Dennis Vissenberg

No ratings yet.

The Swedish payment app Klarna advertises itself with slogans such as “Pay later with Klarna” and “give more people access to amazing live experiences”. Klarna decreases the barriers of the access to “pay later” services, by focusing on the purchase itself and offering several ways to defer the payments.

Benefits of Klarna

The main benefits of the app for consumers are that it gives them more flexibility in their spending when they are on a tight budget and they get a full refund in case of return or cancellation. There are multiple reasons why Klarna is interesting for businesses. Firstly, Klarna ensures the upfront full payments. Businesses do not have to invest time and money in getting delayed payments for their products. Secondly, a higher value per order is realized. As consumers experience less resistance in the buying process in the moment, they are more likely to buy more. Klarna itself even incentivizes shopping more through its rewards club Vibe. Thirdly, Klarna ensures businesses do not lose any money in a transaction, by offering credit risk and fraud protection.

Disruption in the industry

Currently, Klarna is valued at $11 billion. According to Klarna’s CEO Sebastian Siemiatkowski, the company was able to grow rapidly in the past few years because the payments industry was full of opportunities due to several reasons. First, the industry deals with outdated technology. Second, incumbents have lost focus.

Klarna’s main competition is the incumbent Paypal. Unlike Christensen’s disruptive innovation model, the incumbent did respond instead of the usual unresponsiveness of incumbents. The fact that senior PayPal executives expressed their anxiety over Klarna, indicates market awareness from the incumbent. PayPal’s response was the introduction of PayPal Credit, which in essence tries to provide the same service Klarna is offering, but with more restrictions.

Warning

One of the key components of Klarna’s strategy is to change how people talk about spending their money. I personally believe the rise of companies like Klarna is alarming since it practically promotes having debts as nothing to worry about. It should be the other way around, where people are heavily discouraged from having debt. As Peter Tutton, the head of policy of the debt advice charity Stepchange states: “Selling credit is quicker and easier than it’s ever been, but quick decision-making when it comes to credit is not necessarily a good thing. Credit should never be marketed as a flippant thing or something easy and convenient”.

What do you personally think of Klarna? Should it be allowed to gain more influence, or should similar services be prohibited? Let me know in the comments below!

Sources:

https://www.ft.com/content/c52d466b-40c2-4114-bfed-20dc54c8d97c

https://www.klarna.com/us/what-is-klarna/

https://www.stepchange.org/how-we-help.aspx

https://www.forbes.com/sites/parmyolson/2018/09/07/how-klarna-ceo-sebastien-siemiakowski-went-from-flipping-burgers-to-building-a-25-billion-business/#384bca041549

4.8/5 (5)

Professor Li mentioned that Moore’s Law is continuing and that there is no sign of stopping. However, this depends on which angle you are looking at things. Considering the generally accepted definition of Moore’s Law, it is stated that in 1965, Gordon Moore proposed that the number of transistors on a silicon chip would double every year. Because of this, we have experienced an exponential growth of computing power that has made much of the technology of today possible.

Change from the focus on hardware to software

For over the past 50 years, the focus has been on the physical side by reducing the size of transistors. Currently, the industry has accomplished making the transistors as small as 10 nanometer, which is so small that new complications have arisen. The research and development departments are dealing with electrical leakage, increased generated heat, and expanded cost of cooling. These problems are the main causes of contributing to the slowing rate of growth in processor power. It is estimated by several experts that Moore’s Law will end around 2025 because transistors will have reached their physical limits. Will this mean that technology advancement is all gloom and doom?

Not necessarily. Because it has been relatively easy to focus on increasing processor power by expanding the number of transistors on a single chip, there never really was any incentive to optimize performance out of a single chip. As the human species naturally seeks continued advancement, I believe that pushing more performance out of the same single chip will become much higher of a priority. This could translate to better algorithms, to optimize both efficiency and speed. We simply do not have a choice. How much and for how long this switch will lead to improved performance remains to be seen.

How do you think Moore’s Law will be continued? What are your predictions regarding the impact of switching to a software focus for Moore’s Law?

Let me know in the comments below!

References:

Rotman, D. (2020). We’re not prepared for the end of Moore’s Law. Retrieved on 10 September 2020 on https://www.technologyreview.com/2020/02/24/905789/were-not-prepared-for-the-end-of-moores-law/

Loeffler, J. (2018). No more transistors: The end of Moore’s Law. Retrieved on 10 September 2020 on https://interestingengineering.com/no-more-transistors-the-end-of-moores-law

Moore, S., K. (2019). Another step toward the end of Moore’s Law. Retrieved on 11 September 2020 on https://spectrum.ieee.org/semiconductors/devices/another-step-toward-the-end-of-moores-law

Bailey, B. (2018). The impact of Moore’s Law ending. Retrieved on 11 September 2020 on https://semiengineering.com/the-impact-of-moores-law-ending/

Tardi, C. (2020). Moore’s Law. Retrieved on 12 September 2020 on https://www.investopedia.com/terms/m/mooreslaw.asp

Klarna, the “buy-now, paying later” service

10

Please rate this

Moore’s Law from a different perspective

13

Please rate this