DELIVERING THE GOODS
How Ocado chief has confounded his critics
TIM Steiner is one of the business world’s most enduring evangelists. Often derided for his fervent belief in the food delivery firm he founded with two pals from US bank Goldman Sachs at the height of the dotcom boom in 2000, it now appears he was right all along.
The share price of Ocado – best known among many shoppers for delivering Waitrose products – has rocketed thanks to a deal to sell its technological know-how to Canadian retailer Sobeys.
It is the third international contract Steiner has sealed in a little over six months, and the City has finally taken it as proof that Steiner’s strategy of selling Ocado’s expertise in online grocery to other store chains is the right one.
On the day of the deal, Ocado’s stock market value shot up by more than £650 million, adding about £30million on paper to Steiner’s personal wealth, now estimated to be well over £100million.
One friend was candid about Steiner’s long haul at Ocado. The online grocer has at times tried the patience of investors, who have included Tetra Pak billionaire Jorn Rausing and former US vice-president Al Gore.
‘I’m sure he’s had his dark moments but he is resilient,’ the source told The Mail on Sunday. ‘He is a very focused, determined and intelligent bloke who has stuck at it for more than 15 years.’
The source added: ‘The pace of change perhaps didn’t happen quite as quickly as Steiner thought but there is no doubt about it: the changes happening in the grocery market are working in the company’s favour.’
The company has had more than its fair share of ups and downs. Shares hit a nadir of 54p in 2011 – a tenth of their current value.
What has changed? When explaining Steiner’s Lazarus-like revival, analysts point to Amazon’s $13.7billion (£9.7billion) purchase of upmarket US retailer Whole Foods Market last June as ‘the moment that switched on light bulbs across the food industry’.
This deal woke up the sector to the fact that food delivery is now big business and a threat to companies that still lack a viable online operation.
Perhaps it’s no coincidence Ocado revealed it had won its first international contract just a month later.
But it turned out to be a damp squib because Steiner was unable to reveal the identity of his prized new customer.
He must have been pulling his hair out. He had been promising the City a barnstorming deal for two years, but this was an anticlimax.
But then, in November, a second contract with €36billion French grocery chain Casino stunned the market and was followed by last week’s Canadian tie-up.
Steiner was travelling last night and unavailable to speak, his representative said. He is also among those facing a backlash over the sleazy Presidents Club charity bash, a men-only event which he attended among hundreds of others, but which left some threatening to boycott his service.
He can be prickly to criticisms of his firm and has more recently become publicity shy despite the company’s very successful attempts at raising its own profile over the years – mainly through interviews with his more extrovert and accessible co-founder Jason Gissing. Last night, Gissing was reluctant to celebrate the success of the firm he helped to create. ‘I left Ocado nearly five years ago. I really don’t want to talk to you,’ he said.
Such reticence is a far cry from the Jason Gissing of old, who was prone to giving overfrank confessional interviews to the FT.
He and Steiner even verbally sparred with former Tesco chief executive Sir Terry Leahy via the press, accusing him of being ‘obsessed’ with their online delivery firm. The pair revelled in the free publicity it brought, which made them look canny and put them in stark contrast to the dour Leahy.
They ascribed his barbed comments about Ocado’s profitability – or lack of – as fear of the competition it presented. Steiner’s defensiveness and shunning of the spotlight may be attributed to the fact that the company walked a financial tightrope for years.
He may also have been irritated by publicity around his messy divorce in 2016 at a time when the company’s global ambitions seemed from the outside to be on the rocks. After years of hoping that he could make marriage work with former wife Belinda, the couple went their separate ways. He subsequently found a new relationship with Polish model Patrycja Pyka, 20 years his junior. It seems Steiner – now surrounded by a bevy of capable colleagues including chairman Lord Rose and former Sainsbury’s executive Luke Jensen – can rest on his laurels for a moment before he seeks more new contracts. It appears that for its ever faithful investors, Ocado has finally delivered.