The Exchanges

Q Did that drive you in a way that you wouldn't have had otherwise, if you don't mind me asking?

A No, I think for sure. I think it's a combination of that and being an immigrant kid. I think that the, the, uh, you know, seeing all these other Swedish kids going to their summer holiday houses and having, you know, a surplus that to me looked great. And then us eating pancakes, you know, seven days in a row because it was the cheapest food that mom could put together because we were out of money. You know, even though I love pancakes, I thought they were really delicious. Um, I think it created this, like, I felt my, my parents were smart. My dad deserved something, like, better is the wrong word, but like, he started driving a cab, you know, and he was very smart, very intellectual. He, that was not the right job for him. You know, he was saddened when he saw drunk people and he was driving them and seeing what people were saying and, you know, uh, I think he was just not his place to be in life, and just, it broke him down. And, and I felt that, like, if I was going to fix things, if I was going to get money, then I was going to fix this. Now, the problem was, once I got money, it turns out that life isn't like that, because I, I gave a lot of money to my father, and he used it to drink more, and he drank himself to death. So, like, it, it turned out that money was not going to solve those problems. There are some problems that money won't solve, right? And again, I'm not t…

AI assessment note: “No, I think for sure. I think it's a combination of that”

Q You mentioned your father there and him wanting you to be a doctor. I do have to ask while I have the chance, I spoke to Mike Moritz on your board for the show. And he said, you have to ask Sebastian about his family background. So I guess, why do you think he said that? And how did they shape your thinking?

A Well, I'm an immigrant kid, like a lot of entrepreneurs, and my parents moved from Poland. They're kind of a mix of political, economical refugees. My sister, unfortunately, got stuck in Poland, so she wasn't there for a year, which was a big sorrow of my parents, because there was the uprising in Poland at that point of time, so the borders were closed, and then I was born, and then my parents struggle. I mean, I think different societies are difficult to integrate in. I think Sweden at that point of time was quite difficult. My father was Was unemployed for a long period of time, but also had different type of jobs and so forth, and eventually went on to, for example, drive a cab for multiple years, and which, for his kind of sensitive intellectual soul, was a very demanding work. He had a very hard time dealing with drunk people in the middle of the night and stuff like that. It was very tough on him. And my mother was an early retiree, because she had a problem with her back, so it was a fairly modest upbringing, and there were weeks where we only ate pancakes, because that was the only thing we had left. Which, to me, who loved pancakes felt that that was, like, awesome, but nowadays, as I look back, I realized it was for other reasons than I potentially saw back then. So I guess it's a typical story in the sense that you grow up, and you see your parents struggle, and you…

AI assessment note: “you see your parents struggle, and you just want to make right what you feel”

Q You mentioned your father there and him wanting you to be a doctor. I do have to ask while I have the chance, I spoke to Mike Moritz on your board for the show. And he said, you have to ask Sebastian about his family background. So I guess, why do you think he said that? And how did they shape your thinking?

A Well, I'm an immigrant kid, like a lot of entrepreneurs, and my parents moved from Poland. They're kind of a mix of political, economical refugees. My sister, unfortunately, got stuck in Poland, so she wasn't there for a year, which was a big sorrow of my parents, because there was the uprising in Poland at that point of time, so the borders were closed, and then I was born, and then my parents struggle. I mean, I think different societies are difficult to integrate in. I think Sweden at that point of time was quite difficult. My father was Was unemployed for a long period of time, but also had different type of jobs and so forth, and eventually went on to, for example, drive a cab for multiple years, and which, for his kind of sensitive intellectual soul, was a very demanding work. He had a very hard time dealing with drunk people in the middle of the night and stuff like that. It was very tough on him. And my mother was an early retiree, because she had a problem with her back, so it was a fairly modest upbringing, and there were weeks where we only ate pancakes, because that was the only thing we had left. Which, to me, who loved pancakes felt that that was, like, awesome, but nowadays, as I look back, I realized it was for other reasons than I potentially saw back then. So I guess it's a typical story in the sense that you grow up, and you see your parents struggle, and you…

AI assessment note: “you see your parents struggle, and you just want to make right what you feel”

Q If that is the case, should ERPs and ServiceNow's and Salesforce's not be dramatically threatened?

