HEADQUARTERS: Santa Clara, CA
YEAR FOUNDED: 2012
Unbeknown to most, scientists working in computer labs have been growing diamond shards for decades. But in 2013, solar entrepreneur R. Martin Roscheisen decided to apply the technology to a product far more glamorous--fine jewels. Diamond Foundry, a San Francisco-based company with $100 million in venture capital, has taken aim at the $13 billion diamond industry. With 100 employees split between its diamond lab in Silicon Valley and its design studio in downtown Los Angeles, the startup manufactured 10,000 carats' worth of diamonds last year, while doubling its revenue every quarter. Roscheisen explains how his company is cleaning up a dirty industry--while designing some very chic jewelry.
Recast your expertise
In 2010, I left Nanosolar, the solar company I'd started in 2002. Our technology was superb, but the Chinese beat us on pricing. We had amassed an incredible group of engineers, including Jeremy Scholz, who co-founded Diamond Foundry with me and is our CTO. We were looking for our next project. I have a PhD in engineering from Stanford, but my real passion is entrepreneurship. I'd been following the diamond-growing science for more than a decade. In 2012, I began to study the technological advancements being made for creating gemstone-size, jewelry-grade white diamonds. Those recent breakthroughs meant a diamond could be grown in a matter of weeks instead of years.
Diamonds made better business sense than solar panels, which cost as much to produce but are less profitable. We knew our engineers could build the plasma reactor necessary to implement the science to grow jewelry-grade diamonds. And we decided to focus on both diamonds and jewelry, because we wanted to create an integrated company whose product goes directly to the consumer. So we hired a leading diamond scientist, who had a 30-year career with a government lab, and paired him with our engineering team.
Perfect the product
We thought the technology would be the easy part, but it took three dozen engineers, three years, and tens of thousands of plasma-reactor design simulations to get it right. We invested tens of millions of dollars before we produced one diamond.
It was worth it. Our plasma reactor is our secret weapon. It produces a diamond like mined diamonds, made of the same crystal. Our technology is based on a variant of chemical vapor deposition, which builds the diamond lattice atom by atom in a reactor that creates a plasma akin to the outer core of the sun.
The reactor, composed of 350 parts, is based on tens of thousands of simulations. Each simulation took nearly a week to perform. The reactor is very complex, and being off by even the tiniest amount can lead to a meltdown.
Clean up a category
The diamond industry is dominated by very profitable houses like Cartier, the jeweler to the kings for centuries. We wanted to build a new Cartier for people who care about transparency.
More than half of the diamonds on the market today come from conflict regions, like the Congo and Sierra Leone. That reality hasn't changed that much since the movie Blood Diamond came out, in 2006. The film revealed a violent industry that uses both slave and child labor to mine and polish the diamonds. It also portrayed the devastating environmental impact that diamond mining has. As a result, people started thinking about the provenance of their diamonds and wanted to be assured that no one, or the earth, was getting hurt in the process of mining them.
Conflict-free diamonds are highly sought after, but it's difficult to prove where any mined diamonds come from, because they can go through two dozen owners between the mine and the consumer. So a diamond is mined somewhere in Africa and traded several times before it makes it to one of the exchanges. From there, it might get traded a few more times before it makes it to India for polishing. The polished stone gets sent back to the wholesale diamond exchanges, and by then that diamond is virtually untraceable.
Meanwhile, we can make a diamond in two to three weeks in our lab. We're creating a new market of buyers who would not buy a diamond unless it was genuinely ethical. Millennials are our main buyers. We're selling a product based on values, which is what they're attracted to.
Find your essential partner
Once we perfected the technology, we needed to start designing and selling jewelry, so we began collaborating with designers and sold those items on our website. But we quickly saw the advantage of an in-house jewelry-design team. We met Vanessa Stofenmacher in late 2016, and quickly acquired Vrai & Oro, her L.A.-based company. It was a fast-growing company with great traction on social media. She joined us and brought her team of 20.
We charge roughly the same for our diamonds as what mined diamonds cost. Diamond prices go up and down, and cost more or less depends on size, cut, and clarity. A 2.15-carat rose-cut diamond on our website costs $15,000, whereas a 1.2-carat round cut costs $3,300. We sell each batch as quickly as we make it.
Our goal is to grow bigger diamonds and offer them at slightly below-market prices. Our diamonds grow about a millimeter a month. Making a bigger diamond is hard--it might crack as it grows, and you need more material to start it and a larger reactor. Now we can grow a 15-carat diamond, compared with the three-carat we launched with.
Counter critics with customer experience
When consumers are skeptical, we tackle it through education. If you ask people abstractly whether they would buy a synthetic diamond, they tend to be disinclined. But that's like asking consumers in 1990 whether they would buy an electric car, at a time when the only electric cars in existence were golf carts. When people see our diamonds in a store and understand their cultivation, there is zero resistance. We lose virtually no customers once people are educated. Cultivated diamonds are simply a better product all around. It's like organic food--it's better.
A synthetic history
Diamond Foundry's high-tech process is poised to bring lab-grown diamonds to the masses--but it's hardly the first upstart to bet on manufacturing fine jewels.
1945: Lab-grown gemstones are born. Caltech grad Carroll F. Chatham's San Francisco-based Chatham Created Gems & Diamonds pioneered commercial-scale lab-grown gemstones--rubies, emeralds, and sapphires. Today, Chatham's son runs the company, which began manufacturing colored diamonds in the 1980s.
1990: Diamonds built for computing. Robert Linares, a Bell Labs PhD with expertise in crystal-growth technology, founded Boston-based Apollo Diamond, which grew diamonds--long coveted for their thermal conductivity--for industries like nanotechnology and computing.
1996: White diamonds get a manmade makeover. Retired Army brigadier general Carter Clarke founded Sarasota, Florida-based Gemesis using Russian technology to mass produce gem-grade diamonds. It took the company 15 years to manufacture its first white diamond--a process much more complex than producing the yellow diamonds it had previously been making.
2005: Synthetics start to shine on e-commerce. Entrepreneurs Beth Gerstein and Eric Grossberg opened San Francisco, California-based Brilliant Earth, an online retailer founded to sell "ethical" jewelry that today uses lab-grown diamonds and ethically sourced diamonds and gemstones. They claim to be the category's largest direct-to-consumer seller.
2015: DIY diamond ring. Two years after purchasing a lab-grown diamond engagement ring, husband-and- wife team Jason Payne and Lindsay Reinsmith opened Silicon Valley-based retailer Ada Diamonds, where customers can design their own synthetic diamond jewelry--up to 10 carats.