Klarna: Europe’s fountain of entrepreneurship

A cauldron of risk-hungry talent

Fill a room with young, intelligent, ambitious, albeit relatively inexperienced engineers, and what do you get? Well, in Klarna’s case, success. 

Building a density of top talent has played a significant role in Klarna’s achievements, particularly in the company’s early days. After launching out of the Stockholm School of Economics, Klarna quickly gained a reputation as one of Sweden’s most exciting places to work. The region’s most impressive engineers, who might have previously worked at multinationals like Ericsson or McKinsey, were now drawn into Klarna’s gravitational pull. 

It was only a matter of time until startup ideas showed up.

It seems likely that this laid the foundation for the blossoming generation of Klarna offspring. For one, Klarna set an incredibly high bar for new hires. “Each new person was expected to lift the bar in terms of skills and ambition,” says Alex Lungu, a former Klarna engineering manager who went on to found flight tracking software Wingbits. 

It’s also worth recognizing that individuals joining any company at this early stage are inherently self-selecting. “People who go for safety don’t tend to go into a startup,” explains Hans Otterling, a former General Partner at Northzone who led our 2015 investment in Klarna, and who went on to co-found Norrsken22 with Klarna co-founder Niklas Adalberth. As such, it’s expected you’ll find a pool of talent with a very high appetite for risk. 

Throwing these people together into the same environment, Wingbits founder Alex continues, “It was only a matter of time until startup ideas showed up.”

Learning to swim in the deep end

The fact that so many businesses were forged in this environment can’t be purely circumstantial. It’s one thing to have such talent density, but it’s another to see so many of those individuals actually roll the dice themselves. So what conditions at Klarna actually fostered this appetite for entrepreneurship?

Founders we spoke to paint the Klarna offices as a school, or even a crash course, in leading a business. Ohad Samet, whose own business Analyzd was acquired by Klarna in 2011 before joining as Chief Risk Officer, explains: “Klarna taught me many things, first and foremost what insanely fast growth looks like, and how quickly decisions need to be made and issues addressed before they blow up.”

“It was an effective school in operating, demonstrating what ‘great’ really looks like versus ‘good enough’.” 

But digging a little deeper, it’s clear that this was a school firmly rooted in learning by experience, rather than through theory and process. Being thrown in at the deep end is an understatement. 

It was like 90% of the upside of running your own business, without the downside.

Young, inexperienced hires were quickly given a high degree of responsibility and accountability. Many have told us that this environment was truly meritocratic: delivery mattered far more than your background, experience, and appearance. Those who demonstrated initiative and results were disproportionately rewarded. 

At the heart of this, every employee was empowered to take ownership of problems. You’d be unlikely to bring a problem to the attention of the leadership, unless you’d already discovered (and possibly implemented) the solution. Few environments better capture execution as a founder. “It really just forced you to figure out things for yourself,” says Vilhelm von Ehrenreim, former Klarna Lead Data Scientist and now founder & Chief AI Officer at QA.Tech. 

Those with a thirst for entrepreneurship and leadership found sanctuary in this sort of environment. Ex-Klarna VP of Product Rasmus Fahlander describes it as, “90% of the upside of running your own business, without the downside.” For some time, it scratched his own itch for entrepreneurship—that is, until Sebastian was convinced to spin out Klarna’s own B2B checkout product as a separate business, Kustom, where Rasmus is now CPO. “It was a blessing. I could be an entrepreneur again, and bring the 10 years I put into this product with me.”

Many would melt in this accountability-high, supervision-scarce environment. But those who thrived in it were undoubtedly the same type of personality that you’d expected to go on and build exceptional businesses. 

Product mindset & customer obsession at all levels

So if Klarna is a real-life classroom for future entrepreneurs, what else is on the curriculum?

A culture of product thinking runs through the veins of the company, and employees are taught to buy into this from day one. Crucially, this all comes back to a central tenet – a relentless focus on user experience. 

Build it, make it work, optimize later. Don’t overthink it.

Anything that can enhance the online shopping experience for their customers is on the cards. Whichever team or product you’re working on, Klarna employees are encouraged to suggest improvements, implement, test, and use metrics to validate or invalidate your assumptions. All of this happens at lightspeed, with a clear priority for momentum over perfection. 

“The attitude was just build it, make it work, and then optimize later. Don’t overthink it, because whatever you’re building might be scrapped next week anyway,” Vilhelm explains. 

Sven Brauer, founder of MODIFI and ex-Klarna VP Product, recalls one meeting about merchant onboarding, which ended with Sebastian saying, “Onboarding has to work with an email address only.” It was seemingly impossible and meant ripping up the rulebook. But six months later, it was reality, “in large part because he put the statement in place and took the risk”, Sven says.

This is a clear lesson that many at Klarna learn. Obsessively solving problems for your customer, taking bold decisions, and making big bets to do this better than anyone else, is a strong condition for startup success. 

Relentless ambition from the top down

All of these factors have contributed significantly to Klarna’s success and inspired the next generation of founders. It’s also worth noting that all of this happened in the context of the absolute bullishness of the leadership, particularly founder Sebastian, and the core belief from day one that they would build a multi-billion-dollar, category-defining company.

MODIFI founder Sven actually witnessed this first hand, not as a Klarna employee, but as a competitor. His previous business BillPay, ran up against Klarna in the BNPL category, and at one time, may have even been outperforming it, at least in terms of product metrics. But he gradually realized that Klarna’s branding, distribution, and more importantly, its relentless ambition, was quickly going to outpace the business. Joining Klarna only confirmed this feeling, where he saw a culture where people would risk it all for potentially transformational outcomes. 

“Sebastian was willing to bet the house to reach $50, $60, $100 billion valuations,” Sven says. 

This approach taught Sven a great deal about what it takes to build a venture-backed business, an insight he’s applied to raising capital for his new company. “Venture capital doesn’t want 10% growth a year. It wants 10x, 20x, 30x.” By design (MODIFI is distributed across multiple regions), Sven has had to empower his teams to solve problems independently—a cultural approach he credits to his time at Klarna. 

The next Klarna generation

It wasn’t just Klarna’s culture of relentless ambition that created this generation of new companies. There was always an underlying sense of confidence at its core: the alluring belief installed that anyone could go on and build a company like this.  “Once you see how far you can go with a small team, you realize you can do so much yourself,” QA.tech founder Vilhelm says. “There really aren’t many things hindering you from going your own way.”

This could be Klarna’s true legacy: cementing the belief that any Nordic or European entrepreneur can conquer on a global scale. 

This idea could prove to be powerful rocket fuel for a ‘third generation’ of Klarna founders. These post-IPO millionaires will bring a new influx of Klarna money—and Klarna culture—to the market and undoubtedly look to replicate the success of Sebastian and the rest of the Klarna family. 

And there’s no doubt that the European and global investment community will be watching.

Have we missed anyone? Feel free to get in touch.