Ada Diamonds sells lab-grown diamonds and jewelers can't tell
cnbc.com
cnbc.com
There are two main processes for making diamonds - High Pressure High Temperature, and Chemical Vapor Deposition. The first was developed at General Electric in 1955. With a big press, carbon can be squeezed down to diamond. Impurities used to color diamonds made this way, but that problem has been solved and now clear diamonds can be made.[1]
CVD is a process borrowed from the semiconductor industry. The product has very regular crystal structure. This bugs the gem industry, which claims that the best diamonds are the ones which are a perfect crystal with "flawless" crystal structure.
[1] https://www.gia.edu/gems-gemology/fall-2017-observations-hph...
[0]: This is a publicity stunt, but from what I can tell, this does not need to be faked: https://www.youtube.com/watch?v=IcyluvvEfQo
I grew up in a machine shop and those little super hard carbide cutter inserts are surprisingly easy to crack or break if you feed too fast. I remember getting cocky on the lathe trying to take a big cut off a 2 inch bar of mild steel; came in too fast and the lip on the bar from hand cutting on the bandsaw caught the edge of the little $25 carbide insert and shattered it like glass.
You can buy utility knifes with such coatings, or at least I stumbled upon someone comparing different coatings on utility knifes, including diamond nano particles.
Judging by the low life of such a sharp blade which 'just' cuts hairs, I don't think a coating will reach the target.
And yes, the edge will be prone to shattering, but I never said I'd want to be careless with the knife, or never have to care for it. I just don't want to sharpen it more than once a week. If you look, the video I posted shows them hitting a rope, I assume nylon fibers, which certainly isn't that soft, and instead of shattering it results in an almost complete cut. For your carbide cutter you do have to remember that neither your cutter not the lip/bar was particularly likely to give in much. As long as it won't break if I cut a fish and hit a bone, it's not too brittle. I might need a softer cutting mat, but considering the (lack of) force I'd need, the softness shouldn't be much an an issue.
And the cubic zirconia knifes I have do experience significant wear, judging by how quickly they lost their reasonably-sharp state and are no longer superior to a regularly sharpened (cheap) steel knife.
One would probably need a hard-ish backing, e.g. maybe something like an edge-hardened steel blade, but with the thermal expansion coefficient matched to the diamond edge/insert.
[0]: https://scienceofsharp.wordpress.com/2014/01/25/quantifying-... [1]: https://scienceofsharp.wordpress.com/2015/03/24/sharp-and-ke...
https://www.puregrowndiamonds.com/store-locator/
I wonder how much Ada Diamonds pays their PR firm for that submarine article
via
That's $X,000 that you've tied up in something that doesn't actually have the value you paid for it, and even if you did want to sell it, it likely has sentimental value, making it an illiquid asset.
Like the site points out, most people getting married are not in a position to afford that kind of expense. But they do, and they try to make it work, because that's what's "expected".
One way is to find someone that teaches Jewelry making at a university and who also does commissions. They will often have skilled students who are looking for commissions as well. I heard jewelry and gem shows are also a great way to buy gems at a reasonable price and meet people in the industry, many jewelers that do commission will be happy to use gems you supply.
Additionally private jewelers advertise themselves on the internet, on flyers at art shows and own store fronts.
The wedding industry, like the funeral industry, really preys on people's emotions to make the hard sell. "If you really love her you'll give her the best" (implying that giving her something inexpensive means you don't really love her.) "You want to show her (and the world) how committed you are to her."
Then because everyone is so highly pressured to spend big then it becomes a societal expectation in a generation.
(I agree it's weird to me too! Personally, I don't even own an engagement ring or a wedding ring - I see them merely as trinkets and I'm just not a jewelry person)
I swear I've seen "four months salary" somewhere.
Who says poop can't smell worse?
I like the pitch about Moissanite, and I'll have to check it out for other purposes other than an engagement ring!
(1) https://www.statista.com/statistics/585450/market-share-of-d... (2) https://secure.debeersgroup.com/content/de-beers-auction-sal...
Ditto with diamonds. DeBeers associated this relatively common gem with luxury.
From that point, the economics are driven by women. A woman does not want a cheap purse. A fiancée does not want a cheap diamond. The quality is irrelevant. What matters is how much the guy sacrificed for her.
