biz prez script

opening

• 2004, a young swede named Sebastion Semiatkowski

• Working a pretty unglamorous job

• Cold calling small businesses for a debt collection agency

• Now, these Small businesses that he was calling traditionally sold their goods through mail-order catalogs

• These catalogs allowed a customer to pick out what good they wanted, have it delivered to their house, and make payment at the door

These catalogs allowed a customer to pick out what good they wanted, have it delivered to their house, and make payment at the door

• These catalogs allowed a customer to pick out what good they wanted, have it delivered to their house, and make payment at the door

• Now, at this time, internet was starting to get big

• Which meant these small businesses adapted with e-commerce

• But that meant they had to abandon this practice of payment at the door, as that’s not how traditional shipping works

• These small businesses, however, really wanted to retain that practice

• As that is what swede’s were used to at the time

• They couldn't handle the risk

• What if the customers never paid?

• They were small businesses

• They didnt have collection departments, and they couldn’t afford the debt collection agency

• They didnt have collection departments, and they couldn’t afford the debt collection agency

• This is were semiatkowski’s insight came in:

• It sounds almost too simple, but what if a middleman paid the merchant upfront, then took on the job of collecting from the consumer? 

• The merchant gets certainty

• The customer gets to try before they pay

• The middleman earns a fee for taking on the risk

• This was his business model breakthrough

• This was his business model breakthrough

• You might think this problem was already solved by credit cards, but there’s a fundamental difference

• Credits cards serve the bank’s interest first - with high interest rates, lower approvals, and fees

• Semiatkowski’s model was merchant-first

• instead of the consumer paying interest, they would offer interest free installments and the merchant gladly pays the fee because of the improved conversion rate and less friction

• Semiatkowski went on to create Klarna - the buy now pay later service with the greatest market share in today’s markets - 26.1%

• Semiatkowski went on to create Klarna - the buy now pay later service with the greatest market share in today’s markets - 26.1%

• Klarna’s business model, at it’s core, has a three sided value proposition

  • The consumer (use fingers to illustrate these - will serve as organizing markers for sections)

  • The merchant

  • The platform

• Each side gets something distinctly valuable, meaning the incentive reinforce each other

• Each side gets something distinctly valuable, meaning the incentive reinforce each other

• Starting with the consumer:

  • They effectively get a zero percent short term loan

  • No hard credit check, no annual fee, and no compounding interest

  • A $200 purchase becomes four $50 payments over 6 weeks

  • Unlike a credit card, there’s no revolving balance and no minimum payment trap

  • This makes the structure enormously appealing to Gen Z and millennial consumers

  • Research from the Journal of Marketing Research found that BNPL increases online spending by 6% and basket sizes by roughly 10%

• Now the merchant:

  • It solves multiple problems at once

  • Conversion rates go up

  • Cart abandonment goes down

  • And they get paid in full, up front, with no risk

• For the platform:

  • They sit at the center of both sides

  • Collecting a fee from the merchant for typically 3-6%

  • And leverage network effects: more merchants attract more consumers, which in turn, attract more merchants