Klarna Founder: From $0 to $46 Billion: Sebastian Siemiatkowski

Sebastian Siemiatkowski is one of the most successful businessmen in Europe. He is the founder of Klarna, a company that is now worth an incredible $46 billion. Sebastian himself is now worth over $3.6 billion, and what’s more, he’s only just getting started. Sebastian has been incredibly honest with us on what it takes to succeed and the burdens that come with it. Sebastian started Klarna when he was just 23, he hadn’t finished university and he gave up everything when he promised himself that his business would be the only thing in his life for 6 months. He’s much older and much wiser now, and Klarna has had incredible growth to become one of the highest valued tech companies in Europe. Today he tells all about his incredible journey and how he got there, opens up on the criticism he’s received, and where Klarna goes from here. Follow Sebastian: Twitter - https://twitter.com/klarnaseb Instagram - https://www.instagram.com/sebastiansiemiatkowski Follow me: https://beacons.ai/diaryofaceo Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  He had a discussion with me, we were sleeping in the street, dead scared, like, be careful with who you're listening to. Have they really contributed to success? Have they really built success? Or have they simply been in a company that was successful? Afterwards, I've heard from journalists that like a ton of emails were coming from banks because they simply, you know, they're threatened by our existence. And so the kind of articles and the writing about us shifted from their hair to screw customers over, to do bad things. And that was tough. I went home, I had dinner with my wife and we talked about it. And I was like, no, this time around, I should probably help him. I decided and I tried to call him and he didn't answer. And I emailed, he didn't answer. And morning, my mother called and said he was dead.

• 0:49Steven Bartlett?

  Sebastian Shemiyakovsky. He's the CEO and founder of Europe's most highly valued fintech privately held company. His company is worth 45 billion dollars. Sebastian isn't a guy that comes from a stable household or a silver spoon. It's very much the opposite. The stories you're going to hear about his home life, his family, his father, might just bring you to tears because that's the effect they had on me. He came from incredibly, incredibly humble beginnings and he's built a company in an industry where he was not qualified, where he didn't have technical expertise, where he couldn't code, that has completely revolutionized an industry.

• 1:32Steven Bartlett?

  He is humble, he is honest, and he's willing to tell you the truth. And that's why it's such a pleasure to sit here with him today and uncover what it takes and who it took to build such a revolutionary pioneering business. So without further ado, I'm Steven Bartlett and this is the Diary of a CEO. I hope nobody's listening, but if you are, then please keep this to yourself.

• 2:02Steven Bartlett?

  Sebastian, one of the things that I've come to learn from speaking to a wide array of guests on this podcast, from sports athletes to really successful CEOs, is how often our childhood and our early years shape our adult foundations. And whenever I meet someone like you that's achieved really remarkable things in whatever discipline they're in, my first question always becomes, what was it that made them remarkably unique in their early years? What was the experience, the culture that shaped them into who they are today?

• 2:34Speaker 00

  Right. You see how funny you ask that because I don't necessarily feel that I was remarkably unique in my early days. A friend of mine, their son turned out to be blind, but he has perfect pitch and he's now eight years old and he's sitting and playing the piano and singing. And that is to me remarkable. And I was thinking about that, I was like, that was me when I was a kid. Look, I mean, my parents were from Poland. They moved to Sweden about a year before I was born. I was born in the northern part of Sweden. They were basically immigrants because they didn't see a future in the communist Poland,

• 3:17Speaker 00

  which was the case at that point in time. And so they came to Sweden, but obviously as the walls back down, it was very hard to integrate into Swedish society. English wasn't as profound as it is today and there was a lot of language barriers. At that point in time, it was also like a lot of, I would say skepticism about people with Polish name and Polish backgrounds was hard to get a job if you had a foreign sounding name. There was a lot of these biases. So my parents struggled quite a lot to integrate. My mother was an early retiree. Uh, and my father kind of jumped from job to job, was unemployed for quite a long period of time, drove a cab for multiple years, did a lot of different things, right?

• 3:59Speaker 00

  And so I think that like, I do think that there's something to the fact that as an immigrant kid with parents that still like intellectually had academical backgrounds and you know, had studied at universities and stuff like that and never basically were able to live up fully to their potential. I do think that that kind of creates some kind of like, you feel like that's unfair and you're gonna like try to fix that somehow. And I was growing up among Swedish friends who just had better economical standards than we had and I was obviously longing for what they had. Um, you know, I remember that in, in, with my mom, like there were weeks when, you know, we were eating pancakes every day and I thought that was great, but now I realize it was

• 4:44Speaker 00

  because there was nothing left. That was the only thing we had, like flour and milk and so forth. So like, so I think that like, uh, I, I do think that that kind of setting, and there's obviously some research that suggests that in Silicon Valley, more than 50% of the companies are, you know, started by immigrant backgrounds. I do think that that kind of setting of, you know, having a lot of the intellectual capacity and all these things and then the kind of prerequisites potentially to do something different and at the same time, this kind of drive of like, you can almost feel like it's unfair. You know, life isn't necessarily fair, but like you feel like this is unfair, we should have like been able to have something different than this. And, and maybe also to some degree, you've, I don't know to what degree that's, on an emotional level, I don't think on a rational level, but on an emotional level also like

• 5:28Speaker 00

  your parents really sacrificed their lives. Like I think it's, it's hard for people that are not, have, are not immigrants to understand the consequences of not having the friends from school, not having the, you know, the understanding of how society works, which school is better, which is worse, how do you interact with government, you know, how does the system works, all these things like that, that total lack of understanding of a specific society, that it means to shifts like my parents did in their, you know, uh, late twenties, early thirties, uh, and how difficult that means for your own ability to kind of, you know. Do something with your life. I think that's something that's underestimated. So you have the kind of emotional thing that you wanna, you know, you feel that they did a massive sacrifice in some due regards for for your behalf, right?

• 6:13Steven Bartlett?

  Yeah, and that feels like a tremendous privilege. I yeah, I wanted to ask you, um, cause I I can relate a lot to that. I'm an immigrant myself. Came from born in, you know, Africa, in Botswana, and my parents came over here. My mom can't read or write.

• 6:25Speaker 00

  Fantastic country, by the way.

• 6:26Steven Bartlett?

  Yeah, yeah, beautiful, beautiful place. Um, but I moved to the southwest of the UK where I was in an all white school of fifteen hundred white kids. And it was was me and I caught and we were also like the poorest people in a middle class area. So you have you you I felt different all the time.

• 6:42Speaker 00

  Yeah.

• 6:43Steven Bartlett?

  And um, did you feel that way?

• 6:44Speaker 00

  Yeah, absolutely. Very much so. I mean, um, even the fact that we were Catholics. Now, I'm not a very religious person today necessarily, but we were Catholics. And my, you know, my parents, we went to to to church every Sunday and stuff like that in a very non religious society like Sweden. That was in itself very odd. Uh, and I remember people like saying, you know, Jesus wasn't, you know, the son of God and stuff like that. Which at that point in time, like today, I wouldn't necessarily, but coming to that, to be aware at that point in time, it was like, you know, somebody was like, you know, saying things like that. And then also the Polish, like the the view of Poland that part of time was that there was this country behind the Iron Curtain that was spewing out, you know, uh, toxic waste into the Baltic. And so there was a lot of like, you know, Polish and jokes about Polish people and stuff like that.

• 7:28Speaker 00

  So I mean, all of this, like, I took heart. I wouldn't say I was bullied. That would be, in my opinion, to take it too far because people, I know people that have been bullied for real and I don't think I was. But there was like that, you know, the sense of being different, of not necessarily, um, you know, both not having the same prerequisites, but also getting some like, kind of a lot like sometimes getting quite hard time over these things, right?

• 7:50Steven Bartlett?

  And when you were a kid, because because I know I did, I developed a very naive thesis as to how I would escape this scenario.

• 7:56Speaker 00

  Oh, was that?

• 7:57Steven Bartlett?

  Money and success. Because it was the pain in my household, the lack of. So I thought, well, that will fix it. Did you develop your own thesis of how to?

• 8:05Speaker 00

  No, I think, yes, very similar to yours. Because also what happened in my, my, in my life was that my parents divorced when I was about eight years old. Right. And so, and they had a lot of conflicts, right? On different topics. And, and I think to your point, like as a child and interpretation of the reason for that conflict was the lack of money. Like, because that was what they were talking about all the time. You were hearing that. Now, I do today probably have a slightly different view of whether that was the only explanation for their inability to, you know, to be a couple and, and be together. But, but at that point in time, I agree with you. That was like, one of my interpretations was like, yes, it would be nice to, um, to have, you know, monetary success in life. And that would solve some of these problems for sure, for sure. I do agree with that.

• 8:49Speaker 00

  But, but I also, at least in, in my life, there was in addition to that, something else, which I cannot really explain, which was that I was always, I was always intrigued and like, thought it was interesting to kind of do business. Like, it's very nerdy and I can't, I can't explain it. Like, I remember reading like Richard Branson's book when I was like 13 years old. Like, and I think it was like super interesting or the founder of IKEA, Inva Kamprad, it was a big, big thing in Sweden, obviously, because it's Swedish. So like, I remember reading up on these stories and I also remember like trying to start businesses very early. So I had like, I did a lot of different things in like trying to start. It was everything from like gathering some of my friends and we would go to the apartments where we were living, the kind of the story buildings.