A 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, what multiples should they trade? And if you look at historically, software could trade at a price to sales. I'm not going to price to earnings because some of them are in profitable, so it's not an easy way to compare. But if you do price to sales, they've been trading at 2030, and now they're down at five, 10. 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 potential to come down even further. Is it going to be, look at Chegg in the US, right? They're now trading at 0.2. ChatGPT was seen as basically wiping out their business a few years, and now they're trading at a depressed value, and now the revenue is also coming down actually 30, 40% last time I checked. Is that going to happen? I don't think so. That's probably too extreme. 0.2 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.

AI assessment note: “I think the stock market woke up to that in the last few weeks”

Q Totally does, and I love the analogy of an old married couple, for sure. Can I ask that, in terms of, like, you being at the helm, you know, one thing that I always permanently struggle with is bluntly self-doubt. Do you experience self-doubt, and how do you deal with it, and how would you advise me in terms of my dealing with it?

A I think self-doubt is not nothing, it's not a bad thing, right? It's a very healthy thing if it represents you continuously trying to understand, like, am I doing the right thing? Is this something that I want to do? Am I taking the right decisions? I think it's extremely healthy to do that. I'm not saying it's not painful or tough when you have it, but I think it's, like, a very positive thing. I'm much more worried when people tell me they have no self-doubt, and then I'm like, ooh, ooh, because, like, that means that you're not really reflecting on your actions and you're not learning from them. Right? So I wish I could give you something more comforting than that, but I would actually say, like, enjoy it. Be happy that you have it, and it's going to make you a better person.

AI assessment note: “I would actually say, like, enjoy it. Be happy that you have it”

Q Tell me, who's the best board member that you've had the chance to work with and why?

A Michael Moritz. Michael is amazing in so many ways that like I could write a book about Michael and what he's done for me and the support he's given me. And someday I will tell the stories of what really happened. And I think he genuinely very different to a lot of other investors. I think what Michael is looking for, he's looking for a CEO or co-founder where he says, does he have the ambition? Does he have the intent? Does he have the intellectual capacity and the abilities And is he really continuously focused and kind of trying to learn and iterate and become better? Like, those are the things that he tries to assess. And once he's established that he believes that's the case, then he gives you all the trust, and then he just supports you. And that is the best possible way of supporting somebody who has that. Like, I've been just so humbled and so grateful for having him on board.

AI assessment note: “Michael Moritz. Michael is amazing in so many ways that like I could write”

Q did the same and thought the same on the high-level points. When we look at, you know, Klarna, say, 3000 people across multiple different offices, Europe and US, and you said about kind of, how do you do that at scale? What have been some of your biggest lessons in terms of keeping the bar really, really high on talent? But at scale, what's been the biggest lessons for you?

A We played around with a lot of different concepts at Klana. We had, like, free Coca-Cola, ping pong tables, no ping pong tables, Lego in the rooms. Google was pushing for a while, 20% of creative time. We implemented 20% of creative time. Nothing happened. We took it away. Like, people were angry that we took it away. We tried so many things. At the end, around 16 and 17, I got a new management team in place. Niklas had left, and the marriage quarrel were gone. And so we were finally able to sit down seriously and talk through how do we think we create a culture and a setup that works. And we decided to get inspired by Netflix and Amazon, a couple of other companies. We created the idea of small startups, eight people in each team, two pizza teams with a cross competence background. Preferably, I want to see as many teams inclined as possible with cross competence. I always get a little bit sad when I see only marketeers or only this or only whatever. I want to see as much cross-competence as possible. They have an accountable lead that's kind of the mini-CEO. They have a roadmap. They have a vision and mission statement. They have a clarity of what they own. They have KPIs representing what they're trying to achieve, and they have a goal, and they're working towards that goal, but they also know they belong to competence, and occasionally these teams dissolve because things ch…

AI assessment note: “We created the idea of small startups, eight people in each team”

Q If that is the case, should ERPs and ServiceNow's and Salesforce's not be dramatically threatened?

