Klarna CEO: Company stopped hiring because AI 'can do all of the jobs'
businessinsider.com
businessinsider.com
they're actually just covering for a funding problem.
We just had one waiting for over two months (customer is multi million revenue per month) and after escalating twice, we get a link to the docs (didn’t have the info) and find out they have changed the name of their product for online checkout to Kustom after selling it off.
https://www.klarna.com/international/regulatory-news/klarna-...
The use here of "sensible" exemplifies a good way to predict basically anything you want about the market so long as you don't reveal what "sensible" means in concrete terms.
What would count as non-sensible would be company wide mandates that everyone must jam AI into their work. I've heard stories about stuff like this at certain big corps.
But make sure it never guides any downsizing or putting the screws on people to ever inhuman increases of productivity. Thus: it will never happen. Greed wins again
Maybe they know the regulators will dismantle the company in the near future and are optimizing for extracting the maximum before their implosion?
Most OAuth providers have better transparency and control.
Not sure if the information was truthful, of course.
If you don't offer wire transfer or PayPal, you lost me as a customer.
Recently bought something and then found it cheaper, negotiated the seller to match price and now the invoice I got got the cheaper price. And I just now had payment go out.
They abuse dark patterns for sure though.
Some of these companies will not survive the inevitable reality check that is coming. I’m only sad for the people the glassy-eyed CEOs are shitcanning.
I work for a healthcare company and an email from a business customer today found its way to me asking if we use or plan on using "AI".
The person asking this absolutely makes business decisions and absolutely has no idea what they are talking about. It was clear from the email that all they know is "AI good", "No AI bad".
It would be like outsourcing to India if even business that makes absolutely no sense to outsource like restaurants were talking about outsourcing to India for no other reason than "outsourcing good". Of course, not actually doing anything, just the appearance and lip service as to not appear to fall behind the times.
2009, Jack in the box: https://www.reddit.com/r/business/comments/7ujy2/jackinthebo...
2016, McDonalds: https://www.zeebiz.com/companies/news-mcdonalds-to-outsource...
I use it too, but I'm not an idiot about it.
I'm not convinced, but I'm open to it.
It's just re-inventing credit cards, but with significant structural disadvantages leading to higher costs.
If that would be true Billionaires would not have to buy the last US elections....
Personal finances can be viewed (somewhat incorrectly) as not being zero-sum. Me making more for my work or investments seems like it doesn't take from anyone else.
While a CEO deciding that AI should handle as much of the labor in a company as possible seems like a decision that benefits the company and it's shareholders directly at the expense of its workers.
I think in actual fact both sides here are zero-sum, but when the worker makes more personally, there are only diffuse and marginally-affected losers (the company, its shareholders, consumers and customers experiencing higher prices, etc.). The company's actions would affect people that can be directly named and are terribly affected.
It's unfortunately the difference between stealing 5¢ from 10,000,000 people or $100k from 5 people.
Having thousands of smart humans optimizing for their personal goals in their individual ways, at the expense of company goals, is an issue that exists in every company, bankrupts companies and super frightening to deal with as a CEO.
People are not obviously more noble, when working towards personal goals instead of company goals, and a lot of people working towards their personal goals instead of company goals, is a serious issue for any company. Not having a single entity and one big number to deal with makes it actually much more powerful and scary.
Many businesses are low profit margin with very price sensitive customers. There is reasonable concern that if they don’t follow competitors’ in efforts to reduce pricing, the whole business might fail.
See outsourcing textile manufacturing and other manufacturing to Asia. See grocery stores that source dairy and meet from local producers only rather than national operations with economies of scale. See insurance companies where the only concern is almost always lowest premium, not quality of customer service or claims resolution.
Almost every employee starts out believing the spiel about mission, team, and caring for workers (to some degree) and personally invest care in the endeavor.
Up until they are fired for the first time seemingly in contradiction to what was promised.
Companies and employers do not and have never cared for employees personally. They can not.
Eventually, most workers gain a much more pragmatic understanding of how the world works. At that point, they are at best equal.
Being an employer (small medical business, 10ppl), I can tell you that one of two things must be true: Either I am delusional or you are at least in part wrong.
1. I care a lot more about employees than they care about the company, or me (of course not in total, probably). I don't find this surprising, but you seem to think that it is not true.
2. The amount of time I personally spent thinking about personal issues of employees (in addition to their professional issues) far exceeds the time I spend thinking about my own personal issues. That's not by choice, really. It's just that people have stuff and when you do something for 8 hours a day, a lot of your stuff impacts that. Again, not surprising to me, but it is something I care about.
