Diamonds are Forever...And Then Some

31:42And the way in which we're coming to market is different. You know, you can think about it as going from a gifted world, you know, where you are selling for occasions to a world where you're buying something for yourself. And I think that's one of the things that the traditional jewelry business just missed is nobody is waiting for their partner to buy them a pair of shoes or a handbag. And yet there was still this sort of societal expectation that maybe someday you'd be worthy of somebody buying you a tennis bracelet or whatever it is. And like that, that just didn't make any sense. That was, you know, an anachronism from a long time ago.

32:21Yeah, it's interesting because it's this thing of cultural mores changed, but the old way of doing things is still what the majority of people do, which is they get an engagement ring, they do all that stuff. But like there is this other big thing happening where even if they get engaged, it's much later. Sometimes they don't want a white diamond anymore. There's a lot of times I don't know. I know very few people who didn't choose their engagement ring themselves. so it's it all of that changed and it did feel like the market generally the the company I've covered the most closely over the years is Tiffany and I've written about this and talked to their various CEOs about this like what are you gonna do especially when China right now China is very traditional in this way at some point they're not gonna be and they move so much more quickly culturally than than the West does.

33:17So it's there. It there has just always felt like so much opportunity to me when you started to put together who your roster. So explain how you how you have merchandised at present, because you have an amazing mix of jewelers who many of whom I know personally and have met over the years. But it's it's it's definitely has a really strong point of view. It does. I mean, I think about what we do is kind of like the love child of Barneys and Etsy, you know, where we take a very strong kind of curatorial perspective on these are the things that we believe are good. And when people ask, like, what is your selection criteria?

34:03I have to believe that this is something that makes me happy. This is something that is unique. This as somebody who has a unique point of view. And so that's kind of the Barney side of it. The Etsy side of it is most of the people that we work with are independent emerging designers and their strength is not in go-to-market. And so, you know, what we do is help them find the customers who are going to appreciate their art. You know, and so we think about it as, you know, trying to create markets and trying to create matches where those otherwise wouldn't exist. And it's also expanding the idea about what does great jewelry look like?

34:47And in the traditional business, there was this obsession with what is it made out of? And I like to joke, we are not precious about being precious. If somebody wants to make something out of 18 karat gold, amazing. If they want to fill it with flawless diamonds, terrific. If you want to make something incredible out of blown glass, that to me is at least as exciting. You know, so we have a partner whose work that we showcase named Colin Lynch, who is a RISD train studio glass artist. And he blows his his glass in the Brooklyn Navy Yard. And he makes amazing glass pieces that are like 90 to 500 dollars.

35:25And they're really cool. And I was talking to him at one point and we were talking about, you know, the intrinsic nature of the material. And he says to me, Mark, the thing that's so cool about this is there is no intrinsic value to the material. The only value of the product is that that I put into it. And like that was sort of an unlock for me of like, wait, that's actually what we are showcasing here is the creativity and the artistry and the storytelling behind it. Rather than saying, you know, this weighs so many ounces and it has so many carrots of whatever. And I think that's one of the traps that the jewelry business fell into, was this idea that we have to describe in these precious terms, you know, what something is.

36:09You know, when someone goes and buys a Birkin, they don't ask about the quality of the leather. They don't ask about the weight of the hardware. They go, I want a Birkin. I want it in, you know, whatever this color. and and so jewelry i think as a category had this problem of selling something that was uniquely precious in a very commoditized way and the rest of the luxury world found that they could do just the opposite you could take something that was base you could put it up on a pedestal you could shine a light on it and you could through all of your kind of myth making and storytelling create something that was precious.

36:47So what is the intrinsic value of a bottle of Chanel No. 5? You have$0.05 worth of juice in there and$250 worth of storytelling. And jewelry, which is unique, which materials are rare, that they're brought together with great creativity, somehow got in the trap of only being able to sell something when it was 70 % off. And you're like, you're missing this, guys. We need to shine a light on where these things are coming from and why they're so interesting. How long have you been doing it for now? Like three years or is it longer than that? It will be five years coming up next week. We launched August 1st of 2020.

