Klarna CEO says a European tech brain drain is ‘number one risk’ for company ahead of IPO
Sebastian Siemiatkowski, CEO of Klarna, speaking at a fintech event in London on Monday, April 4, 2022.
Chris Ratcliffe | Bloomberg via Getty Images
A European technology talent brain drain is the biggest risk factor facing Klarna as the Swedish payments company gets closer to its upcoming initial public offering, according to CEO Sebastian Siemiatkowski.
In a wide-ranging interview with CNBC this week, Siemiatkowski said that unfavorable rules in Europe on employee stock options — a common form of equity compensation tech firms offer to their staff — could lead to Klarna losing talent to technology giants in the U.S. such as Google, Apple and Meta.
As Klarna — which is known for its popular buy now, pay later installment plans — prepares for its IPO, the lack of attractiveness of Europe as a place for the best and brightest to work has become a much more prominent fear, Siemiatkowski told CNBC.
“When we looked at the risks of the IPO, which is a number one risk in my opinion? Our compensation,” said Siemiatkowski, who is approaching his 20th year as CEO of the financial technology firm. He was referring to company risk factors, which are a common element of IPO prospectus filings.
Compared to a basket of its publicly-listed peers, Klarna offers only a fifth of its equity as a share of its revenue, according to a study obtained by CNBC which the company paid consulting firm Compensia to produce. However, the study also showed that Klarna’s publicly-listed peers offer six times the amount of equity that it does.
‘Lack of predictability’
Siemiatkowski said there a number of hurdles blocking Klarna and its European tech peers from offering employees in the region more favorable employee stock option plans, including costs that erode the value of shares they are granted when they join.
In the U.K. and Sweden, he explained that employee social security payments deducted from their stock rewards are “uncapped,” meaning that staff at companies in these countries stand to lose more than people at firms in, say, Germany and Italy where there are concrete caps in place.
The higher a firm’s stock price, the more it must pay toward employees’ social benefits, making it difficult for companies to plan expenses effectively. Britain and Sweden also calculate social benefits on the actual value of employees’ equity upon sale in liquidity events like an IPO.
“It’s not that companies are not willing to pay that,” Siemiatkowski said. “The biggest issue is the lack of predictability. If a staff cost is entirely associated with my stock price, and that has implications on my PNL [profit and loss] … it has cost implications for the company. It makes it impossible to plan.”
In the past year, Siemiatkowski has more clearly signalled Klarna’s ambitions to go public soon. In an interview with CNBC’s “Closing Bell,” he said that a 2024 listing was “not impossible.” In August, Bloomberg reported Klarna was close to selecting Goldman Sachs as the lead underwriter for its IPO in 2025.
Siemiatkowski declined to comment on where the company will go public and said nothing has been confirmed yet on timing. Still, when it does go public, Klarna will be among the first major fintech names to successfully debut on a stock exchange in several years.
Affirm, one of Klarna’s closest competitors in the U.S., went public in 2021. Afterpay, another Klarna competitor, was acquired by Jack Dorsey’s payments company Block in 2021 for $29 billion.
Klarna brain drain a ‘risk’
A study by venture capital firm Index Ventures last year found that, on average, employees at late-stage European startups own around 10% of the companies they work for, compared to 20% in the U.S.
Out of a selection of 24 countries, the U.K. ranks highly overall. However, it does a poorer job when it comes to the administration burdens associated with treatment of these plans. Sweden, meanwhile, fares worse, performing badly on factors such as the scope of the plans and strike price, the Index study said.
Asked whether he’s worried Klarna employees may look to leave the company for an American tech firm instead, Siemiakowski said it’s a “risk,” particularly as the firm is expanding aggressively in the U.S.
“The more prominent we become in the U.S market, the more people see us and recognize us — and the more their LinkedIn inbox is going to be pinged by offers from others,” Siemiatkowski told CNBC.
He added that, in Europe, there’s “unfortunately a sentiment that you shouldn’t pay that much to really talented people,” especially when it comes to people working in the financial services industry.
