From Goldman Sachs to groceries: Ocado’s boss Tim Steiner

Last weekend, Ocado boss Tim Steiner appeared on the Sunday Times list of the UK’s richest individuals for the first time — at number 882. This week, he will have jumped quite a few places higher after the value of Ocado, the company he co-founded, almost doubled to about £5.3bn.

A major deal to sell its “smart platform” technology to Kroger, one of the world’s largest grocers, this week pushed Ocado’s share price up 44 per cent — and proved vindication for the bond trader who quit Goldman Sachs in 2000 to start an online grocery business with two former colleagues.

At the time, the dotcom bubble was deflating, while the high-profile failure of Webvan in the US cast a long shadow over anything that looked like an online delivery service. But Mr Steiner had a fallback: “I thought I was respected and liked at Goldmans and that if this didn’t work out after 18 months I could perhaps go back there.”

A company at one point written off as a middle-class indulgence after its shares fell below their 2010 IPO price may enter the FTSE 100 index at the next review.

Mr Steiner’s upper middle-class upbringing — he went to Haberdashers’ Aske’s Boys’ School in Hertfordshire — and time in the City meant that his move into the grocery business was met with some suspicion. He spent eight years as a bond trader in London, Hong Kong and New York.

But consumer interests run in his family: his great-grandfather founded Steiner Leisure, the Nasdaq-traded spa group that operates on cruise ships and in holiday resorts.

He is one of the brightest people I have ever met

His stewardship of Ocado has not been without controversy; one detractor describes him as a “promotional and grandiose” individual who bristles at any questioning of the group’s technological prowess or its business model.

Jason Gissing, another of Ocado’s three co-founders and fellow former Goldman Sachs fixed-income trader, rejects this. “He is one of the brightest people I have ever met,” he says, adding that some degree of evangelism and self-belief were essential for an entrepreneur. “When we started, we were trying to take on household names who were very powerful.”

Mr Steiner plays down both the idea that criticism got to him, or that he is now enjoying his revenge. The naysayers were “an annoying distraction”, he says, “but we are not sitting around here gloating”.

When it floated, Ocado was marketed as an online grocery; the opening line of the prospectus proclaimed that it was “the only dedicated online supermarket in the UK, and the largest dedicated online supermarket in the world by turnover”. But its shares only really started motoring when it became less of a grocer and more of a technology provider.

The first licensing deal was with Wm Morrison. Mr Steiner promised another deal would follow by the end of 2015. He says the guidance was given in good faith, since an agreement was very close at the time, but some thought the promise was rash and hubristic. The next licensing deal, finally announced in 2017, was with a small and unnamed player — compounding the sense of anticlimax.

Behind the scenes, though, Ocado’s systems and software had been reconfigured into a solution that could be licensed to third parties. The rewards have been reaped this year, with a flurry of deals culminating in this week’s Kroger agreement. More than one analyst has described it as “transformative”.

There are still mutterings that Ocado is a long way from sustainable profitability. But momentum counts for a lot. When the three friends started Ocado in partnership with Waitrose they took a 90 per cent salary cut. Now Mr Steiner’s 4 per cent stake in Ocado is worth more than £200m — with a remuneration policy partly linked to the groups’ share price — making it likely he will be moving up further in next year’s Rich List.