https://www.telegraph.co.uk/business/2023/12/03/klarna-chief-bets-ai-app-freezes-hiring/ Jump to content UK News Website of the Year * News * Israel * Ukraine * Royals * Sports * Opinion * Travel * Life * Entertainment * Business * Puzzles [USA-SVG] US Edition * [UK-SVG] UK Edition Subscribe now Free for one month Log in See all Business * Tech * Markets * Companies * Economy Sections [USA-SVG] US Edition * [UK-SVG] UK Edition * News + News home + UK news + Politics + World + Health + Defence + Science + Education + Environment + Investigations + Global Health Security * Sport + Sport home + Football + Rugby Union + Cricket + F1 + Golf + Tennis + Women's Sport + Racing + Cycling + Boxing + More... + * Money + Money home + Property + Tax + Pensions + Banking + Investing + Net Zero + Calculators + Guides + + * Business + Business home + Alex + Economy + Companies + Markets + Tech * Opinion + Opinion home + Obituaries + Letters to the Editor + Telegraph View + Our columnists + Cartoons + * Israel * Ukraine + Ukraine home + Daily podcast + Daily newsletter * Royals + Royals home + King Charles III + Queen Camilla + Prince William + Princess of Wales + Prince Harry + Duchess of Sussex + * Life + Life home + Family + Columnists + Cookbook + Food & Drink + Health & Fitness + Tel Mag + Cars + Puzzle News + Gardening + Recommended + * Style + Style home + Fashion + Beauty + Luxury + Interiors + Weddings * Travel + Travel home + UK holidays + Dream Trips + Destinations + City guides + Hotels + Cruises + Rail + Adventure + Luxury + Ask the experts + * Culture + Culture home + TV + Film + Music + Books + Theatre + Opera + Art + Gaming + Hit lists + Telegraph Tickets + More... * Puzzles * [USA-SVG] US Edition + [UK-SVG] UK Edition Subscribe now Free for one month Log in Follow us on: * * * * * * More from The Telegraph * Download our app * Newsletters * Telegraph Extra * Wine Cellar * Recommended * Financial Solutions * Events * Betting * Dating * Offers * Travel offers * Shop * Garden shop * Bookshop * Tickets * Puzzles * Fantasy Football * Work at The Telegraph * Telegraph Corporate * Help and support * The Chelsea Magazine Company * Broadband and Mobile Deals * Voucher codes See top shops + Samsung + Nike + ASOS + eBay + Currys + Wayfair + TUI + JD Sports + Travelodge + Adidas + Broadband deals + Cheap broadband + Broadband in my area + Broadband and TV deals + Mobile deals + SIM-only deals * Klarna freezes hiring as chief bets AI can do the job instead Boss of the buy now, pay later giant has ambitious plans for the financial app James Titcomb 3 December 2023 * 11:00am Sebastian Siemiatkowski Sebastian Siemiatkowski was just 23 when he founded Klarna in 2005 Klarna has frozen hiring and is planning to shrink its workforce as its chief executive bets that more jobs will be carried out by artificial intelligence (AI) in the future. Sebastian Siemiatkowski said the Swedish buy now, pay later giant was no longer bringing on new staff beyond its engineering department, predicting that AI would allow him to reduce the number of staff employed at the business. "There will be a shrinking of the company," Mr Siemiatkowski said, attributing the change to widespread use of tools such as ChatGPT. "We're not currently hiring at all, apart from engineers." The hiring freeze at one of Europe's biggest technology companies comes 18 months after it sacked hundreds of staff during a deep tech downturn. However, Mr Siemiatkowski insisted the decision to only hire engineers was motivated by his belief in the potential of AI rather than reflective of business fundamentals. Klarna recently turned its first quarterly profit in four years and is gearing up for an IPO, expected in the next year. Mr Siemiatkowski, 42, told The Telegraph: "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'." Klarna is not planning layoffs. However, Mr Siemiatkowski said people departing voluntarily meant he expected the size of the company to shrink over time. He said AI was "a threat to a lot of jobs" across the economy. Klarna, which has more than 5,000 staff, was an enthusiastic early user of ChatGPT, the chatbot tool developed by the San Francisco AI start-up OpenAI. It is using the technology to rapidly analyse customer service records and to automate order disputes between buyers and sellers. Mr Siemiatkowski said he hoped to add more consumer-facing AI features into Klarna's finance app, hoping it will help it take a step towards becoming a "personal finance assistant". The embrace of AI comes as Klarna prepares for a much anticipated stock market flotation that could value it at as much as $15bn (PS12bn). Mr Siemiatkowski said the Stockholm-based company had not made up its mind about where to list, saying London was "definitely on the table". However, he said stock markets in the UK and Europe remained well behind those on Wall Street. He called for a pan-European network of stock markets that would improve the pool of capital for large listings. "The benefit you have of the US markets is the massive liquidity, number of companies and the type of investor