“There is more of that sentiment than in the U.S., and that is unfortunately hurting competitiveness,” Klarna’s co-founder said. “If you get approached by Google, they will fix your visa. They will transfer you to the U.S. These issues that used to be there, they’re not there anymore.”
“The most talented pool is very mobile today,” he added, noting that its now easier for staff to work remotely from a region that’s outside a company’s physical office space.
The letters AI, which stands for “artificial intelligence,” stand at the Amazon Web Services booth at the Hannover Messe industrial trade fair in Hannover, Germany, on March 31, 2025.
Julian Stratenschulte | Picture Alliance | Getty Images
Amazon said Wednesday that its cloud division has developed hardware to cool down next-generation Nvidia graphics processing units that are used for artificial intelligence workloads.
Nvidia’s GPUs, which have powered the generative AI boom, require massive amounts of energy. That means companies using the processors need additional equipment to cool them down.
Amazon considered erecting data centers that could accommodate widespread liquid cooling to make the most of these power-hungry Nvidia GPUs. But that process would have taken too long, and commercially available equipment wouldn’t have worked, Dave Brown, vice president of compute and machine learning services at Amazon Web Services, said in a video posted to YouTube.
“They would take up too much data center floor space or increase water usage substantially,” Brown said. “And while some of these solutions could work for lower volumes at other providers, they simply wouldn’t be enough liquid-cooling capacity to support our scale.”
Rather, Amazon engineers conceived of the In-Row Heat Exchanger, or IRHX, that can be plugged into existing and new data centers. More traditional air cooling was sufficient for previous generations of Nvidia chips.
Customers can now access the AWS service as computing instances that go by the name P6e, Brown wrote in a blog post. The new systems accompany Nvidia’s design for dense computing power. Nvidia’s GB200 NVL72 packs a single rack with 72 Nvidia Blackwell GPUs that are wired together to train and run large AI models.
Computing clusters based on Nvidia’s GB200 NVL72 have previously been available through Microsoft or CoreWeave. AWS is the world’s largest supplier of cloud infrastructure.
Amazon has rolled out its own infrastructure hardware in the past. The company has custom chips for general-purpose computing and for AI, and designed its own storage servers and networking routers. In running homegrown hardware, Amazon depends less on third-party suppliers, which can benefit the company’s bottom line. In the first quarter, AWS delivered the widest operating margin since at least 2014, and the unit is responsible for most of Amazon’s net income.
Microsoft, the second largest cloud provider, has followed Amazon’s lead and made strides in chip development. In 2023, the company designed its own systems called Sidekicks to cool the Maia AI chips it developed.
WATCH: AWS announces latest CPU chip, will deliver record networking speed
The logo of the cryptocurrency Bitcoin can be seen on a coin in front of a Bitcoin chart.
Silas Stein | Picture Alliance | Getty Images
Bitcoin hit a fresh record on Wednesday afternoon as an Nvidia-led rally in equities helped push the price of the cryptocurrency higher into the stock market close.
The price of bitcoin was last up 1.9%, trading at $110,947.49, according to Coin Metrics. Just before 4:00 p.m. ET, it hit a high of $112,052.24, surpassing its May 22 record of $111,999.
The flagship cryptocurrency has been trading in a tight range for several weeks despite billions of dollars flowing into bitcoin exchange traded funds. Bitcoin purchases by public companies outpaced ETF inflows in the second quarter. Still, bitcoin is up just 2% in the past month.
Bitcoin climbs above $112,000
On Wednesday, tech stocks rallied as Nvidia became the first company to briefly touch $4 trillion in market capitalization. In the same session, investors appeared to shrug off the latest tariff developments from President Donald Trump. The tech-heavy Nasdaq Composite notched a record close.
While institutions broadly have embraced bitcoin’s “digital gold” narrative, it is still a risk asset that rises and falls alongside stocks depending on what’s driving investor sentiment. When the market is in risk-on mode and investors buy growth-oriented assets like tech stocks, bitcoin and crypto tend to rally with them.
Investors have been expecting bitcoin to reach new records in the second half of the year as corporate treasuries accelerate their bitcoin buying sprees and Congress gets closer to passing crypto legislation.
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