Last Friday’s thunderbolt news in the diamond business is that the Oppenheimer family have decided to sell their 40% stake in De Beers to Anglo American for a tidy $5.1 billion.

We’ll come back to that, but first a bit of history. De Beers was founded in 1888 but in the 1920s Ernest Oppenheimer took control of the diamond company and the Oppenheimer dynasty was established, with control passing to Ernest’s son Harry and later to the next generation, Nicky Oppenheimer, current Chairman of De Beers Group.

So, the Oppenheimers have clocked up three generations, with the fourth – Nicky’s son Jonathan – waiting in the wings.

But it’s not to be for Jonathan. After an 85-year dynastic reign, the Oppenheimer family are cashing out, handing control to Anglo American, a company founded by Ernest Oppenheimer a century ago before he acquired control of De Beers.

It’s one of those things which has come as a bit of a shock but perhaps not a complete surprise. Nicky is 65 and must be thinking about retirement – if not now then at least within a handful of years.

Is it really credible that in the second decade of the 21st Century a company like De Beers would be passed on to the fourth generation like a family portrait?

Can you imagine Anglo American (or its shareholders) standing by and watching any of its other business units being passed down from grandson to great-grandson? Me neither.

Compared to his father, I never thought that Jonathan was all that enamoured with the diamond business anyway (some might add: nor it with him…), at least not that part of the business which involved selling rough diamonds to De Beers’ clients.

In the last few days I’ve read comments about how it’s a shame that De Beers will no longer be a family company. Well, perhaps. But what advantage does being a family company really confer?

Above all else De Beers is a mining business with huge capital investments, long lead times, major physical operations, legislative and environmental issues… does that sound like a quaint family venture?

Perhaps the other side of De Beers – the other end of the see-saw – the luxury brand with retail and marketing ventures, perhaps that’s more sympathetic to a family structure.

Having a family business can be an asset in that context, but it usually requires a family name and perhaps even a specific individual, something or someone for the market and for consumers to get to know… a bit of personality (think Graff, Harry Winston, Bulgari, Ferrari…).

De Beers had a slight problem here because in its downstream ventures the Oppenheimer name isn’t really a part of the proposition in the same way that it has been for its rough diamond clients.

I did a quick check: I searched for ‘Oppenheimer’ on the De Beers retail site. Here’s the rather telling result:So, the implication would seem to be that taking the Oppenheimer family out of the De Beers business isn’t much of an issue, at least not in its guise as a consumer-facing diamond jewellery business.

What next for the Oppenheimers? Well, they have an extra $5.1 billion to play with and I don’t imagine they’ll just leave it sitting in the bank.

I’ve read speculation that they want to invest in Africa, the continent which has been so good to the family over the last century, but I can’t see them going back into the diamond business in a new guise (and I expect there are non-compete clauses in place with De Beers).

Although, having said that, Jonathan is Chairman of Element6, De Beers’ ambitious industrial diamond business, so he might retain some interest in this area… perhaps synthetics? [Note: that's not a serious or an informed suggestion...]

Jonathan describes himself as an ‘Afro-optimist’, so my guess is that we’ll see investments in exciting growth opportunities across Africa. Perhaps precious metals such as gold and platinum, rare earth metals, tourism, agriculture, infrastructure, telecoms, energy…

And De Beers? Well, I’ve read and heard a lot about this being the end of an era, and so it is. But rather than look backwards, I prefer to think of it as the start of a new era.

For De Beers, I think leaving The Family behind will be liberating.

<< Back to the Diamondthrills Blogroll

No, this is about selling a diamond at auction, but perhaps not giving it the best chance of maximising its value.

Ritchies Auctioneers in Toronto, Canada have a fine jewellery sale coming up on Sunday 13th November, and they’re lucky enough to have been entrusted with a diamond weighing 50.24 carats – the sort of stone which would normally be sold at auction by one of the world-famous auction houses in Geneva, New York, or increasingly, in Hong Kong.

