Klarna CEO defends business despite massive losses and layoffs

Klarna CEO Sebastian Siemiatkowski has defended his company’s business product and the controversial “acquire now, spend afterwards” business.

Klarna presents shoppers the selection of when to shell out for an product — they can pay back upfront, pay out in installments or delay payment for a specific period of time. Critics say this allows persons to purchase things they might not necessarily be ready to afford, although Klarna says it operates affordability checks to guarantee that people can pay back them again.

In an job interview with CNBC’s “Squawk Box Europe” on Friday, the Swedish entrepreneur explained BNPL is “exceptional” to the credit score card model, claiming that the regular Klarna consumer has an exceptional balance of $50, whilst the normal credit card user has an fantastic balance of $5,000.

Siemiatkowski went on to say his business enterprise is “really recession-evidence” when compared with regular credit history card firms. Having said that, the fintech documented a reduction of $748 million very last 12 months and past thirty day period declared that it was laying off all-around 10% of its 6,500 staff members as part of an work to lower expenditures.

On top rated of that, Klarna will quickly be competing with Apple in the BNPL sector after the Apple iphone maker declared this week that it designs to enter the sector with a new product called Apple Spend Later on.

That places BNPL gamers like PayPal, Affirm and Klarna in an uncomfortable place. The concern is that Apple, a $2 trillion firm and the world’s second-major smartphone producer, could draw clients away from these kinds of companies. Shares of Affirm have sunk 17% so far this 7 days on the information.

“I feel it is really a closing, large embracement of what to me is a a great deal healthier form of credit score,” Siemiatkowski stated of Apple’s entry into the sector.