire you. It’s bad for company morale and it’s bad for employee mental health. It should be 99% bail and the C-suite can work the lines themselves. Because fuck any company that tries to normalize doing business this way.

silisili• 4 years ago

I'm currently in late stages with Better, and holy crap is this company on fire (not in a good way).

I've been using them for 3 months exactly, and on my 5th advisor. An advisor is your sole point of contact for the loan... questions, concerns, documents, everything. They don't tell you when the advisor changes, you just notice by chance the little initial emoji of your advisor changed. Realize this means the previous one left, or got fired.

They have no real ticketing. Each worker has a unique and seemingly private email and text...so you start fresh with each one. To the point you don't even want to ask questions, because they'll just fire the person you asked and you'll start fresh again...a week before closing...

The site and flow are slick, that's what drew me in. But the company as a whole is odd and I'd highly recommend not using them.

fma2• 4 years ago

I had no issues using them last year. As a matter of fact there was a whole subindustry of churning your mortgage as interest rates kept falling. Better.com allowed for that because of how seamless everything is and they would price match any rate you got.

Of course if you have some edge case and tons of questions or issues YMMV and you'd have similiar back and forth. Their call center which seemed to be staffed in the US was always helpful in answering questions or escalating if there are delays in the advisor side.

shard2• 4 years ago

I had issues with Better last year. Advisors were hard to reach, away on vacation without notice, completely unreachable before 9AM and after 5PM, and unable to adjust to the highly competitive market that was going on last year (needed 15 day close as opposed to 30). I had to switch to a local banker, who was able to provide the speed and flexibility required as they were used to the local market. The local banker also offered the same rate as Better, meaning there was no advantage to Better whatsoever.

tragictrash• 4 years ago

I signed up for a pre-approval letter through them. I was presented with someone else's pre approval letter, names, address, pre-approval amount and all.

They didn't seem to realize the gravity of the situation when I called to inform them of the leak.

My advice is to bail now while you still can.

X6S1x6Okd1st• 4 years ago

My condolences, I was also really attracted by their rates and slick design, but apparently dodged a bullet

Rebelgecko• 4 years ago

I tried doing a refi with better last year and ended up going with someone else because they weren't as competitive on price, and interacting with them didn't feel like the well-oiled machine they were when I originally got my mortgage with them.

l8nite2• 4 years ago

Yea I will never not use a mortgage broker again. The middleman and wholesale pricing is worth it!

b1n• 4 years ago

How does better.com make money? what is their business model?

The site says they charge zero commissions & lender fees - does this just apply to the loan recipient? maybe it's just commission from the lenders?

benoliver999• 4 years ago

Commission from lenders is how fee free brokers work, I gather. I used one once and they were fairly transparent about how it works.

sgerenser• 4 years ago

Better is a direct lender, not a broker. They make their money from the spread between the rate/points offered to the user and the price they can package and sell the loan for.

midasuni2• 4 years ago

Ok so why makes them different from any other company selling loans to consumers?

I took out a loan from hitatchi a while back, I’ve just today had about an exciting new rebranding they’ve had changing they’re name and how ecstatic I, as a customer, will be about it

Do I care? No. At start I care about monthly payments and how many months it is. Afterwards I care how long is left.

If better come out with better rates than any other provider that’s great, but there’s no value add for this type of product, it’s just how much it costs.

nowherebeen• 4 years ago

I wonder if Softbank demanded this because of what happened at WeWork?

hn_throwaway_992• 4 years ago

Makes sense. If Better.com crashes, they're probably not getting much from the CEO, because so much of his net worth is tied up in Better and he would just file for bankruptcy. So it seems like this would be a tool to prevent the insanity of what happened with Adam Neumann, in which SoftBank had to pay a shitload to acquire his shares just to get him to leave and not tank the rest of their investment.

vmception3• 4 years ago

wow! Phrasing! Are we still doing phrasing?

Alternate title: CEO personally guarantees company financing

"The CEO believes in his struggling company, although it theoretically means he could have an excuse to sell a bunch of Better.com shares or personally declare bankruptcy, this CEO has 5x as much cash and is probably swimming in less debt than most of the middle class."

bryanrasmussen• 4 years ago

I agree, there should really be a title change here.

boeingUH60• 4 years ago

OP here..

I in no way meant the title to be misleading…I included the specific company (Better) because they’ve been in the news recently for multiple rounds of layoffs.

Likewise, this is one of the few times I’ve seen a founder personally guarantee such a big loan for their startup, and it’s more notable considering Better’s business (and valuation) seems to be in shambles.

throwk8s• 4 years ago

It is how the CEO himself described it:

"I did personally guarantee three quarters of a billion dollars and I’m personally liable for it."

And it is how the title of the article expresses it:

"Better.com CEO Vishal Garg says he is ‘personally liable’ for $750M SoftBank loan"

vmception3• 4 years ago

He also says he “personally guarantees”

You can look at all the other comments to see how the word choice alone sways people

fpiazza• 4 years ago

wow! Phrasing! Are we still doing phrasing?

i read this in Archer's voice

PolygonSheep• 4 years ago

What's the difference between "personally guaranteeing" a loan and being "personally liable" for a loan? To me they mean the exact same thing: if Better.com (the company) can't pay off the loan then Mr. Garg (the individual) is responsible for coming up with the money.

vmception3• 4 years ago

The difference is that the liable is primarily used in the context of “not initially accepting responsibility for an action, but being forced to”

Whereas “personally guarantees” is used in the context of “I meant to do this to provide confidence”

jgalt212• 4 years ago

The media was long overdue for an update on Better. When last big in the news for the Zoom layoffs in December, the 10Y note yield was approx 1.5% and now approx 3.0%. 30Y mortgage rates went from 3.1% to 4.98%. Certainly not good for Better, but also not good for any mortgage originator whose revenue structure depends on transaction volume.

https://finance.yahoo.com/quote/%5ETNX/history?p=%5ETNX

https://www.freddiemac.com/pmms/pmms30

mkmk• 4 years ago

Reminds me of the old saying:

If you owe the bank $1000, that's your problem. But if you owe the bank $100 million, that's the bank's problem.

Better.com CEO Vishal Garg says he is personally liable for $750M SoftBank loan

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