Now a diamond like this (in fact, any diamond) needs a bit of romancing. It’s worth commissioning some fabulous photography, and perhaps asking a copywriter to put together a compelling story about the diamond, about what makes it so special and so alluring.

But what do we have here? Well, we have a photo (right), but it’s not exactly the world-class imagery that a 50ct diamond deserves — we get no idea of scale: this diamond could weigh 0.05ct or 0.50ct.

This looks like a (low quality) technical image shot on home equipment: top view, side view – it’s clinical, not the least bit emotional.

Bizarrely, the auction house chooses to mention a GIA certificate (apparently it’s VS1 clarity and J colour) but doesn’t tell us the certificate number or provide a pdf of the cert on their website.

Why would that be? My guess is that the diamond is a pretty poor cut and the certificate says so (it doesn’t look that great). Chances are that a diamond which has been cut to hit a weight threshold (i.e. to just beat 50 carats) is not the most Excellent cut.

Lastly there’s the ‘back story’ of the stone. We don’t need to know the buyer’s name – of course he has the right to privacy – but what we are told about the buyer and the diamond’s background is very vague and seems to detract from, rather than add to, the diamond’s allure and value.

A report (including video) can be found here, and the buyer is described as a Belgian hotelier who, because of the economic turmoil in Europe, has been ‘forced into auction‘ of the diamond. We’re told that one of the reasons the buyer has chosen the auction sales route is because it ‘guarantees him confidentiality‘. Yes, well, I think we can all draw our own conclusions from that…

The Managing Director of the auction house talks about “things of this calibre” being “liquidated“. He adds “We’re liquidating. This is a quick sale” – hardly romancing the stone, is it?

Meanwhile, the lead gemologist of the auction house says “I’ve never dealt with a diamond like this before“. His best guess is that the diamond was mined in South Africa, but admits he doesn’t know for sure.

Hmmm… not sure that I would want to buy a used car from these guys.

The stone is described as a “$10 million diamond”, but that’s retail, apparently, so they only expect to get $4 to $4.5 million for it at auction. Extraordinary.

And this from the same team, according to this report, which sold a pink diamond last year for $2.3 million having previously valued it at $8 to $12 million.

Anyway, good luck to them. We’ll bring you the auction result – if they publicise it…

UPDATE, 15th November 2011: Ritchies report that they sold the diamond for $3,107,500 – some distance short of $10m ‘retail’ and their pre-sale estimate of $4 to $4.5 million.

<< Back to the Diamondthrills Blogroll

I’ve just been to New York for 24 hours – one night in a hotel, one day of meetings, and straight back to London this morning on what I suppose I must call the ‘red-eye’ from Newark.

So what’s all this about coffee and hotel rooms?

Well, it all has to do with wi-fi (some of you may know where this is going…).

Here’s the deal: my hotel room, which came with a price tag of several hundred dollars, required me to go through a tedious login process and to pay a $10 fee to access their wifi network (which worked terribly, by the way, and had some sort of daily upload/download Mb limit).

But if I popped downstairs to a coffee shop just across the street (well done Gregorys Coffee, by the way) I could get a coffee for $3 and automatically pick up their excellent wifi service – no logging on, no fee, and all the bytes I could eat to go with my delicious coffee.

So how does this happen? How does a $3 coffee come with perks which you don’t get with a $500 hotel room?

I think of it as a market failure resulting from ‘groupthink’. The people who run coffee shops know that they are in the hospitality business – they’re not just selling coffee – they’re selling a place to catch up on the news, chat with friends, read a book etc.

These days that’s very often done virtually: we catch up on the news by going online, we catch up with friends through social networks, we download a book to read on a Kindle.

The hotel business hasn’t quite made that imaginative leap yet (of course there are some honourable exceptions), and old-fashioned businesses tend to follow industry norms, so if most hotels charge for Internet access, then, well, most hotels charge for Internet access. Groupthink, see.

Plus of course hotels used to make very tidy sums of money by charging exorbitant rates for phone calls, especially international calls, but that lucrative little sideline has been killed off by mobile phones and by applications such as Skype. In the hotel business, it makes sense to recover some of those lost revenues by charging for Internet access.

