Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart.
I’ve been saying the word “upstart” pretty much since the beginning of Mixergy. There’s a reason why I picked that word. I wanted to do interviews for people who didn’t have a background or family or friends and support network of people who were there to make sure that everything worked out for them because I remember growing up and seeing people who had that. I felt they had an advantage that I needed to figure out for myself. Mixergy is for people who need to figure that advantage out for themselves.
So, I wondered about this interview. Is today’s guest different? Is he not an ambitious upstart? We’ll find out. There’s a reason why I have him on here. He’s building a big business online and I want to hear how he’s doing it.
His name is Anish Godha. He is the cofounder and president of Diamondere–sorry, I mispronounced your name before and I thought I had it, Anish–Diamondere, a custom fine jewelry company that has its roots dating back to 1890. I wrote down 1980. Let’s get that right–roots dating back to 1890 and has designed jewelry for royal families, celebrities and dignitaries. Today, Diamondere allows customers of its website to design their own jewelry.
This interview is sponsored by TheArtofCharmPodcast.com. I’ll tell you more about them later. But first, Anish, welcome.
Anish: Thank you, Andrew, for having me. It’s a pleasure.
Andrew: Did you grow up a rich kid in a family of seven generation jewelers going all the way back to the royal family’s jewelers and drive a, what, Maserati to school?
Anish: Oh, I wish. I wish. No. So, because it’s a large family, we all had our ups and downs. So, our peaks were in the 1970s and 1920s. But there was a separation in the family. So, when I was growing up, we were actually eight or nine people living in a 1,500 square foot apartment.
Anish: And then it slowly grew, so now we have distribution centers. So, we’ve actually grown out of that lot. But when I was growing up, that was my life. As I went to high school or middle school and high school, I saw the wealth grow in the family. My parents were entrepreneurs themselves. My dad and his brother essentially, they were entrepreneurs themselves to get a new angle in jewelry. Essentially we’re doing that again with Diamondere.
Andrew: So, when you guys were packed into–that sounds like a really tight situation. Where were you? What country? What city?
Anish: I grew up in Bombay and Mumbai, India.
Andrew: And so, did you feel out of place there or was that just the way things were?
Anish: That was just how things were. I was a little kid too. I didn’t understand exactly what was happening. For me it was just, “Oh, I wake up and I saw everyone.” So, it was just a joint family thing. Eventually we got our own place and then my cousin’s family got their own place. We got a better living situation. But it was just part of the process. I didn’t really think too much of it when I was growing up.
Andrew: So, here’s my reading of your company and the situation. My sense is that you’re using this “since 1890” as a way of adding prestige and history to a new online brand. I’m seeing articles on PandoDaily and other sites that are picking up this, “The guy who used to design jewelry or the family that used to design jewelry for the royal family now is allowing you to design jewelry for yourself online.”
But in truth, you have a family history that your family going all the way back has been in the jewelry industry. Somewhere back there, somebody helped out the royal family by designing jewelry from them. But you’re basically disconnected from that. It’s almost like me saying I’ve got a Persian rug company because my grandfather was in the Persian rug business in Iran. You’re an entrepreneur who said, “I see the way my family does this. I see the way that people around me do it. I see an opportunity for modernizing and creating something brand new.”
And essentially you’re out there on your own, designing your site on your own, figuring out ad buys on your own, figuring out CAD/CAM on your own and so on. Am I reading this right or not?
Anish: A little bit of both, actually. While it is true that Diamondere today is a very modern company which is the evolving on technology at the forefront of how the fine jewelry industry works, we do have roots and a background where a lot of the manufacturing processes or a lot of the designs or a lot of how the design evolved and a lot of the knowledge and most importantly, the procurement network, the sourcing network. We procure gemstones from pretty much all over the world. We have established partnerships which go directly to the mines.
Andrew: I see. And you’re saying I, Andrew, or someone listening in the audience wouldn’t have all those connections and all that understanding of what goes into creating that finished product. That’s what you bring in, your knowledge. But did your family–how much did your family invest in the business when you started it?
