Sebastian Siemiatkowski, CEO of Klarna, speaking at a fintech event in London on Monday, April 4, 2022.
Chris Ratcliffe | Bloomberg via Getty Images
LONDON — After 20 years in the role as Klarna’s CEO, Sebastian Siemiatkowski is about to face his toughest test yet as the financial technology firm prepares for its blockbuster debut in New York.
Siemiatkowski, 43, co-founded Klarna in 2005 with fellow Swedish entrepreneurs Niklas Adalberth and Victor Jacobsson with the aim of taking on traditional banks and credit card firms with a more user-friendly online payments experience.
Today, Klarna is synonymous with “buy now, pay later” — a method of payment that allows people to buy things and either defer 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 grown Klarna into a fintech powerhouse, his entrepreneurial journey hasn’t been without its challenges — from facing rising competition from rivals such as PayPal, Affirm and Block‘s Afterpay, to an 85% valuation plunge.
Nevertheless, Siemiatkowski hasn’t taken 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.
‘Crazy enough’
In October 2024, CNBC met with Siamiatkowski during a visit the Swedish entrepreneur made to London. For a businessman who’s faced 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 gone through with the company, at any point in time I ask myself, do I still think that Klarna can become the next Google in size, that we can become a hundreds of billions dollar market company, or a trillion dollars,” Siemiatkowski told CNBC. “I still am crazy enough to think that’s achievable.”
But the firm has attempted to rebuild that eroded value in the years that have followed.
Klarna makes money predominantly from fees it charges merchants for providing its payment services, in addition to income from interest-bearing financing plans and advertising revenue.
Financials disclosed in its IPO filing show that Klarna reported revenue of $2.8 billion last year, up 24% year-over-year, and a net profit of $21 million — up from a net loss of $244 million in 2023.
Bullish on AI
After the launch of OpenAI’s generative AI ChatGPT in November 2022, Siemiatkowski quickly pivoted Klarna’s focus to embracing the technology, and especially in a way that could slash costs and enhance the firm’s profitability.
However, Siemiatkowski’s strategy and his comments on AI have also attracted controversy.
Klarna’s CEO then said in August that his company 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 marketing and customer service.
“By simply not hiring … the company is kind of becoming smaller and smaller,” he told Reuters news agency, adding that jobs were disappearing due to attrition rather than layoffs.
Asked by CNBC about his views on AI and the upset they have caused, Siemiatkowski suggested he was “done apologizing,” echoing comments from Mark Zuckerberg about the Meta CEO’s “20-year mistake” of taking responsibility for issues for which he believed his company wasn’t to blame.
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 leaders 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 jobs 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 know what these people, the tech leaders are saying when they’re not on public stages, and they’re not saying the exact same things,” he told CNBC in October.
An outspoken CEO
Siemiatkowski is no stranger to defending his company in response to criticisms, especially when challenged over Klarna’s business model of offering short-term financing for all kinds of things from clothing to online takeout.
One X user posted a meme showing personal finance pundit Dave Ramsey with the caption, “what do you mean you have $11k in ‘doordash debt’.”
Siemiatkowski took to X to defend the move, saying that Klarna “offers many 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 offers 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 credit card at DoorDash as well.”
As Klarna approaches its stock market debut, investors will likely be scrutinizing his track record and whether he’s still the right person to lead the company longer term.
Lena Hackelöer, CEO of Stockholm-based fintech startup Brite Payments, is someone who’s worked under Siemiatkowski’s leadership, having worked for the company for seven years between 2010 and 2017 in various marketing functions.
She expressed admiration for the Klarna co-founder — and pushed back on suggestions that leadership mismanaged the business during the pandemic era.
“I never thought that they had mismanaged, which is somehow how it was reported,” Hackelöer told CNBC in a November interview. “I think that they were just very much focusing on growth — because that was the direction that investors were giving.”
Rollercoaster ride
Siemiatkowski admits the journey of building Klarna hasn’t always been rosy.
Asked about the biggest challenge he’s ever faced as CEO, Siemiatkowski said that, for him, laying off 10% of Klarna’s workforce in 2022 was the toughest thing he’s ever had to do.
“That was very difficult because I didn’t predict that investor sentiment would shift that fast and people would go from valuing companies like ours so high and then to something so low,” he said.
