A Message from Founder and CEO Kurt Rathmann

Earlier today, ScaleFactor CEO & Founder Kurt Rathmann met with the full ScaleFactor team to share the following news. 

To My ScaleFactor Family: 

Today has been a difficult day. It’s a day that we believed would never come, otherwise why would we dare to challenge the status quo? I’ve had the honor of working side-by-side with each of you over the last several years, so I know the level of talent and commitment to the mission in this company. That makes today’s announcement all the more difficult. 

What we announced

Today, we announced that ScaleFactor is suspending a majority of its operations on August 28th. To that end, we will be saying goodbye to half of our team members today, and asking the remainder of the team to help us in finding our current customers a good home. 

Throughout this whole process, there have been two groups of folks that I have fought for at every step: our Employees and our Customers. 

For our employees: 

  • Severance: All employees will be offered a minimum of 12 weeks severance pay to help with the transition.
  • Healthcare: ScaleFactor will pay for COBRA health insurance payments through the end of the year. 
  • Recruiting: We will be providing recruiting support and outplacement services to help anyone who would like assistance to find new opportunities.
  • Technology: Employees will be able to keep their computers and related equipment to assist with finding their next opportunities. 

For our customers: 

We are retaining a portion of the team to support our current customers. Throughout July and August, we will be working tirelessly to ensure they can successfully transition to other solutions and providers. In the meantime, our bookkeeping, payroll, bill pay, and other solutions will continue to run as usual through the end of July. We will continue to provide the same level of service to meet all our current customer obligations through July financial close– including any remaining 2019 tax filings. This change will also be hard on them, and it is so important that their service continue uninterrupted while we help them transition. 

How we got here

I know many of you are eager for answers and you deserve them. You’ve poured your hearts into ScaleFactor. I’d like to offer some additional insight into how we arrived at this decision. 

We’ve known from the beginning that the finance and accounting problems we were setting out to solve were very big, very complex problems. There is a reason that no competitor in the space has solved them well – it’s difficult, it’s expensive, and solving them will take a long time. 

In 2017, when we began building our SaaS platform, we laid the groundwork to become the first company to truly solve SMB accounting challenges at scale. Throughout 2018 and 2019, we proved our thesis, validated demand, and helped many customers while attracting the attention of investors and competitors. 

But our growth was not without growing pains and important learnings. The most important of these, which I outlined in our ScaleFactor 2.020 plan, was that technology alone is not enough to make business owners feel financially confident. Customers want a combination of software and human support within an overall solution. Human support wants to be the hero in the customer relationship. Trying to provide both at scale stretched our business in too many directions at once. 

Ultimately, this forced us to reevaluate the relationship between our platform, our software products, and our accounting product support. When we announced in February our intention to accelerate towards a marketplace model, we believed we could successfully restructure the business based on these learnings. However, that plan and timeline have been significantly impacted by COVID. 

Despite the positive traction we’ve shown in the last several months, we can no longer reliably forecast the time it would take to complete restructuring. We simply don’t know how long current market conditions will last or what the small business landscape will look like when the market finally recovers. As a result, we have made the very difficult decision to suspend the majority of our operations effective today. 

What I hope you’ll take from this experience 

While we may not have gotten the outcome we wanted, I truly believe that we were on a path to unlocking real disruption in the accounting industry. Be proud of what we built together. Be proud of how we learned from each other. Be proud of the customers we were able to serve. Be proud of what you contributed while you were here and the learnings that you will take with you. I’m proud of you all.

Together, we built something much bigger than software. We’re the essence of what makes small businesses so special. The hardest part of this will be letting go of all the meaning we have built together – our shared purpose, the comfort of our teams and our friends, our accomplishments, and our many celebrations.

This has been a truly humbling experience, and I’m grateful to each and every team member who has contributed to our mission. It may not feel like it right now given the current situation, but everything you contributed here did, and continues to, matter.  It’s my hope that you will take those learnings into your next ventures and build something even better than ScaleFactor. I hope you will find new and innovative ways to serve small business owners and make them more successful. That is and always will be our mission. While we may be giving up ScaleFactor in its current form, our drive to revolutionize small business accounting will continue well into the future.

With my deepest appreciation, 

Kurt

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