1 00:00:06,006 --> 00:00:09,843 I'm planning on proposing to my boyfriend, uh, shortly. 2 00:00:09,926 --> 00:00:13,722 The weeks leading up to that are, like, the most stressful, 3 00:00:13,805 --> 00:00:14,848 nerve-wracking. 4 00:00:14,931 --> 00:00:17,517 You know when you get to the point that you, like-- 5 00:00:17,600 --> 00:00:20,228 all you can hear is, like, badum, badum, badum. 6 00:00:20,311 --> 00:00:24,357 He got down on one knee, and pulled this box out of his pocket, 7 00:00:24,441 --> 00:00:26,651 -which I had no idea was there. -[both laugh] 8 00:00:26,735 --> 00:00:31,072 And he's like, "Well, I wanna be with you forever." 9 00:00:31,156 --> 00:00:34,951 And everything went black and disappeared, 10 00:00:35,035 --> 00:00:38,788 and I was in this space with him, and my knees were weak. 11 00:00:38,872 --> 00:00:41,541 [Cleo Abram] You probably know what they bought. 12 00:00:41,624 --> 00:00:44,919 Diamonds are the world's most popular gemstone. 13 00:00:45,003 --> 00:00:49,174 But if you compare them to other jewels, it's not obvious why. 14 00:00:49,257 --> 00:00:51,718 These are just as sparkly as a diamond. 15 00:00:51,801 --> 00:00:54,471 These look indistinguishable from diamonds. 16 00:00:54,554 --> 00:00:57,766 One of these is a man-made diamond. 17 00:00:57,849 --> 00:01:00,769 Scientists can now create diamonds in a lab 18 00:01:00,852 --> 00:01:04,522 that are structurally identical to diamonds mined from the earth. 19 00:01:04,606 --> 00:01:06,274 And yet, every year, 20 00:01:06,357 --> 00:01:09,486 people spend their savings to buy the real thing. 21 00:01:09,569 --> 00:01:13,073 It is the single most expensive thing that either one of us has purchased. 22 00:01:13,156 --> 00:01:17,786 It was the most beautiful and most significant thing ever to me. 23 00:01:17,869 --> 00:01:22,248 Somebody that can afford to give you nice diamond, no? It's nice. 24 00:01:22,332 --> 00:01:25,877 So what exactly makes these rocks so special? 25 00:01:25,960 --> 00:01:28,171 What is the value of a diamond? 26 00:01:29,089 --> 00:01:32,592 [woman] Diamonds, forged by nature and crafted by man. 27 00:01:32,675 --> 00:01:35,595 [man] It may be a cliché to say that this is "rich soil," 28 00:01:35,678 --> 00:01:37,680 but this time, it's literally true. 29 00:01:37,764 --> 00:01:39,766 It's beautiful. And he designed it. 30 00:01:40,016 --> 00:01:41,559 Make sure it stays on that finger. 31 00:01:41,684 --> 00:01:42,727 Of course. 32 00:01:42,811 --> 00:01:45,855 [man] It's not a purchase that's logical. It's supposed to be illogical. 33 00:01:45,939 --> 00:01:46,773 It's not rational. 34 00:01:46,856 --> 00:01:49,901 [woman] They just seem representative of these terrible things. 35 00:01:49,984 --> 00:01:51,694 It's like this waste of money, 36 00:01:51,778 --> 00:01:54,447 and we're only doing it to show other people. 37 00:01:54,531 --> 00:01:58,076 [man] What do people want? How much do they want it? 38 00:01:58,743 --> 00:02:00,578 What are they willing to pay for it? 39 00:02:05,875 --> 00:02:08,211 [Abram] We all live on a thin, solid crust 40 00:02:08,294 --> 00:02:11,005 above hot molten metal soup. 41 00:02:11,089 --> 00:02:14,467 That crust is typically less than 40 kilometers deep, 42 00:02:14,551 --> 00:02:16,553 just twice the length of Manhattan. 43 00:02:16,636 --> 00:02:20,473 Rubies, sapphires, emeralds-- these all form there. 44 00:02:20,557 --> 00:02:22,892 But a diamond's home is deeper. 45 00:02:22,976 --> 00:02:25,645 Scientists measure pressure in pascals, 46 00:02:25,728 --> 00:02:30,191 and where diamonds form, pressures are five to six gigapascals. 47 00:02:30,275 --> 00:02:34,362 If you think of 80 elephants standing on your big toe, 48 00:02:34,445 --> 00:02:37,907 that is the pressure that is equivalent to five to six gigapascals. 49 00:02:37,991 --> 00:02:41,744 Every other precious gem is made up of combinations of elements. 50 00:02:41,828 --> 00:02:45,165 A diamond? Only one. Carbon. 51 00:02:45,248 --> 00:02:46,875 From a scientific perspective, 52 00:02:46,958 --> 00:02:50,128 the most important part of a diamond is this. 53 00:02:50,211 --> 00:02:52,005 [Smit] These are small pieces of the mantle 54 00:02:52,088 --> 00:02:54,507 that's been trapped during diamond growth, 55 00:02:54,591 --> 00:02:57,177 and so these inclusions are actually the only direct samples 56 00:02:57,260 --> 00:02:59,721 that scientists have to study the deep earth. 