But let’s for a moment imagine that Internet access is an essential service, like say, water, or light or heat.

Can you imagine a 5-star hotel imposing a surcharge if you switched on the air-conditioning? Would they require you to feed coins into a meter to keep the lights on, or to get hot water from the shower? That’s what happens in a $5 campsite – you must pay extra for a hot shower – but in a $500 hotel room? Of course not, it’s unthinkable.

And the crazy thing is that it absolutely must cost the hotel more to deliver hot water to your shower, or to run the air-conditioning all night, than it does to provide an Internet service, even via wifi which has to be distributed throughout a large building.

And yet they get away with it. Why? Because they can, because it’s just accepted as normal practice in the industry even though a rational analysis shows that it’s barmy.

But most of all they get away with it because too many of us are too lazy to vote with our feet and to go elsewhere. We’re lazy, and we’re tied into corporate loyalty schemes, and we can’t be bothered to complain except by ranting about it after the fact – perhaps in a Blog.

I started out by calling it market failure. But it’s just as much about customer failure – it’s partly our fault, and we should demand better.

PS – In the end I did complain, not just in a Blog but at Reception as I checked out. But my issue wasn’t that it cost $10. I got my $10 back because the wifi reception was so poor, and I went across the street to spend my hard won dollar bills on Gregory’s most excellent coffee (with excellent free wifi).

<< Back to the Diamondthrills Blogroll

This one weighs a very impressive 553 carats in the rough, and it’s a beautifully white (i.e. colourless), described by Gem Diamonds in a press release as D colour (although we’ll all have to wait and see how the polished turns out before it’s officially certified as ‘top colour’).

The diamond diggers proudly, and quite rightly, describe the diamond as ‘exceptional’, ranking it as the 15th largest white diamond ever to be recovered.

It is the fourth historic diamond recovered from the Letšeng Mine in recent years, following the recovery of the 603 carat Lesotho Promise, the 493 carat Letšeng Legacy and the 478 carat Light of Letšeng.

They have just announced that they’re calling this one the Letšeng Star, pictured below next to a perfectly formed but rather overwhelmed yellow rough diamond.

Late last year Gem Diamonds sold a couple of large white rough diamonds for almost $60,000 per carat. A similar per carat valuation for this stone would bring in a very tidy $33 million.

<< Back to the Diamondthrills Blogroll

The collection of almost 300 pieces, many of them gifts from Richard Burton, is up for auction at Christie’s in New York in December, and can be viewed in their London showrooms later this month.

Among the highlights is the Krupp diamond (latterly known as the Elizabeth Taylor diamond), a 33.19 carat Asscher cut stone. It cost Burton less than half a million dollars in 1968, but it’s likely to sell for at least $2m in December, and could fetch twice that.

The whole collection is likely to sell for at least $30 million.

Take a look…

<< Back to the Diamondthrills Blogroll

The street is packed with diamond and jewellery shops, but I found it to be a profoundly depressing place. It does our beautiful product no justice whatsoever.

West 47th Street: Pile 'em high!

Diamond jewellery is piled up high with all the sophistication of apples being hawked from a market stall, and merchandised with all the romance of a 99 cent store.

Aren’t diamonds meant to be rare and precious miracles of nature? Here, they seem about as rare and precious as hens’ eggs.

There was almost no acknowledgement of the reasons why people buy diamond jewellery – the motivation that comes from a special occasion or the season.

There was no attempt to be seen to be selective or discriminating in any way, to ‘curate’ pieces into themed collections.

There was just the most basic acknowledgement of function: rings for fingers, pendants for necks, bracelets for wrists. That’s it.

I believe that part of the art of retail is to be selective, to put some thought into product pre-selection for the customer.

This is especially true with fine diamond jewellery, because (a) it’s something people buy very infrequently – perhaps just once in a lifetime – and too much choice is bewildering in unfamiliar product sectors; (b) it’s very expensive, so holding masses of stock doesn’t seem to make much sense for the jeweller; and (c) there isn’t much space available in a congested, expensive place like central Manhattan, so limited space should be used wisely, not with the wanton abandon of an out-of-town supermarket.

