The layoffs at Klarna

https://blog.pragmaticengineer.com/layoffs-at-klarna/

by lauluz • 4 years ago

312 325 4 years ago

blog.pragmaticengineer.com

brycewray2• 4 years ago

Re item “The pay cut of 2020 which became permanent”: the Day Job I had in 2008 used that year’s onset of the Great Recession to stop annual raises and *never* brought them back — at least, not while I was still there, which was until early 2015.

ivraatiems• 4 years ago

Wow, what kept you there so long?

brycewray2• 4 years ago

No other opportunities to speak of; inertia; I was in my mid-50s at the time (59 by the time the final cut came for me) and didn't think a massive recession was a good time to look. Take your pick. :-)

[Plus, I really liked the company. Had been there longer than in any other job, and it was where I wanted to be when retirement came. Wasn't to be, however.]

Areading314• 4 years ago

Klarna generated $1.42 billion revenue in 2021, a 32 percent year-on-year increase. A majority of Klarna’s income comes from interchange, processing and merchant fees.

As Klarna has expanded its BNPL offering, its losses have increased. It reported a net loss of $730 million in 2021, a 337 percent increase on its 2020 loss.

I would say its surprising that this company is still in business at all with numbers like this.

logifail3• 4 years ago

As Klarna has expanded its BNPL offering, its losses have increased. It reported a net loss of $730 million in 2021, a 337 percent increase on its 2020 loss

Yet the tone from the acticle is that employees appeared to think the company was successful?

bombcar3• 4 years ago

Employees base company success on internal metrics and how they're being paid, few employees bother looking at publicly available numbers lest they "jinx" it.

(Or the ones that do see the writing on the wall and bail, or decide to ride it out as long as they can).

foepys• 4 years ago

Since Uber seems to be a benchmark for VC start-ups (Uber for X) and Uber is still losing money in the tens or hundreds of millions per year, I am not surprised that employees think that Klarna is a success.

PheonixPharts• 4 years ago

At least in tech there are people who have had decade+ long careers where it was very feasible to never work for a company that actually made more money than it spent. I've been at multiple startups that had VCs pressure leadership not to make profit because that would hurt growth of some other KPI of interest (users, revenue etc).

In the last few year many of these people have seen these companies go public, and their imaginary Options/RSUs suddenly turn to liquid assets. Company hasn't started making profits, P/E is negative, but TC has gone up by 50%-200%. That certainly feels like success.

Looking back at my own career the companies that made the least profit (including negative) are the ones that have paid me the most.

I'm old enough to remember the pre-dotcom bust chats of "new economy" and "things are different now", and how all of the stuffy old finance people who thought businesses should make more than they spend where ultimately proven correct.

For many people, even in their late 30s, the ability for a company to actually make more than it spends has been an academic curiosity, hardly relevant to the success of a company.

cosmodisk2• 4 years ago

The company I used to work for got acquired by a listed company. At the same time, I was doing finance module at the university. One assignment was to analyse a company's financial reports and come up with a conclusion. So I analysed the company I worked for and the outcome was that I need to get out. At the same time the company was sending communication as it's about to discover time travel and unicorn milk.

hef198984• 4 years ago

It truely shocking how little employees can care about their employers finacials.

Traubenfuchs2• 4 years ago

That's insane -what's the magic event people believe will turn those losses around?

mrweasel3• 4 years ago

It's kinda fascinating really. We had a client that had only ever lost money. Their idea was pretty good, they had what I'd call a working prototype and paying customers. Our CEO happened to know one of the investors, and chatted with him about the investment and the numbers we did on a whiteboard. Even if they grew their business with 10 times the number of customers, and each customer ramped up their usage 10 times it would take 10 - 12 years to make back the money that had already been spend. That was assuming no new investments and zero cost in those 10 to 12 years. The idea that this may not have been the best investment in history was more or less brushed, as the stock price would surely rise.

VC funding is weird.

kzrdude• 4 years ago

Monopolizing it's market? It looked they were nearly there for payment processing in swedish online shopping.

vadym909• 4 years ago

Most point to Amazon as the example of it will turn around once they start to dominate their space

VLM2• 4 years ago

A classic argument is future sales are equivalent enough to be an asset. So as long as your balance sheet including future sales is growing faster than your income sheet is shrinking, its "OK".

There's a lot of assuming spherical cows going on. If the bean counters like the result when the average customer is milked for six years until having to replace them, that's great, unless customer service is so awful the average customer is gone in six months, or a competitor comes along in two years and wipes you out, market changes evaporate the revenue stream in five years, etc.

BTW this is the housing bubble in a nutshell. Lets say you buy a shack for half a mil at 6% for 30 years which from memory is almost exactly $3K/month. Not because you would, but because these are engineering estimates with very round numbers that are easy to memorize. Anyway, you'll spend 30 years in a row with a negative income statement of losing $36K per year on that shack. Actually you'll lose a ton more money due to maint, taxes, insurance, PMI, remodeling, appliances, whatever else. But who cares about the income statement, because if the total losses over 30 years are a bit over a million, if on the balance sheet the asset goes up to five million because interest rates only go down and real estate only goes up (until it doesn't, LOL) over the same time frame you can cash out for four million net gain? Of course if the shack only goes up to a million because its not in a bubble area like Arizona or whatever, you've not quite broken even, or god forbid if it only goes up to 3/4 of a mil you've lost quite a large life changing sum of money.

qbasic_forever• 4 years ago

For the past decade money has been effectively free to borrow with interest rates at zero. All the companies that immediately went bankrupt, into layoffs, etc. when interest rates were raised this year were coasting on these financial fumes.

killSp4m• 4 years ago

Powell wants to keep wages tethered to his preferred reality of 2% inflation versus the actual reality people live on. The real issue with inflation is it devalues the public hallucination; fiat money: https://www.wsj.com/articles/transcript-fed-chief-powells-po...

Fear mongering over employment security is a favorite tactic: https://www.nytimes.com/1997/02/27/business/job-insecurity-o...

The reality is “people need to eat”, will trade as they must to do so. We don’t actually rely on government officials to do the work; we placate the die hards by speaking in the traditions. They’re yanking on the leash they have.

Big tech looking to axe senior talent and big pay days for cheaper Gen Z grads; a quiet wealth redistribution plan. Some of the rich senior tech people would move on to cheaper locales and perhaps build businesses.

We’re in the ML era and a lot of senior folks are from the “manually program a machine” era; that’s a way over valued skill set now; it’s everywhere.

Cheaper talent with the latest collegiate training not the old ways baked in, could offset the expense of moonshots, hoping to boost an ML-backed cloud economy post generic server backed cloud.

Google’s Eric Schmidt has been in DC lobbying for AI investment: https://www.vox.com/recode/2022/6/9/23160588/eric-schmidt-am...

Picking the winners right away to avoid the last decades shotgun approach.

hotpotamus4• 4 years ago

I recently left an 8,000 person company that's been on a 2 decade loop of private money to publicly traded and back a couple times now. It occurred to me that in 25ish years (about 10 of which I worked there) that it might never have made any money - I can't remember a profitable year ever; we were always seeking growth above all else. I now work at a small SaaS company of around 50 people and it's only ever made money.

Every day I feel like I live the Homer Simpson quote, "I don't know how the economy works".

allenu2• 4 years ago

I recently left an 8,000 person company that's been on a 2 decade loop of private money to publicly traded and back a couple times now. It occurred to me that in 25ish years (about 10 of which I worked there) that it might never have made any money

That is crazy if true. My fear is that there are a ton of tech companies like that, just chasing future profits or an acquisition, but not actually creating anything of value (at least in terms of profit).

I don't know. It just doesn't sit well with me knowing that a lot of products we build don't actually make any money. We're all just part of some weird system of money re-allocation and the software is just there as a signal that money should change hands.

drc500free2• 4 years ago

Every day I feel like I live the Homer Simpson quote, "I don't know how the economy works".

