The Swedish fintech Klarna moved away from its roots among Europe's early adopters of artificial intelligence (AI) in customer experience (CX) in the lead up to its initial public offering (IPO) on the New York Stock Exchange (NYSE). Klarna priced its IPO above range and opened at US$52, above expectations.
Klarna's IPO pops at US$52
The buy-now-pay-later company raised US$1.37 billion, and its IPO signals a greater trend on Wall Street: Increased demand for tech listings, according to CNBC. Although the IPO opened at US$52, it settled down to US$46 by mid-day.
"This moment feels surreal. When we started Klarna back in 2005, it was just a wild idea - me, [co-founders] Niklas [Adalberth], and Victor [Jacobsson] fumbling around, trying to make shopping and payments smoother for people," said Klarna CEO Sebastian Siemiatkowski, according to TechCrunch. "We got rejected left and right, laughed at more times than I can count. But we kept going...Going public in New York is huge. It's not just a milestone; it's a statement. It's proof that a bunch of stubborn dreamers from Stockholm can take on the world - and win."
Klarna reconsiders its investment in AI in CX
Ahead of the IPO, Klarna took stock of its strategy when it came to AI. The company reduced hiring and laid off employees in favor of AI. At one point, Klarna reported that its AI assistant had taken on the job of 700 human customer service agents. However, Siemiatkowski has admitted that it went too far and the AI service was a "lower quality," according to numerous reports citing Bloomberg. As a result, Klarna is rehiring human agents.
Reuters reports that Siemiatkowski may have gone too far in using AI to cut costs and is now focusing on improving its services and products:
"Klarna has cut thousands of jobs, dropped vendors such as Salesforce Inc., opens new tab and turned to AI to create marketing campaigns, saving millions but now realizing it went too fast, too soon. 'We probably over indexed a little bit on that, and then in the last six months we have been trying to course correct,' Siemiatkowski told Reuters from New York."
Becoming traditionalists
Companies that are known for customer experience might see this attempt at going all in on AI as a failure. But Siemiatkowski has said that the company still will use AI but will off more of the human touch to improve customer satisfaction. The goal is to have customers be able to reach a human agent if they would prefer it to a bot.
Many organizations tend to be traditionalists once they execute an IPO. Klarna is 20 years old, and it appears to have vanquished AI fever. Now, the company seems to have a similar goal of many other big businesses: Wisely invest in AI in CX by balancing the human touch with the application of machines and automation.
In the meantime, the IPO comes at a time of other recent high-profile listings, including Circle and Figma. Another company known for CX, retailer Shein, keeps putting in failed bids for an IPO. When CX Network reported on Shein's initial interest in an IPO, it reported on the impact of a public listing on CX:
"In short, a public listing brings many more stakeholders to the table, which heightens the focus on financial performance and often overrides considerations around employees, culture and customer centricity."
For now, however, Klarna's Siemiatkowski explained to CNBC that an IPO does not change the business as a whole.
"To me, it really just is a milestone. It's a little bit like a wedding," he said. "You prepare so much and you plan for it and it's a big party. But in the end - marriage goes on."
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