pool that exists in those markets. And so that's a difficult hurdle to overcome. "Maybe you can create a system of intra-tradability. You could allow people to list on any of the local stock markets, but enforce that if you're listed on one you can trade on all. Then you would actually reach a size of market suddenly that would allow you to to make it more attractive." His suggestion echoes that of European Central Bank chief Christine Lagarde, who last month called for the creation of a pan-European stock exchange to help the region compete. Klarna is best known in the UK for its buy now, pay later credit service, which offers short term interest-free loans for online and offline purchases. The product has proved hugely popular, particularly with young shoppers, but has repeatedly come under fire for allegedly pushing people into debt by incentivising spending. Klarna Oxford Circus Klarna has come under fire for encouraging people to spend beyond their means Credit: Robert Evans/Alamy Stock Photo Mr Siemiatkowski argued Klarna's loans are a fairer and more sustainable alternative to credit cards and said his ambitions for the company are much broader. The company has a banking licence in the EU, offers bank accounts in Germany and is widely used for online payments, rather than delayed payments, in its home country. A listing would cap an eventful and at times tumultuous few years for the business. In 2021, a $639m investment round led by the tech investment giant SoftBank valued Klarna at $46bn, making it Europe's most valuable start-up and turning Mr Siemiatkowski into a paper billionaire. By July 2022, soaring interest rates meant easy money had dried up. Klarna was forced to take new funding at a $6.5bn valuation - an 85pc cut - and refocus on profitability. It announced job cuts last year, including a redundancy round that affected one in ten staff. Mr Siemiatkowski addressed the recent challenges with the breezy matter-of-factness of someone who lives on a longer time horizon. "I've gone through a few cycles with this company before. That obviously gives you at least a little bit more of 'This too shall pass'." A teenage Polish immigrant to Sweden, Mr Siemiatkowski met one of his co-founders while working at Burger King and set up Klarna in Stockholm in 2005. "I personally, have always wanted to build a $100bn, trillion dollar type of company, and I still want to do that and I still see that the opportunity is there." Revenues in the third quarter of the year rose 30pc to 6bn krona (PS454m) and Klarna recorded an operating profit of 130m krona. Crucially, it has been signing up retailers such as Airbnb and German fashion giant Zalando, which pay Klarna a marketing fee for bringing in shoppers. America has become the company's largest market by customers, suggesting it is putting up a strong showing against US rivals such as Affirm and Apple, which launched a pay later service earlier this year. The picture in Britain has been less clear. The Treasury has been consulting on draft legislation that would bring buy now, pay later providers under the gaze of the Financial Conduct Authority, meaning requirements around credit checks and marketing. However, industry sources believe the legislation has been quietly kicked into the long grass. Mr Siemiatkowski described himself as a free marketeer but said the company supports regulation: "I'm not a big proponent of anarchy. I don't think it's a good way to run society." However, he warned against prescriptive rules, arguing that what he sees as the great evil - credit cards - end up being much worse for consumers despite being regulated. Mr Siemiatkowski lobbied Boris Johnson on the rules, an effort that may now have been in vain, but described the current government as "very pro business... it has done a lot of smart things". He said: "The UK is definitely the financial centre of the world and continues to be so," speculating that his fondness for the UK might be the result of a recent DNA test that said he was 30pc British. In the next six months, the company aims to take its first steps towards launching a personal financial assistant, driven by AI, that can automate and suggest better financial decisions. Mr Siemiatkowski believes this is what will drive future growth at Klarna and shake up the banking industry. He said: "The digital assistant will be able to renegotiate your mortgage on your behalf. That means from a macro economic level, all of the excess profits that have existed in this industry are going to go away. "If that's the future, it means that the market will be smaller, but Klarna, if we do a good job, could participate in that transformation and take a larger market share of a smaller pie." Mr Siemiatkowski is not far from having run Klarna for two decades, but said he wants to have "a few more decades here". "I didn't understand fully the complexity of the challenge that I took on 20 years ago," Mr Siemiatkowski conceded. "[If I had] I would probably have chosen a slightly more simple industry." 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