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TechBrunchTechBrunch

Inside the dramatic fall and last-minute comeback of Bench, the venture capital-backed accounting startup that collapsed during the holidays.

TechBrunchBy TechBrunchJanuary 3, 20256 Mins Read
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Friday, December 27th was supposed to be the start of a relaxing holiday weekend.

But for the thousands of small business owners who rely on Bench, a Canadian-based accounting and tax startup that has raised $113 million from investors including Bain Capital Ventures and Shopify, it's been a complete mess.

That morning, just before tax season began, they discovered they couldn't log into their accounts. Bench's entire website was offline except for a notice that Bench was shutting down after 13 years of operation.

Hundreds of Bench's staff members found themselves fired immediately and without notice, multiple former employees told TechCrunch. An email TechCrunch sent to employees that day was bounced.

The move was so sudden that one customer, whose data had been stored on Bench's website for years and was even featured on its home page before being taken offline, said it was shut down only after a call from TechCrunch asking for a reaction. He said he learned about it.

“I didn't know that,” Radiator co-founder Justin Metros said. “I've never seen anyone shut up like that. That's crazy.”

Struggles with bench automation

Bench promoted itself as a technology-advanced bookkeeping and tax startup with an intuitive platform that any small business could use. By the time it closed, it had more than 12,000 customers.

Some staffers say one reason for the company's struggles is its push to deploy AI and other automation tools in recent years.

Former staffers told TechCrunch that automating accounting tasks such as expense classification turned out to be easier in theory than in practice. One former employee claimed that AI was the only way Bench could scale, but its execution was flawed and the tools Bench built didn't work properly. Over-reliance on these tools sometimes came at the expense of human bookkeepers, causing delays as books were passed to different teams rather than staying with one staff member.

These delays caused some customers to quit. One former employee told TechCrunch that some customers are still waiting for their 2023 books in September 2024, well past the important tax deadline.

Mr. Bench has undergone multiple layoffs since the end of 2022, former staffers said. By the end of 2024, fewer than 400 people on LinkedIn said they had worked for Bench, compared to about 700 in January 2023.

commotion at the top

The issue of executions was further exacerbated by the commotion in the bench's boardroom. Bench's original CEO and co-founder Ian Crosbie stepped down in 2021, months after Bench raised a $60 million Series C round. Crosby accused anonymous directors of forcing his replacement to be replaced by a “professional CEO” because they disagreed with strategic decisions.

“We hope Bench's story serves as a warning to VCs who think they can 'upgrade' a company by replacing the founder. It will never work,” Crosby wrote in a LinkedIn post after the sudden closure.

Bench's second CEO was Jean-Philippe Durios, who previously served as CFO. Former staffers say he focused on increasing the company's profits. In theory, automation could allow Bench to rely less on costly labor to serve its many customers. But that bet didn't pay off amid execution issues, customer churn, and a decline in investor interest in non-AI companies.

Bench changed CEOs again in November 2024, bringing in Adam Schlesinger, executive in residence at VC firm Innovia Capital, one of Bench's investors.

Schlesinger, a former Microsoft executive who recently served as president of tequila company Siemple Tequila, said the decision was made at that point to sell the company.

“I was appointed by Inovia Capital and then went through the process of acquiring the company,” Schlesinger told TechCrunch. “They needed someone to steer the ship through a difficult process.”

An impossible resurrection

That process didn't work. On Dec. 27, Bench abruptly shut down without giving employees any notice or severance benefits, multiple former staffers told TechCrunch. According to The Information, the move was forced by the banks that called in Bench's venture financing. According to former employees, Bench continued to generate sales until the day it closed.

The closure received media attention in the United States and Canada. Ironically, it was that attention that saved Bench, Schlesinger told TechCrunch.

“It wasn't until we shut down that all the PR, including yours, basically let the world know that we were for sale. Then there was a lot of interest,” Schle said. Ginger said.

“I haven't slept in 72 hours,” Schlesinger admitted.

The acquirer was unconventional. Jesse Tinsley, CEO of Employer.com, a San Francisco-based HR tech company, was vacationing in Florida when he saw news about the bench the day after the public shutdown. . Tinsley, who owns a number of human resources and recruiting businesses, previously posted on LinkedIn that he only purchased the Employer.com domain name a month ago for about $450,000.

Tinsley and his team spent the next 36 hours finalizing the agreement. By Monday morning, Employer.com formally announced plans to acquire Bench for an undisclosed price.

“I hadn't officially met anyone on the bench team until Saturday afternoon,” Tinsley later tweeted, along with the infamous photo that Photoshopped just Elon Musk's face and bench carrying a sink. Posted on. “Yet we saved hundreds of jobs and saved thousands of customers from great hardship.”

uncertainty remains

Employer.com is making big promises about the return of Bench. First, Bench's chief human resources officer, Jennifer Vuyoukos, told TechCrunch that the company is re-extending job offers to “a number” of Bench's former staffers.

Tinsley also tweeted that the company will honor its customers' contracts and provide full service to their accounts. Bench's initial closure notice advised clients to apply for a six-month extension from the IRS to find a new bookkeeper. Currently, Bench is not recommending any extensions as long as the customer decides to continue.

However, given the last-minute fire sale, uncertainty remains regarding the sustainability of the bench.

Acquisitions typically take months and require extensive due diligence, which is impossible to conduct over a holiday weekend. Additionally, Employer.com had no direct accounting experience prior to the Bench acquisition. Instead, it focuses on payroll, recruitment, and other HR-related areas. If Bench's downfall has shown us anything, it's that accounting is a beast in itself.

There are also concerns about whether customers will receive the same quality of service, given that Bench's entire staff was abruptly laid off on December 27th. Many staff have been rehired, but at least some have only been offered 30-day contracts. three former employees told TechCrunch.

In response, Matt Charney, Employer.com's chief marketing officer, told TechCrunch that while “the transaction happened quickly,” it involved “multiple law firms” and that Employer. com said it was “very, very pleased” with Bench's reputation and track record.

Charney said Employer.com had no previous accounting experience, and that he bought Bench because of its people, experience and customers, and that it “helped us gain that expertise very quickly.” ”. Employer.com declined to comment specifically on the 30-day contract at the time of writing.



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