Steve and Ron Samuelson

400 Block of West Baltimore Street

Balti-West 400, LLC (David S. Brown and A & R Development
Corporation) has moved forward with a $5 million retail based redevelopment of the 400 block of West Baltimore Street. A new PNC Bank anchors the north side of the block at 426 West Baltimore Street (at North Paca Street). The south side of the block features Samuelson’s Diamonds, a family-owned jewelry store that started in business in 1922 on Pennsylvania Avenue (the business was moved downtown to the corner of Baltimore and Paca Streets – 426 West Baltimore Street – in 1972).

With the Hippodrome Theater anchoring the northeast side of our block, this promises to be one of the most exciting areas in Baltimore. We will keep you updated on the new tenants.

Please click here for the full BDC 2009 Annual Report.

Leviev 52.29 D Flawless Emerald Cut

DIAMOND IN THE ROUGH:
Lev Leviev

Leviev was then a 36-year-old Israeli who had been born in Tashkent, Uzbekistan, a Soviet republic lost in the middle of Asia and buried under a sclerotic communist bureaucracy. He immigrated to Israel in 1971. His family had little money, so young Lev dropped out of school at the age of 16 and went to work polishing diamonds. He went into the Israeli army two years later. Upon his release, Leviev set up his own diamond-polishing company ?- an unusual step for somebody so young and so inexperienced.

Becoming an independent businessman at that age was the first expression of a major part of Leviev’s character: his need to be independent. This risky entrepreneurial venture led, in time, to his position today. Lev Leviev is now a multi-billionaire, the second-wealthiest Israeli, a revolutionary in the diamond industry, and the major player on the Russian-Jewish religious and political scene.

Leviev is single-handedly taking on the great DeBeers diamond cartel that has dominated the diamond industry for generations -? and by almost anyone’s account, he’s actually gaining ground on them. Leviev has parlayed his riches into political power and charitable contributions, touching the lives of countless Jews. The Lubavitcher Rebbe blessed Leviev for success in the diamond business, and he asked him to use the resulting power and wealth to build Judaism. Leviev has done exactly that.

Diamonds have always been a Jewish business. One might even say that Jews created the industry. The first world diamond center was the Jewish quarter of 17th century Amsterdam. These Sfardi refugees from Spanish oppression established the cutting and polishing professions in Europe, and they used their former Spanish and Portuguese connections to import stones from the Portuguese colony of Goa on the coast of India. Before diamonds were found in South Africa, most diamonds arrived in Europe from India. Amsterdam was the first center to employ large numbers of workers who cut and polished; the merchants and importers were mainly Jews, and the workers they employed were mostly Jewish. These Jewish businessmen entered the elite of Dutch society, and their Jewish employees were among the first and the most militant to be unionized in The Netherlands, making a major contribution to early Dutch labor history.

Amsterdam is no longer the world diamond center it once was. That center is now a little less than two hours away by train in Antwerp, Belgium. The diamond business here is also heavily Jewish. Most of the dealers and workers are from the local Chassidic community, who live nearby and worship in the dozens of synagogues that dot the area. Most diamonds pass through this town at one stage or another on their path from the mine to the ring-finger of a bride.

Antwerp’s diamond community established the Israeli diamond industry, which has the second-biggest center of diamonds in the world, located in a complex of buildings in a Tel Aviv suburb. A young person can get a job polishing stones there; not many of them will work themselves as far up the ladder as Leviev has, but opportunities still exist for people who have luck and pluck. And not many of them have seen fit to do battle with the mighty DeBeers cartel. By doing so, Lev Leviev is attempting a revolution in the diamond world, a revolution so basic that few other industries have experienced the like in our time.

To understand what Leviev is doing, a closer examination of the remarkable DeBeers cartel is in order.

A little economics, please: The classic DeBeers system
The diamond industry has been dominated by the DeBeers cartel since it was founded in 1888. The family that established it and in whose possession it remains today, the Oppenheimers, were German Jews living in London in the 19th century. Most diamonds mined and sold during the last century have passed through the cartel’s hands.