• 9:29Speaker 00

  There was this bus stop where all the people were coming and we would go there and like offer us to carry, you know, groceries and stuff like that. Return from, I like all that kind of stuff, like just finding different ways of like, you know, trying to do things. So.

• 9:40Steven Bartlett?

  Is there, there's something really intriguing about that in my mind, because as, as you've highlighted, immigrants tend to be more entrepreneurial generally. And in the situation you're brought up in, and I reflect on my own situation, because of the circumstance, I had made this connection that if I was to have anything or become anything, it would be a direct consequence of my own actions. And then I think maybe entrepreneurship appealed to me because it was, I knew I wasn't going to do great in the conventional route. But then this, it was this really nice route to potentially huge success.

• 10:14Steven Bartlett?

  And it was all kind of centered on what I did. It was going to be me. And I think, you know, from hearing about the, this scenario you're in with your parents and your upbringing and being an immigrant.

• 10:26Steven Bartlett?

  Entrepreneurship was something that maybe you could control.

• 10:29Speaker 00

  No, but I think you're right in the sense that like, I think definitely in that environment, growing up in that setting, you know that like, there's nobody who's going to help you. Like, there's nothing, you're not going to get anything from anyone, right? It's just going to be, either you do it, or it doesn't happen. Those are the two options. Like, it doesn't happen, or you do it yourself. Like, those are the options. I think if I look at my own kids, there's a lot of things that happens in their lives that fit into a third category. It happens because dad and mom helped out and, you know, whatever. There's a lot of other things that happens. But here it was like, you know, if I want to have an adventure, if I want to go and see the other part of the city, I bike there. I have to go there myself. Nobody's going to drive me. Like, you know, this is like, and I do think that there's some, some lack of like healthiness to that as well, right? Whereas like, it, it, it kind of educates you and I haven't thought about it.

• 11:12Speaker 00

  But now, as you're saying, it's actually kind of thought about it, that it does help you. But I would also say on the immigrant side, what you said, like, they are more commonly among entrepreneurs. But I also think that like, when I look at like, you know, when we have problems in neighborhoods with a lot of immigrants and so forth. I think that, to me, it's almost like, I wish that society would realize that like, there's going to be a lot of frustration. A lot of people with like, you know, energy, they want something different. They want something, a change. They don't want things to be the way they are. That's kind of where you're coming from. And then it's just society's ability to try to showcase that that energy can be used to become Slavtan Ibrahimovic, it can be used to become, you know, a music artist, it can be used to become an entrepreneur.

• 11:56Speaker 00

  It's that energy. Or if we fail to offer those opportunities or showcase that, those alternatives, they may come out as burning cars and doing other things that are less, less, you know, less productive, right?

• 12:09Steven Bartlett?

  Yeah.

• 12:09Speaker 00

  So I think it's really that, you know, to me today, I would just like wish that society would really see it as like, how do we help showcase and show that there are these great options for that, like, build up energy of wanting something to be different, right?

• 12:23Steven Bartlett?

  And for that, you need sort of great empathy and to understand that people are different shapes and sizes.

• 12:28Speaker 00

  Yeah.

• 12:28Steven Bartlett?

  That kind of brings me nicely to the, the education system.

• 12:31Speaker 00

  Yeah.

• 12:31Steven Bartlett?

  And your, your personal experience with the education system. And do you think it, did you serve you well, or did it fail you?

• 12:36Speaker 00

  Well, I think it did, one thing that, to your point, which you were describing as well in your own history, is that I, I, one thing that I do worry for today compared to me was that I was in a school with mixed. I would still say seventy, eighty percent were Swedish. Twenty percent at that point in time had different immigrant backgrounds. If they would have been only immigrants in there, I would not have anything to compare to, right? So I do think that the school system at that point in time was less segregated than it is currently, at least in Sweden. I'm not that familiar with the UK current situation, but I think that was that was a case. So in that case, now where the teachers that amazing and like, you know, like, you know, there was a mix. Like some were good, some were bad, right?

• 13:18Speaker 00

  Um, so, and I remember like, you know, I, I was one of the kids who had very easy at school. I learned to read quickly and so forth, right? And I believe to some degree, then I became slightly bored because the Swedish school system at that point in time was very much set up as like everyone equals. So if you were like a head in math or a head in reading or whatever, I, I, I literally still remember from like, you know, second grade, which is eight years old in Sweden, when you're eight years old, you know, uh, we were having like reading, which meant that everyone was reading from a book and like some kids, unfortunately for them, like they were still struggling, right? And I had already read the whole book, so I was quite bored sitting there, listening to the story that I already read.

• 14:00Speaker 00

  And then I started disturbing the lesson because that was kind of, so I became, I became a person that was quite problematic for the teachers. So I was just like, I was so understimulated and that I think is a little bit sad that I hope that like schooling has become better in like, you know, actually, you know, understanding that all pupils are different and need different support and, you know, can get a different challenge. Cause you all need to have like a continuous challenge, right?

• 14:21Steven Bartlett?

  And those, that lesson there, you learn about that need for challenge. You're now the headmaster of a

• 14:27Speaker 00

  Great.

• 14:28Steven Bartlett?

  School that has thousands and thousands of employees in it.

• 14:30Speaker 00

  Yeah.

• 14:31Steven Bartlett?

  And that, that point about making sure that the people that attend your institution are also challenged must, must still sort of be important to you, right?

• 14:39Speaker 00

  Absolutely. I think it's like, actually, you know, and in a way, especially in Swedish society, which I, you know, the Swedish culture is very much just saying that alla scamia, which means that everyone should join, like everyone should be part of this. And, and that's a fantastic ambition and vision for a society that like no, no man left behind is kind of a different translation of it. Or, or no woman left behind on, but, and, and for a while that was, that was creating a conflict because. Klarna, as a company, we have very high aspirations. We wanna do something very different. We wanna, you know, really, as I say, sometimes play in Champions League.

• 15:23Speaker 00

  And then, you know, the problem is that's not true for everyone in the work world. Some people are fine with playing kids league and so forth, right? So it took us some time to dare to say that Klarna is not for everyone. That Klarna is actually a company that wants to attract people that want to make a real impact, make a real difference, that wanna learn, that wanna be challenged. And that took some time. And it might sound odd, but for us at least, in the Swedish cultural context, it took some time to get to that, where we started saying, you know what? Klarna isn't for everyone. Not everyone is gonna enjoy this environment, because not everyone is willing. A lot of people will say, it's amazing to climb Mount Everest. Did you climb Mount Everest? They're fantastic. That's one thing, but it's a very different thing that like,

• 16:08Speaker 00

  how many people are really willing to like freeze their fingers off, train for four years, like all the things that you need to do to climb that mountain? Then like the number of people that like check the box and say, I wanna do that, becomes massively smaller, right? And I think the same applies for companies. Like, a lot of people will say, I wanna, I wanna work for a successful growth company, doing things that's really cool, like climbing Mount Everest. But then the question is like, are you willing to do all these things? Like, that, that, that, that means that you need to do in order to be able to accomplish that, right? And, and so, so yeah, to your point, like, I think the challenge today, I always tell that people like, when they, you know, when I interview them, or just like, just be like, be aware, like, this is, you're gonna be very challenged.

• 16:51Speaker 00

  This is not gonna be a place where like, it's just gonna go easy. You're gonna, you're gonna be very, very challenged here.

• 16:56Steven Bartlett?

  What's the perfect balance of challenge between being too challenged that they, you know, they end up in, they're burnt out or something? Or under-challenged that they lose motivation, like you did as a kid reading the book?

• 17:06Speaker 00

  It's super difficult, right? And I think that's why it has to, it has to be about encouraging them. And seeing like each individual by individual where they are, right? So think about a great personal trainer, right? When you go to the gym, you know, how do they find the balance of, you know, how much to push you and when to kind of hold off a little bit, let you, you know, breathe and so forth, right? Actually, you know, it's kind of interesting because my kids have this swim teacher. Her name is Petra and I can sometimes just sit and watch her in when she's training my kids swimming because she has that perfect balance. I've never seen a teacher that finds that perfect balance as well as she does.

• 17:48Speaker 00

  So she pushes my kids exactly to the point where they're like dead scared, like almost like they're almost there where they're like gonna wanna, they want to give up and get out of the, out of that, but they're doing it. And then they're proud of what they accomplished. And that to me, to your point, like that's almost like a piece of magic that a teacher has, like the best teachers can spot that in their pupils, can spot that and really find that perfect balance, right? But it's very difficult. It's obviously difficult in a company with 4,000 people. Like, how do you try to put mechanism in place to ensure that you, that you find that balance, right? And that, that, that you really allow people to get to that perfect spot where they develop heavily, but at the same point of time doesn't move, you know, ahead and just bang the heads

• 18:32Speaker 00

  to the wall and feel a give up or, you know.

• 18:35Steven Bartlett?

  To your, to your point then as well about it took you a long amount of time to realize that you wanted to just say to the world and to anyone that was considering joining your company, we're not for everyone. The pandemic happened and what I saw was leaders were kind of forced in this wave of virtue signaling to say, everyone can work from home forever. It became like, if you didn't say that, now you're a bit of an asshole company. And as I reflect on that and as it, as it went through, I started to reject that narrative because I think that the culture of the company should be determined by the mission. And also the other thing was, I actually think that companies, as you said, should have really clear communication at all stages about who we are, how we work and what our culture is and allowing it to be kind of you decide.

