so you were a young student living in sweden in the early 2000s awarded two immigrant parents from poland they didn't have the chance to live up to their full potential you have a deep desire wanting to show the world what you're capable of you decide to get a job your local burger king to earn some extra money on the side later on one night while flipping burgers you spark up a conversation with a guy named nicholas adelbert on the other side of the assembly line you're not being close friends and dream of creating something that could provide the best service and make people's lives just a little bit easier a little did you know that you will be running one of the most successful startups in europe together just 20 years later this is a story behind klarna one of the world's most successful online payment processors cornell's founder sebastian simatowski was born to polish parents on the 3rd of october 1981. the family lived in the northern town of sunswell sweden where samatovsky would spend his early years his parents immigrated to sweden for a better life but life in sweden did not turn out as they had imagined samotoski's father had studied for a dedicate ended up being unemployed for a long period of time and jumped from one job to another for a long period his mother who was also an academic was an early retiree because of problems with her back during this time the family would sometimes eat the same dish day after day for weeks and samotoski will start to pick up on the differences between his lifestyle and that of his friends his parents relationship was also full of conflicts which inevitably led to a divorce when simultoski was only eight years old and although swatoski didn't suffer from it at the time he understood in retrospect that the family was struggling and the main cause was lack of money besides the conflicts matuski was from a young age an extremely smart kid with an obsessive interest in entrepreneurship and business he will spend a lot of time coming up with business ideas and read a lot of business books about successful entrepreneurs like richard brunson he also learned at an early age that he had a deep desire wanting to live up to his potential as he thought that his parents never did and back in school samotoski was also excelling in his academics as his parents taught him at an early age their studying would be very important to succeed in life while in school he would earn money on the side while working at a burger king where he later met nicolas adelbert the pair became close friends and constantly discussed business ideas during work but the dream of running a company was still a dream and samotoski still had to graduate from high school and once he did simultoski had the grades to get into pretty much any higher education he wanted and would eventually decide on stockholm school of economics but in contrast to his previous education he was suddenly among lots of talented smart individuals who were also incredibly good at giving the impression that all success in life came without effort his confidence was at stake and eventually became insecure and felt that he had to find his own way in life and after two years wataski was close to quitting he missed many courses and because he felt so many classes he was about to lose his student aid because it is he decided to take a full year's break from his academics together with nicholas the guy he earlier met while working at burger king during this trip samotoski felt as if he aged twice as fast and that he grew more confident as time went on once mataski was back in college he co-founded klarna with nicholas and victor jacobson who he met later while studying at stockholm school of economics and this is when klarne was born once klarna was founded originally under the name creditor sabotage get together with his two friends all in their early twenties set up creditor in a small office in stockholm in 2005. and the idea of creditor was simple with the rapid advancements of the internet creditor would offer consumers the chance to pay for goods after receiving them a business model based on the old mail order catalogs at the time consumers were still hesitant to shop online as it was widely regarded as unsafe complicated and frustrating now we have to remember that this was still the early days of the internet and many consumers still prefer the traditional brick and mortar stores which was also still in its heyday now to get the initial funding to get the company of its feet swatoski and his friends decided to join in on a pitch of ant held an incubator in stockholm after the pitch a woman at the event called jane vollerrood loved the idea and approached the group by explaining that she had access to some of the best engineers and that she recently sold the company blue tell for 150 million dollars during the dot-com bubble now as no one among the founders at curator had an engineering background this was the perfect match for the company as they still needed developers to get their initial version of the software working crater eventually took on the offer from volleyrood and ended up giving away 37 of the company to a group of four developers and 10 percent to valueroot in return for 60 thousand dollars and he helped to get the software off the ground everything is going perfectly for creditor up until this point that was until samatosky and his friends realized that the contract with the developer mentioned that the software was to be completed and then the four developers were free to go their way and keep their stake in the company and this is exactly what happened the developers completed her software in four months and left the company and leaving