Klarna has a 10% reduction in staff "due to the war in Ukraine": the company laid off about 700 employees via video call (UPD)

Swedish fintech company Klarna announced a 10% reduction in staff "due to the war in Ukraine." The corresponding decision was announced by the company's CEO Sebastian Semyatkovsky in a pre-recorded video message, writes The Verge.

It is known that the company currently employs about 7,000 employees, so a reduction of 10% means that the number of dismissed employees is approximately 700 people.

Details of the company'S CEO statement

In particular, Semyatkovsky called the reasons for this decision "the unfolding war in Ukraine, a change in consumer sentiment, a sharp increase in inflation, a very unstable stock market and a possible recession."

CEO Klarna explained that workers in Europe will receive "appropriate compensation", but added that the process of laying off workers in the United States" will look different " depending on location.

At the same time, despite the company's declining value and massive layoffs, Semyatkowski told employees that "Klarna continues to hold a strong position in the market." He also added that he is still "relentlessly optimistic about the company's future."

What preceded this

Last week, The Wall Street Journal reported that Klarna is looking to raise a new round of funding that would value the company at.30 billion, about a third less than the. 46 billion it was valued at almost a year ago.

BNPL services (buy Now, pay later — Buy Now, Pay Later), such as Klarna, Affirm and Afterpay, allow users to buy a product for a song or for a small fraction of its full price. Customers can then make additional payments over a certain period of time, but any late payments will usually be charged an interest-free Commission.

BNPL businesses are known to have skyrocketed in the midst of the coronavirus pandemic, when many people were limited in cash and had nothing better to do than shop online.

Meanwhile, BNPL service providers are currently experiencing problems. A Fox Business report indicates that about 30% of BNPL customers in general are struggling to pay off their debts, and the current state of inflation is not helping. BNPL services can't make money if they don't get a refund, and that's what can make running this business risky.

Employee comments

In a comment to DOU, Anna Gerasimenko, Senior Product Designer at Klarna, confirmed the fact of a massive reduction, but noted that it did not affect her.

"It's true, but it didn't affect me. The company is being restructured due to the recession of the entire market and the impact of this on the company," she explained.

In turn, another employee of Klarna — Senior Data Scientist Alexander Kutovoy — told us his own vision of such a decision of the company's management.

"I and my team were not affected by the process. It's a pity, of course, that it came to this, but, in my opinion, given the market situation, the radical step may well be justified — we all probably have 1.5-2 years of severe recession ahead of us, and I am not very surprised by Klarna's desire to react aggressively in order to tighten our belts quickly, and not stretch out painful steps in time," he said.

Updated 12.07.22

On July 12, Klarna said that the company is now valued at.6.7 billion, which is 85% less than it was in June 2021. Then its estimate was almost 4 46 billion, writes TechCrunch.

With a valuation of 6 6.7 billion, the company attracted інвестицій 800 million in investment. The round was attended by new and current investors, including Sequoia, Silver Lake, Commonwealth Bank of Australia and CPP Investments.

Despite the company's low valuation, Klarna's position in various markets and the popularity of services among users is now greater than in previous years.

Mass layoffs via video link are not a new practice. In December 2021, the founder of Better, a startup that simplifies mortgage processing, Vishal Garg laid off approximately 900 employees (9% of the company's total staff) with a single video call.

At the end of January 2022, the Chinese internet company ByteDance, which owns the popular social network TikTok, disbanded the global team of its HR department of 100 people during a five-minute video parade.