April 28, 2016

Unicorn + Pink Squid = Emotional Value Proposition?

A slow-motion rainbow trout, sliding balletically across a shiny floor; cut to a smiley hairy sloth-like animal swimming underwater; cut again to a chrome cheese slice, shaving off an endless ribbon of zero-gravity Emmental.

Don’t worry it’s not the crystal meth kicking in. I’m waiting in a foyer, watching a 25 by 10 foot video wall. The interior entrance portal is Scandinavian chic, an eclectic mix of polished concrete and galvanised steel, where form almost follows function. This is not a normal e-commerce company.

We’re visiting our Swedish friends this week – not King this time, but Klarna. We’re here to ‘smoke-test’ our next EVP iteration with Sebastian Siemiatkowski, the founder and CEO; unless you are in the FinTech industry, you’ve probably not heard of them. They’re a Unicorn. A pet name coined in Silicon Valley for a startup valued $1b or more (that’s b for Billion). Klarna is currently valued at $2.25b which mathematically equates to: boy unicorn marries girl unicorn and they create a little baby unicorn! Like me, Klarna like their maths …

So why so valuable? Put simplistically, they’ve perfected an intuitive way to allow people to ‘buy now and pay later’. Not to be confused with a DFS Easter sofa sale, this is pioneering stuff, a payment platform which takes the risk away from buyer and seller. The Nordics are addicted to it, and what the Nordics love, (see Spotify, Candy crush, Skype, Minecraft, Lego, Ikea, Volvo…!) the rest of the world usually loves too.

But PayPal already does that right? No, wrong,  <geek alert>PayPal needs a bank account to connect to and deducts the cost from the user almost immediately. But even before you can do any of this, you need to have previously registered your online banking facility and link it back to PayPal. You need a username and password to login to your PayPal and separate username and password for your Bank, plus your memorable word, pin or passcode – Klarna is the financing bank and technology platform all-rolled-into-one. Plus, they only ask for payment 14 days after delivery. A newbie can just enter an email and postcode and start buying, simplicity itself. But the clever bit behind it is Klarna’s nano-second risk algorithm that calculates your credit worthiness, we’re told it uses various profiling and behavioural widgetologies!  <end geek alert> Yada yada yada, anyway you get the picture, it can be clunky with lots of security nags.

The buzzword is ‘frictionless’, but it’s all very sophisticated and they’ve lured a team fresh out of developing a CERN project (google God Particle) to make it happen. So cue the spinning fish, hairy sloth and floaty cheese… When things get this complex, its far more elegant to say it with emotion: smoooth payments. We say we blend Art with Science, well maybe this time we’ve been out-gunned?