• 19:18Steven Bartlett?

  I actually think is it's, it's for me, super weak as leadership, but I also think it will have an adverse effect on the ability for the company to achieve its mission, but also the company culture, people knowing like what's expected of them. But now it seems to have become really like accept politically acceptable to just say, our employees will do whatever they want. How do you feel about all of that?

• 19:40Speaker 00

  It's a very complex topic. But I think, look, I think that the, look, I'll give you an example, right? Is that previously, which you might have found odd, Klarna was not really following agile work tactics. And then a few years into Klarna's development, we realized that some aspects of agile, like daily stand-ups, weekly retros, working as small teams on specific topics. There were some aspects of these that are very productive and really help productivity, help achieve our goals and so forth. So then what we did is we said, like, okay, now all teams within Klarna should do daily stand-ups, should do weekly retros.

• 20:24Speaker 00

  And I think currently, when we look at it, our data, about 50% of teams are following this, right? So then the question is, like, how do you then approach that? Because you feel yourself very convinced that, for example, the idea of daily stand-ups is helping to be productive.

• 20:43Speaker 00

  But if you enforce that, if you simply go and say, everyone has to do this, period, like, check the box, the problem is, like, you can do daily stand-ups in very productive ways, where you're engaged, the whole team is engaged, you're discussing, what can we do? How can we move faster, et cetera, et cetera? Or you can do daily stand-ups only to check the boxes. There are different ways, and that applies to almost all such rules and concepts within companies. So I think that, like, what I'm still, and I still, I don't feel that I entirely figured this out, but there's a balance in an organization around, like, when are we prescriptive and mandating things? And when are we suggesting and highlighting?

• 21:25Speaker 00

  Because in the end, the reason I believe in daily stand-ups so much is because of my own experience of that. But there was also something that I seeked up myself. There was a willingness to, I was interested in trying to find out better ways to working. I learned about this, I saw it in practice being done in a good way. And then I, my conclusion was that this was that. So if you think about my learning process, my personal learning process in that situation, it was driven by my interest, my passion, and then I accomplished. That's a very different thing to if my board suddenly would have dialed me up one day and said, everyone has to do daily stand-ups, period. Because it didn't, it would not have given me the opportunity to learn and reflect on it. That's when I, so a lot, when I think about learning within an organization, I think about like,

• 22:08Speaker 00

  The karate masters and the Japanese, they kind of like, they remember all these like karate kid and everything. Yeah. Like how they learn in those environments. It is like, obviously at the beginning, there has to be an interest by the individual self to try to learn. But then the master doesn't always tell you like exactly what to do. They like, they provoke you to try to learn yourselves, right? There's an excellent example from the Toyota Way on that topic where like, some of the like masters of Toyota Way within Toyota would like take a lot of their senior managers and they would draw a circle on the factory floor within Toyota factory. And then the, the managers would have to stand there and observe uh the manufacturing of the cars. And then by the end of the day, you know, the totally silent teacher would come and say, "Okay, so tell me, what have you observed?"

• 22:53Speaker 00

  And then the, the senior managers within the circle have been standing there the whole day, had to say, "Well, we saw this, we saw that." And then he would look at them, the senior, you know, senior kind of Shenzhen like,

• 23:04Speaker 00

  he would be like, "No, another day." You know, so they have to do another day. So like, and as they like provoke them, because I think that's the, and, and it's very, learning is such a difficult thing, right? Because you don't, as much as we, we, we think that learning is sitting in a room and listening to somebody, that is, you know, a very inefficient way of learning. We learn by doing, uh by doing things ourselves, right? Uh, that's really, uh, that's the truth. And I think that COVID is such a good example of that, because we had a lot of experiences that we've never had before. And they taught us a lot about our life, our priorities. A lot of people talk about that today, because we were forced to do things differently. Not because we read about COVID and we read about, you know, how things can be different, because suddenly we had to experience it.

• 23:46Speaker 00

  And when you experience that's when you truly, that can impact your behaviors, can change your ways. So the, the, the kind of, it's a very difficult balance in these companies consistently from a culture perspective. Like how do I, how do I encourage and kind of push people to go and find out? Like, you know, try to experience that and learn for it, but. But not trying to enforce it too much. And that's a balanced game, right? You cannot be entirely without rules, to your point. Because if you join a soccer team, there are some rules. Like you come into exercise every morning. If you just don't come to exercise, we're like, okay, look. You know, maybe you have a different philosophy about how you're going to become a great soccer player. But like, I just don't believe in your philosophy. Like, it's not gonna work. So like, if you wanna go and believe that you never have to exercise to become a great soccer player, you do that, but you can't do it on my team. Like, great. So there is obviously some selection criteria.

• 24:31Speaker 00

  We have to decide within our ecosystem, within our company, these are the rules that will apply. And because we just feel that they're so fundamental and so important. But once you're beyond that level, then it's more like, how do I intrigue you? How do I challenge you to develop that insight for yourself? So that you really come to embrace those ways of working and really make them your own and really expedite them. I think, and I haven't solved all of this, to be very, you know, honest. I think we have lots to learn still with Klarna. But I think that that just is a very interesting. Sorry, it was a long answer.

• 25:05Steven Bartlett?

  No, it was amazing. It was really, really thought provoking. And I was, I was thinking, yeah, I don't think a lot of people would have given that answer. But I feel it's the right one for so many reasons. Especially as it relates to the process of learning. I think the things that I was most successful at in all facets of my life were things that started with interest.

• 25:19Speaker 00

  Yeah.

• 25:20Steven Bartlett?

  And the things that I had an allergic reaction to in terms of topics in school.

• 25:23Speaker 00

  Yeah.

• 25:24Steven Bartlett?

  Were the things that there wasn't that fundamental curiosity.

• 25:26Speaker 00

  Yes.

• 25:26Steven Bartlett?

  I was kicked out of school. But if you look at business and psychology, like I was, I would have gone to more lessons.

• 25:33Speaker 00

  Yeah.

• 25:33Steven Bartlett?

  I was 30% attendance in these other subjects. And that's, and that's so true. So it's, it provides a different way to, I think.

• 25:40Speaker 00

  And I would say one more thing on your specific like work from home thing, which is also another thing to take into consideration is that what ends up happening, and this is not a problem when you're 10, 20 people in the startup. But when you start becoming 4,000 people, that what, what ends up happening is you have, obviously, unfortunately, that's the only way to describe it, layers of management. And then you have the people actually doing it. And that's just how most organizations are structured. But what ends up happening is, okay, how are we gonna do with this work from home? What are the rules that are gonna be set? And there is a tendency for people to go and say, management team, the top people have to tell us what the rules are. And if you write those rules, the problem is like, look at Klarna, we're active in like forty offices across, you know, twenty countries. Each one which will be in a different phase of COVID or not and stuff like that, right?

• 26:25Speaker 00

  So try to write a rule that is applicable for each team. And then you're gonna have individuals, maybe some individuals have immune diseases and are extremely worried about, you know, moving into that environment or more careful than others. Maybe you're gonna have like, you know, some people that have religious concerns somehow tied to this, you know, you're gonna have a flora because you have so many people, you have so many different individuals with different perspectives. So what you then sometimes need to do, in my opinion, is you need to say, look, you will decide for yourselves. And what then ends up happening is that, in my opinion, what happens is that the people actually doing the work, they usually find that quite attractive, that they can take that decision.

• 27:03Speaker 00

  So the managers of those people, they may find it's more difficult because to them it's nicer that the top management team has written a policy and they can say like, this is the rules. But why? Why these rules? Because it was said so, right? And so then they can hide behind that, right? And if you don't allow them to hide behind that, they will actually have to motivate, why are we gonna do like this? We've decided in this team that we're gonna work in office, so we're gonna do this. And that forces them to do that, which is good for them, they need to do that, they need to provoke that. But there's always a risk when you write two strict rules on the top is that they're being used and then there's just management said so. And that is just so bad for the culture and everything.

• 27:42Speaker 00

  You wanna provoke an environment where people feel like the rules are there, they were well-intended, they had a good purpose, but they also need to be challenged. If they, on a specific individual, on a specific situation, do not apply, there needs to be a mechanism where those rules comes back and say, let's, what if we were in this? And in the end, rules can never be an excuse for not thinking for yourself, right? That, that never happens and they always have to be, there's gonna be exceptions in a large company, there has to be exceptions. Because those are healthy signs of the fact that people are thinking for themselves and judging by themselves and not just hiding behind the rules.

• 28:14Steven Bartlett?

  I always reflect on the, that made me reflect then on the example of the, someone told me, certain country, I think it might be Germany, where pilots were having a huge amount of crashes. And it was because the, the culture was you don't challenge the pilot. So even when the co-pilot knew there was-

• 28:29Speaker 00

  I think it was South Korea, I think.

• 28:30Steven Bartlett?

  It was South Korea, yeah, yeah, I think it was, yeah. The planes were crashing, but because the co-pilot didn't feel like a challenge. And I think that's a sort of analogous to what you were saying there. I have to go back and hear about the start of Klarna, because, you know, one of the things that really intrigued me and made me feel a lot of respect towards you was that you're not technical as a co-founder.

• 28:49Speaker 00

  Unfortunately, no.

• 28:50Steven Bartlett?

  So you would have built this mega tech company, but you're not technical. And I know, I tried when I was 18, that was my first failure. But I found that really just horrifying and respectful.

