Friday, December 27, was imagined to be the beginning of a soothing vacation weekend.
But it was chaos for 1000’s of small enterprise house owners who use Bench, an accounting and tax startup primarily based in Canada that raised $113 million from buyers like Bain Capital Ventures and Shopify.
That morning, they discovered themselves unable to log into their accounts proper as tax season was beginning. Bench’s total web site was offline apart from a discover that Bench had shut down after 13 years of operation.
Bench’s lots of of workers discovered themselves laid off efficient instantly with none severance or discover, a number of ex-employees instructed TechCrunch. Emails TechCrunch despatched to staff that day bounced again.
The transfer was so sudden that one buyer who saved years of information on Bench’s web site, and was even featured on its entrance web page earlier than it went offline, realized of the shutdown solely when TechCrunch known as him for a response.
“I used to be not conscious of that,” Justin Metros, co-founder of Radiator, mentioned. “I’ve by no means seen anybody simply shut down like that. That’s loopy.”
Bench’s automation struggles
Bench portrayed itself as a tech-forward bookkeeping and tax startup with an intuitive platform that any small or mid-size enterprise might use. It claimed greater than 12,000 prospects by the point it shut down.
One motive for the corporate’s struggles was a push to embrace AI and different automation instruments lately, in accordance with some staffers.
It seems that it’s easier to automate accounting duties, like categorizing bills, in idea than in observe, former workers instructed TechCrunch. One former worker claimed the one method Bench might scale was AI, however its execution was flawed and the instruments it constructed didn’t work correctly. Overreliance on these instruments, typically on the expense of human bookkeepers, brought about delays, with books handed round totally different groups as a substitute of staying with one staffer.
Those delays brought about some prospects to stop. One former worker instructed TechCrunch some prospects have been nonetheless ready for his or her 2023 books in September 2024, effectively previous key tax deadlines.
According to the previous staffers, Bench went via a number of rounds of layoffs beginning in late 2022. By the tip of 2024, lower than 400 individuals mentioned they labored at Bench on LinkedIn, in comparison with virtually 700 in January 2023.
Tumult on the prime
Execution points have been compounded by tumult in Bench’s govt suite. Bench’s first CEO, co-founder Ian Crosby, left in 2021 a number of months after Bench raised a $60 million Series C spherical. Crosby accused unnamed board members of forcing him out to get replaced by a “skilled CEO” after he disagreed with strategic selections.
“I hope the story of Bench goes on to turn into a warning for VCs that assume they’ll ‘improve’ an organization by changing the founder. It by no means works,” Crosby wrote in a LinkedIn submit after the sudden shutdown.
Bench’s second CEO was Jean-Philippe Durrios, who had beforehand served as CFO. He centered on making the corporate worthwhile, in accordance with former workers. Automation might, in idea, make Bench rely much less on expensive human labor to service its many shoppers. But the gambit didn’t work amid execution points, buyer churn, and waning investor curiosity in non-AI-related corporations.
Bench switched CEOs but once more in November 2024, bringing in Adam Schlesinger, an executive-in-residence at VC agency Inovia Capital, one in every of Bench’s buyers.
By that time, a choice was made to promote the corporate, in accordance with Schlesinger, a former Microsoft govt who additionally not too long ago served because the president of a tequila firm, Siempre Tequila.
“I used to be put in place by Inovia Capital after which took the corporate via a course of to go get acquired,” Schlesinger instructed TechCrunch. “They wanted anyone to steer the ship via what’s a tough course of.”
An unlikely revival
That course of didn’t pan out. On December 27, Bench abruptly shut down with out giving its staff any discover or severance, a number of former workers instructed TechCrunch. The transfer was pressured by a financial institution calling in Bench’s enterprise debt, The Information reported. Bench had continued making gross sales proper as much as the day of the shutdown, in accordance with a former worker.
The shutdown sparked a rash of media consideration within the U.S. and Canada. Ironically, it’s that spotlight which saved Bench, Schlesinger instructed TechCrunch.
“It was solely after we shut down that each one the PR, together with from you guys, principally made the world conscious that we have been on the market, and we had some nice curiosity after that,” Schlesinger mentioned.
“I haven’t slept in 72 hours,” Schlesinger admitted.
The acquirers have been unconventional. Jesse Tinsley, the CEO of Employer.com, an HR tech agency primarily based in San Francisco, was on trip in Florida when he noticed the information about Bench a day after the general public shutdown. Tinsley, who runs a number of HR and recruiting-related companies, had solely purchased the Employer.com area title for about $450,000 a month earlier than, he posted on LinkedIn.
Tinsley and his workforce spent the following 36 hours hammering out a deal. By Monday morning, Employer.com had formally introduced its deliberate acquisition of Bench for an undisclosed value.
“I had by no means formally met anybody on the Bench workforce till Saturday afternoon,” Tinsley later tweeted, sharing the notorious picture of Elon Musk carrying a sink into Twitter, solely together with his face and a bench Photoshopped into the picture. “Nonetheless we saved lots of of jobs and 1000’s of consumers being left in an enormous lurch.”
Uncertainty stays
Employer.com is making large guarantees about reviving Bench. To begin, it’s re-extending job provides to a “massive quantity” of former Bench workers, Bench Chief People Officer Jennifer Bouyoukos instructed TechCrunch.
It additionally says it can honor buyer contracts and totally service their accounts, Tinsley tweeted. Bench’s preliminary shutdown discover really useful its purchasers file for a six-month extension with the IRS to discover a new bookkeeper. Now, Bench isn’t recommending extensions so long as prospects determine to remain on.
But there are uncertainties remaining round Bench’s sustainability, given its last-minute fireplace sale.
Acquisitions usually take months and require intensive due diligence, which might be not possible to conduct over a vacation weekend. Employer.com additionally had no direct expertise in accounting till the Bench acquisition — as a substitute, it focuses on payroll, recruiting, and different HR-related fields. If Bench’s downfall exhibits something, it’s that accounting is its personal beast.
There are additionally issues about whether or not prospects could have entry to the identical high quality of service, given the sudden firing of all of Bench’s workers on December 27. Although many workers are being employed again, at the very least some are being provided solely 30-day contracts, three former staff instructed TechCrunch.
In response, Employer.com’s chief advertising and marketing officer, Matt Charney, instructed TechCrunch that “whereas the deal occurred shortly,” it concerned “a number of authorized companies” and Employer.com feels “very very comfy” with Bench’s popularity and monitor report.
On Employer.com’s lack of prior accounting expertise, Charney says that Bench was acquired for its individuals, expertise, and prospects, who can “assist us purchase that experience very, in a short time.” Employer.com declined to remark particularly on the 30-day contracts as of press time.