This was my attempt to explain this phenomenon. https://news.ycombinator.com/item?id=32453161

djmips2• 4 years ago

Sounds like the old old SNL skit about banking.

Wikipedia- "First CityWide Change Bank – Two ads promote a financial institution whose only service is providing change (e.g. "you come to us with 16 quarters, 8 dimes, and 4 nickels, we can give you a 5 dollar bill"). How does First CityWide make money doing this? As one service rep says it, "The answer is simple: Volume"."

RandomLensman• 4 years ago

From the outside, I find it difficult to judge as management might have been focused on top line growth (given investors preferences in recent years). A (possibly) changed focus could now mean a very different profit profile will develop.

tibbydudeza• 4 years ago

Uber

treis2• 4 years ago

In a lot of ways internet businesses are like buying bonds. You pay some cost to acquire a customer and will get revenue from them over time. You can calculate a present value for that customer based on that future revenue. As long as that value is more than what you paid to acquire the customer you're making money.

And if your numbers are right then you, more or less, want to spend as much money as you can buying customers. So that's how companies with numbers like this continue to operate.

To put it simply, Klarna is spending a billion dollars to buy customers that will generate more than a billion dollars in revenue. The catch is that you have to pay now for later revenue. So your numbers look like crap until your existing customers far outnumber your new ones.

disgruntledphd2• 4 years ago

This is a very, very dangerous business to be in unless your numbers are rock solid and you make sure your models reflect reality.

yuliyp• 4 years ago

They're much riskier bonds. The market can change, or competitors can try to win customers over, or anything else to throw out those lifetime value calculations.

lumost7• 4 years ago

For transaction processing, wouldn't a 1-3% margin be about the maximum achievable? That would translate to about 15 million dollars in potential profit against a 730 million loss.

treis2• 4 years ago

1-3% of the transaction volume. That percentage is the 1.4 billion Klarna takes as revenue. The margins of that can be very high.

naturalauction• 4 years ago

I think Klarna can charge slightly higher fees to merchants (it looks like they charge up to 6%) as sales increase with buy now pay later. Also they probably think they can make money off of servicing the debt (late fees, interest on balances).

peyton3• 4 years ago

Visa’s margins are like 50–60%.

dilyevsky• 4 years ago

Per https://www.klarna.com/international/regulatory-news/klarna-... their volume was $80B last year, 1.4B was their cut (1-3%) aka revenue, and the profit would depend on bunch of things such as their marketing/sales spend, wages, debt servicing, etc and most likely has been negative.

Edit: not "most likely" - apparently they lost to the tune of $700M

throwaway8593833• 4 years ago

Up until a massive expansion push some years ago, Klarna used to be a profitable company. It expanded from 3200 employees in 2019 to the 7000 that are there now. They also started spending money on experiments that had not much to do with the core business.

indymike• 4 years ago

Employee count may be the worst business metric of all time.

speedgoose2• 4 years ago

I’m surprised to read that Klarna had 7500 employees. It seems to be a lot for an online payment company offering consumer loans.

What were the people doing?

akmarinov• 4 years ago

Klarna’s “Super App” was an area getting lots of investment in 2021. This investment was a step away from the core offering of the handling of payments. The vision of this app was to create an experience where people could do all their shopping within a Klarna super-app.

However, this super app never launched as planned. Internally, confusion arose when it emerged the super app would use scraped data from customers who were already partners of Klarna. The super app efforts are still progressing slower than originally planned, and some employees think the company is spending too much on this area for too little return.

Trying to come up with something out of nothing it seems

speedgoose2• 4 years ago

But can you keep thousands of people busy on such a project?

bombcar3• 4 years ago

Apparently every "payment" app/startup is valued as if it will somehow magically replace Amazon instantly.

I don't understand it myself, but that's what happens.

enviclash2• 4 years ago

I might be just an ignorant user in Europe, but this super-app thing could scare me out of Klarna and let me find an alternative, I got uncomfortable with the app when they required unnecessary data for a payment.

Traubenfuchs2• 4 years ago

What were the people doing?

Right? If they are even somewhat productive, there should be enormous output created by them.

jon-wood• 4 years ago

This is the death spiral all large organisations go into, they hire more people so that they can do more things, but then they spend increasing amounts of time in meetings or trying to work out how some other team’s system works, so productivity goes down, so more people are hired to counteract that.

Ekaros2• 4 years ago

I understand them being somewhat big with customer support and all the debt collection they are likely involved with. But still 7500 is a lot.

mrweasel3• 4 years ago

My understanding was that, at least in Scandinavia, their debt collection was a separate company. I may have gotten that wrong, but we had a few customers who paid us using Klarna. When Klarna didn't get their money after some period of time they'd normally let some 3rd. party handle debt collection. In some cases they just reverse the charges and leave us to eat the lose arguing that: The customer claim to have never received the item, or straight up let us know that they weren't about to lose money on this transaction, reverse the charge on us, the retailer, and leave debt collection to us.

throwaway8593833• 4 years ago

Lots of experimental things that had nothing to do with its core business such as Blockchain currency. Klarna massively expanded in the last 3 years. In 2019 there were about 3200.

VLM2• 4 years ago

The problem with a secret sauce is the market needs more than sauce.

So even if they could proactively leverage their synergies using mobile apps or whatever their secret sauce was, activities like, I donno, collections maybe, still scales up linear with size like legacy companies.

xBK• 4 years ago

With Klarna's valuation spiralling downwards, those bonuses in RSU's couldn't have been timed worst for the workers.

bombcar3• 4 years ago

A 'deal' forced on you is almost always not to your benefit (or it wouldn't have to be forced).

enviclash2• 4 years ago

I am a user. Annecdotically, since a few weeks ago the app started working slow and not as perfect as before, when it was flawless for years.

chrsig6• 4 years ago

The culture of “we are awesome” has dominated most internal communications for the last couple of years, including in 2022. We all believed that we were awesome and would continue growing and winning.

This is the big thing that drives me nuts.

I don't know if it's a fragility of ego thing or what the cause may be, but it results in a corporate inability to critically self-evaluate at the highest levels. If you can't say where your weak areas are, you're not improving.

One of the experiences that untreated ADHD blessed me with was routinely failing classes. That repeated exposure to undeniable failure (and the consequences of it) really helped me accept that failure is the default. If you're not constantly fighting against failure, you're failing. You can't pretend that something didn't work out, or stop thinking about it because it hurts.

The self congratulatory back-patting (even if it's just "everything is fine, we're doing great") is treating success like an achievement. Success requires vigilance. Excellence is not an achievement, it's an activity.

We need more leaders that talk about the things we could be doing better, and doing so inspirationally, not derogatorily. It's ok that you're not the best at something. Very few are. That doesn't mean you can't or shouldn't do better.

Try internalizing that if you're not constantly struggling to do better, you're not living up to your potential.

JumpCrisscross• 4 years ago

experiences that untreated ADHD blessed me with was routinely failing classes. That repeated exposure to undeniable failure

Huh. Never thought of this. In a balanced culture, this offers no advantage. But in one still recovering from the self esteem days, when even games were encouraged not to produce any losers, I see how that awareness is competitive.

chrsig6• 4 years ago

I used the word blessed somewhat tongue-in-cheek. I'm not sure I would call it an advantage, rather just a different set of experiences than a large majority of the tech world.

alecbz2• 4 years ago

Stripe had a few “official” principles that I really liked along these lines: “We haven’t won yet”, “macro-optimism but micro-pessimism”.

They’re no longer official principles though, and I’m not 100% sure how much they were actually acted upon while they were (at least during my tenure).

dsomers• 4 years ago

“macro-optimism but micro-pessimism”

This is an interesting idea, I have I feeling I know the what they’re getting at, but if you have any examples of how they put that into practice I’d love to hear it.