• 29:00Speaker 00

  Yeah.

• 29:01Steven Bartlett?

  So tell me, so how did it start and where did you find the courage?

• 29:05Speaker 00

  Sure. No, so look, as I said previously, like, it's kind of ironic, I always had tons of business ideas. And I even remember like when I, when I was like probably 13 or something, in Sweden was the first time we had private radios, private radio stations. And I thought the one in my home city of Uppsala sucked. So I kind of wrote the business plan for them, how they should change the shows and things like that. And I actually called them and tried to convince them to change.

• 29:28Steven Bartlett?

  At 13?

• 29:28Speaker 00

  Yeah, 13, like, I can imagine they were like laughing their guts off, like this 13 years old is calling us like, you should do this programming instead, you should have a show about this.

• 29:36Steven Bartlett?

  I bet they gutted now.

• 29:37Speaker 00

  Yeah, exactly. So for whatever reason, I always had this like inclination to wanting to do something. And then I did two years at Stockholm School of Economics, which is one of the like top schools in Sweden around, if you're, you know, want to study it in an economical direction. Everyone at that point, this is 2000, everyone wanted to work at Goldman Sachs, Morgan Stanley, McKinsey. That was really the vibe. It's actually interesting because they had this survey where they said like, at that point in time when they asked students, 7% wanted to start their own company. Today it's 70%. It just gives you like how much of a shift there's been during that period of time. But anyways, and then in 2002, because I went directly from college to university, I was like, okay, I just gotta do something else. I mean, every, all my friends had like backpacked and stuff like that. So ended

• 30:22Speaker 00

  up me and actually what became my co-founder Niklas, we went backpacking, which- At that point in time, because we always wanted to do something that was a little bit different, we ended up going around the world without flying, which was a lot of fun. So if you want to go to YouTube, you'll find the videos when we were like from this trip.

• 30:37Steven Bartlett?

  Oh, really?

• 30:37Speaker 00

  Yeah.

• 30:37Steven Bartlett?

  You say YouTuber.

• 30:38Speaker 00

  Yeah, because we had this idea that we were, this was just at the beginning of all these like, you know, Big Brother and all these like, you know, documentaries and stuff. So, so we thought that we were gonna like, we, we recorded the whole thing and we did less, we thought we were gonna like air this as a TV show. That was a very funny game.

• 30:53Steven Bartlett?

  I need to ask you one question about that. How did you get to Australia without flying?

• 30:56Speaker 00

  Um, yeah, so you had to, uh, we took a cargo ship from Singapore to Brisbane.

• 31:00Steven Bartlett?

  Ah, okay.

• 31:01Speaker 00

  And then we had a cargo ship from Sydney over New Zealand up to Mexico. So that's how we did it. And then we actually took the QE two, you know, Elizabeth II second, uh, between New York and, um, and Southampton. So, so that was kind of, we did that, that, those were the expensive parts of the trip. I mean, we, we did it on an extremely low budget. I think the, on average, we spent like $10 a day, like we spent, you know, we're sleeping in the streets. I actually slept on Piccadilly Circus on the street, uh, when we were in London that night and, uh, we were passing through London. And then I went, we went to Hyde Park when, when the sun had risen and slept, because you don't sleep really well in Piccadilly Circus at the money, at 4am, I tell you. So like, uh, you can imagine how, you know, the vibe there at that point in time. Um, but anyways, so we came back and then I missed to start my semester.

• 31:46Speaker 00

  And so instead I was like, on the second sabbatical the other, I hadn't expected. And it was 2003 and I was looking for a job in my home city of Uppsala and I couldn't get a job. I was actually on welfare for a time because I just couldn't get any, it was a low economy, it was very hard. Eventually ended up working at this account receivables factoring firm, which was like the last place in the world I ever thought, as a sales guy.

• 32:08Steven Bartlett?

  Yeah.

• 32:09Speaker 00

  And, and I was like, okay, but now I'm here, I'm gonna do the most out of this, right? So I started calling and trying to sell these services. And then I, it was very difficult to sell such services to companies because they're all like, yeah, you can save me £400 a year, but I don't really care because we worked with this other company for 15 years and they're great and whatever. But then I started talking to entrepreneurs and these entrepreneurs were starting small e-commerce companies because some of them had figured out at that point in time, you could buy Google Ads where it's super cheap because no one was buying them. And then you can get some traffic and you can sell some stuff. And like, it was like, it was all kinds of stuff, right? So you started talking to them and they were really keen. Oh, I can save £400 a month a year. That's awesome. I'm gonna work with you guys. So then I started like thinking about payment services and I was asking them, what are your problems? What are the things that you would like to be solved? So that was kind of where the idea

• 32:50Speaker 00

  came from. But then a year had passed and I want to go back to school. So I came back to the Stockholm School of Economics to start my third year. I left my job. And but there was an incubator at the school and it was very early at this point in time. Now everyone has an incubator, but at that point in time, it wasn't that common. So I went to the CEO of the incubator and I said, hey, you know, I have this idea, this kind of payments, offering buy now, pay later services. It would look like this and you know, whatever. And she was like, this is awesome. You have to do this. And when she said so, I was a little bit like, now I can't just like, give up on this, you know? So, so I was kind of looking around and then I stumbled into one old friend of mine, Victor, who I knew a little bit. And he was like, because I was sitting in the cafeteria of the school and I was telling some friends like, I want to do this company is going to do this. And

• 33:35Speaker 00

  everyone was like, yeah, good luck to you, man.

• 33:37Steven Bartlett?

  Kind of like patronizing?

• 33:38Speaker 00

  Yes, patronizing and like

• 33:40Steven Bartlett?

  Kind of like fake support?

• 33:41Speaker 00

  You do that and I'm gonna go to Morgan Stanley and make all my bonuses. Like that's like, that was like, kind of the, the perception. So, so that's kind of, but Victor then was the only one who was like, wow, that's awesome. I'm with you if you do it, right? So I was like, okay, that's cool. Let's do it together. We didn't know each other that well. And I had Nicholas, who was an old friend of mine who I did the trip around the world with. So, so we kind of joined forces. But then, but it was still like a huge decision to us, like, starting a company at that point in time felt like, wow, crazy. Are we giving up on careers? What's gonna happen, you know? So it was only when we came to the conclusion, we were like, okay, you know what? Let's not think about this as a lifelong decision. Let's think about this as a six month decision. I often tell this to people today, like, we said, like, we're gonna do this for six months. But if we do it for six months, we're gonna do like all of our energy, all of our time is gonna be this for the next six months.

• 34:27Speaker 00

  So we even had like a rule, we had to eat breakfast in the office, we had to be there, we were counting the hours, whoever else was there, so it's fair. So we were like, we were living in the office for the first six months and we were just like focused on that and nothing else. And but it was when we decided it was going to be a six months and then we're gonna evaluate, then we kind of was easier to take a decision because you're like, yeah, six months, whatever, that's fine, right?

• 34:48Speaker 00

  So so we got off and then what we did, we realized that we couldn't code, to your point, right? We couldn't code, we needed a system, right? So we're like, how are we gonna solve that? So are we gonna raise money, try to pay some engineers and hire them, what are we gonna do? And eventually, we ended up, the incubator we're in, they had this like Christmas drinks thing, where they invited some business angels and they invited the companies that were in the incubator to pitch. And so Nicholas, my co-founder, did like a thirty second pitch. And after that, a woman called Jane Valerud kind of approached us and and and she was like, you know, she almost like pushed me off to a corner. She's like, this is awesome, tell me what you're gonna do. She was like, she just heard that pitch and she was like, I like this business idea. And she tells us, look, I have these engineers and they're like the best engineers, this is amazing.

• 35:34Speaker 00

  Cause she had actually done one of the few really successful exits during dot com area, where they had sold a company for a hundred fifty million pounds. And so she had money from that and she had the engineering team from that. So she said, I'm gonna connect you with those guys. And so we sat down with those engineering guys and they were much more senior than us, then we're like in their forties and, you know, we were twenties and. And there unfortunately, a misunderstanding arose, right? Where our understanding was that these five engineers or four engineers, they really were, they were gonna join us full time and work on this and continue developing the company with us, right? Their understanding was they were going to give us some source code, some code and a system that works. And then they're off and doing something else.

• 36:18Speaker 00

  And so, but you know, as it is, and I'm now tired to tell other founders this today. Like if you found a friend and you want to start a company together, don't only talk about all the amazing stuff you're going to do and everything you're going to accomplish. Also, sit down and ask like, how many hours per week are you going to spend on this? Versus because you love exercising and you love, you know, hanging out with your friends and so forth. Just so like, not that, you know, you can do it on 30 hours a week or you could do it on 80, but just so you're aligned. It can't be too big disalliances. It can be one person doing 30, another one doing 80. Make it super concrete, exactly what expectations you have on each other. Because otherwise, there's just such a big risk of like misalignment and conflict.

• 36:57Steven Bartlett?

  Resentment comes quickly, doesn't it?

• 36:58Speaker 00

  Right. So then what we did, so we brought those engineers on board and they started coding. And they were excellent. They were amazing engineers. So they started coding the system in December. In, in April, four months later, we launched with the first customer. So it's four months and they put together a lot of fundamentals that actually still, you know, today are part of what Klon offers as a service. So there was a grow up. But then, you know, after that, they were like, good luck, guys. See you later. And we were like, no, no, no, that's not what we agreed. And then we looked into the contract and we had given off 37% of the company to them for the technology. And then we had given 10% to Jane as the business agent, but she gave us 60,000 pounds, right?