57 00:03:00,305 --> 00:03:02,765 [Abram] And those inclusions can be dated. 58 00:03:02,849 --> 00:03:07,854 If this is all of human history, and this is the time of the dinosaurs, 59 00:03:07,937 --> 00:03:12,650 this is the period when all the diamonds we see today were born. 60 00:03:12,734 --> 00:03:16,196 The oldest diamonds that have been dated actually predate life on Earth. 61 00:03:16,279 --> 00:03:18,823 Over 25 million years ago, 62 00:03:18,907 --> 00:03:23,286 diamonds blasted to the surface in rare and violent explosions. 63 00:03:23,369 --> 00:03:26,998 In the most seismically active regions, they just evaporated. 64 00:03:27,081 --> 00:03:29,918 In the more stable areas, they survived. 65 00:03:30,543 --> 00:03:32,879 This is a map of seismic waves through the Earth. 66 00:03:32,962 --> 00:03:35,215 The most stable areas are the pink ones. 67 00:03:35,298 --> 00:03:38,635 And that's where diamonds lay unnoticed for millions of years. 68 00:03:39,385 --> 00:03:41,846 The earliest piece of surviving diamond jewelry 69 00:03:41,930 --> 00:03:44,432 is this ring made around 300 B.C. 70 00:03:44,515 --> 00:03:46,351 Over the next 2,000 years, 71 00:03:46,434 --> 00:03:49,395 diamonds popped up in crowns, rings, and pins 72 00:03:49,479 --> 00:03:51,147 alongside other precious gems. 73 00:03:51,231 --> 00:03:52,941 And sometimes they were wedding gifts, 74 00:03:53,024 --> 00:03:55,360 like the diamond ring exchanged in the betrothal 75 00:03:55,443 --> 00:03:58,863 of Archduke Maximilian of Austria and Mary of Burgundy. 76 00:03:58,947 --> 00:04:02,158 But diamonds wouldn't become the unrivaled gemstone of love 77 00:04:02,242 --> 00:04:05,662 until these diamond deposits were discovered in South Africa 78 00:04:05,745 --> 00:04:07,080 400 years later. 79 00:04:07,664 --> 00:04:11,584 Enter Cecil Rhodes, a British 17-year-old sent to South Africa, 80 00:04:11,668 --> 00:04:12,961 then Cape Colony. 81 00:04:13,044 --> 00:04:16,339 He would one day be remembered as a colonizer of Rhodesia, 82 00:04:16,422 --> 00:04:19,926 now Zimbabwe and Zambia, the namesake of Rhodes University, 83 00:04:20,009 --> 00:04:22,136 the creator of the Rhodes Scholarship, 84 00:04:22,220 --> 00:04:24,055 a zealous imperialist, 85 00:04:24,138 --> 00:04:27,725 and the founder of the company that would dominate the diamond industry 86 00:04:27,809 --> 00:04:30,478 for more than a century--De Beers. 87 00:04:30,561 --> 00:04:34,524 Under its watch, diamonds transformed from a gem like any other 88 00:04:34,607 --> 00:04:36,317 into a cultural touchstone. 89 00:04:41,781 --> 00:04:46,160 To understand how they pulled that off, you have to learn the De Beers' playbook. 90 00:04:46,244 --> 00:04:48,496 The first play--control supply. 91 00:04:48,579 --> 00:04:51,958 In the 1870s, Rhodes started buying up his competitors. 92 00:04:52,041 --> 00:04:53,876 I think it's important to understand 93 00:04:53,960 --> 00:04:56,587 De Beers didn't necessarily produce all of the diamonds in the world. 94 00:04:56,671 --> 00:05:00,883 They produced a lot of the diamonds. They bought supply from other producers, 95 00:05:00,967 --> 00:05:03,761 and this allowed them to basically control supply. 96 00:05:03,845 --> 00:05:07,598 Around 90% of the world's supply within two decades. 97 00:05:08,349 --> 00:05:09,684 Then came the second play. 98 00:05:10,810 --> 00:05:13,563 Rhodes made a deal to sell his entire supply of diamonds 99 00:05:13,646 --> 00:05:16,065 to an exclusive diamond syndicate in London. 100 00:05:16,566 --> 00:05:19,652 When De Beers had control of global supply under the monopoly, 101 00:05:19,736 --> 00:05:21,571 they had a strategic stockpile. 102 00:05:21,654 --> 00:05:24,949 And in situations where, um, you know, demand would decline, 103 00:05:25,033 --> 00:05:27,994 they would hold back supply to market as they saw fit. 104 00:05:28,619 --> 00:05:31,497 De Beers never released information about its stockpile 105 00:05:31,581 --> 00:05:33,207 and claims they no longer have one. 106 00:05:33,291 --> 00:05:37,378 But in 1999, The New York Times pegged it at 5.2 billion. 