Interview: How Tim Steiner’s ‘never satisfied’ attitude has shaped Ocado

Why can’t the UK create an Amazon, a Facebook or a Google, you often hear people ask. While it might not be on quite the scale of those tech powerhouses, Ocado is probably the closest that UK retail has come – and that is testament to the leadership of co-founder Tim Steiner.

Over the two decades since he established the business in 2000 – helped by financial backing in the early days from investors including John Lewis Partnership – Ocado has grown to become an etail and tech giant. Sales last year topped £1.7bn, as revenues from its online grocery business jumped 10.3%, quicker growth than any of its UK food retail rivals.

That is tribute to Steiner’s vision, resilience, and entrepreneurial verve. His leading role is humorously reflected in the name of Ocado’s HQ canteen, Tim’s Diner – a decision which, he hastens to add, had nothing to do with him.

“We’re very non-self-congratulatory in our general style – we always think that whatever we do, we have to achieve more tomorrow”

Tim Steiner, Ocado

After highlights such as the partnership it penned with US grocery giant Kroger in 2018, last year’s landmark £750m deal to create a retail joint venture with Marks & Spencer, and Ocado’s eclipse of the latter in terms of market capitalisation, it is easy to forget the many obstacles Steiner has overcome during that journey.

In its earlier years, Ocado was famously characterised by a City analyst as “beginning with an O, ending with an O and worth zero”. But now, as well as opening the door for M&S to sell food online, its technology is sought after by retailers worldwide, from Canadian operator Sobeys to Japanese powerhouse Aeon.

Yet Steiner, the winner of the Clarity Retail Leader of the Year Award, laughs off comparisons with the FANG stocks. “There’s some difference, unfortunately, as you can tell from the hundreds’ times market caps they have,” he observes – Amazon became the second company in the world to hit a $1trn valuation in September 2018.

However, one characteristic Ocado shares with America’s tech titans is a founder’s mentality and ongoing involvement, which have allowed the business to beat adversity – whether that be the scoffs of doubters, or the blaze that destroyed its state-of-the-art fulfilment centre in Andover last year.

Road to success

“It’s not been a straight road,” Steiner tells Retail Week. “People underestimate how hard it is and how many challenges you face. You have to rise to each one, you can never stop. Just because we’ve reached this level doesn’t mean we’re not going to see challenges – we have to rise up to them each time and we will.”

Steiner finds it hard to answer whether he had imagined, all those years ago, what Ocado has ultimately become. Its journey has reflected particular choices along the way and wider market trends, such as the decision to build the Ocado Solutions business and internationalise it to capitalise on the global shift to online. 

“On a spreadsheet, you can build a really big business,” he explains. “They’re always much easier to run and build on spreadsheets, they’re a lot harder to do in practice. I’m sure we built some crazy spreadsheets, but I don’t think we ever imagined building a company of the scale we have today in terms of the geographical coverage, the people, the influence on the industry globally and stuff like that.

“It would be crazy foresight if we’d understood 20 years ago what we needed to do to be here today. I think what you have to do is keep looking ahead and try to steer in what you think is the right direction, taking what you think are long-term decisions.

“What you’re thinking about long-term changes slightly over time. You take what opportunities you see and as the world evolves, you see what other people are doing. If other people had stuck as aggressively to what they were doing in the same way that we did, then the business we’re in today might not exist because the understanding of this market and people’s ability to design and build scalable, automation and software solutions may be greater than it is.

“In our case, I think that some spectacular failures in online grocery, particularly in the US in the early 2000s, created a strong myth that you couldn’t use automation to assist in online grocery. To some extent, that myth has helped us build the business because we convinced ourselves early on it was wrong and have now gained 20 years’ experience in a field that fewer people looked at or entered because of the myth.”

Belief in the vision

Steiner puts Ocado’s ability to ride the challenges and opportunities down to the conviction and culture of the Ocado team. He says: “We’ve done a great job of believing in our business and our vision, and therefore not believing that every time we see a challenge you run for the hills. We’ve been good at problem-solving and innovating.

“We’ve got a very good, never satisfied attitude, not just to problems, but to successes. If we’re trying to get to 100, when we get to 90 we move the target to 120. We’re very non-self-congratulatory in our general style – we always think that whatever we do, we have to achieve more tomorrow.

