The diamond industry has long hovered in that space between your grandmother's dust-sheet-covered sofa and the invention of the first Commodore 64 computer. What those in the trade might call "traditional," others see as archaic. But as technology continues to develop, a new era of startups is emerging, giving the sector a modern upgrade. 'The old, quaint definitions and roles are slipping away," says Chris Del Gatto, CEO of web-based peer-topeer diamond and jewelry reselling platform I Do Now I Don't. "Everyone needs to reinvent themselves." Sabin Choksi agrees. An adviser to and investor in Sift Wallet, an app that helps customers utilize their credit card benefits, he notes that not only does technology enable greater transparency and efficiency, it can serve as a yardstick for how good a company is and the added value it offers the customer.
Filling in the gaps.
There are many holes in the services that old-fashioned diamond companies provide, and Choksi believes it's a startup's job to see a void and fill it. One gap, according to Zeev Maimon, founder of mobile-payment app Mazalit, is the financial constraints that come with the trade's high-risk nature. "Fintech [financial technology] companies have an amazing opportunity to solve issues like regulations, payments, credit, legitimacy and transparency," he says.
Stephen Silver, a gemologist and tech-startup investor, sees financial growth as the missing link, and believes advancements in digital marketing, financial software, inventory management, and asset-tracking systems are a step toward spurring that growth. However, the rewards tech brings to the diamond industry don't come without their share of challenges. One of the main problems Maimon identifies is trying to increase transparency without putting traders at risk of having their information exploited. Choksi, meanwhile, points to the difficulty of getting new ventures off the ground. He believes there are plenty of people out there who have good ideas, but no access to financing. For Del Gatto, the most pressing challenge is persuading the industry to accept the idea of change in the first place. 'The pace of change is faster than ever and getting faster almost daily," he elaborates.
"Changing the inherent structure of organizations so they can make decisions faster without losing any 'best practices' is key, or even rethinking what certain best practices should be in this new environment. There are systemic changes that will need to be made." The benefit of experience."
The road to building a successful startup is not easy, particularly in the diamond and jewelry industry. The general consensus is that entrepreneurs with experience in the industry have a significant advantage, as it is a community in which bonds are built on trust. Insiders are also familiar with the product and audience, meaning they can tailor solutions to particular areas of the trade. But while understanding the product is critical, Silver says, hiring the right talent to implement an idea is essential to a startup's ability to stay relevant. Determination and perseverance are also crucial to advancing an idea in an industry that is not fully open to innovation, adds Maimon. Though it can take time for new initiatives to gain acceptance, there are a variety of exciting opportunities emerging. Consumer-focused technologies are valuable to an industry driven by customer sentiment, observes Silver, while Maimon believes innovations in fintech, regtech (regulatory technology) and insuretech (insurance technology) have the broadest space in which to flourish. Alternatively, Choksi sees opportunity in the service sector, noting that as a business matures, its need for services increases. The real question is, can a traditional dealer continue to survive in an ever-changing industry, or must he or she rebrand as a diamond entrepreneur? Silver says he can already feel the shift. Choksi concurs, explaining that while the dealer has a trading mind-set, the entrepreneur finds a way to add value. Or, as Del Gatto puts it: "If you don't have an entrepreneurial way of thinking, or employ someone who does ... good luck."
Delgatto/I Do Now I Don't
The Delgatto/I Do Now I Don't marketplace, which lets private individuals sell pre-owned diamonds and jewelry, came into being six years ago. Cofounder Josh Opperman originally had the idea when his engagement broke up and he received below-value offers for the ring. Since then, the self-financed platform, which acts as a middleman between consumers and retailers, has expanded to include high-end jewelry and watches. The New York-headquartered startup will soon extend its reach within the diamond industry, with plans to launch a fund that could lend diamantaires as much as $1 billion. The Delgatto Diamond Fund will provide immediate capital to an industry that generally deals with slow-moving consignment issues.