Buttons8403• 4 years ago

I like the book Crucial Conversations, which tells us to avoid the "fool's choice" and be 100% honest and 100% respectful at the same time. The fool's choice is when a fool thinks something like "I can either tell the truth and be fired, or keep my mouth shut". The book teaches that with some thought you can find a way to tell the truth without being fired, etc. This is advice for an individual, but not an entire organization.

For organizations, they could at least hire a consultant / speaker to do a presentation every year on how people can effectively give negative feedback. The speaker could say "you all see bad things happening at the company, things you aren't happy about but don't want to risk speaking about, here's how you can speak about those issues without any risk". Teach people things like, studies have shown that proposing a solution along with your complaint makes it more likely to be accepted, etc. For the price of a speaker or two, you could train your company to effectively deliver and act on negative feedback. Too many people don't know how to effectively express their problems.

If someone wants to start a consultants / speaking tour you can have this idea.

hbrn• 4 years ago

It's still on their website, not sure if it's public though: https://stripe.com/jobs/culture

pjot• 4 years ago

I like the saying, “strong opinions, loosely held” which I feel hits in the same vein.

rubyist5eva6• 4 years ago

The self congratulatory back-patting (even if it's just "everything is fine, we're doing great") is treating success like an achievement. Success requires vigilance. Excellence is not an achievement, it's an activity.

I used to wonder why friends of mine would get gifts for things like graduating elementary school or even high school. I asked my father for something because I was graduating highschool on the honour roll, and he told me completely stoned faced "i am not going to reward you for things that you are just simply expected to do". That sticks with me 20 years later and I apply that to everything I do in life, especially work.

If you aren't succeeding, you are failing - and I was expected and taught to succeed by default.

msie• 4 years ago

If you aren't succeeding, you are failing - and I was expected and taught to succeed by default.

That sounds messed up too. Maybe you need a break now and then from trying to succeed all the time.

icegreentea22• 4 years ago

If you aren't succeeding, you are failing - and I was expected and taught to succeed by default.

Nitpicking, but you were expected to succeed by default, and also taught to strive for success by default (and presumably also taught the tools and approach to maximize likelihood of success). People cannot be taught to "succeed by default", anymore than someone could be taught to "win the world series by default".

And then that unpacks the challenge of this particular world view (and points at why the 'self-esteem thing' is a thing), is that learning to strive for success, and learning the tools and methods to achieve success does not mean you will actually reach success (this would just be a variant of the just-world fallacy). The challenge is how do you create the motivating factors and structure for as many people as possible (hopefully everyone) in your society/culture to earnestly strive for success, but not crack apart when they encounter continued failures.

djmips2• 4 years ago

I feel sorry for you that your father never got you that gift for graduating high school. My father got me an HP calculator and it's still one of my treasured possessions. It has had no negative impact on my success.

throwawaysleep2• 4 years ago

It comes from a time when it was not so mundane. My grandfather on one side was the first in his family to truly read and write well enough to have a job involving it.

That is a big deal and far from a default.

Yes, now graduating high school is not an achievement, but it used to be quite one, especially for the average person.

puchatek2• 4 years ago

I hope that your definition of success is healthier than your definition of failure.

lbschenkel• 4 years ago

In Brazil, where I am from, the big achievement that warranted a celebration used to be graduating from university (I guess you call it college in the US). For many families the celebration was also the gift — those things don't come cheap.

But in the last 30 years or so, I have noticed that many now celebrate completing high school, completing primary school, or even completing kindergarten (!) — and not just something symbolic or small, but big events.

Maybe I'm just old and grumpy, but this rubs me off in the wrong way: I also believe that these "achievements" are things that you are simply expected to do. Congratulations and positive reinforcement are always welcome, but when there is an expectation of a reward then to me it crossed the line into something unhealthy.

mhuffman• 4 years ago

We all believed that we were awesome and would continue growing and winning.

Hilarious since Klarna has one of the worst customer service experiences I have ever witnessed.

Their real monetization strategy seems to be to get your mobile information. It is not necessary to micro-finance through them, just to do anything at all after that!

They actually have a website, which you might think would be an alternative way to manage your account, however it also requires your verified mobile device (not a phone number) to access.

Now, they never tell you any of this and none of the people that work there seem to know that this is policy and are shocked that you can't do things like check your balance, pay off your balance, basically anything you might want to do.

hulitu• 4 years ago

If it works for Google, shall work also for them.

humaniania• 4 years ago

Do they get a tracking pixel or something on all the checkout pages where they are a payment option? They get to embed code?

CharlesW• 4 years ago

I worked for a company where the C-suite used the phrase "drinking our own champagne" instead of "eating our own dog food". To me, this just oozed insecurity about the product and the company.

highwaylights2• 4 years ago

“Drinking our own champagne”

I feel like I need to take a shower because of how vomit-inducing that statement is.

parkerhiggins• 4 years ago

sure let’s replace a daily life sustaining activity with a celebratory product

total disconnection and bastardization of the point of the phrase

rare level of yuck here

polote• 4 years ago

Nothing matters as long as a company is growing. You don't have to improve or have the best tech or the best sales or do everything right or have the best culture. The only thing that matter for a company is to grow.

peyton3• 4 years ago

Clearly something did matter since Klarna grew a lot and will probably continue growing. What matters is access to capital.

doktorhladnjak6• 4 years ago

I’d say it even goes beyond that to how you treat employees. Poor raises? Long, demanding hours? Unethical practices? Burning people out?

If the business keeps growing and the stock keeps going up, it papers over a lot of those problems.

Of course, when the growth stops suddenly, all the skeletons fall out of the closet.

datalopers2• 4 years ago

The self congratulatory back-patting

HN is guilty of this constantly. Everyone who posts here is implicitly in the right and users unequivocally back that attitude, even when it realistically is a scenario of "maybe you were a shit employee and were fired for it and your employer isnt in the wrong?" or "your Show HN really isn't that impressive". We're not allowed to say anything critical of other HN users without being downvoted or reprimanded by dang.

So why is it any surprise that every startup company has precisely the same back-patting culture?

vorpalhex• 4 years ago

There's a difference between being introspective and just being a jerk.

chrsig6• 4 years ago

You're complaining that you can't shit on other people. I'm complaining that people don't shit on themselves.

tshaddox• 4 years ago

There’s a big difference between the people in control of a company back-patting everyone when employees’ livelihoods are actually in danger, and back-patting an individual for sharing their personal projects and experiences in good faith even if they have a lot of room for improvement.

mk892• 4 years ago

I don't know if this was the meaning of the OP's message, but the way I read it tells me that he dislikes the "everything is fine" BS that some companies keep on doing, not the fact you still need to criticise constructively, which "your show hn isn't that impressive" clearly doesn't do.

Realistic, yes, but you don't have to be an ass, that's kind of how I interpret it.

iforgotpassword• 4 years ago

"maybe you were a shit employee and were fired for it and your employer isnt in the wrong?" or "your Show HN really isn't that impressive". We're not allowed to say anything critical of other HN users without being downvoted or reprimanded by dang.

These things absolutely can be said on HN, if you list some points that make you think so. If OTOH your comment ist literally just that one sentence then I don't see why it shouldn't get downvoted and flagged. This is not the YouTube comment section.

dan-robertson2• 4 years ago

I would not say that HN does this constantly or agree with much of what you write. In general I think written/upvoted comments tend to be biased towards being critical[1] and disagreeing with the comment/article being responded to.

In general, the guideline is for comments to be curious and “maybe you were a shit employee” or “your Show HN really isn’t that impressive” do not sound to me like they are curious. However I realise it is hard to describe in general comments that would surely contain specific things.

