Inside the Layoffs at Klarna

The FinTech company valued at $45B laid off 10% of its staff. How did it happen, and what can other companies learn from this execution?

Late last month, midday, Monday, May 23rd, employees at Klarna were growing increasingly nervous. In the early hours of the morning in Europe, an all-hands meeting had appeared on the calendars of all ~7,500 employees. Attendance was mandatory. A few minutes later, this invite vanished.

Employees I have talked to told me they felt something was not right; this kind of notification simply disappearing had never happened before.

Two hours later, the same meeting reappeared, with mandatory attendance at 4pm in Sweden, 10am on the US East Coast. Employees told me that dread and speculation spread fast, with people unsure if it was bad news or just business as usual.

The mandatory meeting turned out to be very bad news. In a pre-recorded video message, Klarna CEO Sebastian Siemiatkowski announced Klarna would lay off employees. On the call, he didn’t mention numbers, only that “the vast majority will not be impacted” and that those impacted would receive emails soon.

After the meeting ended, an article was posted on one of the main Klarna Slack channels; it was published by Techcrunch and went live during the video call. Most employees learned from this article that Klarna was laying off 10% of staff, about 700 people.

In the two weeks after the layoffs, I talked with more than 30 current and former Klarna employees to understand how the layoff was executed, how it has impacted people, with an emphasis on those working in tech like software engineers and engineering managers.

This issue walks through how the layoffs happened, takes a pulse of how people are feeling and reflects on the ‘good’ and ‘bad’ of these layoffs which other companies can learn from. We cover:

1. The pay cut of 2020 which became permanent

2. The road from a $45B valuation to layoffs

3. Layoffs: Day 1

4. The night of dread for many Klarna employees

5. Layoffs: Day 2

6. Layoffs: Day 3 & the Q&A

7. Taking stock and the current mood

8. Takeaways: the ‘good’ and the ‘bad’ learnings from how this layoff was done

A recurring theme of this round of layoffs was poor internal communication. Employees tell me that struggles with internal communication started much earlier, and a major internal event in 2020 whose consequences continue to be felt today.