Tomshane

Introduction

We are super-excited to share with you one of our favorite interviews with the world famous Tom Shane, co-founder of Shane.Co, one of the largest jewelry retailer in the United States.
This was an exciting interview with Tom where we talk about whether gemstone certification is worth the money, value of synthetic diamonds, his morning routines, why your reputation is more important than money and much much more….
If you want to make an informed decision when purchasing diamonds and gemstones, then this interview is for you.
And if you haven’t already, download our ultra-powerful 12-step Diamond Buying Guide for FREE As always, let us know what you think about this interview.

Tomshane_Shaneco

Sampat Jewellers: You started your business at the age of 22! How fantastic is that. What advice would you give to a recent graduate interested in the fine jewelry business?

Tom: Whatever business one gets into, it has to be something they are really interested in. They have to be honest with themselves. When it comes to fine jewelry, you get into so many types of people that enjoy jewelry and it may or may not be valid business reasons. Some people enjoy designing, creating jewelry. Some view it as investment. Like putting your money there. The advice I give anyone is with any business you first have to identify what customers or people you think you are going after. You need to even go further and recognize that throughout the world people have problems. The reason for a business for a business to exist is to solve those problem. Who are the people and what problems they may have. Then to have a valid business, the business needs to be able to reach out to those people and to be able to communicate with them and to let them know that this business can help them solve these problems. A lot of times people don’t recognize it is a problem but they do have problems. The reason for the business to exist is to solve those problems. You have to identify what problems they are that people have and let them know that you have solutions to those problems. In the case of jewelry business, what are the problems that people might have. Are they concerned about getting a fair value, are they concerned about the quality, do they want unique styles they can’t find elsewhere. What problems do they have? It could be that in certain markets and certain segments of certain markets, people don’t have problem because there is already somebody in place that is very competently solving those problems. You need to find a location where people exist that have problems that they are not able to they are not able to get solved conveniently or you can offer a better solution to those problems. And that is not unique to jewelry, that’s for any business.

Sampat Jewelers  : When we last met at JCK 2015, your interest was in buying rubies and sapphires in Bangkok. From your experience, how can a retail buyer ensure their precious stone purchase is genuine?

Tom: Genuine is the easy part. If they are worried about it being genuine, they can send the stone to an independent lab to get a confirmation that is genuine. The real is issue is one of value. When I started in the jewelry business 40+ years ago, diamonds had this issue and people didn’t use labs. They technically existed. People didn’t use labs for traditional or normal stones. Unless you are a million dollar gemstone. Normal person on the street, they weren’t interested in certificates, they weren’t interested in labs. They went to a jeweler they trusted. The problem is that it was a very blind industry and there were huge differences in how different jewelers acquired their stones. Many jewelers weren’t knowledgeable and in their opinion didn’t need to be knowledgeable. So our strength was in really focusing on the market and learning the diamond business. Learning the diamond business not as gemologist but from a financial, business standpoint. Going to the source and really selecting the best stones and understanding the pricing and the market. Not that it was real precise back then because it was not, because it was not. And is still with the right sourcing done from the right people and the right type of people, the right type of goods. The goods that your customers want.  don’t get them more expensive, better quality than they want, don’t get them inferior quality than they want. And then presented in that light. As diamonds became commodities, the market become organized. As the market become more organized, pricing became more consistent. Personally this was a catastrophe to the industry. Most people viewed this as progress and I don’t. Today the consumer has a false belief, a false confidence that they can look online  and look at the certificate in person or online, and they don’t even need to look at the diamond. They look at the certificate. They feels that if it has a certain grade or certain demarcation, then they can compare one certificate to another certificate and it the same as comparing two diamonds to each other, which is not accurate. But that is how a consumer feels. Therefore the consumer does not feel they need to depend on the jeweler or the jeweler’s knowledge. They think they can make their own comparison and as a result they are more vulnerable to getting ripped off. To me it’s catastrophe. Having said that as the diamond market was becoming commoditized, I focused on rubies and sapphires because to this day there are no standards and to this day it requires the expertise of the people that are buying the stones. The stones we buy we ultimately cut and I’ve got my own cutters. We lose half the value  and they are not cut the same as diamonds. What I do still requires a skill set and knowledge of the world market in terms of price and that gives our stores a huge advantage over my competition. Because my competitors are smart enough to know they don’t know and they wind up getting killed. The business requires technical expertise and knowledge. 