A 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, what multiples should they trade? And if you look at historically, software could trade at a price to sales. I'm not going to price to earnings because some of them are in profitable, so it's not an easy way to compare. But if you do price to sales, they've been trading at 2030, and now they're down at five, 10. 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 potential to come down even further. Is it going to be, look at Chegg in the US, right? They're now trading at 0.2. ChatGPT was seen as basically wiping out their business a few years, and now they're trading at a depressed value, and now the revenue is also coming down actually 30, 40% last time I checked. Is that going to happen? I don't think so. That's probably too extreme. 0.2 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.

AI assessment note: “Is it likely they could come down to one or two? Yes, I think so.”

Q I look at Dave, and I look at all the other current. I mean, they're all a fart compared to the market cap of Revolut right now. Um, or whatever the private latest valuation with market cap is a very different thing, as you know, 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?

A 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, you know, walk into a lot of subprime and they make huge losses 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 28 or something. So like, but soon it's going to be 30. Our card is growing at a very rapid pace in the US.

AI assessment note: “So the financial institutions in the US are just better.”

Q Custom support is one I just cannot get as a category because there have been 14 players funded with over a hundred million in the last 15 months. Uh, and then you have all the existing incumbents. And when I speak to Ariel at Navan, Jack at Airwallex, And they're building their own. Are you building your own custom? You are.

A 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 600 agents jobs, and it, it caught a lot of attention at the point of time. Now, you know, media always tends to like simplify these stories a little bit. The truth was that at that point of time, you know, Our customer service was doing very simple questions. It was like, hey, did I pay Klana? 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 roll this thing out. We've rolled a lot of product improvements out. I've never rolled a product improvement out that instantaneously took, took away 600, you know, the equivalent of 600 agents worth of work. Now, these, because we don't hire these people ourselv…

AI assessment note: “we were one of the early ones, right? So we, this is actually”

Q I look at Dave, and I look at all the other current. I mean, they're all a fart compared to the market cap of Revolut right now. Um, or whatever the private latest valuation with market cap is a very different thing, as you know, 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?

A 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, you know, walk into a lot of subprime and they make huge losses 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 28 or something. So like, but soon it's going to be 30. Our card is growing at a very rapid pace in the US.

AI assessment note: “partially because competitive competition is better. If you take your Amex app in the US”

Q Custom support is one I just cannot get as a category because there have been 14 players funded with over a hundred million in the last 15 months. Uh, and then you have all the existing incumbents. And when I speak to Ariel at Navan, Jack at Airwallex, And they're building their own. Are you building your own custom? You are.

A 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 600 agents jobs, and it, it caught a lot of attention at the point of time. Now, you know, media always tends to like simplify these stories a little bit. The truth was that at that point of time, you know, Our customer service was doing very simple questions. It was like, hey, did I pay Klana? 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 roll this thing out. We've rolled a lot of product improvements out. I've never rolled a product improvement out that instantaneously took, took away 600, you know, the equivalent of 600 agents worth of work. Now, these, because we don't hire these people ourselv…

AI assessment note: “I mean, we were one of the early ones, right?”

Q Did you always think you would succeed there?

A No, but it's exactly the same. There's funny, there's this, so there's this email that I found that I wrote only six months into the company, and I found this email just by coincidence, and it's to my co-founders, right? And it basically goes like this, this is like six months into the company, we just started, we're getting our first customers, And then the, and basically the email goes like this. I'm sitting here. It's late evening. It's written like 11:30 p.m., you know, something. Yeah. And it goes like, I'm sitting here myself, and I started thinking like, you know what? What if, like, we're actually successful with this thing? Like, what if this thing, like, what if we start, like, growing maybe from Sweden to Finland and Norway, and then we go to Germany? What if we actually grow this globally? What if we actually go, and then we go off to the banks, and we start building financial services? And so I basically, in that email, I write everything that's happened the last 20 years. So the point is that, obviously, did I know that was gonna happen? No. But just like Zlatan, when he was kicking a ball down in Malmö, you know, like, on the street, did he dream about being in the finals? Of course he did. And of course I did as well. I dreamt about being where I am now, and even more so where I want to take the company in the next decades, right? So like,

AI assessment note: “did I know that was gonna happen? No.”

Q Is that because you have an enterprise deployment in Contrast?