3. I spent way more time thinking about using/abusing my own power and responsibilities, than I am certain any of my employees does about using/abusing theirs. For example, while I have yet to fire anyone, people quitting their job is fairly normal. But neither is to me. Both of these options are stuff I do lose sleep over. You might argue that that's just part of the job, but idk what special sauce people dream "CEOs" are made of. I care about other humans, from what I can tell more than average (I attribute that, again, not to being special but because there is a lot of surface area), and the people I work with are no exemption.
I don't think any of the above is unique to me in any way.
This may not be an edge case in terms of # of employers that fit your description, but is very likely an edge case in terms of # of employees with an employer that fits your description.
You’re the exception that proves the rule.
—————
Edit: Looking into it more, the margin is closer than I assumed; ~half of employees work for a “small business”, that term meaning <500 employees (1). Of those, ~80% are for a “small business” with <10 employees (2).
1: https://advocacy.sba.gov/2023/03/07/frequently-asked-questio....
2: https://www.pewresearch.org/short-reads/2024/04/22/a-look-at....
So you’re representing the majority of half the employment marketplace. That said I’d still argue that conversations about labor relations are focused on the subset of companies with many hundreds, thousands, and/or hundreds of thousands of employees.
—————
Interestingly, the majority of small business revenue is generated by the extreme minority of small businesses—per (2), the “small businesses” with >50 employees (so, 50<employees<500) represent just 3.3% of “small businesses”, but generate 53% of the revenue among all “small businesses”
you find your fantasies fascinating, great.
Even in good, reputable companies, there is a certain amount of legally/ethically dubious behavior that is nonetheless desirable.
An H1B candidate for a position has been found, but it must be demonstrated that there is no local candidate for that position. Every local candidate must fail the interview, whether or not that is fair.
You have a small team. You've hired someone good at their job, but over lunch, they've mentioned they plan to have 10 children, so they will be on parental and FMLA leave for 3+ months a year indefinitely. You need to find a problem with this person's performance.
You have a team of developers. One of them has done a great job this past year, but the project they are working on and their specialization is no longer needed. It would not be fair to them to give them a middling performance review, but it's in the company's interest that the limited compensation budget goes towards retaining someone with skills aligned to the future direction.
An AI would have any unethical or illegal prompting exposed for any court to examine. Likewise, there would be little reason not to maintain a complete record of everything the management AI is told or does. One could design an AI that leadership talks to off the record, which then manifests its instructions in its state, and then could lie (or be unable to prove) its instructions later. That would then be similar to a human manager.
But I don't think any court would accept such an off the record lying AI. So an AI probably can't keep any secrets, can't lie for the company's benefit in depositions or court, and can't take the fall for leadership.
A company is literally a group of people working towards the same goal. The people are just as important as the goal itself, it's not a company otherwise.
I actually do know of a small company that was quite badly screwed over by a vindictive employee who hated her boss, deliberately did not quit because she knew she was about to have another child, got pregnant and then disappeared for a year. Local law makes her unfireable almost regardless of reason (including not actually doing any work), and then gives her three months maternity leave too. So she basically just didn't work for a year. She said specifically she did that to get back at her boss, she didn't care about the company or its employees at all.
For a company of that size something like that can put it in serious financial jeopardy, as they're now responsible for paying a year's salary for someone who isn't there. Also they can't hire a replacement because the law also guarantees the job is still there after maternity leave ends.
> If any of these cases appears to lead to the downfall of a corporation, there were much bigger problems looming that actually caused the failing in the first place.
This kind of thinking has caused ruin throughout history. Companies - regardless of size - aren't actually piñatas you can treat like an unlimited cash machine. Every such law pushes a few more small companies over the edge every year, and then not only does everyone depending on that company lose, but it never gets the chance to grow into a big corporation at all.
Employees don't extract capital from companies, especially unsustainably.
Executives and Boards of Directors do though
I think that it would be hard to hide all the inputs and outputs of the AI from scrutiny by the court and then have the company or senior leadership be held accountable for them.
Even if you had a retention policy for the inputs and outputs, the AI would be made available to the plaintiff and the company would be asked to provide inputs that produce the observed actions of the AI. If they can't do that without telling the AI to do illegal things, it would probably result in a negative finding.
----
Having thought a bit more, I think the model that we'd actually see in practice at first is that the AI assists management with certain tasks, and the tasks themselves are not morally charged.
So the manager might ask the AI to produce performance reviews for all employees, basing them on observable performance metrics, and additionally for each employee, come up with a rationale for both promoting them and dismissing them.
