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Klarna CEO: SaaS is Dead: Why Systems of Record Will Die in an Agentic World

Sebastian Siemiatkowski is the co-founder and CEO of Klarna, the global digital bank with over 114 million global active users and 3.4 million transactions per day. Seb is one of the leading public company CEOs pushing the boundaries of AI. ----------------------------------------------- Timestamps: 00:00 Intro 01:16 The real Threat to SaaS 05:58 What revenue multiple will software companies trade at in the future? 10:31 Why you need to build your own customer service AI to win 22:12 Klarna has two times the customer base of Revolut. They will beat Revolut 24:17 How I lost a billion dollars not investing in Nubank 25:54 Why Nubank are more likely to win the US than Revolut? 33:59 We used to be 6,000 people. Now we are just 3,000 40:14 When is a high valuation too high and can be dangerous? 41:27 How we got Sequoia to invest & Michael Moritz to join the board 53:19 Investors who don’t build will lose 01:07:56 What CEOs really think about AI 01:13:34 I have changed my mind on the adoption cycle ----------------------------------------------- Subscribe on Spotify: https://open.spotify.com/show/3j2KMcZTtgTNBKwtZBMHvl?si=85bc9196860e4466 Subscribe on Apple Podcasts: https://podcasts.apple.com/us/podcast/the-twenty-minute-vc-20vc-venture-capital-startup/id958230465 Follow Harry Stebbings on X: https://twitter.com/HarryStebbings Follow Sebastian Siemiatkowski on X: https://twitter.com/klarnaseb Follow 20VC on Instagram: https://www.instagram.com/20vchq Follow 20VC on TikTok: https://www.tiktok.com/@20vc_tok Visit our Website: https://www.20vc.com Subscribe to our Newsletter: https://www.thetwentyminutevc.com/contact ----------------------------------------------- #20vc #harrystebbings #sebastiansiemiatkowski #ceo #klarna #ai #saas

Sebastian SiemiatkowskiguestHarry Stebbingshost
Feb 16, 20261h 29mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 1:16

    Intro

    1. SS

      We've gone from seven thousand people, we're now below three thousand. We've shrank fifty percent, and I didn't ask for a single dime to do all this. And the reason for that is because I've seen the acceleration of AI, and I know we can ship all these things on the existing organization.

    2. HS

      Is twenty thirty, how many employees do you have then?

    3. SS

      Two thousand? No, it may very well be even less than that.

    4. HS

      No!

    5. SS

      But listen-

    6. HS

      Now, we have an incredible episode today. Seb from Klarna is probably one of the leading figures in how to implement and use AI effectively to shrink headcount and make your business way more efficient. This was one of the most wide-ranging conversations we've had.

    7. SS

      This is what I signed up for. It is stressful. It was hard as hell, but this is what I wanted. The next thing that's gonna hit everyone bad is the switching cost of data, because- [dramatic music]

    8. HS

      Ready to go? [upbeat music] Sebastian, it is so good to have you in the studio, dude. We've done this before-

    9. SS

      I know.

    10. HS

      -but to have you here in person is fantastic, so thank you for joining me.

    11. SS

      I am so happy to be here. This is gonna be a lot of fun.

    12. HS

      Dude, this is gonna be great. So this is also gonna be the best show you've ever done.

    13. SS

      [chuckles]

    14. HS

      You've done a lot of shows. I'm telling you already. But I'm just freewheeling. I had these brilliant notes.

  2. 1:16 – 5:58

    The real Threat to SaaS

    1. HS

      Dude, where the fuck is value in a world of Anthropic and Claude code wiping billions of dollars off a stock market? How should I think about that?

    2. SS

      Uh, you should think that software-- cost of ca- creating software is going down to zero. That's it. So, uh, and that means that, like, everyone will be able to generate software at any point in time. So it is a massive change, and, uh, I was a hundred percent con-- you know, convicted about this already when I saw this one or two years ago. So I've been-- that's been very, very clear to me.

    3. HS

      If the cost of software creation is going down, how do we determine which businesses have sustaining value versus which do not?

    4. SS

      So the, the key thing right now is, so far, the only thing that's gone down to, or not to zero yet, but become extremely much cheaper, is the generation of software. The next thing that's gonna hit everyone bad is the switching cost of data, because so far, what you're seeing is you have proprietary data stuck in, for example, the CRM vendor or the, you know, other software as a service that you're using currently. So you may replicate and build the same dashboard or build the same processes in your own tool, but all your data is in there, according to their data model, according to their setup. What's gonna happen is people are gonna start solving that problem. How do I get all of my data from the existing vendor and move it to the new vendor with the help of AI through one click? That brings down switching cost, and that's when the real threat to SaaS comes.

    5. HS

      So we had Aneesh Sundaresan on the show, one of their GPs, and he said agents in particular will dramatically reduce the friction of switching.

    6. SS

      Yes.

    7. HS

      Is that the method of which you're talking about, which will allow for this migration to happen?

    8. SS

      Exactly. That's exactly what I'm saying. It's going to happen. It's happening already.

    9. HS

      If that is the case, should ERPs and ServiceNows and Salesforces not be dramatically threatened? 'Cause the-

    10. SS

      Well, I, I think, I think the stock market woke up to that in the last few weeks, right? The question is just like... I mean, it's not like any business is going to disappear overnight because people tend to stick. They have used these things for a long period of time, they like them, et cetera. The question is, at what multiples should they trade? And if you look at historically, software could trade at a price to sales. I'm not going to talk price to E- to earnings, because some of them aren't profitable, so it's not an easy way to compare. But if you do price to sales, they've been trading at twenty, thirty, and now they're down at five, ten. But if you look at utilities, normal companies that are more utility, they may trade at one to two. So I-- from that perspective, you would argue there is still some unfortunate [chuckles] potential to go down even further. Is it gonna be... Look at Chegg in the US, right? They're now trading at zero point two. ChatGPT was seen as basically wiping out their business a few years, and now they're trading at a, at a depressed value, and now their revenue is also coming down, actually thirty, forty percent last time I checked. Is that gonna happen? I don't think so. That's probably too extreme. Zero point two would be very extreme for some of these companies, but is it not on-- Like, is it likely they could come down to one or two? Yes, I think so.

    11. HS

      My question to you is, though, there's this kind of consensus from all investors, which is always a worrying thing, um, that if you think that we're really gonna vibe code a lot of these tools internally, you've never worked in a big organization. The permissions, the hierarchy that ensues with the implementation of these tools, we are not gonna see large companies vibe code mission-critical systems, and they will keep the largest systems of record. How do you think about that when David Sze says that?

    12. SS

      No, I understand that some people have that opinion. Uh, I am not, because I think that, like, one thing is also, like, currently, the way AI is set up, and I've already started seeing people doing this differently, but one thing is, y- right now, AI is allowing us to reinvent the wheel all the time, right? So if you come in and say, "I want to write this piece of code," somebody else prompted the same AI, the exact same thing, somewhere else. We're still using tons of server power to do generate the exact same code. What people's gonna start realizing: "Why? Why don't I cache these things if I'm getting the same question, if I'm getting the same-- Or why don't I use existing open source components and reuse software?" Like, what if, if software becomes more like Lego pieces that you put together, that perfect, it's gonna be more and more efficient to just, like, bundle things together. And this also means that things like what you're talking about is, like, production-ready, you know, uh, security s- uh, security assured, and all these things, they will become more and more standardized building blocks. And I'm- I think in the future, I'm not sure AI was even gonna code that much. It's just gonna pick some pieces together and stitch them together to, to come to what you really need, which also actually means less, uh, need for compute.

