The Boring Company

Klarna

The Boring Company

The Boring Company's business model is infrastructure contracting — they bid on tunnel construction projects and get paid by the clients (usually government agencies or private venues). Revenue comes from construction contracts for building the tunnels and from operating the transit systems within them.

The core economic thesis is that tunnel boring is absurdly expensive — typically $100 million to $1 billion per mile — because the technology hasn't meaningfully improved in decades. The Boring Company claims they can reduce costs by 10x through smaller tunnel diameters, continuous boring (no stopping to install tunnel walls), electric machines instead of diesel, and autonomous operation.

The Las Vegas Convention Center Loop was built for $47 million — about 1.3 miles of twin tunnels. That's roughly $18 million per lane-mile, which is genuinely cheap compared to traditional subway construction.

Whether that cost advantage holds at scale on larger, more complex projects remains unproven.

Klarna

Klarna makes money from merchant fees and consumer interest. Merchants pay Klarna 3-6% of each transaction — they're willing to pay because Klarna increases conversion rates by 30%+ and average order values by 45%.

On "Pay in 4" (interest-free installments), Klarna makes money purely from merchant fees. On longer financing (6-36 months), Klarna charges consumers interest up to 25% APR.

Klarna also earns revenue from its shopping app (affiliate commissions when users discover and buy from merchants), and from its Klarna Card.

The Boring Company

The Boring Company started, quite literally, with a tweet. In December 2016, Elon Musk was stuck in LA traffic and tweeted "Traffic is driving me nuts.

Am going to build a tunnel boring machine and just start digging." Most people assumed he was joking. He wasn't.

Within weeks, Musk had a team digging a test trench in the SpaceX parking lot in Hawthorne, California. The initial concept was ambitious: a network of underground tunnels where cars would be loaded onto electric sleds and whisked through tubes at 150 mph.

Think the Hyperloop but underground and for individual vehicles.

The company was formally incorporated in late 2016 as a subsidiary of SpaceX. The name was classic Musk — a pun on both tunnel boring and the company's supposed boringness compared to rockets and electric cars.

Early funding came from Musk personally and from a surprisingly successful merchandise operation: The Boring Company sold 20,000 branded flamethrowers (rebranded as "Not-a-Flamethrower" for legal reasons) for $500 each in 2018, generating $10 million in revenue before they built a single tunnel.

Klarna

Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson were students at the Stockholm School of Economics. In 2005, they entered a startup competition with an idea: let people buy things online and pay later.

At the time, online shopping was still new and most people were terrified of entering their credit card details on the internet. The idea was simple — Klarna would pay the merchant immediately, and the customer would get an invoice with 14-30 days to pay.

The competition judges hated it. The idea was dismissed as financially irresponsible and the team didn't win.

But Siemiatkowski pressed on. Swedish e-commerce was growing fast and merchants were desperate for any way to reduce cart abandonment.

Klarna's "pay after delivery" model was a hit because it shifted the risk — customers could receive the product, try it on, and only pay for what they kept.

The first customers were Swedish e-commerce merchants selling fashion and home goods. Klarna handled the invoicing, fraud detection, and collections.

Merchants saw conversion rates jump because customers were more willing to buy when they didn't have to pay immediately.

The Boring Company

The strategy is to prove the concept in Las Vegas and then replicate it in cities worldwide. The Vegas Loop is the showcase project — a real, operating system that city officials and transportation planners can visit and experience.

Las Vegas was a strategic choice. The Las Vegas Convention and Visitors Authority was a willing early customer.

Nevada has friendlier regulations than most states. The flat desert geology is easier to bore through than urban bedrock.

And tourism means high passenger volume to demonstrate utilization.

The plan is to expand from convention center shuttle to city-wide transit system. Clark County approved the full 68-mile Vegas Loop expansion.

If it works — moving tens of thousands of passengers daily, reliably, at low cost — it becomes the proof point for selling Loop systems to other cities.

Klarna

Klarna grew by being embedded at checkout. The strategy was to sign up the biggest online retailers and become a payment option alongside Visa and PayPal.

Once Klarna was at checkout, consumers discovered it organically. The "Pay in 4" button became ubiquitous across fashion, electronics, and home goods retailers.

