A single (and so far unknown) labor lawsuit hides multiple details of Betterfly’s internal operation, as well as a criticism of the leadership of its co-founder and CEO, Eduardo della Maggiora.
Said judicial action was presented at the beginning of November before the 1st Labor Court of First Instance of Santiago by the former digital manager of the firm (CDO, Chief Digital Officer in English), Cristián González, who was terminated at the end of July 2022.
The lawsuit arises after a failed conciliation attempt before the Labor Inspectorate and because, says an insider, “important differences regarding the stock options policy (a contract that allows a worker to buy a certain number of shares of the employing company -or another related company- at a preferential price)”.
In particular, on November 2, the lawsuit was filed in which González (advised by Pedro Julio Martínez, deputy director of Labor during Bachelet 1) He accuses that Betterfly fired him abusively and that there was a violation of his fundamental rights. But perhaps the most notorious is his criticism of the CEO of the company, which -precisely- is dedicated to labor welfare. “(There was) mistreatment by Eduardo della Maggiora himself,” the legal action reads.
Faced with these accusations, Betterfly went on the offensive this week: In a legal brief on Tuesday, they denied all the facts. and accused Gonzalez of acting in bad faith. This is the story.
Cristián González studied civil engineering at the Central University, he is currently 51 years old and during his career he worked mainly in two large companies: Telefónica and Consorcio. In August 2019, together with two other former executives of the Chilean company, he set up his own technology solutions company. He named it Digitali and went looking for clients.
The link with Betterfly began in January 2020, when the firm was still called Burn To Give: they were not a unicorn, they did not have hundreds of workers, nor the current business model. However, and as Eduardo della Maggiora has commented on various occasions, they wanted to become the first social enterprise in the region to exceed a valuation of US$1 billion. At that time both companies got together to see the possibility of generating a technology consultancy. They “clicked” immediately and in February they began to work together.
According to the lawsuit, Digitali helped build Betterfly’s technology, extending their business relationship for several months. In December of that same year, and due to the close treatment they had, Della Maggiora invited González to join the firm as a full-time worker. According to what is read in the letter, former JP Morgan offered him “to be ‘owner’ of part of Betterfly, through the purchase option (stock option) of 45,000 shares, at a very low value of US$ 0.19 (valued , in total, in US$ 150 thousand)”. He would also have put on the table a contract of at least five years with a rising remuneration.
According to González, Eduardo della Maggiora told him that the value of stock options could grow “10, 50 or 100 times, given the exponential growth that Betterfly was experiencing.”
With all this, González accepted.
Mergers “with many difficulties and errors”
He officially started working on February 1, 2021 under the position of Chief Digital Officer (technology and/or digital manager). His main task was to advance the design and implementation of the platform. He was also in charge of assembling a team of area managers to accelerate product development.
A few months later, González -according to the lawsuit- realized some elements that caught his attention, especially the treatment of the CEO of the company: “The intensity of work imposed by Eduardo della Maggiora implied working hours from Monday to Monday, especially for company leaders. My focus was to carry out the professional challenge of building the best digital factory in Latin America, which kept me awake and obsessed with performing in the best way to achieve the objective”.
He assures that workers in the digital area would have begun to identify something similar: “(They) also noticed the inconsistencies and felt the mistreatment, which I minimized by always putting the professional challenge first, leaving these situations in the background.”
The plaintiff says in the text that he has witnessed two key milestones for Betterfly: the capital increase for US$ 60 million (Series B) and the Series C for US$ 125 million. This last event made them the first social unicorn in Latin America.
After Serie B (which happened in June 2021) González received a 23% salary increase and direct congratulations from Eduardo della Maggiora through a letter. “Your effort, commitment, transparency, and performance have been exemplary,” the CEO wrote. In addition, he detailed the increase in his stock options, reaching 50,000. “Today they represent a value of US$690,208, considering a price per share of US$13.8”, he added.
He also had to witness Betterfly’s internationalization strategy, which forced them to triple the digital team. For this, in September 2021, they announced the purchase of five technology firms (100% of Kunder, Heypay!, Nesto, Numi, and a minority percentage of Racional).
And precisely this operation was the one that triggered, in the future, the problems between González and the board of directors of the company.
The merger process, the lawsuit reads, occurred “with many difficulties and errors.” This is where the figure of Andrés Munita appears, a partner in the five firms that Betterfly acquired (but who today is outside of insurtech). “I found out that (Munita) had generated a report of more than 15 pages with personal and professional judgments (against González), that he found everything wrong in the management that we had carried out to date,” it appears in the legal action.
According to the legal action, Della Maggiora would have indicated that these accusations were “as true facts, without investigating (or) verifying them.”