An alternative strategy to the former general comment might be to try to get curious about the details more. For example one might discover that the likely cause was a breakdown in communication leaving the employee unable to understand what was actually wanted and being fired for failing to read minds to meet expectations. However I think it can be hard to actually be curious here rather than applying some kind of smug-Socratic method[2] asking innocent-seeming questions where the answers lead to one’s unwritten hypothesis, though perhaps the answers can give an opportunity to update. I think it can be doubly hard to do these things in a kind way, especially when, like in the general examples, the topics are personal to one participant rather than a typical internet discussion where parties may pretend to be disinterested.

[1] There are two common meanings of ‘critical’. One is related to ‘critical thinking’ or critiquing: looking specifically and carefully at the faults or merits of something. The other meaning is similar to ‘disapproving’. Generally the former kind is accepted here and the latter is less accepted, though I think comments which are negative and not particularly thoughtful or curious often do better than I would hope. Further, the acceptance of the former kind of critical discourse may sometimes be hidden behind for comments that perhaps fit into the latter sense (when they don’t fit I would say it is because they are too mean to really deserve to be called critical).

[2] I think this roughly corresponds to what the guidelines call cross-examining.

raxxorraxor• 4 years ago

Never really noticed posts about people getting fired and complaining. My impression is that the HN audience is generally pretty strict on work behavior.

"Oh, you slightly smiled when everyone else did not? Not appropriate, we are a serious and professional enterprise, you should be fired and restricted to ever work in this industry again."

That said, claiming the audience is or does something specific is probably always a large generalization.

"your Show HN really isn't that impressive"

On that I do agree. The criticism is often very direct. There is a certain aspiration that product or solution x must be either the best or it doesn't deserve to exist at all. On the other hand such criticism can still be valuable if it is still received as hinting to stuff that can improve.

throwawaysleep2• 4 years ago

I think a lot of this is that nobody has long term incentives and plenty of people believe "we are awesome" is truth.

As a developer, if I paper over problems and claim to have resolved them, people will love me, trust me, and give me bonus pay. If I bring up problems, people consider me a trouble maker.

And when the bill comes due, I will just jump to another company.

onlyrealcuzzo• 4 years ago

I really think this just comes from the fact that most startups are either:

1) from California

and/or 2) have founders that worked in California

and/or 3) raised money from VCs in California

I'm all on-board with it being better to be an optimist than a pessimist, and also on-board that destructive criticism doesn't really "serve" anyone.

But there's just this rampant over-optimism like nowhere I've experienced.

The culture of "we are awesome" to me - is culture of California.

I prefer California culture over doom and gloom and pessimism - but a little more reality, I think, is welcome.

The thing that rubbed off on me about California that I'm really grateful for is to always start with the positive. I'm definitely a happier person from getting absorbed into that culture.

But I think when you get to the point where you just completely ignore or don't speak about the negatives, it's not really helpful anymore. It's just delusion.

georgeecollins• 4 years ago

Interesting point, but the example here is HQ'd in Ohio. I think some of what you talk about in California is true but you could say that about New York, or once upon a time Hong Kong. Places where ambitious people come to breed a certain mindset. California is a big state and very rural parts California arre like Idaho (I'm not talking exurbs).

aledalgrande• 4 years ago

Nah the Vancouver scene is the same. Maybe it's a West coast thing?

drstewart• 4 years ago

I like how you mention California 6 times but somehow fail to realize this company was founded and based in Sweden

Animats2• 4 years ago

A comment from when I knew theater and film people in SF: "In New York, they tell you when you suck. In Hollywood, they don't call you back when you suck. In San Francisco, they don't tell you that you suck. So you can suck forever."

(Yes, SF once had a film scene. Mostly because there was cheap warehouse space South of Market usable for production.)

garrickvanburen• 4 years ago

failure is the default. If you're not constantly fighting against failure, you're failing.

This. Any success, let alone wild success is highly unlikely. Just assume you’ll work on interesting problems and at some point you’ll realize either you or the problem will change in a way that makes disengaging the right answer.

jiggywiggy• 4 years ago

I dealt with Klarna once, made a mistake. Gmail filtered out all their invoices & reminders, had to pay reasonable extra sum. No leniency, fine, but nothing special or awesome about them, they are just a regular credit company. No special tech or whatever, no special awesomeness, no special kindness.

Gmail filtering out invoices has been a big issue for my btw, Im forcing the government to send me invoice in print, even though they don't want to.

duxup• 4 years ago

I worked at a place where the executives constantly sent out company wide congratulations emails, to each other.

The HR director wrote “why it is a great time to work at X part 1” and then we did some layoffs… and part 2 was sent out the next day without missing a beat.

That company eventually stumbled and failed largely because they wouldn’t cancel a product that was clearly deficient (a far superior product was available but wasn’t invented by the established engineering manager, so they killed that product instead ).

johannes1234321• 4 years ago

I think people in an organisation are constantly confronted with the problems and downsides. Engineers always know where the problems in the code and architecture are. Sales people and support always see the complaints from customers. CEOs see how high-valur prospects always find new issues to lower the negotiated prices and how features are delivered late. And so on.

My interpretation is that the overly positive view aims to drive the positive points forward and remind everybody about the positive things and how well things work on a macro view. If you stick small negatives in the message to cover "reality" this is what sticks.

I can't stand these motivational speech, but I also don't see a good speech for high level talks and not saying anything is bad as well and for some kind of people that seems to give them a push.

huijzer• 4 years ago

Ben Horowitz talks about this somewhere near the start of his book "The Hard Thing about Hard Things“. If I remember correctly, he said that it was very difficult for him as a CEO to load the problems he had onto his employees because handing the burden over felt bad. He was responsible for the burden. It makes some sense if you think about it like that. Later he did turn things around and share his worries and to his surprise the employees weren’t to worried and actually started to solve some of the problems.

greenwithenvy2• 4 years ago

There's a reason why recruiters at Spotify jokingly referred to Klarna as "our relocation agency". Klarna would relocate folks to Stockholm who'd then leave within 6 months to a year once they realised the shitshow they signed up for.

This was in 2015. They didn't value people back then or care to treat folks with the tiniest amount of decency. Seems not much has changed.

dcminter2• 4 years ago

There was a corresponding joke at Klarna that Spotify was part of the natural promotion path.

greenwithenvy2• 4 years ago

That's fascinating.

But generally when people feel like the best way to advance their career is to leave, then I don't think that joke works in Klarna's favour as much as they might think it does.

d-trieu• 4 years ago

Not just at Spotify, at both of my previous jobs we were joking about picking up Klarna employees that has managed to disconnect from the Matrix.

smashah4• 4 years ago

I tried to get a big-ticket item using Klarna. Had the money in the bank, just thought I'd give it a go. It failed multiple times without any sort of meaningful error message. Apparently each of those failed attempts hit my credit score. I told them to close my account multiple times through multiple channels (chat/email/etc.) and reverse any damage done to my credit score.

Till this day I get monthly balance/statement emails from them even though I have yet to use a single penny of their credit facility. Too bad they don't use all that marketing budget on competent customer experience/service.

antupis• 4 years ago

Yup funny how big they growth becouse they pretty much dont add anything to consumer experience and they are well know issues like if you know social security number you can order stuff.

BonoboIO• 4 years ago

Hit them hard with a GDPR request, forward it to your local privacy organization.

In Europe this is popcorn time.

nibbleshifter3• 4 years ago

This is what I do with every single company I have even the slightest negative interaction with regarding my data.