Anish: Our family provided seed and angel funding for that.
Andrew: I see. Okay. All right. And Diamondere is not a brand that’s been around for over 100 years. It’s the family that’s been around for over 100 years in the diamond business, in the jewelry business. I see.
So, I had this idea that you were like the founder, essentially, of Barnes & Noble who wanted to have–what was it that they used to say? “Barnes & Noble, established in the 1800s” or something and Phillip–what’s his name? The guy who really ran it went and bought one little bookstore that has been around forever and started using the brand name and the heritage to build up the business. You’re saying that’s not your story.
Anish: So, initially, how we started off was our family were one-on-one jewelers. So, they would go to royal families and sit with them, understand their jewelry requirements and create very high-value sets exclusively for them. That was our primary bread and butter. That was our primary method of sale.
And then as the family evolved and as generations went down, my father and his brother started a manufacturing business to export fine jewelry around the world. So, they expanded to about 20 countries. They have a distributor in each country where they export maybe 500, maybe 1,000 pieces of a ring, for instance. And then that gets passed on to wholesaler and then that gets passed on to retailers and that gets passed on to the consumer. So, that’s how we grew.
Diamondere is kind of mixing both aspects of it, so, not only the custom fine jewelry angle, but also the mass manufacturing by using CAD and 3D printing. A technology like 3D printing has made that possible to make custom fine jewelry pieces at scale.
Anish: So, essentially we are using our background and expertise and understanding how requirements work and understanding how manufacturing works and marrying that with existing technology.
Andrew: Alright. I was also looking up what I said earlier because I hate when I listen to a podcast and they get all the facts wrong and I then get them jumbled in my head. So, in 1971, Leonard Riggio bought Barnes & Noble for $1.2 million. It was a small book company that was established originally in 1886. At the time, it was called Arthur Hinds & Company and then it just kept going through these evolutions.
Alright. But that’s not your story. Your story, you’ve given us a little bit of the background. You realized what you wanted. How much money was it going to take to create his vision of an online retailer that allowed people to customize their jewelry?
Anish: Yeah. Initially, we actually didn’t know what we were getting into because our family had always worked at the backend, always worked at a B2B level.
Andrew: What does that mean? What did you guys do at a B2B level?
Anish: Just sales. My father’s company was a mass manufacturer of fine jewelry. And then through tradeshows and other forms of industry meet ups, they started working with one distributor in every country. It grew to about 25 distributors around the world. And then these distributors know country heads, they have a network of wholesalers where they pass on products and then the wholesalers pass it on to retailers. So, we were never interacting with the end consumer directly. It was always at the backend. So, that’s what I mean by B2B level.
And then going to B2C level, which is skipping all the middle men and going directly to the end consumer as a manufacturer, because we’re a manufacturer, we can actually customize and listen to the customer according to what they want. And going directly to the end consumer, when we started off, we actually had no idea what we were getting into or how hard it would be to scale up our business from the ground up.
Andrew: But it started with a little bit of a realization which was, “Look, if our product is leaving us, leaving our possession and going through all these middle men, if it’s $100 when we let it go, it’s $500 once it makes it to the consumer because of all the different middle men. If I can just get rid of all those middle men and go directly to the consumer, then I can reduce the cost by 80 percent, take 80 percent off.” What were these middle men doing when we were in an offline world?
Anish: Distribution and in terms of retail they were providing a place where you could go and interact with a sales person and see the products.
Andrew: So, if your dad was creating a ring with a diamond in it, who would he pass it on to? Who were these five people? Who were the handful of middle men who would take it? Who’s the first person?
Anish: So, the first person is a distributor. So, the United States would have one distributor that my dad would work with. And then he would work with wholesalers.
Anish: So, a California wholesaler or New York wholesaler and then they would work with a network of retailers. So, in that sense, there were about three middle men before the jewelry piece that was made got to the end consumer. So, each one had their massive markups. At the retail level, it’s almost doubled because you have to pay for the brick and mortar expenses, the sales people, gas, electricity, water.
Andrew: What about the design when you’re that far removed from your customer? Who comes up with the designs in that old environment?