DeBeers is having harder times than it has previously experienced, but no other cartel has been so successful for so many years. Even OPEC, the Organization of Petroleum Exporting Countries that so terrorized everybody and had such an effect on the world’s economy during the 1970’s, has fallen on very hard times and lost control of the market it once dominated. In contrast, DeBeers still manages to maintain substantial domination of the diamond world, if differently and to a lesser degree than previously. Experts have been predicting the diamond cartel’s demise for decades, but it is still here, and it is adapting to a changing environment.

In its classic form, the DeBeers cartel tries to control its industry in three basic ways: it dominates supply, determines prices, and it influences demand a brilliantly executed advertising campaign in recent history.

DeBeers manipulates the supply of diamonds entering the world market by signing contracts with diamond mines around the world to buy their diamonds. These agreements are long-term and exclusive ?- a mine dealing with DeBeers can sign with no other purchaser. These contracts are not for an unchanging quantity of diamonds, but rather for a specific fraction of the total number of diamonds DeBeers buys that year. The risk of a weak market in any given year is thus carried by the mines, rather than by DeBeers. The mining companies bear that burden, but they also enjoy the certainty that there will never be a year in which they sell not one diamond -? they have the limitations of a long-term contract, but they also have its security. Even more importantly for them, the mines need not compete with each other. Each side lives with the risks and the benefits of this arrangement.

In a rising market, DeBeers enjoys rising profits as it sells its appreciating stock, but in a falling market, the cartel is still obligated to purchase stones, and its stock depreciates. If the mutually advantageous character of this deal does not impress itself onto the minds of the mining companies, DeBeers can make its displeasure known by selling comparable stones from its own stock at low prices and busting that company. This has happened only a couple of times during the last couple of generations, for the same reason that the man with the only gun in his village need shoot only one villager to obtain the respect he claims.

DeBeers dominates the demand end of the market by selling diamonds in a ritualized and colorful ceremony that takes place every fifth Monday in its London offices. Big, established dealers with many years experience, called sight-holders, receive an elegant bag with a lovely ribbon around it containing a cardboard box. This box is called a “sight”. In this box are a millions of dollars worth of stones. Sight-holders are welcome to request certain kinds of stones. Since DeBeers has known and dealt with these people for years, it has a picture of what each prefers, but DeBeers wraps what it chooses in that lovely red ribbon, even as it decides how much the dealer will pay. The sight-holder is entitled to refuse his elegant bag, but he cannot choose to take only part of its contents, to bargain over its price, or to ask for substitutions. It is very uncommon for a sight-holder to refuse his sight.

A DeBeers sight-holder attains that dignity by the invitation of DeBeers. A dealer who receives such an invitation has arrived at the highest position a diamond-dealer can achieve. Among the most prominent sight-holders was Maurice Tempelsman, an Antwerp Jew who was Jacqueline Kennedy-Onassis’ live-in lover during her final years. DeBeers will not offer a permanent sight to a dealer who does not have large capital reserves, or whom the cartel does not think capable of selling its stones. The cartel will not deal with a dealer who has ever sold a stone that has been artificially altered in any way, who is known as a cheat, who buys “conflict diamonds” ?- stones collected in African war-zones — or who is in any way not completely “kosher”.

Advertising is the third weapon in DeBeers’ arsenal. It is perhaps the most interesting thing they have done, and among the most successful campaigns in the history of advertising. Individual jewelry shops, of course, advertise so that people will know that they exist and where to find them, but DeBeers advertised the diamond itself ?- a new concept.

In 1939, Harry Oppenheimer went to New York for a fateful meeting with the N.W. Ayers advertising agency. His aim was to transform large diamonds of quality from a bauble of the rich into a consumer good without which ordinary people could not live. Before the resulting campaign, wedding rings of women who were not wealthy usually had small stones of lesser quality. The ads featured glamorous actresses who wore rings and earrings that DeBeers eagerly gave them for free, hints of how a man might surprise his bride with an engagement ring, and above all, the message that diamonds have sex appeal and status.