The situation deepened in November 2021, when Munita removed González from his “position and functions.” He did not fire him, but he was left without a specific position. Four months later, he was given a role in the human resources area (which is not detailed in the letter).
“Inconsistencies, impairment and mistreatment”
Since the change of pieces within Betterfly took place, González -explains the labor lawsuit- began to “suffer constant threats and comments such as ‘if you don’t like it, you can leave'”.
“I commented to Eduardo della Maggiora on the situation of inconsistencies, impairment and ill-treatment, but I received from him statements such as: ‘You lied to me’; ‘you don’t have the technological skills’; ‘You are not up to the level and quality of an elite team like the one I need’; ‘now people who know have arrived’; ‘there is no agility’; ‘mission not accomplished’”.
In July 2022, following the departure of Andrés Munita from Betterfly, González returned to the technology team under a new boss (Andrés Liberman). On the 22nd of that same month, his superior invited him to talk about his future in the company because, according to knowledgeable sources, “he was not complying with a series of agreed projects.” The following week González spoke with various people from the firm -among them Cristóbal della Maggiora, co-founder and chairman of the board, and Sol de Cabo, VP of people and culture-, who offered him a proposal to end the employment relationship.
However, as explained in the lawsuit, said offer did not comply “with the spirit of the initial agreement of my employment contract or with the labor benefits delivered.” Why? The agreement contemplated a link of five, for which he was not being compensated, and that his 50,000 stock options “were not included in the mutual agreement proposal either.”
To resolve these differences, both parties participated in a conciliation hearing before the Labor Inspectorate. But nothing was solved, quite the opposite. “The most unusual thing is that the defendant’s representative denies that the Stock Purchase Options that I own are a labor benefit and refers us to the United States for collection (…) It is an evasive maneuver, which tries to make it illusory to demand my labor benefits in Chile,” González states in the lawsuit. Specifically, he refers to an email that Cristóbal della Maggiora wrote to him on October 15: “The stock options plan is offered and granted by Betterfly PBC, located in the state of Delaware, USA. The contracts you signed are totally different and separate from the documents of your employment relationship. What’s more, they are in English and are subject to Delaware law. For all of the above, the stock options plan is not today nor was it before a labor benefit granted by your former employer Betterfly Chile SpA”.
To this he criticizes that “a labor benefit that is part of the employment contract must be sued in another country, under other legislation and with respect to another person.”
In the legal action, he claims $336 million for moral damages, in addition to additional compensation for $88 million. And finally, the Commission for the Financial Market (CMF) is requested to officiate to “monitor compliance with the payment of the so-called stock options offered by Betterfly.”
Betterfly responds: “(González) seeks to enrich himself without cause”
On the night of Tuesday, December 13, Betterfly -supported by the lawyer Enzo Canales, from CMS Carey & Allende- entered the response to González’s lawsuit, in which they accuse him of acting in bad faith and claiming to enrich “without cause”.
In the first place, regarding the stock options, they affirm that “it is false that my client is the one who offered the plaintiff own shares, but rather that Mr. González entered into a stock options contract with a third party unrelated to the trial, Betterfly PBC, and For this, the actor had to validate an electronic signature, creating a secret username and password in a system called Carta (equity management software), and where he agreed to submit to Delaware regulations regarding such participation program, adhering in addition to US regulations of the Securities Exchange Commission (SEC)”.
Therefore, they add, “(González) intends to hide the true legal nature of the benefit he is claiming, assimilating it to a kind of bonus equivalent to 50,000 shares of Betterfly Chile SpA.”
And they provide a piece of information: “On October 24, 2022, (the plaintiff) exercised the right to purchase 16,875 shares of Betterfly PBC, this through the Carta system, at a value per share of US$ 0.19.”
Regarding their changes in positions, Betterfly affirms that -during González’s leadership- the digital department suffered a series of delays with committed projects. “The actor refused to acknowledge any error on his part, always attributing it to others, commenting that – given his supposedly successful performance at Telefónica, and the creation of technology companies – his work could not be questioned by his colleagues no headquarters.”
In addition, the startup denies the existence of mistreatment and workplace harassment. Regarding the alleged statements by Eduardo della Maggiora, Betterfly mentions that González “does not indicate the context, date, or any detail regarding these alleged facts, which prevents the right to defense from being duly exercised.”
And they add: “The phrases mentioned by the actor are devoid of any relevance. For example, if there was a delay in the delivery of a report, of course it is logical to indicate that “there is no agility”, and if a job was done poorly, it should be noted that the mission has not been accomplished. The actor seems to forget that part of what a relationship of subordination and dependency implies is precisely ‘the critical judgment’ of the work carried out by the worker”.
The next chapter of this plot will arrive next week, on December 20. Both parties will meet on the Zoom of the preparatory hearing at 9:40 am.