107 00:05:39,255 --> 00:05:43,634 In the 1940s, the U.S. government tried to build its own diamond stockpile, 108 00:05:43,718 --> 00:05:45,595 because diamonds aren't just for jewelry. 109 00:05:45,678 --> 00:05:49,432 They're also the hardest-known natural material on Earth, 110 00:05:49,515 --> 00:05:50,641 which makes them crucial 111 00:05:50,725 --> 00:05:52,935 for manufacturing weapons, tanks, and airplanes. 112 00:05:53,811 --> 00:05:55,897 And while ultimately, the War Production Board 113 00:05:55,980 --> 00:05:58,066 said no piece of equipment was delayed, 114 00:05:58,149 --> 00:06:00,860 a government official claimed the De Beers-led syndicate 115 00:06:00,943 --> 00:06:03,529 was making getting diamonds so difficult 116 00:06:03,613 --> 00:06:06,532 that the U.S. had to threaten to "not give planes to England 117 00:06:06,616 --> 00:06:09,911 if the syndicate did not sell us the diamonds to make them." 118 00:06:09,994 --> 00:06:13,664 The reason? "The diamond syndicate will not sell us a stockpile 119 00:06:13,748 --> 00:06:17,960 because it will not tolerate large stocks outside its monopoly control." 120 00:06:18,044 --> 00:06:21,422 But maintaining the price of something isn't just about supply. 121 00:06:21,506 --> 00:06:22,924 It's also about demand. 122 00:06:24,133 --> 00:06:26,928 The decade before World War II, De Beers was in crisis. 123 00:06:27,011 --> 00:06:28,471 It was the Great Depression, 124 00:06:28,554 --> 00:06:31,349 and there weren't many people shopping for diamonds. 125 00:06:31,432 --> 00:06:34,185 Worse, people might sell the diamonds they had bought, 126 00:06:34,268 --> 00:06:37,480 increasing the supply and further driving down the price. 127 00:06:37,563 --> 00:06:41,109 So De Beers has hired an advertising firm which came up with a brilliant idea. 128 00:06:41,192 --> 00:06:43,861 What if people kept diamonds... forever? 129 00:06:43,945 --> 00:06:47,156 Certainly the famous slogan "A diamond is forever." 130 00:06:47,240 --> 00:06:50,368 It's probably one of the most successful advertising campaigns 131 00:06:50,451 --> 00:06:52,036 in advertising history. 132 00:06:52,120 --> 00:06:55,498 Rings had been a common engagement gift since the early Middle Ages, 133 00:06:55,581 --> 00:06:58,459 but the idea that a diamond should be on that ring? That was new. 134 00:06:59,127 --> 00:07:00,837 The first campaign ran in the U.S. 135 00:07:00,920 --> 00:07:03,714 with paintings by some of the world's biggest artists. 136 00:07:03,798 --> 00:07:06,300 On the right, that's by Salvador Dali. 137 00:07:06,384 --> 00:07:08,678 On the left, Pablo Picasso. 138 00:07:08,761 --> 00:07:12,056 The message was, "Diamonds are works of art." 139 00:07:12,890 --> 00:07:16,102 Many campaigns followed, all with that same slogan. 140 00:07:17,562 --> 00:07:19,480 [man] A diamond anniversary band. 141 00:07:19,564 --> 00:07:22,817 On your tenth, show her you'd marry her all over again. 142 00:07:23,526 --> 00:07:24,819 [Abram] It worked. 143 00:07:25,570 --> 00:07:28,614 In the 1939 classic, Gone With The Wind, 144 00:07:28,698 --> 00:07:31,075 Scarlett O'Hara pleads for this precious gem. 145 00:07:31,159 --> 00:07:33,119 What kind of ring would you like, my darling? 146 00:07:33,202 --> 00:07:36,497 Oh, a diamond ring. And do buy a great big one, Rhett. 147 00:07:36,581 --> 00:07:39,083 But she'd have been one of only 10% of American brides 148 00:07:39,167 --> 00:07:41,377 who received a diamond ring that year. 149 00:07:41,461 --> 00:07:42,795 By the 1950s... 150 00:07:42,920 --> 00:07:45,798 ♪ But square-cut or pear-shaped ♪ 151 00:07:45,882 --> 00:07:48,050 ♪ These rocks don't lose their shape ♪ 152 00:07:49,093 --> 00:07:51,179 ...diamonds were a girl's best friend. 153 00:07:51,262 --> 00:07:55,141 And by 1990, 80% of American brides got one. 154 00:07:55,224 --> 00:07:58,478 And if a diamond is forever, most people don't want a used one. 155 00:07:58,561 --> 00:08:01,314 There's no official price scale for second-hand diamonds, but... 156 00:08:01,397 --> 00:08:04,734 I think you would be stunned 157 00:08:04,817 --> 00:08:06,861 by how little you would get 158 00:08:06,944 --> 00:08:09,447 as-as a percent of what you paid. 159 00:08:09,530 --> 00:08:14,577 You might get 25% of your purchase price, 30%. 