But there’s something worse: trust, or rather, lack of it. As I walked down West 47th Street I was assaulted from all sides by pushy salesmen and by people beseeching me to sell them my unwanted gold or jewellery.

Some of the behaviour reminded me of rather unsavoury ‘street businesses’; I felt like I was among pushers and pimps, or perhaps ticket touts/scalpers.

Now that sounds terrible and I hate saying it about this business, but I was actually looking to buy something so I was a genuine customer, and if I got that impression then I’m sure that other visitors will have the same reaction.

It doesn’t have to be this way. I happily turned my back on 47th Street and walked up Fifth Avenue, surrounded by fabulous emporia of fashion and, in some cases, fine jewellery (I checked out Cartier, Tiffany & Co., and De Beers).

Why is the jewellery business of 47th Street stuck in what appears to be the 19th century (actually, in some ways, several centuries earlier)?

Some industry people will say that it’s because they don’t have the margins to invest in fancy marketing and retail space. But you don’t need to invest anything to clear out the clutter – on the contrary it can release cash which is tied up in inventory. Lots of independent retailers create a really nice environment without spending a fortune – it can be done with little more than an ounce of imagination.

I think it’s more profound than that. It’s a trading/dealing mindset, the inability to sell on anything but price. It’s so primitive that it belongs to a time when sales and marketing meant the same thing.

Others say that it’s because of fragmentation – too many small businesses – which in turn is a symptom of an industry of family-run businesses which has never been rationalised by merger and acquisition.

Well, maybe, but I think there’s something else: the diamond business as seen in 47th Street (and to some extent in Hatton Garden in my own fair city of London) has blurred the line between B2B (business-to-business) and B2C (business-to-consumer).

It seemed to me that many of the buyers in 47th Street were not retail consumers at all; they were other diamond/jewellery people, i.e. traders, looking for something on which they could turn a profit.

Nothing wrong with that – all industries have B2B marketplaces – but perhaps the mistake in 47th Street is that the curtain is pulled back so that the wider public gets a glimpse of distinctly unromantic B2B trading behaviour which does nothing for the ‘myth & magic’ of diamonds.

Whatever the reason, it’s sad to see. I can’t imagine that it’s a pleasure to go shopping for diamond jewellery in the West 47th Street bazaar. In the end Tiffany won my business.

As I made my way further up Fifth Avenue the retail landscape improved, and at the corner of Central Park it reached its zenith: the Apple ‘Cube’ store. Now that’s retail.

<< Back to the Diamondthrills Blogroll

There’s a website called Verichannel which styles itself as ‘The Jewelry Industry Search Engine’. It’s a B2B diamond trade/industry thing, but unlike regular search engines, you have to pay to access its services.

Anyway, one of their services is listing diamonds which have just been graded by major gemological laboratories including GIA, IGI, AGS and HRD. It describes these gems as “Fresh Diamonds“.

That sets up a fabulous contradiction – well, it does for me.

Diamonds are arguably the least fresh thing on the planet.

They have been around for a minimum of 990 million years and possibly up to 4.25 billion years (according to De Beers). On average diamonds are likely to be something like 3 billion years old – around two-thirds the age of the planet.

Diamonds are older than almost all life on Earth and older than the surface materials from which they are now ‘liberated’ by mining companies.

A diamond is not just the oldest thing you will ever own, it is the oldest thing which you will ever touch or even see (OK, apart from the sun and other stars).

So, not very ‘fresh’ then?

Of course, Verichannel aren’t referring to the primitive ancient history of diamonds. For them and for most diamond industry professionals, life begins with certification of the polished gem: that’s when the diamond’s attributes, its ‘4Cs‘, become defined by an independent third party. It’s these attributes which determine a diamond’s all-important value.

Despite the unmatched geological age of diamonds and the extensive stock which already exists in the trade, there’s still something important – for the industry – about the ‘freshness’ of diamonds.