  3. 5:58 – 10:31

    What revenue multiple will software companies trade at in the future?

    1. HS

      The, the other argument, and, and I totally hear that, but the other argument is enterprise software spends about eight to twelve percent of company budgets. [chuckles]

    2. SS

      Mm.

    3. HS

      And you look at that, and you go, "Well, hang on a minute. Our core business is X-

    4. SS

      Mm-hmm.

    5. HS

      ... Why the fuck are we building a Monday replica or a you name it replica?

    6. SS

      Yep.

    7. HS

      That's not our core business. Why spend the internal resources on it?

    8. SS

      Yep.

    9. HS

      How do you justify that then?

    10. SS

      I, I think that's to some degree, correct, but like, funny, the same weekend that this whole Claude bot thing exploded on X, I was actually sitting myself and playing around with a project, which I was just calling Company in a Box, right? And the idea was just- I was just- I just wanted to test it a little bit, and the idea was to do very similar, what Claude bot did, but more on a company, like, for a small company. And I just put, like, a small workspace, in there was accounting, and in that, I put the, an open-source accounting software. And then I put, like, a CRM, and I put an open-source CRM, and then I put a Claude agent on top of that. And then I told my Claude agent, "Hey, can you bookkeep this invoice for me?" Or, "Hey, can you set up this customer account for me?" on top of that software, right? And it worked really, really nice, which I just wanted to test the idea. Because the point is that-- and that's actually where it's also, uh, I see the risks of even more, uh, jobs being threatened, because to some degree, if I'm a small company today, then I may have an accountant, uh, firm, that's helping me with accounting, and those are the ones I would email like, "Hey, can you fix this invoice?" Or, "How, how much money do I have on my cash? You know, what's the current PNL look like?" Et cetera. But now I have Claude as an accountant on top of the accounting open source software, and then I'm just asking, "Hey, bookkeep this in, you know, bookkeep this invoice," or, "Check me my balance," and it works really, really well. So I think-- I'm not saying-- I don't think the plumbing firm, the electrician of the future, will code vibe code this themselves. [chuckles] Definitely not. They will buy off-the-shelf products for this. But the thing is, the question is, most of our ERP systems that we see today or software as a service, because coding was so difficult and hard, are still fairly siloed, right? They don't-- They are not broad in their spectra of what they cover, and the kind of winner of the future is much more likely to be extremely broad. They're kind of coming with a Claude bot or a Claude bot of companies, like, those services. That's how, how I think the future of that kind of things is. It's different for a company like Klarna, because in our case, to some degree, this is the operating system of the company. And what we realized when we looked at SaaS and all of these things already two years ago, which is why we started closing down SaaS, for us, was because we need to provide our AI the best context. We need to provide as good context as possible to be able to perform a job, and if your data is separated in these silos, a little bit in this SaaS, a little bit in that SaaS, a little bit here. Here's all the project management stuff, here's all the product definitions, here is the accounting stuff, here is this, here's that, y- it's, it's just harder to provide the appropriate context, right? So to us, it was like, "No, we need to reimagine the tech stack with AI first, being AI native, and incorporate AI and deterministic and probabilistic code into one text, that it becomes the operating system of the bank." And I think that that's, like, the future of larger enterprise, and that's why, to us, we're very mindful that we do still use some SaaS, for sure, like, we use Slack as an example today, like, yeah, which is a Salesforce company, right? So that happens.

    11. HS

      You should use Slashwork.

    12. SS

      Yeah.

    13. HS

      It's, it's one of ours. It's a competitor to Slack-

    14. SS

      Oh, yeah, I have to try it.

    15. HS

      It's much better. [chuckles]

    16. SS

      Yeah, I'll have to try it.

    17. HS

      We incubated it.

    18. SS

      [chuckles] Happy to hear that. So you see what I mean? So it's just like for a large company, I think that, like, obviously, not everyone needs to reinvent everything. I don't think the plumbing firm will reinvent it. I don't think they're gonna vibe code. That's not the point. Uh, I think they will buy something that looks like Claude bot or company-in-a-box kind of thing, um-

    19. HS

      Totally get you. I see how they're becoming the compound start-up and the benefits-

    20. SS

      Yeah

    21. HS

      ... that come from not having to integrate with fifty different providers. So totally get that. Do agents not just make that easier, though? Do agents not just make the data migration between different tools from third-party providers way easier? And actually, we'll be looking at this going, "It was a ridiculous idea to ever think that we needed to own every part of every element."

    22. SS

      Yep, that's exactly... You're exactly right. That's what is gonna happen.

    23. HS

      So, but if that's the case-

    24. SS

      Mm

    25. HS

      ... why do you need to vibe code it all yourself and build it all yourself if you're gonna have agents that are able to move data between different products much more easily?

    26. SS

      It depends on what kind of company you are. As I said, like, if you are a, if you are a, a plumbing company, maybe Claude will offer a solution for all of this, and Anthropic, or maybe there will be somebody else who kind of uses Claude and empowers this kind of company-in-a-box experience. That, I think, is still the kind of unknown answer. We don't know what's gonna

  4. 10:31 – 22:12

    Why you need to build your own customer service AI to win

    1. SS

      happen.

    2. HS

      Customer support is one I just cannot get as a category because there have been fourteen players funded with over a hundred million in the last fifteen months. Uh, and then you have all the existing incumbents.

    3. SS

      Mm-hmm.

    4. HS

      And then I speak to Ariel at Navan, Jack at Airwallex, and they're building their own.

    5. SS

      Mm.

    6. HS

      Are you building your own custom?

    7. SS

      Mm.

    8. HS

      You are.

    9. SS

      I mean, we were one of the early ones, right? So we-- This is actually one of the things we were surprised, but I think I announced already in '23 that, you know, our AI customer service had, you know, done the equivalent of six hundred agents' jobs, and it, it caught a lot of attention at that point of time. Now, you know, media always tends to, like, simplify these stories a little bit. The truth was that at that point in time, you know, our customer service was doing very simple questions. It was like: "Hey, did I pay Klarna?" "Yes, you did." "Okay, thank you." You know, like, so obviously, that wasn't that hard to, to do, uh, but it's still like... I mean, to some degree, a large company like ours, what do we do? We try to improve our product. Partially, we try to do that to, for fewer people to, you know, contact us and ask, "Hey, it isn't working," or, "I'm not-- I don't understand what I'm supposed to do," right? I mean, part of it, you just want your product to be so good that people don't feel they have to do that. So we've always tried to reduce customer service calls, right? The only, to me, shocking experience back then was that, like, we'd roll this thing out, we've rolled a lot of product improvements out. I've never rolled a product improvement out that instantaneously took a- took away six hundred, you know, the equivalent of six hundred agents' worth of work. Now, these-- Because we don't hire these people ourselves, they work for customer service companies, they just shifted and started working on others. So fortunately, in that situation, nobody lost their job, but it was still, like, an eye-opener for us, like, wow! And then, the point is, what you realize when you're early on that journey is, again, for customer service agents, whether it's AI or humans, for that sake, for them to be able to answer questions really well, they need as much context as possible. Where is that context? It's in the source code of your software.... How does Klarna calculate interest? Well, we can have a, a d- documentation of that, but at the, the truth is in our source code, is somewhere deep in our source code where that interest calculation is actually explained, right? So even if a- and documentation may be inaccurate, so what you realize when you pursue this is that, like, customer service isn't just like, "Hey, I need an agent that answers questions." Sooner or later, you want it to read the source code, then explain to the customer how it works. You want them to provide as much context as possible to be able to give the right answers, and that's when you start realizing that it's not something you- in our case, at least, we come to the conclusion we cannot buy it off the shelf because it actually becomes part of our tech stack.

