Technology
Upcoming two decades on the helm, Klarna’s CEO Sebastian Siemiatkowski is ready to stand his greatest check but
Sebastian Siemiatkowski, CEO of Klarna, talking at a fintech match in London on Monday, April 4, 2022.
Chris Ratcliffe | Bloomberg by means of Getty Photographs
LONDON — Upcoming two decades within the position as Klarna’s CEO, Sebastian Siemiatkowski is ready to stand his hardest check but because the monetary generation company prepares for its blockbuster debut in Fresh York.
Siemiatkowski, 43, co-founded Klarna in 2005 with fellow Swedish marketers Niklas Adalberth and Victor Jacobsson with the effort of taking up conventional banks and bank card companies with a extra user-friendly on-line bills revel in.
These days, Klarna is synonymous with “buy now, pay later” — a mode of cost that permits nation to shop for issues and both defer cost till the top of the future or repay their purchases over a line of equivalent, interest-free per thirty days installments.
However time Siemiatkowski has grown Klarna right into a fintech powerhouse, his entrepreneurial move hasn’t been with out its demanding situations — from going through emerging festival from competitors equivalent to PayPal, Verify and Restrain‘s Afterpay, to an 85% valuation plunge.
However, Siemiatkowski hasn’t taken the ones demanding situations mendacity indisposed and the outspoken co-founder isn’t shy to problem criticisms within the run as much as an IPO that would price it at $15 billion.
‘Mad enough quantity’
In October 2024, CNBC met with Siamiatkowski all over a talk over with the Swedish entrepreneur made to London. For a businessman who’s confronted a rollercoaster trip of ups and downs over his two-year CEO tenure, Klarna’s leading has a quitness breeze to him.
“Independently of all the cycles and everything we’ve gone through with the company, at any point in time I ask myself, do I still think that Klarna can become the next Google in size, that we can become a hundreds of billions dollar market company, or a trillion dollars,” Siemiatkowski told CNBC. “I still am crazy enough to think that’s achievable.”
Once a pandemic-era darling valued at $46 billion in a SoftBank-led funding round, Klarna saw its valuation plummet 85% in 2022 to $6.7 billion as rising inflation and interest rates dented investor sentiment on high-growth technology firms.
But the firm has attempted to rebuild that eroded value in the years that have followed.
Klarna makes money predominantly from fees it charges merchants for providing its payment services, in addition to income from interest-bearing financing plans and advertising revenue.
Financials disclosed in its IPO filing show that Klarna reported revenue of $2.8 billion last year, up 24% year-over-year, and a net profit of $21 million — up from a net loss of $244 million in 2023.
Bullish on AI
After the launch of OpenAI’s generative AI ChatGPT in November 2022, Siemiatkowski quickly pivoted Klarna’s focus to embracing the technology, and especially in a way that could slash costs and enhance the firm’s profitability.
However, Siemiatkowski’s strategy and his comments on AI have also attracted controversy.
Klarna imposed a freeze on hiring in 2023 as it looked to tighten costs. The following year, the company said that its AI chatbot was doing the work of 700 full-time customer service jobs.
Klarna’s CEO then said in August that his company was able to reduce its overall workforce to 3,800 from 5,000 thanks in part to its application of AI in areas such as marketing and customer service.
“By simply not hiring … the company is kind of becoming smaller and smaller,” he told Reuters news agency, adding that jobs were disappearing due to attrition rather than layoffs.
Asked by CNBC about his views on AI and the upset they have caused, Siemiatkowski urged he was once “done apologizing,” echoing feedback from Mark Zuckerberg in regards to the Meta CEO’s “20-year mistake” of taking duty for problems for which he believed his corporate wasn’t responsible.
Doubling indisposed, Siemiatkowski added that AI “already today can do a lot of the jobs that people do — but I don’t want to be one of the tech leaders that stands on a stage and says, ‘Don’t worry about it, there’s going to be new jobs,’ because I don’t know what those new jobs are.”
“I just want to be transparent and honest with what I think is happening, and I’d rather be open about that, because I know what these people, the tech leaders are saying when they’re not on public stages, and they’re not saying the exact same things,” he instructed CNBC in October.
An outspoken CEO
Siemiatkowski is not any stranger to protecting his corporate in keeping with criticisms, particularly when challenged over Klarna’s trade fashion of providing momentary financing for a wide variety of items from clothes to on-line takeout.
Latter time, Klarna introduced a tie-up with DoorDash to offer its flexible payment options on the U.S. food delivery app. However, the move was met with backlash from internet users, who said it risks saddling struggling consumers with more debt.
One X user posted a meme appearing private finance pundit Dave Ramsey with the caption, “what do you mean you have $11k in ‘doordash debt’.”