37:26This was my second COVID baby. My wife and I had a daughter in February. We launched a business in August. Oh, wow. That's amazing. So what have you learned in those five years? Because obviously you launch in the middle of COVID. It's an interesting time because people were shopping online and your prices, and it's not A, people will spend 100 grand on a piece of jewelry online. I've also written stuff about that. But also your prices are generally approachable and feel like a lot of people can access what you're doing. What was it like and what were the things in these five years that you've learned about the consumer?

38:06When the pandemic hit at the beginning of that year, I looked at this and I said, oh my God, like the economy is cratering. And what is the first thing that goes? Discretionary spending. Like, do I, you know, am I jumping into a giant inferno here? And I looked at this and said, I don't know what I'm looking at in the near term, but I am building for the long term. And I still believe all the predicates are in place here. I still believe increasingly people are going to buy things for themselves. I still feel like There's this desire for this unique product. And I still feel like people are going to find them online.

38:45So, you know, you just build more slowly and more deliberatively. Deliberately. And I think that's been the biggest lesson is that consumer brands take a long time to build. And it takes a long time to grow awareness and to earn love. And I don't know that there are too many shortcuts to that. I think that maybe if you have a triple A celebrity who's fronting your beauty brand, maybe you can go, you know, from zero to a billion dollars in five years. but absent that cheat code, I think you just earn it slowly and you find interesting things. You find ways of connecting with customers. You know, you build a community of like-minded people.

39:32And I think that's been one of the most fun parts of building the business is we have created, you know, this kind of community of creative people on the artist side, on the influencer side, on the cultural side, you know, people who all sort of lean into this notion of celebrating where they are and doing it with this extraordinary product. And that's really kind of the core of at present philosophically. Yeah, I think the taking time thing is really important and something that people are, it's easy to forget when you do see a beauty brand, which has, you know, a easy entry point and a good margin and that can scale up and and distribution is so simple right now in this era I don't know if it will be forever but right now it's like Sephora Alta$25 for a lipstick you're good and and you have Hayley Beaver fronting it but you're wearing a Tom Brown cashmere cardigan and shirt that is very nice that we were talking about pre-recording But the thing is, like Tom Brown, he was doing like five million dollars, you know, 10 or 15 years into running his business.

40:46Yeah, exactly. And so that it does it does just take time. And sometimes you get a bump and you get lucky. But a lot of times that that doesn't last forever either. Are there, you mentioned a couple brands, but is there anyone else that you've seen really develop and grow that you feel like is, I know you did a collaboration with Jaleel Johnson, who is a creator, I guess you would call him. It's, you know, not influencer, but editor, writer, stylist, all those things. And I think it's really beautiful. Man about town. But is there anyone whose business you've seen flourish that you're just really excited about?

41:35I like any business where someone is irrationally passionate about something weird. We were talking about my friends who do the Acquired podcast, and I've been thinking a lot about them recently because I was in New York last week. They did a show. They sold out Radio City Music Hall. There were 6 ,500 people listening to these two guys talk about business strategy. I heard it's so amazing. It's absolutely extraordinary. But one of the things that Ben often talks about is that great businesses are built by people who are a little bit irrational, continuing to bang their head against the wall for a really, really long period of time.

42:18time and it is that commitment to something plus the sort of iterative learning from you know all right like i did this for this period of time and this is what worked and this didn't you know and then and then the compounding value of time and so it's sort of strange to think about what they're doing as a consumer brand but they have created an enormous amount of love in such a way that like you know the number of people that go to a knicks game you know go on a tuesday night to you know See, people interview the president of a bank, which is just like something that, you know, and I think it gets to, you know, the nature of the way also in which consumer brands are funded.