A No, I don't think so. I don't know why. Like, so I kind of switch between Claude, I'm a big Entropic fan. I love Claude Chat version of it as well. I use that all the time. I just find that, like, it depends on kind of the tasks. 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 load 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 ID. 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 ID today. So that cursor is my standard ID, right? Just like as a, as a consequence of that. So, you know, you could, you could be right, but I'm actually more optimistic about their future than that.

AI assessment note: “No, I don't think so. I don't know why.”

Q um, that if you think that we're really going to 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 going to 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 Tsai says that?

A 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, 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 is going to 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 going to 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, 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 going to code that much. It's just going to 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.

AI assessment note: “They will become more and more standardized building blocks.”

Q Well, we were, again, I was with Mike last night from Atlassian. He's like, I'm up at five a.m. coding. I'm like, was that, The same before? He's like, no.

A No. Well, I think so, but it's also amazing, right? It's accelerated. It's, I mean, I think for somebody like myself who didn't use the 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 that. 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 slide because it was an HTML file, but it was just like, and 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 it was the first time I had that experience. And the reason was because if I would have liked to do the…

AI assessment note: “No. Well, I think so, but it's also amazing, right? It's accelerated.”

Q Okay. Knowing what you know now, are you happy you did that? And is there anything you would have done differently?

A 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 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, 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 more cautious about.

AI assessment note: “I could have been, you know, more careful, specifically on the hiring side”

Q Were there any other takeaways from your conversation with Michael Berry? He's a phenomenal thinker.

A Yeah. Yeah. No, we enjoy. I mean, I think, I mean, in this, in this regard, I think we were aligned, right? Like, But it was funny because we were talking about this, you know, how much novelty is there really, right? And it's an interesting concept because as I said to him also, there's other data that suggests otherwise. I've heard data that suggests that 30% of the searches on Google every day are new. Like, I don't know if that's true. It sounds crazy to me, but there are some data to suggest. So maybe there is more novelty. And I think that's like, I don't know the answer to these questions, but I think this is like very, very fascinating to me to like see, uh, the, the, Counter effects of these things.

AI assessment note: “we were talking about this, you know, how much novelty is there really”

Q Final one. I'd like to finish on a, like, theme of positivity. What are you most excited for in the next 10 years? Like, my mother's got MS. I'm very excited for developments with diseases and treatments for diseases like MS. What are you most excited for?

A Well, I am, look, I, I am, I'm just very, very, I think with AI, obviously, the thing is that if you five, 10 years ago could say that, like, well, I kind of think I know what's going to happen in the future. Like, it's going to kind of continue like this or whatever, and then suddenly came COVID and the war in Russia, and you know, it doesn't think it's like the world just changed, and suddenly came AI, and you suddenly sit there and like, I have no idea how the world is going to be in two years. Like, I have no clue. Like, um, but, but for myself, what I'm most excited about is like, I, A, I do, I'm still an optimist at heart. I do believe that these technologies will make Life better for humans. I think it will actually lead to something positive. I'm in that camp. Not, I, you know, you can have an intellectual debate with me if you want to, but like, I think that's true. And then what I'm most excited about for me is I want to realize the vision of Klarna, like against what you said about not having visions, like I want to put that vision into reality. I want to bring finally a banking product that truly helps people save time, save money, being controlled their finances. That excites me. It excites the hell out of me. And I think that like all these incumbents have been having all these excess profits. They've made so much money. Because people don't switch because, and ho…

AI assessment note: “what I'm most excited about for me is I want to realize the vision of Klarna”

Q There is an incredible number of incredible CEOs attacking the incumbent banks. What happens to BNP ING, 20, 35?

A Haha. I think, so that again comes back to what we talked in, our conclusion was there's gonna be difference. So what I thought was interesting, Solomon also recognize 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, 20, 21, you know, valuations up. Marcus is the best thing that Goldman ever did. And then suddenly what ends up happening is, you know, Marcus turn. And then it's very hard for Solomon to defend Marcus. But the problem is like Marcus would have needed five, 10 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 have sticked the guns to doing that. Uh, Jamie is now doing neobanking. He's 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 with their way, right? Like, which is always what's happening in the disruption of an industry. So it will depend on the leadership of those financial institutions.

