Published in Svenska Dagbladet, 2024-10-07. Translated from Swedish.
Tensions are rising ahead of Klarna’s approaching stock market listing. A power struggle with echoes of Silicon Valley appears to be taking shape in the boardroom.
For 19 years Klarna has been a privately held company. Its twentieth year looks set to be different. CEO Sebastian Siemiatkowski has been unusually clear — for the CEO of a major tech company — about his ambitions and plans for a listing. If Klarna goes public in 2025, much may change.
Life on the stock market is something different, for better and worse. Both the CEO’s outspokenness and the company’s operations may need to adapt. The internal struggle between Klarna’s major shareholders should be seen in that light. The Financial Times reports that the board intends to remove Mikael Walther from its membership in the near term. Walther represents Victor Jacobsson, one of Klarna’s founders and its third-largest shareholder.
Jacobsson is not currently active at Klarna beyond being a shareholder — but he has consolidated that position over recent years, buying shares on multiple occasions from former employees or investors who wanted to exit.
Siemiatkowski, for his part, is the fourth-largest shareholder and the company’s CEO. That combination gives him enormous power. Strictly speaking the voting register may not look overwhelming, but in practice it is decisive. It is unthinkable that a board would pick a fight with — or even irritate — a CEO whose company is about to list. And the absence of challenge creates power in these contexts.
The conflict between the two co-founders appears to stem from differing views on that power. How much influence will Siemiatkowski hold once the company is listed? The informal power will of course remain even in a public setting — but the complexity will increase. New shareholders will arrive who have no interest in old merits and achievements. Groups of shareholders will vote according to rules that can seem rigid, at least to those accustomed to private companies. A different way of running Klarna will be required, whether one wants it or not.
The issue is well-known. Among the American tech giants there are many entrepreneurs who have found ways to keep the best of both worlds — the control of a private company and the capital access of a public one. The method used is to convert some shares into super-voting stock, creating a controlling influence without needing to hold a majority stake. Sweden has plenty of examples of this too, including in Investor AB. By changing the share classes, founders create a mechanism to retain control. There is much to suggest it is precisely this type of process that the two Klarna founders disagree about — and what underlies the potential board change.
Changing share classes can seem unfair to individual shareholders, but it can also have advantages. The method creates a predictability and continuity that stock markets sometimes struggle to provide. Consider Twitter, bought by Elon Musk in 2022. The focus at the time was largely on the price and the conflict between buyer and seller. Less reported was that Twitter was one of the few larger tech companies where a takeover — without the consent of major shareholders — was even possible. Twitter did not have super-voting shares. Snap, Meta and Pinterest all do. That is why Twitter could be taken private and begin its transformation into what is now known as X.
Klarna has undergone major changes recently. It sold its checkout solution and has launched a long series of AI initiatives — the aim being to present a different kind of company than the image Klarna once had, in order to be well received on the markets.
The boardroom fight is a sign of the kinds of situations that may become more common going forward. It is understandable to want to keep control of the company close. It would be having the cake and eating it too. But having sceptical shareholders — perhaps all the way into the boardroom — is a situation Klarna and Siemiatkowski may need to get used to. On the stock market, more people get a say — even if super-voting shares help.
