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The beginning of the end for SaaS products?
Klarna axes major SaaS products
Alex Debecker
September 12, 2024
Klarna / klarna.com
Klarna, the buy-now-pay-later giant, is cutting almost half of its employees... and turning off some costly product subscriptions.
Or, at least, that's CEO Sebastian Siemiatkowski’s plan.
Why, and how, you might ask? AI, of course.
Not only can we do more with less, but we can do much more with less. Internally, we speak directionally about 2,000 [employees].
Is AI taking our jobs?
Klarna is perhaps the first company to unapologetically harness the power of artificial intelligence. Here's how they're doing so far:
In 2023, Klarna began investing heavily in AI and cutting its workforce from 5,000 to 3,800 employees.
In February 2024, Klarna released a customer service chatbot (built in collaboration with OpenAI). According to Sebastian, this chatbot does the work of 700 customer service reps.
In August 2024, Klarna announced a 27% increase in revenue in the first half of the year compared to the first half of 2023. Revenue per employee also dramatically rose, from $393,000 to $689,000.
So, is AI taking (Klarna) jobs? Not exactly. Sebastian's execution so far has been to freeze hiring and not replace people who leave the business.
We are in the fortunate position of being a growing company, so for Klarna, AI enables us to grow more quickly without adding headcount as quickly as we would have done previously.
The end of SaaS products
This week, Klarna took it a step further, announcing they are turning off their subscriptions to Salesforce and Workday, replacing these products with internal tools built with AI.
There are large ongoing internal initiatives that are a combination of AI, standardization, and simplification. As an example, we just shut down Salesforce. Within a few weeks, we will shut down Workday. We are shutting down a lot of our SaaS providers, as we are able to consolidate.
The industry is ablaze with comments. Salesforce CEO Marc Benioff, of course, is dubious (but I think he may or may not have a horse in this race).
Could this be the beginning of the end for SaaS products?