    10. HS

      Will every large technology-first company build their own customer support system?

    11. SS

      I'm not sure. I think there will be- no, I think, obviously, I, I, I believe that for Klarna, the right thing was to be early, to, you know, r- try to find what we can do with this technology and where it can bring us, and I think it's, it's going to be a competitive advantage over time to incumbents that haven't done that. But a lot of incumbents will obviously procure fantastic AI customer service solutions in order to try to, you know, reduce the gap between what we're doing and they're doing. So, you know, who knows? We'll see what happens, but in our case, it was very evident that we needed to do this ourselves.

    12. HS

      When you said this, it was a brilliant headline.

    13. SS

      Mm.

    14. HS

      It was like, "Seb from Klarna replacing hundreds..." I can't remember. M- I think it was six or seven hundred. Uh, yeah, replaced seven hundred.

    15. SS

      Yeah.

    16. HS

      Um, and it was a big furor, and my question to you is, do you think that did more to harm or to help you? Because for me, as a marketer, I actually thought it helped you-

    17. SS

      Mm

    18. HS

      ... because it put you in a AI-first CEO camp that very few public company CEOs are in.

    19. SS

      Yes, I, I... It's- but it's a good, very valid question, and one of the things we also realized is that i, I mean, like, I obviously, like, as, as a Polish person, [chuckles] I think when, when things are about to change, I look at them very cynically, right?

    20. HS

      [laughing]

    21. SS

      Like, I'm just like: Okay, this is what's happening. I'm not that kind of person that's like gonna try to gloom things over. I'm like, "Okay, this is happening. It's gonna be a big change to the world. How do I adopt? What do we do the best out of it?" And I'm sure there's gonna come a lot of positive things and a lot of negative things. Uh, in this case, also, when we announced this, we obviously had some people being very frustrated with us. Like, "Oh, you know, you're, you're laying people off because of AI." People were angry to some degree as well.

    22. HS

      Yeah.

    23. SS

      And, and I, I respect that. I understand why, right? And that's why a few months later, we tried also to go out and say a different story, which-

    24. HS

      You walked it back.

    25. SS

      Yeah, we don't think so. I think Bloomberg changed kind of the headline, and then that got misinterpreted, but what we were trying to say a little bit later on is that, like, to me, as we explore this further, we were like: Well, but to be honest, if AI can do customer service, it's means it's gonna be the cheap customer service. It's gonna be the one that everyone gets because it's cheap and simple. But as has always happened historically, like when, you know, when, when people started in factories making cheap clothing or cheap furniture, we started appreciating artisan things.

    26. HS

      Mm-hmm.

    27. SS

      We started appreciating an artisan coffee shop, an artisan, you know, uh, uh, manufacturers or, uh, furniture that was done by artisans. So we said the future of VIP experience will be the human connection, the relationship, and that we genuinely believe. So we said we need to transform our customer service from thinking about it as like: Okay, yes, it's officially just, like, good customer service, but to some degree, when I kind of challenge it internally, I said, "Look, what I've seen has happened is also too much focus on cost," right? There's been too much focus on that. We have to rethink this and make customer service into this human part of what Klarna is and make sure that we offer everyone who wants a human connection. That's gonna be what VIP service looks like in the future. Like, "Oh, I'm not dealing only with machines. I'm dealing with a human," [chuckles] you know? That's what we think, at least. So that's the message we tried to get out, but then-

    28. HS

      I completely get you, Seb, but I am sorry, dude, for being so blunt.

    29. SS

      Yeah.

    30. HS

      Uh, that sounds a bit Silicon Valley idealistic. [chuckles]

  5. 22:12 – 24:17

    Klarna has two times the customer base of Revolut. They will beat Revolut

    1. SS

      gonna get a driver's license.

    2. HS

      Do you think you're best positioned to do that? Like, if you look at, like, the entry point and where you sit in the stack, are Revolut not in a more strategic, better position to be that digital financial assistant than you?

    3. SS

      Ah, [chuckles] they'd say- I mean, I love Revolut. I think Nik is a fantastic guy. I think it's an amazing company, um-

    4. HS

      Nik's the greatest CEO I've ever interviewed.

    5. SS

      He is-

    6. HS

      I'm also terrified he's gonna kill me. [laughing]

    7. SS

      [laughing] I love Nik. He's amazing. I've always felt very competitive with Nik, and, you know, and I think he feels competitive with me. Uh, we have a common friend, um, who, Oleg, who we talk to a lot about these things, which is funny. Uh, but the point is that, um, if you look at it, Klarna has a hundred ten million customers worldwide. Revolut now has sixty-five, right? So I'm twice the size in number of customers. The engagement that I have is not as high yet as it is with Revolut, so people may use us more- less frequently and for other things, right? So what I'm doing right now, what we're doing at Klarna, is moving from being kind of your infrequent payments solution to being your high-engagement banking, uh, provider, right? And that, that transition is going extremely well. It's going extremely well, and it's accelerating. Uh, people are adopting our banking services at a very rapid pace.

    8. HS

      Do you look at Robinhood? I've had Vlad on the show multiple times.

    9. SS

      Mm-hmm.

    10. HS

      And I think Vlad is astonishing. He's got eleven lines of business that produce over a hundred million in revenue. Um, and I think it's an incredible model for moving from entry product-

    11. SS

      Mm

    12. HS

      ... be it BNPL, or for him, you know, kind of frequency trading, um, into the full-stack banking provider. Do you look at him, and do you take lessons from that?

    13. SS

      Yeah, absolutely, but we all have different entry points. I mean, Revolut, to some degree, was like an early, like, "Hey, I'm an expat. I travel a lot in Europe, and, like, this is better for my currency," or, "I trade in crypto." That was kind of the-

    14. HS

      Yeah

    15. SS

      ... early adopter thing. Uh, I think, you know, uh, Robinhood was like, "I'm trading. I love trading." Klarna is very different. Like, our customer is like, "I shop online. I do shopping." You know, we, we skew more female than male. We have a very different brand. I would think of us more like a lifestyle brand, like a digital version of American Express. That's how I think about Klarna. So I think all of these growing

  6. 24:17 – 25:54

    How I lost a billion dollars not investing in Nubank

    1. SS

      fintechs... You know, I know David from Nubank since early days, right? Like, I have a funny story where, like, I was down in Brazil meeting David when he was just leaving Sequoia, starting, and, and, you know, we had a fantastic conversation. We talked about the future of, of, of banking, and then he sends me an email [chuckles] ... [chuckles] which was like, "Hey, Sebastian, would you like to, like, advise me a little bit? I'm starting this new company." And I was like: "I'm sorry, I don't have the time." [laughing] So I lost out on a lot of, a lot- I would've been a great angel investor there, but that's how life goes. [laughing]

    2. HS

      [laughing]

    3. SS

      Um, you know, that's how life goes. So anyway, so David-

    4. HS

      Dude, I'm gonna be honest, I'm not crying for you.

    5. SS

      No, no, no. Okay, okay, yeah.