AI assessment note: “some of them will, uh, reinvent themselves... Some of them will not”

Q like to travel here. I thought about these three restaurants for your romantic Valentine's Day trip with your wife. That's a really thoughtful agent or person. The trouble is most people are not that, and it takes training and development to get there. The low skilled labor, a la that, a la social media marketing, content creation that's low level, is going to be eroded faster than ever before, no?

A But you're right, and that's exactly why we started changing. So one thing that we've done that has worked fantastic for us, and we're rolling this out, we started saying, okay, to your point, if we looked at like these agents that we were hiring previously, even through other companies, we didn't really have a relationship with them. We don't know who these people were. Like some of them were great, but it was like, to your point, a mix, right? And we said, how do we create something very different? And so what we started since then, which has worked amazingly well, and we were kind of just starting to romp it up, Is we actually built like our own Uber model, which means that we encourage today, we recruit our own customers, the most passionate customers that live in rural areas and so forth. And we say, Hey, do you want to work extra? Would you want to work part-time in our customer service? And they actually just like somebody can go and drive an Uber for a while. They can actually jump on and work for Klana's customer service. And these are our most passionate customer. They love our products. They love how it works. They know Klana in and out. And now they earn extra money by actually working on our customer service. And obviously the MPS and the customer satisfaction of those interactions with our customers is through the roof. So, so we, to your point, we need to change,…

AI assessment note: “you're right, and that's exactly why we started changing.”

Q like to travel here. I thought about these three restaurants for your romantic Valentine's Day trip with your wife. That's a really thoughtful agent or person. The trouble is most people are not that, and it takes training and development to get there. The low skilled labor, a la that, a la social media marketing, content creation that's low level, is going to be eroded faster than ever before, no?

A But you're right, and that's exactly why we started changing. So one thing that we've done that has worked fantastic for us, and we're rolling this out, we started saying, okay, to your point, if we looked at like these agents that we were hiring previously, even through other companies, we didn't really have a relationship with them. We don't know who these people were. Like some of them were great, but it was like, to your point, a mix, right? And we said, how do we create something very different? And so what we started since then, which has worked amazingly well, and we were kind of just starting to romp it up, Is we actually built like our own Uber model, which means that we encourage today, we recruit our own customers, the most passionate customers that live in rural areas and so forth. And we say, Hey, do you want to work extra? Would you want to work part-time in our customer service? And they actually just like somebody can go and drive an Uber for a while. They can actually jump on and work for Klana's customer service. And these are our most passionate customer. They love our products. They love how it works. They know Klana in and out. And now they earn extra money by actually working on our customer service. And obviously the MPS and the customer satisfaction of those interactions with our customers is through the roof. So, so we, to your point, we need to change,…

AI assessment note: “But you're right, and that's exactly why we started changing.”

Q Were there any other takeaways from your conversation with Michael Berry? He's a phenomenal thinker.

A Yeah. Yeah. No, we enjoy. I mean, I think, I mean, in this, in this regard, I think we were aligned, right? Like, But it was funny because we were talking about this, you know, how much novelty is there really, right? And it's an interesting concept because as I said to him also, there's other data that suggests otherwise. I've heard data that suggests that 30% of the searches on Google every day are new. Like, I don't know if that's true. It sounds crazy to me, but there are some data to suggest. So maybe there is more novelty. And I think that's like, I don't know the answer to these questions, but I think this is like very, very fascinating to me to like see, uh, the, the, Counter effects of these things.

AI assessment note: “we were talking about this, you know, how much novelty is there really”

Q um, that if you think that we're really going to 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 going to 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 Tsai says that?

A 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, 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 is going to 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 going to 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, 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 going to code that much. It's just going to 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.

AI assessment note: “things like what you're talking about is like production ready, you know, security assured”

Q What does that mean for data centers and for chip companies like NVIDIA?

