#53. Klarna Episode 3. Year In Review.

Nov 25, 2024

This is one of the greatest apps ever (in my life). A shout out to my son Julian – he and I played Pokémon Go together on both coasts, in the Midwest, and our nightly neighborhood rumbles.

The company calls OUR creation …

… a “large geospatial model” (LGM), drawing parallels to large language models (LLMs) like the kind that power ChatGPT. Whereas language models process text, Niantic’s model will process physical spaces using geolocated images collected through its apps. – Ars Technica

Last week, Perplexity unleashed its latest technological shoppertunity upon unsuspecting American shoppertunists. The company, ever-hungry for market dominance, has unveiled a shopping feature that ensnares its paying customers in an algorithmic web of “recommendations,” trapping them within its search results. Most ominous of all, users can now complete their purchases without ever escaping to a retailer’s website – another nail in the coffin of traditional e-commerce as we know it. – TechCrunch

Better audio, sharper lyrics, and more dynamic song structures now available in beta to Pro & Premier. With its fourth major update, the music generation platform V4 introduces more “soulful” vocals, with things like grunts and breaths that add to the realism. Plus, it can now generate sharper lyrics and higher-fidelity audio.
– 11/19/24 Suno AI

The impact of Klarna’s AI assistant was immediate – within its first month, it processed two-thirds of all customer service cases, performing at a level that would typically require 700 full-time human representatives.

The AI system revolutionized service delivery, slashing average resolution times by over 80% – from 11 minutes to under two minutes – without compromising the quality of customer support compared to human agents.

Operating around the clock across 23 markets, the AI assistant communicates in 35 languages, positioning Klarna to save an estimated $40 million USD in 2024. While customers retain the option to speak with human agents, the system’s multilingual capabilities have particularly enhanced service accessibility for immigrant and expat communities.

Thanks for reading The Ad Stack! Subscribe for free to receive new posts and support my work.

Subscribed

Klarna’s Co-founder and CEO Sebastian Siemiatkowski moved swiftly to capitalize on its potential. The company soon achieved dual firsts – launching Europe’s first ChatGPT plugin and becoming the global fintech industry’s earliest adopter, laying the foundation for more ambitious AI initiatives.

Klarna, the buy-now-pay-later company, is changing how we think about AI in customer service. Following its partnership with OpenAI last year, Klarna’s AI assistant has delivered impressive results just one month after launch. 

Serving Klarna’s 150 million customers worldwide, the OpenAI-powered assistant streamlines the shopping and payments journey through multilingual support, automated refund processing, and proactive financial advisory services.

• It handled 2.3 million conversations in its first month; two-thirds of Klarna’s customer service chats.

• It is doing the equivalent work of 700 full-time agents.

• It is on par with human agents in regard to customer satisfaction score. It didn’t just handle the volume, it also improved efficiency. 

• It is more accurate in errand resolution, leading to a 25% drop in repeat inquiries. Resolutions were cut by nine minutes and customer satisfaction scores stayed steady.  

• Customers now resolve their errands in less than 2 mins compared to 11 mins previously.

• The implementation cost $2-$3 million, with a projected $40 million profit in 2024. 

• It’s available in 23 markets, 24/7 and communicates in more than 35 languages.

The assistant works in over 35 languages, helping with everything from refunds to financial advice. Human agents are still available for more complex queries, while AI focuses on simpler tasks. 

Despite its success, the AI assistant has sparked concerns. Two years ago, Klarna laid off 700 employees — the same number the AI now replaces. 

Klarna denies a direct link between the layoffs and its AI investment, saying the roles were reassigned within its global service partners, which employ over 650,000 people. However, the timing has raised questions. But then in 2023, the company announced a hiring freeze which was confirmed to be partially due to AI reasoning. 

The AI assistant costs $2–$3 million to develop and is expected to bring in $40 million in profits. Klarna’s AI shows how businesses can improve customer service and efficiency with technology. 

Yet, it also reminds us of the need to carefully balance innovation with its effect on workers.

Klarna’s adoption of AI hasn’t been limited to its products—it extends deep into the organization as well. Klarna has made ChatGPT Enterprise available to all its employees around the globe, enabling access to the power of OpenAI in the familiar and easy-to-use ChatGPT interface, with protected company data.

• 90% of Klarna’s employees are using generative AI tools powered by OpenAI daily.

• Their success spans across the org, with Communications, Marketing, and Legal teams seeing adoption rates of 93%, 88%, and 86% respectively.

• Klarna is seeing a wide variety of additional use cases, from building software to streamlining customer service.

So what’s next?

-Inc. SEP 12, 2024

Klarna is no longer using Salesforce, a platform that aggregates and packages sales and marketing data for businesses. The company has also removed the HR and hiring platform Workday from its tech stack, a Klarna spokesperson confirmed to Inc. 

As rumors circulate about Goldman Sachs’ involvement in a potential IPO, Klarna’s aggressive AI strategy and push toward profitability could strengthen its position for going public.

Please help share this far and wide:

Leave a comment

Thanks for the read!

-pb