Has Siebel CEO got the right stuff?

George Shaheen's track record at Andersen Consulting and Webvan means the new CEO faces fresh challenges at the battered software maker.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
3 min read
George Shaheen's comeback as CEO carries a tough task: to bring better days to Siebel Systems, a company battered by weak earnings and investor hostilities.

The situation at the enterprise software maker has industry observers wondering whether Shaheen, who was named Siebel's CEO on Wednesday, has the track record to carry it off. Shaheen was chief executive at management consulting firm Andersen Consulting, which later became Accenture, before moving on to now-defunct online grocer Webvan.

George Shaheen
George Shaheen
CEO, Siebel

"Siebel is a turnaround situation, and the guys who were successful in a growth situation are not necessarily the same guys you need for a turnaround," said Jon Holman, head of executive recruitment company the Holman Group, who pointed out that Andersen Consulting required growth management rather than troubleshooting. "You need people who can act quickly and have a bunker mentality."

Analysts have also questioned Shaheen's ability to take San Mateo, Calif.-based Siebel, which has seen poor financial performance and growing investor troubles, down a path of success.

"George Shaheen is a nice guy. (But) he was generally thought to be retired," said Peter Coleman, an analyst at ThinkEquity Partners.

Coleman also noted that Siebel's business challenges are different to those at Andersen, which was not a public company when Shaheen ran it. As for Webvan, the start-up's failure was "not his fault," Coleman said. "The business model was flawed."

But from these two disparate companies, Shaheen gained exposure and a perspective that he may find useful at Siebel, Holman said

"At Andersen Consulting, he was selling big, complicated technology to enterprises. That is what Siebel does," he said.

And from his Webvan experience, Shaheen likely gained a keen understanding of how quickly markets can change, as the company rode the rapid rise and steep fall of the dot-com cycle.

The road to Webvan
When Shaheen left Andersen Consulting to join Webvan, his departure shocked many in the consulting world, given the CEO had led the controversial process of separating the highly lucrative consulting business from the company's accounting business.

It was during Shaheen's 10-year tenure at Andersen Consulting that the company's revenue increased from $1 billion a year to more than $9 billion.

But the lure of the dot-com won out. Shaheen joined Webvan in October 1999, a month before the online grocer went public.

Webvan managed to attract more funding than any other Web retailer, apart from Amazon.com, during the go-go years of the stock market. Webvan's highly anticipated initial public offering raised $375 million in capital, and the company debuted with a market capitalization of $8.45 billion.

Flush with cash, the company expanded rapidly into a number of markets, gobbled up competitor HomeGrocer via a merger, and tried to fend off others such as online grocery pioneer Peapod.

But Webvan, like other dot-com companies, faced troubled times in the post-Internet bubble implosion, as business models failed and investors refused to pump more funds into Web-related start-ups.

Less than two years after he arrived at Webvan, Shaheen resigned. Webvan filed for bankruptcy in the summer of 2001.

Webvan, as part of Shaheen's severance package, agreed to pay the outgoing CEO $375,000 annually for life. But a bankruptcy court later cut that figure to a lump-sum payment of roughly $250,000.

In a post-mortem on his experience, Shaheen told News.com in an interview that despite leaving Webvan at a low point, he was not worried that his reputation had been damaged.

"I have a track record, and I've had a good career, but I don't care what anybody thinks about it," Shaheen said. "I did the job, and the bottom fell out of the industry, and that's all there is to print."