A Well, that would mean that you would leave mean significant, you would need significantly less. That's the consequence because you, because the AI, the problem is why, why do we have so much big software? Why do we have so much data? It's all a mess because we had humans who were trying to do their best, but the right hand didn't know what the left hand were doing and they were overriding that and the code over there didn't there. And then people start doing transformations and stuff, and it all becomes a big mess. And actually, you know, Wikipedia is the most successful knowledge graph in the world, I would argue. But if you look at the standards that they apply, how do they do that? They're very, like one very, I'll give you a very simple, like I love this principle. So if you go to Wikipedia and you try to create a new article about a new topic, it's very hard. Like if you go to Google Docs, you just click new, boom, you start writing a new document. You know, if you go to cursor, you start new, new code base. Wikipedia, where's the new button? There is none. Do you know how to find a new button? No. You have to search for an article, and if you search for something that doesn't exist, then you're allowed to create new. See what I mean? And that's so different. And companies doesn't work like that. In companies, it's like, hey, I have an idea. I think Lana should be doing th…

AI assessment note: “you would need significantly less. That's the consequence”

Q Okay. Knowing what you know now, are you happy you did that? And is there anything you would have done differently?

A 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 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, 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 more cautious about.

AI assessment note: “I could have been, you know, more careful, specifically on the hiring side”

Q There is an incredible number of incredible CEOs attacking the incumbent banks. What happens to BNP ING, 20, 35?

A Haha. I think, so that again comes back to what we talked in, our conclusion was there's gonna be difference. So what I thought was interesting, Solomon also recognize 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, 20, 21, you know, valuations up. Marcus is the best thing that Goldman ever did. And then suddenly what ends up happening is, you know, Marcus turn. And then it's very hard for Solomon to defend Marcus. But the problem is like Marcus would have needed five, 10 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 have sticked the guns to doing that. Uh, Jamie is now doing neobanking. He's 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 with their way, right? Like, which is always what's happening in the disruption of an industry. So it will depend on the leadership of those financial institutions.

AI assessment note: “Some of them will, uh, reinvent themselves... Some of them will not”

Q Is that because you have an enterprise deployment in Contrast?

A No, I don't think so. I don't know why. Like, so I kind of switch between Claude, I'm a big Entropic fan. I love Claude Chat version of it as well. I use that all the time. I just find that, like, it depends on kind of the tasks. 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 load 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 ID. 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 ID today. So that cursor is my standard ID, right? Just like as a, as a consequence of that. So, you know, you could, you could be right, but I'm actually more optimistic about their future than that.

AI assessment note: “No, I don't think so. I don't know why.”

Q Tell me, what are the next five years for you and for Klarna, and just how big could this be?

A Look, I have been doing this now for 15 years, and that year has been spent Understanding retail banking, understanding these day-to-day banking services that we use. I'm not talking about investment banking, corporate banking, all that stuff. I'm talking about our everyday spending. That is a trillion dollar industry that has totally lost sight of the customer, that has a lot of legacy systems, and a lot of companies that have benefited from massive barriers of entry, massive barriers of entry, from capital, technology, regulatory protection. This is like the dream. Of an entrepreneur to come in such an industry and have customer focus, fast speed, new technology, and the question is only like, when? Like, it's a little bit like self-driving cars. We all know it's going to happen. The question is when? Based on what I've seen in the last 15 years, and I've seen how retail has gone from retail to e-commerce and all these trends, this decade is going to be the disruption of retail banking. At the end of this decade, there will be a couple of new total players that will be very dominating in this space, and the rest will Either cease to exist, will merge, and kind of try to acquire some of the new ones, or maybe a few of them will manage to reinvent themselves, but this is going to be an extremely interesting time, and most importantly, which I always point out, people don't list…

AI assessment note: “this decade is going to be the disruption of retail banking.”

Q had Vlad on the show multiple times, and I think Vlad was astonishing. He's got 11 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, be it BNPL or for him, you know, kind of frequency trading, um, into the full-step banking provider. Do you look at him and do you take lessons from that?

A 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 early adopter thing. Uh, I think, you know, uh, Robinhood was like, I'm trading. I love trading. Klarna is very different. Like our customers, 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 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 banking, and then he sends me an email, 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. So I lost out on a lot of, a lot, I would have been a great angel investor there. But that's how life goes. You know, that's how life goes. So anyway, so David is doing it.

AI assessment note: “Yeah, absolutely. But we all have different entry points.”