Yahoo News Meet The Klarna Founder Behind The 'Buy Now, Pay Later' Shopping Revolution
'Have you had breakfast?', the co-founder and CEO of Klarna, Sebastian Siemiatkowski asks in a strong accent that is part-Arnold Schwarzenegger, part-Yogi Bear.
He is late – one of his children is ill – and flushed from the February cold when he arrives at the Stockholm headquarters* of the $5 billion company he founded as a student. Introductions made, he quickly hangs up his smart woollen coat before setting down a heavy-looking brown paper bag on the table in front of us.
I say I’ve already eaten, but as he decants the contents of the bag, I begin to wish I’d kept quiet. Slowly, tantalisingly, he pulls out an assortment of expensive-looking breakfast items: a posh apple juice, a giant, pillowy-soft croissant, a jar of what appears to be cloudberry jam and, finally, an egg roll that is so enticing it practically smoulders when he lays it out on the coffee table between us.
He looks at me, then takes hold of the croissant with both hands. Suddenly, I want a second breakfast.
The 38-year-old Swede – who, at 6ft 2in, looks like a Disney version of a tech entrepreneur prince – has an uncanny ability to create desire. Eighteen months ago, few people had even heard of Klarna, the banking company Siemiatkowski started when he was just 23 years old.
Now, it is bankrolling wardrobes around the world, allowing anyone the ability to buy what they want, when they want and pay for it a whole lot later. You may have seen its little pink logo in shop windows across the country – a semaphore to all that you can spend like an oligarch even if your bank balance declares otherwise.
In just 15 years, Siemiatkowski has grown Klarna into one of Europe’s largest banks, which provides, at its core, a ‘buy now, pay later’ service to 85 million shoppers. He has also persuaded more than 205,000 fee-paying retailers, including Farfetch, Asos, Nike and H&M, to sign up in a bid to make consumers’ buying journeys smoother by essentially offering flexible payment methods – with just one-click.
Through Klarna, which launched in the UK in 2014, you can opt to ‘Pay Later’ (between 14 to 30 days after purchasing), ‘Pay In Three’ (repaying in three equal statements) or ‘Slice It’ (where you repay in installments for anything from three months to three years). It’s the digital, shiny version of the 1980s catalogue shopping your mum used to get excited about.
The office is certainly unlike any bank I’ve ever been in before. For a start, Klarna HQ is a sleek modernist building slap bang in the middle of Stockholm, filled with expensive-looking Scandi furniture. There’s free-flowing coffee, thoughtfully placed green plants everywhere and giant screens declaring: ‘It’s semla time’ – semla being Swedish cardamom-spiced buns filled with cream.
By a large square atrium, where Siemiatkowski hosts regular all-staff meetings, there is a vending machine that won’t give you a Diet Coke, but will provide you with a Mac charger and a keyboard to make sure you’re never caught short. I spot an employee – or ‘Klarnaut’, as they’re called – casually walking by with a baby in a sling. No one bats an eyelid.
Over the past three decades, the retail landscape has completely reinvented itself – and Siemiatkowski has been operating from its epicentre. While Amazon has had ownership over the one-click checkout for 20 years (and this is ownership in the literal sense: the retail giant patented the technology in the 1990s and it has only just expired), Klarna has emerged as a middleman payment option that not only promises to make shopping more ‘frictionless’ for the consumer, but also more lucrative for retailers.
In the UK, merchants that have signed up to Klarna have seen a significant boost in sales.
This has made the brand one of the darlings of Sweden’s tech scene; impressive when you consider Stockholm is the second-most-prolific tech hub per capita after Silicon Valley. (Klarna is also, alongside Spotify and games maker King, one of the country’s top five ‘unicorns’ – a startup valued at over $1 billion.)
It’s easy to see why it’s captured the world’s attention. With its pop-y branding, cutesy Pepto-pink logo and flashy celebrity credentials (Snoop Dogg is an investor and there have been starry collaborations with the likes of Lady Gaga), Klarna isn’t your average bank. It’s cool. It’s fun. It’s one of us.