    6. HS

      [laughing]

    7. SS

      I don't think anyone will cry for me over that. I will cry over myself. That's okay. I can, I can, I can fall asleep crying over that. But, but, um, no, but the funny thing is that, like, so you have these fintechs now, right, who are actually starting to become really big. I mean, Revolut is really big, Klarna's really big, Nubank, you know, et cetera. So, so, and but we're all coming from slightly different angles. We're just all coming from slightly different, and now the people who are going to be threatened by this is, is the incumbents primarily. Like, of course, I'm gonna partly compute with... uh, compete with Revolut. I'm partly doing that already. Um, but if you look at, like, who- like, they're very big in Romania. Romania is not a big market for me, right? Like, there... I think they're the second-largest market or something for Revolut-

    8. HS

      Yeah

    9. SS

      ... if I look at, like, number of active users. Like, Romania is not a big market for me. You know, I'm very big in other markets, so like it's, it's, it's the, uh... So that's gonna differ, right? But the- who are- whose market share are we eating? You know, Barclays, you know, uh, the Wells Fargos, the Capital One, those are the companies that we are going after, right? So I don't really see there's a big conflict between us. It's more the incumbents that are going to lose

  7. 25:54 – 33:59

    Why Nubank are more likely to win the US than Revolut?

    1. SS

      customers.

    2. HS

      You spoke about Nubank and, and David. I love David.

    3. SS

      He's amazing.

    4. HS

      Fucking legend. Um, but anyway, obviously, they just got a banking license in the US, and they're very much aggressively planning in the US. Is the US the main goal for you?

    5. SS

      Yes. So going back now [laughing] is-

    6. HS

      [laughing] Okay, sitting in London, I'm just like-

    7. SS

      Well, I-

    8. HS

      ... I feel so special in here. [laughing]

    9. SS

      No, no, no. No, but listen, it's like this: it's, it comes back to what I said. In fifteen, where, like, the future of financial services is going to be this digital financial system, okay? So then the next question is: who is gonna participate in that challenge, and why would Klarna stand a chance? 'Cause those are the two questions we need to answer, right? And we say, well, first and foremost, there's gonna be three types of company participating: the tech companies, Google, Amazon, Apple. There's gonna be fintech, Revolut and so on. We didn't know them at that time. Revolut hadn't even started, but we got- knew there were gonna come entrants, and then banks, right? That was kind of our, our view. Okay, so why would Klarna... So, like, what's gonna be critical for us to win in that big transformation? Global. We realized first, if we're just big- at that point of time, we weren't even in the UK yet. But, like, if we're only in the Nordics and Germany, we're not gonna have the scale to be able to win this big transformation that's coming, so we need to be global, and global means US. Like, if you're not in the US, if you're not big there, you're just not gonna be big enough, and the risk is you're gonna get acquired by somebody in the US. So to us, like, nailing US was, like, super high priority, super high priority. Second, we realized that data, the more I understand about you as a customer, the more likely I am to give you that advice that you said, "Hey, you know, you should pick up the flowers when you go there," or whatever. So the key thing we saw is different than Revolut and all the others. We have our own payments network. Just like Amex, we have our own rails. Every time you shop with Klarna, the information that flows on the rails isn't just the amount that you purchase for, it's the exact products. We have the full digital receipt. So we know you shopped at Sephora but also what cosmetics you bought at Sephora, and the benefit of that is, if I'm then supposed to advise you on your purchases or your day-to-day finances, I just have much more richer information that allows me to provide you good advice. "Oh, these contact lenses were really expensive. You can get them cheaper," et cetera, right? So if I wanna help people in their everyday spending, like, I have more information. So we said understanding the customer depth is very, very critical, and data was gonna be very, very important. And so it was being global and having a good understanding of our customer and having a lot of trust and brand. The other thing was brand. Build a brand that people relate to, that people feel emotionally connected to, and not just like a utility, right? Create something different.

    10. HS

      I'm sorry, I struggle, and, you know, I'm a proud European. I struggle when I look at the European, uh, neobanks, and I look at Chime, and I look at Dave, and I look at all the other, Current-

    11. SS

      Mm-hmm

    12. HS

      ... and everything. I mean, they're all a fart compared to the market cap of Revolut right now, um, or whatever the private-

    13. SS

      [chuckles]

    14. HS

      ... latest valuation, but market cap's a very different thing, as you know-

    15. SS

      Mm

    16. HS

      ... as a public company CEO. Like, why, if the US is such a focus, has it been such a lackluster performance from their domestic participants?

    17. SS

      Well, partially because competitive- competition is better. If you take your Amex app in the US and compare it to one here, it is significantly better there, right? Your JP Morgan app is significantly better. So the financial institutions in the US are just better. There's less... And the problem is that then people try to find an entry point that is probably, for example, very big lending, and then they w- you know, walk into a lot of subprime, and they, uh, make huge losses at, or, or there are other things, right? So people struggle to find that entry point. But we have thirty million users in the US, right? Almost, like, I think it's twenty-eight or something, so like, but, but soon it's gonna be thirty. Our card is growing at a very rapid pace in the US.

    18. HS

      So your core focus is, can I turn those-

    19. SS

      Yeah

    20. HS

      ... thirty million users from BNPL into core customer account?

    21. SS

      Yes, and we saw- we launched a card in the US, and I have to be careful now 'cause we haven't released the new earnings yet coming [chuckles] next week, so I have to use the Q3 numbers. But if I remember correctly, we're, like, at two, three million active cardholders in just, you know, a few months in the US. So we are transitioning these buy now, pay later customers into full banking relationship customers at a very, very high pace.

    22. HS

      Totally get you. When you look at New Bank and Revolut moving both aggressively-

    23. SS

      Mm

    24. HS

      ... into the US, if you were to put money on who's gonna do better, who would do better? [laughing]

    25. SS

      [chuckles] That's a good question. Uh-

    26. HS

      I'm a good interviewer. [laughing]

    27. SS

      Yeah, exactly. Who is gonna do better? Klarna's gonna do better. [laughing] That's my answer.

    28. HS

      No.

    29. SS

      I, I, I can't tell you between those two. It's very, very interesting. I think that the, uh... Well, we'll see. I, I think I have to go with David.

    30. HS

      Wow. Why?

  8. 33:59 – 40:14

    We used to be 6,000 people. Now we are just 3,000

    1. SS

      a budget. I mean, Klarna has been shrinking. We used to be six thousand, uh, or over seven thousand, six thousand people, and we're now less than three thousand, and I didn't ask for a single dime to do all this, right? And the reason for that is because I've seen the acceleration of AI, and I know we can ship all these things on the existing organization. We've gone from seven thousand people, we're now below three thousand. We've shrank fifty percent, and the majority of that is just through normal attrition. We, uh, initially, when we had twenty twenty, we did a little bit of layoffs, but that was, you know, not that big of a number compared to what has happened since then. And so, so that was the reason. There was a reason it was easy for the board to take a decision is I didn't ask for a single dime in investments.

    2. HS

      It's twenty thirty. How many employees do you have then?

    3. SS

      Less, for sure.

    4. HS

      Two thousand?

    5. SS

      No, I think it, it may very well be even less than that.

    6. HS

      No!

