Over the last week, Small Potatoes Urban Delivery, a rapidly expanding Vancouver, BC–based organic produce and natural grocery delivery service, has purchased or merged with three smaller organic delivery services, including two San Francisco companies and Seattle's own Pioneer Organics. Pioneer Organics CEO Ronny Bell, who founded the company with six customers and a battered Subaru in 1997, has stepped down. So far, the company has entered at least seven West Coast markets. "We're rapidly growing and expanding out to new markets," SPUD CEO David Van Seters says—as many as 20 by the end of this year. The purchases will bring SPUD's revenues to about $18 million a year.
Employees found out about the merger at an all-company meeting last week. "There were a lot of tears," says Alexis Allen, Pioneer Organics' human-resources manager. "There was a lot of talk [at the meeting] about profit sharing and stock options, but that's not why anybody was with Pioneer Organics in the first place."
Last week's announcement was the denouement of a protracted conflict between Bell and Michael Knight, his cousin and financial partner, who bought out Bell's interest in the company. No one, Bell says, anticipated Knight would merge Pioneer Organics with a larger company. "I didn't decide to sell to SPUD, that's for sure," Bell says. "It was my baby." Knight could not be reached for comment.
While Pioneer Organics appeals to crunchy green environmentalists with its calls for "health" and "community," SPUD claims to be all about convenience. With Pioneer, you never knew exactly what you'd get each week—part of the appeal was getting a seasonal selection of the produce that was coming off farm trucks at any given moment. SPUD, in contrast, is more like a traditional grocery-delivery service—customers can specify exactly what they want, and the available products include "a full selection of everyday products you would expect to find in a grocery store," according to the company's website.
Employees and former employees of Pioneer Organics describe Bell more like a family member than a boss. "Ronny would come through the warehouse and he'd remember your name, and you didn't feel like he was kissing ass," says a current Pioneer Organics employee who wanted to remain anonymous. "He really cared."
Employees worry that with the takeover, Pioneer Organics will become just another home-delivery grocer, à la HomeGrocer or Webvan. "Their primary interest in doing what they're doing is 'how can we get the customers to spend more money?'" the current Pioneer Organics employee says.
It's true that, despite Van Seters' talk about reducing car trips by keeping people from driving to the grocery store, SPUD is first and foremost a growing business. Its definition of "local" food, for example, is food from as far as 780 miles away—not a definition that would satisfy most committed locavores. On the other hand, as Van Seters points out, SPUD has a much more sophisticated database and a larger selection than Pioneer Organics—a product, in part, of its larger size.