Lessons - A 4th Generation Diamond Expert Reveals How the Industry Rips You Off | Olivia Landau - The Clear Cut CEO & Forbes 30 Under 30

In this lessons episode, explore the truth behind the growing debate between natural and lab-grown diamonds and what determines long-term value. Discover how natural and lab-grown diamonds are created, understand why resale value and scarcity play a critical role in pricing, and uncover how industry incentives and consumer misconceptions can shape purchasing decisions. You've been in this industry for a long time, so you're obviously very well aware of what's good value, what's good quality, what's real, what's not in terms of lab grown. But is there in this particular industry, because like in all luxury good industries, there's a certain amount of fraud. Is there a significant amount of fraud in this industry or is it not because of GIA and other sort of bodies like that? You know, I think there's a lot of ways that customers can get taken advantage of, but there have been a lot of elements in place to protect customers like GIA certificates. I think right now with the lab grown and natural, I think there's a lot more fraud going on because it's harder to detect the differences. so it can detect if there's any like mixing in like parcels of lab grown with natural. I think, you know, I've seen a lot of people trade in their natural diamonds for larger lab grown diamonds, which I believe in and of itself is fraud because that jeweler is taking something with value and giving them something bigger that's worth zero dollars and misleading the customer. So in terms of fraud, I think that's the most rampant thing that's happening. And it's, I think, you know, our responsibility as like anyone in the industry that if you're dealing with the consumer directly, like it's your responsibility to be honest and upfront. But unfortunately, that's not the case a lot of the time. So let's talk about lab grown. So maybe just give a brief explanation as to how they're actually made for people that don't understand and what they are. I am curious about why you feel that they're worthless, how they're priced. I'm curious about profit, like the points that you can make on a lab grown versus a natural. So let's just go into it. And this can be like a master class on, you know, candidly, why not? to buy a lab-grown diamond. So start off with how they're made, because I don't even know. So basically, natural diamonds are formed under the earth's surface near kimberlite pipes, kimberlite deposits, in very specific circumstances under high pressure, high temperature, over billions of years. it's kind of like a natural miracle that occurs. There are no new diamonds that are being formed. All diamonds, natural diamonds have already been formed. We're just extracting them. So most diamond mines will be depleted in the next 20 or 30 years. And some of the largest diamond mines, like the Argyle Mine in Australia and a very large mine in Canada, have already been depleted. So I think it is a misconception to think there are unlimited supplies of natural diamonds and they're not a rare and finite resource because they are and that's why they maintain value. Lab-grown diamonds mimic this natural formation process, but in a laboratory. There are two main ways of creating lab-grown diamonds. There's chemical vapor deposition, CBD, or high-pressure, high-temperature, HPHT. basically, you know, slight nuances and differences between how to make them. Most of them come with a carbon or diamond seed, and then it is built, the lab-grown diamond is built around that. And then basically most lab-grown diamonds are mass manufactured. Right now, most of them are being produced in China and in India. The rough, which is you know before the diamond is cut and polished obviously a rough natural diamond looks very very different than a rough lab-grown diamond lab-grown diamonds are kind of like in these cookie cutter sheets they're cut into these like perfect squares and then they're polished and cut um so obviously the inclusions um in lab-grown diamonds are going to be very different than natural diamonds because natural diamonds have um natural uh like organic inclusions that um you know You can't replicate. They're not trying to replicate those natural inclusions. But chemically, if you're going to go to the chemical level, yes, they are chemically the same thing in terms of carbon. Their growth structures are different. There are ways of telling the differences through machinery. But if you are looking at your friend's ring and you're not inspecting it, you're probably not going to be able to tell the difference. The main difference is their masks. Would you be able to? If I'm inspecting food, yes, but if I'm just looking at it, like, I probably couldn't tell the difference between a real Birkin bag and a fake Birkin bag if someone was wearing an old suit either. But the main difference is it's a mass manufactured product. There's unlimited supply. like they use an insane amount of greenhouse gases, especially methane. It's basically the fast fashion of diamonds. Once you purchase it, it is worth the zero. There is zero resale value. It's not like they're less value. They are completely worthless. And it's not going to help. Those diamonds aren't helping anyone. Whereas with the natural diamonds, like I've been to Botswana recently, I would say three times in the last 18 months. And that's one of the locations where most of our natural diamonds are mined from. And the fact that an entire country relies on a natural resource that they have, you know, have used to better their people and their economy. They were one of the poorest countries pre-1960s. After independence, they found their natural diamond deposits and have used that to become a Very wealthy nation. Every single person in the entire country goes to school for free anywhere in the country through graduate school. They have free health care. They have amazing infrastructure. And I think that us as Americans, and we are the largest consumers of diamonds in general, we're... We like to think of Africa as one place and it's bad and like their children dying in these mines. It's a highly technical operation and you need, you know, very skilled labor to extract the diamond. It's not like there are like children digging holes. So I think that, you know, we grew up with that narrative of blood diamond, but it's really actually doing action. actual Africans a disservice to blanket everyone together and just be like, well, I'm going to buy a lab grown because it's it's more ethical or more sustainable when in fact it's not at all. And I want to just sort of paint this picture because you are in this industry and you're in this business and you have this stance, but I want to make sure people understand that this stance is not biased. And what I mean by that is I know several of your competitors are probably very happy to just go with the market and to sell lab grown and to make money on it because you can make a good margin on lab grown and you can build a good business. So it's not like... oh, I started in natural and that's why I don't like lab grown. It's really, you have strong convictions for a reason. And you could, in theory, overnight, start selling lab grown under the clear cut and make money on it. And it could turn, right? You have the customer base, you have everybody set up. We have left millions and millions of dollars on the table. Like, The reason why we decided not to sell lab-grown when... I mean, it would have been the easy thing to do to just be like, yeah, we'll sell lab-grown. It's like, you can make so much more money on it because you have like 300% margins on lab-grown diamonds right now. Is that actually the case when that's how much money you can make on it? Yeah. Right now, so we were the first people to launch a free lab-grown travel ring to like show the value. I'm purchasing... lab-grown diamonds right now for about $100, $150 per carat from our travel ring. And these are... So a two-carat diamond would be, let's conservatively say, like $300. Whereas... some of my competitors are selling that exact same diamond, same quality for last year, like $15,000, maybe now like $5,000. So it's an insane margin. That's why like the misinformation is really being perpetuated by the industry. And a lot of people are like, you know what, I don't really care about, you know, my consumer, or like the long term, you know, value of my brand, I just want to make money now. So, you know, the reason why we decided not to sell Lab Grown is because when we first started, the whole goal was I will never recommend something to one of my customers that I wouldn't recommend to my best friend, or it was built on education. And that's something that... We felt very strongly that we still wanted to empower our customers and really give them the proper information to make the right types of purchases. So it didn't feel right to, you know, to sell lab grown, even though that is the easiest way to make money right now, for sure. Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.