If you live in the U.S., you might not be terribly familiar with Klarna, a 10-year-old Stockholm-based company that provides payment services for online storefronts in a somewhat unique way — by “separating the buying from the selling,” as company cofounder and CEO Sebastian Siemiatkowski explains it.
Put simply, you visit a site powered by Klarna, input only your email and zip code, and presto, your item is purchased. You then have 30 days to pay back Klarna, using whatever payment method you like. The big idea is to increase conversion rates, and whether or not they realize it, 35 million consumers have now used Klarna across the sites of 50,000 merchants, who understandably love the service. (The fewer keystrokes required, the higher the chance a purchase will be made, especially with a smartphone.)
Of course, what’s happening behind the scenes is a sophisticated fraud management operation, one that counts Sequoia’s Michael Moritz as a board member and which was most recently valued at $2.25 billion. Klarna plans to compete more aggressively in the U.S., too. Over the past year, it has set up offices in New York and Columbus, Ohio. Now it’s searching for space in San Francisco, where it eventually expects to employ up to 30 people to help it strike relationships with companies big and small.
Over coffee earlier this week, we talked with Siemiatkowski about Klarna’s roadmap and what he thinks of one competitor in particular: four-year-old Stripe, whose valuation is twice that of Klarna and which now has its sights on the Nordic countries where Klarna has become king. (Stripe also happens to be backed by Sequoia.) Our chat has been edited for length.