The dramatic downfall and unexpected revival of Bench, a venture capital-backed accounting startup, has captured the attention of the business world. Bench, based in Canada, was well-known for offering bookkeeping and tax services to small and mid-sized businesses via a tech-forward platform. Over its 13-year lifespan, the company managed to secure $113 million in funding from high-profile investors such as Bain Capital Ventures and Shopify. However, on December 27, 2024, the company abruptly shut down, leading to significant chaos for its customers and employees just as the tax season loomed.
Bench’s Abrupt Shutdown
Immediate Impact on Customers and Employees
On the morning of December 27, thousands of Bench customers found themselves unable to access their accounts due to the company’s website going offline. A notice disclosed that Bench had ceased operations after 13 years. This sudden shutdown left many small business owners in a difficult situation, particularly given the timing close to tax season. The company’s 700-strong staff were also laid off without any severance or prior notice. Emails sent to employees by TechCrunch were bounced back, confirming the cessation of activities. The abrupt manner of the shutdown caught everyone by surprise, including customers who had years of data stored on Bench’s platform.
Stranded without access to their financial records, small business owners faced an imminent crisis. With the tax season on the horizon, the timing couldn’t have been worse. Furthermore, the sudden layoff of Bench’s 700 employees, without any compensation or warning, ignited a storm of distress among the workforce. This news came as a shock wave, disrupting the routine of both employees and clients who relied on Bench’s services for their critical business functions. The inability to retrieve crucial financial information during such a pivotal time exacerbated the stress for clients.
Challenges with Automation
One of the main reasons for Bench’s struggles was its aggressive push towards automating accounting tasks through artificial intelligence (AI). Despite Bench’s ambition to scale through AI and other automation tools, implementing these technologies proved more challenging than initially anticipated. Former employees mentioned that the execution of these automation tools was flawed and often ineffective. This led to delays in accounting tasks, with tasks being shuffled across multiple teams instead of being handled by a single point of contact. Such inefficiencies resulted in client dissatisfaction and subsequent attrition. An instance cited involved customers still waiting for their 2023 books by September 2024 – long past crucial tax deadlines.
The example of customers waiting many months for their essential financial records serves as a reminder of the potentially detrimental impact of poorly executed automation. As tasks were dispersed among various teams rather than efficiently managed through a streamlined process, delays became endemic. Client frustration grew, and the prolonged wait times resulted in significant client losses. The failure to deliver a reliable, automated system not only reflected on Bench’s operational capabilities but also dented its reputation, ultimately affecting investor confidence and customer retention.
Turbulence in Leadership
Leadership Instability
The internal issues were exacerbated by instability within the leadership team. Bench’s co-founder and first CEO, Ian Crosby, left the company in 2021 following a significant disagreement with the board over strategic decisions. Crosby accused the board of replacing him with a “professional CEO,” believing this would lead to better strategic outcomes. However, this move did not yield the expected results. Jean-Philippe Durrios, who succeeded Crosby as CEO, focused on profitability through automation but faced similar execution issues, leading to customer churn and a decline in investor confidence. In November 2024, Adam Schlesinger was brought in as the new CEO to prepare the company for sale amidst dwindling investor confidence and operational challenges.
Crosby’s departure marked a turning point, but the leadership turmoil did not end. The new leadership under Durrios aimed to drive profitability by emphasizing automation as a core strategy. However, given the already documented shortcomings in Bench’s AI initiatives, this pivot did not address the underlying execution flaws. Customers continued to leave, compounding the company’s woes. By the time Adam Schlesinger took over, Bench was already grappling with ongoing operational problems and waning trust among investors. Schlesinger’s mandate to ready the company for sale underscored just how critical the situation had become.
Forced Shutdown and Unexpected Revival
Bench’s downfall culminated in its abrupt shutdown on December 27, when a bank called in the company’s venture debt. The news caught employees and customers off guard as the company had been making sales up until the shutdown date. The resulting media attention in the US and Canada brought unexpected visibility to the company, leading to renewed interest in its acquisition. Jesse Tinsley, CEO of Employer.com, an HR tech firm based in San Francisco, learned of the shutdown while on vacation and quickly moved to acquire Bench.
