BAKERSFIELD, Calif. (KGET) – One of the Central Valley’s great success stories, Bitwise Industries, has apparently hit a bump in the road: Company officials have announced 900 furloughs.
The tech incubator/workspace-sharing company informed employees in six cities Monday night not to come to work pending the resolution of unspecified cash flow issues.
Employees in six cities – Bakersfield, Merced, Oakland, Toledo Ohio, El Paso Texas and the main office, Fresno, home to 300 of those Bitwise workers, were placed in employment limbo and advised banks might not honor their paychecks right away.
It’s a dramatic turn of events for a high-profile technology company – an entrepreneurial golden child that has raised $157 million from investors over the last four years, including an $80 million announced just in February.
But Bitwise missed its $122,000 property tax bill from Fresno County six weeks ago and was a month late on an identical payment last December, according to the Fresno Bee. The San Joaquin Valley Sun reported Tuesday that Bitwise has not distributed funds into employees’ 401(k) plans since mid-March, exposing Bitwise to potential civil and criminal penalties.
The city of Bakersfield has had several contracts with Bitwise over the years including two that are still active. One is a $640,000 workforce development contract with Bitwise, according to City Councilman Andrae Gonzales. About half that money has been spent according to the agreement – and Gonzales said city officials expect Bitwise to live up to the remainder of the contract.
Kern County and the city of Bakersfield also have an ongoing CARES Act agreement with Bitwise of not more than $750,000 for the implementation of an Apprenticeships & Diverse Talent Program, according to the city.
City Councilman Bob Smith, who is personally invested in downtown Bakersfield, said he admired the Bitwise mission but has been concerned with the company’s rapid growth.
“Very fast, very big,” he said. “They were in Fresno for a couple years and came here and I think they have great programs and a great vision. But they seem to be expanding very rapidly. … I’m hoping for a reset where they get back to what the original vision was.”
Bitwise Bakersfield occupies two prominent historic buildings in the city center, across the street from the Padre Hotel, with plans to occupy a third.
The lights were on and the wifi functioned as usual Tuesday morning. The only difference – no Bitwise receptionist. No Bitwise employees at all. The co-workspace tenants weren’t completely sure what was going on.
Chelsea Baker, an independent insurance broker, enjoys the environment.
“I didn’t know they were having trouble, honestly,” she said. “But I would like for it to stay open. I really like co-working.”
The situation didn’t seem to be affecting the tenants much. That was certainly the case with Robert McDonald of Northstar Technology Group.
“There’s nothing really that we need to stress about because we’re tenants of the building,” he said, “but it is a little inconvenient.
Efforts to reach co-CEO Jake Soberal have been unsuccessful. Executive Vice President Amy Thelen, who runs the Bakersfield operation, said she was not able to speak to the situation but expressed hope things would come together.
So it’s business as usual for those who lease space at Bitwise. As for the company itself – we’ll just have to wait and see.