Matt Lauzon, Founder of Gemvara
If Matt Lauzon has his way, his online custom jewelry company will one day "take on Tiffany head-to-head." That may seem like a bold prediction, but consider that Gemvara, which is just more than a year old, had a $10 million run rate at the end of last year and, as of this spring, is venture capital funded to the tune of more than $25 million. The company allows consumers to customize jewelry by design, stone, and metal, and offers more than a billion styles from which to choose (including Kate Middleton-inspired earrings and a reasonable facsimile of Natalie Portman’s engagement ring). Lauzon carries no inventory; he sources his gemstones and diamonds from suppliers in the United States, then works with several manufacturers (also domestically) to produce the jewelry as it’s ordered.
Lauzon was a student at Babson College when he started his company, which was originally called Paragon Lake. Initially, he thought he'd build the company with a business-to-business model, partnering with jewelry retailers who would offer their customers the opportunity to customize jewelry using Lauzon's proprietary software loaded on an in-store computer. The idea won him $500,000 in seed capital from Highland Capital Partners. "In the past, jewelry was done in an inventory-centric way," says Lauzon. "We don't want to play that game. So we were asking the jewelers to make a huge paradigm shift."
The recession worked to his advantage: both retailers and manufacturers were hurting and were receptive to trying new strategies.
Ultimately, though, Lauzon decided that he wanted more control over both pricing and customer service, and decided that a direct-to-consumer model was best. With $5.8 million from Highland and Canaan Partners, he launched the Gemvara website in February of 2010. He also hired executives from Tiffany & Co. and Swarovski: people who were frequently mistaken for Lauzon, who is perpetually rumpled and in need of a shave. "By the third month, we were seeing six figures in revenue and our average sale was $1,000," says Lauzon. And, he notes, 20 percent of all customers send unsolicited Thank You e-mails or give testimonials.
With two more capital raises—another $5 million from Highland and Canaan at the end of last year, and a whopping $15 million in March from Balderton Capital, a European firm—Gemvara is on a steep growth trajectory that will take the company from 40 employees to more than 100 in the coming months. "The vast majority of the money is going toward additional functionality on the site," says Lauzon, "including the ability for customers to share and tell stories." He also hints at the possibility of partnerships with some recognizable brands down the line. "I think about us as Amazon early on," he says.
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.