    7. SS

      Yes, but it's a... But listen, again, relationship cannot be replaced. One of the strengths-

    8. HS

      We're gonna do a show in twenty thirty-five-

    9. SS

      Yeah [chuckles]

    10. HS

      ... and Seb's gonna be the only one. [laughing]

    11. SS

      [laughing] Yep, um, there was, um... I think that the, the, the thing is that the one thing that's important for us is relationships. We have relationship with merchants, as an example, retailers, and we have those relationship locally. So I have people in Portland talking to Nike. I have people in, in China talking to Shein. I have people in, you know, in Amsterdam talking to Adyen, et cetera, et cetera. So we have over fifty locations where there's people. AI is not gonna move those jobs. Like, that we need. It's very important, the relationships with our partners and the same customer service. It's gonna be- I'm still gonna argue that it's gonna be vital to offer a human connection there.

    12. HS

      Yeah.

    13. SS

      So those jobs will remain, but for the rest, it's gonna be definitely smaller. So we're shrinking through natural attrition with about twenty percent per year. It's just people leaving. They stay about five years, and then they move on, which is natural, and then what we have said very clearly is that, like, we're not gonna recruit. So we're, we're recruiting a little bit. People then came again on X, like, "Oh, it's not true! Look, they're recruiting." It's like, "Come on, guys."

    14. HS

      [laughing]

    15. SS

      Yes, occasionally, we hire somebody here and there, but if you look at the next- you go to LinkedIn and look at the insights, you're gonna see how the company is shrinking. So the point is that we've shrank fifty percent, but we also promised our employees, which is very important... We said, "Guys, this is gonna mean we're gonna do much l- more with much less people. This is gonna make more profit for us, and you're gonna share in that profit." So our, uh, employee compensation has grown almost fifty percent per head during the same time. So we have given a lot of that money back, and that creates safety for our, uh, for our employees. They know that, like, through this AI transformation and using these utilities, they are, you know, getting some of the benefit of that.

    16. HS

      Weird question: How do you think about the current state of AI?... SBC, stock-based compensation for anyone, which is obviously how-

    17. SS

      Yeah

    18. HS

      -we dividend or give stocks to employees. And you see aggressive from OpenAI, uh, argument being, why does Sam give a shit if he doesn't have any stock anyway? Dilution doesn't matter to him. Uh, Evan Spiegel is the, the godfather of SBC. [chuckles] Um, uh, astonishingly high amounts.

    19. SS

      Mm.

    20. HS

      How do you feel about the state of SBC?

    21. SS

      Well, I think it's very clear when we compare American companies to European companies, there's a huge difference.

    22. HS

      Yeah.

    23. SS

      I mean, I think that, like, American companies are five to ten X more than European companies do. Uh, and Klarna is, by that-- from that perspective, we're a European company. We have come from very low levels. We have increased, because we need to stay competitive, uh, for talent, and talent today can move between US and EU pretty easily with the help of companies. So, uh, but I still think also, like, the, the thing that's gonna happen, there's been these industries, they're called tech, and they're called fin, right? Financial services. They have all had this amazing thing, which is that you create this service, and there's a huge switching cost, so your customers can't really switch that easily, and hence, you create this money-printing machine, and then life is sweet, right?

    24. HS

      [chuckles]

    25. SS

      And then you build these campuses, and you play volleyball in your office, and you go and get free lunches, and, you know, and you live off the spoils of this money-printing machine in your basement, and that's not how normal business work. If you're in retail, if you run a restaurant, you freaking wake up every morning, and you ask yourself, "How do I put the right product in front of the right customer, bring them into my store, so that I can actually sell them and make them happy," and so forth. You have to wake up every day and do care about that, right? And so the point is that, like, it-- this is gonna be a brutal awakening for fin and tech [chuckles] that, like, that's what's gonna happen to all of us. Like, we're gonna have to wake up every morning, make sure that we serve our customers. We work really hard and effortlessly to make them happy with what we're offering them, and it's not gonna be what it used to be, right? And so I think that, like, share-based compensation, as an example, like, everything that was, was it really because, you know, it made sense, or to what degree was it just the spoils? A- and I think to some degree, it's spoils, right? In some degree, it's, uh, relevant, like, because some people can make a huge difference, but there's a balance between the two.

    26. HS

      There is an incredible number of incredible CEOs attacking the incumbent banks. What happens to BNP, ING, twenty thirty-five?

    27. SS

      [chuckles] I think... So that again comes back to what we talked in fifteen. Our conclusion was there's gonna be different-- So what I thought was interesting, Solomon also recognized, uh, this at Goldman Sachs, so he created Marcus. And then talking about public companies, the challenge was that when fintech was like, everything was high, twenty twenty-one, you know, valuations up, Marcus is the best thing that Goldman ever did. And then suddenly what ends up happening is, you know, markets turn, and it's very hard for Solomon to defend Marcus, but the problem is, like, Marcus would have needed five, ten years to fully mature, and when you're a public company, that's hard to defend. I don't know, maybe Solomon doesn't agree, and he's like: I did the right thing, and I changed it. But, like, in my opinion, he should've sticked to guns to doing that. Uh, Jamie is now doing neo banking, is going in, but he's going in a bit later now. Um, and so you will see different banks. I think some of them will, uh, reinvent themselves, become neobanks, become tech-led, use AI to, like, you know, reinvent themselves. Some of them will not, and they will wither away, right? Like, which is always what's happened in the disruption of an industry, so it will depend on the leadership

  9. 40:14 – 41:27

    When is a high valuation too high and can be dangerous?

    1. SS

      of those-

    2. HS

      [chuckles]

    3. SS

      -financial institutions.

    4. HS

      You said about twenty twenty-one and the high valuations, high prices. I, I remember the round where you were done at forty-five-

    5. SS

      Yeah, [chuckles]

    6. HS

      -by who? It was SoftBank, no?

    7. SS

      Uh, it's not entirely true. There's also a little bit of media, but, like, yes, there was, there was some shares bought at forty-five as well. Yes, that's right.

    8. HS

      Okay. D- knowing what you know now, are you happy you did that, and is there anything you would have done differently?

    9. SS

      [sighs] I-- That's a good question. I think that when you're in that kind of high-growth phase, one thing to keep a close eye on is your multiple expansion [chuckles] going faster than what your revenue is growing, right? If your revenue is growing faster than your multiples, then you're probably fine, but if you start seeing the opposite, where multiples are expanding faster than revenue growth, that may potentially be a problem longer term, right? So I think today maybe that, like, I, I, I could have been s- you know, more careful, specifically on the hiring side, because it was very sad and difficult to me to, like, a few quarters earlier, be hiring at a high pace, and then a few quarters later, have to announce layoffs. That, that I felt that, like, I should have predicted and been, uh, more cautious

  10. 41:27 – 53:19

    How we got Sequoia to invest & Michael Moritz to join the board

    1. SS

      about.

    2. HS

      Was that the hardest board meeting? You mentioned the board meeting earlier, where I was like, oh, that was kind of, kind of nice and easy with the expansion. You know, you've got an amazing board.

    3. SS

      Mm.

    4. HS

      Uh, and we're not talking about the board in any other capacity. I'm just talking about, like, a hard board meeting.

    5. SS

      But-

    6. HS

      Does Mike ever get angry, by the way?

    7. SS

      No.

    8. HS

      He doesn't?

    9. SS

      No, angry is not the word for Michael.

    10. HS

      I, I would be-

    11. SS

      Yeah

    12. HS

      ... shit-scared if he was-

    13. SS

      No. I- I mean, it's actually, it's, it's less scary, 'cause he doesn't get angry. Uh, what, what-

    14. HS

      He's, like, disappointed.

