Klarna: The Untold Story

Early Life and Background of Sebastian Siemiatkowski

• Born on October 3, 1981, to Polish immigrant parents in Sundsvall, Sweden.
• Parents were highly educated but struggled financially in Sweden.
  • Father: Studied but was unemployed for long periods.
  • Mother: Early retiree due to back problems.
• Family struggled with money, leading to frequent arguments and eventual divorce when Sebastian was 8.
• Developed interest in business and entrepreneurship from a young age.
  • Inspired by entrepreneurs like Richard Branson.
  • Excelled academically; parents emphasized the importance of education.

Meeting Nicholas Adlerbert

• Worked at Burger King while in school to earn extra money.
• Met Nicholas Adlerbert, who became a close friend and business confidant.
• They dreamed of creating a company to make people's lives easier.

Higher Education and Personal Challenges

• Graduated high school with top grades; chose Stockholm School of Economics.
• Found himself among highly talented peers, leading to insecurity and self-doubt.
• Took a year off after struggling academically and missing many courses.
• During the break, grew more confident and inspired to resume studies.

Founding Klarna (Initial Years as Kreditor)

• Co-founded Klarna (originally Kreditor) with Nicholas Adlerbert and Victor Jacobsson in 2005.
• Business model: Allow consumers to receive goods first and pay later.
• Initially faced trust issues from retailers due to their young age and lack of finance experience.
• Pitched at an incubator event in Stockholm; gained support from Jane Walerud and four developers.
  • Gave 37% of the company to developers and 10% to Walerud for $60,000 and development support.

Early Challenges

• Developers left after completing initial software, taking 37% of the company’s equity.
• Founders had to convince retailers to trust their platform despite having no engineers.
• Adopted professional appearance and tactics to gain retailer trust (e.g., business cards, suits).

رشد و موفقیت

• Signed deals with major retailers like IKEA, Adidas, Zara, and others.
• Enhanced their "Buy Now, Pay Later" feature, making online shopping more appealing.
• Rebranded to Klarna in 2009, expanded to Nordic countries and later globally.
• By 2011, received $155M investment from General Atlantic, reaching a valuation of $800M.
• Achieved unicorn status in 2013, with a valuation over $1B.
• Expanded to the U.S. in 2015 and gained investment from celebrities like Snoop Dogg.

Criticism and Controversies

• Criticized for encouraging overspending and debt among young consumers.
• Accused of normalizing unaffordable purchases leading to increased personal debt.
• Swedish debt collection reports showed a major rise in debts linked to Klarna users.
• Faced new regulations (e.g., FCA in the UK) for stricter affordability checks and better support for vulnerable consumers.
• Marketing tactics likened to luring buyers into debt by promoting "Buy Now, Pay Later" as easy and harmless.

Conclusion

• Klarna's success story is a complex journey filled with initial struggles, challenges, and criticism.
• Despite controversies, Klarna remains one of the most successful online payment processors globally.