Friday, December 27, was alleged to be the beginning of a soothing vacation weekend.
However it was chaos for 1000’s of small enterprise homeowners who use Bench, an accounting and tax startup based mostly in Canada that raised $113 million from traders 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 complete web site was offline apart from a discover that Bench had shut down after 13 years of operation.
Bench’s a whole bunch of workers discovered themselves laid off efficient instantly with none severance or discover, a number of ex-employees advised TechCrunch. Emails TechCrunch despatched to staff that day bounced again.
The transfer was so sudden that one buyer who stored years of information on Bench’s web site, and was even featured on its entrance web page earlier than it went offline, discovered 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, stated. “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 may use. It claimed greater than 12,000 prospects by the point it shut down.
One purpose for the corporate’s struggles was a push to embrace AI and different automation instruments lately, in line with some staffers.
It seems that it’s easier to automate accounting duties, like categorizing bills, in idea than in follow, former workers advised TechCrunch. One former worker claimed the one means Bench may scale was AI, however its execution was flawed and the instruments it constructed didn’t work correctly. Overreliance on these instruments, generally on the expense of human bookkeepers, brought on delays, with books handed round completely different groups as an alternative of staying with one staffer.
These delays brought on some prospects to stop. One former worker advised TechCrunch some prospects had been nonetheless ready for his or her 2023 books in September 2024, effectively previous key tax deadlines.
In accordance with the previous staffers, Bench went by a number of rounds of layoffs beginning in late 2022. By the top of 2024, lower than 400 folks stated they labored at Bench on LinkedIn, in comparison with virtually 700 in January 2023.
Tumult on the prime
Execution points had 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 Collection 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 grow to be a warning for VCs that assume they will ‘improve’ an organization by changing the founder. It by no means works,” Crosby wrote in a LinkedIn put up 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 line with former workers. Automation may, in idea, make Bench rely much less on expensive human labor to service its many shoppers. However the gambit didn’t work amid execution points, buyer churn, and waning investor curiosity in non-AI-related firms.
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 traders.
By that time, a call was made to promote the corporate, in line 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 by a course of to go get acquired,” Schlesinger advised TechCrunch. “They wanted any person to steer the ship by 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 advised TechCrunch. The transfer was compelled by a financial institution calling in Bench’s enterprise debt, The Data reported. Bench had continued making gross sales proper as much as the day of the shutdown, in line with a former worker.
The shutdown sparked a rash of media consideration within the U.S. and Canada. Satirically, it’s that focus which saved Bench, Schlesinger advised 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 had been on the market, and we had some nice curiosity after that,” Schlesinger stated.
“I haven’t slept in 72 hours,” Schlesinger admitted.
The acquirers had been unconventional. Jesse Tinsley, the CEO of Employer.com, an HR tech agency based mostly 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 crew 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 worth.
“I had by no means formally met anybody on the Bench crew till Saturday afternoon,” Tinsley later tweeted, sharing the notorious photograph of Elon Musk carrying a sink into Twitter, solely together with his face and a bench Photoshopped into the picture. “Nonetheless we saved a whole bunch of jobs and 1000’s of consumers being left in an enormous lurch.”
Uncertainty stays
Employer.com is making massive guarantees about reviving Bench. To begin, it’s re-extending job affords to a “giant quantity” of former Bench workers, Bench Chief Individuals Officer Jennifer Bouyoukos advised TechCrunch.
It additionally says it would 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.
However there are uncertainties remaining round Bench’s sustainability, given its last-minute hearth 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 an alternative, it focuses on payroll, recruiting, and different HR-related fields. If Bench’s downfall reveals something, it’s that accounting is its personal beast.
There are additionally issues about whether or not prospects may have entry to the identical high quality of service, given the sudden firing of all of Bench’s workers on December 27. Though many workers are being employed again, at the very least some are being provided solely 30-day contracts, three former staff advised TechCrunch.
In response, Employer.com’s chief advertising and marketing officer, Matt Charney, advised TechCrunch that “whereas the deal occurred shortly,” it concerned “a number of authorized corporations” and Employer.com feels “very very comfy” with Bench’s repute and observe document.
On Employer.com’s lack of prior accounting expertise, Charney says that Bench was acquired for its folks, 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.