The Klarna app became a growth engine beyond checkout. By building a shopping app where users could browse products, discover deals, and track deliveries, Klarna turned from a payment method into a shopping destination.

The app has 35+ million monthly active users who start their shopping journey inside Klarna before even visiting a retailer.

International expansion was aggressive. Starting in Sweden, Klarna rolled out across Europe, then into the US, UK, and Australia.

The US became the biggest growth market — American consumers were especially receptive to Pay in 4 as an alternative to credit cards. By 2023, Klarna had 34 million US users.

The Boring Company

The core criticism is that The Boring Company has essentially built a taxi tunnel, not a transit system. Traditional subways move thousands of people per hour in high-capacity trains.

The Vegas Loop moves people in individual Teslas — one car at a time. Critics argue this is fundamentally less efficient and will never match the throughput of real mass transit.

Scaling beyond Las Vegas is unproven. Urban tunneling in cities with existing underground infrastructure — sewers, subway lines, utility conduits, building foundations — is exponentially harder than boring through Nevada desert.

The cost advantages may not hold in complex geology.

The autonomous driving requirement is another dependency. The long-term vision requires fully autonomous vehicles navigating tunnels at high speed.

Currently, the Vegas Loop uses human drivers in Teslas going 35 mph. Removing human drivers and increasing speed are both necessary for the economics to work at scale, and both depend on Tesla's Full Self-Driving technology actually becoming fully autonomous.

Klarna

The valuation collapse was humiliating. Klarna raised at a $46 billion valuation from SoftBank in 2021.

One year later, they raised a down round at $6.7 billion — an 85% haircut. It was the most dramatic valuation drop in fintech history.

Employee stock options were underwater. Siemiatkowski had to lay off 10% of the workforce.

The entire BNPL category went from hot to radioactive in months.

Credit losses are the existential risk. Klarna is lending money to consumers who want to buy things they can't afford to pay for right now.

When the economy slows, defaults rise. Klarna's credit losses hit $1 billion in 2022.

The company had to tighten underwriting significantly and pull back from riskier markets. The tension between growth (approve more loans) and profitability (reject risky borrowers) defines every quarter.

The IPO in 2025 was a comeback story but with caveats. Klarna went public at $15 billion — a major recovery from the $6.7 billion trough but still less than a third of its 2021 peak.

The company finally turned profitable by slashing costs with AI (replacing hundreds of customer service agents with AI chatbots) and tightening credit standards. But investors remain cautious about the BNPL model's long-term sustainability.

The Boring Company

Prufrock — the next-generation tunnel boring machine designed to bore at over 1 mile per week, compared to the industry standard of roughly 300 feet per week. The name comes from T.S.

Eliot's poem. Vegas Loop — the operational system under Las Vegas with 93 stations planned across the Strip, downtown, and the airport.

When complete, it would be a 68-mile network. Loop Transit System — the overall concept of small-diameter tunnels with autonomous electric vehicles providing point-to-point underground transportation.

Not-a-Flamethrower — technically a roofing torch in a Nerf gun shell. Sold 20,000 units at $500 each.

Not really a product anymore but too iconic to leave out.

Klarna

Pay in 4 is the signature product — split any purchase into four interest-free payments over six weeks. Pay in 30 lets customers receive the product first and pay within 30 days.

Financing offers longer-term payment plans with interest for larger purchases. The Klarna App is a shopping destination — browse deals, track orders, manage payments, and earn cashback.

The Klarna Card is a physical Visa card that lets users Pay in 4 anywhere. Klarna Creator is a platform for influencers to earn commissions sharing products.

Klarna AI is their customer service chatbot that handles two-thirds of support queries.

The Boring Company

Elon Musk funded the company initially from personal wealth. Sequoia Capital, Valor Equity Partners, Craft Ventures, DFJ Growth, and 8VC participated in the $675 million Series C in 2022 that valued the company at $5.7 billion.

Vy Capital and Brookfield also invested. The investor base is heavily Musk-aligned — many of the same funds that back SpaceX and Tesla.

Klarna

Sequoia Capital, SoftBank, Silver Lake, GIC, Atomico, Commonwealth Bank of Australia, Heartland