160 00:08:15,828 --> 00:08:19,290 The campaign was such a hit, De Beers ran it again. 161 00:08:19,373 --> 00:08:20,583 This time in Japan. 162 00:08:20,666 --> 00:08:23,753 -[man speaks Japanese] -[speaks Japanese] 163 00:08:23,836 --> 00:08:26,923 [man speaks Japanese] 164 00:08:27,590 --> 00:08:29,800 In 1967, when that campaign began, 165 00:08:29,884 --> 00:08:32,303 almost no Japanese brides received a diamond. 166 00:08:32,386 --> 00:08:35,056 Twenty years later, over 70% of them did. 167 00:08:36,933 --> 00:08:40,394 In the 1990s, De Beers turned to China. Same slogan... 168 00:08:40,478 --> 00:08:42,563 [man speaking Chinese] 169 00:08:43,648 --> 00:08:45,441 -[Abram] Same result. -[man] De Beers. 170 00:08:45,525 --> 00:08:49,695 These ads are trying to create demand, and that's not some dirty trick. 171 00:08:49,779 --> 00:08:51,239 That's capitalism. 172 00:08:51,322 --> 00:08:54,408 I can convince you that you actually want to buy a pet rock, 173 00:08:54,492 --> 00:08:57,328 which, to me, was, like, the dumbest idea in the world, 174 00:08:57,411 --> 00:09:01,749 but people were able to be convinced you should value this pet rock. 175 00:09:01,832 --> 00:09:05,127 That's why ad companies get paid what they get paid. 176 00:09:05,753 --> 00:09:07,838 De Beers was just remarkably good at this. 177 00:09:07,922 --> 00:09:10,716 But not all De Beers' efforts have been successful. 178 00:09:10,800 --> 00:09:14,178 In the 1980s, De Beers tried to get women to buy diamonds for men. 179 00:09:14,262 --> 00:09:17,640 That one didn't stick. De Beers tried again to get women to buy diamonds 180 00:09:17,723 --> 00:09:21,227 in a 2003 campaign called, "Raise Your Right Hand," 181 00:09:21,310 --> 00:09:23,437 with the idea being that an empowered woman 182 00:09:23,521 --> 00:09:25,690 would have an engagement ring on her left hand 183 00:09:25,773 --> 00:09:28,734 and a diamond ring she bought herself on her right. 184 00:09:28,818 --> 00:09:30,486 That one didn't take off, either. 185 00:09:30,570 --> 00:09:32,113 Diamonds may be worn by women, 186 00:09:32,196 --> 00:09:35,324 but the primary consumers of diamonds are men. 187 00:09:35,408 --> 00:09:38,244 For a few years, De Beers commissioned surveys. 188 00:09:38,327 --> 00:09:40,621 One question asked if you'd want a diamond ring 189 00:09:40,705 --> 00:09:42,873 if it meant forgoing other things. 190 00:09:42,957 --> 00:09:46,627 In 1990, only 22% of women said yes, 191 00:09:46,711 --> 00:09:49,338 but for men, it was 59%. 192 00:09:49,422 --> 00:09:51,966 Many men reported that buying a diamond engagement ring 193 00:09:52,049 --> 00:09:53,634 was a mark of adulthood. 194 00:09:53,718 --> 00:09:57,847 I think it is, in some ways, a symbol that I've arrived, 195 00:09:57,930 --> 00:10:01,183 and I'm able to make such a significant purchase 196 00:10:01,267 --> 00:10:03,269 and kind of take this step. 197 00:10:03,853 --> 00:10:06,147 This set the stage for De Beers' next play-- 198 00:10:06,230 --> 00:10:08,482 linking the amount a man spent on a diamond 199 00:10:08,566 --> 00:10:10,776 to his professional success. 200 00:10:10,860 --> 00:10:13,321 It's become a cultural norm in the United States. 201 00:10:13,404 --> 00:10:15,865 The rule of thumb--diamonds should be about two months' salary. 202 00:10:15,990 --> 00:10:18,034 -Two months' salary. -Two months' salary. 203 00:10:18,117 --> 00:10:22,455 De Beers came up with that. In Japan, they came up with three months. 204 00:10:22,538 --> 00:10:25,666 That link between diamonds and a man's professional success 205 00:10:25,750 --> 00:10:28,502 grew in a way that De Beers may not have anticipated. 206 00:10:29,545 --> 00:10:32,131 And rappers started name-dropping their favorite jeweler. 207 00:10:32,214 --> 00:10:33,174 ♪ You are the Jacob ♪ 208 00:10:33,257 --> 00:10:34,133 -♪ Jacob ♪ -♪ Jacob ♪ 209 00:10:34,216 --> 00:10:35,593 ♪ Jacob the Jeweler ♪ 210 00:10:35,676 --> 00:10:37,637 My nickname is Jacob the Jeweler. 211 00:10:37,720 --> 00:10:40,139 ♪ All these diamonds on my wrists ♪ 212 00:10:41,682 --> 00:10:43,267 ♪ All these diamonds on my wrists ♪ 213 00:10:43,351 --> 00:10:46,395 How much value we have here? I would say, um... 214 00:10:47,438 --> 00:10:48,689 about 35 million. 215 00:10:50,733 --> 00:10:53,903 I have put diamonds on almost everything. 