• 37:41Speaker 00

  And so, and then, so each one of us then had equal. So we had 17% each. And so that was kind of the setup after that. And then we had basically given away now all these percentages to these engineers and they just left us. And so that became a quite tough conflict, obviously. But legally speaking, they had followed the contract. So there was nothing for us to go into contracts and say, you know, whatever. Because the contract was, we just, we, we just hadn't talked about this. And we were under different assumptions of what they meant. The contract was just there, like we didn't think about, you know, this consequence. So they ended up leaving us and it was kind of funny because in that room at one point in time. In the boardroom, one person said, well, you know what? Just so you know, Sebastian, you have to calm down on this topic. Klarna is never going to be the size of a company

• 38:26Speaker 00

  where it's going to need four great engineers like this. That's kind of funny. I almost laughed at it. Yeah, it's kind of funny now as I think back about it.

• 38:34Steven Bartlett?

  Did you ever resolve that?

• 38:35Speaker 00

  Sorry?

• 38:36Steven Bartlett?

  Did you ever buy them out?

• 38:39Speaker 00

  No. So what ended up happening is, to some degree, I think, just because they didn't understand the potential of what they had built together with us, they also sold much too early. So as a consequence, I mean, they sold at a very early day where maybe the company was $10 million worth or something.

• 38:52Steven Bartlett?

  Oh, God, that's awful.

• 38:53Speaker 00

  Yeah. So I mean, well, it's not awful in a sense because to me it feels a bit fair. Because they got the upside of what they did. If they would have participated longer and so forth, they would have seen a very different upside.

• 39:02Steven Bartlett?

  True.

• 39:03Speaker 00

  And they would have built the company with us. But, you know, but this was a challenge for us as a consequence to your point, because at least what it allowed us to do is very quickly get a system live and get something going. But then, as they left, I needed to figure out, okay, I need to hire engineers. And I have no clue how to code. And how do I evaluate a good engineer for a bad engineer? I have no clue. You're like, architecture? What is that? You know, like, there was like zero knowledge, right? So you, and that is one of the biggest challenges, I think, for a lot of people. Like managing people that do the same thing that you know yourself is one thing. Trying to manage somebody that does something that you have no clue how to do is very, very different.

• 39:39Steven Bartlett?

  How did you? I was in the same place. I was, I knew I needed to build a website, not technical, went on Google, just started looking at their own websites.

• 39:45Speaker 00

  Right.

• 39:46Steven Bartlett?

  Using that as, yeah, this, this is cool. This animation looks good. I will hire them. So how did you solve that problem of not knowing what good looks like?

• 39:55Speaker 00

  Well, first and foremost, I think unfortunately, um, you know, in, what ended up happening in our situation was that, um, one of the guys from this engineering team stayed on because they were still shareholders for a bit of time, right? So he stayed on as an advisor. And we started hiring some engineers and some which were better, some which were worse. Some, you know, as you will always have a mix. And we also got a CTO eventually who came in.

• 40:22Speaker 00

  And the C, he, he as a CTO was an amazing programming and developer. But he wasn't necessarily the CTO that would, you know, hire the right talent, build it. He wasn't business oriented. He was very much like technically interested and wanted to build like really beautiful code basis and stuff like that. Which, you know, some engineers tend to have more of that tendencies. And what was the frustration to me is that for a long period of time, and this was a challenge in Sweden and Stockholm at that point in time. The advisors that we had around us, none of them had built a forty five billion dollar company like we are today. None of them had that experience, but they were senior in our opinion compared to myself.

• 41:05Speaker 00

  They had done great corporate, big jobs. We had like, you know, advisors and board members that had corporate backgrounds and been in big institutions and, and so forth. And so they were giving us a lot of advice on topics like, is this the system that you're building? Is this fast enough? Should you be able to build it faster or slower, like the progress and things? And so when they were giving us that advice, it was bad advice, but we were too young and too inexperienced to be able to recognize that. And so unfortunately it took us some time and it created a lot of frustration because I was always sitting there. It's like, does, does it really need to take this long time to build something like? And is it really unfair of me to expect that the engineers are like a little bit interested in the product they're building as well? And the business side of it?

• 41:46Speaker 00

  Or are they only always going to be interested in the coding itself and the technical challenge? Like, shouldn't I be able to engage with them on the product side as well? Like, and a lot of times we were like, they were like, oh, we want to build this product. You need to give us more clear specifications. And I was like, but if I write those specifications, what's left to do? Like, that's part of the creative process to sit together and create these. So, you know, you get stuck in a lot of these things. And then, and then eventually I remember I was very frustrated because at one day when Sequoia invested. And that was why Sequoia was so important to us because in two thousand nine, we got Sequoia to invest in the company. Michael Morris joined our board. And one of the ambitions we had with that was to get. Get a some kind of contact point to somebody that had actually seen large tech companies grow,

• 42:30Speaker 00

  had seen real success of a tech company and start understanding their mindset. And at that point in time, I unfortunately concluded that like it was not going to work with our CTO because he didn't have that right mindset for it and he was interested in something very different. He's a great guy in many ways, but he wasn't the person that would be able to allow us to build our engineering organization and bring us to become a true tech company and be really technology driven. And and I remember going into the board eventually and saying like, and and at that point in time, the representative of the engineers that built the original system who was on my board, he had been telling me all over and over again, like, I was like, I'm really worried. Should it really be this slow? And he was like, yeah, you know, it's different, this, this and that. And then eventually I came to him one day and said, look, I've taken a decision.

• 43:14Speaker 00

  Unfortunately, I have to change CTO. And he was like, good decision. And I was like, I almost wanted to smack him in the face. I was like, for four years, you were telling me that this is okay. And now you're, I'm doing this change and you're saying good decision. Like, that's not like, you should have said, you're wrong. That would have been respecting him more, right? So there was in that setting we were coming up for, there was a, it really nowadays I appreciate much more like how I have to really look through a person and ask myself, is this a believable person? Is there somebody I should really take advice from? And I think a lot of entrepreneurs that will listen to this and startup people, like be careful with who you're listening to. Have they really contributed to success? Have they really built success? Or have they simply been in a company that was successful? Like, those are very different, different aspects, right?

• 43:58Speaker 00

  So being very careful about who you get advice from. But that's kind of how we saw this. So it was just like, we had to learn, have to test. And then the last piece of very practical advice that we did, which was one of the best things I ever did was, because I was so mixed up, like engineering, whatever, what does me? And then I said to my CTO, a very practical thing, I was like, hey, can you show me how you fix a bug? And so we sat down together by his screen and he basically took one bug that we had and he started searching in the code and then he wrote, you know, the fix and then he wrote a test case for the fix and just sitting and watching him do that made a huge difference for my understanding of like, you know, how long to, so I think as much as sometimes

• 44:40Speaker 00

  you may feel like very, whatever you're managing that you don't understand, you may feel like, oh my God, so difficult and to talk about all these technical terms and so forth. Sit down next to them, spend half a day, spend a day, just look at when they're doing it, a designer or whatever it is, something that you don't know how to do yourself, just sit next to them, see them do it. And that already will at least put you at a different level of understanding of, you know, the job and so forth. So there are practical ways in which you can try to gap that, you know, bridge that gap.

• 45:09Steven Bartlett?

  So important because again, it comes back to communication and I had the exact same thing. And I think in my first tech business, I wish I had done exactly that. I wish I had taken the time to go in, build empathy towards the role of my, my CTO and understand what his job was and I guess how I could make it easier, but also to, I really also should have had a, an objective outsider come in and do an assessment on how he was working, how I was working and everything in between. I think entrepreneurs don't do that. They, they, they, I think because they don't know what they don't know.

• 45:41Speaker 00

  Exactly.

• 45:42Steven Bartlett?

  You don't know that. So that's the biggest curse in business and.

• 45:44Speaker 00

  It's not only entrepreneurs, it's great managers and leaders and people as well. I think to your point, the really tricky thing is to know what good looks like.

• 45:51Steven Bartlett?

  Yeah.

• 45:52Speaker 00

  Right. What does good look like? Right?

• 45:53Steven Bartlett?

  Oh God, yeah.

• 45:54Speaker 00

  That's different. Like when you judge some work, like what would great work, work look like? And it's when you've established that understanding, whether it's in communications, marketing, you know, whatever, you know what good looks like, then your job becomes so much easier. But the only way to find that out, obviously to your point, is introducing external people, talking to people, comparing, you know. We also did that actually with my CTO at that point in time, which was one of the things we actually did that led me to conclude that I had to let him go was that. I said, because I was having a lot of dialogue, like, should this take this long time and so forth. So one thing I eventually said was, you know what we do? We booked meetings with five other CTOs in five large Swedish companies. So among them were like Ericsson, the more traditional ones, but it was also like a gambling company that was doing fantastic. There was a gaming company, Dice, you know, stuff like

• 46:39Speaker 00

  that. And we went and had meetings with them. And in those meetings, I started raising my concerns and stuff like that. And I was listening to the, the other company CTOs answering to the same discussions, comparing it to the answer of my CTO. And in that conversation, I really saw the difference in how they were attacking these problems and what their philosophies and the.

• 46:59Steven Bartlett?

