Latest news with #Klarna
Forbes
12 hours ago
- Business
- Forbes
Klarna, Etsy, And A Driverless Truck Company Learn A Few Harsh Lessons About AI
One of my favorite AI stories this year is the reckoning of Swedish Buy-Now-Pay-Later platform Klarna. "Klarna's AI assistant handles two-thirds of customer service chats in its first month!" the company giddily announced to the public in early 2024, further trumpeting that it did the work of '700 customer service agents.' And that wasn't all. "About 12 months ago, we would have been about 5,000 active positions within the company, and we are now down to about 3,800," the company's CEO said last September. "By simply not hiring, which we haven't done since September ... the company is kind of becoming smaller and smaller.' Replacing people with AI. Great idea! Except…not. Just a few weeks ago Klarna's CEO - who literally used an AI doppelganger to deliver an earnings report - admitted to Bloomberg that the company is "slowing down its job cuts" and getting back to hiring real people to do customer service because the company discovered that people actually want to talk to people. Separately, a representative from Klarna said that the company is "not reversing on AI" and is "continuing to invest heavily in AI, including rebuilding our tech stack to be AI-first.' But the company also admitted that their CEO "acknowledged that an overemphasis on cost—not AI itself—led to lower quality." Turn's out Klarna's not the only company experiencing buyer's remorse from AI. For example, a company that announced "driverless trucks" built on an AI platform that would be rolling through Texas recently discovered that they actually needed drivers after all. Translation company Duolingo aspired to replacing their translators with AI bots only to change course after a backlash from its community. Etsy has faced similar backlash from its community thanks to non-human-looking-AI-generated products flooding its system. After firing 8,000 employees in order to replace them with AI systems, IBM wound up re-hiring many due to "gaps in service, dips in employee morale, and delays in resolution." Australian telecom company Optus, after attempting to automate functions with AI, turned around once it found that AI couldn't handle many issues as well as humans. McDonalds ended its drive-through AI-based ordering test after discovering that humans could do a better job servicing their customers. Which is why it should be new surprise that a recent report by organizational design and planning platform firm Orgvue found that as much as 55 percent of companies that had laid off staff due to AI automation now regret the decision. According to the report "these companies found that AI could not fully replicate the nuanced understanding and adaptability of human workers, leading to a reevaluation of their workforce strategies and a renewed emphasis on human roles." Uh…duh? This stuff just isn't ready for prime time in 2025. And companies who think that they can use AI instead of humans this year are going to learn the same lessons as Klarna, McDonalds and others. I stayed at a Marriot conference resort recently and called to find out if the restaurant was still open. A very human-like bot answered my call, and at first I thought it was a real person. But I figured out quickly that it wasn't. Something was Just like you can sense someone else in a room with your eyes closed, humans innately know when they're not dealing with another human. We quickly figure out when we're talking to a bot. Maybe not right away. But give me just 60 seconds on the phone with an automated, AI-driven voice and I'll be able to figure out that the "person" on the other end isn't a person. AI isn't yet capable to respond quickly, jump back and forth between questions and issues and generally behave like a human. All you have to do is ask a personal question or veer off track from the main conversation and most AI bots get confused and then sound like…a bot. How many times do you furiously punch "0" on the phone the minute an automated system picks up? Navigating through these help desk mazes can be infuriating and time consuming. But that doesn't mean there isn't a role for AI. A good customer service system using AI will eliminate the "press 1 for customer service, press 2 for sales, etc." with a human-like voice asking questions and (hopefully) giving answers quickly. But therein lies the most important thing: if an answer can't be gotten quickly or if the caller simply wants to vent to a human, there has to be quick way to take the red pill (or is it the blue pill?) and get out of the Matrix. My advice to companies is to understand that people do want to talk to people sometimes and to understand that not every question is a simple question. Be transparent when a bot answers the phone and give us a way out. Don't get rid of your customer service staff. Use AI to screen and answer low-level questions and then use your humans for everything else. 'Humans deeply care about what other humans think—it's something that seems hardwired into us,' OpenAI's CEO Sam Altman said last year at a conference. 'While we may keep developing better tools, our focus will always return to one another.' Many companies think they're doing the world a favor by issuing press releases advertising their AI investments. My advice: don't. It's simply bad PR. Klarna made the mistake of gleefully telling the world how they're literally replacing humans with AI. Now they look dumb. Please don't advertise how you're replacing people with AI. Don't be like the Shopify CEO who publicly stated that it has to be proven that any new job can't be done with AI. He looks like a villain. No one wants to hear it. Keep it to yourself. Many workers are terrified of losing their jobs and when a company like Shopify does this kind of stuff it says to them: we don't care about you. Good luck finding talent after that. Who wants to work for a company that considers their people so value-less that they'll not only replace them with bots but tell the universe how smart they are by doing so? AI is great and it will get better. But never believe that it will be good enough to fully replace a human interaction. It never will.