But celebrity endorsements and highly stylised adverts aside, reactions to Klarna haven’t always been frictionless. There has been widespread criticism that Klarna is in fact just a modern-day loan shark, but with better branding. It claims transparency, but encourages dangerous spending habits, sometimes leading consumers – particularly its younger consumers (of which there are many) – into large amounts of debt.
‘We care a lot about responsibility,’ Siemiatkowski says, stalling slightly as he searches for the right words. He admits that he is a player in an industry that ‘unfortunately has historically ruined people’s lives. Banking has never been customer-friendly and I think we can be a beam of light in that industry to change and improve it’.
But what about the parents of teenage users, one of whom tweeted angrily, claiming that their 14-year-old daughter received a letter threatening debt collection after opening a Klarna account without any security checks? (The Tweet has since been taken down.) And the people whose shopping habits verge on addiction? How does he see Klarna helping them?
‘[If you look at] Klarna versus the credit card industry, I’m much happier for people to use Klarna because it’s on a single transaction,’ he says. ‘Would I rather have a young person carrying around a credit card or this? I would much rather they had a debit card and occasionally used Klarna.’ (In fact, at 33, the average age of Klarna users is far higher than the often inflammatory headlines would suggest.)
It’s clear that Siemiatkowski takes the responsibility he has to his customers seriously. This includes being as transparent as possible about what happens if you don’t pay on time, and ensuring they make a good decision as to whether an application is accepted or not – if a soft credit check (one that doesn’t appear on your credit history) shows that a user could be overspending, their purchase will be blocked. You don’t have to look hard for frustrated tweets about Klarna users having their order denied.
But his plan with the company, which now hires 2,500 people worldwide, is that it is far more than just a loans platform.
‘It started as a very simplistic "buy now, pay later" service, but I’ve always had an aesthetic side,’ Siemiatkowski says, recrossing his long legs, bashing his Arctic-proof leather boots against the coffee table, and taking another bite of his overfilled egg bap. ‘I’ve always loved arts, music… I’ve done a lot of different things.’
Born in 1981 to Polish parents who had emigrated to Sweden earlier that year, Siemiatkowski was a high achiever at school. Growing up in Uppsala, a city just north of Stockholm, his parents put a huge emphasis on education and he remembers always going beyond what was demanded from him, reading Richard Branson’s business books at the age of 12.
‘Even when I flipped burgers at Burger King, I was always thinking about how I could provide the best service and make people’s lives a bit easier. You could say I had two parents who, because they were immigrants, didn’t have the chance to live up to their full potential,’ he says, suddenly becoming very serious.
‘My father, who studied for a doctorate, ended up being unemployed for a period of time; then he was a cab driver. My mother, who was also an academic, was an early retiree because she had problems with her back.’ He pauses. ‘I’m sure there was some level of just wanting to live my potential when I saw that my parents hadn’t.’
It was while he was a student at Stockholm School of Economics that he first had the idea for Klarna – known as InvoiceMe then – along with two fellow students, Niklas Adalberth and Victor Jacobsson, both of whom are still shareholders in the company. The early days echo the stories of Mark Zuckerberg coding away in his college dorm or Jeff Bezos creating Amazon from a rented garage in Seattle, but with a more Scandinavian twist.
‘We have this very old picture, which was taken during the summer,’ Siemiatkowski recalls laughing. ‘There was no air conditioning, so it was super hot and we’re all there sitting in our underwear working together, because it was so warm.’
This was also the time when breakfast became an important part of his business plan.
‘We had a rule that we had to have breakfast together in the office, then we worked the whole day,’ he says. While their fellow students were going to class, determined to go into steady jobs with stable salaries, Siemiatkowski, Adalberth and Jacobsson knew they were taking a risk.
‘We said we’d be really focused for six months and then we would see where we were: either in a place where we’re like, “This is actually fun and interesting, let’s continue.” Or, “It’s not worked, let’s go back and do something else.”’
At the beginning, though, in order to break onto the scene and be taken seriously, they had to act smart.