    15. SS

      Disengaged-

    16. HS

      Mm

    17. SS

      ... is the worst. Like, the worst thing you don't wanna get with Michael is disengaged. That's, like, the big warning sign. [chuckles]

    18. HS

      He's never lay on the floor and pretended to sleep?

    19. SS

      Nah, he- no, but, but you- no, I mean, yeah. [laughing] He- I mean, he's so amazing. I love him so much. I think he's fantastic. Uh, but, but you obviously care a lot to make sure that, like, you wanna see that he's engaged.

    20. HS

      Can I ask you, what's been your biggest lesson from working with him? 'Cause you're like his chosen child in the nicest way, which is amazing, right? Well done.

    21. SS

      Look, I've worked with him so many... And this is a funny story, how we ended up working with him, because at that point in time, uh, Sequoia, uh, there was a guy called Chris Olsen, which is amazing. He's still a friend of mine, who was at Sequoia, and he did, kind of, found Klarna in Stockholm.

    22. HS

      He did Drive, no?

    23. SS

      Yeah, exactly.

    24. HS

      Yeah.

    25. SS

      And he did, uh, uh, the Klarna investment. So, you know, there was just, like, this story where [chuckles] ... where, like, I'm talking to this guy, saying, "Hey, do you"-- he, 'cause there was a guy in Stockholm that knew Sequoia a little bit, so I was, like, talking to him: "Hey, do you, would you-- do you think that Sequoia could be invested in, you know, interested in investing in Klarna?" And, and he's like, "No, that would never happen." And I was like, "Okay, fine." So we just talked to the European funds, which is just, like, it's not even worth, right? But I was still looking there on Google Maps. I was looking, like, Sand Hill Road, and I was, like, dreaming- [chuckles] ... you know, could I have the chance to work with these guys? And then suddenly, my phone is buzzing, and I'm like, oh, I had a message. And it was like, "This is Chris Olsen from Sequoia," uh, you know, and I was like, "Oh, my God!" [laughing] I was like, uh-oh. So what I do is, like, I know, like, okay, this is like dating, right? I can't call back in three days. [laughing] I have to wait, I have to wait three days before I call back, so I'm just sitting there, like, counting the hours. Like, I cannot... [chuckles] I don't wanna look too interested. Yeah, exactly. Ah. So I was thinking, and then I call Chris, a- and, and we take a meeting, and they get super excited, and we instantly wanted to work with Sequoia. We were like, "They're the best." That's how we saw it. Like, we saw this was gonna be a huge, you know, brand uplift for a company. At this point of time, you know, Daniel Ek at Spotify is getting all the tech credibility. Like, all the engineers in Stockholm wants to work with Spotify. Klarna is some boring, you know, invoicing company. People are like, "What the hell is that?" Like, so we're like, "We need tech. We need tech credibility, right? So- Sequoia's gonna give us that." So anyways, what happens is l- a little bit later on, uh, Sequoia decides to make the investment. Chris flies to Stockholm, and we had met Michael in a, in a hotel breakfast here in London, and then, and then we come, and, and, and Chris comes, and he makes this beautiful presentation, right? And the presentation is like, "These are the Apple guys in the garage, these are the Google guys in the garage, and these are the Klarna guys in the garage, and you're gonna be the next Google," you know, and we're sitting there like, "Oh, my God, we're gonna be Google." [laughing] You know, like, we're just like we're buying it all. And then I feel afterwards, I was like, "This is not good." Like, we have to do something cocky here. We can't just, like, you know, just swallow this and be like, "Okay, please, can we work together?" [chuckles] So when Chris exits, uh, the room and he's just about to leave, I say, "Hey, Chris, just one thing. If we are genuinely the next Google, how come you're the only one from the Sequoia partnership that's here in Stockholm today?" Uh, and then Chris looks at me, says, "Oh, I'm so sorry, the other guys couldn't make it," you know, whatever. You have to remember, they invested-- they took a twenty-five percent stake at a hundred million dollar valuation, right? They took a twenty-five percent stake? Yeah, at a hundred million dollar valuation. That was what the deal, they eventually did that. Oh, my God! So, so, so Chris is like, "I'm so sorry, um, we couldn't, I couldn't make it." And, and he goes into the elevator, and literally twenty seconds later... This is so impressive. Twenty second later, my phone starts buzzing, and it's Michael Moritz, and Michael Moritz is like: "Hey, I'm so sorry I couldn't make the meeting, [laughing] and if we get to do this investment, I'll join the board." So thanks to me saying that and being a little bit cocky and not being so freaking Swedish, um, you know, we actually got Mike on the board, and then since then, I've worked with Mike and gotten to know him. The thing people don't understand with Mike is that, like, Mike has this... You know, I always think that if for you to be really good, for you to really understand a topic, you need to be in every freaking detail, you need to read up a lot, and, and he does. But the point is, it's almost like sometimes I feel like he can just take this huge mass of information, and he can, like, without, you know, a second of thought, he's just, "That is important," and he just gets that at a, at a level I, I... Other people I don't interact with, like, I interact with, but it's just- he's just brilliant at that. It's just amazing. He can, like, he, he called me in 2019, in summer. I don't know why he called me, but he was like... And this was when we were- we had been in the US for a few years. We weren't getting any traction. The business wasn't doing- And then Nick, another Nick, from Afterpay in Australia- Yeah ... was starting to get, you know, traction in, in the US with buy now, pay later. And Chris just, a- a- and Michael just calls me out of the blue and is just like, "Sebastian, I think it's now or never. If we don't do US now, we're never gonna do it." And it was just like, I don't know how the hell he knew that, but he was, like, so spot on. It was exactly the thing, and I just dropped everything, and I was just like, "We have to win the US." And then I just spent, you know, the next two years focusing a hundred percent on that. Do Sequoia move the needle for a company? In my opinion, they do. Yeah, I think so. I think they do. I think they are- they... I mean, I think they- I've been very impressed with all the people I've worked with there. I think they're amazing, and there's a new generation now with Sonya and Andrew, and- Yeah ... and, and the new guys coming, so, like, it's really cool. Pat, and, and the, um, um, yeah, what's his name? From Zappos, sorry, uh, Alfred. Yeah. Um, you know, so yeah, I think they're amazing. When you talk about the expansion of products, and you've said obviously about kind of Afterpay and BNPL... God, I'm gonna get in trouble for this. Um, I'm pleased to hear about the movement away from just pure BNPL, because is that not just evidence that for all the people that said lending is a shitty business to be in, they were right? Lending? What, what does that mean? Well, like, BNPL is a shitty business. Why would it be a shitty business? Oh, it's really hard to build like a, a twenty, thirty billion dollar business on BNPL. Like, consumer lending is a hard business to build on- Oh, consumer lending. Yeah. Okay. It's like a hard business. You know, when I get a startup pitch me consumer lending, I'm like, "Mm, sorry." [laughing] Look- I, I- ... you're like, "Wow, he's honest these days." [chuckles] Yeah. I think the way I thought about this is like, when we started Klarna twenty years back, we were just like, "Okay, look, why are we not just making these banking products better working online?" Because you gotta remember, in '05, I mean, the banks' internet offering were shit, you know- Dude, in 2026, they're still shit. Yeah, exactly. [chuckles] 20VC. So it was just like, they were all shit. So we were just like, "Okay, we're gonna take some of the stuff that the banks do, and we're just gonna do it better online." We did that, and then that grew, and we were successful. I mean, people don't know this, but we were- we, we, we raised sixty thousand dollars in our first angel investment, thirty thousand dollars of that was spent, and then we became profitable, and we were running this as a profitable company from '05 to '19. We had almost ten consecutive years of high growth and profitability that w- actually got us, like, this reward because we were, like, I think, o- only one of two companies in Sweden that ever had such a long streak of high growth and profitability at the same point of time. So the thing is that-... uh, but what we realized also over time was suddenly I'm sitting one evening, and I'm looking at my P&L, and I'm like: "Wow, what is that line? Oh, shit, that's late fees," right? That's a big revenue line. And I was like, "That's not gonna be long-term sustainable," right? So at some point in time, I started thinking, "Wow, you know what? We're actually doing lending. What does that mean? What does it mean for our consumers? What does it mean for their financial life? You know, what's the implications of this?" Um, and at that point in time, I th- I thought to myself, "Okay, there's two things I can do here, right? I can either sell this business and say, 'Oh, shit, we're making a little bit too much on interest and, and, and late fees. Let's go and do something else,' you know? Or I can try to change this." And, uh, one of my co-founders left at that point in time, right? But I said, "No, I'm gonna stay, and I'm gonna make the change." And I realized that the buy now, pay later credit offering is a healthier one than your credit card. Like, you- on your credit card, you put all your spending, full month, on that, and then the bank tries to push you to revolve. You build up a balance of a few thousand pounds or dollars, and then you pay very high interest. So I was like, "But I remember when I worked at Burger King, it used to be, like, press one for debit, press two for credit, when I would swipe my card." And so, like, where did that go? Well, banks didn't like it because the problem was, if you were pressing debit now and then, your bill at the end of the month was much smaller, and you were less likely to revolve and borrow money, and they would make less money, so they removed the debit button, right? And I was like, "No, no, no, let's bring that back. Let's make sure Klarna offers press one for debit." Twenty percent of our transactions are debit, and then the rest is credit, but the credit is interest-free, eh, fixed installments, no revolving. Revolving we've removed. It cost us... We gave up a hundred million dollars of revenue when we removed revolving, 'cause we used to do it in the Nordics. We took it away. Uh, we even didn't have late fees in the UK for a period of time at all, but it turned out that that wasn't great either, because then people, to some degree, were overextending themselves. So it's good to have a little bit of fee, some kind of consequence of not paying on time. So we, we got that back, but you have to be mindful of not making too much money on it because people will tend to use it in a way that's not good for them. So you just have to find the balance. But over the years, we iterated on a model that we feel like is a better alternative to credit cards. If ten years from now, less people have credit cards and more people have debit cards, we- and then use buy now, pay later occasionally, I would argue it's a better society. Like, that's my belief, right? And that's what we've been pushing, and the consumers now, we see they are- they love that. They reward us for that. They in, they in- they agree with that, right? And that doesn't mean... You're still in credit, so you're still gonna have, unfortunately, occasionally, people who overextend themselves. You have to be mindful about that. You have to- how you help them when they're distressed and so forth. It's a difficult business in that sense. It's a bank, right? So you have to be mindful about these things, but generally speaking, the type of product we're offering is a better product than the traditional products of the banks.