New York Times
18 hours ago
- Business
- New York Times
‘Bellwether of Risks': What ‘Buy Now, Pay Later' Defaults Say About the Consumer
'Buy now, pay never' For months, economists have warned that consumers faced an affordability crunch, a prediction supported by a lousy first quarter G.D.P. report. Now, new data suggests that there's a credit crisis brewing: a rising number of defaults for 'buy now, pay later' loans, the typically zero-interest debt used for things like sneaker purchases and DoorDash deliveries. In the Biden era, the Consumer Financial Protection Bureau warned that pay-later customers would be especially vulnerable if the economy worsened, and called for measures to safeguard them. That's in jeopardy as President Trump has essentially tried to dismantle the watchdog, Grady McGregor reports. The context: Pay-later borrowing in the United States has soared rapidly, with American consumers taking out more than $75 billion worth of these loans in 2023. But as household finances deteriorate, buy-now-pay-never fears have grown; late payments were on the rise over the past year. Democrats on the Senate Banking Committee plan to intervene, some with knowledge of the matter told DealBook. Concerned about rising defaults, they intend to call for more oversight of pay-later lenders, including pushing for more robust reporting on their loan losses. The consumer bureau did not respond to a request for comment about the Democrats' plan. Pay-later lenders see no reason for alarm. That's despite Klarna, one of the biggest providers, reporting a 17 percent year-on-year rise in credit losses this month. The company — which paused its I.P.O. plans amid tariff-related market volatility — acknowledged that its losses were growing, but said that its default rate rose only marginally and represented a tiny share of its total loans. 'There's nothing troubling or worrisome from this data,' Clare Nordstrom, a spokeswoman, told DealBook. Want all of The Times? Subscribe.
Yahoo
21 hours ago
- Business
- Yahoo
CEOs know AI will shrink their teams — they're just too afraid to say it, say 2 software investors
Behind closed doors, CEOs are saying what they won't admit publicly: AI means smaller teams. In public, they stick to the safe script — "we're hiring" — to soften the blow, one investor said. From Klarna to Duolingo, companies that touted bold AI plans have quickly walked them back after backlash. AI is a tool to boost productivity, not to take anyone's job, according to the script many CEOs have been using. Behind closed doors, it's a very different conversation, said two software investors on an episode of the "Twenty Minute VC" podcast published Thursday. "Public companies are trying to prepare their teams for it, but the backlash was too strong," said Jason Lemkin, an investor in software startups. Instead, CEOs fall back on the safer line: "In fact, we're hiring." "That seems to take the edge off," Lemkin said. "But I think they're just walking back the fact that everybody knows they don't need 30% to 40% of the team they have today. Everybody says this," he added. "It's too hard for people to hear. There's only so much honesty you can get from a CEO," he said. Rory O'Driscoll, a longtime general partner at Scale Venture Partners, said CEOs can't talk about job loss because employees will "lose their shit." He said what ends up getting shared publicly is a "very bland statement" full of "standard corporate speak for how you talk about AI." "No one is going to get fired. You're just going to do more interesting things," O'Driscoll said. "That's the current state of the lie." From Klarna to Duolingo, several companies have tested the waters with bold AI declarations — only to backtrack. Klarna' CEO, Sebastian Siemiatkowski, said in December that AI "can already do all of the jobs" humans