When we see a diamond accompanied by a certificate which is a year or two old (they’re dated) we can’t help wondering, “What’s wrong with it? How come it hasn’t sold until now?” Many diamantaires will send an ‘old’ diamond back to the Lab just to get an updated (literally) certificate. They might not always get the same result, but that’s another story…

And of course diamonds are relatively scarce, especially in top colours and clarities and in larger sizes, so there is some advantage to be had by being first to sift through polished diamonds coming off the production line, as it were. That’s the advantage which Verichannel provides and explains its apparent success and rapid growth within the trade.

Perhaps consumers would also like to think that they are getting a crisp, new, ‘fresh’ diamond, but I’m not sure that they are quite so bothered.

‘A Diamond is Forever’ is a forward-looking statement linked to the idea that love is timeless – it will last forever – but it also carries the implication that a diamond has been around forever: it has a timeless past as well as future.

I think that flirting with the idea of diamond ‘freshness’ is risky. It undermines the core message of A Diamond is Forever, and promotes the idea that last week’s diamond is somehow better than last month’s or last year’s.

Oh, and one more thing. There is a much truer sense in which a diamond can be described as fresh: it could be a synthetic/lab-grown/cultured stone, which really might have been created last week. Such a ‘diamond’ comes without 50% of that A Diamond is Forever story: the past.

When I hear ‘fresh diamonds‘, that’s what I think about: synthetics. As if they weren’t a big enough challenge already…

<< Back to the Diamondthrills Blogroll

Diamondthrills has been roughing it for the last three months.

Yup, we’ve been moonlighting on the elemental dark side of diamonds: the world of rough, or uncut, diamonds.

Let me explain.

The primary business of Diamondthrills is hiring out diamond jewellery for weddings and other special occasions here in the UK.

But that doesn’t mean that we can’t play away once in a while and we (well, I) took the opportunity to accept a consultancy assignment over the last three months which has kept me very busy and in India for about a month. Hence my blog-silence since April.

So what’s the deal with rough diamonds? Well, they are mined and sold by a handful of major diamond producers plus quite a lot of smaller ‘junior’ mining companies.

Leading diamond producers include De Beers Group, Alrosa, Rio Tinto, BHP Billiton, Harry Winston, Petra Diamonds, and Gem Diamonds.

Each of these companies has their own way of selling rough diamonds into the market, and the total value of all rough diamond production in 2010 was probably around $12 billion. De Beers continues to be the biggest player, selling around 40% to 45% of the total.

My role over the last three months was to advise a number of ‘diamantaires’ – the businesses which buy rough diamonds from these producers and others – on how to make their application to De Beers (actually a London-based subsidiary of De Beers Group called the Diamond Trading Company, or DTC) for a three-year contract as buyers of their rough diamonds.

That’s right: De Beers gets to choose its customers. To be fair, the same sort of thing applies to other diamond sellers – they select their clients – and this is because diamonds are a natural resource for which demand generally exceeds supply; if you don’t have enough of something to sell to everyone who wants to buy, then you have to make choices about to whom to sell.

That’s a nice problem to have.

There are two main ways of making these choices. One way is to make an assessment of applicants and to judge their worthiness as customers: “this one is better than that one so he gets the diamonds“. The other way is to use price as arbiter: “he who pays the most gets the diamonds“.

De Beers/DTC adopts the first method: they ask applicants for lots of information about their business, then they get into a huddle to make a comparative assessment of all applicants in order to create a list of clients for 2012-2015, together with a sales plan outlining dozens of categories of rough diamonds and the value allocated to each client per annum.

Applicants compete for specific types of diamonds, so if Applicant A asks for large white ones and Applicant B asks for small brown ones, then they’re not really competing against each other but against other applicants who asked for the same category.

The final outcome will depend upon how much of each category De Beers expects to have available to sell, almost all of which is still buried in the ground where it has lain quietly bothering nobody for couple of billion years, so they have to predict what they will dig up over the next three years. De Beers has had over 120 years of practice so they’re quite good at that.

Still with me? Good. If all this applying and assessing and predicting sounds complex and demanding then, well, it is.