The morally dubious choices are then performed by a human, that reviews the AI output and collects or discards it as the situation requires.
It often seems that AI 'will replace middle managers' though it would be more likely that middle managers would be made redundant, given a lack of people to 'manage'.
They would end up as a frat startup with 5 people all with a CxO position but no organisation.
I am sure these CEOs are more power hungry than that.
However, there will be a selection of smaller firms, offering a more human touch, which will manage to survive just by virtue of above average customer retention. As these businesses continue to succeed and grow they will enshittify their own processes until they are indistinguishable from the incumbents.
AI changes nothing about this.
Some of them use AI as an excuse for layoffs, but many of them do believe that AI (or ChatGPT, specifically) is some kind of magic that can make (1 employee + ChatGPT) equal to 3 employees.
I mean, they must have used ChatGPT, right? How does ChatGPT give them the conclusion about this?
I am absolutely convinced that none of these companies have done any benchmarking or trials.
>I mean, they must have used ChatGPT, right? How does ChatGPT give them the conclusion about this?
Ask ChatGPT to generate a program for you. Imagine what the result would look like to you if you had never read a single line of code in your life. It is pretty obvious that the output of ChatGPT is indistinguishable from what your developers produce, so they obviously are superfluous.
You may think I am exaggerating, but there are many people in very large companies who think exactly like that. Often their ambitions are smaller, but usually that just worsens their lack of understanding. Problems which could be trivially solved by a mediocre software engineer in a week suddenly become AI Game changing Technologies.
Let's say company A is planning on releasing product X to the market in FY25, product Y in FY27, and product Z, in FY30. Well, now you should be able to marshal your resources and release all three products on an expedited schedule.
Obviously this is reductive, but it seems like the best companies are going to use this new tool in their toolkit to dominate, and bad companies are going to get crushed. AI is not a panacea, just yet. But it sounds so confusing to me to hear "We invented jet engines which are superior to prop engines, so we're firing a bunch of our pilots."
For example, I know a boss add AI as a factor in performance reviews, where someone was evaluated as 'not AI-capable' for not using ChatGPT. He also asked for 3x output from the teams and said, 'If you feel it's too hard to complete, go learn how to work with AI.'
AI market is in a feedback loop which is why it is so powerful.
Some of them, barely.
Most arguments that technicians will try to put forth against LLMs will fail here because they apply in the same way to humans. "LLMs sometimes make weird errors? Well, so do human employees!"
They already have replaced designers and writers. It probably seems reasonable they could replace other jobs very soon, if your knowledge is superficial and you're just reading marketing brochures.
The reality AI's are confidently wrong. Where that doesn't matter they already cut swathes through the workforce. Where it does they haven't made much progress so far.
Yet, I saw a post from someone here saying they were a web programmer who didn't know javascript. They just prompted the AI until it produced something that worked. Them calling themselves a "web programmer" seemed like a stretch to me, and I'm sceptical about them tackling anything but cookie cutter work the AI has already seen a lot of, but that's clearly the direction copilot and it's ilk are headed. Currently, they look like they might soon succeed at using RAG to produce a better grep, so they have a little ways to go yet. I find checking the code written AI's to be more effort than it's work primarily because if I have to understand the code anyway, it's easier if I write it. But maybe that will change. One day. Right now this constant checking of AI's output is a huge time sink.
But there is class of jobs that continually have humans checking their output and giving corrections. That is ... managers. Even CEO's. Maybe the future jobs of board is to select the right AI to be the CEO, and the future of the human workforce is to be prompt engineers for that AI CEO. My guess is AI's will be replacing managers and CEO's before they make a serious dent on STEM jobs.
One hopes at least, anyway...
We've been here before: From componanies throwing millions at rebuilding their content-website as IOS app, showing off their crypto or low-code "RnD" or car manufacturers going full-BEVs, Karl Marx's axiom that "social existence determines consciousness" seems to be vindicated with this fad as well.
AI gives them a smokescreen, gives them fear/uncertainty they can use as leverage over their workforce, and sometimes can help efficiency (but usually not, if you factor in any element of quality - which usually they can get away with ignoring at first).
I've built products used by millions of users, I've built ML models and AI coding tools, and I've been using AI to generate 70% of code that's shipped to production in the last few months.
I do believe that we can replace a large percentage of software engineers with AI in the next 3 years (2025-2027).
Also this 1 million dollar Kaggle competition on AI coding just launched: https://www.kaggle.com/competitions/konwinski-prize
AI will absolutely accelerate development, but we still need so much more modernization across all industries. We still have factories running on Windows NT with software made in the 80s. We have mines, lumberyards, farms, retail, parking, bio labs, etc. So many things need to be upgraded to the same standard as big tech is, but hasn't because it was too expensive.
