Webvan’s George Shaheen: A man before his time

Area native George Shaheen was enormously successful in business, leading Andersen Consulting from 1989-99, when its revenue grew from $1.1 billion to $8 billion. So it wouldn’t be surprising for him to sour some after a failure – especially one that’s back with a bang after a few clicks.

“I have no regrets,” says the one-time online-grocery entrepreneur. “My wife and I were on a cruise ship when we tested positive for COVID and quarantined in our cabin for five days. That might’ve angered some, but it was just another life experience. Nobody was out to get us or anything.”

Shaheen, who turns 78 this month, was raised in Elmwood and attended Bradley University before rising through the ranks at Andersen, moving to Silicon Valley, and then getting involved in the dot-com boom, from software maker Siebel, where he was CEO in 2005-2006 when it merged with Oracle, to Webvan a few years before.

In some ways the ex-Webvan CEO got his start in the family’s grocery.

“I worked there what seems like a long time,” Shaheen says. “Started early. It was a small store – one of three in Elmwood then, before the Interstate and chain stores and people driving to Peoria or Galesburg. We couldn’t compete with their selection. Now, of course, it’s not the Interstate but the Internet.”

After he left Andersen (“Too many CEOs stay too long,” he says, chuckling), he joined Webvan, a huge startup, reportedly attracting hundreds of millions of dollars in investments.

“It was a great idea with good people, all on a mission,” Shaheen says. “The technology was pretty good but fragile. We had different iterations of computers and dial-up Internet [so] the underpinning was powerful but clunky.”

Aiming to deliver groceries in less than an hour, Webvan built a $25 million Oakland warehouse with more than four miles of conveyer belts through the 330,000-square-foot facility. (Most traditional supermarkers have about 60,000 square feet.)

“We had a tracking system that could handle thousands of orders a day, refrigerated trucks to make sure produce stayed fresh, 12 docking stations and more than 60 vans in the Bay Area,” he says.

Early in Webvan’s launch there, about 10,000 households signed up.

“Looking back, consumers weren’t ready,” Shaheen says. “Shopping was still an experience itself.

“I grew up in the grocery business, so I didn’t want to go to the store,” he continues, laughing. “But at that time, a lot of people did want to go shop, to get out of the house, look over the shelves…”

Within a year, Webvan bought Home Grocer with plans to move into 13 other markets and expand from groceries to an all-purpose e-commerce retailer. But the company couldn’t cultivate and maintain a loyal customer base, says Shaheen, who resigned from the company in 2001, when it shut down and filed for bankruptcy.

Decades later, the pandemic changed consumers, with shopping-as-socializing less appealing with health risks, and vastly better technology, from fiber-optics to smart-phone apps.

Now, online grocery shopping makes up 12% of all grocery sales nationwide, according to Deborah Weinswig of Coresight Research, which studies the sector. That percentage is up from 2% pre-pandemic.

Online groceries are increasing in cities including Chicago and New York, offering safety and convenience. Besides familiar brands such as Amazon Fresh and Instacart (a delivery service working with many retailers), Chicago has Farmstead, offering locally sourced produce and national brands from a “dark store” closed to the public in Franklin Park but serving people within 50 miles – from Gary, Ind., to Kenosha, Wis.

Similarly, New York has several speedy online grocers: Buyk, Fridge No More, GoPuff. Instead of Webvan’s centralized-warehouse model, most operate from a network of neighborhood microhubs with inventories of less than 5,000 items. (Brick-and-mortar grocers have some 35,000 items.)

“I don’t know how food delivery is doing, really,” Shaheen says. “I don’t see food-delivery vehicles in our area. When Webvan was going, we’d see our trucks all over the place.”

Apart from timing, “the idea was right,” he says, adding that he sees unending business possibilities ahead.

“Jeff Bezos started out selling books, but he didn’t start an online bookstore. He built a platform.” Sahheen says. “I’m curious about what’s coming, like artificial intelligence. It happens fast. Business life cycles aren’t very long.”