I’m thrilled to announce that I’ve joined Jocalio as the Vice President of Digital Services. I’m just getting started and will share more of my own perspective soon. In the meantime, I wanted to repost this X thread from mid-2024 as to why my new boss, Val Katayev, entered the jewelry industry to help independent jewelers. It feels damn good to have a mission! Without further ado, here's Val...

One company dominates the fine jewelry category in the US. It does $8 BILLION in sales. 6 years ago I started a company to take on this juggernaut.

The company is Signet and it manages 2,800 locations with 30,000 employees across these stores they own:

The crazy part is that the "giant" of Signet only has 9.7% of US market share. And the next biggest jewelry company in the entire western hemisphere is tiny. In fact the next biggest sellers of jewelry are Walmart, Costco, Amazon, who are very distant players from the top (as far as jewelry sales are concerned). That's because Signet bought all the big ones.

So how did I end up in this industry? Here’s a bit of a backstory. After selling a couple of tech companies and taking a 3 year break, it was obvious to me that I need to build again. But I wanted to attack something completely out of my comfort zone. The first thing I did was select a criteria of things I'm looking for. The following were the elements I was filtering for:

The goal was to find an area where I can use my experience in tech, data and marketing. Then apply it effectively where scale was missing to afford top resources.

Some of the industries that I looked at were:

But the industry I was looking for was right under my nose the entire time.

When I came to the US at 11, I worked at a jewelry store weekends and summers until the age of 17. I’ve learned how to sell to customers and repair jewelry. At 15 I’d hold a blow torch and do repairs.

Inefficiencies were evident even back then. Customers would ask for battery changes, yet this jewelry store didn’t offer them. I convinced the owner to let me offer it. 

My investment was $150 for tools and batteries. This side business would generate $200 a month for me.

But it was super boring. We’d sit around and wait for customers to come in. There was no excitement.

As boring as it might be, jewelry is an $80 BILLION market in the US alone. Plus, it turns out the kind of independent jewelry store I worked at make up 2/3 of fine jewelry sales. And because about 50% of jewelry sales are bridal, it’s relatively non-cyclical.

Fast forward 20 years, this is exactly the group of businesses I wanted to help.So I decided to build a company that empowers independent jewelers. Jocalio was born.

We’d focus on building an infrastructure where they can join and we’d bring services that are only available to a major corporation. We want to be the HQ for the independent jewelry stores.

So how can we help these businesses when their marketing budgets are relatively small? While the average jeweler only spends 5% of their revenue on marketing, they spend 10x on inventory. And once you’re in the showcases with inventory, it’s a sticky long-term relationship.

The friction to change vendors is high, so it’s hard to get into jewelry stores but once you’re in, the revenue is recurring. Our business model was born. 

We’d offer various tech, marketing, platform and support services on one hand. Everything those stores need to succeed and thrive. To access those services, the stores would commit to make us their top vendor of product. 

Furthermore, we’d position ourselves as king makers. Rather than accepting multiple stores in any given market, we were looking for owners who want to grow. Our focus was to grow that store to be #1 in their territory. And if they are already #1, expand their market share.

This also allowed us to avoid any conflicts and owners to feel confident that we are working in their best interests. We’d come in and do a full integration with the store that involves many facets of their business.

At first everyone thought I was crazy for picking this industry. Some of the people in the jewelry industry itself were confused why we’d pick their industry to focus on. Frankly it felt like many were lacking excitement and felt beaten up by non-stop challenges.

We launched in 2017, but spent most of the year on researching and developing our strategies. Going to market with our offering was not easy, these retailers were so entrenched, and so used to the way they’ve done business for decades.

At first everybody would tell us there’s no way we’d get access to real-time sales data. Or access to see customer data. I was being told that I’m way over my head and the idea of having a headquarters that handles the services, the tech, and the marketing while also selling the inventory into the company cannot possibly work.

But the more time I spend in this industry the more I was seeing how much they could use our help. And it really just took two breakthroughs to get things off the ground revenue wise.

First one was a big time jewelry store, who was very successful with his own marketing, and was just interested in us producing their jewelry. He believed in our team’s ability to produce jewelry. While he was skeptical, he gave it a shot thanks to the team we’ve put together.

We became that store’s main white label producer. A store doing tens of millions of dollars out of a single location. Although that was great, it did not satisfy our vision, the vision was not about selling products. The vision was about helping stores through all the other services we offered so we still needed that full service client.

That client came along when a giant single store met us at a tradeshow. They believed in our story, and I think the owner was just excited about somebody from the outside trying to tackle all of the challenges that the industry was facing. They were the first fully integrated store with Jocalio. The team was young so they understood our process to open up all access to the data and allow us to do our work.

And the work we did.

What was insane is that we took over an event that they would run at the store. It was an event marketing wedding bands on a weekend and they’d do it twice a year. We looked through the numbers and found that the event would actually lose money. They spent about $50,000 just on marketing to generate $90,000 in gross sales.