These ads were aimed at women, who saw other women wearing diamonds, but they were aimed even more at the men who held the checkbooks that would pay for these stones, thus making themselves feel like conquering kings who gave diamonds to their queens. During a royal visit to South Africa in the late 1940’s, the Oppenheimer dynasty worshipfully presented a huge stone to Queen Elizabeth, the Consort of then King George VI — as publicly as possible.

The DeBeers slogan coined by N.W. Ayer, a diamond is forever, speaks volumes. The company’s ads show the true power of advertising. Like the great P.T. Barnum, they have turned a product that is relatively worthless into a much-needed necessity. In Japan, for example, it had not been customary to give diamond rings to brides, and marriages there were, and often still are, arranged by the families, so that Japanese men cannot be said to court their wives as men do in the west. DeBeers managed to make diamonds a necessity even under those circumstances.

Another DeBeers miracle happened in the 1960’s ? they contracted to buy Russian diamonds, but Russian diamonds tend to be small but of high quality. DeBeers had been urging people to buy rings with large stones, but the public developed a sudden taste for rings with several small stones in a row -? not coincidentally because DeBeers began telling everybody that small stones in a row were also glamorous.

Using these methods, DeBeers has smoothed out many decades’ worth of business cycles for the benefit of its sight-holders, smaller dealers, jewelry-store owners, and itself by managing its immense stock of diamonds in ways that OPEC could only dream of. Its astutely developed system suits itself to the conditions that are inherent to the diamond market, and that are not found in the oil market. The cartel is able to maintain its vast storage of stones, because storing them is infinitely cheaper than storing huge reserves of oil. DeBeers reserves are of every kind of diamond ?- all the sizes, qualities, colors, of gemstone, as well as the great variety of industrial diamonds that make up the sub-markets of the diamond market are represented in their well-hidden and carefully guarded vaults. The product they sell can be stored forever; unlike food, diamonds do not rot. DeBeers is thus capable of stabilizing what would otherwise be an extremely unstable business for the benefit of the people who work in it.

The DeBeers system might be viewed as dictatorial, but the industry accepts it because it stabilizes their business. The dealers might grumble, but the sight-holding system has its advantages for them as well. DeBeers is thus a dictatorship, but it is a benevolent dictatorship.

A diamond is forever, but is DeBeers?
Thus the DeBeers system has worked for a long time in its classical form. Today, however, DeBeers is tending to lose control of the market it created and nurtured for generations. The market is less controllable than it once was, and this fluidity is creating opportunities for new people like Lev Leviev.

In addition to sex, another message lies hidden in the foreverness of diamonds: “Don’t sell! Please, not that!” DeBeers markets its diamonds as heirlooms, and not as investments. During the late 1970’s, a number of companies in New York were trying to market stones for investment purposes, but DeBeers discouraged them from doing so. Sooner or later people sell their investments, but they do not sell their family’s precious rings. There is little market for second-hand stones; who wants a used wedding-ring anyway? It probably came on the market because its first owners got divorced. If ordinary people started selling diamonds, the market would crash immediately.

In addition, the Russians have huge numbers of stones in storage. During the chaotic Russian days of the mid-1990’s, the prospect of a Russian general escaping with a beer-barrel of these diamonds and selling them for what the market would bear caused no few sleepless nights in that market. There is little chance of a diamond-market meltdown now, but it could happen some day.

Another problem is that anti-monopoly regulators in Europe and America have concluded that the DeBeers monopoly is just that — a monopoly. They accuse DeBeers of acting in restraint of trade. The cartel operates its monopoly in various clever ways, by winks and by nods, without contracts whose paperwork could be subpoenaed, but the regulators and everybody else know what is going on. The company’s board of directors cannot travel to America, because they will be put on trial and face immense fines or even imprisonment. DeBeers must live with the threat that someday the authorities will succeed in finding the legal means to liquidate the cartel.

Lev Leviev had been a major player in the diamond market for some time, but his first act of business heroism came on the day he refused the box DeBeers had prepared for him as a sight-holder. While such an act had not been unheard of, Leviev raised many eyebrows. Leviev had prepared himself for his declaration of independence by developing other sources of diamonds ?- something impossible not many years ago.
?? Leviev is single-handedly taking on the great DeBeers diamond cartel that has dominated the diamond industry for generations — and by almost anyone’s account, he’s actually gaining ground on them …?