Much of this AI isn't great at. It's easy to just spit out a web page with reactJS that was done 10,000x times already by millions of devs, but it's not so easy to make sure your smelter doesn't overheat or go cold using 20,000 live sensors.
New devs will have a harder time getting in, but they'll also have an easier time learning. Senior devs will be able to supervise much more.
The industry will change, but it's far from over. If anything, it will grow massively and make other industries much more productive.
I usually call them IT instead of tech. Wrote more in my blog post: https://16x.engineer/2022/08/23/it-vs-tech.html
I have no knowledge of other industries that software is not the primary product.
Truly one of the more grandiose terms people in the software industry use to describe themselves. Same with every single person calling themselves an engineer, something which in many countries would be illegal.
Google sells ads, not tech Uber sells rides, not tech. Amazon sells a marketplace, not tech. Tesla sells cars, not tech.
Tech is just the tool.
Google ads is in ad industry.
Uber is in transport industry.
Amazon is in electronic commerce industry.
I'm glad that we understand that we are talking about different things.
Is Oracle in the tech industry?
Also on the blog post you linked you seem to imply that you do consider Google to be a tech industry company, so I am very confused.
> In tech industry, software is the main product of the company. It can be sold to a customer (B2C product) or a business (B2B product).
> For example, Facebook is the main product of Meta. Google Search is the main product of Google.
For some people (consumer), it would be Google Search, it is a piece of software, so in that sense Google is a tech company because its main product is Google Search.
However, for marketers, who use Google Ads, to them they deal with the ads division in Google, and that division's main product is the ads service. So in that indivision, the main product is ad space, not software. And rightfully so Google Ads is not in the tech industry, but ad industry enabled by tech.
For pure tech companies, I would say AWS division in Amazon, Microsoft (Windows, Azure, GitHub divisions), Facebook/Instagram division in Meta (not Ads division).
Then there are a lot of companies that just sell software as a service (SaaS) or just software license, they are millions of them, but to name a few: Figma, Slack, Vercel, Supabase, Docker, OpenAI, Salesforce, Oracle.
Pure tech products is GCP or AWS.
Instagram's business is photos, Facebook is connections. Figma is a design tool, Slack is a way to connect with coworkers.
Most of tech isn't really tech.
Personally I think Oracle is in the licensing business, but perhaps they also have a "tech industry division," as you say.
- AI naturally writes AI code that is more organized and clean (proper abstraction, no messy code)
- I've recognized that, for AI to write code on an existing codebase, the code has to be clean and organized and make sense, so I tend to do more refactoring to make sure AI can take over them and update them when needed.
I assume you also believe you'll be one of the developers AI doesn't replace.
Prompt engineering, organizing code for AI agents to be more effective, guiding non-technical people to understand how to leverage AI, etc. I'm also building products myself and selling them myself.
Frankly, if you were writing code that is worse structured than what GPT or whatever generates today then you are just a mediocre developer.
My belief is that we can't solve them today (agree with you), but we can solve them in foreseeable future (in 3 years).
So it is really a matter of different beliefs. And I don't think we will be able to convince each other to switch belief.
Let's just watch what happens?
I assume you're not talking about chatgpt4o, because in my experience it's absolutely dogshit at abstracting code meaningfully. Good at finding design patterns, sure, but if your AI don't understand how to state machine, I'm not sure how I'm supposed to use it.
It's great at writing tests and documentation though.
You should join my Discord channel so we can chat more: https://discord.gg/S44tzqHqU4
Good thing they aren't growing, they appear to have scaled those negative margins, and it's time to dial it back.
Will AI also be able to hyperscale a negative margin business?
I have not seen this term before. What do you mean by it?
Not exactly a recipe for a long-term healthy code base, and helps explain the revolving door phenomenon previously mentioned.
IIRC they are one of those services who basically want access to my bank account, from where they could read my account balance. I think this is something even regulated by the EU, but why on earth should someone agree to that?
Basically digital loan sharks.
That means a post-tax take home of about 45kSEK and a small one bedroom apartment in the general neighbourhood of their office is on the order of 4-5MSEK.
But their services are pretty decent.
you see it with a lot of tech companies acquired by PE or massively funded by VCs that on their careers page - most positions are either India or Eastern Europe.
“It is difficult to get a man to understand something when his salary depends on his not understanding it.” -Upton Sinclair
Better UX than Klarna and no scummy dark patterns to add "late fees".