Its a lot of fun.

smashah4• 4 years ago

Good suggestion. I've now filed a complaint with the ICO and sent them an email requesting for all the data they have on me.

mlonkibjuyhv• 4 years ago

Oh all the things I wish they would use their marketing budget on. For instance they still can't correctly compute different VAT classes in their merchant reports.

chrisseaton2• 4 years ago

I thought Klarna did a 'soft' credit check? That shouldn't show up on your file? I think they need permission to do a hard credit check.

smashah4• 4 years ago

After the third attempt I decided to chat with Klarna support. They saw the attempts and told me to stop trying as it would be damaging my credit score. What exactly is the truth? I don't know. Klarna is a black box to me.

lupire• 4 years ago

The layoffs are 1/3 of the headcount growth in the past year. That's just embarrassing for the planners.

bastardoperator• 4 years ago

I left a company at the beginning of covid that jumped at the opportunity to reduces everyone's pay... except the executives.

ec109685• 4 years ago

I’m not sure who the audience of all 5000 words of that article.

Obviously it caused me to click the link, but it seems like a lot of excruciating detail about internal company process.

I guess its useful for potential future Klarna recruits.

And there’s an even longer extended version behind a paywall! https://newsletter.pragmaticengineer.com/p/layoffs-at-klarna

brtkdotse• 4 years ago

Oh, come on. Everybody likes a good, juicy airing of dirty laundry.

dom96• 4 years ago

Adjacent to the topic of this article but I really love Gergely's reporting. It's great that he is shining a light at how poorly these companies are handling layoffs. Hopeful that this will change our industry for the better.

mrweasel3• 4 years ago

Klarna made a major mistake in not letting the majority of employees know if they were safe from layoffs or not, for a whole night.

I worked for a company that didn't let people know if they where safe, for a week. A friend worked for a company that didn't let people know for 3 months. It's beyond stupid, people becomes nervous and starts looking elsewhere and it's always the best people who leave first.

That being said: Why does Klarna have 7500 people employed? I feel bad for the people who will be losing/have lost their job, but they also won't be the last in tech. Klarna have done what Google, Twitter and other have done, hired people they didn't need, so now productivity per employee is too low.

15 years ago I worked for a company that used Klara for payment, right when they started to expand beyond Sweden. The experience was interesting to say the least. They where completely naive about fraud. They didn't understand the markets they where trying to expand to. If everything else failed, payback the customers and let the retailers deal with any loses.

While I'm sure they improved, based last my experience with them in 2016, I don't see how they could be ready to enter the US market.

jks• 4 years ago

I worked for a company that didn't let people know if they where safe, for a week. A friend worked for a company that didn't let people know for 3 months.

Finland has in some respects even more stringent employment laws than Sweden. If a company is laying off people, it needs to "negotiate" with employee representatives for a set amount of time. For small companies or small layoffs, the time is two weeks, but if there are at least 30 employees and the layoff affects at least 10 of them, the negotiation time is six weeks. Companies typically say at the outset which employee groups are affected but delay the decisions about individual employees to the end. I don't know if this is by law, but I suppose that saying sooner would be an opening for a union to claim that the negotiations were not done in good faith, and possibly sue the company.

Having been a potentially affected employee on two occasions and an employee representative on one of them, let me say that waiting six weeks for the decision is not fun for anyone.

lumost7• 4 years ago

For the last 7 years I noticed a strange trend in tech. The skill of management was not getting the people you needed, but instead turning down people you didn't.

Whenever ive been a manager for the last 7 years its the same. One day you get a ping for “can you onboard X”. It doesn't matter if you had work for one more person or not, thus projects are created for them to do something.

GordonS• 4 years ago

I've worked for (non-tech) companies that didn't let employees know they were safe for months - and they did it almost every.single.year... and always just before Christmas, like they planned to hurt people as much as possible. Utterly despicable.

Thinking about it, I guess they hoped to make people jump ship before they were pushed, but it destroyed any semblance of a good relationship between employees and management/HR.

rsanek2• 4 years ago

productivity per employee is too low

When referring to productivity, what do you mean in this case? For Google, their profit per employee is still very high (about $300k [0]). Of the top 10 biggest employers in that list, they are 3rd-highest-earning per capita.

[0] https://tipalti.com/profit-per-employee/

jedberg3• 4 years ago

Wow, that sounds so poorly handled. Not figuring out a way to tell everyone affected at (nearly) the same time is probably the worst sin.

Best layoff I ever went through was when my boss came to our team and said, "look, don't tell anyone, but we have a layoff coming in a few days. I have to let one of the three of you go. Do you want me to decide or do you want to decide amongst yourselves?". She knew we were good friends outside of work and would probably make a better choice than her.

I ended up volunteering because one other guy had just bought a house and had a baby and the other guy had debts to pay off and I didn't. Ended up working with both those guys again. One of them ended up leaving and getting a new job, then he pulled me in after 1.5 years of unemployment, and then we pulled the last guy in after he eventually got let go.

curiousllama2• 4 years ago

Best layoff I ever went through was when my boss came to our team and said, "look, don't tell anyone, but we have a layoff coming in a few days. I have to let one of the three of you go. Do you want me to decide or do you want to decide amongst yourselves?"

Judging from your reaction, it sounds like yall had a great work environment, and that this was a good way to handle the layoff for your team. It sounds like it went smoothly, which is 100%, A+, great.

But HOOO BOY, that was a HIGH RISK move by your boss. I sincerely can't imagine the clusterf** that would've resulted from that at some of the places I've worked. Good GOD. This is an invitation for a lawsuit on a silver platter, holy guacamole.

jedberg3• 4 years ago

Oh yeah for sure. The only reason she could do it is because we all got along.

I would not recommend this approach for most managers. :)

stormbrew5• 4 years ago

Fwiw there is a more normalized practice that resembles this and is, afaik, not a massive hr risk: openly offering a voluntary severance with defined benefits.

Obviously it's not a great signal to those who don't take it about the health of the company, and you might lose a bunch of people you'd rather not, but I think allowing some level of self-selection is good when it's possible.

YPCrumble• 4 years ago

Why would this invite a lawsuit? Layoffs are part of business.

xmonkee• 4 years ago

I know right, what a firecracker.

babyshake2• 4 years ago

What would the grounds of the lawsuit be? I can think of reasons to not announce a layoff in advance, but I can't think of why what the boss did was illegal.

nvarsj• 4 years ago

Maybe she had just watched The Hunger Games and was feeling inspired.

orzig2• 4 years ago

That is awesome for a cohesive, high functioning team. I worked at a company with some obvious (to everyone else) under performers, and as much as I wish they had not been a layoff, I would have been pissed if some of the nicer members of the team had volunteered to take the bullet.

That said, the standard layoff protocol only got rid of one of them, and the other only left after reacting badly to the slight uptick in performance feedback (suggesting his lack of self awareness)

rospaya• 4 years ago

Wow, that sounds awful for me. Being a boss means making hard decision, he just dumped that on the three of you. Glad it worked out for you, but I can't imagine this working in most situations.

nr2x2• 4 years ago

*she

ronnier• 4 years ago

I ended up volunteering

You are a good person.

matrix_overload• 4 years ago

Yeah, so the company ended up losing the most confident/competent person (since they have the highest chance of quickly getting another job).

literallyWTF3• 4 years ago

How was that the “best layoff”?

Instead of being an actual fucking leader and making a difficult decision, your boss just said “lol so who wants to leave.”

I swear sometimes the shit I read here makes me go insane.

jedberg3• 4 years ago

She was a great leader. She recognized that our team was cohesive and could make a better decision than she could. She was one of the best managers I ever had.

babyshake2• 4 years ago

Sometimes people are planning to leave anyways, and wouldn't mind a potentially generous severance package.

compiler-guy2• 4 years ago

Context and relationships matter. Apparently this manager had a relationship with her reports where that would work. It's obviously not going to work in nearly any other situation, but kudos to her for figuring out what would work in this situation.

Bottom line is that all of the reports involved were reasonably ok with the outcome--no one is ever happy about getting laid off--and that is far better than the situation in most layoffs.

puchatek2• 4 years ago

By quoting her wrongly you missed precisely the reason why her's was considered a good approach to communicating this.

yibg• 4 years ago

Yea but try doing that with 700 people.

blantonl4• 4 years ago

99 out of 100 times this would have been 3 spidermen pointing at each other.