42:55And I am a big believer that capital structure in a lot of ways dictates destiny. and if you need to grow really quickly to you know appease the people who have given you the money you make different decisions than if I want to build something interesting for my friends and the people who are listening to me and that's how you end up with four-hour podcasts you know selling out you know the most famous arenas in the world you know and and then when I look at a generation of consumer businesses that have gotten obliterated since they've gone public, they built the wrong business. And I understand the incentives that led them to that.

43:40But I think that's just a really hard thing to do. I think about this a lot in parenting terms, because my wife and I have a nine-year-old son and a five-year-old daughter. And it's a little bit like thinking that you are going to create a successful adult by ensuring that they're a child star. and I'm going to get them on Nickelodeon or the Disney Channel and then they're going to be well adjusted as an adult, you might get a quick hit, but I don't think that leaves you in good stead for the long run. Yeah, that's an interesting way to think about it. It does feel like I see this again and again where an IPO or an institutional raise and I always think, well, what is the end goal?

44:22And I think what ends up happening with a lot of founders in this era is the end goal ends up being, well, I just want to make sure I make enough that like my kids are going to also be able to invest and maybe for a few generations not have to worry about money. And that is not like if you're if you're if you want to build a brand that's going to last forever or whatever, you got to think about when you're dead and what that will be. And that's so strange. I think we live in such a short term quarterly reports and any brand that IPOs, I just think, oh, man, like, are you really ready for this?

45:03And sometimes it makes sense if you want to open a bunch of stores and that's part of your ambition for it. But a lot of times I say to people, don't raise until you have to, until you feel like it's going to actually help increase the value of the business. But sometimes people raise because they want to increase the value of the quality of their own lives. So it's a complicated, it's such a complicated thing. And I think most people do make the wrong decision if the goal is to have a long term brand. And that may not be the goal for everybody, but I don't know how to do anything other than sell jewelry.

45:43And so I am just trying to build a long term sustainable jewelry platform. Like I'm not looking to get on the cover of Inc. Magazine. I'm not looking to exit so that I can go start a venture fund. Like this is what I fundamentally want to be doing. I have the great privilege of being able to choose my own adventure, you know, and this is the adventure and it's really fun. and I feel a strident need to make it work because I want to keep doing it and because I think there's so many interesting avenues that we can take it in. Yeah, it sounds very fun and you can tell that you really love your work, which is amazing and it also comes back to this family-run businesses.

46:23It's like in your blood in a way.

46:32so a couple questions about the future of of the market and i do want to ask you one more watch question because please i've i am obsessed with the consumer behavior around around watches but right now so it's it's earning season by the time this runs earning season for luxury will be over But the basic premise of the last, and I think Richemont did theirs a couple of weeks ago. It'll be like over a month ago now. But Richemont owns Cartier and Van Cleef & Arpel and I think a couple of watch brands too. Lots of watch brands, yeah. Lots of watch brands. And as we know, Rolex is still a private company, et cetera, et cetera.

47:13But on hard luxury generally, on jewelry, that business has been incredibly resilient in the last few years, especially in the last year where soft luxury, so handbags, clothing, all that stuff has really struggled so much that like LVMH brands like Dior, which is, you know, has been up on the up for the last 25 years are seeing declines, deep declines in revenue because the handbags, things like that. It's just not there. It's a little bit of a crisis that I'm sure that they'll manage and get out of. But why do you think jewelry has been so stable in this market and also more stable? And do you think that that's just it?

48:01Do you think this is going to be like the next 10 years? I have my own opinions as someone who covers it and a consumer, but as someone who lives and breathes it, why do you think it's been, it's resisted all this, you know, all these macro issues? Like no other category. I kind of want to get your opinion before I answer it myself, but I suppose that's not the nature of you answering, asking the questions. I think there's a couple of thoughts that come to mind. One is that you have saturation, I think, in the other categories. I think that they have been so big and so successful for so long that there's just kind of fatigue.