Anish: Yeah. So, in that sense, it’s always a conversation that’s going on. So, the retailers would talk to the wholesalers, “Okay, guys, we’re seeing this moving. We need more pieces of this.” Then they’ll talk to the distributors and then that will come back to the manufacturer. But that’s kind of like Chinese whispers because what the end consumer wants isn’t always translated back to the manufacturer. So, there’s always a disconnect in that sense.
Traditionally, it was a push model. So, once a piece is made, the distributor would place an order of, say, 500 rings. And then it’s up to them to actually sell those rings to the wholesaler. Then the wholesaler would sell them to the retailer and they would push it to the end consumer. Once a consumer goes to the store, it’s what he sees and if he doesn’t like it, well, tough luck.
Andrew: “That’s just what we have. Come back later and maybe we’ll have another one.”
Andrew: Okay. So, that’s what you saw. Did you start writing up a business plan when you had an idea for how to go directly to consumers online?
Anish: It was a rough plan. We worked with the engineering team. We had to build an engineering team. We had to build a design team. We had to build a CAD team. We had to build essentially every piece of the puzzle. It wasn’t a structured approach because we weren’t going to formal investors to have them invest in us. It was on the family funds and was using the family’s expertise. So, in that sense, it was an informal business plan, if you will. It wasn’t really a structured approach.
Andrew: The engineers, some of them went to the website, right? Others went to the process of creating the jewelry.
Andrew: So, jewelry creation is still done by my dad’s company. The role they play in Diamondere is it’s a traditional supply vendor. They set up a factory right under our office. We use it for Diamondere orders. So, in terms of legal agreement, it’s just an arm’s length approach. And then the rest of the website and the sales and the ecommerce portal, that’s all built by Diamondere in house by our un-proprietary technology.
Andrew: Today, 25% of your sales come from made-to-order, the process where someone says, “Here’s the vision I have for a diamond. You guys go and create it.”
Andrew: Did you imagine that it would be 100 percent that way or something else?
Anish: So, actually, the way we got into custom–this technology was always available, CAD and 3D printing and CAM machines were available to the jewelry industry about a decade ago. It was being used by my dad’s company. What we realized is we can actually, since we were using it before we were doing Diamondere, we could actually make custom jewelry pieces at scale using these technologies. So, we always did do custom fine jewelry.
But sometime last year, the beginning of last year, we started highlighting it more on the website in terms of messaging, in terms of the call to action of the products. So, it was about in the low single digits. And then that suddenly took off because people were like, “Oh, you can do this. I had no idea you could do this.” So, they started reaching out to us, giving us more ideas and started treating our designs as templates. “I don’t want diamonds on the band. I want diamonds on the band.”
Andrew: So they don’t have to start from scratch.
Andrew: I see.
Anish: So, the 25%, it doesn’t mean everyone came to us with a hand-drawn image. No. What that means is they used our design as templates to actually work with one of our designers.
Andrew: I see that. If I click the shop button on your site, I see a ring, but next to it it doesn’t say buy, it says customize. I click the customize and I can decide whether I want to essentially keep it as is or use a different kind of gold, maybe yellow instead of white gold, maybe 18-karat instead of 10-karat, etc. And that was always there?
Anish: Yeah. That was there about six months after the website was created. But right next to that you’ll see “request custom order.” The option is available to you if you want even further customizations. Then we’ll create a custom order and we’ll go render a CAD image and send you a price quote within the day.
Anish: We will send you a link if you are happy with it and you can place an order online.
Andrew: How long did it take you to produce this whole thing, end-to-end creation from the website to the email to the actual product to shipping?
Anish: This was about six to eight months.
Andrew: Six to eight months of development?
Andrew: That’s impressive. How did you find the developers, the engineers who were going to do this all?
Anish: What we did is we got a bare bones ecommerce portal. And then our CTO essentially made the customization and the renderings of the CAD and he married that with the CAD team. So, essentially they just worked together and built their own product software where they ended up creating the website as it is today. We went through about 78 designers because we just weren’t happy with the output of it. Essentially we ended up creating what it is today. So, we did have to go through a lot of iterations. We did have to go through a lot of failure and trial and error to get where we are today with the business.