Sampat Jewelers:  You’ve mentioned that the richest man in Bangkok isn’t the stone dealer but rather the owner of the local lab that sells $400 a certificate for a stone that doesn’t cost $200. So should consumers demand gemstone certificates?

Tom: If a consumer trusts a jeweler, they should rely upon the jeweler. I can’t imagine it being advisable for anyone to pay a huge increase in their cost to get a piece of paper as well as a stone. If I was a consumer and if I was going to buy a stone for $200 without a certificate or for $600 with a certificate; I would rather buy a $600 stone without a certificate. Get a much larger, much beautiful stone. I don’t believe in paying in certificates. To me it’s throwing away money. It does not help the consumer. They get don’t get a prettier stone, they don’t get a valuable stone. They get nothing. They get something that they put in their safe box and show their insurance company. It is worthless.

Sampat Jewellers: Like Shane.co, we are also a family business with strong values. Could you tell us more about your experience transitioning US business operations to your son Rordan?

Tom: Let me start by saying that we very much indeed a family business and have no interest in selling the company or going public. We want to remain family held. Having said that, Rordan, my son has worked besides me now for 7-8 years on a full time basis and also when he was a kid he also, so he had been exposed all his life. We share philosophically the same values – things like being open, being transparent, being honest,  bottom up management – not top-down. Every decision we make, what is best long term for our company. We don’t care about quarterly or annual earnings. We look long term. We want to build relationships with the customers. In many instances, our customer relationships are also multigenerational. And we want them to be our family jeweler and we want them to trust us. Those are the guidelines with which I think as a parent are what need to be taught to a child coming into the business. And working out the specific details whether it is with the IT department, HR, merchandising, manufacturing, whatever it is all secondary. You’ve got to have the basic philosophy. You’ve got to have the basic company culture and have it very clearly defined and understood by all. So there is never a conflict in what direction one of us will be trying to take the company and not the other. This also applies equally to our sr. management and many of the people have been with us for 10, 20 years and half a dozen have been with us for 30 years. We really focus on long term values. Rordan was brought up with that. With that foundation and he started out working out at the store, so he understands selling to a customer. Which means he understands what the customer’s perspective is. We try to help the customer and not to take advantage of the customer. We are looking at long terms solutions and long term relationships. It’s our values that Rordan learned over the years. Therefore preserving the values is relatively easy so long as you believe in them – which he does.

Sampat Jewellers: There is something magical about a stone from the earth vs. synthetic diamonds. We believe customers should only buy natural diamonds. What are your thoughts?

