Friday December twenty seventh was speculated to be the beginning of a calming holiday weekend.
But chaos reigned for 1000’s of small business owners using Bench, a Canada-based accounting and tax startup that has raised $113 million from investors including Bain Capital Ventures and Shopify.
That morning, they were unable to log into their accounts as tax season began. Bench's entire website was offline apart from the notice that Bench had closed after 13 years of operation.
Hundreds of Bench employees were laid off immediately without severance pay or termination, several former employees told TechCrunch. Emails that TechCrunch sent to employees that day were returned.
The move was so sudden that a customer who had stored data on Bench's website for years and was even featured on the front page before the corporate went offline didn't learn of the closure until TechCrunch reached out to him for response.
“I wasn’t aware of that,” said Radiator co-founder Justin Metros. “I've never seen someone just switch off like that. That’s crazy.”
Bench's automation problems
Bench presented itself as a technology-focused accounting and tax startup with an intuitive platform that any small and medium-sized business can use. By the time it closed, the corporate had greater than 12,000 customers.
One reason for the corporate's difficulties, in keeping with some employees, was a push lately to adopt AI and other automation tools.
It seems that automating accounting tasks like categorizing expenses is simpler in theory than in practice, former employees told TechCrunch. A former worker claimed the one method to scale Bench was with AI, however the execution was flawed and the tools he developed didn't work properly. Over-reliance on these tools, sometimes on the expense of human accountants, resulted in delays as books were passed around to different teams moderately than staying with one worker.
These delays caused some customers to cancel. A former worker told TechCrunch that some customers were still waiting for his or her 2023 books in September 2024, long after vital tax deadlines.
According to the previous employees, Bench experienced several rounds of layoffs starting in late 2022. By the top of 2024, fewer than 400 people on LinkedIn reported working at Bench, compared to almost 700 in January 2023.
Turmoil at the highest
The execution problems were compounded by the turmoil in Bench's executive suite. Bench's first CEO, co-founder Ian Crosby, left the corporate in 2021, just months after Bench raised a $60 million Series C round. Crosby accused unnamed board members of attempting to have him replaced by a “skilled CEO” after he disagreed with strategic decisions.
“I hope that Bench’s story becomes a warning to VCs who think they will “value-add” an organization by replacing the founder. It never works,” Crosby wrote in a single LinkedIn post after the sudden shutdown.
Bench's second CEO was Jean-Philippe Durrios, who had previously served as CFO. According to former employees, he was focused on making the corporate profitable. In theory, automation could mean that Bench is less reliant on costly human labor to serve its many purchasers. But the move didn't work amid execution problems, customer churn and waning investor interest in non-AI firms.
In November 2024, Bench modified CEOs again, bringing in Adam Schlesinger, an executive-in-residence at VC firm Inovia Capital, one in every of Bench's investors.
That's when the choice was made to sell the corporate, said Schlesinger, a former Microsoft executive who also recently served as president of a tequila company. Always tequila.
“I used to be hired by Inovia Capital after which led the corporate through a process to get acquired,” Schlesinger told TechCrunch. “They needed someone to steer the ship through this difficult process.”
An unlikely revival
This process didn't work. On December 27, Bench abruptly closed without giving its employees notice or severance, several former employees told TechCrunch. The move was forced by a bank calling in Bench's enterprise debt. The information reported. According to a former worker, Bench continued to make sales until the day it closed.
The shutdown sparked widespread media attention within the United States and Canada. Ironically, it's this attention that saved Bench, Schlesinger told TechCrunch.
“It was only after we closed that every one the PR, including from you guys, mainly alerted the world that we were on the market, and we had loads of interest after that,” Schlesinger said.
“I didn’t sleep for 72 hours,” Schlesinger admitted.
The buyers were unconventional. Jesse Tinsley, the CEO of Employer.com, a San Francisco-based HR tech company, was on vacation in Florida when he saw the news about Bench the day after the general public shutdown. Tinsley, who runs quite a lot of HR and recruiting firms, had purchased the domain name Employer.com only a month earlier for about $450,000, he said posted is LinkedIn.
Tinsley and his team spent the subsequent 36 hours negotiating a deal. On Monday morning, Employer.com officially announced its planned acquisition of Bench for an undisclosed price.
“Until Saturday afternoon, I had never officially met anyone on the bench team,” Tinsley said later tweetedby sharing the infamous photo of Elon Musk carrying a sink on Twitter with just his face and a bench Edited with Photoshop into the image. “Despite this, we saved tons of of jobs and left 1000’s of shoppers within the lurch.”
The uncertainty stays
Employer.com makes big guarantees about Bench's revival. Initially, the job openings might be expanded to a “large number” of former Bench employees, Jennifer Bouyoukos, Bench's chief people officer, told TechCrunch.
It also says it would honor customers' contracts and fully service their accounts. Tinsley tweeted. Bench's first shutdown notice advised its clients to request a six-month extension from the IRS to seek out a brand new accountant. Now, Bench doesn’t recommend renewals so long as customers decide to stay.
However, uncertainties remain regarding Bench's sustainability given the last-minute fire sale.
Acquisitions typically take months and require extensive due diligence that will not be feasible over a vacation weekend. Employer.com also had no direct accounting experience until it acquired Bench – as an alternative, it focuses on payroll, recruiting and other HR-related areas. If Bench's fall shows anything, it's that accounting is its own beast.
Given Bench's sudden layoff of all employees on December 27, there are also concerns about whether customers could have access to the identical quality of service. Although many employees are being rehired, not less than some are being offered only 30-day contracts. three former employees told TechCrunch.
In response, Matt Charney, Employer.com's chief marketing officer, told TechCrunch that while “the deal got here together quickly,” there have been “multiple law firms” involved and Employer.com was “very comfortable” with Bench's fame and track record “very comfortable”.
As for Employer.com's lack of accounting experience, Charney says Bench was acquired due to its people, its experience and its customers, who can “help us gain that expertise very, in a short time.” Employer.com declined to comment specifically on the 30-day contracts at press time.