216 00:10:53,986 --> 00:10:56,864 I think I once made a toothbrush in diamonds and gold. 217 00:10:56,947 --> 00:11:01,661 It's a sign of success. Like you would say, "Honey, I love you. 218 00:11:01,744 --> 00:11:05,247 And this is how much I love you. This is how big I love you." 219 00:11:05,915 --> 00:11:09,669 This is a 75-carat, uh... vivid yellow. 220 00:11:10,378 --> 00:11:14,507 Carat, color. What he's talking about was another play. 221 00:11:14,590 --> 00:11:17,093 Number five--define value. 222 00:11:18,135 --> 00:11:22,765 If you walk into any diamond store today, they'll probably tell you about the 4Cs. 223 00:11:22,848 --> 00:11:26,477 The 4Cs are the four most important characteristics of a diamond. 224 00:11:26,560 --> 00:11:29,897 They represent cut, color, clarity and carat weight, 225 00:11:29,980 --> 00:11:32,024 which is the size of your diamond. 226 00:11:32,108 --> 00:11:34,860 A diamond should be cut not too flat, not too deep. 227 00:11:34,944 --> 00:11:38,489 It should be either colorless or a bright color, but not in between. 228 00:11:38,572 --> 00:11:42,076 It should be clear, free of the inclusions that scientists love. 229 00:11:42,159 --> 00:11:43,327 And it should be big. 230 00:11:44,245 --> 00:11:46,956 That system for grading diamonds was invented in the 1940s 231 00:11:47,039 --> 00:11:48,666 by a gem research institute. 232 00:11:48,749 --> 00:11:50,501 They started selling certificates. 233 00:11:50,584 --> 00:11:55,631 I think that everybody feels very assured when they get some kind of certificate 234 00:11:55,715 --> 00:12:01,053 and some kind of, um, understanding of-of where their diamond lands, 235 00:12:01,137 --> 00:12:02,722 in terms of the grading system. 236 00:12:02,805 --> 00:12:06,142 De Beers promoted the 4C system, helping it take off. 237 00:12:06,225 --> 00:12:09,270 Conveniently, a lot of their diamonds were big and clear. 238 00:12:09,895 --> 00:12:11,981 And demand for them kept going up. 239 00:12:12,064 --> 00:12:14,483 But in countries where diamonds are mined, 240 00:12:14,567 --> 00:12:17,528 that demand sometimes meant funding for conflict. 241 00:12:22,366 --> 00:12:25,202 Between 1992 and 1998, 242 00:12:25,286 --> 00:12:26,829 a rebel group in Angola 243 00:12:26,912 --> 00:12:30,916 raised more than $3.7 billion from diamond sales, 244 00:12:31,000 --> 00:12:34,170 fueling a war that killed at least half a million Angolans. 245 00:12:35,421 --> 00:12:39,550 Diamond sales also helped fund conflicts in Sierra Leone, 246 00:12:39,633 --> 00:12:42,887 the Ivory Coast, and Liberia. 247 00:12:42,970 --> 00:12:46,766 Eventually, this drew international attention and backlash. 248 00:12:46,849 --> 00:12:48,225 -Blood diamonds. -Blood diamonds. 249 00:12:48,309 --> 00:12:51,103 -Blood diamonds. -So-called "blood diamonds." 250 00:12:51,187 --> 00:12:55,733 But in the U.S., the demand for diamonds remained pretty much the same. 251 00:12:56,525 --> 00:12:58,694 And while there is now a certification system 252 00:12:58,778 --> 00:13:02,198 to try to stop the sale of diamonds smuggled from conflict zones, 253 00:13:02,281 --> 00:13:04,825 no one knows for sure how well it's worked, 254 00:13:04,909 --> 00:13:08,120 because the diamond supply chain is incredibly opaque. 255 00:13:08,204 --> 00:13:12,166 I think it's difficult if you don't have any paperwork with the diamond 256 00:13:12,249 --> 00:13:15,127 to really fully understand where it came from. 257 00:13:15,211 --> 00:13:18,422 But around the same time that blood diamonds were making headlines, 258 00:13:18,506 --> 00:13:22,259 De Beers and its playbook faced its biggest threat yet--real competition. 259 00:13:23,093 --> 00:13:25,930 I think most people think that all diamonds come from Africa, 260 00:13:26,013 --> 00:13:27,681 but it's actually important to understand 261 00:13:27,765 --> 00:13:30,059 Russia's the largest supplier of diamonds in the world. 262 00:13:30,142 --> 00:13:32,520 For decades, De Beers had an exclusive deal 263 00:13:32,603 --> 00:13:35,064 to buy most of the Soviet Union's diamonds. 264 00:13:35,147 --> 00:13:38,609 But when the Soviet Union collapsed, so did the deal. 265 00:13:38,692 --> 00:13:41,362 Then, in 2005, De Beers settled an antitrust lawsuit 266 00:13:41,445 --> 00:13:44,490 that had accused them of a conspiracy to fix the price of diamonds. 