Alex Marsh never thought he would miss his daily commute to central London from Brighton, but such are the revelations of working through the Covid-19 pandemic.
“I’ve moaned about commuting for 10 years, and I completely take it back – I’m sorry, I apologise,” says the UK head of Swedish fintech company Klarna. “I enjoy it. I enjoy the benefits of getting back into London every time I do it.”
A daily train journey is one of numerous seemingly staid elements of working life that some have found themselves longing for during more than a year of enforced working from home. Now, like so many company leaders, Marsh is working out what else his teams have missed during the pandemic, how their working practices should change in response and, crucially, where they should be working.
Klarna, which offers consumers a “buy now, pay later” option at various retailers, is growing quickly, including in the UK, and is now valued at some $45.6bn (£33.5bn) based on its most recent funding round. Earlier this year the company moved into a new London headquarters, taking 11,000 sq ft of WeWork space in Aviation House in Holborn, WC2. As it grows its UK headcount and shifts to a greater focus on hybrid working, this corporate occupier is rethinking what its office space needs to look. But there is one constant – and that is its place in the capital.
Hub and spoke
London isn’t Klarna’s sole base in the UK – it has also grown its Manchester office, taking extra space in the Old Granada Studios. But the capital was a natural home for its UK HQ since the company first got a foothold here in 2014.
“We’re in the crosshairs of fintech and retail, and when we were looking where to be based in the UK, London really stood out for us across both those lenses,” Marsh says. “From a fintech side, London’s reputation globally is phenomenal, linked to consumer adoption of technology but also support from government to foster an environment of innovation and collaboration. And from a retail lens, London really is the home of shopping in the UK. Given our product and our sector, that was incredibly appealing.”
Those factors have only grown, Marsh adds, but the company will look to branch out beyond the capital while maintaining that London hub.
“Our model globally is to have major hubs in the markets in which we operate and then to have spokes around them,” Marsh says. “For us it’s very important that we have proximity to the retail partners that we work with. That was really the genesis of expanding to Manchester, having a major hub in London, then starting to build up these spokes – Manchester being the first and we are looking at other locations.”
Hybrid hopes
As a technology company, Klarna has always been able to have staff working remotely, Marsh says. It operates across 20 markets globally and its teams need to be in regular contact with colleagues hundreds of miles away. But there were challenges when 100% remote working became the norm at the start of the pandemic.
“[There are] areas where the challenge of not being together with your colleagues really stands out – areas like collaboration,” Marsh says. “The creativity that comes from collaboration is also challenging when you’re not physically located together.”
Coaching newer team members too has suffered. “In our model and in the fintech space, talent is an absolute battleground,” Marsh says. “So much of that is about identifying people with the right attributes and capabilities, but then nurturing that talent. That can be from graduates, people returning to work, or reskilling or upskilling from other sectors. But to get them where we want them to be within Klarna, coaching is key. That’s been one of the challenges. When you work remotely, it can become transactional.”
Klarna kept offices open where it could, even if they would only be used for a small number of employees. Now the business is working through a formalised hybrid working plan that Marsh and colleagues hope will give staff the best of all worlds. It has started with teams coming in for one specific day a week. Soon that will increase to two days a week, with staff given flexibility around the other three days.
“As we’ve seen in the past six months as people start to return to the office, it’s actually more challenging having half of the team in the room and half out of the room than it was when we were all on a call or all together,” Marsh says.
“We wanted to invest in a really good quality office space in London so that when the teams are together, it’s an environment that does support collaboration and creativity, connections between team members and, really importantly, that coaching aspect.”
Best of both worlds
The pandemic has fuelled much debate over the future of the flexible workspace sector. Its advocates believe corporate occupiers will turn in their droves to flex offices in order not to be tied down to the inflexible, years-long leases they once would have signed. Critics believe the pressures of the pandemic will expose the flaws of flex operators’ business models, particularly their reliance on selling short-term leases of properties they hold for the long term.
Klarna had been leasing space close to Oxford Circus, W1, on a traditional lease, which expired during the pandemic. Marsh and colleagues weighed up all their options when choosing their next home.
“We looked at both models – traditional space and then flexible working spaces,” Marsh says. “We saw many spaces coming back on the market – companies giving up office spaces, subletting floors at very short notice and very attractive deals. Equally, shared workspace is seeing occupancy drop. So not by design but by fortune, in a way, there were lots of options for us.”
The company has boosted its team numbers rapidly. Klarna entered the pandemic with a UK workforce of about 200, Marsh says. That figure is now above 300 and he expects it to reach 400 by spring 2022. Planning for a new office that could accommodate a swelling workforce that will nonetheless only use the office for part of the week was a challenge. The WeWork space at Aviation House – the flex operator struck a 20-year lease on the entire building with Malaysian sovereign wealth fund Permodalan Nasional Berhad in 2018 – ended up ticking the right boxes.
“It really has worked out as the best of both worlds,” he says. “We have a dedicated fixed space for ourselves and the flexibility to grow that space. But, equally, we have the shared space of the building, the meeting rooms, the collaborative space as you come into the atrium of Aviation House. We were really keen that it was an environment that was hugely appealing for the team as they came back in to work and got used to commuting and used to being here in person.”
Now making that journey from Brighton more regularly, Marsh has been enthused by the signs of London coming back to life since September. Running a business that relies on retail spending and tourism, he will be watching footfall on the city streets closely. And as the capital livens up once more, he remains confident that its workforce, too, will want to return.
“I strongly believe that people are getting a real energy back from the in-person events, in-person meetings,” he says. “London has so much to offer. I feel confident that from a business perspective, people will be returning and will enjoy the benefits of being back in the city.”
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