Leviev’s major coup was beating DeBeers for a contract with the government of Angola. Angola is a country that had been in a state of near-constant civil war since its independence from Portugal. For a variety of reasons, Angola is now calming down, after years of economic chaos and millions of deaths. Leviev signed with the new government to operate the big Angolan mine near Catosa, and more importantly, to buy the alluvial diamonds in that country; most Angolan diamonds are not underground in mines, but rather along the banks of rivers.

Leviev’s aim in Angola was independence from DeBeers. Leviev once said, in a remark that has become famous in the diamond industry, that you cannot be truly independent unless you own your own diamond-mine. Already prominent in the manufacturing part of the business, which means preparing the stones for market by cutting and polishing, he now had a huge, guaranteed supply of stones as well. Leviev’s gain was also Angola’s. Before it signed with him, the war-torn country hardly collected any taxes and had little budget to spend on reconstruction; within a year of the agreement, most of the Angolan government’s finances were derived from Lev Leviev. He also donated millions of dollars to build a hospital near his mine at Cartosa.

Leviev is integrating vertically within the diamond world, uniting his raw material to manufacturing the final product, but he is also expanding geographically, opening diamond factories in Moscow and other former Soviet cities. Leviev emphasizes the high-tech aspects of production. His companies hold patents on many advanced techniques for cutting stones with laser beams. One particular gadget his company developed helps sort the stones accurately and faster than had previously been possible. Sorting is a major professional problem while dealing with thousands of diamonds. This new technique enables him to sell to those who buy from him exactly what they want.

DeBeers used to control eighty percent of the diamond market. By definition, a monopoly must monopolize in order to be effective. In recent years, DeBeers’ share of the total market has fallen. Nobody has exact figures for this decline, but most analysts throw around figures of a fall from an eighty percent share to somewhat less than sixty percent. It is not easy to fix an exact percentage below which the cartel would lose control of the world it has dominated for so long, but there definitely is one, even if it has not yet been reached. At the moment, Leviev’s market share to is about twenty to thirty percent.

Leviev competes with DeBeers, but he does not want DeBeers to die. The diamond market must be stabilized in order for it to exist. If prices went down to a totally free-market level, they would become so cheap that nobody could afford to mine them or cut them. If there were no DeBeers, it would be necessary to invent a new one. Leviev benefits from his competitor as much as any other diamond man does. For example, DeBeers put so much investment into advertising, because, even though it was not a retail operation, it was the ultimate source of most diamonds. DeBeers is now reducing its advertising budget in accordance with its reduced market-share.

Leviev owns the biggest company in the world for selling cut and polished stones. His factories are in many countries. He, like DeBeers, sells rough stones as well to many buyers who then do their own polishing and cutting. His customers are therefore also his competitors, even as Leviev himself competes with DeBeers, the shadow of whose protected market allows him and all other diamond-people to exist. These inter-locking relationships between competitors and customers are one of the peculiarities of the diamond world.

The Oppenheimers and Leviev have both diversified away from diamonds. The Oppenheimers also own Anglo-American, a huge conglomerate that owns real estate all over the world, especially in South Africa. Leviev acquired Africa-Israel Investments in 1996. This company has an interesting history, going back to 1934, when South African Jews wanted to make investments in what was then the Palestine Mandate. In Leviev’s hands, the company has grown to include hotels, shopping malls, and many other businesses in Israel and elsewhere. Its big mall in Ramat Aviv has become a subject for great controversy, because Leviev does not want his mall to be open on the Sabbath, while Ronni Milo, the mayor of Tel Aviv, is aggressively pushing for it to be open seven days a week.

More than just business
The differences between Leviev and DeBeers are not simply in ways of doing business. Leveiv is a young man with great ambition. His competition with DeBeers is that of an energetic entrepreneur taking on an old, established giant. Leviev makes decisions on the go, while talking to his brother Moshe; DeBeers has committees, family members, and bureaucrats who hold meetings.