Glad your manager was able to recognize your team could handle this decision themselves. But, wow.

lr4444lr2• 4 years ago

Just wanted to say, that's a great story, and you should tell it often.

ergocoder• 4 years ago

This sounds like a worse way of doing a layoff. It specifically worked for you in your situation. I doubt it would work for anyone else.

ImPleadThe5th• 4 years ago

I heard some horror stories from some managers that have since left.

They were not told that there would be any layoffs, and when their employees came and asked them what it was all about there was no support from the top so they had to just tell everyone "I don't know". What an awful position to put people in.

redleggedfrog• 4 years ago

Well, that's some seriously incompetent management. Thing is, when these reports get out and later I'm assessing tech to potentially use I go back in my head "Oh yeah Klarna - incompetence. Moving on."

rvz• 4 years ago

I mean the warning signs of the overvaluation and hype around Klarna was there ever since a private early investor unloaded their shares on to retail via an online investment [0] [1] platform at $45B, last year December. [2]

Those 6,000+ retail investors who FOMOed and bought in are now down more than 80% of their investment due to the down-rounds, with the private early investor escaping and banking $8 million. So it is no surprise that the layoffs had to happen especially with the recent rate hikes which are accelerating the costs at Klarna.

[0] https://www.crowdcube.com/cubex/klarna

[1] https://milled.com/navia/klarna-pitch-is-launching-tomorrow-...

[2] https://www.thetimes.co.uk/article/online-investment-platfor...

rconti• 4 years ago

Garden leave is when an employer requests that an employee, upon submitting their notice, need not return to the office. This is a type of absence where an employee is asked not to work during their notice period, in anticipation of their departure, while still being kept on the payroll.

https://www.personio.com/hr-lexicon/garden-leave-uk/

nibbleshifter3• 4 years ago

Usually they kill your VPN/email/AD access as soon as you hand in your notice.

You can also be put on gardening leave when you are fired, if there's a notice period there.

rightbyte2• 4 years ago

So ... handovers is not a thing at Klarna?

esel2k• 4 years ago

Isn’t garden leave agreeing that you won’t work for the competition? Or is it even saying not working at all, not even in an unrelated job?

If I had a job the next day I might just enjoy two salaries. Would this be blocked by a garden leave agreement?

throwaway36756• 4 years ago

I worked at Klarna between 2011-2013 as a software engineer and later as a team manager. I was laid off in a very similar fashion at the same time a bunch of others also got the same surprising news.

When it happened to us there was no announcement from the CEO. Sebastian had actually just gone on parental leave and one of the co-founders, Niklas Adalberth had taken the reigns.

At the time, my suspicion was that it was because Niklas Adalberth was getting rid of people he didn’t like and that the main reason my firing in the way it was done.

I was invited to an external meeting room at 17:00 in the Stockholm office with my boss and my boss’s boss, where they proceeded to tell me “we think we need someone else in your position”.

My boss looked helpless and sat quietly the whole time. My boss’s boss did all the talking and seemed just like someone following orders.

Reading this now it’s sad to see how nothing has changed at Klarna and makes me think that even if Niklas did had something to do with my firing that it couldn’t have happened without Sebastian’s knowledge and approval.

My experience of Sebastian was that he was a talented product guy, but unfortunately seems to leave a lot to be desired as CEO.

doktorhladnjak6• 4 years ago

What happened to you is not a lay off. You got fired!

Aradalf• 4 years ago

It sounds like you were fired, not laid off.

dudul2• 4 years ago

Doesn't sound like a lay off to me, you were just terminated and let go. When you lay people off you don't replace them, you eliminate the position.

ygram2• 4 years ago

I have never understood why health ensurance is handled by the employer in the US, why don't people buy private health insurance instead? It feels insane to put yourself in that kind of dependency on your employer.

whichdan• 4 years ago

Employers cover a majority of the cost of insurance. In Boston, I pay maybe $70 every 2 weeks for health insurance, but on the private market I'd be paying 5-10x as much for worse coverage.

ygram2• 4 years ago

Do people ever try to negotiate higher salary instead of health endurance from employer and then have a private one instead?

drc500free2• 4 years ago

Private insurance can be thousands of dollars a month, so before Obamacare it was a pretty niche thing. It still kind of is, because for professional jobs the expectation is a massively subsidized health plan. Voluntarily paying an extra $1500/month for the independence of not relying on your employer is not a choice most people would make.

petsormeat• 4 years ago

Private health insurance can be extremely expensive, especially if you have a chronic illness, or are over age 40. I buy my own as a freelancer; the monthly premiums for even a basic plan are extortionate. There are government subsidies for lower income people, but many tech freelancers earn too much to qualify.

Izkata• 4 years ago

Around the Great Depression, in an effort to get control of inflation, the 1942 Stabilization Act was passed. Because employers could no longer attract new employees by offering higher pay, they started offering other things like health insurance. Since it was payed directly by the employer it wasn't taxable income and didn't fall under control of the Stabilization Act, and since then it just stuck.

drdec• 4 years ago

If I am not mistaken, WWII was a bigger driver for that legislation than the Great Depression.

lumost7• 4 years ago

Note: 1942 is the middle of ww2, not the great depression. The war effort dramatically reduced labor availability. (back of the napkin math says roughly 12% of the US population served in the military, disregarding the massive labor pool required to support the military industrial complex)

tryptophan• 4 years ago

If EMPLOYER pays you 10k and you want to buy a plan for 5k, you first have to pay taxes on the 10k, lets say 20%, so you have 8k - 5k = 3k left over.

The employer can just buy the 5k plan for you tax free, and pay you 5k instead. This means you have 4k left over after tax! This is because healthcare plans are not taxed if provided by the employer.

Incredibly retarded, yes, it is.

lumost7• 4 years ago

Why isn't this just tax deductible?

doktorhladnjak6• 4 years ago

Employers also often get better pricing on insurance for their employees because the pool is less risky overall. Those buying health insurance on the private market are more likely to have health problems and need it. Lots of healthy, young employees with limited health problems at tech companies.

eschneider• 4 years ago

It started that way because it got around WWII-era wage caps and it remains advantageous because it gets paid for with pre-tax dollars. (Which isn't, I know, carved in stone. But that's the way it is atm.)

kolanos• 4 years ago

Most employers subsidize, in part or in whole, employee health insurance as a part of their benefits. Private health insurance is very expensive. [0]

[0] https://www.ehealthinsurance.com/resources/individual-and-fa...

dudul2• 4 years ago

It is indeed a stupid system. Private insurance is very expensive compared to the premium you usually pay when you're covered by your employer's plan. Employers can negotiate better prices because they bring a pool of insured to the insurance carrier. An individual doesn't have the same leverage.

jarym• 4 years ago

this approach was the fairest option for all

I have heard this line a few times for HR recently and it makes me cringe every time. Putting everyone in the same shitty boat is never fair. Takes me back to George Orwell’s Animal Farm every time!

status200• 4 years ago

It is unfortunate that people lost their jobs, but is anyone else not upset that a "buy now, pay later" company is struggling? They are exacerbating consumer's reliance on credit and causing some reckless spending, I personally believe they do more harm than good.

no_wizard• 4 years ago

I don’t understand why companies do these scale up things. Hoard your cash and wait it out a stint before making major moves. Don’t hire fast hire smart.

