NEW YORK — Vishal Garg is seeking to return as CEO of Better Home & Finance after the company’s board removed him on Aug. 3 and replaced him with hedge fund manager Daniel Lewis.
Garg says the board made a mistake and claims Lewis gained his trust before taking his place. He has since hired high-powered lawyer Alex Spiro of Quinn Emanuel and sent the board a letter demanding that he be reinstated.
“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 says he has enough voting power to challenge the decision. He also says he would return for $1 a year and remain CEO only until Better reaches profitability.
The fight comes after years of major setbacks for Better and its founder.
During the pandemic refinancing boom, when mortgage rates fell below 3%, Better reached an $8 billion valuation. Its market value is now about $300 million as the refinancing business has collapsed and mortgage rates approach 7%.
The company also faced the fallout from Garg’s decision to lay off 900 workers during a company Zoom call shortly before Christmas in 2021. The episode damaged his reputation and led to a leave of absence.
Better later faced a whistleblower lawsuit that was dropped, a Securities and Exchange Commission investigation that produced no action, and a disastrous 2023 SPAC merger. The company’s stock fell 93% after the merger, while losses continued to mount.
Garg argues that the company was finally turning a corner when he was removed.
Better’s annual sales dropped from $1.5 billion in 2021 to $70 million in 2023. Garg says the company is now on track for $200 million in sales this year.
He credits artificial intelligence with helping drive the recovery. Better trained AI models to process mortgage applications much faster than traditional methods, which Garg says can require dozens of workers over several days.
A partnership with Neo Home Loans doubled productivity and cut loan origination costs by 50%, according to Garg. Intuit, Coinbase and OpenAI also partnered with Better this year to power mortgage services, he said.
Better has also built a 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 said Lewis first approached him about six months ago with ideas for cutting costs and improving profitability.
“(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 joined Better’s board on July 27. One week later, the board removed Garg as CEO and named Lewis to replace him.
Garg said he accepts that his leadership style has been demanding and that the 2021 layoffs caused lasting harm.
He said Lewis had convinced the board that Garg had not pushed the company hard enough, while Garg believes Lewis had his own plans for the top job.
“I suspect he always wanted to become CEO,” said Garg. “The board made a mistake.”
Better and Lewis did not respond to a request for comment.
Lewis posted on X on Aug. 4, “There was never a $BETR without @vishal_better. That demands respect.”
Garg remains on Better’s board despite losing the CEO position. He says several investors contacted him after the ouster and urged him to return.
He also claims he has the votes needed to win back the job through Class B shares with special voting rights held by him and a group of early investors who support him.
“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.”
The market has also moved sharply since Lewis took over. Better’s stock has fallen 45% since his appointment. Before Garg’s departure was announced, the stock was already down more than 16% for the year.
Garg says he wants to return only long enough to complete the turnaround before eventually leaving the CEO role.
“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.”