Siemiatkowski took to X to preserve the walk, pronouncing that Klarna “offers many payment methods” together with the facility to pay in complete in an instant or defer cost till the top of the future along with per thirty days installments.
“DoorDash offers many products beyond food!” Klarna’s boss mentioned on X in keeping with the criticisms. “I know we are most famous for pay in 4. But you can use a credit card at DoorDash as well.”
In 2022, the outspoken entrepreneur stressed out his corporate was once “superior” to bank cards and “extremely recession-proof” later the company laid off 10% of its group of workers.
As Klarna approaches its reserve marketplace debut, traders can be scrutinizing his monitor document and whether or not he’s nonetheless the precise particular person to manage the corporate long term.
Lena Hackelöer, CEO of Stockholm-based fintech startup Brite Bills, is anyone who’s labored underneath Siemiatkowski’s management, having labored for the corporate for seven years between 2010 and 2017 in diverse advertising purposes.
She expressed astonishment for the Klarna co-founder — and driven again on tips that management mismanaged the trade all over the pandemic presen.
“I never thought that they had mismanaged, which is somehow how it was reported,” Hackelöer instructed CNBC in a November interview. “I think that they were just very much focusing on growth — because that was the direction that investors were giving.”
Rollercoaster trip
Siemiatkowski admits the move of creating Klarna hasn’t at all times been rosy.
Requested in regards to the greatest problem he’s ever confronted as CEO, Siemiatkowski mentioned that, for him, shedding 10% of Klarna’s group of workers in 2022 was once the hardest factor he’s ever needed to do.
“That was very difficult because I didn’t predict that investor sentiment would shift that fast and people would go from valuing companies like ours so high and then to something so low,” he mentioned.
“That’s obviously very difficult because, then you realize like, ‘OK, s—, I’m going to have to make a change. It’s not going to be sustainable to continue, and I need to protect the consumers, who are stakeholders in the company, the employees, the investors — I need to [do] what’s right for all of my constituents,” Siemiatkowski persisted.
Klarna is synonymous with the “buy now, pay later” pattern of constructing a purchase order and deferring cost till the top of the future or paying over interest-free per thirty days installments.
Nikolas Kokovlis | Nurphoto | Getty Photographs
“But unfortunately, it’s going to affect the smaller group, which happened to be about 10% of our employees.”
Like alternative tech companies, Klarna grew considerably over the Covid-19 pandemic. In 2020, the company grew its improper products quantity or the overall price of all gross sales processed thru its platform, via 46% year-over-year, to $53 billion.
I believe any individual who’s a modest bit sane, that’s no longer one thing you’re taking shiny hearted, proper? It’s a difficult resolution. It makes you yell. I’ve cried.
Sebastian Siemiatkowski
CEO, Klarna
The corporate additionally onboarded masses of unused staff to capitalize and amplify at the alternative it noticed from executive lockdowns’ have an effect on on shopper habits and the wider acceleration of e-commerce adoption at that presen.
“I think anyone who is a little bit sane, that’s not something you take lighthearted, right?” Klarna’s CEO mentioned, relating to the layoffs. “It’s a tough decision. It makes you cry. I’ve cried.”
Alternatively, Siemiatkowski stood via his resolution to put off employees: “I felt like I had an obligation to my constituents, everyone, all of these stakeholders, the company, and I think it was a necessary decision at that point in time.”
The street to IPO
Now, Klarna’s CEO faces his greatest check but — taking the trade he co-founded 20 years in the past nation.
“IPOs are risky for companies as share prices can fluctuate quickly,” Nalin Patel, director of EMEA personal capital analysis at PitchBook, instructed CNBC by means of electronic mail. “They can be costly and lengthy to arrange with investment banks too.”
Klarna previous this future filed its prospectus to listing at the Fresh York Book Change. The corporate hasn’t but all set a presen for when it’s going to exit nation, nor has it priced stocks.
If it succeeds, the result may catapult the web utility of Siemiatkowski and alternative shareholders together with Sequoia Capital, Silver Pond, Mubadala Funding Corporate, and the Canada Pension Plan Funding Board.
Sequoia is Klarna’s single-largest shareholder with a 22% stake. Siemiatkowski is the second-largest, proudly owning 7% of the trade.
A good IPO result would additionally raise the worth of Klarna staff’ stakes, and doubtlessly spice up morale later a stormy few years for the corporate.
“It’s a balance between finding a fair value for existing investors looking to cash out and new investors seeking a stake in Klarna at a fair price. Overvaluing the company could lead to its valuation falling in the future. While undervaluing it may mean money has been left on the table for those exiting,” Patel mentioned.