If you are in a money problem environment maybe start with transparency and freezing of things like hiring? There just seems to be 100 better ways to approach this

alkonaut2• 4 years ago

Should be noted that employment in Sweden is as far from “at will” as you can get. There is basically no legal difference between a union worker at a paper mill and a software developer at a startup (once it reaches a certain size). The law basically says that the last one in must be first out, and sidestepping this order requires negotiating severance with unions (yes also for white collar tech workers). So if you need to reduce headcount by 10% it’s going to be cheap if you fire the 10% most recent hires. If you want yo choose the 10% to cull it’s going to be expensive. The compensations in the article don’t look very generous at all.

rsanek2• 4 years ago

It seems like the article is saying that the fact that there isn't a union is actually a big help in the ability to do this kind of lay-off.

Swedish companies must negotiate with unions before layoffs. However, this was not the case at Klarna, nor is it the case at most Swedish tech companies. Klarna does not have a collective bargaining agreement (called “kollektivavtal” in Swedish) in place. This means that Klarna as an employer is not forced to negotiate layoffs with a union. Instead, Klarna is entitled to negotiate directly with each affected employee, which they are doing.

Klarna is also pretty big (7500 employees according to the article) so I imagine it doesn't have to do with the company size.

mongol• 4 years ago

I never heard this before. I thought unions were always involved, regardless of kollektivavtal or not. Would like to hear from a Swedish expert on this.

alkonaut2• 4 years ago

Yes exactly, If there is no collective agreement then it’s simpler: the law applies. It’s the law that says you fire the last hire first.

To sidestep it then just requires bargaining with the individual rather than a union.

dymk• 4 years ago

The article makes it sound like this is a suggestion, not a requirement, for layoffs

Kiro3• 4 years ago

"Last in, first out" is stipulated in law but you can still negotiate, which means the employee themselves quit and get compensated for it.

throwaway8593833• 4 years ago

I still currently work at Klarna.

The article is a very good write up of what happened. I'm going to talk about what the current internal situation is and how people are feeling based on what I'm seeing.

Since the layoffs there has been a noticeable shift in atmosphere. Previously quite a few people would regularly come to the offices, now not so much. Some still do come but significantly less. Performance has gone from people often going beyond what was expected to "I'll do enough to keep my job". A colleague who was previously very keen working for Klarna and would often work a good 11 hours+ is now "disenchanted" and doesn't quite know what to do with themself.

Job satisfaction and overall happiness has rapidly declined and is still going down. Some departments do internal anonymous surveys where people outright get asked if they are happy at work. From the ones I saw, every single one had a drop of at least 20%, some significantly more. Participation rate of those surveys has also declined. Most people I spoke to outright said they're not participating anymore because they're on the way out.

A good 50% of the people I asked, outright said they are looking for a new job. I expect some are not sharing because they want to keep it a secret. I'm expecting my team to loose about 40% of its members within the next 5 months. As far as I know, there is only replacement hiring, no active hiring.

One of my very talented colleagues that I have been working with for 3 years got laid off. During a chat with our direct supervisor I asked them if they could tell me the reason. Trying to reassure me, they said I had nothing to worry about and that my colleague wasn't fired for poor performance but other internal reason. I knew this colleagues salary so I also know they weren't let go because of their high salary. Since then my team has an open position that is hiring for this exact role. Make of that what you will.

As you might have read from the article, communication was absolutely horrendous. One of the key things I'd like to mention is that Klarna always promoted open and frequent communication. Only this was never practiced by the C-Level. This was incredible apparent during the layoffs. Many people had questions but C-Level was dead silent and let HR people "manage" the fallout. My colleague had their meeting at the start of the working day on Tuesday (layoffs were announced the day before). My supervisor got told of the layoff 15 minutes before my colleagues meeting. Informing my supervisor was done through a 3 sentence slack message.

2 weeks after the announcement, quite a few pregnant women came forward that they also received an offer. Additionally, a lot of people on long term sick leave were contacted. Since the layoff decisions weren't made centrally, I doubt these groups we're specifically targeted but Klarna is, in comparison to the average Swedish company, quite international. I know of at least one case from a decision maker (not C-Level) that a woman was laid off because she was 8-months pregnant and due to go on her maternity leave. I'm not going to speculate on what, if any, legal actions are following from this.

akudha2• 4 years ago

One of my ex-colleagues simply quit one day - no emails, no notice...nothing.

Another one of my ex-colleagues told me he was doing two jobs, but only working 8 hours in total per day, if that.

Then COVID layoffs happened. In the first case, the company simply turned off the logins - it was their way of laying people off (one laid off guy had been with the company for 15 years, another one had health issues and needed the insurance). In the second guy's case, they told him one Friday afternoon that it was his last day. We were in different teams at the time, but neither of us had any work, despite asking our respective managers for work daily. He got frustrated with having no work and took another job. Also, it took them three more months to give us the last two paychecks (for two months).

Both times, I thought my colleagues were nuts and were unethical - doing second job, not giving notice etc just felt ugly. Now I feel different. If employers treat employees like crap, why should any employee show any loyalty? When my colleague was laid off, he didn't care, as he was already had another job. I on the other hand, spent the next month looking for one.

In every contract job I worked, the first thing they say is "you can (and should) work more than 40 hours if we need you to, but you can only bill us for 40 hours".

If this is the treatment in a sophisticated, (relatively) high paid industry like software, I wonder how people are treated in service industries, retail etc. No wonder so many workers are striking and trying to unionize... Maybe it is time for software developers to unionize too

tialaramex• 4 years ago

In Europe (I work in the UK) it's usual to require that both sides commit to the employment on a rolling basis. My contracts have for over a decade now required roughly 90 days, but it's common to see 30 days in most jobs.

That means if I want to leave I need to give 90 days notice and if they don't want me any more I get 90 days notice of that or I get 90 days pay immediately.

This also leads to "Garden leave": https://en.wikipedia.org/wiki/Garden_leave

As I understand it Garden Leave is not uncommon in the US... for executive level jobs. The guy cleaning the hallways is lucky if they remember to tell him not to come in tomorrow rather than just locking the doors and not paying him any more.

SahAssar2• 4 years ago

the company simply turned off the logins - it was their way of laying people off

In a lot of countries this is illegal, you need to prove a cause for firing anyone. One of the reasons klarnas firings in Sweden have been controversial and complicated is that they specifically tried to sidestep that by "firing people" by getting them to resign and accept a deal. They would not be able to just outright fire people without negotiating the terms, and those terms are usually based on a LIFO queue.

One of my ex-colleagues simply quit one day - no emails, no notice...nothing.

Some people don't want to leave with fanfare, but notice is basically required in sweden (again, using sweden as a comparison since the thread is about klarna).

Another one of my ex-colleagues told me he was doing two jobs, but only working 8 hours in total per day, if that.

If they were dishonest about that then that does not look great IMO. If they weren't and both companies were fine with it then it seems OK.

jyriand• 4 years ago

Why do startups(tech companies) need so many employees? My first thought is that because of the rapid growth startups are plugging inefficient holes with more brains.

kqr• 4 years ago

Since this is presented as a voluntary separation agreement for the Swedish staff -- does anyone have information about what happened to those who went, "thanks but no thanks"? I assume they have to be let go in LIFO order, which ought to give them more time to get their affairs in order.

xkbarkar• 4 years ago

Almost reads like a detective story as if not only mass layoffs, but poorly managed ones are unique to Klarna. Feels like the author has not really understood how incredibly common mass layffs as a tool for keeping profit margins really are.

Layoffs sucks no doubt but I cant say I feel as "outraged" as the author seems to intend. My current employer cut 10% of the workforce about 3 years ago (1800 ppl).My preevious one did that twice (about 3500 people in total). Another former employer would cut 2-3% every other month or so. Then go on a hiring spree, and then cut again.

Laying off 5% every year Microsoft style because of a crazy in house performance review system, now thats a news worthy evil story. This is just standard bad management vs profit margin not really interesting.

Yea Sweden, it happened to you too. Welcome to the club.

literallyWTF3• 4 years ago

Lol wow. What a complete shit show. Gotta love when a billionaire also shits on unions.