    26. HS

      You mentioned starting with Spotify and Klarna in Stockholm together.

    27. SS

      Yeah.

    28. HS

      And obviously, Stockholm's been the birthplace of great AI companies in the last year, with Lagura and Lovable, to name a few. Um, I'm a young eighteen-year-old Stockholm entrepreneur. Seb, you've got this incredible experience, and you've been to the US, and, oh, how wonderful. Do I have to be in the US if I want to build a big startup today?

    29. SS

      No.

    30. HS

      Hmm.

  11. 53:19 – 1:07:56

    Investors who don’t build will lose

    1. SS

      like, so-

    2. HS

      Do you think the state of VC is very good today, actually?

    3. SS

      I think, again, it's changing so fast. I think that the, the, the challenge right now is a lot of them are piling money into AI that they don't necessarily fully understand. Like, how good is it? How differentiating is it? Is it really-- does it have a real moat?

    4. HS

      Well, what should I know then, as one of these VCs piling money into AI?

    5. SS

      Well, I think what you should be doing is coding with Cursor and building things yourself. If you do that... I think you do that, if I remember correctly.

    6. HS

      Yeah.

    7. SS

      Yeah, yeah.

    8. HS

      I did that at Lovable.

    9. SS

      Yeah, yeah. Well, you only do Lovable or only- have you t- tried Cursor as well?

    10. HS

      I've tried Claude Code.

    11. SS

      Okay, good. Yeah. So the point is, like, I just think that, like, I f- I- if I meet investors today that haven't actually downloaded and tried to build something themselves, I think they don't have the skill set to make an evaluation of the company they're looking at. I think it's so critical to actually just understand how powerful these tools are today before you make those decisions. If you then- if you have that insight, if you understand that, and then you make your decisions, fine. Like, there's gonna be opportunities.

    12. HS

      I think Cursor will lose half of its revenue in twenty twenty-six.

    13. SS

      Is that your prediction?

    14. HS

      Yeah, agreed.

    15. SS

      Why is that?

    16. HS

      Because Claude Code's just eaten their lunch. I don't see any engineering team that's still on Cursor, and that's it.

    17. SS

      We love it, actually. We use it all the time. [chuckles]

    18. HS

      Really?

    19. SS

      Yeah.

    20. HS

      Is that because you have an enterprise deployment and contracts?

    21. SS

      No, I don't think so. I don't know why. Like, so I kind of switch between Claude... I'm a big Anthropic fan. I love, I love Claude, the chat version of it as well. I use that all the time. I just find that, like, it depends on kind of the task, so sometimes I use-- I'm almost using them as, like-... I would go into Cursor, I would write some things, then I go to Claude Code, then I'll ask Claude Code to do some other things. I still feel they have, like, almost distinct personalities and skills, and so I kind of enjoy still. And, and I need an IDE. The problem is also, like, because I wasn't an engineer, I never used like, you know, uh, VS Code or any of these tools. I still need an IDE today, so, like, Cursor is my standard IDE, right? Just like as a, as a consequence of that. So, uh, you know, i- you could, you could be right, but I'm actually more optimistic about their future than that.

    22. HS

      You can invest in Anthropic, it's three sixty, or OpenAI at five hundred. I'm giving the discount-

    23. SS

      Oh, God!

    24. HS

      -to make it easy.

    25. SS

      Don't make me answer this question, please. [laughing]

    26. HS

      [laughing]

    27. SS

      I thi- I think they're going in very different directions.

    28. HS

      Mm-hmm.

    29. SS

      I think that if you- if... At least my experience with OpenAI is that it's becoming a consumer company, and if you're- if I'm building AI for, like, a billion people, right? I'm building AI, that I would focus on making sure that, like, for example, there's gonna be people that are gonna seek this AI as a friend, as, as a friend in their day-to-day life, as somebody w- more like from that movie... What's the movie again? Uh, uh-

    30. HS

      The Scarlett Johansson one?

  12. 1:07:56 – 1:13:34

    What CEOs really think about AI

    1. HS

      Be- before we go into a quick fire-

    2. SS

      Yeah

    3. HS

      ... despite not knowing the answers to the questions, I'm sure you're in CEO groups, go to CEO events, sit in green rooms, and there are topics or themes that CEOs discuss about AI that they do not discuss publicly.

    4. SS

      Mm-hmm.

    5. HS

      What do you think they most are?