267 00:13:44,573 --> 00:13:49,119 De Beers agreed to pay $295 million back to American consumers. 268 00:13:49,787 --> 00:13:51,956 And in a separate case with the U.S. government, 269 00:13:52,039 --> 00:13:54,500 De Beers plead guilty to price-fixing. 270 00:13:55,209 --> 00:13:57,044 De Beers' market share began to go down. 271 00:13:57,670 --> 00:14:01,215 But something strange happened. The price of diamonds didn't. 272 00:14:03,133 --> 00:14:05,219 De Beers is no longer the biggest player, 273 00:14:05,302 --> 00:14:07,847 but diamond companies still look to their playbook. 274 00:14:07,930 --> 00:14:12,893 Alrosa is, uh, the largest producer of diamonds worldwide. 275 00:14:12,977 --> 00:14:15,604 We have about a 27% market share, 276 00:14:15,688 --> 00:14:18,566 which means that one out of every four diamonds 277 00:14:18,649 --> 00:14:20,192 is an Alrosa diamond. 278 00:14:20,276 --> 00:14:24,905 The top three producers--De Beers, um, Russia's Alrosa, and Rio Tinto-- 279 00:14:24,989 --> 00:14:27,408 none of them actually manage a strategic stockpile 280 00:14:27,491 --> 00:14:29,785 the way that De Beers did during the monopoly era, 281 00:14:29,869 --> 00:14:32,538 um, but they will, you know, withhold goods, uh, from the market 282 00:14:32,621 --> 00:14:34,623 if they feel there isn't substantial demand. 283 00:14:34,707 --> 00:14:37,251 [woman] How do you think about stockpiling diamonds, 284 00:14:37,334 --> 00:14:40,254 and how does the industry make sure 285 00:14:40,337 --> 00:14:42,756 that there aren't too many diamonds on the market 286 00:14:42,840 --> 00:14:46,218 in such a way that would cause the price to go down? 287 00:14:46,302 --> 00:14:48,429 Yeah. There's a-there's a party line 288 00:14:48,512 --> 00:14:50,931 that I'm supposed to say about that, which, uh... 289 00:14:51,015 --> 00:14:53,017 [both laugh] 290 00:14:53,100 --> 00:14:56,520 Sometimes, of course, there's more supply than demand, 291 00:14:56,604 --> 00:14:59,690 um, and, uh, certainly when that happens, 292 00:14:59,773 --> 00:15:01,609 we don't look to reduce pricing 293 00:15:01,692 --> 00:15:06,614 because we don't want to jeopardize the inherent value of the diamond 294 00:15:06,697 --> 00:15:09,575 or what ultimately the consumer is going to be purchasing. 295 00:15:10,367 --> 00:15:13,370 At this point, I can't really imagine 296 00:15:13,454 --> 00:15:15,998 who is incentivized to have the price fall. 297 00:15:16,749 --> 00:15:18,542 And that even includes consumers. 298 00:15:18,626 --> 00:15:21,921 [Spriggs] If I offer you a bottle of red wine, 299 00:15:22,004 --> 00:15:27,468 and I say one of them cost $75 and one of them cost $20, 300 00:15:27,551 --> 00:15:29,011 if you know a lot about wine, 301 00:15:29,094 --> 00:15:31,555 you may look at the labels, you may taste them, 302 00:15:31,639 --> 00:15:34,224 and if you're really good, you may be able to tell me 303 00:15:34,308 --> 00:15:37,561 this $25 bottle of wine is really the better wine. 304 00:15:37,645 --> 00:15:41,482 Most people don't have that ability. They're gonna give me the $75. 305 00:15:42,107 --> 00:15:46,528 That creates this perverse setting 306 00:15:46,612 --> 00:15:51,867 in which if I raise the price, instead of the quantity demand falling, 307 00:15:51,951 --> 00:15:54,745 I can actually see the quantity go up. 308 00:15:54,828 --> 00:15:56,789 They're called Veblen goods, 309 00:15:56,872 --> 00:15:58,457 and they're a unique good 310 00:15:58,540 --> 00:16:04,755 in which the price itself is interpreted by people as a signal. 311 00:16:04,838 --> 00:16:07,841 Other famous Veblen goods include Birkin bags, 312 00:16:07,925 --> 00:16:10,135 Cristal champagne and lawyers. 313 00:16:11,929 --> 00:16:15,516 I do think that there is an aspirational quality to diamonds, 314 00:16:15,599 --> 00:16:19,728 where the price, the fact that it is expensive, adds desire. 315 00:16:19,812 --> 00:16:23,899 Because it's-it's a sense of arriving, it's a sense of aspiration. 316 00:16:23,983 --> 00:16:26,652 And it means that people will pay top dollar for them, 317 00:16:26,735 --> 00:16:30,322 even if an option exists that's structurally identical. 