But when you think about the size of the prize it doesn’t seem so unreasonable. De Beers/DTC is likely to sell around $18-$20 billion of rough diamonds between 2012 and 2015 (at current sales volumes and allowing for some price inflation).

They currently list 107 clients in London, Botswana, Namibia, South Africa, and Canada, but that includes some double-accounting because most of the local clients in places like Botswana are actually part of one of the ‘international’ diamond businesses based in India, Belgium, Israel, New York, etc.

Let’s use 100 as a nice round number of clients, so the average client might buy $200 million of rough diamonds from De Beers/DTC over the three year period.

How much effort should go into winning $200 million of (almost always profitable) business? Well, if you had a team of five people working flat-out for three months, including travel etc, to make the application, then the total cost might be $100,000 to $200,000.

Is it worth investing $200,000 (that’s just 0.1%) to secure $200 million of profitable rough diamond supply over three years? In the diamond business, where securing reliable and consistent raw material supply is of paramount importance: yes, it is.

And in any other industry (construction, say) it would be normal practice to invest quite a lot of time, effort & money in preparing a bid to win a $200 million contract.

Of course the other model is to just sell on price. No need for all these complex & intrusive assessment systems (which may not always lead to the ‘right’ outcome), just sell the diamonds to the highest bidder in an auction or tender. A tender is usually confidential and may involve considerations other than price, whereas an auction has a degree of transparency of prices being bid.

Auctions in particular have been recently finding favour, and diamond producers – large and small – have been developing online auction sales models for a few years now. Even De Beers is getting involved, selling a part of its production (up to 10%) by auction through its Diamdel subsidiary.

The alleged downside of auction/tender sales models is that they can be volatile, both in terms of pricing and volume.

Diamond miners like to have a plan which is built upon reliable revenue forecasts (especially true in a country like Botswana where so much of the national economy is dependent upon diamond revenues), and diamond buyers/manufacturers also like the certainty of knowing that they have supply secured for months or years into the future, enabling them to invest in their business and to cultivate client relationships with jewellery manufacturers or retailers.

Auctions and tenders introduce more uncertainty, and can lead to an increase in damaging speculative behaviour where the price of diamonds shoots up in the expectation that the price of diamonds is going to, er, shoot up. This market froth has little to do with underlying consumer demand and can lead to the instability of a market bubble: there are some signs that a rough diamond bubble has been inflating for most of 2011.

Conversely, in a poor market such as the one we saw in late 2008 and into 2009 when the post-Lehman financial crisis hit the diamond business hard, if you relied upon auctions or tenders to sell your diamonds then you probably had no buyers turn up, or you had to sell at rock-bottom prices (but then the major Producers selling in the traditional ‘planned’ way also struggled to sell anything during that period).

So, that’s a bit about how the rough diamond market works. My role has been to help a number of major Indian diamantaires make their application to De Beers/DTC for rough diamond supply from 2012-2015, working towards the immovable deadline of 7th July – i.e. last week.

De Beers will now do its thing, handing down its solemn judgement to all its eager applicants in December. Whatever happens, I don’t expect that we’ll all be doing the same thing in three years’ time; I have a feeling that we will be playing by rather different rules by then.

As for the ‘selective distribution’ of planned rough diamond sales versus auction/tender models, well, perhaps there’s another way. Actually, I have a rather cunning idea, a radically different way to sell rough diamonds, but I’m keeping that under wraps for now…

It’s good to be back.

<< Back to the Diamondthrills Blogroll

When we cooked up the idea of Diamondthrills a couple of years ago, that problem made our brains ache.

Our business model involves handing over thousands of pounds worth of diamond jewellery – items that are rather less traceable than a hire car, for example – to people who we don’t know, people who (in most cases) we never even get to meet face-to-face.

We solved the problem in a fairly conventional way by talking to insurance experts and by turning to established credit & identity checking agencies. We obtained a licence from Experian and we use that licence to check out customers’ identities (we ask for basic personal information: name, date of birth, address).

So far so dull: we’re behaving like a bank or a mobile phone company, asking our customers some mildly intrusive questions and running some bureaucratic checks.

