Friday, December 27, was presupposed to be the beginning of a soothing vacation weekend.
However it was chaos for hundreds of small enterprise homeowners who use Bench, an accounting and tax startup based mostly 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 aside from a discover that Bench had shut down after 13 years of operation.
Bench’s a whole lot of employees discovered themselves laid off efficient instantly with none severance or discover, a number of ex-employees instructed Fintech. Emails Fintech despatched to staff that day bounced again.
The transfer was so sudden that one buyer who saved years of knowledge 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 Fintech referred to 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 response to some staffers.
It seems that it’s easier to automate accounting duties, like categorizing bills, in principle than in apply, former employees instructed Fintech. 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, triggered delays, with books handed round completely different groups as a substitute of staying with one staffer.
These delays triggered some prospects to give up. One former worker instructed Fintech some prospects have 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 way of a number of rounds of layoffs beginning in late 2022. By the tip 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 have been compounded by tumult in Bench’s government suite. Bench’s first CEO, co-founder Ian Crosby, left in 2021 a couple 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 choices.
“I hope the story of Bench goes on to develop into a warning for VCs that suppose 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 response to former employees. Automation may, in principle, 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, considered one of Bench’s buyers.
By that time, a call was made to promote the corporate, in response to Schlesinger, a former Microsoft government 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 way of a course of to go get acquired,” Schlesinger instructed Fintech. “They wanted anyone to steer the ship by way 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 staff any discover or severance, a number of former employees instructed Fintech. 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 response to 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 instructed Fintech.
“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 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 bunch 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 group 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 group 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 a whole lot of jobs and hundreds of shoppers being left in an enormous lurch.”
Uncertainty stays
Employer.com is making huge guarantees about reviving Bench. To begin, it’s re-extending job presents to a “massive quantity” of former Bench employees, Bench Chief Folks Officer Jennifer Bouyoukos instructed Fintech.
It additionally says it is going to honor buyer contracts and absolutely 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 resolve to remain on.
However there are uncertainties remaining round Bench’s sustainability, given its last-minute hearth sale.
Acquisitions sometimes take months and require in depth 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 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 can 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, a minimum of some are being provided solely 30-day contracts, three former staff instructed Fintech.
In response, Employer.com’s chief advertising officer, Matt Charney, instructed Fintech that “whereas the deal occurred rapidly,” it concerned “a number of authorized companies” and Employer.com feels “very very comfy” with Bench’s fame 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. Replace: post-publication, Bench Chief Folks Officer Jennifer Bouyoukos instructed Fintech that the 30-day contracts are a short lived measure to “guarantee continuity” whereas the required infrastructure for long-term employment in Canada is about up.