do, and that the company has stopped hiring for over a year. But earlier this month, he walked it back, saying his pursuit of AI-driven job cuts may have gone too far. Duolingo's CEO, Luis von Ahn, also faced criticism after posting a memo on LinkedIn last month describing plans to make the company "AI-first." He later said on LinkedIn that he does not see AI replacing what his employees do and that Duolingo is "continuing to hire at the same speed as before." Lemkin and O'Driscoll did not respond to a request for comment from Business Insider. Lemkin said mass layoffs could hit in the next two years as companies come to terms with a new reality. He added that he expects overall headcount to "stay flat." There will be "efficiencies" and also "jobs that would have existed in the absence of this product that won't exist now," said O'Driscoll. "So there will be tension." O'Driscoll said he sees a gradual shift — more of a "steady grind" of 2% to 3% less hiring each year. Tech companies, in particular, will see "significantly reduced hiring", he added. Anthropic's CEO, Dario Amodei, said on Thursday that AI could soon eliminate 50% of entry-level office jobs. AI companies and the government need to stop "sugarcoating" the risks of mass job elimination in fields including technology, finance, law, and consulting, Amodei said. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
a day ago
- Business
- Business Insider
CEOs know AI will shrink their teams — they're just too afraid to say it, say 2 software investors
Behind closed doors, it's a very different conversation, said two software investors on an episode of the "Twenty Minute VC" podcast published Thursday. "Public companies are trying to prepare their teams for it, but the backlash was too strong," said Jason Lemkin, an investor in software startups. Instead, CEOs fall back on the safer line: "In fact, we're hiring." "That seems to take the edge off," Lemkin said. "But I think they're just walking back the fact that everybody knows they don't need 30% to 40% of the team they have today. Everybody says this," he added. "It's too hard for people to hear. There's only so much honesty you can get from a CEO," he said. Rory O'Driscoll, a longtime general partner at Scale Venture Partners, said CEOs can't talk about job loss because employees will "lose their shit." He said what ends up getting shared publicly is a "very bland statement" full of "standard corporate speak for how you talk about AI." "No one is going to get fired. You're just going to do more interesting things," O'Driscoll said. "That's the current state of the lie." From Klarna to Duolingo, several companies have tested the waters with bold AI declarations — only to backtrack. Klarna' CEO, Sebastian Siemiatkowski, said in December that AI "can already do all of the jobs" humans do, and that the company has stopped hiring for over a year. But earlier this month, he walked it back, saying his pursuit of AI-driven job cuts may have gone too far. Duolingo's CEO, Luis von Ahn, also faced criticism after posting a memo on LinkedIn last month describing plans to make the company "AI-first." He later said on LinkedIn that he does not see AI replacing what his employees do and that Duolingo is "continuing to hire at the same speed as before." Lemkin and O'Driscoll did not respond to a request for comment from Business Insider. Layoffs are happening Lemkin said mass layoffs could hit in the next two years as companies come to terms with a new reality. He added that he expects overall headcount to "stay flat." There will be "efficiencies" and also "jobs that would have existed in the absence of this product that won't exist now," said O'Driscoll. "So there will be tension." O'Driscoll said he sees a gradual shift — more of a "steady grind" of 2% to 3% less hiring each year.