    6. SS

      Well, I think most of them, as I said previously with me and Dario, is that I think most of them recognize, in my opin-- now, first of all, I don't go to that many [chuckles] of those, to be honest, because I'm hard coding and working with my teams and trying to make sure that Klarna is as successful as possible through this transformation. So I just, I spend very little time on those kind of, you know, things.

    7. HS

      Does this generation make every CEO, even public company CEO, as a builder again?

    8. SS

      I think it has to be.

    9. HS

      Yeah.

    10. SS

      Doesn't it?

    11. HS

      Well, we were... Again, I was with Mike last night from Atlassian.

    12. SS

      Mm.

    13. HS

      He's like: "I'm up at five AM coding."

    14. SS

      Mm.

    15. HS

      I'm like: "Was that the same before?" He's like: "No."

    16. SS

      No. Well, I think so, but it's also amazing, right? It's acceler- it's, I mean, I think for somebody like myself who didn't use to code or couldn't code, like, I think it's fantastic to, to be able to take my ideas and thoughts and turn them into something I can show others. It doesn't mean to have to be production ready, but I can articulate things at a very different level of quality than just, like, trying to explain something on a whiteboard or, you know, whatever. Now, I can actually bring things to people. Uh, I had this very, very unique experience with Claude just last week, where I was-- we were trying to talk about to kind of communicate a very specific thing that was, like, touching on, you know, accounting, and finances, and predictions, and stuff. Like, it was pretty, like, very, very complex thing, and we were just talking about it. And this was, like, the first time I went to... I went to Claude, and I said, "Hey, can we, like, interact a few times? I want to, like, see if we can, like, explain this concept." And after a few iterations, I got this, like, beautiful animation. Wasn't even a, a, a slide because it was an HTML file, but it was just like... And I, I thought to myself: "Wow, you know what? This is actually the first time I felt that AI could do something that humans couldn't." And, and it was the first time I had that experience, and the reason was because if I would've liked to do the same animation and beautiful pedagogical explanation of a very complex technical accounting, finance thing, historically, I would've bring- brought in an animator, a designer, an accountant, a finance Google Sheet guy, et cetera. And each one of them may have been extremely skilled at what they do, but didn't necessarily know what the other person needed in order to, to perfect that outcome. And so the animator would have been like, "Yeah, I can animate like this and that," but they don't really understand what they're animating, right? The financial concept. The financial guy may be like: "I can do the numbers like this and that, but I don't really understand why we would need this, like, animation, 'cause I read the numbers, and I get everything. I don't need this freaking visualization," right? So, like, so the point, but here, Claude, Claude had all the skills in one and then created this, and I was like: "I could not... A, a, a human would not have done that." Like, it-- and it was just, like, such a experience to me. I was like, " Shit!"

    17. HS

      There's a special moment when AI exceeds human capabilities.

    18. SS

      And I think in this-

    19. HS

      Yeah

    20. SS

      ... in this experience, to me, it did. Like, it did something that I, I don't think a sing... And it's not like a single person could have done each part of different parts, but what was requi-- Like, how many people are we gonna find in the world that are great animators, great visualization people, super pedagogical, knows everything about financial accounting, understand financial services? [chuckles] Like, you know, what I'm saying, who are you gonna find that have-

    21. HS

      Rare Venn diagram.

    22. SS

      Yeah, [chuckles] yeah.

    23. HS

      Yeah.

    24. SS

      Like, it's gonna be hard to find the person that's good at all of these things in one, right?

    25. HS

      Final one before a quick fire.

    26. SS

      Yeah.

    27. HS

      What happens to Elon with Grok? I would never dare to bet against is when you have two people you would never dare to bet against-

    28. SS

      Mm

    29. HS

      ... in the same market, and most people would never dare bet, dare to bet against Sam.

    30. SS

      Mm-hmm.

  13. 1:13:34 – 1:29:35

    I have changed my mind on the adoption cycle

    1. SS

      Yeah.

    2. HS

      Uh, dude, I wanna do a quick fire with you.

    3. SS

      Yep.

    4. HS

      So what have you changed your mind on most in the last twelve months?

    5. SS

      I've changed my mind most about the pace at which the transformation is happening. I think that I was probably in the camp of... I, I thought it was gonna happen too fa- like, faster than it did. But I think I've- I'm always- my problem is that, like, I overestimate. It takes time for people to change habits and, and, and ways of working and stuff like that. So I actually think it's gonna take a little bit longer. The adoption, it's not necessarily the, the capabilities of the technology, but like how fast people will adopt it and how it will change.

    6. HS

      Do you think that differs for enterprise versus consumer? 'Cause I-

    7. SS

      Uh-

    8. HS

      ... I'm actually the opposite. I'm, like, surprised by how quickly consumers adopted it when you look at the wow rate, wow numbers for ChatGPT.

    9. SS

      Yeah, but consumer is always gonna be faster, right, to your point?

    10. HS

      Way faster.

    11. SS

      Yeah, way faster. Absolutely.

    12. HS

      I think we underestimate how fast consumers adopt and overestimate how fast enterprise adopt it.

    13. SS

      Yeah, for sure. And I think in, in, in kind of work life, it's definitely, it's definitely going to, to be slower.

    14. HS

      What criticism about you stings because it's partly true?

    15. SS

      [laughing] No, I think the criticism that stings is the one that isn't true.

    16. HS

      Which is?

    17. SS

      Well, I think people sometimes said that like: "Oh, he's just trying to make an exit. He's just trying to make a big, fast buck," or that like I-

    18. HS

      [chuckles]

    19. SS

      ... I just wanna... You know, and after twenty years, I feel like: "Hello! You know, haven't I proven now? I'm in it for the long term." I think the other one is that, like, "He just- he doesn't care about the consumer. He just wants to make money on interest rates," etc., etc, you know, reckless lending and all that stuff. I- none of that is true. I, I deeply care about our customers. I deeply care about them being financially well off, and I think I'm providing a product that is better than the alternative. So, like, that's, that's the one I- that stings because it's just, it's not true.

    20. HS

      I've never... I, I, I don't understand how you'd ever level that criticism against you, like, fi- battling public company CEO ship every day. I mean, it's like the opposite of, like, quick buck. But anyway, um, what would you do first if you were not a public company and had no scrutiny on you? Like, if I said, "Here's an invisibility cloak, you can do anything, spend any money on anything internally," what would you do?

    21. SS

      No, I think the only thing I would do different is spend less time on communicating and talking, uh, to investors, right? That's it. Um. [laughing]

    22. HS

      [chuckles]

    23. SS

      I mean, to be honest, uh, but when I look at the strategy and what I'm trying to do with the company, I, I, I, I, I honestly feel like, as I said, that 2015 vision, let's be that digital financial service assistant, that's the one I'm executing on. We're executing on it, the company's executing on it. I feel we're having tremendous momentum on it. We see the nu- uh, you know, the affection of our customers picking up our banking products is amazing.

    24. HS

      Do you think you've told a good story around that?

    25. SS

      No, I think communication is hard. I think-

    26. HS

      'Cause I respectfully, I didn't, I didn't know this.

    27. SS

      No.

    28. HS

      I feel terrible.

    29. SS

      But you and I talked about it even before this podcast started, that I, I think my problem is, right, is that like... And I- and this is definitely what Michael gives me as feedback, like, I need to stick more on message. I need to b- I failed probably at this podcast again.

    30. HS

      [chuckles]

Episode duration: 1:29:45

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