In some respects, the diamond industry has been stuck in the Stone Age. Specifically, while the rest of the world gets ready to plunge into Web3, the process of rough diamond sales has remained remarkably analog and resistant to tech-driven updates. Until Clara Diamond Solutions (Clara).
Clara: Technology and Diamond Sales Collide
Clara, founded by Ophir Stolov and Aaron Ariel, is a sales platform that launched in 2018 and pairs rough diamonds with specialty manufacturers based on the precise specifications of the stones they’re looking to yield. The company has partnered with Israel’s Sarine Technologies on exclusive scanning technology that scans rough diamonds on site at the mines and uploads them for potential customers to view virtually. Clara sales are held every two weeks and the platform specializes in diamonds that are between one and 15 carats.
“This is an industry that has remained unchanged for the better part of a hundred years,” says Eira Thomas, President and CEO of Lucara Diamond Corporation, the Canada-based diamond mining company which is leading the industry into the digital age with Clara.
Thomas uses Tiffany & Co. and its Lucida cut as an example; If Tiffany & Co. needs six Lucida shaped diamonds of a certain size, colour and quality, they place an order through Clara, which uses its proprietary algorithm to match the order with a rough diamond that will efficiently polish into exactly what Tiffany wants. This helps the manufacturer efficiently buy the diamonds they need, without buying anything they don’t.
Technology = Transparency
The platform is built on blockchain technology, enabling a completely transparent supply chain. That means that all diamonds sold on Clara are completely traceable, something that has been increasingly important in the diamond industry today. Lucara is a diamond mining company with a 100% interest in the producing Karowe Diamond Mine located in Botswana, but its Clara technology is available to all of its competitors interested in modernizing their supply chain and sales process.
The idea of creating an online marketplace for diamonds may seem like a no-brainer, especially when examining the traditional way of selling rough diamonds, which remains industry standard despite being prime for disruption. To summarize the way it’s always worked: Diamond mining companies, such as Lucara and DeBeers, recover rough diamonds and put them into “parcels,” or assortments of stones based on size, colour and quality. All rough diamonds are heterogeneous in nature—no two are alike. Specialty manufacturers, or those who cut and polish the diamonds into gems that go to jewellery makers or retailers all over the world, are invited to bid on parcels—with a caveat. “They can’t go in and say, ‘I want two of those and one of those,’” says Thomas. “They are offered a parcel, and it’s a take it or leave it scenario. And if you leave it, you might not be invited back.”
How Clara Works
Once the manufacturers get their parcel of rough diamonds, they assess each stone using magnification and detailed scans to discern what kind of polished diamonds it can yield. Inevitably, the parcel’s assortment includes many diamonds that don’t meet the manufacturer’s needs. They have a choice: cut and polish the surplus or sell them on the secondary market.
If this process doesn’t sound efficient, it’s because it’s not. So, why did it take so long for Clara to come along in the diamond industry? “There’s very little incentive for a large institutional player that has been profitable doing something one way for such a long period to say, ‘Okay, it’s time to innovate,’” says Aaron Ariel of Canadian diamond cutter HRA Group. “They have a ton of infrastructure in place that is facilitating the existing supply chain. They’re profitable doing it that way. To wake up one morning and say, ‘You know what? We’re going to scrap all of this and try a different way.’ There’s not enough incentive.”
In addition to being an executive at a diamond manufacturing company, Ariel is an engineer who began developing Clara’s software in 2015 along with his cousin Ophir Stolov. They had a unique perspective being in tech and diamonds. “We saw the opportunity because we were experiencing all the pain points,” says Ariel. They eventually sold Clara to Lucara and continue to manage the platform’s research and development today.
At first, there was some resistance to joining Clara from traditional players who were hesitant to break the status quo. But Covid and all its travel restrictions illuminated the platform’s value in connecting supply with demand online. “We went from 20 customers to now over 90 customers today,” says Thomas, and “we’ve transacted well over $50 million worth of diamonds.” Thomas says the platform is at an inflection point of gaining critical mass. It’s ramping up sales of natural diamonds beyond what Lucara is recovering with the idea of bringing the majority of the industry, regardless of competition, onto one shared platform, which will unlock long-term value for the entire natural diamond industry.