Forbes
2 days ago
- Business
- Forbes
What Recent Tech Layoffs Reveal About The 2025 Job Market
In April alone, more than 23,000 tech workers lost their jobs. Klarna, Duolingo, Cisco, and Amazon all made sweeping cuts – but not in the areas you might expect. While some teams are shrinking, others are growing. The 2025 job market isn't collapsing – it's restructuring. These layoffs aren't just about cost-cutting. They're a signal of how the workplace is shifting: automation is accelerating, skill demands are evolving, and job security is increasingly tied to how adaptable you are. Here's what the recent tech layoffs reveal – and what you can do about it. The current wave of layoffs isn't a simple result of poor earnings or pandemic aftershocks. Companies are streamlining to shift investment into AI and automation. Klarna announced cuts to its customer experience and marketing departments shortly after revealing a major AI chatbot rollout. Cisco trimmed 4,000 roles to focus on AI-enabled networking. Duolingo, despite strong growth, cut staff as it leans into automated content generation. According to tech job losses in April 2025 marked the second-highest monthly total since early 2023. These aren't panic layoffs – they're part of a realignment toward a leaner, AI-augmented future. If you dig into the affected departments, a clear pattern emerges. Customer support, operations, and marketing teams are taking the brunt of cuts – especially where automation is viable. Generalist and mid-level roles, particularly those without tech specialisation, are proving vulnerable. Internal functions like HR, recruiting, and learning and development are also being consolidated or outsourced in many organisations. The pressure is greatest on roles that don't directly contribute to AI products or data infrastructure – or can be replaced by them. This doesn't mean you need to be a coder to stay employed. But it does mean you need to understand how your role interacts with emerging tech. The same companies issuing layoffs are aggressively hiring in other departments. Salesforce has opened dozens of new roles in AI product strategy, for instance. Even Amazon, after recent cuts, is recruiting for machine learning engineers and data architects. As Jack Kelly notes in Forbes, AI-driven productivity gains are enabling companies to achieve more with fewer employees, leading to a reduced demand for entry and mid-level roles. Jobs aren't disappearing – but they are moving up the skill chain. Tech layoffs are rising — but they reveal a broader shift in where opportunity lies. Despite headlines, many parts of the job market remain active – and even booming. AI and machine learning roles continue to grow, with engineers and product managers in high demand. Cybersecurity and compliance are also thriving, particularly in finance and healthcare. Data and cloud infrastructure roles – like DevOps engineers and data analysts – are seeing consistent hiring. And consulting giants like McKinsey and Deloitte are scaling digital transformation and AI advisory teams. Even public sector and nonprofit tech teams are expanding – especially in climate, healthcare, and education tech. LinkedIn CEO Ryan Roslansky has highlighted how jobs are evolving faster than ever, noting that 'even if you're not looking to change your job, your job is likely changing on you.' His point reflects a broader trend in the 2025 job market: the most secure careers are those that combine domain expertise with adaptability and emerging tech literacy – particularly AI. If you're in a role that feels at risk – or just uncertain – the smartest move is to upskill in a direction the market is already heading. Take Rachel, a mid-level marketing manager affected by a recent restructure. Rather than chasing the same title, she completed a six-week prompt engineering course and began freelancing on generative AI campaigns. Within months, she landed a role leading AI content strategy at a fintech startup. Her path reflects a broader trend: roles that blend business insight with emerging tech are in high demand. If you're in marketing, explore AI content tools or data-driven growth roles. For those in operations or support, learning automation platforms or customer analytics can offer a competitive edge. HR professionals can gain traction in tech recruitment or people analytics. Platforms like Coursera, edX, and Google Career Certificates offer affordable routes into these growing areas. McKinsey's 2024 Technology Trends Outlooksupports this shift, noting a 111% year-on-year increase in generative AI job postings and underscoring the value of 'fusion' roles that pair technical fluency with business acumen. In a 2025 job market shaped by AI, your most valuable assets are adaptability and a skill set aligned with where your industry is going – not where it's been. If you're job hunting, don't limit yourself to your current title. Ask yourself what parts of your role can't be automated. Identify adjacent skills that are gaining demand. And scan for sectors still investing in talent. Because the future of work won't belong to those who never face disruption. It will belong to those who know how to pivot through it.