And still people in this industry will forever think that unions are a waste of time.

koinedad• 4 years ago

Clear communication is not easy…

samcrawford• 4 years ago

The same author has been reporting diligently on Pollen, and has said he will do a write-up on the collapse there. I will be very interested to read that.

SahAssar2• 4 years ago

Got some links? A quick search of the blog turned up nothing besides a quick mention here: https://blog.pragmaticengineer.com/pragmatic-engineer-test/

tomduncalf• 4 years ago

It was on his Twitter AFAIK, for some reason Twitter search wouldn’t find it but here is the thread! https://mobile.twitter.com/GergelyOrosz/status/1557841469674...

justin66• 4 years ago

The CEO said employees at Klarna are superstars, and superstars don’t want unions negotiating for them.

Actual superstars are happy to take advantage of what the Screen Actor's Guild does for them, just as the crew working on their shows are also happy to have their union, the writers are happy to have their union, and so on.

m8s• 4 years ago

Buy now pay later schemes are usually really terrible ideas. Companies like Klarna and Afterpay should be avoided at all costs. Often the loan repayment schedules are intentionally confusing and predatory.

Here’s a relevant You Need A Budget podcast episode for those looking for more on this topic: https://open.spotify.com/episode/0Z9NQoseq5nvutAInURR2r

Cornelius267• 4 years ago

The Venn diagram of C-levels who are willing to work at a company with an inherently predatory business model, and those who will lay people off and screw them over is basically a circle.

It is impossible for someone who leads a company like that to be a good person. Why would anyone be surprised at them being heartless to their employees?

Maro2• 4 years ago

I feel for the people who were layed off, esp. ones who just left their previous jobs and/or relocated. One thing as an employer I would never do (if it were my call) was to lay off somebody who just recently joined/relocated [unless there are already performance problems]. That's just a shitty thing to do, at a human level.

Putting that aside (since all tech companies will lay off new joiners), I don't think this story points to any (cultural) problems at Klarna.

Layoffs are always tough and people will be unhappy. Based on the timelines presented in the article, everybody knew within 1-2 days whether they are affected or not, and affected people got a good severance package. By "good" I mean more than Klarna had to pay based on the law, based on the article.

It's important to remember that 99% of working people in the world would not get this deal in a layoff.

I think we (tech workers) need to stop expecting to always be treated as unicorn snowflakes (esp. in the current market conditions).

doktorhladnjak6• 4 years ago

I’ve been through several tech layoffs. I can’t think of any case where new joiners were targeted. It was always some combination of performance and cost (either personal pay or an entire group being less profitable).

Maro2• 4 years ago

Based on my reading of the article, Klarna didn't _target_ new joiners, they were just part of the unfortunate mix.

jupp0r• 4 years ago

Seems like a poorly executed layoff. I’ve seen a few of those in my previous job. Things like an SVP of Product congratulating the machine learning team for an awesome alpha demo and asking when we would be ready to ship this to customers. The answer he got was that it would never get to customers because he laid off the whole team the day before.

drakonka5• 4 years ago

I was actually surprised to read that the Swedish CEO "took a dab at unions". Sure, relationships with unions can be complicated, but I've never heard an employer talk negatively about them here (maybe I'm just sheltered?). I am used to seeing union reps come to the office a few times a year for Q&As and feedback sessions, and taking about union membership was normal in internal channels. Never heard of anyone in leadership batting an eye (heck, they were likely also union members). Being hostile to unions seems like a normal thing for some other parts of the world, but seeing a Swedish employer talk like this about union membership here immediately leaves a bad taste in my mouth about the company. It's a red flag.

Unfortunately it can take a while for employees who have relocated to Sweden to consider joining a union. It took me about a year or two after moving here to realize it was a thing, and such a normal thing at that. I can imagine that Unionen et al would have gotten more than a few phone calls from Klarna employees asking for advice during/after this whole thing.

Ekaros2• 4 years ago

At least in Finland the tech unions are mostly toothless. They might help you with a lawyer if it is certain that employer screwed up. And any actions taken are very light, in lines of we recommend you not to work overtime... And maybe day or two of walking out... And then finally capitulate for minimal pay increase...

drakonka5• 4 years ago

Swedish unions aren't perfect for sure, but so far I've only had positive experiences myself. I've luckily never had an actual conflict at work to bring my union in over though, so the extent of my experience has been calling them for general advice and getting an extra week of vacation as part of a collective agreement. I've also heard a few stories of coworkers bringing in union reps when they felt they were being pushed out on unfair terms and negotiating much better severance packages.

Kiro3• 4 years ago

From my experience, it's not very common in tech companies in Sweden. They often lack collective agreements and in the last company I worked at I never heard anyone talk about it or say they were a member.

drakonka5• 4 years ago

The only companies I've worked for in Sweden have been tech companies, and union membership was very common. At EA we had a collective agreement, along with some other larger games companies here iirc. Many people are members but don't mention it unless it gets specifically brought up since it's such a non-event.

Edit: Was curious to find some numbers about this. I don't read Swedish fluently yet so having to use Google Translate, but one report I found from 2020 says that "Information and communication" (which I suspect IT/software engineering might fall into) has 69% membership [0]. It seems to say white collar workers actually have a higher membership rate than others at >70% overall; will look some more and add any other numbers I can find.

[0] - (page 13) https://www.lo.se/home/lo/res.nsf/vRes/lo_fakta_136602747878...

rightbyte2• 4 years ago

I was actually surprised to read that the Swedish CEO "took a dab at unions"

My impression is that he wants to be like the cool kids on the other side of the Atlantic. Meanwhile the Engineering union and Bankers guild are suing Klarna for the way the layoffs are being done. Maybe they are pissed. Dunno.

jdasdf2• 4 years ago

Have you considered that this:

Being hostile to unions seems like a normal thing for some other parts of the world, but seeing a Swedish employer talk like this about union membership here immediately leaves a bad taste in my mouth about the company. It's a red flag.

is the reason for this:

I was actually surprised to read that the Swedish CEO "took a dab at unions". Sure, relationships with unions can be complicated, but I've never heard an employer talk negatively about them here (maybe I'm just sheltered?).

drakonka5• 4 years ago

Could you please clarify your point? I presented the first two sentences you quoted as an elaboration on why the Swedish CEO taking a dab at unions was surprising to me, so yes it is indeed a reason. I have a feeling that's not what you meant though?

ilrwbwrkhv• 4 years ago

Klarna is another one of these businesses like affirm which should not exist. Propped up using VC money, it will all come crumbling down. What a disaster. Shopify also got caught up in this mess by investing in all this. A lot of Shopify's revenue came when Klarna went public instead of product and merchant revenue. Everything burning down.

mise_en_place• 4 years ago

These articles are a good reminder that everyone is expendable at a company. Plan accordingly and remember that income is way more important than net worth.

travisgriggs• 4 years ago

I admit that I was barely aware of this apparently largish company? I'd heard the name Klarna before, but knew nothing of it.

And yet, I found myself reading this in a riveted fashion. Why is that? Is it just the macabre nature of humans to slow down when passing accidents? My anxiety about how the little guys world can suddenly be turned upside down? I'm honestly intrigued why I couldn't quit reading this.

CRConrad3• 4 years ago

TFA:

There’s few better adverts for unions than a CEO condemning them, while wielding the ax on people’s jobs.

Heh. Yeah, bit of a footgunning, that.

CRConrad3• 4 years ago

From Forbes article[1] linked in TFA:

Headwinds for the 17-year-old startup started before the war in Ukraine sent a chill through public markets.

WTF does the word "startup" even mean, if it can be applied to something that's seventeen years old?

___

[1] https://www.forbes.com/sites/iainmartin/2022/05/28/klarna-ch...

The layoffs at Klarna

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