  And the level of optimism in which they approach problems as well.

• 47:02Speaker 00

  For sure.

• 47:02Steven Bartlett?

  Because that's for me has been the biggest differentiator between the really exceptional CTOs I've worked with in San Francisco when I was there.

• 47:08Speaker 00

  Yeah.

• 47:08Steven Bartlett?

  Versus bad ones is they have a everything is possible attitude, right?

• 47:12Speaker 00

  Yeah.

• 47:12Steven Bartlett?

  And those people are an absolute joy to work with. Speed and optimism in a, in a CTO is just makes your life.

• 47:18Speaker 00

  For sure. And again, I just want to highlight here that like, my CTO wasn't bad. He wasn't bad. He, he was totally fine and okay, but he wasn't the right person to build a $45 billion company. That was just like, those are two different things, right?

• 47:32Steven Bartlett?

  There's not many of those.

• 47:33Speaker 00

  No, no, no, exactly. Right. So he wasn't exceptional and he didn't have the right mentality.

• 47:38Steven Bartlett?

  Yeah.

• 47:39Speaker 00

  To, to do what we're doing now.

• 47:41Steven Bartlett?

  Pain.

• 47:42Speaker 00

  Yeah.

• 47:42Steven Bartlett?

  Part of the reason I started this podcast was because, and why it's called The Diary of CEOs, I wanted to show, I wanted to really give a fair impression of the other side of entrepreneurship. It's been super glamorized. Probably why, you know, that stat you shared where it went from seven to 70%. That's probably why it's now seen as a very sort of glamorous thing. And I wanted to create a bit of a, a platform to share some of the harder parts of business. And listen, you've built a company worth $45 billion. Like, I know that it was painful. So talk to me about the, the pain and the unexpected pain that might have put you off starting this had you known it. Had you been, had you not been naive enough to, to realize how painful it is at times?

• 48:22Speaker 00

  Well, I think that like my, a lot of my pain, I would feel equals when I see athletes, you know, trying to throw or trying to jump and then failing and the frustration that you see in them when they cannot achieve what they want to accomplish. I feel that's a lot of the pain that I've experienced. So like my, a lot of my frustration and pain has been associated with like, oh, you know, I know we can do this. I know we have the opportunity to do this and we're just not getting there. We're not getting there. It's not getting through. It's not happening the way it could be. I think that's a big piece of a pain for me is that lack of like, ah, so frustrating

• 49:05Speaker 00

  to feel like you're so close, something could be there, but it's not that. I think that that's one part. Then, I mean, another part is obviously, um, you know, when things go wrong and you're frustrated because, you know, you wanted something to be better and it didn't work out and stuff like that. So you're very like, uh, you're challenged by those situations.

• 49:27Steven Bartlett?

  In terms of stress?

• 49:29Speaker 00

  Mm hmm.

• 49:29Steven Bartlett?

  How do you feel that and how have you dealt with that?

• 49:31Speaker 00

  Um.

• 49:35Speaker 00

  I am not that stressed, to be honest. I don't know why. It's almost like, to some degree, I'm almost more stressed when things are good.

• 49:46Speaker 00

  No, because like, like when we have some crisis or something happens, right? Like, you know, we had an incident with some breach of data, uh, for example, uh, a few months ago, right? In those situations, as much as it's painful that something's happened and I'm sad about potential consequences for individuals that we might have made some errors, I feel like it all becomes like execution mode. We bring everyone into room. It's just like, what do we do? What do we do now? And I kind of in a way enjoy that work. It's very concrete. It's very like, you know, focused and you're like, there's nothing else. You have to do only this now. Let's see about what can we do about this problem? How are we going to fix it? Who's doing what? You know, so forth. In those situations, I don't feel that stressed, actually. I can even feel an adrenaline in that situation.

• 50:31Speaker 00

  As much as it's painful to me to see the consequences, I can feel adrenaline and like, let's get this to work. Let's do this now. Let's, you know, let's take on this challenge that has suddenly arisen.

• 50:42Steven Bartlett?

  It's funny, the best leaders, and I'm sure you'll find this even in your company, all seem to speak to that. They all seem to be really emotionless in those, the absolute chaos moments.

• 50:50Speaker 00

  Right.

• 50:50Steven Bartlett?

  And it becomes a, you know, a methodical process of how to solve the problem.

• 50:54Speaker 00

  Yeah.

• 50:55Steven Bartlett?

  Versus.

• 50:56Speaker 00

  And, and I do think, again, as much as, you know, I don't wanna, obviously, I feel a lot of pain from the perspective of like, if we've done a mistake or done something wrong as a company, it might have had implications for our customers or whatever, that's very painful. But at the same time, those incidents or the situations when you've gone through something that was very chaotic or very challenging, are the moments that have created the strongest relationships within the companies have shown, you know, has shown some amazing talents stepping up to, like, it's a little bit like you go on a vacation, it's just sunny. You don't really remember it, but if you had like a, you know, a thunderstorm, you'll, you'll talk about it for, for, for years, right? So like, there's something to that. So I think my stress may actually more come from sometimes when I feel like

• 51:41Speaker 00

  we're all kind of happy, we all feel as going well, like, it cannot be true, there must be something that's wrong. Yeah. And I think Alex sitting over there will, will, um, will kind of smile now, I guess, I think he will recognize this. But again, um, so I think that, that's where I can, I actually more get stressed from, like, are we doing fast enough? Is this good enough? Like?

• 51:59Steven Bartlett?

  That's really interesting. I, I, it comes, also relates to your point about needing to be challenged. You talked about in school when you'd read the book and you got bored. And that, it's funny because I, I was writing my book and I finished writing my book recently and it was published. And one of the paragraphs in it talks about how I used to believe that my life was the pursuit of trying to get to stability.

• 52:17Speaker 00

  Yeah.

• 52:17Steven Bartlett?

  But in fact, when you look at when people arrive at a point of stability.

• 52:20Speaker 00

  Yeah.

• 52:20Steven Bartlett?

  Everything is fine.

• 52:21Speaker 00

  Yeah.

• 52:21Steven Bartlett?

  When they've won the gold medal, then they descend into chaos.

• 52:24Speaker 00

  Yeah.

• 52:24Steven Bartlett?

  Then they get depression and they get, they lose their sense of purpose and then they, they get irritable. So I flipped it and thought, you know, my life is actually the, the, the pursuit of, of staying in chaos because chaos is my stability. And if I ever get to stability, completed goals, nothing to strive for, then I descend into chaos. And it sounds exactly like what you've described.

• 52:42Speaker 00

  Aspiring and working for things is so motivating, important. I think to some degree, as much as Klarna had a lot of success in Europe, there's a kind of funny story around this topic because, um, you know, we were doing really well in Europe and developing our services, but there wasn't necessarily that much fierce competition from one perspective, right? And then as we were moving into the US market, there is this company in Australia called Afterpay, run by Nick. And they are competing head on with us, right? And they were doing really well. This is back in like two thousand and eighteen. And I was like, ah, this is so annoying. They're coming in here, they're taking our market share, they're doing our product, they're copying us. You know, all this frustration building up. And the funny thing is, I happened at that point in time to be visiting with Mahmoud, who runs Boohoo, right?

• 53:25Steven Bartlett?

  Oh, good friend of mine.

• 53:26Speaker 00

  Yeah, so I'm sitting there with Mahmoud and I'm like complaining to him and I'm like, look Mahmoud, it's a little bit like, you know, you know, the Olympics? When there's this guy who's been like, this is his fourth Olympic. And everyone knows like now finally he's gonna get the gold medal because he's been training like. And then this young guy comes from nowhere and like, that's so unfair. This is my fourth Olympic and this guy comes in. And Mahmoud looks at me and he's just like, Sebastian, shut up. Stop whining, stop whining. And like, this is gonna make you so much better. You have been not having proper competition, you now have proper competition. And it is so true. Klarna in the last three years, thanks to the competition with Afterpay in the US, has become such a much better company.

• 54:10Speaker 00

  It has helped us so much to improve, to get focused, like. And it was just so funny when he was just like, stop whining. And I can't, you know, he will speak his Manchester. I can't do that, I won't be able to try to replicate how you express this, but I thought it was really funny.

• 54:23Steven Bartlett?

  Well, that's Mahmoud. I remember the first time I met him. I was in his office four days that week and he insulted me several times, but in the most loving way. Like, you remember him smashing his pen on the desk and telling me how stupid I was? Because of a decision I was gonna make. And I've been like good family friends with the whole family for a very, very long time. What was, just on that point then, what was the toughest moment in your Klarna journey? A moment you think that was, that was the worst fucking day?

• 54:49Speaker 00

  I think maybe one of the toughest was that, similar to there's been some media scrutiny of us in the UK. We had a similar experience in Sweden about a few years earlier, which was in around two thousand and twelve and thirteen. And, and like, it started off with this like media inquiry about what we were doing. Cause we were, you know, first just like, oh, it's an amazing, successful company. And then once people like, oh, we're actually doing credit and what does that mean and stuff like that. And so there started to be quite a lot of like, and it actually started with a mistake that we had done internally. It was an operational mistake, we've done a stupid thing. And, and that had resulted into a lot of customer complaints and stuff, which was our own fault. But that was the beginning of it. And, and I think through that process, when the papers started writing about us in a negative way.

