I Run an AI Company. Here’s Why Blindly Replacing People Is a Mistake

Recently, Klarna made headlines — not for a breakthrough, but a retreat. After replacing 700 customer service agents with AI to save costs and boost profits by $40 million, the company admitted the move hurt service quality and began rehiring humans to fix critical gaps. This isn’t just a tech story; it’s a leadership lesson about balancing innovation with real-world impact.

As the founder and CEO of an AI-first company, I get the pressure to move fast, scale big and cut costs. My team lives and breathes that every day. So Klarna’s course correction didn’t surprise me — it underscored a key truth: there’s a difference between deploying AI and truly integrating it. Getting that wrong can cost you more than money — it can cost trust.

Efficiency isn’t the only goal

Sure, efficiency looks great on paper. Klarna saw faster resolution times and lower overhead. But when saving money becomes your north star, you risk breaking the very customer experience that drives your business. AI should be introduced thoughtfully, step by step, earning its place alongside human insight, not replacing it outright.

At Phantom IQ, we call this “stackable efficiency” — small improvements layered over time, always grounded in how customers actually experience your service. One task improves by 2%, then another ten — soon you’ve got exponential gains that truly scale.

Cutting your team overnight to save costs isn’t innovation. It’s a shortcut. And shortcuts in AI nearly always lead to costly course corrections.

Related: Is Your Relentless Pursuit of Efficiency Actually Hurting Your Business? Here’s How to Tell When You’re Taking Productivity Too Far

Real leadership means real results

There’s a common AI story these days: announce big plans, scale fast, figure it out later. But flashy headlines don’t build customer loyalty or employee trust.

Klarna’s experience is feedback, not failure. Any AI strategy must be rooted in delivering real value, whether you’re a startup or a global fintech.

We use AI as a co-pilot, not a replacement — surrounding it with human judgment, oversight and context. When AI operates without this, it doesn’t just fail — it hurts your entire system.

How do we make AI work for us?

We scale with intention. When pressure is on, automation can seem like a quick fix—but we’ve learned the hard way: sequence beats speed.

Our approach:

• Avoid AI where things aren’t clear-cut.
• Tie every efficiency gain to a human check.
• Design workflows with AI, test them live, then automate.

This keeps us honest and focused on lasting results.

Culture is your AI foundation

Here’s the hard truth: AI isn’t just a tech upgrade — it’s a culture shift. Deploying it purely to cut costs sends a message: people come second.

That kills trust faster than any bot error. If you replace your team without clarity or reinvestment, you risk more than turnover — you risk your company’s future.

At my company, AI supports the people who make things work. If your team feels threatened by AI, you’re not innovating — you’re risking dysfunction.

Related: 5 Common Misconceptions About Public Relations

What you should take away

Klarna’s story isn’t a warning; it’s a prompt. Think carefully about how you deploy AI. Balance efficiency with empathy. Build a culture where AI lifts your people, not replaces them.

If you’re an entrepreneur without a big tech team, start small. Use AI to shape your strategy, co-create your roadmap and treat it as a partner, not a silver bullet.

The winners won’t be the fastest to automate. They’ll be the ones who lead with clarity, empathy, and foresight.

Leading into the future

AI will keep accelerating. The question is: will you lead with cost-cutting metrics, or with clear vision and care?

Avoid performative adoption. Design smart so you don’t have to backtrack. Fear isn’t tech — it’s skipping the hard work of true integration. That’s where trust breaks and reputations fall. Done right, AI isn’t about spending less — it’s about creating more value. The best leaders understand this, and that’s how they scale for tomorrow.

Because AI rewards not the loudest, but the smartest leaders.

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