77 Diamonds' aim is 'to bring clarity, choice and value to the process of buying high-quality diamonds'. Founders Vadim and Tobias tell us more.

‘Diamonds are a girl’s best friend’ - so the old adage goes, and never is the theme more prevalent than at this time of year. Hence the impetus for seeking out two founders who are doing decidedly disruptive things to an industry in which innovation hasn’t always been a running theme. So how about this for a game changing idea? Sell diamonds online but provide your customers with a seriously slick Mayfair showroom where they can come and peruse your high-class offerings at leisure? That’s what we call killing two diamond shaped birds with one stone, and exactly the business model I’m here to discuss with Tobias Kormind and Vadim Weinig, the co-founders of 77 Diamonds, who have for the last nine years developed a quite radical way of engaging their customers. Yes it’s all about high-end customer service, innate not to mention bespoke craftsmanship (nine in the workshop, with an additional forty staff), and a user experience that aims to educate customers on the provenance of their chosen stones.

First things first - how did the duo meet? Weinig (a self proclaimed tennis fanatic) comes from an established diamond background; indeed his father and grandfather were both diamond dealers. ‘I’ve been looking at rough diamonds since the age of five - my father used to come home with them. I didn’t even see them as diamonds. It was just a stone that I had to guess the colour of. Growing up, I learnt more about the business aspect of it; what are they worth, where do they come from, how do you acquire them, how do you sell them? Eventually, I decided I wanted to be more involved – less in the classic, rough aspect of the diamond business, and more in the modern, internet retail-based aspect of it. This is when Tobias and I talked with each other.’
Tobias Kormind left and Vadim Weinig, right.

Kormind meanwhile was deeply immersed in the world of banking at Morgan Stanley, working largely with Internet companies, whilst simultaneously harbouring a strong desire to immerse himself in technology and e-commerce. Having set up an online marketing company (helping, amongst others, seminal brands such as Estee Lauder, Anya Hindmarch and Astley Clarke with their online presence) his experiences proved invaluable; ‘I discovered long ago that you can build a financial model and tweak it to give almost any result you want. Actually that is just fiction. What it comes down to – what you learn from banking – is how unrealistic things can be, and how important it is actually that you are grounded in reality.’

So now they had their partnership in place, but what of the challenges that lay ahead?  ‘In the early days of the internet,' Kormind says, 'people were really trying to figure out what actually works. For us, diamonds are such a tactile product. It’s incredibly difficult to just be virtual, unless all you’re doing is competing on price. When you start to go into the manufacturing quality in what you’re producing and combining. I think people are buying into more than just something that is great value. A lot of the large sales that we have happen in the showroom.’ Ah yes the hallowed showroom, an elegant arrangement of meeting rooms on Hanover Square, all dove grey carpets, artfully arranged display boxes and dangerously comfortable seating. 

What better location to entice the decidedly upmarket customer? But don’t let this fool you, because while the design, quality and packaging are seriously sparkly, the price point is not; ‘We’ve got some of the highest quality workmen sitting here in London,’ Kormind says with pride, ‘and that normally comes at a massive premium; but at the same time we’ve invested in technology in our diamond sourcing; and we sell at wholesale prices to the consumer.’ And for goodness' sake, don't forget the returns policy – a factor that augurs utmost peace of mind, because this in an ethos that is all about being upfront, accountable and most of all ‘transparent’; building trust in an industry that hasn’t always been associated with the word.

Which brings us onto the $64,000 question – how do the pair ensure the conflict-free nature of their product? ‘You know, the conflict diamond thing is not as big an issue as the media makes it out to be,’ Weinig says with authority. ‘There are other much more relevant issues within the retail sector of the industry. For example, you could be buying an In-House Made Certificate, where somebody who works within the company grades the diamond and then they issue a certificate, which actually doesn’t really conform to the rules of grading. We only sell independent certificates. That could have a huge impact on the price, and a lot of people use it to their advantage, whereas we don’t. That’s what I mean by transparency. That’s something that hasn’t even made it to the media, because that’s less understood.’

Time for Kormind to chime in: ‘Traditionally, I think people were buying a diamond if a salesman said: “This is a good quality diamond”, then I think people would accept that. With diamonds there’s incredible subtlety between, say, a D colour and a G colour, but there could be a 30-40% price difference. So there’s still plenty of scope for people who self-certify to mislead people. We only sell independently certified stones [certified by non-profit organisations like the GIA, which offers gemstone identification and buying advice to consumers and training to those in the jewellery trade]. ‘That’s what’s opened up the diamond market and made businesses like ours possible.’ At 77 Diamonds, laser inscriptions (easily verified) mitigate the risks for consumers. ‘From a conflict perspective, there are much bigger problems out there. I don’t want to negate the fact that we are very vigilant about the diamonds that we sell, but if you look at what people are walking around with in their mobile phones…’ 

With benchmarks of such high quality, how on earth do the pair ensure value for their customers? ‘If you look at the traditional consumer retail models out there – not just talking about jewellery, but in general – even if we take something like the cosmetics industry: you pay £20 or £40 for a product,’ Weinig says. ‘The product itself costs £2 to manufacture. The majority of that sits in marketing budget. We’ve taken that huge marketing budget and we’ve streamlined it, so we’re much more efficient about passing all of that value back to the consumer. Yes, it is, in a way, a volume game for us, but our volumes are still very, very low and we don’t mass-manufacture on made to order. I think it’s just a new type of business model that accepts the realities, embraces it and then innovates.’

