Leibish and Rosi on their most recent trip to NY
I woke up Sunday morning in Tenafly, NJ, and found an Amazon delivery on my son’s door step. They operational speed and ability is stunning. Seeing Amazon’s recent balance sheets, it is clear that a large number of retailers are licking their wounds and looking for the best and quickest way to create an Internet business.
Buying and searching the Internet is not yet a habit of everyone, but it definitely has become a way of life. What many business owners are unaware of is that fact that the trip to a successful Internet business is not quite a honeymoon. I recall, roughly ten years ago, when a bank manager from UBS told me that Amazon will never make money. At that time, UBS stock was traded at $65 dollars a share. Today, it is only $16 dollars a share. At that time, Amazon stock was worth about $80 dollars a share. Today, that same share is priced at $1,590.
Obviously, both companies have burned billions of dollars on the road. One company managed to build themselves up while the other, unfortunately, destroyed their brand.
Most of the world doesn’t really understand the cost of building and maintaining a good website, especially when it comes to ecommerce. When I look at Google’s balance sheets, it makes me think how many millions we had spent with them over the past 20 years to keep Leibish in a leading position on the web.
One of our oldest clients is a West End jeweler with 20 stores around the world. He told me that the cost for him to open a new shop was about 10 million dollars. “You are lucky,” he said. “You made a very smart move to go online 20 years ago.” Now, especially since you guys are so big, it seems that the whole world is open to see your jewelry.
“The grass of the neighbor is always greener,” I told him.
But even with all the expenses and hardships of upkeeping our development, I am not complaining. I am happy to be an Internet brand. When it comes down to it, there is no such a thing as a free lunch.
The legendary founder of Alibaba, Jack Ma, said to the new recruits in his company in Hangzhou: “Today is brutal, tomorrow is more brutal, but the day after tomorrow is beautiful.” The part many are not aware of is how he continued. “The majority of people will die tomorrow night.”
The road to success is paved with a lot of dead bodies. The shopping habits of the customers have changed dramatically in 20 years. The nature of things is that once you buy a Leibish design diamond ring, you just won’t go out jewelry shopping again. The return customer rate by us is extremely high. Looking for groceries, books, jewelry, diamonds, or whatever it might be all flows along the same pattern.
Had you asked me a long time ago, I wouldn’t have believed myself that customers would order a $400k color diamond after only a short virtual presentation. The cost and hassle of running around are too high. Also, no brick and mortar shop can match the comfort of an Internet brand with nearly an endless inventory.
Facebook has approximately 2 billion regular daily users and Google is close to 3.5 billion queries each and every day. Just imagine the magnitude of that number. The habits of such a huge crowd can build or destroy entire industries. When Jerry Young made his initial investment in Alibaba, which turned out to be the most lucrative bet in Silicon Valley’s history, he didn’t imagine that one day Yahoo will be history. There was no way for him to know then that his holding in Alibaba would be the only value in the rubble.
Jerry spent one billion dollars of Yahoos money to buy 40% of Alibaba. I believe he knew it would be a great investment, but probably wasn’t aware it was the best investment Yahoo ever made.
Alibaba bought back half of it in 2012 for $7.1 billion dollars. Just two years later the stock was worth $30 billion. In 2016 Yahoos remaining investment in Alibaba was worth more than the whole Yahoo company itself. But, as in every game, the winner takes it all.
Google ate Yahoos market share similar to how Amazon is swallowing up most of the retail store’s business in America. But at the end of the day, everyone has keep plugging away in order to deliver.
The highlight of my most recent New York visit was an unplanned meeting with a customer and his wife. They had come to our showroom and asked to resize and clean their anniversary pink diamond ring, which they had purchased a year ago for just below $400k.
Fancy Intense Pink Radiant Diamond Ring (1.76Ct TW)
We cleaned, fixed up, and resized their ring free of charge. When the lady got her ring back freshly repolished and fixed up to perfection, she smiled so brightly at her husband. I could see right there that they were both experiencing the Anniversary feeling once again. I know that now, a matching pair of pink diamond earrings is on the way.
Leibish Polnauer, President and Founder of LEIBISH Fancy Color Diamonds