As our company celebrated its 40th anniversary, many of my friends ask me what functions I perform personally, along with my role of Executive Chairman. They marvel at the idea that I buy all of the rubies and sapphires…mandating my going over to Bangkok 7 or 8 times a year for approximately 3 weeks each time. They can neither understand how I can be away from the business that long, or away from my home. They can’t imagine that I can justify spending so much time buying those stones, and why I haven’t hired a person to do that function for us.
For the first twenty years of our company’s existence, I bought every diamond personally. As the company grew in size, and I was forced to give up most of the ‘hands-on’ functions, I kept on doing the radio ads, and buying the stones. During that period, buying diamonds changed materially. Grading became both standardized and common. Price lists came into being, and stones were priced and traded based upon those grades. What had been an art was turned into a science. That took the fun out of it for me, quite frankly.
By fun, I don’t mean that I didn’t take it very seriously. But the way I learned the business, there were no grades. Every stone I would buy would be examined by me, and I would offer based upon my knowledge of the wholesale market. The better I knew the market, the market conditions, the situation of the sellers, and all of the intricacies of where there was a surplus of certain goods, a shortage of others, etc., the better I could buy. My skills as a negotiator came into play as well; but the real key competitive advantage that we had was my intimate knowledge of a complicated but disorganized, segmented market.
Once the diamonds were commoditized, the relative advantage of understanding (or needing to know) the market’s intricacies was minimized. Our buyers today still examine each and every stone, and select the most beautiful within each grade, and negotiate hard to save a few percent…but the atmosphere is completely different.
Buying rubies and sapphires, on the other hand, is even more demanding, in terms of a buyer knowing the product and knowing the market. By comparison, diamonds are much easier to purchase. There are so many more variables with a colored stone.
With a diamond, “color” is a negative attribute. In other words, the best color is no color at all, what we call colorless. Compare this to the color of drinking water. The more color, the less the diamond is worth. But with colored stones, there is no ‘ideal’ blue, or red, or pink, or yellow, or lavender, or green, etc. And sapphires come in every color of the rainbow. Like buying a pair of jeans, who is to say which shade of blue those pants should be? So it comes down to the personal taste of the buyer…and I love being able to select those shades of color that are what I know our customers will like. Plus, many colors are those that our customers won’t find at any other jewelry store in America.
Then there is the fact that with diamonds, there is a very consistent, standard cut. Deviations in cut are not nearly as great as with colored stones. I recut most of the sapphires that I buy. We employ several cutters, in our own buying office, that I keep busy all year long. I order the stones I buy to be recut, and work with those cutters to detail my desired results, stone by stone. I see, firsthand, the results of the improvements that I make with the stones. I am, therefore, able to add value for our customers, without increasing the cost of the stones. This is a huge advantage to our company, and it makes me feel good, to know that I am capable of selecting stones that I can enhance by re-cutting or re-polishing. While I would never turn around and sell those stones back on the wholesale market, I know that I could, and at a nice profit. So again, my ego is fed!
There is a difference between being an employee in a company and being an owner. It is an unfair burden for a company to hire someone to make buying decisions based solely upon their own personal opinion. The employee can never defend his/her action, should the boss wish to criticize it. And buying colored stones is totally an art. We hear occasionally of someone trying to standardize the rubies and sapphires, like they did with diamonds. In fact, I know that will never happen, because there are just too many different independent variables that come into play. Sure, you can find a date on the web, and people have even more variables! But this is not about matchmaking…it is about buying tens of thousands of stones many times per year, to meet the needs of thousands of customers. And, in most cases, the customers don’t even realize, much less appreciate, the number of choices that are out there.
Even when professional jewelers come into one of our stores, they are struck in the face by the quality of our rubies and sapphires…which most of them admit they have never seen anywhere in their lives. And of course, that makes the ruby and sapphire buyer feel that it is worth spending half his life in Asia! The fact that I love being in Bangkok makes it even better for me, as I can rationalize my time there easier, when challenged. And today, with the world’s connectivity, most people I work with via phone or email don’t even realize that we are communicating from somewhere outside of America. They don’t need to know either. And that too, is part of the fun for me.