Klarna CEO avoids IPO talk and says he's just getting started
The chief executive of online credit giant Klarna has avoided speculation about a looming stock market listing, insisting his business is more focused on innovating in retail banking.
As speculation abounds on whether buy-now-pay-later giant Klarna is poised to announce an IPO, chief executive Sebastian Siemiatkowski largely avoided the issue during an appearance at the Viva Technology conference in Paris, France, on Wednesday.
Siemiatkowski, who recently said Swedish Klarna was likely to pick the US for an IPO, said he was more focused on the company's mission of reforming retail banking.
Read more: Klarna boss says IPO location not a clear cut choice
Citing a report in The Economist that said every consumer pays $350 a year for banking services, Siemiatkowski said: "That’s ridiculous”.
He accused banks of overcharging consumers to put money in their own pockets and said barriers to entry meant the industry lacked of competition.
“As an entrepreneur, you can't dream of being in a better industry" as a challenger, he said.
Klarna describes itself as a leading global retail banking, payments, and shopping service and is available direct to consumers via its shopping app, which it says is used by 18m customers and 250,000 retailers. It is best known for its buy now, pay later product, which lets online shoppers effectively borrow money interest free at checkout. Klarna advances money to merchants and follows up with buyers later.
Read more: Klarna now worth $45.6bn after Softbank investment
Siemiatkowski's comments about taking on retail banks came during an on stage interview on Wednesday. He was quizzed about what keeps him motivated to stay with Klarna, even though he is a paper billionaire and could theoretically walk away to spend more time with his family. Klarna was valued at $45.6bn (£32.3bn) last week after raising $639m.
Siemiatkowski, who cofounded the business, said being CEO gave him the chance to help other people thrive, learn to teach themselves, and to make things happen on a big scale. He said he hoped to run the company for decades “unless they throw me out”.
Siemiatkowski's said Klarna's recent mammoth valuation was less important than the business' “internal momentum”. The company has benefited from a huge uptick in online shopping around the world since the onset of the COVID-19 pandemic.
Read more: COVID-19 will permanently change how we shop, says Klarna CEO
Siemiatkowski praised Silicon Valley venture capital firm Sequoia, which invested in Klarna five years after the company was founded in 2005.
Sequoia “has been able to create an evergreen structure that allows it to be extremely long-term unlike most venture capitalists," Siemiatkowski said.
“They’ve been a shareholder for about 12 years now and they have never asked me about an IPO.”
Siemiatkowski said Sequoia stood by the business when it went through a rough patch around 2010. The company wasn’t able to deliver new products as fast as it had been in the past and new senior executives who had joined were not as willing to get their hands dirty.
Read more: Barclays goes toe-to-toe with Klarna in buy now, pay later market
Some investors started getting jittery but Sequoia was less interested in profitability and more focused on whether the founders were working hard, learning and determined to succeed.
That was their “primary evaluation criteria, and as long as they thought we had the ambition to make it work they were willing to wait," Siemiatkowski said.
Today, Klarna benefits from faster internal decision-making, he said. Better recruitment helped the company address its issues and things "started shifting internally, that was key for me... then PNL [profit and loss] and valuation will follow."
Earlier this month, Siemiatkowski said his company would likely look to list in the US as the UK's financial watchdog looks to tighten the rules around BNPL lending.
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