Andrew: I’m looking here at a page on eBay. When did you guys decide to sell your jewelry on eBay?
Anish: This was a platform sales push. So, if customers want to stay on Diamondere, that’s fine. But what we decided to do is, as a marketing effort, we decided to try and promote Diamondere on as many platforms as possible just as a way of lead generation. We’re getting more sales. At and the end of the day, it’s a business that’s trying to sell more jewelry. We’re essentially offering the same products to consumers on eBay or we’re even starting up an Amazon soon. We’re active on other social channels. But it’s basically trying to promote ourselves online so we have more leads coming to us or just coming to our brand, rather.
Andrew: I see. That makes sense. You’re saying that someone might see you on eBay and then think, “I want to see what this company is.” I do this all the time when I’m on eBay. They do a quick Google search and they end up on your website and they come up with more options and often buy directly from you. But if they buy from eBay, then that’s fine too.
Anish: Yeah, of course. Because it’s a shop on eBay, the cost is very low. So, we actually like it if they come and buy with us on eBay too. That’s fine.
Andrew: I mentioned earlier that you were buying Facebook ads and you were doing some online marketing. What’s the first bit of online marketing that you did after you had the website built?
Anish: When we had the website built, we started off with Google ads. So, essentially we looked at both Facebook and Google as lead generation platforms. Google is interesting because if someone types in “emerald ring” in Google to search, there’s a good probability they’re interested in buying an emerald ring. So, in that sense, it seemed like a better approach.
For Facebook, it was still further back in the funnel where it was kind of discovery-oriented, where if someone is engaged or someone is in a relationship, we’ll give them diamond ring popups or diamond ring ads in a way to entice them, “Oh, yeah, maybe I should purchase.” But that’s very expensive to do. Discovery is very expensive to do. It’s a lot easier to address and convert customers who are further along in the value chain after they’ve already made up their mind that, “Okay, we want to buy an emerald ring to propose to my girlfriend.”
So, in terms of customer acquisition costs, it just turned out to be more economical. So, that’s what we started off with. We started off obviously unprofitably and then gradually as we learned the business, as we learned what was resonating, what designs were running, what keywords were running, then it ended up becoming actually positive.
Andrew: I’m wondering why you’re doing this interview, as much as I’m happy to have you on here and why you guys are on PandoDaily. Pando is a site that’s geared towards people in the venture capital-funded tech community. You guys aren’t in that. You’re not there so that the VCs can see you. You’re not there so the techies who read the site will end up buying jewelry. Maybe they will. But it seems like you have a different marketing strategy. What is your marketing strategy here?
Anish: So, marketing strategy is a lifestyle business. But it’s separate because, to address your question about PandoDaily, we are a tech company. We sell fine jewelry and we are focused on fine jewelry and bringing the experience of fine jewelry. But what has made it possible underlying that is technology.
What used to happen back in the day is a person would sit and craft a wax piece of a design. So, someone would make a design on paper and then someone would make a wax piece of it, like sit and carve it out. It would take a week. And then they would essentially create a mold using it. Then they would pour liquid gold in that mold and that’s how you got your end product.
So, what these technologies enabled was instead of paper, we ended up making models on CAD. And then instead of someone sitting and carving out the wax piece by hand, we ended up using 3D printing. So, what used to take a week became five minutes. Any changes that needed to be made, you just go to the CAD model and just make a change.
Andrew: CAD is short for computer-aided design. All we’re talking about is software that allows you to design a ring and other things on a computer screen and then you have a 3D printer print out the jewelry, the ring?
Anish: No. The printer prints out the wax piece.
Andrew: The wax, which you then fill in with the metal.
Anish: Yeah. Exactly.
Andrew: Got it. And then on top of it, you add the diamonds and that can take such a short amount of time. How long?
Anish: So, after you place the order, then we start the process of manufacturing. It’s anywhere between two to three weeks of being at the doorstep after you order.