• 55:33Speaker 00

  I kind of jumped in and it's kind of funny because I was actually, at that point in time, they had comments fields on the articles. So I would go into the comments field and write my responses in real time and then other consumers and readers would answer and I would answer them. And even the newspapers started writing about like, look, Sebastian CEO is on our forum discussing the topics. So I was very engaged. I was sitting like working 24 hour and I was thinking about like, how do we give, because quickly the media went, you know, out of control and there was a lot of bias and, and, you know, inaccurate reporting and just like a lot of things. Some were accurate and some was fair, but a lot of it was also like out there. And then obviously the banks, because we are a big threat to the establishment banks. So even, you know, afterwards, I've

• 56:15Speaker 00

  heard from journalists that like a ton of emails were coming from banks saying like, oh, you know, they're bad, they're this, they're that or whatever. Cause they simply, you know, they're threatened by our existence. And so, um, so there was that going on. But I remember what was the hardest thing to me to point is that that situation itself was fine. But at some point of time, the, um, uh, the kind of articles and the writing about us shifted from they're bad, they've done these mistakes to they have bad intent. They're here to screw customers over, to do bad things, right? And that was tough. That was really tough because I know that wasn't true. And I know that we have good intentions and we're trying to do that. We have done mistakes and we can fix things.

• 56:59Speaker 00

  But being judged and questioned on your intentions of what you do.

• 57:03Steven Bartlett?

  Your character.

• 57:04Speaker 00

  Yes. That hurt a lot. And I took that very hard. And I took that to heart. Um, so that was very, very challenging to cope with.

• 57:10Steven Bartlett?

  When those things happen, what kind of partner do you become to your, your romantic partner, your wife you've got to work with?

• 57:18Speaker 00

  Yeah. She knows that I'm like extremely passionate about Klarna and the company. And, and I think that she's, um, She knows that like a lot of my thought process will be here all the time, right? So I think that, but, but you know, I'm very lucky in the sense that Nina is an amazing person herself. She's done amazing things and now she's running a startup with thirty people. So that helps because she has her own like things and, and actually we can come together at dinner table and we can, you know, on, we can talk about the challenges and the things that we, that we face and we can exchange thoughts about that. So it, it, well, we have three kids as well, right? I have a four year old and a six year old and a seven year old.

• 57:59Speaker 00

  So, um, so I actually, you know, as much as I live my life, I try to work really hard and then come home, turn off the phone, be very present with the kids and then they go to sleep and I get to work some more. And then me and my wife has a very like, which is I think maybe most families with kids our age, but have a very strict, you always thought that that was not gonna happen. You're gonna stay spontaneous and all that.

• 58:20Steven Bartlett?

  Yeah, yeah.

• 58:21Speaker 00

  You end up having an extremely strict calendar where it's like Wednesday is dinner night, me and Nina have dinner together, Tuesday we're working like nights and so forth. So it's extremely strict calendars to make that work.

• 58:32Steven Bartlett?

  You were, you were, you know, grew up from a very humble beginnings with an immigrant family, as you said, and because of the success of Klarna, that's now made you very wealthy. And it's something wealth beyond probably you've ever imagined. I don't know how ambitious you are, but, um, what role does that, that play now in your life in terms of your relationship with money? It was the thing that, as you say, you thought might have been liberation from a lot of pain and heartache. And what role does, does the financial side of it success come in your life?

• 59:00Speaker 00

  I think it's an interesting topic and, and you know, I've been asked sometimes like the classic question, like, does money make you happy? Right? And, and, you know, I, I, I understand why some people try to say, no, it doesn't because to some degree, like you're the same person, even if you have a different income level and wealth than you used to have. So you're the same person, you still get angry at things and sad at things, you know, still things happens. You, you lose a relative or something happens in your life, you know, you go up and down. So from from one perspective, I can understand why people, but I've stopped saying that because I actually think that it's slightly out of touch. I mean, there are elements in my life I don't have to worry about.

• 59:40Speaker 00

  Like, I can still remember the feeling of like, you know, I used to go into seven eleven and I would be like, I would just love to have orange juice, but I can't afford it. Or I would just love to have a sneakers or I would just like, like, and I remember the day coming in into seven eleven like, it doesn't matter. I can buy whatever I like in the store. It will have no impact. And that is a difference. And I just, you know, I think it's a little bit like out of touch to say that that doesn't impact you. I don't have to worry. I never worry about finances, like it's all taken care of, right? And that obviously creates a different life. It gives you a different thing. Then I'm not a big, like, I don't like have ten cars or anything like that. I'm not a big interested in cars. Like, I'm not necessarily the person, I have a couple of things like I have, for example,

• 1:00:25Speaker 00

  my, I'm very, very proud that I bought a Steinway piano that is self-playing.

• 1:00:30Steven Bartlett?

  Oh.

• 1:00:31Speaker 00

  Yes, so you actually have this like app, like Spotify, you can go in and select.

• 1:00:35Steven Bartlett?

  Perfect. And you can sit there, do the video.

• 1:00:36Speaker 00

  Yeah, exactly. Pretend that I have learned to play piano as well. So like, I have some like luxuries that I've really afforded myself that I think, and we have a beautiful house and and and things like that. But but, you know, but I still think that like the key thing is I don't worry about it. And I know that most people, and I remember myself worrying about it, right? Worrying about next month, end of, you know, end of these things. And and that is a difference in life, obviously, right? So that has changed.

• 1:01:02Steven Bartlett?

  I read something which was um, was quite difficult to read, actually, which was about your father and his response to your success.

• 1:01:08Speaker 00

  Yeah.

• 1:01:08Steven Bartlett?

  Not being, not being particularly proud necessarily of your success.

• 1:01:13Speaker 00

  Yeah, but that also comes back to alcoholics, like, because, so what happened in my, um, my life, right, is that, um, my grandpa unfortunately drank himself to death. And then when I was growing up, my father was very conservative and I never saw alcohol in our house. He badly had a bad glass of wine. And unfortunately, that started changing in my like teens. So I started discovering bottles of vodka at home and so forth. And then over time, uh, there were instances where I would come home and dad would be quite drunk and and act in a very irrational way. And he became more aggressive and and so forth. And. And this was at a point in time where I was still out partying and drinking and so

• 1:01:57Speaker 00

  forth. And it was interesting because at that point in time, and that just tells you about, you know, the problems of alcohol addiction, I never reflected that maybe I have a problem as well. All right, that was like out of, of course not, like it was my father who had an issue, right? And but he unfortunately found himself in a spiral in his life where, and I think it's almost like people find themselves in a positive spiral, negative spiral. The positive spiral is like, you know what, I can actually affect my own life. And now I'm gonna try it a little bit. Ooh, things got better. You know what? I can maybe do even more. I can do even more. And then some people are on that positive spiral. While other people find themselves in a negative spiral where it's like, I have

• 1:02:42Speaker 00

  found myself in this. It's not my fault. It's everything else's fault. And then, you know, things get even worse and then look, and they just found themselves in a very negative spiral. And obviously, I'm simplifying, people are different in all the situations. But there's something that and that found itself in that spiral where it was everyone, everyone else. And alcohol tends to extrapolate that and make it even stronger that you, you basically blame everything else and you take not, don't take the responsibility. That's the beginning of the 12 steps of the anonymous alcoholics is actually to take responsibility for your own actions. And so unfortunately, and it, it, it went as far as, as, you know, he, he lost his job, he, he lost his apartment. And, and I found myself in a very tricky

• 1:03:25Speaker 00

  situation because at the same point in time, my economical situation was improving heavily. And I was trying to figure out what, what do I do now? Because he could call me and he would ask for money. And I would be like, of course, I want to help my father. And so I would help him. And then if I did that, I didn't hear from him for a couple of days. And then he would call me super drunk or text me something very, you know, nasty. And so it was very difficult because and then I started seeing counselors and understanding that like, maybe actually in this situation, I needed to put like limits, you know, and ask him to not, to say, look, I'm not going to do this unless, you know, you do this and stuff like that, which was kind of the right way to deal with it. But very, very obviously tricky. And unfortunately,

• 1:04:09Speaker 00

  In my situation, it didn't, it didn't work. So at the end, there was a situation where, you know, um, he was, um, he was about to lose his apartment and he had a discussion with me and I was very like ambiguous. Should I help him? Should I help him and all? And, um, and then I was, it was an evening in, in the office and suddenly I see my phone's phone number. He's calling me on the phone and I was like, oh, I don't know yet what the right answer is. Should I help him and all? What should I do? It's difficult. So I was like, I'm gonna call him later. So I didn't answer the phone. I went home, I had dinner with my wife and we talked about it and I was like, no, this time around, I should probably help him. Uh, I decided and I tried to call him and he didn't answer and I emailed, he didn't answer.

• 1:04:53Speaker 00

  And I was like, okay, fine. Maybe you just, you know, whatever. And then in the morning, my mother called and said he was dead. Right? So it was a, so that was like a very, very obviously dramatic moment in my life. And very difficult, like, uh, you know, from that perspective. So, um, he, he was so smart. He was so thoughtful. He had gone to the places we had worked. He had tried to do things better and so forth, but he had been in normal places where if, you know, I remember him working for the municipality, for example, and he integrated, like he created some Excel systems that would rationalize everybody's work and nobody wanted to rationalize their work because that meant that they would have less to do and then maybe somebody would lose their jobs.