318 00:16:30,406 --> 00:16:32,282 The structure of a diamond is simple. 319 00:16:32,366 --> 00:16:36,078 All carbon atoms, each one forming four bonds with its neighbors. 320 00:16:36,161 --> 00:16:39,873 In graphite, also all carbon, atoms form three bonds. 321 00:16:39,957 --> 00:16:43,794 And that tiny difference is why graphite is soft enough to be a pencil, 322 00:16:43,877 --> 00:16:47,339 and why diamonds are so hard, they can only be cut by another diamond. 323 00:16:48,674 --> 00:16:52,678 We actually first figured out how to make diamonds in a lab back in the 1950s. 324 00:16:52,761 --> 00:16:56,640 I twiddled around a little bit and saw the sparkles. 325 00:16:57,599 --> 00:17:01,061 My knees weakened. I had to sit down. 326 00:17:01,145 --> 00:17:04,314 That's scientist Tracy Hall in an interview with the BBC 327 00:17:04,398 --> 00:17:06,150 describing the moment he and his team 328 00:17:06,233 --> 00:17:11,030 became the first to consistently and publicly create a diamond in 1954. 329 00:17:11,113 --> 00:17:14,700 And at that instant, I knew that man 330 00:17:14,783 --> 00:17:18,245 had finally turned graphite into diamond. 331 00:17:19,455 --> 00:17:23,250 And today, we can pump gem-quality stones out of machines. 332 00:17:23,333 --> 00:17:26,253 There are two completely separate ways to grow a diamond. 333 00:17:26,336 --> 00:17:29,256 High-pressure, high-temperature diamond growth 334 00:17:29,339 --> 00:17:32,301 is recreating the conditions in nature 335 00:17:32,384 --> 00:17:36,138 with which carbon crystallizes into diamond. 336 00:17:36,221 --> 00:17:40,309 Chemical vapor deposition is a methodology to grow diamonds 337 00:17:40,392 --> 00:17:44,938 where hydrocarbon gases are injected into a growth chamber, 338 00:17:45,022 --> 00:17:47,399 and microwave plasma energy 339 00:17:47,483 --> 00:17:52,154 is used to break apart the bonds of that hydrocarbon, 340 00:17:52,237 --> 00:17:57,117 allowing free carbon atoms to rain down on a plate of diamond, 341 00:17:57,201 --> 00:18:00,996 and atom by atom, grow that diamond vertically, 342 00:18:01,080 --> 00:18:05,626 resulting in extraordinarily high-purity, high-quality diamonds. 343 00:18:05,709 --> 00:18:08,212 A diamond is a diamond, regardless of whether it's made in a lab 344 00:18:08,295 --> 00:18:09,922 or whether it comes from the earth. 345 00:18:10,839 --> 00:18:13,342 Take a guess. Which of these is lab-grown? 346 00:18:13,926 --> 00:18:15,552 You definitely couldn't tell. 347 00:18:16,261 --> 00:18:20,057 It takes very specialized laboratory equipment 348 00:18:20,140 --> 00:18:24,686 to detect the minute differences, uh, between the two products. 349 00:18:24,812 --> 00:18:27,147 And as lab-grown diamonds have gotten better, 350 00:18:27,231 --> 00:18:28,565 they've also gotten cheaper, 351 00:18:28,649 --> 00:18:31,318 which brings us to number seven in the playbook-- 352 00:18:31,401 --> 00:18:33,403 if you can't beat 'em, join 'em. 353 00:18:34,113 --> 00:18:37,908 In 2016, De Beers and its peers in the natural-diamond industries 354 00:18:37,991 --> 00:18:40,035 slapped back against lab-grown diamonds 355 00:18:40,119 --> 00:18:42,663 with an ad campaign called "Real Is Rare." 356 00:18:42,746 --> 00:18:45,833 [woman] It will be kind, and it will be real. 357 00:18:47,835 --> 00:18:49,586 [Abram] But then in 2018, 358 00:18:49,670 --> 00:18:52,798 De Beers actually launched their own lab-grown diamond line 359 00:18:52,881 --> 00:18:54,883 at the lowest prices on the market. 360 00:18:55,509 --> 00:18:58,554 They claim that's how much they're worth since they're mass-produced. 361 00:18:58,637 --> 00:19:02,516 But some say this is a strategy to make lab-grown diamonds seem worse. 362 00:19:02,599 --> 00:19:04,017 The efforts of De Beers 363 00:19:04,101 --> 00:19:07,646 to price light-box diamonds at such a low price point 364 00:19:07,729 --> 00:19:10,941 are a very clear effort to denigrate the product. 365 00:19:11,024 --> 00:19:15,279 Laboratory-grown diamonds are superior to dirt diamonds 366 00:19:15,362 --> 00:19:18,073 or mined diamonds that have come out of the earth. 367 00:19:18,157 --> 00:19:21,410 But lab-grown diamond companies are capitalizing on the lasting connection 368 00:19:21,493 --> 00:19:23,036 between diamonds and love. 369 00:19:23,120 --> 00:19:25,122 As someone who's in the business of selling diamonds, 370 00:19:25,205 --> 00:19:26,123 I like the connection. 