Andrew: So, what’s your goal with being on Mixergy here?
Anish: Yeah. Mixergy is a great platform for people who understand entrepreneurship and understand how people startup companies. The way we started off is yes, we had the background of the family and we did have the procurement network with the family, but there was a huge amount of entrepreneurship that we still needed to do.
We needed to figure out a lot of the existing technology. We needed to figure out the competitive landscape. We had funding constraints. We had marketing constraints. We had legal constraints. So, going on Mixergy is just to give back to the community and understand what helped me out. Something like this, if I had seen it by someone else who was working in a similar space, it would have helped us out a lot.
Andrew: One of the areas that you say that you struggled was in keeping costs low. Where was your biggest challenge in keeping costs down?
Anish: The jewelry industry is such a massive industry and it’s a very crowded industry. So, when we first began, we were still trying to figure out a niche. Do we compete in rings or necklaces or earrings? Do we compete in diamonds or emeralds or sapphires or tourmalines or aquamarines or tanzanites, gold, platinum, silver?
There are so many options. We initially started off with the diamond space. We realized it was very crowded, very expensive to convert customers and to have customers on board. It was just marketing. We were trying to figure out our niche.
Unit economics in any ecommerce company is king. You have to figure out a way where if you sell any product, after your costs of goods, after your marketing expenses, after your legal and admin, you have to make a dollar at least. You have to make some amount of money on every product you scale or when you scale up, you will not be sustainable or you will not be able to survive as a business.
So, in that sense, the unit economics just weren’t working out in a lot of the marketing campaigns that we did. Eventually we found out that there was a huge niche in the colored gemstones market. The colored gemstones is a very crowded space. Existing companies find it very difficult to have a good procurement network that enables them to get a very competitive product price for colored gemstones. Since we already had the procurement network existing, we ended up competing in that space and that’s what our made our unit economics positive.
Andrew: I’m checking now to see where your traffic is coming from and I’ll talk to you in a moment about that. I’ve been looking at SimilarWeb. But I need to do my sponsorship message for The Art of Charm Podcast. What do you think, by the way, of the fact that I’m doing a podcast now and my sponsor is another podcast? You wouldn’t have on ad on your site for another jewelry company?
Anish: If it’s a complementary jewelry company, yes, we would.
Andrew: This is someone who’s become a really good friend. I interviewed the founder of TheArtofCharmPodcast.com here on Mixergy. We became friends when he came over for a scotch here at the office. I ended up inviting him and a few other friends over for dinner at my place or maybe it was just drinks over at my place. I forget. We’ve gotten to know each other a lot.
He was even in my course on how to do interviews because he just keeps wanting to improve the work that he does. You can tell. He is now and has been for a long time with The Art of Charm Podcast, a top-50 podcast on iTunes consistently. In fact, if you don’t even search for his name in the iTunes Store and you just go look at the top 10 list or the top 50 list, you’ll see him on there often. Almost definitely right now you’ll see him in the top 50 and very likely see him in the top 10.
The reason for that is that he does a podcast that’s packed with wisdom and it’s about things like confidence, how to get people–wait, what is this? It’s not just how to get people to like and trust you. It’s also about business, time management. He does everything including business, but without–what I’m trying to say is I focus on business, he does a little bit of business and a whole lot of everything, including interpersonal relationships, time management. He talks to interesting authors.
He keeps it lighter, lighter than I do. Immediately, before, Anish, you and I even started recording, I started pounding you with questions, “Tell me about your family.” And then I started digging into the Indian royal family, which I knew nothing about, but I said, “I’ve got to find out.” You’re like, “Andrew, I’ve got photos. Please. I promise.” I don’t see Jordan doing it. So, he’s a much lighter person and that’s probably why we’ve become such good friends.
If you want to check out his podcast right after this one, go to TheArtofCharmPodcast.com. He takes his work seriously but he keeps it light and it’s really well done and I’m grateful to them for sponsoring Jordan and the whole team over at TheArtofCharmPodcast.com.