The Oppenheimer patriarchs were dignified elderly gentlemen who look like royalty. Lev Leviev is a short, fat man who makes no pretense to charisma. The noblest title to which he aspires is that of a pupil of the Lubavitcher Rebbe. The Oppenheimers were baptized into the Anglican Church long ago; Lev Leviev is a very religious man, a convinced follower of the Lubavitcher Rebbe and his movement. His businesses close on the Sabbath. Leviev’s faith permeates his every action.

Leviev has stretched his power into the political pool and is very connected in Russia and the former Soviet republics. He is, after all, a man who was born in the USSR, who speaks the language, and understands the culture and how to get along with people there. His familiarity with the ways of those countries gives him a great advantage over others for whom Russia is a mysterious and intimidating place. As a Russian emigrant who made good, Leviev also excites admiration among the many post-Communist Russians who would like to do the same. They listen when he talks.

At one time Lev Leviev was an advisor to Mikhail Gorbachev, back in the 1980’s, before Leviev became a billionaire. Today he counts Putin among his friends. As president of the Russian-Israeli Chamber of Commerce, Leviev is poised to encourage commerce between the two countries and to work for building Russian communal Jewish life. He once convinced the president of the Ukraine to give a building to the local Jewish community for a synagogue, during a meeting whose official purpose was economic.

Leviev is a Bukharan Jew, a descendent of the Jews of the old Kingdom of Bukhara in central Asia. This very ancient and fascinating Jewish community lived for centuries in relative isolation from both European and Sfardi Jewish communities. It was culturally autonomous, a bit like Leviev himself. Leviev is also president of the Bukharan Jewish Congress, an organization that represents Bukharan Jews, now scattered all over the world, from Queens to Israel to Russia.

That day in 1992, while the unassuming companion of the powerful, millionaire, and future billionaire stood quietly and unnoticed on the same line where others asked for a blessing to be able to pay their rent that month, Lev Leviev received the Lubavitcher Rebbe’s blessing for success in his endeavors. The Rebbe asked him only to use his expected success to help rebuild Russian Jewry.

To that end, he created a fund called Ohr Avner, named after his father, that buys, staffs, and operates Jewish schools in former Soviet countries. Leviev’s personal contribution to fund hovers around $15 million annually. These schools are generally, but not exclusively, Lubavitch in orientation. They also teach practical subjects that will help their students make a living some day, either in Russia or in Israel.

The Lubavitcher Rebbe would be proud. Leviev kept his end of the bargain.

Hope you learned and enjoyed this fascinating story.

Click here for the press release from National Jeweler.

Look forward to seeing you there!

I was asked to give my opinion on what guys should do when buying an engagement ring. The guy before me says to “Man Up” – I’m ok with that, we’ve said that around here as well. I put it a little more gently so take a look at about 5.09 minutes in and you ‘ll see! This video was shot at the Lieberfarb booth, one of our best bridal lines:

Pear Shape with Baguettes

We also pride ourselves in educating customers on how the jewelry buying process works, and how we have to buy diamonds from the public. We like to make everyone who comes in feel comfortable selling their diamonds, gold or fine jewelry to us and in some cases, it can even be liberating!

Here’s a testimonial we received last week that made us feel great and really summed up the vibe that we try to give customers when they’re in our store:

Dear Ron, David and Dad,

I just wanted to take a moment to thank you for treating me so kindly today. I appreciate your time and patience in providing information that was meaningful to me. This was a very difficult moment, however I felt relaxed through it all.  As I was leaving, I not only felt a sense of relief, but that I had also made a friend! I hope to visit “you guys” on a happier occasion!

Click here to read some other testimonials from our great customers!

Some highlights included being on a panel about Social Media in the jewelry industry that was featured in JCK Online:

JCK 2010

Ron Samuelson, of Samuelson Diamonds in Baltimore, said he’s seen a big spike in traffic as a result of his presence on social networks. “The other day I had two customers come in that I knew from Twitter and nowhere else,” he said. “I believe it’s helped me very much.”