the funders without any engineers to continue working on the project one engineer even said that the company would never be big enough to need four engineers anyway so it wouldn't make sense for all of them to stay at the company full time obviously the four developers didn't share the same vision as their founders as they would sooner or later regret despite losing its four engineers the company still had a finalized software so they took what they had and started doing everything they could to get retailers to sign up to their platform the main problem for the company was not to get consumers on board we wanted to convince the retailers to trust a group of guys in their early 20s with no experience in finance or banking to process their money the group decided to make up for the lack of experience by doing their best to give the right impression during meetings by wearing suits hoping to be seen as bankers also printing proper business cards and expensive paper and even picking telephone numbers similar to switchboard numbers to full clients into believing that they were big enough to actually have a switchboard the business eventually began to land massive deals with global retailers like ikea adidas zara as well as small groups such as the uk fashion retailer icemash the company's priorities continue to develop and eventually added on new features and making their most famous feature buy now pay later even better than before this continued to add to the company's success as a financing tool for online shopping while also making it a greater experience for consumers to shop online the hype around the company started to rise and in 2009 with over 120 employees they eventually decided to rebrand the company under the name klarna the company expanded beyond sweden to neighboring nordic countries norway finland and denmark and even though there were signs of growth says it still took a long time to realize that if kelana was ever going to be successful it needed to be fully transformed into a tech company klarna continued expanding into new markets globally such as germany and the netherlands and more investors started jumping on board in 2011 general atlantic invested 155 million dollars valuing the company at around 800 million dollars and it wouldn't be long until the company reached unicorn status in 2013 with a company value of over one billion dollars cleaner success continued and the company eventually launched in the us in 2015 and laid it at an investor such as snoop dogg who temporarily changed his name to smoothdog as part of a marketing campaign in the us but despite his massive success the company ran to major issues during its rise despite both consumers and retailers loving the product karna eventually runs in their problems news articles all around the world started writing about the dark side of klarna even some suggesting that they're just a modern lone shark with a fancy branding all of a sudden millions of consumers had the option of purchasing something they were unable to afford with the option to pay for it later encouraging young people to overspend spending money that they didn't have and creating mounting debt the idea is simple by allowing consumers to buy something without the feeling of the actual true cost of the transaction you can encourage shoppers to buy everything they want now and only think about the consequences later it can be compared with the feeling of paying with something with physical cash or paying with a card in general most people are more reluctant to spend money if they can feel it and touch it as it feels more real once you actually hold it in your hand now clark nobody's carefully developed checkout experience make this even more frictionless the joy of getting an item now an item we may have previously thought of ottawa budget shadows the contractual obligation to pay for that very item later down the line the klarna app seems to misrepresent the brute fact that this is the company that profits from the debt of others by luring young people into his vision of cool and his understanding of millennials desire to purchase the latest trends and keep influence your culture it encourages purchases from a group of people with statistically lower incomes and introduces them to a credit in a way that normalizes the purchasing of items you cannot immediately afford this is evident when you look at the swedish debt collecting agency where klonos swedish customers have increased their overall death by 380 million sacks since 2016 with the median debt increasing by 353 percent in the same period these schemes make it easy to quickly fall into debt a death that until recently would not be picked up by credit reference agencies and other lenders only to the increased use of buying out paleo schemes in recent months it was announced in 2021 that the fca financial conduct authority in the united kingdom would subject firms like clarinet to stricter regulations affordability checks and better support for those who are vulnerable or struggling to repay would be introduced as soon as possible preventing shoppers who are already dealing with adapt elsewhere from slipping through the cracks but what about the digitally cheap marketing these friends rely on to learn buyers in the apps don't seem out of place in our home screens blending effortlessly in and seamlessly into our fabric of modern life the various ways to pay via buy now pay later schemes are often advertised on their home page front and center as if they were not slippery slopped towards depth but quick easy seamlessly harmless ways of keeping up with examples set by social media influencers and the importance of consumption online [Music] you