I've heard about this company called Klarna[1] a few times, and each time it's made me more and more pissed off. So I thought I'd dig into it a bit and explore why.
Klarna's primary value proposition is that you can pay for anything in four payments. By anything, they specifically mean consumer non-essential goods, primarily clothing.
Already, we've come upon the main issue. If you have to pay for shoes in four payments, you can't afford those shoes. That's it. There are cheaper shoes you could buy, but instead you're opting to purchase shoes that are so expensive it would be a financial burden for you to afford in a single payment. Shoes. Not a car, or a house. But shoes.
Maybe I'm misrepresenting what people are actually buying through this service. But I don't think so. If the marketing page is anything to go by, the sort of people using Klarna are female, millennials, and live in cities. The style is that iconic shiny-plastic-fake-gold-chain-bedazzled-rubber-pleather-fur-covered-rainbow-puke look. They pay $3000 a month for an apartment with a few roommates, swing by Starbucks or the local boba shop between their visits to socially-concious art galleries, socially-conscious clothing stores, socially-conscious bunch spots, and their socially-conscious job at a socially-conscious sort of company. What are they buying? Clothes, $250 shoes, makeup, furniture, Bluetooth speakers. All at a price that would normally be way out of budget after the rent, boba, organic avocado toast, organic wine, organic vegan cruelty-free makeup, and Amazon, Netflix, NY Times, Hulu, Spotfiy, Apple+, and Uber One subscriptions. Not a prob, they've got Klarna.
So what does the company itself think about all this? According to their 2021 year-end report[2] to their investors:
Let’s set the record straight once and for all.
Consumers should first and foremost pay with money they have. Period.
Interesting considering the heading on their marketing site is:
Pay in 4. Anywhere.
Split any purchase into 4 interest-free payments. Online or in-store, it’s easy with Klarna.
They continue in their report:
Our extensive research and interviews with consumers finds that with those suffering persistent debt, most often there is sadly a broader addictive behavior that sits at the center of those consumers’ situations. The majority of their debt will be with high-cost credit cards, unsecured loans, payday lenders etc. In addition to that they will most often have overdue electricity bills, phone bills, rent. Since Klarna never lends cash and the outstanding balance on average is USD 100, when consumers find themselves in debt, the amount owed to Klarna represents about 2% of their total debt.
Ok good, so some of their customers are perpetually in debt and exhibit a "broader addictive behavior" but we're still cool with building a service for them that... allows them to continue their addictive behavior? But it's okay because it's not that much money?
Helping someone continue their addictive behavior at a small scale is still helping them continue their addictive behavior. You can't just pretend that since you're not lending much money you're not contributing; if someone is $5k in debt because they're addicted to buying useless crap, then your service that lets them buy more useless crap is contributing to the underlying behavior.
I was going to continue on with one of their recent marketing videos[3] in which a rich guy walks bored and unsatisfied around his penthouse with rows and rows of suits and shoes wrapped in plastic, goes out to buy some chips, gets bullied by everyone for not wearing nice clothes, then buys some new nice clothes with Klarna to appease them. Not entirely sure what the feel-good message was there, but the visuals were certainly vomit-inducing. And then I was going to break apart Klarna's sustainability report[4] which includes such juicy lines as
At Klarna, we acknowledge that we’re part of the problem, and that’s why we want to be part of the solution
and
We make donating to the causes they care about frictionless, promoting planet health nonprofits that have been carefully vetted and sourced. So you can make an impact with just the click of a button.
and include such images as
Bit of a tricky situation when you're a socially-and-environmentally-conscious company but your entire aesthetic is based on plastic, pleather, fake gold, and rgb puke. Anyway, I'm done now, point has been made.
At what point does a company become so clearly detrimental to society that it's fair to say that its existence is a net negative to the world? This is quite honestly the first example that seems pretty clear-cut to me. And yet people... love it?
Maybe I'm the insane one here.
Last updated Mon Apr 18 2022 in Berkeley, CA
2: https://www.klarna.com/assets/sites/15/2022/02/27195201/Klarna-Full-Year-Results-2021-EN.pdf
3: https://www.youtube.com/watch?v=Funrra4WcUs
4: https://www.klarna.com/international/sustainability/
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