It certainly has been useful for getting publicity. Samuelson notes that he’s been written up in the Wall Street Journal and Baltimore magazine.

“Every single reporter is on Twitter,” he said. “Before, you needed a PR agency to get press. Now all you need to do is hit an ‘at reply’ and you can get the attention of a New York Times reporter.”

The full article: JCK Las Vegas: Social Media Can Help Jewelers, Panel Agrees

I also spoke at the Couture Show that was featured in National Jeweler in this article: ABJ Panelists Help Solve Social Networking Issues

Then on Sunday I was interviewed by Engagement 101 magazine for a video that will be out in a few weeks. Here’s the writeup on the shoot:

Jewelry Fashion Week Roundup

And of course, we were buying (and selling) some great jewelry! Below is a stunning bridal set from Lieberfarb, a Michele Diamond Deco Watch and a BIG yellow cushion cut diamond ring. Come by and check them out!

To check out my Vegas blog post for some more personal stuff please click here: JCK Las Vegas

Technically, this isn’t social media, but it’s essential to have a hub on your website that you can quickly update on your own without the aid of a programmer. When it comes to search-engine rankings, Google loves fresh content, and a blog is an easy way to add keyword-rich new stuff to your site. Use your blog to reach out to your customers. Offer them resources to aid them in decision-making; share the expertise you and your staff have worked so hard to acquire. Schechter ­suggests checking out ­Verragio (verragio.com) and Samuelson’s Diamonds (baltimorediamonds.com)—two sites that do it right.

Samuelson’s is continuing its focus on being a leader in the jewelry industry in social media and cutting edge technology.

The original article, “Social Climbing”, can be found here. A special thanks to our friend Michael Schechter of Honora Pearls for writing this informative piece.

Some of the jewelry retailers that have embraced Facebook are realizing significant returns. Samuelson’s Diamonds, for example, a recognized leader in the movement, has not only posted a page under its specific company name but also operates a page under the title “Diamonds.” As I write this column, that latter page was being followed by 342,977 people. Imagine what that’s doing for Samuelson’s.

The original article is from the May 16th Edition of National Jeweler and is entitled “The Facebook Wave is Cresting” A pdf excerpt is available here.

Hello,

As of last night, we’ve removed the recently-added authentication requirement for setting custom landing tabs on Pages. The requirement was instituted as part of a Pages quality initiative, and we apologize for the inconvenience this caused to our developer and business community. We are re-investigating the situation, and will not make any further changes without first giving our community standard notice and lead-time.

Thanks for all your feedback,
Matt Trainer

---

Facebook Developer Network Team

Good sense prevails, I think.

(My original article follows below)

In what is no doubt a move to combat spam and scams, Facebook has done the following:

… Facebook recently made a change requiring that Pages be authenticated before enabling the ability to set a landing tab beyond Wall or Info. To be eligible for authentication, a Page must have greater than 10k fans or the Page admin must work with their ads account manager. …

This is potentially a good move, since it requires page owners to actually have a relationship with someone at Facebook (this is fine for small biz) whereas spammers and scammers in particular would shy away from any kind of relationship which could be used to trace their identity when their malfeasance is discovered.

But what is odd is the ambiguous language: ‘must work with their ads account manager.’ This implies that these page Admins must be paying ads customers – in other words, the little guy must put some skin in the game to prove he isn’t a crook.

Then again, presumably there is no required ‘minimum spend’ (Don’t see this anywhere) for being able to work with a manager to authenticate your page. While the attitude is typical of large bureaucratic organizations (guilty until proven innocent) when dealing with small players, the effect may be, in the long run, positive for small businesses and Facebook, provided that Facebook does not use this as a blatant opportunity to extract a toll from small or medium sized businesses.

Looked at in a different light, this could be more evidence that the switch to ‘like’ and the attendant changes were Facebook finally jumping the shark. I’m holding out hope that they retain their good sense.

This stunning wedding/anniversary band features five round brilliant cut diamonds. Always available in 14K white gold and platinum. Come by and take a look!