Sometimes we add to the paperwork by asking for copies of passports, driving licenses, or household bills, just as banks and mobile phone companies do.

Luckily our customers don’t seem to mind too much; they accept the need for some checks, and I even remember one bride telling me that she would be worried if we weren’t asking for this sort of information.

Anyway, I’ve been spurred into blogging about this by a fascinating piece that I read this week on Emergent by Design – The Bank of Facebook: Currency, Identity, Reputation.

The piece makes a bold proposal, that identity is a currency, and that Facebook will evolve to become a ‘utility for identity‘.

Facebook users create a ‘virtual vapour trail’ about themselves online, made up of comments, photos, videos, information about their status, interests, holidays, careers, etc.

Much of this information is sensitive and personal, and in its own way it can create and confirm a person’s identity.

Just as credit & identity checking agencies use banks, mortgage lenders, credit card companies, electoral rolls, and court records to help their clients make decisions, so companies (and government agencies?) might in the future use Facebook profiles to help them to flesh out profiles of customers or applicants for credit (oh, and applicants for jobs).

Take a simple example: you apply for car insurance but your Facebook profile includes video of you hod-rodding up & down a desert road, or you regularly lament the fact that you’re accident prone and you’re always crashing into things with your car. Might the insurance company not factor your Facebook exploits into their calculation of your premium? I would.

As I read the article I realised that we’re actually doing this already. When we carry out an identity check on a potential customer we normally also perform a broad Internet search, and sometimes we find out things about customers that help us to make decisions about whether or not to lend them our precious diamonds.

These things can be positive (for example publicly available information about the job that a customer does, such as working for a prestigious law firm in the City), or perhaps negative (for example, we once found that a potential customer had been in trouble with the police and it was reported in the local press).

At Diamondthrills we do use Facebook (we have a Facebook page), and perhaps we’ll start routinely to ask customers whether they’re on Facebook. LinkedIn is also good for this purpose because it can confirm the professional background (or otherwise) of a customer.

Twitter’s less suitable because people often hide behind pseudonyms on Twitter, and it’s generally more anonymous and transitory – information is harder to find once the Twitter timeline has moved on.

The most amazing thing about all of this information is that it’s (more or less) publicly available. Identity & credit checking agencies need all sorts of special permissions and security in order to access data about us from banks and other institutions, but we can all search for a name on the web and most people are pretty cavalier about making their Facebook & LinkedIn profiles public.

We need to establish trust between companies and individuals. Mostly this means that individuals need to trust companies, so the marketing and PR people invest time and money in building trust through advertising, PR, and nowadays through social media.

But sometimes (including in our business) we need to establish trust the other way – we need to find out more about our customers in order to trust them with our expensive jewellery. Any business that offers credit of some sort has the same need.

We can do this in a conventional way, through Experian for example, but we can also do it in a very new way, through Facebook, LinkedIn, and through other information that’s available online.

Here’s our prediction: agencies will spring up that specialise in this exact thing (in fact, they probably already exist). There will be companies that can produce a report on someone’s identity and background purely based upon their ‘virtual vapour trail’ across the Internet.

Included in an individual’s ‘trust audit’ could be the personal recommendations and referrals that are now common on sites like eBay – a seller with 100 positive reviews will have a higher rating than one without any, or one with negative reviews.

Algorithms can be developed which rate us according to how many friends we have on Facebook, connections & recommendations on LinkedIn, followers on Twitter, how much influence we have according to our re-tweets (actually these things already exist: see Klout and PeerIndex).

This is powerful information about us which is just waiting to be harnessed in a more comprehensive and systematic way. Sure it’s not 100% accurate or reliable, and the system will be open to abuse and manipulation, but that’s a risk with any kind of information or system, and the wider the net is cast the more reliable it’s likely to be.

So, if you contact us asking about borrowing some of our jewellery, please don’t be surprised or offended if we ask you about your Facebook page or your LinkedIn profile, as well as your full name and address.

<< Back to Diamondthrills Blogroll

So three months into our experiment, how’s it going?

