Letter #270: Sebastian Siemiatkowski (2025)
Klarna Founder & CEO | F-1 Shareholder Letter
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Sebastian Siemiatkowski is the Founder and CEO of Klarna, which he founded when he was just 23 and a business school student at Stockholm School of Economics. Prior to founding Klarna, Sebastian had worked as a salesperson as a factoring company. Before joining the factoring company, Sebastian had been living on welfare checks and food stamps after traveling the world for a year and missing his course registration. He had started working at the age of 15, flipping burgers at Burger King, working as a caretaker for elderly people with dementia, as a school teacher, and a telemarketer.
Today’s letter is the Sebastian Siemiatkowski’s F-1 shareholder letter. In this letter, Sebastian shares why banking is all about trust, how traditional banks traded trust for profit, why consumers stopped believing in change, Klarna’s birth, his admiration for IKEA and Walmart and how they both had economies of scale, were willing to put their profit back into higher quality at lower prices, and created a positive loop of ever-increasing trust with their customers. He then addresses Klarna’s skeptics before highlighting what Klarna has accomplished and how they have served their customers, before ending by sharing the quintessential strategy that has allowed them to grow into the company they are today, and then addressing potential shareholders and telling them that they are not just investing in a company, but a new era of finance.
I hope you enjoy this letter as much as I did!
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Letter
Banking is about trust. At its core, trust is rooted in the profound yet daring belief that someone else will place your needs above their own. It’s a distinctly human trait, the glue of relationships, and the bedrock of progress.
Yet, somewhere along the way, traditional banks traded this principle for profit, losing sight of what truly matters. Instead came financial engineering, raking in profits through late fees, overdraft penalties, revolving debt traps, and countless other tricks designed to exploit their customers. Trust in banks has never been lower.
So, wasn’t competition supposed to fix this? Sure, but it was sacrificed at the altar of “financial stability” and “privacy” through misguided regulation that raised barriers to entry. Consumers, disillusioned and doubtful that anyone could truly be different, stopped believing change was possible.
Klarna, at the beginning, 20 years ago, was no different. We just copied the business model of banks and made it digitally native. But as time passed by, we realized many old bank practices were harming their customers, so we changed our course. We had our reckoning. I decided this bank was going to be different. That was ten years ago.
As a kid, I admired IKEA and Walmart—businesses that had a common theme: when they grew, when they benefited from economies of scale and success, they were willing to put that profit back into higher quality at lower prices. Year after year, they ultimately created a positive loop of ever-increasing trust with their customers, allowing them to dominate their segments.
So, post our reckoning, we took the opposite approach. Late fees? We minimized them. Revolving credit? Eliminated. Our Buy Now, Pay Later (BNPL) feature has saved consumers billions in interest compared to using credit cards.
There is a long list of skeptics out there. People who’ve never used our service criticize it as promoting debt. What they miss is this: credit cards lump all your spending into a single bill, encouraging larger balances and revolving debt.
Klarna, by contrast, lets you decide on a purchase-by-purchase basis whether to pay now with debit or use credit with clear, fixed terms. It’s a difference that keeps the average Klarna balance at $87, compared to the $6,730 average credit card balance in the United States.
It’s no surprise skeptics are coming after us. We are challenging one of the largest profit pools ever created by humanity—the profit pools of the world’s biggest banks.
These institutions have built an addressable market of over $1 trillion, profiting for decades under the shield of misguided regulation, stifled competition, and insurmountable barriers to entry.
Klarna has broken through the barriers! This is the choice of a new generation—one smart enough to avoid credit cards and banks that rely on outdated tricks. Close to 100 million people across the globe have realized Klarna has something different to offer. It is an amazingly diverse group of people with really one thing in common: their resentment of traditional banks. They want simple and transparent fees. They want to avoid mishap fees. They want fixed and clear payoff horizons for major purchases. Ultimately, they want a bank that delivers trust by putting their interests first—and yes, preferably interest-free.
Investing in trust, investing in your customers, is the quintessential strategy that has delivered the most outstanding returns for shareholders. For those to join us, you’re not just investing in a company—you’re investing in a new era of finance.
Cheers,
Sebastian Siemiatkowski
CEO & Co-Founder of Klarna
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Wrap-up
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