Sort of silly and irrational. But, it's true.
I am for free markets, but I had read, and I will need to confirm if this is still true, that diamonds are plentiful, so the raw stock before cutting and them should be cheaper than current market price due to keeping them in stores to maintain an inflated price. Whether that's De Beers acting alone with its market share as you cited, or two or three other companies colluding on this scheme to keep an inflated market value or not, I need to confirm.
It's well written, but that's not the impressive part. The impressive thing is that this "expose" was written in 1982, 36 years ago. As Epstein mentions, diamonds are not "forever", or even particularly robust (they can be burned, crushed, chipped, etc), but the industry seems to age quite well. In the half-lifetime since that article came out, nothing has changed.
[1]: https://www.theatlantic.com/magazine/archive/1982/02/have-yo...
You can get a 1 carat moissanite for ~$400. They shine better, are nearly as hard, and nobody can tell the difference.
It looks rather like the startup is trying to undercut mined diamond cartel prices, but keep a hefty cut of that markup while the artificial market is still low on competition.
Colorless is still a pain, though - apparently 1 carat gem-quality colorless is still about $4,300 at market rates.
And I should mention, I don't actually blame anyone for this - capturing some profit before the market reacts is exactly what promotes competition, and as a startup they're taking a nontrivial risk that would be much larger if they simultaneously tried to run at cost. Still, I won't be interested until prices drop a lot further.
Moissanite is a great stone, but its price follow the same tactic as the diamond industry including ridiculous level of artificial scarcity. The biggest selling point they have over CS is that "surely you are not the kind of man that spend $5 for his fiancée"
I don't know much about gems, but this seems contradictory.
To know the difference you would need to examine one closely. They're pretty much identical on casual inspection, especially mounted in a ring.
Only if you know either the grade or the type (using high-tech instruments) can you infer the other from the observed shine.
CVD diamonds all seem to come in the form of a very thin sheet/disk, so getting something thick enough to use as jewelry may actually approach that price
I've always told people if the girl is concerned about what type of stone you get her then that is a real cause for concern IMO.
This seems written for an audience with very wealthy friends and family.
If it works awesome if not I work another ~3 years.
I am not saying it's a good idea for most people, just it's more possible for a wider range of people than you might think.
I can speak for myself personally, since I have no generalized data, but I have several _close_ friends earning within the top 5% of the nation. Even _they_ would have trouble parting with 50k on a risky investment. They'd _want_ to invest, but that's not an insignificant amount of money to part with for them.
PS: The other thing that happens to most people is eventually their kids move out of the house. That opens up a lot of possibilities even without a pay bump.
Many of us in the HN community have wealthy friends. I'd wager that few us of could get 20 of our friends to invest $50K in our startup.
For similar friends & family rounds I've been involved in, you'll have one or two people cut $100 to 500k cheques; a few with $25 to 50k cheques, and then some from $5 to 10k.
- How much did you pay for your tie?
- $400 in the store next door.
- They tricked you! Store across the street sells the same tie for $800.
If you are paying 10K for an engagement ring and I can buy the same exact engagement ring for 1K, it is just matter of time when your ring will loose it's "social show off value", because "everyone" will have similar rings.
I think after some time De Beers or a company similar to theirs will find for rich and/or overly emotional people something else very expensive to buy to show their "love". It is just a social signal "my ring is better than yours" => "my male ape is better than your male ape" => "I am more superior". People are social animals, social signals are very important for them, they'll always find a way to send social signals: super expensive cars, shiny things, handbags for $5K, golden iPhone for 18K, ... Look at luxury industry, it is booming.
It's not about the ring, it's about the expense. The same purpose could be served by just piling up twenty-dollar bills and setting them on fire, and the person with the biggest pile of bills to set on fire would be the highest status. There are cultures historically where stuff like that was common: generally as sacrificial offerings, but same thing really -- if you can afford to sacrifice a horse, in a culture where a horse is really valuable, it means you're really fucking serious about whatever you're doing, or so rich that you can do it casually, one of the two.
> serious about whatever you're doing, or so rich that you can do it casually
or, the common case: bluffing and setting up for a financial and relationship disaster down the road.
https://www.morganstanley.com/ideas/diamond-market-lab-grown...
