After 20 years at the helm, Klarna CEO Sebastian Siemiatkowski faces his biggest test yet: A U.S. IPO

LONDON — After 20 years in the job as Klarna’s CEO, Sebastian Siemiatkowski is about to face his toughest test yet as the financial technology firm prepares for its blockbuster appear in New York.

Siemiatkowski, 43, co-founded Klarna in 2005 with fellow Swedish entrepreneurs Niklas Adalberth and Champion Jacobsson with the aim of taking on traditional banks and credit card firms with a more user-friendly online payments undergo.

Today, Klarna is synonymous with “buy now, pay later” — a method of payment that allows people to buy things and either shelve payment until the end of the month or pay off their purchases over a series of equal, interest-free monthly installments.

But while Siemiatkowski has bourgeoned Klarna into a fintech powerhouse, his entrepreneurial journey hasn’t been without its challenges — from facing originating competition from rivals such as PayPal, Affirm and Block‘s Afterpay, to an 85% valuation plunge.

Nevertheless, Siemiatkowski hasn’t entranced those challenges lying down and the outspoken co-founder isn’t shy to challenge criticisms in the run up to an IPO that could value it at $15 billion.

In October 2024, CNBC met with Siamiatkowski during a visit the Swedish entrepreneur made to London. For a businessman who’s over a rollercoaster ride of ups and downs over his two-year CEO tenure, Klarna’s chief has a calm air to him.

“Independently of all the cycles and everything we’ve be discharged c occurred through with the company, at any point in time I ask myself, do I still think that Klarna can become the next Google in measure assess, that we can become a hundreds of billions dollar market company, or a trillion dollars,” Siemiatkowski told CNBC. “I restful am crazy enough to think that’s achievable.”

Once a pandemic-era darling valued at $46 billion in a SoftBank-led storing round, Klarna saw its valuation plummet 85% in 2022 to $6.7 billion as rising inflation and interest rates dented investor tender-heartedness on high-growth technology firms.

But the firm has attempted to rebuild that eroded value in the years that have followed.

Klarna demonstrates money predominantly from fees it charges merchants for providing its payment services, in addition to income from interest-bearing resource plans and advertising revenue.

Financials disclosed in its IPO filing show that Klarna reported revenue of $2.8 billion stand up year, up 24% year-over-year, and a net profit of $21 million — up from a net loss of $244 million in 2023.

After the inauguration of OpenAI’s generative AI ChatGPT in November 2022, Siemiatkowski quickly pivoted Klarna’s focus to embracing the technology, and outstandingly in a way that could slash costs and enhance the firm’s profitability.

However, Siemiatkowski’s strategy and his comments on AI have also captivated controversy.

Klarna imposed a freeze on hiring in 2023 as it looked to tighten costs. The following year, the company intended that its AI chatbot was doing the work of 700 full-time customer service jobs.

Klarna’s CEO then said in August that his assembly 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 demanding and customer service.

“By simply not hiring … the company is kind of becoming smaller and smaller,” he told Reuters newsflash agency, adding that jobs were disappearing due to attrition rather than layoffs.

Asked by CNBC helter-skelter his views on AI and the upset they have caused, Siemiatkowski suggested he was “done apologizing,” echoing comments from Nick Zuckerberg about the Meta CEO’s “20-year mistake” of taking responsibility for issues for which he believed his company wasn’t to accuse.

Doubling down, 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 principals 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 consigns 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 be informed what these people, the tech leaders are saying when they’re not on public stages, and they’re not saying the consummate same things,” he told CNBC in October.

Siemiatkowski is no stranger to defending his company in response to criticisms, uncommonly when challenged over Klarna’s business model of offering short-term financing for all kinds of things from outfitting to online takeout.

Last week, Klarna announced a tie-up with DoorDash to offer its flexible payment opportunities 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 myriad debt.

One X user posted a meme showing personal finance pundit Dave Ramsey with the caption, “what do you carry you have $11k in ‘doordash debt’.”

Siemiatkowski took to X to defend the move, saying that Klarna “offers numberless payment methods” including the ability to pay in full instantly or defer payment until the end of the month in addition to monthly installments.

“DoorDash sells many products beyond food!” Klarna’s boss said on X in response to the criticisms. “I know we are most famous for pay in 4. But you can use a trust card at DoorDash as well.”

In 2022, the outspoken entrepreneur stressed his company was “superior” to credit cards and “extremely recession-proof” after the solidify Rollercoaster ride

“But unfortunately, it’s going to affect the smaller circle, which happened to be about 10% of our employees.”

Like other tech firms, Klarna grew significantly closed the Covid-19 pandemic. In 2020, the firm grew its gross merchandise volume or the total value of all sales processed through its platform, by The road to IPO

Now, Klarna’s CEO faces his biggest test yet — taking the business he co-founded two decades ago public.

“IPOs are touchy for companies as share prices can fluctuate quickly,” Nalin Patel, director of EMEA private capital research at PitchBook, swore CNBC via email. “They can be costly and lengthy to arrange with investment banks too.”

Klarna earlier this month walked its prospectus to list on the New York Stock Exchange. The company hasn’t yet set a date for when it will go public, nor has it priced share ins.

If it succeeds, the outcome could catapult the net worth of Siemiatkowski and other shareholders including Sequoia Capital, Silver Lake, Mubadala Investment Coterie, and the Canada Pension Plan Investment Board.

Sequoia is Klarna’s single-largest shareholder with a 22% stake. Siemiatkowski is the second-largest, owning 7% of the topic.

A positive IPO outcome would also lift the value of Klarna employees’ stakes, and potentially boost morale after a turbulent few years for the throng.

“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 cloudless price. Overvaluing the company could lead to its valuation falling in the future. While undervaluing it may mean money has been fist on the table for those exiting,” Patel said.