“That’s obviously very difficult because, then you realize like, ‘OK, s—, I’m going to have to make a change. It’s not going to be sustainable to continue, and I need to protect the consumers, who are stakeholders in the company, the employees, the investors — I need to [do] what’s right for all of my constituents,” Siemiatkowski continued.
Klarna is synonymous with the “buy now, pay later” trend of making a purchase and deferring payment until the end of the month or paying over interest-free monthly installments.
Nikolas Kokovlis | Nurphoto | Getty Images
“But unfortunately, it’s going to affect the smaller group, which happened to be about 10% of our employees.”
Like other tech firms, Klarna grew significantly over 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 46% year-over-year, to $53 billion.
I think anyone who is a little bit sane, that’s not something you take light hearted, right? It’s a tough decision. It makes you cry. I’ve cried.
Sebastian Siemiatkowski
CEO, Klarna
The company also onboarded hundreds of new employees to capitalize and expand on the opportunity it saw from government lockdowns’ impact on consumer behavior and the broader acceleration of e-commerce adoption at that time.
“I think anyone who is a little bit sane, that’s not something you take lighthearted, right?” Klarna’s CEO said, referring to the layoffs. “It’s a tough decision. It makes you cry. I’ve cried.”
However, Siemiatkowski stood by his decision to lay off workers: “I felt like I had an obligation to my constituents, everyone, all of these stakeholders, the company, and I think it was a necessary decision at that point in time.”
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 risky for companies as share prices can fluctuate quickly,” Nalin Patel, director of EMEA private capital research at PitchBook, told CNBC via email. “They can be costly and lengthy to arrange with investment banks too.”
If it succeeds, the outcome could catapult the net worth of Siemiatkowski and other shareholders including Sequoia Capital, Silver Lake, Mubadala Investment Company, 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 business.
A positive IPO outcome would also lift the value of Klarna employees’ stakes, and potentially boost morale after a turbulent few years for the company.
“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 fair price. Overvaluing the company could lead to its valuation falling in the future. While undervaluing it may mean money has been left on the table for those exiting,” Patel said.
Capital One secured approvals from banking regulators Friday for its $35 billion acquisition of Discover Financial — a deal that analysts believe could have far-reaching benefits beyond just the Club holding. The news Wells Fargo research analysts said the greenlights from the Federal Reserve and the Office of the Comptroller of the Currency highlight a softer regulatory environment under the Trump administration. That bodes well for investment banking businesses in large U.S. banks such as fellow portfolio name Goldman Sachs . In a Sunday note, the analysts described the Capital One-Discovery merger as a “clearing event” for more bank deals that should likely “kick off further bank consolidation.” They added, “The approval is a down payment on the improved regulatory environment from the new administration.” Research analysts at Wells Fargo said the Discover acquisition will not only boost Capital One’s earnings potential but also provide “more than enough cushion to protect” it from an uncertain macroeconomic environment. The analysts reiterated their buy-equivalent rating on shares of Capital One, which said it has all the necessary approvals now and plans to close the Discover purchase on May 18. Capital One, which reports earnings after Tuesday’s closing bell, has three main segments: credit cards, consumer banking and commercial banking. It gets most of its revenue from credit cards. The merger development was not enough to boost financial stocks as concerns about President Donald Trump’s so-called reciprocal tariffs continue to rattle the market. Capital One shares, which shot up more than 5% shortly after Monday’s open, reversed lower and spent the afternoon around the flat line. Goldman was little changed after the open but saw declines accelerate as the S & P 500 sank more than 3%. COF 1Y mountain Capital One 1 year Big picture Coming into 2025, investors had high hopes that Trump’s more lenient stance on antitrust issues would lead to more mergers and acquisitions (M & A) and initial public offerings (IPOs). But with tariff and recession concerns gripping the market, deal activity has not rebounded as much as expected during the president’s first few months in office. Investment banks make money by offering M & A advisory services and IPO underwriting. Case in point: Heightened uncertainty about the outlook for the economy has disrupted plans for big-name IPOs like fintech firm Klarna and ticketing platform StubHub over the past month. Last week, Goldman also posted weaker-than-expected revenue for its investment