So, I am looking at your SimilarWeb traffic and it doesn’t look like you guys are getting much traffic. It looks like you guys are just getting going as a business but revenues are strong and growing consistently. Am I right?
Anish: Yeah. So, we have high order values because since people customize a lot of orders, the average custom order after they work with us and they want a nice stone and we give them all shapes of stones possible and give them a range of choice and variety, our order values tend to be a little higher than normal. So, we do have a lower number of sales, but each sale counts a lot to our revenue margin. In terms of traffic, we’re still about two years old. We’re still trying to grow as a business. So, essentially we’re still a startup. That said, we are growing at a rate of about–
Andrew: Can you say what your revenue is? You told me before we started. What’s your run rate?
Anish: We’re still small because we’re still bootstrap.
Andrew: No, you’re not bootstrap. You took money from your dad.
Anish: Well, yeah.
Andrew: That counts.
Anish: So, okay, it was family-funded. It’s about a $1.5-$2 million run rate.
Andrew: What is it?
Anish: $1.5 to $2 million.
Andrew: $1.5 to $2 million run rate, which of course means you took last month’s revenue and you multiplied it by 12 to come up with that. How much money did go into this business? Are we talking about $3 million, $5 million?
Anish: So, essentially to build up the base of the business, it was about $1 million.
Andrew: $1 million.
Anish: And then the marketing is kind of something that we try to recoup back in terms of revenues. So, we try to have a very laser-focus on unit economics and on making sure that every dollar we spend is spent wisely. So, the marketing bit is very heavily in sync with revenues.
Andrew: Marketing comes back to you? It’s profitable? Every dollar of marketing is profitable?
Anish: That’s what we try to do. Yes.
Andrew: And how much of the original $1 million or so do you still have?
Anish: The first million we’ve already spent.
Andrew: And now it’s self-sustaining and profitable?
Andrew: Really? Oh, that’s impressive.
Anish: It’s borderline profitable. We had a party that when it went cash positive.
Andrew: I see. When was that?
Anish: It was a few months ago back in November of last year.
Andrew: Okay. How much money do you guys have in the bank now?
Anish: We’ll talk about that later.
Andrew: Even I as I ask that question, I couldn’t keep a straight face. That’s where more practice as an interviewer will make me better. I said, “If I would have held that face straight, you would have responded.” I am looking to see where your traffic is coming from as I said earlier. The cool thing about SimilarWeb is they even show me where your search ads are. So, you guys buy ads for “pawn shop emerald ring,” and I see that Diamondere.com comes up as an advertiser. I see “sapphire engagement ring.” “Sapphire ring” is another thing that you guys buy ads for. Who does the ad buying internally? Is it you still?
Anish: Yeah. So, it started with us. But eventually, we brought in an agency that works closely with us for ad campaigns. A lot of our actual traffic comes from referrals. So, if customers have bought from us and really liked us, they talk about us with friends and families. So, we don’t really spend any marketing dollars to get that traffic.
Andrew: I do see you guys doing a lot of things. You have a PR agency, right? You have someone who’s buying ads for you. You’re trying Facebook. Where is my tab with your Facebook page? Facebook, you have 12,000 likes. Who’s running your Facebook campaign?
Anish: Facebook essentially we began by ourselves and then gradually we kind of trying to build out that campaign as well. We’re trying to focus on the re-marketing segment of it, so targeting similar customers through people who have already bought from us.
Andrew: But the organic stuff doesn’t seem–well, you guys are engaging and you are producing I think every day at least or every other day, right?
Andrew: On Facebook organic, you’re posting a lot. I see one right now with Zoe Deschanel on her pregnancy and beautiful sparkle. “Our own Diamondere expert Anish weighed in for People StyleWatch.” Wow. So, there’s a link there to People StyleWatch. So, that’s the kind of stuff you’re doing there. Do you know if it’s successful for you? Is the Facebook organic stuff working?
Anish: So, essentially the way we look at social is we look at social as a conversation with our customers. We currently don’t use social as a way to make money. But essentially we use it as a way to build trust and credibility with the brand and have a conversation about jewelry out there. So, we post celebrity updates or we’ll post jewelry updates or jewelry trends or even how to keep your jewelry shining, essentially just as a way to have a conversation about jewelry tips and trends and good content around that.