Tom: You have to consider first of all, what do you stand for and also what is important to your customer. What is the responsibility or the burden of a retailer…What is it that we are selling to the customer. We are selling them something that represents a personal thing, a relationship, something that has a sentiment to it. In our business we have always and only sold natural, from the earth. Whether it is a diamond, ruby, sapphire, or semi precious stone, it comes from the earth and it is natural. We’ve never sold that is man made, synthetic or out of a machine. When you go into the future you always have to be thinking are we forcing old fashion values onto customers that don’t care about that. When we talk about these synthetic diamonds, originally my thinking on that is that stores that sold ladies wigs don’t really compete with the hairdresser. When it comes to these synthetic stones, they are the biggest rip off in the world, they have no value, they cost nothing. The manufacturers of them are making a fortune by pricing at 30-40% of what the diamond would cost. The consumer thinks he is saving money but what he is really buying himself is worthless. He is throwing away his money. On the other hand, some people can’t about that. It is very hard to force our values upon the public. When you go back as far back as 1950’s, DeBeers working with General Electric on synthetic diamonds and they still own a company, to this day that produces synthetics. So where do you draw the line. If you are a retailer and if you are reaching to a particular customer, I don’t know if it is appropriate that we should force our values upon that customer. I am not sure going forward what is going to be happen. It will be a catastrophe to those that have spent our lives in the diamond business if basically we educate the public that there is no value in a genuine diamond and they might as well have a synthetic. It will destroy that business and put a lot of wonderful people out of business. However if a consumer does not care, is it our position to force our values upon them? It’s a fine line there that one is drawing. And I think we have to continue to monitor the future in terms of the values of the customers, of the younger customers that are coming in. To me, I’ve always tried to look at it and say well of course we need to be only selling natural diamonds. Is you love natural? Is your love not real? Don’t you want you want your symbol of love to be equally natural. A lot of people today, young kids will look at you with a blank look in the eyes and they are just as happy. To be they’ve got to go to the pinball machine and buy something for a dime. To me the synthetic diamond is a rip off because there is no intrinsic value yet it is outrageously priced. It’s a huge mark up to those that are selling it. It is an inducement to cause the jewelers to walk away from the diamonds or to add these synthetic stones where they can make 10 time mark up or something. To me they are just ripping the public off. To say that would be forcing our values to the public and that is not the job of the retailer and to me that is a very fine line.

Jewelry Quote

Sampat Jewellers: In your speech at the Indian Diamond and Colored Stone Association, I was humbled by how vulnerable you were on stage in front of several hundred people. You shared how you can’t take money to your grave with you; but you will be buried with your reputation. How and when did this realization occur to you?

Tom: Probably the first time I ever went to Antwerp when I was 22 years old and also the lessons that the diamond man that I was working with who my family had work with and was continuing to work with as well. I met him, when I started my own business at the age 22 and he was selling diamonds for my uncle and other people. To this day, he has passed away, but I am friendly with his son. It’s long term, multigenerational relationship and friendship. These are the lessons I learned: everything is done on a handshake, we have no written contracts, we have no lawyers. It’s worldwide. If you thrown out of one exchange, you are thrown out of life, you are kept out of the industry. Your reputation is your money. When you shake your hand, you’ve made a deal. Unless it is an honest mistake that one of the two of you’ve made – the buyer or the seller, you do what you say. People count on it. I just lived my life that way. It’s much easier.

Sampat Jewellers: What do the first 60-minutes of your morning look like? Do you have a morning routine?

Tom: It’s hard to define morning. Half the time I wake up at 2 or 3 or 4, check my emails from Bangkok, from Antwerp and Mumbai, just want to see what is going on in the world and the people I am in touch with. When I actually do get out of bed, which is 6-7. Three mornings of the week, I try to work out. I have a trainer come to my home for an hour, which is usually 7 in the morning. I spend half of my life in Bangkok and the States. I do the same thing over there and it does not change. I like to work out for an hour in the morning, maybe three days a week. Then I focus on my international business first, particularly if there are calls or something because of the differences in the time zone. Then I’ll have some breakfast and usually, I get into the office around 9:30 or 10. I don’t like to have early appointments in my office because I like to get my international stuff done, what I need to communicate with the people so it is less inconvenient to them, I do first thing the morning or late in the evening. I prefer to do in the morning. I have a normal day…usually leave the office at 6-7 o’clock. I have just very happy. We’ve got probably 900 or so employees in America and another 125 or more in Bangkok. There are 1000 people whose family are dependent on our company. I love what I am doing and I have fun with what I am doing. No interest in retiring. I am not working for the money. It’s that I enjoy what I am doing and take pride in the business model and in satisfying the customers. We are an important part of a lot of people’s lives and that’s rewarding.

Sampat Jewellers: Tom, where can people find out more about you and your work?

Tom: On our website we keep it current, www.shaneco.com

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