‘Buy Now, Pay Later’ Giant To Shrink Human Workforce as It Goes All-in on AI

The CEO of the “buy now, pay later” giant Klarna told The Telegraph this week that his company had instituted a hiring freeze outside of engineers, saying that he expects many jobs and tasks could be allocated to artificial intelligence in the near future.

“Things that previously took people a lot of time can be done much faster and much shorter, and we need fewer people to do the same thing. The right thing for us is just to say: ‘let’s not recruit now, let’s see how this plays out,’” Siemiatkowski told The Telegraph. 

The company did not have immediate plans to lay off staff, but CEO Sebastian Siemiatkowski said he expected the decision would lead to a natural “shrinking of the company” as people leave the company and are not replaced. 

In a phone call, a spokesperson for the company told Motherboard Klarna was taking a “wait-and-see approach” to hiring moving forward, and that it will attempt to find additional AI “efficiencies” before revisiting what “our ‘real people’ requirements are.” 

The spokesperson added the company doesn’t see the point in “hiring as if AI didn’t exist.”

Siemiatkowski has been all-in on ChatGPT since soon after its launch. “This is a fundamental change to business,” he told CNN in April. “I’ve never seen anything like it.” 

Already, Klarna is reportedly using ChatGPT for various tasks across the business. More than half of Klarna employees are now using ChatGPT Enterprise, and tasks that used to take “days” can now take “minutes” and even “seconds,” the spokesperson said. 

Klarna is also now using AI to handle disputes between buyers and sellers, which the spokesperson said has saved the company 60,000 hours on an annual basis on customer service time. He claimed the experience was better for customers as well. “Those disputes are getting resolved much more quickly,” the spokesperson said. “They're getting much higher quality answers, and the whole process for them is taking less time.”

Asked why the company planned to continue to hire engineers, when research has repeatedly listed software and coding jobs as some of the most likely to be replaced by AI in the near future, the spokesperson said Klarna considered itself a tech company and that engineers were still necessary since AI alone could not be trusted to autonomously develop products. 

“They're not yet off-the-shelf tools,” the spokesperson said.  

The rise of ChatGPT and other AI programs over the last year has led to a growing amount of angst that many careers will be automated away. While automation has long been a feature of the capitalist system, what has made this time slightly different is that the jobs most at risk appear to be higher-paid “knowledge” jobs. ChatGPT maker OpenAI has estimated, for example, that people who make over $100,000 are many times more at risk than those earning $30,000, and those who had a college degree were more at risk than those who did not. 

Nevertheless, Siemiatkowski’s hiring freeze is some of the substantial evidence yet that business leaders are not wasting time figuring out where ChatGPT can be used to justify reducing headcount. Some of the most public-facing AI automation has come from the media industry, where Sports Illustrated and G/O Media, among others, have recently faced criticism for AI-created articles that have appeared on their sites. 

But additional evidence has begun to filter out that AI is already taking work away from top-performing humans elsewhere. Days after the release of the more advanced GPT4, startups were already figuring out how to use it to reduce human costs, and one study by U.S. researchers this year found copywriters and graphic designers using online freelancing platforms saw a drop in both earnings and jobs after ChatGPT was released, and that the highest-earnings freelancers were not immune. 

“In fact, we find suggestive evidence that top freelancers are disproportionately affected by AI. These results suggest that in the short term generative AI reduces overall demand for knowledge workers of all types,” the researchers wrote. 

The “buy now, pay later” industry has become increasingly omnipresent in recent years as young shoppers in particular use them to pay for expenses for everything from sofas to groceries. The industry, which offers loans at little to no interest, sees itself as a better alternative to the credit card industry and its cycles of compounding debt, but it has been accused of causing young, vulnerable people to overspend. 

Siemiatkowski’s motivation for diving head first into AI is not hard to parse. He has said he always wanted to build a “trillion dollar type of company” and for a time, Klarna was momentarily considered Europe’s most valuable startup after SoftBank estimated it was worth $46 billion.

But the startup struggled as interest rates rose, and its valuation dropped to $6.5 billion by the middle of 2022 as it was forced to lay off 10 percent of its staff. The company has since turned the first quarterly profit in years and is preparing to go public in the near future. It’s worth noting that Wall Street cannot get enough of AI, meaning that any company willing to bet its future on the technology has a better chance of riding the current market’s hype train.