• 1:05:34Speaker 00

  So he's doing all these things and nobody was showing gratitude to his attempts of trying to fix things and things. Similarities to what I'm doing, I could see him having those things. But because of his background, because of his situation, and to some degree, probably because of his, you know, addiction, he just found himself in this negative spiral rather than the positive spiral that I found myself in. And it just made him, you know, more and more depressed and, and, and that made him also very difficult for him to relate to me. Because like, in one way, I must believe and hope that at some point in time, he was proud and, and, and, you know, happy about how things have evolved in my life. But at the same point in time, it was very clear that he felt frustrated by the fact that what he had gotten and how his life had turned out compared to mine.

• 1:06:17Speaker 00

  As, as crazy it might seem that your father would relate in those terms, but I think unfortunately that was part of the case. So, you know, it's very tricky and difficult, um, and, uh, but I'm very happy at least that I stopped drinking and I'm, I'm a, I'm a sober alcoholic since. Nine years now, so.

• 1:06:33Steven Bartlett?

  Amazing. Well done. My last question then, that was incredibly, incredibly moving for so many reasons. And I think it's really also inspiring that you have that sense of sort of empathy to be able to look back at you and your father and understand that a lot of his circumstances came from his own pain. And that was a generational cycle.

• 1:06:52Speaker 00

  Yes.

• 1:06:52Steven Bartlett?

  One that you have the power to stop.

• 1:06:55Speaker 00

  Yes.

• 1:06:56Steven Bartlett?

  I say, and also to kind of, it sounds like you've kind of forgiven him for.

• 1:07:00Speaker 00

  Yeah, I have because, look, I think, you know, people, I don't think people still fully understand alcoholism. In my opinion, it is a disease. He was sick. He had, you know, he had an addiction. Yes, was he, does that mean that he couldn't cure himself? No, he could cure himself. If he would have found himself on a positive spiral, he might have been able to cure himself. That doesn't mean he wasn't sick. This, the father that I had the last years was not my true father. Those are not the memories that I have from my youth, when he would bring me into the forest outside Uppsala, and we would go on long walks together and we would fantasize about being space explorers, or he would introduce me to amazing science fiction literature, or what are these things like, there are different memories of my father that was my true father. That was a sick man. And that's

• 1:07:45Speaker 00

  just unfortunately, like how things develop, right?

• 1:07:48Steven Bartlett?

  And now you're a father, three beautiful kids. What matters to you in terms of the principles in which you hope to raise them? And obviously now, as we talked about at the start of this podcast, much of the, I guess, the circumstances that created you were because you went without, and you didn't have, you know, things handed to you, and you form that connection that if I'm going to be, then it's going to be a direct result of my actions. So what do you, what's your thinking is, and what do you want to impart on them?

• 1:08:17Speaker 00

  It's a topic I tend to talk a lot about with my wife, and that's very difficult. I mean, it's a mix, right? Because first and foremost, like. Obviously, my kids are not gonna have the same upbringing that I had. Like, there is a massive difference. Like, you know, look at our vacations, look at our summer house, look at like all the things. There's just like, there's no way I'm gonna be able to ever like recreate any of that. But um, but that's, you know, that's part of it. And I, but I do think also like when it comes to being spoiled, like to some degree, to be entirely fair, like, and I love my mother, she's amazing, but she did spoil me. She had a very hard time saying no. And if we were in this grocery store and there was some candy and I would be like, I want candy. She tended to give me the candy. So I'm a pretty spoiled person by my upbringing, even though we didn't have that much financial means.

• 1:09:02Speaker 00

  Now, she wouldn't buy the candy if there was no money left, but if there was money left, she tended to buy it and then there was no money left for something else, right? So like, she had, my, my, especially my mom had a very hard time putting no's to me. And she would say yes to basically everything as long as she could, basically, right? Um, so you can spoil somebody without having financial means to some degree, right? Um. Now, uh, so that's one thing. But, but there is something where I, you know, and it was funny because now as I was like, uh, my son was invited to like a, you know, a party, a birthday party with some of his friends, like six years old, right? And you're standing and talking to the parents and we have this amazing school. It's not a private, it is a private school, but it's not kind of though like upper class private schools. It's actually a really nice school with a good mix of people from all types of society and stuff.

• 1:09:46Speaker 00

  And, but very ambitious teachers and a good school. And, and we're starting there and the other parents are a little bit like complaining about like, you know, oh, this could be better and this could be better. And I, it's not like I didn't agree with them that some things were, um, couldn't be improved in our school as well as they always can be. But then I told them to, I, I didn't like stop them a little bit and said, you know what? I, to be honest, like for myself, if I think about the schools that I went to and the environment I brought up into, I sometimes wonder whether I want my kids to continue going to this very good school or whether maybe when they're like 12 or 13, I'm gonna try to find the worst school in Sweden and put them in there for three years, just to create a little bit of resistance, like to get something like a different perspective on like,

• 1:10:31Speaker 00

  be in an environment where it's very difficult. And like, I was like, because I really want them to get the resistance. I want them to. Get to know themselves and get to know that they can actually fend for themselves, that they can solve these problems for themselves. I don't want them to be without resistance. And I feel like all of our parenting today is about like, remove all resistance. And I'm like, no, no, I want some resistance. And the funny thing is, I'm telling this to the other parents, and they're all looking at me like, is he stupid? Is he, is he wacko? Like, what's wrong with him? Like, you know? And it's like, no, no, no, I want some resistance, right? And I remember I just to, to round off, look, when we did that round the world trip,

• 1:11:10Speaker 00

  we had very little money on that trip. And at some point in time, we arrived from Singapore to, to, to Brisbane, and we were going down to Sydney, and we were actually supposed to take the cargo ship the next day to go to US already. So we were only going to stay one day in Australia. But we missed the boat. We had an unfortunate event and we came too late. And the cargo ship was not going to wait for two passengers, I promise you. So they just left. And we went to the firm that helped us find these cargo ship trips. And they said, sorry, the next boat is in a month. And we're like, okay, but we don't have any budget, no money. And now we're like stuck in Australia for a month. Obviously, quite a nice place to be stuck, honestly. But, but still, like, and I remember walking down the street, I think it was Elizabeth Street or something, in, in Sydney.

• 1:11:53Speaker 00

  And I remembered that like, I have no job, I have no money, I have nowhere to stay, I have only my backpack. And you were like, and we're going to stay here for a month. Let's try to start a life. And we had to find a place to live that was affordable, and we had to find a job. And we actually started working as furniture movers for a company called City Move. Everyone who worked there called it shitty move because they have this about, but, but it was like, and we were in. And so, but the point is that like, it taught me, I can fend for myself, I'll survive. And like, it's only dependent on me. And that resistance created a sense of like, you know, I can do this and so forth, right? And that's, that's what I hope to give my children somehow.

• 1:12:31Steven Bartlett?

  But how do you do that if you pass them your wealth?

• 1:12:33Speaker 00

  Well, I'm not sure I'm gonna pass them the wealth. So I actually have officially said in some interviews in Sweden that I am, and my wife and me are still not entirely aligned on this topic, but I have actually said I'm not gonna give them anything. And I tell them in that. And it was even funny because, you know, in Sweden, I'm quite well known. So even the fact that I said so on public TV, then my kids heard from their friends like, Dad, you said on TV that you're not gonna give us anything. That's unfair. We were like, I don't like stuff. No, but I've been telling you consistently, like, when you're 18 years old, you're on your own. Like, and then my wife always goes, but we may buy an apartment for them, right? And I was like, I'm not sure. Let's see. Like, I just, there is to your point, like, I mean, I don't, I don't wanna like, and in Sweden also, it's a little bit provocative

• 1:13:18Speaker 00

  for somebody with money to say I'm not gonna give anything. Because I don't, I'm not saying I don't believe in welfare. I think sometimes you need to support people in difficult situations and so forth. So I said, look, I'm not talking about people in general. I'm only talking about my kids. But for my own kids, I'm not convinced that giving them all of this is gonna make them happier. And I meet a lot of people from family wealth that have inherited wealth that are extremely unhappy with the pressure and the expectations that comes with that. So as much as, and again, I, I'm not saying that money doesn't make you happy. We already talked about it, but like, there are some aspects of it that are very difficult. And I think that like, in general, building a person's own self-confidence and belief in their own abilities to actually have a positive impact on their lives.

• 1:13:59Speaker 00

  I feel still think that that is the key, you know, path to happiness.

• 1:14:04Steven Bartlett?

  I agree. Listen, Sebastian, thank you so much for your time and your honesty and your humility. And you're a massive inspiration to me for so many reasons. Not least for your business success. But I really do come back to that point about you building such a great tech company without technical expertise. I hear it all day, every day from entrepreneurs. I felt it myself. I think I've told myself that there's certain industries I can't build in because of that, because I lack fundamental expertise there. And I think you, you kind of bucked that trend and proved to me and entrepreneurs listening that you can, if you have the drive and determination and that self, underlying self-belief to get there. What you've done is just absolutely phenomenal.

• 1:14:39Speaker 00

  Thank you very much.

• 1:14:40Steven Bartlett?

  Unbelievably pleasant human being as well. And you're very sort of, very, very honest. And I think that's, that's a gift that I'm glad you shared with us.

• 1:14:48Speaker 00

  Thank you.

• 1:14:49Steven Bartlett?

  But yeah, thank you so much for your time and I can't wait to continue to watch your journey. Yeah, yeah. It's gonna be exciting. Thank you. Thank you so much.