Friday, December 27, was imagined to be the beginning of a calming vacation weekend.
But it surely was chaos for hundreds of small enterprise homeowners who use Bench, an accounting and tax startup primarily based 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 tons of of employees discovered themselves laid off efficient instantly with none severance or discover, a number of ex-employees advised TechCrunch. Emails TechCrunch despatched to workers 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 called 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 cause for the corporate’s struggles was a push to embrace AI and different automation instruments lately, based on some staffers.
It seems that it’s less complicated to automate accounting duties, like categorizing bills, in concept than in observe, former employees advised TechCrunch. One former worker claimed the one manner Bench may 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, precipitated delays, with books handed round totally different groups as an alternative of staying with one staffer.
These delays precipitated some prospects to give up. One former worker advised TechCrunch some prospects have been nonetheless ready for his or her 2023 books in September 2024, properly previous key tax deadlines.
In accordance with the previous staffers, Bench went by means of 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 high
Execution points have been compounded by tumult in Bench’s government suite. Bench’s first CEO, co-founder Ian Crosby, left in 2021 a number of months after Bench raised a $60 million Sequence 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 change 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 post after the sudden shutdown.
Bench’s second CEO was Jean-Philippe Durrios, who had beforehand served as CFO. He targeted on making the corporate worthwhile, based on former employees. Automation may, in concept, make Bench rely much less on pricey human labor to service its many purchasers. However 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 traders.
By that time, a call was made to promote the corporate, based on Schlesinger, a former Microsoft government who additionally lately 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 means of a course of to go get acquired,” Schlesinger advised TechCrunch. “They wanted any individual to steer the ship by means of 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 workers any discover or severance, a number of former employees advised 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, based on a former worker.
The shutdown sparked a rash of media consideration within the U.S. and Canada. Paradoxically, it’s that spotlight which saved Bench, Schlesinger advised TechCrunch.
“It was solely after we shut down that each one the PR, together with from you guys, mainly made the world conscious that we have 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 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 staff spent the subsequent 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 staff 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 tons of of jobs and hundreds of consumers being left in an enormous lurch.”
Uncertainty stays
Employer.com is making large guarantees about reviving Bench. To start out, it’s re-extending job presents to a “massive quantity” of former Bench employees, Bench Chief Individuals Officer Jennifer Bouyoukos advised TechCrunch.
It additionally says it should honor buyer contracts and totally service their accounts, Tinsley tweeted. Bench’s preliminary shutdown discover advisable its shoppers 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 fireplace sale.
Acquisitions usually take months and require intensive due diligence, which might be unimaginable 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 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 employees on December 27. Though many employees are being employed again, no less than some are being supplied solely 30-day contracts, three former workers advised TechCrunch.
In response, Employer.com’s chief advertising 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 popularity 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.
