Friday, December 27, marked what was intended to be a tranquil holiday weekend.
However, it turned into turmoil for numerous small business owners using Bench, a Canadian accounting and tax startup that secured $113 million from investors, including Bain Capital Ventures and Shopify.
That morning, as tax season commenced, customers discovered they could not access their accounts. Bench’s entire website was down, except for a message indicating the company had ceased operations after 13 years.
Bench’s hundreds of employees were dismissed immediately, with no severance pay or prior notice, as reported by various ex-employees to StartupSuperb. Emails sent to the workforce on that day bounced back.
The shutdown was so abrupt that one customer, who had years of data stored on Bench’s platform and had been featured on its homepage, only learned about the closure when contacted by StartupSuperb for his reaction.
“I was not aware of that,” stated Justin Metros, co-founder of Radiator. “I’ve never witnessed a company shutting down so abruptly. It’s astonishing.”
Highlights
Bench’s Automation Challenges
Bench presented itself as an innovative bookkeeping and tax startup with an easy-to-navigate platform suitable for small to mid-sized businesses. By the time of its shutdown, it boasted over 12,000 customers.
One contributing factor to the company’s difficulties was its recent attempts to integrate AI and automation technologies, as noted by some former employees.
In practice, automating accounting tasks, such as expense categorisation, proved more challenging than anticipated, according to ex-staff. One former employee mentioned that AI was seen as the only pathway for Bench’s expansion; however, the implementation was flawed, resulting in ineffective tools. This overreliance on automation often compromised human oversight, creating delays as work shifted between teams rather than being handled by a single staff member.
These delays led some customers to leave. According to a former employee, several clients were still awaiting their 2023 financial records as late as September 2024, exceeding critical tax deadlines.
Former employees indicated that Bench experienced multiple rounds of layoffs beginning in late 2022. As of the end of 2024, fewer than 400 individuals were listed as employees on LinkedIn, a significant decline from nearly 700 in January 2023.
Disorder Among Leadership
The challenges in execution were exacerbated by instability within Bench’s leadership. Co-founder Ian Crosby, who served as the first CEO, departed in 2021 shortly after the company secured $60 million in Series C funding. Crosby claimed he was compelled to leave by unidentified board members who sought to appoint a “professional CEO” after disagreements over strategic directions.
“I hope Bench’s story serves as a cautionary tale for VCs believing they can ‘upgrade’ a company by replacing the founder. It never ends well,” Crosby expressed in a LinkedIn post following the company’s abrupt closure.
Jean-Philippe Durrios, Bench’s second CEO and former CFO, aimed to steer the firm towards profitability. He believed automation could potentially reduce reliance on expensive human resources to service the large customer base. Unfortunately, this strategy faltered amid ongoing execution problems, client losses, and declining investor interest in non-AI ventures.
In November 2024, Bench appointed Adam Schlesinger, an executive-in-residence at VC firm Inovia Capital, one of Bench’s investors, as its new CEO.
By this time, it was determined that the company should be sold, according to Schlesinger, a former Microsoft executive who most recently led a tequila brand, Siempre Tequila.
“I was brought in by Inovia Capital to guide the company through the acquisition process,” Schlesinger informed StartupSuperb. “They required someone to navigate a complex transition.”
An Unexpected Comeback
That acquisition process did not materialise. On December 27, Bench unexpectedly ceased operations without prior notice or severance for its employees, multiple former staffers relayed to StartupSuperb. This closure resulted from a bank demanding repayment of Bench’s venture debt, as reported by The Information. A former employee noted that sales continued up until the day of the shutdown.
The closure drew substantial media attention in both the U.S. and Canada. Ironically, this publicity was pivotal in saving Bench, as disclosed by Schlesinger to StartupSuperb.
“It was only after the shutdown that all the media coverage, including from your outlets, made the acquisition opportunity known, generating considerable interest,” Schlesinger explained.
“I haven’t slept in 72 hours,” Schlesinger confessed.
The acquirers turned out to be an unexpected pair. Jesse Tinsley, CEO of Employer.com, an HR tech firm based in San Francisco, discovered the news about Bench while on holiday in Florida the day after the public announcement of the shutdown. Remarkably, Tinsley had recently purchased the Employer.com domain for about $450,000, which he shared on LinkedIn.
Tinsley and his team worked tirelessly for the next 36 hours to finalise an agreement. By Monday morning, Employer.com officially announced its intention to acquire Bench for an undisclosed amount.
“I had never formally met anyone from the Bench team until Saturday afternoon,” Tinsley later tweeted, sharing a notable image of Elon Musk carrying a sink into Twitter, but with his face and a bench Photoshopped into the scene. “Nonetheless, we preserved hundreds of jobs and prevented thousands of customers from facing immense disruption.”
Lingering Uncertainty
Employer.com is making ambitious promises regarding the revival of Bench. Initially, it plans to extend job offers to a “significant number” of former Bench employees, as stated by Bench Chief People Officer Jennifer Bouyoukos during discussions with StartupSuperb.
The company also vows to honour existing customer contracts and provide full service, as Tinsley tweeted. Following Bench’s initial shutdown notice, clients were advised to seek a six-month extension from the IRS to secure a new bookkeeper. Now, Bench is no longer recommending extensions as long as customers choose to remain with them.
However, questions about Bench’s sustainability linger due to its hasty sale.
Typically, acquisitions span months and involve thorough due diligence, which would be unfeasible over a holiday weekend. Furthermore, Employer.com lacked direct experience in accounting prior to acquiring Bench, instead concentrating on payroll, recruitment, and other HR domains. The downfall of Bench illustrates that accounting operates under its unique challenges.
There remain apprehensions about whether clients will receive the same quality of service, considering the sudden termination of all Bench employees on December 27. Although many individuals are being rehired, at least some are receiving only 30-day contracts, as reported by three former employees to StartupSuperb.
In light of these issues, Employer.com’s chief marketing officer, Matt Charney, reassured StartupSuperb that “while the transaction was executed swiftly,” it involved “multiple legal firms,” and the company feels “very, very confident” in Bench’s reputation and history.
Regarding Employer.com’s prior lack of accounting experience, Charney stated that Bench was acquired for its skilled workforce, expertise, and customer base, which will “help us acquire that knowledge very quickly.” Employer.com has not yet commented specifically on the 30-day contracts as of this writing.
