Are synthetic growers trying to appeal to investors or consumers?
This week two very good articles were published on lab-grown diamonds, which included two delete-your-account comments from Martin Roscheisen, the CEO of synthetic manufacturer Diamond Foundry. In the first, in Racked, he declared that the mining industry “enslaves people.” (He should tell that to his backer Vast Ventures, which supports an asteroid mining compamy.) In the second, in Atlas Obscura, when asked about the unemployment that synthetics might spark in Africa, Roscheisen smiled and compared that to releasing drug dealers.
Now, to be fair, he was just firing back at Martin Rapaport’s often-heated criticisms. Still, his comments come across as cold rationalizations in the face of the very real prospect of massive job losses. (We should note that Diamond Foundry has discussed mounting factories in Africa. Is it committed to paying its employees there several times more than the major mining companies? Does it do that currently with its Indian cutters?)
In any case, in its scant eight months of operation, Diamond Foundry has turned itself into a lightning rod for a trade that is already half-panicked over its product. It hails from Silicon Valley rather than 47th Street, and you can tell that from its public pronouncements, particularly the fetishizing of disruption. As The Los Angeles Times put it: “The promise of a disruptive business model can be worth billions of dollars in putative investment valuation.”
But while that buzzword is catnip to investors and the consumer media, it plays poorly in the jewelry trade, which feels it has been disrupted more than enough, thank you. Retailers are already worried that synthetic diamonds will devalue their inventory. They will be even more reluctant to patronize a company that denigrates it as well.
Yet lab-grown diamond manufacturers will need the trade’s support if they ever hope to be a real business rather than an investment vehicle. (They could exclusively sell lab-grown diamonds direct to consumers online. But that’s been tried.) I’m not even sure that “disruption” is a winning story for consumers. Granted, the diamond industry isn’t exactly topping popularity contests. But I don’t patronize companies such as Amazon, Spotify, or Uber because they disrupt their respective industries; in fact, the more I learn about those companies and their effect on people, the uneasier I get. I use them because they provide a good service.
Likewise, lab-grown diamond producers need to offer a product that appeals to the public. Their current marketing may pick up a few people who are wary of the diamond industry, but that is not a huge customer base. Swarovski, the newest entrant in the lab-grown arena (and a company that clearly knows how to sell jewelry), isn’t touting the superiority of its man-made gems. It is pitching them as an attractive product at an attractive price point—the way most diamonds are sold. Yet selling a niche jewelry line, with a booth at the JCK Las Vegas show and SKUs at Helzberg, doesn’t entice investors as much as boasting you’ll turn an industry upside down.
In fairness, Diamond Foundry is a new company, and some internally acknowledge the need for a course correction. In the end, the lab-grown industry needs to figure who it wants to appeal to: its investors or (potential) customers.
One final point: While some complain about the rhetoric from the synthetic side, clearly the hostility is not just one way. Below is a button Abe Sherman of Buyers Intelligence Group distributed at the JCK Las Vegas show:
I respect Sherman a lot, and he, like Roscheisen, is entitled to his opinion (and buttons). But lab-grown diamonds are a legitimate product that the trade must come to terms with.
Brandee Dallow, director of Rio Tinto Diamonds’ North American office, modified the button to:
(Photo of original pin courtesy of Buyers Intelligence Group)