Beth Gerstein: Making a Profit with Ethically Sourced Diamonds
The cofounder of online jewelry retailer Brilliant Earth explains how she built her business.
Beth Gerstein, cofounder of online jewelry retailer Brilliant Earth. (Photo courtesy of Brilliant Earth)
Beth Gerstein started out as a biomedical/electrical engineer and satellite architect, and now spends her days selling the romance of sparkly baubles. She offers Earth-friendly, ethically sourced jewelry while running a profitable online business. Gerstein and her cofounder, Eric Grossberg, met as students at Stanford Graduate School of Business (later receiving their MBAs in 2003 and 2004, respectively) and launched Brilliant Earth in 2005. They bootstrapped the business, which has been profitable since its first year of operations, and now donate 5% of profits to improve African communities harmed by the diamond industry. She talks about refining your pitch until it resonates, making a difference even when you are small, and bootstrapping as a way to force you to focus on consumer feedback.
In 10 words or fewer, what is the big idea behind your business?
Transforming the jewelry industry by demonstrating transparency, responsibility, and compassion.
What is the best advice you’ve ever received?
I’m a very focused individual. I’m always thinking about how to get to the next level. Of course, when we reach the next level, I’m thinking about how to get to the level after that. My friends are always reminding me to recognize and appreciate what I’ve accomplished.
What was the most difficult lesson you have learned on the job?
Persevere when encountering unexpected adversity. It is always a challenge to keep perspective when hurdles appear.
Early on, we pegged all of our hopes to one diamond supplier. The company ended up being completely unreliable and went bankrupt. Without this supplier, we had no way of sourcing diamonds. We didn’t have any other relationships. I remember thinking, “This is it; we are done for.” There were times we considered giving up, but we got so much positive feedback from customers that we wanted to exhaust all possibilities.
Eventually, we figured out that we needed to change the pitch. We started out calling people and telling them we wanted to sell their diamonds online. They would just hang up. After some iteration, the pitch became, “We want to buy your diamonds.” After a few early sales, we could transition into a deeper relationship.
What advice would you give other entrepreneurs on how to build a great business?
Test early and test often. Start on a small scale, iterate, and course-correct. This is how we were able to bootstrap the company.
The first thing we started to do before almost anything else was to sell. We didn’t have a website. We worked out of my apartment. We asked friends what they were looking for, and then we would go find it. We wanted to understand what consumers wanted before spending a lot of money building the business.
The first thing we launched was a $5,000 splash page. It said we sold ethically sourced diamonds and recycled gold. We started advertising on a small scale and eventually got some responses. We slowly built our diamond inventory, then added search, then allowed people to pick their own settings, then built in e-commerce functionality. We didn’t spend a lot of money on an expensive website, then wait six months before our first sale. We got immediate feedback.
What inspires you, and how do you come up with your best ideas?
I am equally driven by customers who share their proposal stories and the nonprofit work we have done, such as building a community center in the Congo.
What is your greatest achievement?
Creating a successful social enterprise that has been consistently profitable. Even when we were incredibly small, we were able to create waves in the $60 billion U.S. diamond industry.
What do you consider your biggest failure?
It took me a long time to transition from my bootstrap mentality. As we have grown, I have been too focused on mitigating the downside. That can be a challenge when you reach a certain scale. I tend to be too conservative and try to be more aggressive in pursuing new opportunities.
What values are important to you in business?
Accountability. We believe at every level, people have to own their mistakes along with their successes.
Authenticity and integrity. Our mission is based on transparency, traceability, and responsible sourcing. We need to maintain that integrity all along the supply chain. We want consumers to be aware of the issues surrounding diamonds and gold and to care about the impact their purchases have on the world.
What impact would you like to have on the world?
I’m borrowing from Margaret Mead: “Never doubt that a thoughtful, committed group of citizens could change the world. Indeed, it’s the only thing that ever has.” We want to improve the livelihood of artisanal diamond miners and their families.
What was your first paying job?
I was “Miss Beth” at a day care center. I got paid $3 an hour to supervise 10 four-year-olds. It makes every job after it seem like a piece of cake.
You run a company with two CEOs. How do you achieve balance between the two leaders?
For us, being co-CEOs is not a challenge to overcome but more of a fallback. I have had two small children since starting this company in 2005. Taking off for maternity leave is a huge challenge for anyone, but it is a lot easier when you have a trusted business partner.
Finding balance has come naturally. We support each other and help each other gain perspective. We tend to agree on the vision of the company at a high level, and we have worked out a way to make decisions in each of our domains. The process was organic. We saw each other’s strengths, and it naturally fell into place. It helps that we are committed to doing what is right for the business versus focusing on our personal pride, ego, and goals.
What is the best business book you have read?
Thinking, Fast and Slow, by Daniel Kahneman. It is not a traditional business book. It describes how we make decisions and the heuristics that define the choices we make. It is equally applicable to consumers, employees, suppliers, or any human relationship.
What businessperson do you most admire?
Anita Roddick, founder of the Body Shop. She invented ethical consumerism and took a stand against animal testing. She was also very philanthropic and built a successful international brand. I’m sorry I never had a chance to meet her. She passed away a few years ago.
What is the most valuable thing you took away from your time at Stanford?
My business partner. I met him my second year. We were introduced by friends.
What do you think is the greatest innovation in the past decade?
The proliferation of networked devices, and the behavioral shift that has happened as a result.
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