48:41And I think that there has been a lack of excitement in certain areas. You know, there's obviously been supply challenges. You know, we've read this week about all the stuff going on with Loro Piana. And I think that, you know, happened with Dior, I think, at some point also in the last year. These sort of questions about supply chain and integrity. and people starting to ask these very fundamental questions of like, what am I buying here? You know, I am buying into this dream. I am buying into this myth. Is it really doing what I think it is? And so, you know, I am obviously quite biased in that I believe that jewelry is a superior product.

49:19I believe that jewelry has a smaller share of wallet than it deserves based on the emotional import of what it does. And so I think in some ways it's a little bit of catch up. I think that the jewelry business often reflects the rest of the fashion world or the business world, but with a five to 10 year lag. And so all of the lessons that I think the rest of the world learned a decade ago, jewelry is finally starting to impart in some of the collection making and the storytelling and who they're partnering with. And so some of it, I think, is a natural catch up. So, you know, I believe the product is better and I believe that the businesses are increasingly being better run and they're earning the share of wallet that they deserve.

50:05You know, I got for my wife gave me a Cartier tank watch for my 40th birthday. And, you know, as much as I love my Tom Brown sweater, I get far more joy out of the watch than I do out of the sweater. I'm going to continue to buy both of those things. But there is, you know, just a tremendous amount of satisfaction in owning things, you know, in the hard category, I guess we would call it. yeah I I think that that's a big part of it and I also got a watch from my a Cartier watch for my 40th birthday and is is just I actually I forgot to what I was going to put it on it's still early and I need to go on my uh my girl walk or whatever it's called but um yeah I mean I feel so good about it I I have very little fine jewelry but what I have I am just so I never get sick of it And I think there's something about it feels so permanent, it can't disintegrate.

51:07And so that is part of it. But I also think that there isn't as much. It's this confluence of what you were talking about where people are buying stuff for themselves. I think people's closets are just too full and bags are big. If you have 50 bags, that takes up a lot of room. A necklace, you know,$100 ,000 necklace doesn't take up that much room. And then the other part of it is this idea of like, I have everything. What is actually special? And despite the fact that we know that this diamonds aren't as rare as De Beers may have marketed them to be and 20 years after they stopped kind of using that way of thinking about it, I laugh because there's a lot of natural diamonds advertising around Los Angeles.

52:00And I'm always like, that's I don't know if that's the right angle either for the marketing. But but there's it still just imparts more value and and that part of it. And also there is so much opportunity in terms of the branding. There was at speaking of Dior at at Jonathan Anderson's first show. He did a lot of necklaces that with with their jewelry designer that were like a ladybug and a daisy. and you know I have no idea how much I know that it'll be fine I have no idea if it'll be you know two thousand dollars for one of these dainty things or fifty thousand if it's two thousand I will probably buy one they that was the thing and it was a menswear show but whatever like that genders construct the that was the thing that I thought if they get that right that's their future And so I think you're totally right.

52:58I am curious for your take. And this is a little bit off topic, but it is one of the threads I wanted to pull from earlier. The watch market. So you mentioned that when automated watches came up in the 70s and 80s and you have your Casio calculator watch, the watch business was really good at kind of shifting the narrative and saying, hey, yeah, but it's not as accurate as what we make in Switzerland and it never will be. And they didn't say it's not as accurate. They said it's not as desirable. They said it basically said it's not as good. All right, this traditional basis of comparison has changed.

53:40We used to think about value based on accuracy. And they go, yeah, whatever. Accuracy becomes table stakes. What you care about now is, let me show you how beautifully finished this is. Let me show me how many complications it has. They changed the nature of competition, which is really the brilliance. So let's talk about the Apple Watch and the iPhone generally. Because A, the watch market is not as strong as fine jewelry right now. but I, I was, my husband covered Apple forever. He is, I, when, when the iPhone came out, we were very early into our relationship and he bought one for me because he was like, I don't think says I love you like an early iPhone.