Well, we’re mobile and we’re surviving: we haven’t felt the need to rush out and replace the BMW 1-Series which we sold at the start of the year.

I’ve used Zipcar a few times, but they’ve unhelpfully removed our local Zipcars so they aren’t nearly as convenient as they were at first (they’re merging with their rival, Streetcar, so they’re ‘optimising’ the new combined fleet, which is nice, but less than helpful for the time being…).

In fact I tried to book a Zipcar over the weekend for a family trip up to North London, but our local Zipcar parking spaces are empty and forlorn, with a ‘To Rent’ sign hanging over them. We ended up getting two buses and a taxi, which cost about the same as a Zipcar would have cost for the afternoon.

We feel a little duped by Zipcar, like holiday home owners who’ve had their cheap flight withdrawn from the Ryanair schedule, but I’m hopeful that they’ll sort out their fleet with Streetcar and we’ll be Zipsters again soon.

We haven’t used Whipcar yet because none of their vehicles are quite close enough to us or large enough to accommodate two adults, one toddler, plus all the toddler’s stuff. But I believe Whipcar’s fleet is growing fast as new people sign up, so our choice should increase.

And we’re still finding new ways to get around without wheels in our garage: last week I finally got around to signing up for the Boris Bike hire scheme in London (or the Barclays Cycle Hire scheme, as it’s officially known) and in this dry sunny weather that’s been a great way to get around central London.

But here’s the key question: are we better off without wheels?

Absolutely, and here are a couple of charts to prove it.

First, our monthly spending on getting around, including cars, trains, Oyster cards, etc.

The chart shows 2011 vs 2010 for each month, January to March, and for 2010 the numbers include the actual depreciation of our BMW.

The high figure for January 2010 includes the major annual costs of insurance and road tax, but after January the monthly costs settled down a bit.

In 2011 we spent more than we expected to in March because we were house-sitting for some friends in Kent, so we spent a lot of time & money commuting back & forth on the train.

Conversely, 12 months ago we had just had Ella – our daughter born in early February 2010 – so we weren’t really going anywhere much and our spending was below average.

So how does that look cumulatively over the first quarter of the year? Here’s how:

By this time last year we had spent over £2,500 (including depreciation) on getting around, whereas this year that number is just £704 – a saving of around £1,800, or £600 per month.

And even if we strip out depreciation we’ve saved almost £1000 so far compared to our travel costs in 2010.

Looking ahead, we’ve got the Easter break coming up and I’ve already booked a hire car for the long weekend, plus as the summer kicks in we’re going to want to get out of town for weekends more often, so we’ll be busily juggling our transportation options in the months to come.

What’s all this got to do with diamonds?

Well, by trying a life without wheels we’re opting into something of a burgeoning movement – the idea that we don’t always need to buy things, to own things; the idea that we can share, hire, borrow, be more flexible and adaptive, less encumbered by possessions – especially expensive possessions: expensive to buy, expensive to insure.

It’s all sounds a bit hippy-trippy, eco-loony, but saving the planet is less of a motivation for us than saving money and space.

It’s accidental environmentalism.

We’ve freed up our parking space and our cash flow, and we get to pick & choose exactly what we need for different situations: a quick zip across town or to the supermarket is a different requirement to a week-long road trip, and we can choose a different vehicle for each circumstance. If the sun is shining we can even pick up a convertible!

You can call it rentalism or collaborative consumption or probably a few other things, but the point is that ownership is less important than access.

Diamonds? Well, we can share them too. You can pick and choose something sparkly for different occasions and just hand back the jewellery once the candles have been blown out and everyone’s gone home.

Let us worry about buying the expensive gems, about insurance and secure storage, about the fickleness of fashion.

Oh, and if you own some diamonds or other fine jewellery and you want to share it with others, earning a tidy little income in the process, then check out our innovative Jewellery Share scheme.

Meanwhile, I’m off to the office, riding a Boris Bike of course.

<< Back to Diamondthrills Blogroll

Photocredit in Blogroll page: onelowerlight.com