Andrew: I see.
Anish: It’s just a way for people to get more information about the purchase before they make a purchase.
Andrew: Yeah. It does look like you guys are in a stage where you’re just going to try everything and figure out what works for you and what doesn’t.
Anish: Yeah. In a place like this with digital marketing, there isn’t one right answer. You do have to figure out your own way. You have to try and be as many places as you can and try to be where your customers are going to be. So, you understand your customers really well, understand where they go, what they see, what they like and then be where they are, essentially as a way to have them come to you. Targeting the right audience is extremely important.
Andrew: That’s why it’s impressive that you guys are cash flow positive after experimenting for such a short period of time that you’ve found a few things that are actually working for you.
Anish: Yeah. We’re trying to keep the innovation alive as well. So, we’ve started a partnership with Sophie Simmons, who’s the daughter of Gene Simmons. She’s built her own collection on Diamondere. It’s a very nice collection. It’s a very young and trendy collection. So, we’ve worked with that. Then we’ve also created an Apple Watch band.
Andrew: I see that. It feels like that’s going to be the future possibly for a lot of watchmakers, that they might not be able to compete with Apple on creating the watch people are going to want to wear on their wrist, but the jewelry, the wristband around it is going to be something that a lot of innovation could happen in.
Anish: Yeah. Because the watch is meant to be very versatile. It’s an interesting place because it essentially matches technology with lifestyle or with luxury products. So, with an Apple Watch, you can swap out the bands as you want. While you have very good technology with the watch with Apple, with the bands you can have custom fine jewelry, if you will, for pretty much exactly what you want. So, we can do custom fine jewelry-based watches or bands.
Essentially an Apple Watch is a bracelet that tells you time and does all these functions. Will it replace the watch? Time will only tell. It’s a little too early, I think. But that said, it does look very promising.
Andrew: I agree. I remember when I interviewed the founder of the DODOcase, who created a case for the iPad. Things were just taking off for him, for just one simple case. He doesn’t have nearly the kinds of margins, the kinds of revenue that you guys would have in the jewelry business. I feel like every time Apple comes out with one of these products, there’s room for huge businesses to take off around it.
I’m on your site right now, the one where you showed the Apple Watch band. I like the grey one with the diamonds in it. But I see you guys are experimenting. You haven’t figured out what people want. Maybe that’s part of the benefit of being who you are, that you don’t have to bank on one style of wristband and then hope that’s the one that hits.
Anish: So, that’s the thing. Our motto is we can’t tell you what you want. You have to tell us what you want. We’ll work with you to get you what you want. So, for every design, we have a few thousand combinations online. Beyond that, you can work with our designers to make exactly what you want.
So, we do have very diverse styles. So, we have a vintage-inspired jewelry and then we have very elegant, modern, minimalist jewelry as well. So, it really depends on the design. We had someone who was having a Disney-themed wedding and they wanted a Mickey Mouse-inspired ring. So, we ended up creating a solitaire and then the wedding bands had two side stones that gave it the illusion of Mickey’s head. That became one of our top selling rings.
So, it’s stuff like that that really enables us to take creative liberties and experiment with things that we wouldn’t have been able to experiment with if we were just a brick and mortar company that was selling to a distributor.
Andrew: Right now, while recording, the watch has gone on sale online but hasn’t hit the stores yet. It will in a few days. You guys show what’s coming in 2015. Why aren’t you allowing people to buy it right now and to adjust it?
Anish: The band itself?
Anish: So, we still need to figure out a few things at the backend just to make sure it works well with the watch, comfort and fit, just finishing touches essentially. Once it’s ready, it will be released.
Andrew: About a year and a half ago at the business, morale was low. What was going on?
Anish: So, I talked about how we were trying to figure out our place in the market. So, are unit economics were completely out of whack. We were burning a lot of money trying to compete in the crowded diamond space. Diamond ads are very expensive and not very profitable. So, in that sense, our marketing budget, we spent through it and the revenues were in no way even close to our marketing budget.