banking division during the first quarter . CEO David Solomon acknowledged that dealmaking expectations have not panned out yet. “We are entering the second quarter with a markedly different operating environment than earlier this year,” Solomon said during the post-earnings conference call. Corporate clients are “concerned by the significant near-term and longer-term uncertainty that has constrained their ability to make important decisions,” the exec said. Bottom line We’re thrilled that bank regulators have decided to move forward with the Discover deal. It’s a key reason the Club first started a position in Capital One. The acquisition should support earnings growth and price-to-earnings multiple expansion over the long run. Upon completion of the transaction, Capital One, a major credit card issuer in its own right, will own Discover’s payment network, which will decrease its reliance on Mastercard and Visa . On Monday, we added to our Capital One position . “We got the catalyst we wanted in Capital One,” Jim Cramer said during the Morning Meeting. “The stock didn’t move [much]. That’s an opportunity.” GS 1Y mountain Goldman Sachs 1 year Like analysts, we’re also hoping this is a positive sign about the U.S. regulatory backdrop. Fewer deals blocked by regulators means more upside for Goldman’s crucial investment banking business. But for a material rebound, more clarity on tariff policy is needed. “What Goldman excels at is helping clients in a time of turmoil, and they did great there,” Jim said after the firm’s earnings last Monday. “But .. when you take a look at investment banking, they’re just not making a lot of money.” Thankfully, the weakness was offset by Goldman’s trading business due to the stock market’s volatility. WFC 1Y mountain Wells Fargo 1 year Finally, Club holding Wells Fargo also stands to benefit from a more lenient regulatory regime. Wells has been working to convince the Fed to lift the $1.95 trillion asset cap imposed in 2018 for misdeeds at the bank that predated CEO Charlie Scharf’s tenure. We think Scharf and his team have done a great job cleaning things up. It’s only a matter of time until the asset cap is lifted, which would allow Wells to expand its balance sheet. When that happens, Wells can grow its budding fee-based business like investment banking and not rely so heavily on interest-based revenues, which are at the mercy of the Fed’s monetary policy decision. (Jim Cramer’s Charitable Trust is long COF, GS, WFC. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Screens display the logos and trading information for Capital One Financial and Discover Financial as traders work on the floor at the New York Stock Exchange on Feb. 20, 2024.
Brendan Mcdermid | Reuters
Capital One secured approvals from banking regulators Friday for its $35 billion acquisition of Discover Financial — a deal that analysts believe could have far-reaching benefits beyond just the Club holding.
Torsten Slok, chief economist at Apollo Global Management, is certain the U.S. will fall into a recession this year if tariffs stay where they are. “It’s all conditioned on tariffs staying in place at these levels, and if they stay at these levels, we will absolutely have a recession in 2025,” Slok told CNBC’s ” Squawk on the Street ” on Monday. If the high tariffs that were put in place earlier this month remain in effect, odds of a two-quarter contraction in economic output stand at 90%, with gross domestic product dropping by four percentage points, according to the private equity firm’s economist. President Trump on April 9 granted a 90-day reprieve for many tariffs, while hiking those on China to 145%. Central to Slok’s recession forecast are the China tariffs, which he argues are especially damaging for small businesses that less likely to hold sufficient cash on hand to pay the higher tax on imported goods. “They basically do not have money and cash to pay 145% extra,” Slok said. “So, we will have bankruptcies of retailers of very significant magnitudes if this is allowed to continue.” Jobs, sentiment damage Any slump in retail would end up damaging the labor market and consumer sentiment, since small businesses with fewer than 500 workers make up 80% of total employment, according to Slok, who previously worked at Deutsche Bank and Bank of America after stints at the IMF and OECD. Particular attention should be paid to weekly jobless claims reports as job market weakness will show up there first. “The impact of tariffs, especially on China, is still weighing heavily, in particular, on small businesses,” Slok said. “And we have not seen that in jobless claims yet, but we should expect to see that.” Recession calls have grown on Wall Street in April, though the frequent tariff changes have made it nearly impossible for forecasters to measure the full impact. Earlier this month, JPMorgan Asset Management’s David Kelly, immediately following the April 2 announcement, said there’s a 60% chance of a recession, depending on whether high tariffs stay in place. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!