“Don’t trust people on the internet!”- it’s every parent’s mantra nowadays.

This sentence echoed out from the mouths of parents everywhere, and most internet users today have heard some variation of this. Yet, we are expected to trust online spaces more and more with various aspects of life - even with our finances. So, naturally, people will harbor many insecurities when it comes to e-commerce.

Easing these insecurities was crucial in expanding stores’ online market. Leading the movement towards such action were Sebastian Siemiatkowski, Victor Jacobson, and Niklas Adalberth when they founded Klarna.

The platform helps you make purchases and lets you pay at a later date. Therefore, in the event of an issue with the product, none of your money is tied up while you sort things out.

Klarna sets out to be different from current banking methods and pioneer a new way of finance. Continue reading the story of how feeding an idea with effort and perseverance can blossom into something great.

The Swedish Dream

Sebastian was born to two Polish immigrants who had just moved to Sweden.

Both of Sebastian’s parents were academics, which led to them emphasizing the importance of education to young Sebastian. He took his parents’ lectures to heart and was dedicated to his studies, achieving high grades and great success academically.

As a child, Sebastian was driven, always eager to listen, learn, work hard and improve. Sebastian remained that way into adulthood and these characteristics are reflected in Klarna.

Being a second-generation immigrant Sebastian was offered far more opportunities than his parents. In fact, the opportunities his parents were denied served to further fuel Sebastian’s drive.

As a teenager, Sebastian got a job at a Burger King restaurant in his hometown of Uppsala. Even while Sebastian was flipping burgers, he was a highly motivated and enthusiastic worker, looking to provide the best service possible.

It was at Burger King that Sebastian met one of his co-founders - Niklas Adalberth, who had also taken a part-time job during his teen years at the same restaurant. The two became friends, and both would go on to enroll in the Stockholm School of Economics. At the university, Sebastian and Niklas met Victor Jacobsson, another student. Little did they know at the time, but he’d be an invaluable part of their future journey together as the third co-founder of Klarna.

Learning Curve

Aside from their previously mentioned work in fast food service, our founders had little to no experience. In some cases, you could say the lack of experience and naivety helped them to succeed.

While at the university, Sebastian worked in sales for a while and got familiar with e-commerce and the problems consumers had faced. This would become the principal idea behind Klarna.

Starting this firm in their early 20s, there’s very little to say about the founders prior. In a way, they grew and matured as their platform did, and most work experience they have has been garnered from working in Klarna.

Sebastian holds a degree of a Master of Science from the Stockholm School of Economics and has been CEO at Klarna since 2010. Sebastian is also the last founder standing, having remained in the company well after the other two founders decided to pursue other endeavors.

Niklas served as deputy CEO until 2015 when he left the firm to pursue philanthropic projects. In 2016, Niklas established the Norrsken Foundation which is focused on supporting and investing in social entrepreneurship. He remains with only a 0.75% share in Klarna.

Victor had earned himself a Master’s Degree from the Stockholm School of Economics with a major in Accounting and Financial Management. Victor was the CFO at Klarna up until 2012, and still owns a large stake in the company.

It’s Not Always Smoooth Sailing

Once Sebastian, Viktor, and Niklas had the idea for a fintech company, the young men used it to compete for the Stockholm School of Economics annual entrepreneurship award. Unfortunately, their idea was not well-liked and the young entrepreneurs were placed among the last.

After the event, however, an audience member came up to Sebastian with positive feedback encouraging Sebastian to pursue his idea. This emboldened the team to move forward.

The platform launched in 2005 under the name Kreditor Europe AB. It would provide financial services in online transactions and offer post-purchase payments to its customers.

An angel investor, Jane Walerud, saw the potential in this idea and aside from investing, put the team into contact with programmers. Jane’s idea revolved around the collaboration between Klarna and the programmers, helping it build and transform the company from a mere concept into a serious tech firm.

After a few years, the company was steadily expanding to other European countries. Following this growth, in 2009, Niklas, Viktor, and Sebastian decided it was time for a rebrand - going from Kreditor to Klarna.

The next few years were a time of flourishing for Klarna, and by 2013, the company acquired the coveted status of a unicorn - a startup valued at over $1 billion.

Being a huge success will put anyone under a magnifying glass, and in 2014, there was an ever-growing criticism from the Swedish press regarding invoices not being paid on time. This period was difficult, but ultimately, the team at Klarna used it as fuel to improve on the platform and shape it into a more innovative and efficient product.

Since then, Klarna had further refined its communication with customers and worked continuously to address any complaints.

Klarna has always strived to change with the times and has undergone multiple rebrands like their “Smoooth” campaign. The campaign launched with a series of ads that seemingly made no sense - a fish going down a slide and such. This made viewers scratch their heads but also intrigued them, and so the Smoooth rebrand was a big success. So big in fact that it’s won multiple awards - most recently the Youtube Works Awards in Sweden for their 2019 collaboration with Snoop Dogg - and is still a major part of the company’s brand.

Today, Klarna is at the head of the “buy now, pay later” market. The company features an app with multiple payment options, such as paying in multiple installments and keeps expanding its horizons.

The Money Pool

They deal with your finances, but what about theirs?

Since Klarna got its first angel investor, the company has gone through 29 funding rounds. The latest funding round was a Secondary Market round and has managed to raise a total of $3.7 billion. Klarna is currently funded by 60 investors and valued at over $30 billion.

The company remains private for the time being. Founder and CEO, Sebastian, does not oppose the idea of an IPO, however, considers the current stock market too unstable.

What’s on the Horizon?

Today, Klarna boasts over 90 million users and 200,000 retail partners. With over 3500 employees, Klana goes through an astonishing average of 1 million transactions per day. Today, Klarna is headquartered in Columbus, Ohio, with offices in New York City.

Since the very start, the company has stayed true to its initial goals and values - offering simple and easy solutions for e-commerce.

Before serving as the top company in the “buy now, pay later” market, Klarna was faced with some serious competition from companies like Affirm, Sezzle, and Afterpay, among others.

It’s been years since Klarna has been the poster child for a successful European tech firm. It turned out that Sebastian’s perseverance paid out in the end.

Klarna acquired its banking license in 2017 and plans to continue challenging the norms, setting off to hopefully spearhead a transformation in traditional retail banking.

So, if you’re up for a shopping spree, Klarna has your back!