54:22Exactly. And he was like, I'm going to be on this all the time. And I just don't want you to be annoyed. And I was definitely like a flip phone person who I never had a Blackberry. I, you know, I was, I was flip phone and it didn't care at all. And so he was like, you got it. We got to get this for you, A, for when you go to fashion shows and B, because it's going to be annoying otherwise. Same thing with he's always gets the he even bought like one of the AI things that Apple did and then returned it just to try it. Like he gets everything from Apple first. It's really important to him, all that stuff.

54:58So when the Apple Watch came out, we got them. And I had never worn a watch. I had tried over the years to sort of, growing up, like Fossil Watch is really big in the 90s. I would try Fossil Watch or whatever, Casio, you know, for fun. And I just never got in the habit of wearing one. And then the iPhone even made that more unnecessary. necessary but the Apple watch I became super addicted to it because I loved tracking my steps I loved the fact that I didn't have to look at my phone a lot if there was a call I could just see oh the call I need to take this or I can ignore it I could look at text it just felt like in a way it was actually better for me from a screen time perspective and I became totally addicted to it didn't care that it didn't look cool, didn't care that like, I thought they could do a lot more on the design side.

55:58I thought it was a nice looking watch, but then they didn't evolve it fast enough. But they did a great job of looping in the fashion industry in the beginning. And that has a lot to do with this woman, Anita, who worked with them on a lot of these projects. But then I would say during the pandemic, and look, I'm getting older, etc. During the pandemic, I started to feel a little self-conscious about it. And I got an Hermes Apple Watch because I thought I want at least a nice band. I need that. I'm addicted to the Apple Watch, but I want it to be beautiful and to feel comfortable. And then for my 40th, I wanted a watch, which a lot of people I think of our generation.

56:43It's interesting. I know I have a lot of friends who who that was their 40th birthday gift. And I would say now I wear my Apple watch maybe once or twice a week. If I'm doing a workout that I need it for to track, like if I'm doing speed work running or something, or I just am like annoyed that I'm not getting credit on the steps for some boutique fitness class, I'll wear the watch. But generally I wear my Cartier watch every single day now. and on the weekends, everything. And it feels so, I can't believe I used to walk around and go to meetings. I went to, I remember I went to a wedding in New York City and I had the worst tan light.

57:31I'm wearing this gorgeous Loewe dress with these huge sleeves and it was so elegant. And I have this Apple Watch tan line in all the photos. And I'm like, thank God I didn't wear the watch to the wedding. But it basically wore the watch. I basically wore the watch and I'll never these gorgeous photos. And then there's my my white Apple Watch giant line. The point being that I this is a very long way to say I feel like the Apple Watch pushed a lot more people into being interested. and obviously this is the same time Houdinki and I'm sure you know Ben like Houdinki rose up and there was interest on that end too but I think it pushed me I don't know if I had not bought that Apple watch if I would have wanted a Cartier watch at some point but when you look at and I think Apple could have done a lot more in terms of innovating on on design of the Apple watch to get people like me to stick with it.

58:33But the point being like, when you look at the watch market, it's sort of in a crisis too. What do you think of all this? Do you think that it will also sort of bounce back? Or do you think that it's a permanent sort of management of this and that it's never going to be what it was? Like, what do you think is going on there? I think that the Swiss watch market has become very niche. And I think that if you look at the units sold over time, I mean, 10 years, but if you look back, I mean, even going back to, you know, 1946, the number of units made by Swiss watchmakers has gone down by an enormous amount.

59:18And they have balanced that in the last 20 years by continually increasing the average price of each piece. So a Rolex used to cost$5 ,000 and the average Rolex today is$15 ,000. All right, there is a smaller market for$15 ,000 watches than there are for$5 ,000 watches. and there's enormous demand for Rolex, but the thing is all the way down the line that way. So I think the question for the high end is, do they want to be a niche purveyor? And is that an area where there is enough scale for the whole thing to work? Maybe in a world where Ferrari is the most valuable car maker, selling 12 ,000 cars a year, maybe that makes sense.