‘Coming from an investment banking background where you were working with entrepreneurs,’ Kormind adds, picking up the baton, ‘you’re seeing these big businesses at a completely different level and you’re maybe a part of a transaction. You don’t understand what went before, nor what comes after. You’re just there doing a deal. It’s a different universe. Now that I look back, I think we were up in the clouds – we’re now down in hardcore reality here. But the satisfaction when you hear a good story from a customer that moves you emotionally.... We wake up in the morning going: “This is good. I’m enjoying what I’m doing.”

The process hasn’t been ‘without its stress however… I don’t want to paint just a rosy picture: you have to be an incredibly resilient person to be able to do something like this. We can’t go on vacation and switch completely off: we’re thinking about the business 24-7. We write emails to each other past midnight: we’re both still up, thinking about stuff. But it’s great, that’s part of the stimulation. It’s about building something organically and being proud of what you do. There’s no excuses if things go wrong!’

Things certainly don’t seem to be going too badly, if proof were needed – 77 Diamonds was privately funded and remains so to this day. ‘It’s something we’re very proud of,’ Weinig says, visibly moved, ‘because it’s something that virtually doesn’t exist within our line of business. I don’t know of any other company our size and in the space we’re in that hasn’t had to seek outside investment.’

Whilst this puts the pair in a strong position, there are always compromises; ‘It also means we probably didn’t grow as quickly as we could have,’ Kormind admits. ‘That was a conscious decision; it’s about control of the business… We’ve watched some of our competitors sell out, and as a result their business models are disappearing. They’ve lost focus, and their entrepreneurs are not driven in the same way as they were, and they’re not able to seize the same opportunities.’ Carpe Diem, nose to the grindstone – play nice and above all play fair; these are nothing if not running themes. ‘The most important thing is: how much drive do you have?' Weinig adds. 'If you look at people who have achieved things in life, the one common thing you’ll see in them is – sometimes there’s luck, and there’s how much drive you really had. Of course, chance favours the prepared mind.’

A fitting quote from Louise Pasteur – but what of ‘sending the elevator down…’? What would the pair say to the young entrepreneur (in their early days), hoping to follow in their decidedly sparkly footsteps? The conversation goes like this:

Kormind: ‘When we started the business, everyone was laughing at the fact that you could buy a diamond online. It was just a common perception of purchasing: “Luxury companies are never going to be online."
Weinig: ‘There was the American model that was showing signs of promise, so we had something to gauge ourselves on. But it’s true: a lot of people were still skeptical.’
Kormind: ‘And there was a huge amount of resistance within the industry, and now everybody’s talking about it like it was always going to happen, like it was inevitable that diamonds would be sold in an online environment.’
Weinig: ‘There had been people that failed before us, and there will be people –’
Kormind: ‘That fail after!’

Sheer self belief is the implication - that's what will carry you through. This conversation is of course  vintage Kormind/Weining; always harmoniously in sync – finishing each other’s sentences... A Winston Churchill quote springs to mind; ‘Never, never, never give up’ – nor underestimate the ability to withstand the early starts and late nights; ‘It was mainly just driving leads,’ Kormind says of the nascent years of the company and the formative revamp of the website. ‘We didn’t really have a lot of experience… We projected a sales target; we outperformed it by 2.2 times. It was just insane. People were staying late every night in the office, virtually in tears because we just couldn’t handle the volume. But what a feeling that was: to be able to put something live and just watch it grow.’

But now, back to the crucial issue of… (drumroll) the tennis;
Weinig is a serious sports fan. ‘I just read Rafael’s and Djokovic’s biographies. The qualities you find in the businessman are not completely dissimilar to the qualities you find in the successful sportsman.’ The Abramovich biography (naturally) is another recent buy; ‘Actually I love reading biographies more than about businesses, because businesses are about people.’

Kormind refers me to The Signal and the Noise by Nate Silver. ‘It’s about the prediction of things and being able to spot trends. I think that’s important for our business, but I think it’s important in general for business. The key for us is always to be a few steps ahead. I love that psychological element of the decision making process for customers as well; we’re incredible beings and there are parts of our brains that are triggered by subliminal things. How we base our decisions sometimes doesn’t make sense at all. The psychology of that, I think, you can’t try to cover that. I love reading those types of books.’

‘You’ve got to believe in what you’re doing,’ Weinig says in a parting sound bite. ‘If you’re doing it for the money, you’re the wrong type of person.’ As ever Kormind leaps in; ‘You need to ruffle feathers. You need to shake the tree a little bit and not worry so much about what everybody’s saying about you.’ Wise and disruptive words indeed – and yes, here we are full circle – back at the ethos that leaves no ‘stone’ unturned.

Interview by Alice Kahrmann December 2013.