But they continued to do it because the owner understood the importance of having a customer coming in and buying the wedding band. Wedding bands are important because it's the first jewelry purchase you make as a couple. Potential to cement a lifetime customer relationship with the store. So that was the first event we took over and quickly turned it into their most profitable event.

In fact, the first event generated $190,000 in revenue but what was even more amazing is that we were able to get the costs down to just $30,000. Making this event very profitable. And that same event would continue to keep going up and up and up over the years.

Thanks to this early success with Jocalio, the word got around the industry that there are some new guys doing some new things. So we got another batch of clients, and most were a big success as well. Several quickly grew from $2.5M, $3M, $6M to $5M, $6M, $11M in annual sales. And that resulted in more clients.

We did nearly no marketing. Stores were joining to lock in their territory before their competitors do. At one point we had a 6 month waiting list to join the Jocalio Collective as we call it.

And I realized we are making a big impact on these small family-owned businesses. One of our other first clients was a single store that was supporting three families. When we started with them, they were thinking about quitting it. The business was continually declining.

They went from $4.4M down to $2.7M revenue over the last few years with no signs of recovery. The owners saw Jocalio as the last chance to turn the business around. We took on the challenge because they had the growth mindset. They just didn’t know how to execute it.

After signing this client, within two years we turned their business around from going from $2.7M million all the way up to $4.5 million in the first two years. Today it's doing $6 MILLION and looking to expand across more locations!

Stories like these were not isolated, we’ve had multiple stores that doubled their revenue, and became #1 in their territory. My focus was then on how to keep improving. What are we offering to keep the Collective ahead of the curve? 

Because the $8 billion juggernaut is definitely not sleeping.

Signet’s new CEO has revamped the business and made it a lot more streamlined. Included a lot of digital initiatives, especially after Covid. They are aggressively going after our independent jewelers. In fact their annual shareholder report mentioned that collectively, independent jewelers were their biggest competition in every market.

All wasn't rosy however. This growth was coming at the same time as we dealt with some serious challenges. There were 4 unexpected challenges:

1 - Our first and main source of production was in China, which was hit with high tariffs in our 2nd year of business. So we started to diversify our production sources and chose Ukraine as our 2nd location to build a factory and processing center in.

And not just anywhere in Ukraine. We found jewelry talent and expertise in the city of Kharkiv which sits about 10 miles from the Russian border. Over the next two years we built it up to 33 people to manufacture and process our inventory. In 2021 we produced over 10,000 pairs of diamond studs alone at that facility. The people there were amazing to work with.

2 - The war of course stopped it all. We lost our factory.

3 - There was Covid, which shut down all of our retailers for several months, bringing our revenue source to a grinding halt. And while many larger companies turned to e-commerce, that was not an option for us because we were built to help retailers grow their foot traffic.

4 - And then there is today’s challenge, which is the growth of lab-grown diamonds, and that is throwing a whole new uncertainty and complexity into the mix.

Nevertheless, our business was growing, and after the lockdowns Covid actually helped as the stimulus money was getting spent on jewelry. In addition to that our business continued to thrive.

Our vision of uniting independent jewelers was coming to life. And it was timely because Signet started to make more acquisitions to take more market share from independent stores.

I broke a lot of my own rules when it came to running this business. For one, I got involved with physical product. Not only is it product, but we design, manufacture, and wholesale. And it’s very capital intensive to acquire materials, stock it, and distribute it. My counter argument to it was that it’s small, high value, and stores like an asset (gold and diamonds don’t perish).

The first thing you think is, why not just focus on the tech/marketing services side of the business? 3 reasons.

This also creates more efficiencies when a central point can manage supply (product) and demand (marketing) to work together. Similar to how Apple’s product was better because it married hardware and software. The logistics are hard, but they figured it out. 

Where is Jocalio today? Today the Jocalio Collective represents retailers with over $300M in sales. And over $1B when including clients that are not Collective. The Jocalio stack offers a number of services that are built specifically for this industry and include data-driven:

We also started to distribute other brands and designers into the Collective stores.

Our ultimate goal is to grow the Jocalio Collective to $10 billion strong and truly empower independent jewelers to thrive against the Goliath that is Signet.

It may take us 10 more years to get there, but one thing I’ve learned is that big goals help teams sustain long-term building. Big game-changing goals take time and I have the patience, the determination and some craziness to see them through.

I hope you've found this thread helpful. Follow me @ValKatayev for more. And Like/Repost if you learned something (I put a lot of time into it, so it would be appreciated if you share).

Most outside entrepreneurs look at the jewelry industry and attempt to disrupt it, usually unsuccessfully . Jocalio, on the other hand, is taking the exact opposite approach. Val and team are empowering existing independent jewelers to succeed through their digital presence, marketing and experiences. I could not be more excited to be a part of this mission. If you’d like to learn more, you can visit our website and contact us at Jocal.io. Or better yet, come check us out at CBG and Couture!