1:00:09but I think you need to have some units in order for, for things to work. Um, so, uh, that's thought one. Thought two is I agree on, on the Apple watch and my journey has been very similar to yours. I bought the first one, wore it for three days and I'm like, this doesn't do anything, but that was because that was just such an underpowered product. And like, I wear it now when I do my workout and I wear it some of the time when I sleep, because I don't know, for some reason I want that data. but I like never wear it during the day. I think the interesting question with the tech companies in the fashion realm is do people all want the same thing?

1:00:47And I think about this with cars also like basically the theory behind why Tesla was the most valuable car company in the world was people assumed that the Tesla was going to work like the iPhone. Everybody was going to want the same thing. And I think the Apple watch is the same question. And I don't know that those are the right analogies. I think, you know, okay, maybe I, you know, you and I have different cases on our phones, but we effectively have the same iPhone, but like, who cares? Yeah, I don't think it actually works the same way when you're talking about items of self self-identification or uniqueness.

1:01:29And I think people feel very strongly about their cars that way. I think watches feel the same way. So I don't know. I'm always skeptical of everybody is going to have the same thing. I think that is the exception that proves the rule that most people generally want things that feel a little bit more unique. Yeah, the software is why we want the iPhone, not the hardware, whereas the Apple Watch, sure, the software is interesting, but the hardware is so obvious that it can't be uniform. And so, yeah, it's a fascinating thing. And I've always wondered why they didn't sort of just embed it more in a more traditional looking watch.

1:02:16But But I guess the issue is those companies don't want to engage with them on that level. And I don't know how successful that they have been, but some of the Swiss watch makers have created smart watches. You know, Tag Heuer has a connected watch. I don't know why you that that seems to me to be neither fish nor fowl. I understand why you buy a mechanical Swiss watch and I understand why you buy a smart watch from Apple. I don't it's a little bit like the, you know, the Virtu phones. I don't know if those are still around. Oh my God, Virtue. Right? Like, okay, everybody's spending a lot of money on phones.

1:02:51People want things that are distinct. We're going to sell a$15 ,000 carbon fiber and diamond phone. Everybody's like, but the phone sucks. Like, okay. Very short anecdote. When I lived in London after college for two years, I worked for this concierge company who did the white label concierge for the Virtue phone. They did it for like Amex Black. They did it for Virtue. And then they had a branded concierge service. But yeah, that's very funny. I understand how you come to that conclusion. And I think it's the wrong one. Yeah. Mark, what's next for you all at present? What are you excited about for the next year?

1:03:33We are continuing. We have a number of fun partnerships that we're going to roll out for New York Fashion Week. So we're excited on that. Yeah. Yeah. You know, and just continuing to grow, you know, the people that we're working with. I get so much joy out of seeing, you know, new jewelry. And like that is the highlight of, you know, what it is that we do is just finding new things. And so, you know, I saw this week for the first time pieces of needlepoint and crocheted jewelry. They're the coolest thing I've ever seen. Amazing. I'm like, this is cool. This is something I have seen millions of pieces of jewelry.

1:04:09And it never occurred to me to do, you know, high end jewelry with needlepoint made in Brazil. OK, cool. Incredible. So just finding ways to continue to share those, you know, and and finding fellow travelers. You know, we are in the growth stage of our business and, you know, finding friends who appreciate what it is that we are doing. And, you know, just going forth and shouting from from the mountaintop that this is something fun and come play with us. Well, I love a discovery platform and that's what you've created. So congrats and look forward to seeing you in New York during Fashion Week.

1:04:47I'm sure we'll run into each other. We would love to have you at all of our fun things and such a joy always to talk with you. Thank you. I'll be there. Thanks for being here. It was so fun. Fashion People is a presentation of Odyssey in partnership with Puck. This show was produced and edited by Molly Nugent. Special thanks to our executive producers, Puck co-founder John Kelly, executive editor Ben Landy, and director of editorial operations, Gobby Grossman. An additional thanks to the team at Odyssey, J.D. Crowley, Jenna Weiss-Berman, and Bob Tabador.