Can you start by telling us about House of Diamonds?
House of Diamonds is a leading natural-diamond and jewelry manufacturer. Our business model is from rough to polished. In Surat, we cut and polish rough diamonds, while in Mumbai, we assemble our natural-diamond jewelry. Almost all of the inventory comes to our New York or Hong Kong office, and from there, we help our customers through direct sales and/or memo. Our specialization lies in larger diamonds, particularly 2-carat-plus, GIA-certified diamonds in both round and fancy shapes, as well as diamond melee and jewelry. Our [GIA-certified diamond] prices are updated biweekly using our pricing algorithms. We are proud to say we serve customers in over 60 countries.
Who are those customers?
We sell to wholesalers and retailers. Our priority has always been helping retailers, but sometimes our prices are really good and other dealers will also buy from us.
How did you get involved in the business?
I went to Cornell University for my undergrad, and I wanted to explore a bunch of different careers. I gained tremendous experience through my time as founder and president of Cornell’s marketing organization. I also joined many finance and venture-capital clubs, but at the end of the day, I spent a few summers at our family business office in New York, and I believe that the family business was the best way for me to express my personal creativity and leadership skills. It’s a very fun profession. There’s a lot of interaction with amazing people, customers. You’ve got to see your family every day, and managing your own business is like growing your own baby. I’ve always been very growth-oriented, and I love to see things grow.
How did the pricing algorithm come about?
I started work on this in sophomore year of Cornell University, very early. In high school and every summer almost, I’d be working with the family business, and I started coming to the shows. [Later,] we had a team of artificial intelligence (AI) engineers and computer science engineers who spent around two, three years developing and refining this model using our 25 years of data and current-day data. It’s still a work in progress, but I do think it has helped us tremendously, especially in this downward-trending market. It’s helped us navigate the process much more smoothly.
How does it differ from what other diamond companies are using?
It’s very unique because it’s a big automation. Before, we would have to manually look at each diamond, so one person would have to keep analyzing its characteristics and see how the price is compared to the quality of the diamond. Now, we have an automation that helps us look at 3,500 diamonds every day, and it makes suggestions to us — whether we should lower or increase the price of something, depending on the market. It’s become a real game changer for us because it allows us to adjust very quickly. The past three years, I think there have been tremendous market changes, so it’s been extremely helpful for us.
Does the algorithm help you sell at lower prices than competitors?
Exactly. We want to be at the best market price every day, so we can promise that to our customers.
How has the diamond market been performing in the US?
At the right prices, US retail demand is still very much there. It’s very important to stay on top of your prices, adjust them constantly. Retailers are still buying, just at lower price points due to price pressures.
We have noticed that SI- and lower-clarity diamonds are outperforming VS and higher — why is that?
SIs are very affordable right now. In the high-interest-rate economy, consumers are very price-sensitive, and SI goods are beautiful to the naked eye and provide a very good size-to-value ratio for consumers. That’s the trend we’ve seen in the US, where consumers want big diamonds. The best way to get big diamonds that are also rare and natural is to go for SI-quality.
What are your thoughts on the market trends for natural versus lab-grown diamonds?
I do see a big shift back to natural diamonds. [Lab-grown diamonds have] reached the pinnacle, and now it’s slightly going down, but it’s going to go down dramatically as we go into 2025. I do not think natural-diamond dealers or retailers should be nervous at all, because if you look at economics and history, the future for lab-grown diamonds is not very bright. You can’t sell something that’s mass-produced as luxury. I feel bad for end consumers. They don’t know the real price of lab-grown diamonds. They don’t know the real cost of wholesale lab-grown diamonds, which I assume is $25 per carat, maybe even lower. At a recent show in Las Vegas, they were selling 5-carat-plus lab-grown diamonds for $99 a carat, and that was just what they were offering to sell it at — I’m sure you can negotiate with them, too. Soon [consumers] will find out, and the romanticism of natural diamonds will be the only thing that can stay in the market.
This interview was conducted in July 2024 and is an edited extract from episode 116 of The Rapaport Diamond Podcast, “The Diamond-Pricing Prodigy,” sponsored by the GIA. Listen to the full episode wherever you get your podcasts by subscribing to The Rapaport Diamond Podcast, or listen online at rapaport.com/podcasts.
Main image: House of Diamonds chief financial officer Ari Jain. (Ari Jain)