>Morgan Stanley estimates that the capital costs for lab-grown diamonds are negligibly lower than minded [sic] diamonds: $343 per carat vs. $367 per carat for mined.
>Yet, at the wholesale level, they may sell at a 30% to 40% discount to mined stone. This is in part because lab-grown diamond producers are a fragmented, independent channel, while the mined diamond industry is highly consolidated and coordinated, in terms of supply, distribution, marketing and pricing. The labs aren’t just competing with the mined diamond industry, but also with each other for market share.
So costs are around 350 US$ per carat, and they sell retail the ring ".95-carat lab-grown stone" for US$ 4,000, let's say that US$ 500 are for the (white) gold and craftmanship (the ring seems a very simple one).
It would be interesting to understand where the remaining 9/10th of the price go.
Preventing competition. I'm sure monopolies like this are expensive to maintain.
Preventing how?
There is NO monopoly (at least yet) for lab-grown diamonds, if you use the same calculations for the real diamond, you have 5000-500=4500/370= 12x, which may apply to the De Beers' monopoly (but being a monopoly you have no real alternatives by definition).
The point I was trying to make was more that while I can understand how a monopoly can have and maintain a 12x margin/profit over capital costs, it is hard to justify a 10x one for the "lab-grown" ones.
This startup, which seemingly is only a commercial middle-man, with no particular innovative (as I would expect from a start-up) business (in the sense that buying goods from producers and/or wholesalers and selling them to final customers it is "traditional commerce"), seems like having a lot of overhead.
I imagine diamonds need to maintain some minimum price point in order to sell, after all, they are a luxury good. And a 10x margin is high enough to not raise eyebrows, but low enough to undercut the competition.
If Lamborghini released a $40,000 Mustang competitor, then their brand would suffer. But if the same car retailed for $120,000, then people would accept it.
Yep, but only (or however mostly) because of the DeBeers marketing.
> And a 10x margin is high enough to not raise eyebrows, but low enough to undercut the competition.
My eyebrows are raised nonetheless.
We are not talking of technology, design or "brand" such a Mustang or a Lamborghini, we are talking of (almost) RAW materials, not entirely unlike gold or any other "mined" material.
As an example in Napoleon III times, aluminium cutlery was a "luxury" item, because the metal was more valued then gold.
Reference:
http://www.todayifoundout.com/index.php/2014/05/aluminium-co...
(coincidentally the above article talks in passing-by of diamonds, citing a report thaat is giving completely different valuation of the diamonds market, so maybe the numbers cited are completely off )
I cannot access the Bain report cited, right now, but is dated 2011 and available via Wayback Machine:
https://web.archive.org/web/20170830050614/http://www.bain.c...
And I'd love to believe most founders are motivated by value creation, not market manipulation.
I welcome the flood of diamonds to the market. The only entities scrambling to combat this are the diamond companies who have everything to lose because they can no longer extort people.
Wonder if only past generation people are the ones who still interested to buy these and feel like whole price is fall down once people loose interest in materialistic things.
A clickbait headline would be something like 'He made cheaper diamonds using this one simple trick. Jewelers hate him!', because you'd have to click to find out what that one simple trick is.
This headline seems to be literally true: A startup is making lab-grown diamonds that are 30% cheaper than mined diamonds, and jewelers can't tell the diamonds are lab grown. I think this might actually be the opposite of clickbait, because the headline is a complete summary of the story. You know what happened without needing to click at all. You only need to click if you want to learn more about the why and the how.
The lab grown diamond passed every test except conductivity. The jeweller found this curious as usually if a stone fails conductivity it also fails, for example, refraction tests. A bit of research on this topic led me to discover that the lab grown diamonds have a slightly higher metal content than natural diamonds which makes them slightly more conductive.
TLDR; A good jeweller with the right equipment can tell.
That being said, this topic always generates a lot of discussion.
What’s the point of owning the real thing at that point?
Synthetic moissanite (silicon carbide) is optically superior to diamond at drastically lower cost. Even to an untrained eye, moissanite has visibly superior brightness and fire. Cubic zirconia is optically comparable to diamond and ludicrously cheap. Moissanite is only marginally softer than diamond and cubic zirconia is comparable in hardness to topaz, emerald and spinel.