The media spotlight shined a light on Bench’s crisis, inadvertently paving the way for potential buyers. Jesse Tinsley, undeterred by the sudden closure, saw an opportunity amid the chaos. From a vacation destination, he set in motion negotiations that would see Employer.com acquire Bench. Tinsley’s immediate response and strategic foresight turned what seemed a terminal situation for Bench into a chance at revival. This unexpected turn of events illustrated the impact of quick decision-making and media influence, redirecting Bench’s fate almost overnight.
Employer.com’s Acquisition of Bench
Swift Negotiations and Acquisition
Within 36 hours of the shutdown, Tinsley and his team negotiated a deal to acquire Bench. By the following Monday, Employer.com had announced its acquisition of Bench, saving hundreds of jobs and ensuring continuity for thousands of customers. Tinsley, who had only recently acquired the Employer.com domain name, executed the acquisition without previously meeting anyone from the Bench team.
The acquisition process, moving at a breakneck speed, was finalized remarkably within a short span. The urgency underscored the critical need to stabilize Bench’s operations and restore customer confidence swiftly. By securing the deal and making the formal announcement within days, Employer.com managed to prevent a prolonged period of uncertainty for Bench’s employees and clients. Tinsley’s ability to act decisively and navigate the complexities of the deal was crucial in ensuring a smooth transition and immediate continuity of services.
Future Uncertainties
Employer.com has ambitious plans for Bench, promising to rehire a large number of its former staff and to honor customer contracts fully. However, there are still uncertainties about Bench’s future sustainability given the hasty nature of the acquisition and Employer.com’s lack of direct experience in accounting. Although Employer.com remains confident in its capabilities and decision, emphasizing the importance of Bench’s existing team and customer base, some former employees expressed concerns over being offered only 30-day contracts initially. This measure is aimed at ensuring continuity while establishing the necessary infrastructure for long-term employment in Canada.
The concerns voiced by former employees reflect the broader anxieties surrounding such a rapid and unplanned acquisition. Offering initially short-term contracts raises questions about job security and the new parent company’s understanding of Bench’s operational intricacies. This transitional period is crucial, as Employer.com must build on Bench’s existing strengths while addressing previous shortcomings. The challenge lies in navigating the initial integration phase to ensure long-term viability, especially given the vital technical expertise and customer relationships that must be preserved.
Navigating the Complexities Ahead
Legal and Operational Considerations
Despite the tumultuous events, Employer.com’s Chief Marketing Officer, Matt Charney, affirmed that the acquisition involved thorough consultation with multiple legal firms and underscored their confidence in Bench’s reputation and expertise. Charney also emphasized the importance of leveraging Bench’s existing team and customer base to quickly acquire the necessary accounting expertise. The thorough legal vetting process was essential in de-risking the acquisition, ensuring compliance and smooth transition. Charney’s reassurances highlight Employer.com’s strategic intent to stabilize Bench and placate any lingering doubts about the acquisition’s legitimacy and effectiveness.
The legal experts’ involvement played a crucial role in this high-stakes acquisition, as legal scrutiny ensured adherence to employment laws and customer contract obligations. By leveraging Bench’s experienced team and established client base, Employer.com aims to quickly bridge any gaps in its own accounting proficiency. This approach underscores the symbiotic relationship between Bench’s legacy assets and Employer.com’s visionary leadership to drive future growth. Nonetheless, the journey ahead requires carefully balancing operational integration with the legal and logistical challenges inherent in such a fast-paced acquisition.
Potential for Long-Term Success
The dramatic rise, fall, and surprising rebound of Bench, a venture capital-backed accounting startup, has caught the attention of the business community. Based in Canada, Bench was recognized for its innovative platform offering bookkeeping and tax services to small and mid-sized businesses. Over its 13-year history, the company secured $113 million in funding from notable investors like Bain Capital Ventures and Shopify. However, on December 27, 2024, Bench unexpectedly shut down, sparking widespread disruption for its customers and employees, particularly with tax season on the horizon.
Amid this chaos, users struggled to find immediate alternatives while the once-thriving company left them in limbo. Employees faced uncertainty about their future as business operations came to a grinding halt. Despite the turmoil, there were efforts behind the scenes to revive the company, aiming to restore both customer trust and employee confidence. The business world watched closely as Bench embarked on its journey to redemption, making this episode a case study in resilience and crisis management.