So, in that sense, morale was low because we were still trying to figure out our space in the market and still trying to figure out what we were selling, where we were selling. The number one goal was to make sure unit economics were positive. So, in that sense, morale was low because we’re spending so much on marketing but it’s not working because our revenue doesn’t match up.
Every entrepreneur goes through this. Every business will go to a point where they need to scratch their heads and figure out the next way forward. When you start up with very little data, you have to try a few things and then figure out ones that work and then go towards those. So, that’s essentially what we had to do.
Andrew: So, what did you do to turn it around? How did you figure it out?
Anish: We shifted focus to colored gemstones. Colored gemstones is a very crowded space. It’s very expensive in the sense if you order colored gemstones at a retail level, it’s very expensive because there are so many middle men that go through from the mines to the factories. The factories go through another range of middle men before it comes to the end consumer.
So, we cut out all the middle men not only from the mines to the factories, but also from the factories to the end consumer. So, we were able to offer a very competitive price for colored gemstones and very good quality colored gemstones since we had access to a great procurement network.
Andrew: So, you’re saying you shifted away from diamonds to colored gemstones because you could get better prices on colored gemstones than on diamonds.
Anish: Competitively. Yes.
Andrew: More competitive prices. Right.
Andrew: That switch did it. Even though diamond is in your name, by adjusting and spending more time on colored gemstones, you ended up turning the business around.
Andrew: You know why I feel you guys are on to something? First of all, the fact you were able to get cash flow positive in such a short period of time is impressive. But the reason is I got my wife an engagement ring when we got engaged obviously. I started paying attention to other people’s engagement rings. I don’t think any one of my friends actually bought a ring themselves. They’re all so proud that they designed it.
Andrew: I had no idea. I had no idea how to design. I still would not. And a lot of my friends don’t, even though they designed it themselves, they don’t know how to design or their process is really cumbersome or something. So, apparently, the thing is to design a ring, to not just buy off-the-shelf something that you’re going to get for the rest of your life. If you’re going to design a ring, then you need some basis, some start.
Also, I can’t wait a long time for the ring to come. I wanted to take it home with me. I was a little afraid to have it in the house, but I still wanted to own it with me. That’s a dramatic change, I think. People expect that you’re going to design your own engagement ring and at the same time, we all want it fast and we need a lot of help because that’s the way we’ve been trained by the internet to operate.
Anish: Yeah. Essentially, we’ve been seeing this a lot. Millenials, people today, especially the millenials, they don’t want a single piece of jewelry that’s mass-manufactured for like 100 different pieces. They want something that tells a unique story. If I’m getting engaged to someone, I want a ring that tells our story for what it is, whether it’s my birthstone and hers as adjacent birthstones or a number of diamonds that say how many years we’ve been together, even an engraving that ties us together.
So, we’ve been seeing a lot of that. We’ve been seeing a lot of traffic coming from that. We’ve been seeing a huge trend towards that. So, yeah, I do think we’re very excited about the business and how it’s been growing. It’s been growing very well, actually.
Andrew: I’m going to give that as advice to all the guys. Seriously, if you guys are getting engaged, don’t take my word for it. Your friends could be different. The environment you’re in could be completely different than mine. Here’s what you ask. Ask a couple of your friends where they got their rings. Listen to them tell you whether they just went into a store and bought it or they had a friend and bought it or whether they start talking about how they designed it themselves and what the story behind designing is. My guess is you’re going to see that a lot more people designed it themselves and it’s at least something worth considering.
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So, if you believe in what we’re doing here and you want to be a part of it and get it every day and help me promote it to more people, go to your friend’s phone and subscribe there to Mixergy’s podcast and then do it on your phone too. Let’s get a two-for-one.
Anish, thank you so much for doing this interview.
Anish: Thanks a lot, Andrew.
Andrew: Alright. The website is Diamondere. We’ll, of course, link to it on the site. Thank you all for being a part of it. Bye everyone.