“I’ve definitely seen a difference there with some other businesses, where they’re looking to be able to tell whoever their outside constituents are that all they ever do is perfect. We’re not like that, we’re about an ‘everything I do every day, how can I do it better tomorrow’ as opposed to a ‘how can I blame that on someone else’ attitude. Some businesses get too busy working out who to blame rather than putting their effort into working out how to solve the problem.

“There’s no doubt it’s a culture, and early on we had a few people who didn’t like the challenging nature. Now the whole business has a more challenging nature and I guess people who join and don’t like it probably don’t stay. Most people enjoy it because it gives you satisfaction to know you’re being challenged. It’s not a blame culture. There are too many UK businesses that have both a short-term culture and a blame culture. We try to have a long-term, collaborative culture and an innovative, problem-solving culture, and hopefully, that will steer us well versus a typical Plc quarter-by-quarter and ‘if anything goes amiss who do I take outside and shoot’ culture. That’s not to say it can never happen, but that’s not where we’ve been.”

More than a retailer

As Ocado increasingly sees opportunity in licensing its intellectual property to retailers worldwide, rather than simply selling groceries in the UK, some observers are now questioning whether it is a retailer at all. For Steiner, such distinctions can miss the point.

“I’ve said for many years we’re a retail business, a logistics business and a technology business – we are still all three,” he says. “Obviously we’ve got a lot being invested in the technology part, but it is a technology business that is there to aid retail and logistics – it’s not like a tyre company that became the world’s largest manufacturer of mobile phones. To pick a much more successful and recognised example than us, it’s like Amazon Web Services.

“We did a phenomenal job changing the business. Management made some money from it, the shareholders made a lot more”

Tim Steiner, Ocado

“Our technology business spun out of the technology that supported retail and logistics, that now is helping other retailers with their retail and logistics and has become a very big part of our business today. We’re a bit of everything. Sometimes there’s a bit of pressure to conform and say you’re one or the other – if you’re a retailer, not to develop your own technology because you’re not a technology company, and if you’re a technology company, not to own part of a retail business. I think we just need to think strategically what’s best for us, not how do we conform to someone else’s view.”

On the retail front, Steiner says the joint venture with Marks & Spencer, which goes live this September, is “super-important and super-exciting”. M&S’ own-label range will be complemented by Ocado’s products and branded lines to form what Steiner lauds as “an offer that you can’t buy anywhere, not just online but even in bricks and mortar”.

In a swipe at its soon-to-be-former partner Waitrose, he adds that Ocado “have not had a supportive partner there for a long time” and insists the combined efforts of Ocado and M&S will “help grow this business faster than we would have been able to with our old supply partner”. 

Waitrose is now seeking to supercharge its online business alone, after it pulled out of a deal with Today Development Partners (TDP) – the company set up by Steiner’s fellow Ocado co-founder Jonathan Faiman, which is now at the centre of a legal row.

That saga has created plenty of column inches – something Steiner has become no stranger to during his colourful career. Just last month, the Ocado boss attracted criticism for the size of his remuneration package, which included a £54m bonus, despite the company making a pre-tax loss last year.

The bonus reflected a five-year incentive scheme for senior management tied to its share price, which has trebled to more than 1,100p since March 2015. But Steiner defends the scale of the reward, saying all shareholders benefited from “an extreme change” in the company’s value, which, at the time of writing, stood at £8bn.

He says: “We went from the lower half of the FTSE 250 to the middle of the FTSE 100 in that time window. It was a reward for success, not anything else. I’ve not had a shareholder query it with me. We did a phenomenal job changing the business. Management made some money from it, the shareholders made a lot more.”

Plenty more to do

After the years of hard work, culminating at last in a raft of global deals that some observers doubted would ever happen, Steiner shows no sign of heading for the exit. “You never know, but they’ve not asked me to leave yet,” he says. “Hopefully I’ve got a few years left in me and the business – we’ve never had more opportunity than we have today. Hopefully, it will be fun playing a big part for the next few years.”

That will be music to the ears of Ocado’s shareholders and growing stable of international partners. Perhaps not so much for the grocery rivals that Steiner remains unwavering in his desire to disrupt.