- “Buy now, pay later” spending has surged during the pandemic, propelling fintechs like Klarna.
- Niklas Adalberth, Klarna cofounder and former executive, thinks BNPL isn’t “what the world needs.”
- He told Insider why he left Klarna and how his views of consumerism changed.
- See more stories on Insider’s business page.
The pandemic has fueled online shopping and a boom in “buy now, pay later,” which allows shoppers to pay for purchases in installments. Chief among these fintech giants is Klarna, a Swedish firm that raised $1 billion last month at a valuation of $31 billion.
Two of Klarna’s cofounders became billionaires after the fundraise. The third, Niklas Adalberth, sold most of his equity since departing in 2015 to go into philanthropy and impact investing. The 39-year-old told Insider he left the firm in order to create “something net-positive” for society.
“I think Klarna does a lot of great things. But we also enable people to pay for purchases in installments,” Adalberth told Insider from his home in Stockholm. “Is that really what the world needs, to buy stuff that they might not need at a certain interest that they’re going to pay off in the future?”
Klarna’s most popular payment option comprises four interest-free installments, which can incur late fees. There is also a basic financing option with an annual percentage rate (APR) of up to 19.99%.
For better or worse, BNPL companies enable shoppers to buy items they cannot afford. An analysis conducted by Cardify.ai, which uses data from mobile rewards platform Drop, found that 21% of BNPL users did not have enough funds to afford their purchase upfront.
It took years for Adalberth, who was 24 when he cofounded Klarna in 2005, to realize he wanted more than wealth.
“When I started Klarna, I had this belief that money correlated with happiness,” he said. “It was really egotistic from a start in that sense.”
After a fund raise for Klarna in 2012, Adalberth and his cofounders were able to sell some of their equity for the first time. Overnight, he had $10 million in his bank account. He decided to celebrate by stopping by Las Vegas while flying from Stockholm to San Francisco for a conference. He splurged on a business-class flight, a hotel suite overlooking the Strip, fine dining, and a designer shopping spree.
“But living this dream, I started to get this bad feeling that, ‘Hey, I can’t really taste the difference between this wine and the s— wine I have at home. I don’t sleep better in this panorama suite compared to my IKEA bed at home,'” he said. “I started to look at these [shopping] bags, and they looked back at me as if they had some kind of message. And that message was, ‘You’re so pathetic. How could you believe that all of this consumption or stuff could in any way buy happiness or meaningfulness?'”
After the trip, he started therapy and went on retreats. He began to reevaluate his priorities, which led to his decision to leave Klarna in 2015. A year later, he started the Norrsken Foundation, a “tech for good” nonprofit that he has funded with €140 million (about $165 million).
Adalberth believes that philanthropy and impact investing are more popular in the US than his native country. (“In Sweden, people think they do everything they have to by paying taxes”). He is hopeful that more high-net-worth Europeans will follow in his stead.
“I do think there’s more people out there that feel some kind of emptiness after they made way too money,” he said. ” Extraordinary resources also comes with some extraordinary responsibility.”
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