‘We tried so hard to act like a bank. We would run around in suits, making sure our business cards looked professional. It was important that our phone number ended with lots of Os so it looked like there was a switchboard,’ he recalls of the startup days in the early 2000s.
As work took over, studying took a back seat, much to the chagrin of Siemiatkowski’s parents.
‘The company started growing, so suddenly we were 10 people, then 20. I would call home to my parents and be like, “It’s amazing, we just hired another person, numbers are looking great, we’re growing super fast!” And they’d say, in a very traditional way, “OK! Great for you. When are you going to finish your education?” In a way, my father was never proud,’ he says slowly.
‘He struggled so much with his own life and his own disappointments of what he wanted to accomplish and what he didn’t manage to. So, he was always twisted between pride and at the same time his immense frustration over his own failures. Up until his death that was always the case.’
Even from his mother, he says he will never get the affirmation he craves.
‘To some degree I am still looking for that acknowledgement that I will never get from them. So, I have to basically be happy myself,’ he determines, taking a bite of his sandwich and chewing slowly.
There’s no doubt that Siemiatkowski’s drive has been one of the key factors in Klarna’s evolution. Five years ago, the company underwent a serious rebrand inspired by Siemiatkowski’s wife of five years, Nina, who also went to Stockholm School of Economics but who he never had the courage to approach: ‘Maybe after a couple of beers [which he pronounces ‘bears’], I’d stumble close to her hoping to get her attention.’
Several years later, when he was 28, they were at the same party. Only then did he dare to talk to her. They’re now a Swedish power couple with celebrity status: Siemiatkowski’s team has discussed the growing need to get him a security detail. If Klarna, which is worth $5.5 billion, floats on the stock market as its rumoured to do soon, they will be one of the richest families in Sweden.
When he talks about his wife, who he lives with along with his three children in the countryside just outside Stockholm, his ice-blue eyes become even brighter.
‘Nina is a fantastic marketer and has such a sensitivity for brands and fashion. She was bugging me all the time, saying, “You don’t have a brand, you don’t really get it. But you have potential.”’
So, Siemiatkowski hired her.
‘And you can imagine the faces inside Klarna when I said that my wife is going to take this job!’ he hoots. ‘They were like, “Oh my god! Where the hell is this going?” But she was working pro bono and she only did it for a couple of months.’
I get the sense that Siemiatkowski genuinely sees himself as a banking saviour. In Sweden (the technology hasn’t been introduced in the UK yet), Klarna can connect all your bank accounts so it allows you to track your spending – a bit like the different money ‘pots’ on a Monzo card – which is so popular now. He shows me how this works on his phone and I get a glimpse of what he spends his own money on: a trip to Paris with one of his kids, flowers for his wife and a drone for him.
Siemiatkowski has also personally invested in Depop, the social shopping platform. One of the other big accusations that people throw at Klarna is that the easy payment method can encourage that quick-fix, fast-fashion purchase.
‘The reason I invested in Depop is because I want to understand better how these models are going to work.’ He claims there’s a lot of opportunity to position Klarna as part of a more cyclical retail economy.
‘Another one is renting items. We have a lot of ideas and plans for this year, of things we can do to help drive this change,’ he says, adding, ‘even when you see that item list [of purchases], you can provide more information – like what was the human cost of producing this and how can you reduce that?’
Klarna is definitely becoming much more than a ‘buy now, pay later’ platform, but right now Siemiatkowski has another meeting to get to. In a week that’s seen him travel to Australia to launch Klarna there, then to London for meetings with Farfetch’s CEO José Neves, I ask him whether he has time to sleep. He jokes that sleep is the one thing that ‘just works’ for him: ‘I go home, put my head on the pillow and I’m out.’
With that, he packs up the remainder of his three-course breakfast and hurries off to his next meeting. And I’m left contemplating one thing: Where can I buy myself a cinnamon bun, or three, and can I Klarna it?
*This interview was conducted on February 7.
This article appears in the May 2020 edition of ELLE UK. Subscribe here to make sure you never miss an issue.
Like this article? Sign up to our newsletter to get more articles like this delivered straight to your inbox. SIGN UP
You Might Also Like
