Romolo Tavani - stock.adobe.com
The boss of US-based digital mortgage company Better.com used a single Zoom call to tell 900 of his employees that they were no longer required.
Tech startups including fintechs are more prone to making sudden job cuts when business levels fall, but the number of cuts at Better.com and the way the announcement was made has drawn criticism.
On the call, Vishal Garg, CEO of the unicorn valued at about $7bn, said: “If you’re on this call, you’re part of the unlucky group being laid off.”
About 9% of the company’s employees were laid off on the call, according to Kevin Ryan, Better.com’s CFO. “Having to conduct layoffs is gut-wrenching, especially this time of year,” he said. “However, a fortress balance sheet and a reduced and focused workforce together set us up to play offence going into a radically evolving home-ownership market.”
During the three-minute call, Garg also said: “This is the second time in my career I’m doing this and I do not want to do this. The last time I did it, I cried. This time, I hope to be stronger.”
According to The Daily Beast, one of the affected staff said: “They dumped us like trash. We were there since the beginning and worked hard for the company and for our roles.”
The fintech industry, renowned for its need for talent, saw high numbers of job cuts in the early stages of the Covid-19 pandemic.
For example, in June 2020, UK digital challenger bank Monzo cut 120 jobs as the disruption caused by Covid took its toll. And in the US, peer-to-peer lender LendingClub, which was an early market entry after being launched in 2007, announced it was laying off 400 staff as demand for its lending service fell during the pandemic.
A survey of Tech London Advocates’ network of 10,000 tech startup executives in the early stages of the pandemic last year showed that 49% believed the coronavirus crisis was a threat to their existence, and 53% were establishing business models for the next quarter focused on survival, with 32% expecting business to stagnate in that period.
Read more about fintech and Covid-19
- Banking and financial services trade body UK Finance to increase spending limit for contactless payments to £45 from the start of April.
- Technology startups in London are fighting for their existence, with business plans for the next three months geared towards survival.
- The coronavirus will wipe out some fintechs, but those that get through it will share in the next growth phase of the industry's development.