371 00:19:26,206 --> 00:19:28,709 A connection they owe to De Beers. 372 00:19:28,917 --> 00:19:31,378 The lab-created producers want to market their product 373 00:19:31,461 --> 00:19:32,796 as a more innovative 374 00:19:32,880 --> 00:19:35,757 and environmentally friendly, um, you know, product 375 00:19:35,841 --> 00:19:38,260 that's superior to natural diamonds in those ways. 376 00:19:38,343 --> 00:19:41,722 But at the same time, they still want the value associated with diamonds 377 00:19:41,805 --> 00:19:44,558 that, you know, that De Beers created over a hundred years. 378 00:19:44,641 --> 00:19:48,187 The narrative is what a lot of purchasers 379 00:19:48,270 --> 00:19:51,023 might feel on some level is like the bullshit, right? 380 00:19:51,106 --> 00:19:55,319 Like, "They-They told us this story that, you know, you got to do this, 381 00:19:55,402 --> 00:19:57,821 and this is, like, how you prove love." 382 00:19:57,905 --> 00:19:59,781 I think the thing is, though, 383 00:19:59,865 --> 00:20:05,537 that, uh, there's something really, really deeply touching 384 00:20:05,621 --> 00:20:07,831 about doing this for somebody, 385 00:20:07,915 --> 00:20:13,170 about wanting to be very public about how you feel about somebody. 386 00:20:13,253 --> 00:20:16,882 And in a way, uh, burning a pile of money 387 00:20:16,965 --> 00:20:20,260 is a pretty compelling argument 388 00:20:20,344 --> 00:20:23,513 that you feel what you say you feel. 389 00:20:23,597 --> 00:20:25,807 Just because the connection between diamonds and love 390 00:20:25,891 --> 00:20:29,853 was manufactured by marketing, that doesn't make it less real. 391 00:20:29,937 --> 00:20:34,233 It was the most beautiful and most significant thing ever to me, 392 00:20:34,316 --> 00:20:38,820 not because it's a diamond, but because he's my best friend. 393 00:20:38,904 --> 00:20:41,490 He was like, "This was my mom's diamond." 394 00:20:41,573 --> 00:20:43,492 That's when I really started crying. 395 00:20:43,575 --> 00:20:46,995 When you put it into perspective that an ad campaign drove, 396 00:20:47,079 --> 00:20:49,748 you know, what we now consider, like, the step to getting married, 397 00:20:49,831 --> 00:20:53,877 you have to buy a diamond, it's kind of infuriating to think about, 398 00:20:53,961 --> 00:20:56,046 but at the same time, it makes-it makes sense. 399 00:20:56,129 --> 00:20:59,508 Like, I didn't come up with this. This is just the-the world's standard. 400 00:21:00,550 --> 00:21:02,678 A diamond is a product of heat, 401 00:21:02,761 --> 00:21:06,056 time, capitalism, and us. 402 00:21:06,974 --> 00:21:08,725 It isn't bullshit, 403 00:21:08,809 --> 00:21:11,645 because the volume of people 404 00:21:11,728 --> 00:21:15,107 who kind of are convinced by it 405 00:21:15,190 --> 00:21:17,276 tells us that their story 406 00:21:17,359 --> 00:21:22,823 is tapping into this complexity of who we are. 407 00:21:23,699 --> 00:21:26,827 And when you think about it, so much of what we do, 408 00:21:26,910 --> 00:21:29,413 so much of what we wear, you know, what we carry. 409 00:21:29,496 --> 00:21:33,792 So-So much of it is about communicating who we are. 410 00:21:35,127 --> 00:21:39,339 Here's my diamond. It's absolutely stunning, in my opinion. 411 00:21:40,007 --> 00:21:41,466 What do people want? 412 00:21:42,175 --> 00:21:43,927 Uh, how much do they want it? 413 00:21:44,678 --> 00:21:46,513 What are they willing to pay for it? 414 00:21:46,596 --> 00:21:50,183 The question becomes more, "How do you value different things?" 415 00:21:50,267 --> 00:21:55,022 And I think diamonds are a little bit of, uh--they're kind of like an ink-blot test, 416 00:21:55,105 --> 00:21:58,859 and you can kind of see what you want and make your own criteria 417 00:21:58,942 --> 00:22:01,778 in terms of what's the most important to you. 418 00:22:01,862 --> 00:22:03,822 He's my everything, and... 419 00:22:05,032 --> 00:22:06,199 through thick and thin, 420 00:22:06,283 --> 00:22:09,995 and that just meant the world to me when he gave me this ring. 421 00:22:11,538 --> 00:22:15,042 -I love seeing it on your hand. -I know. I love seeing it on my hand, too. 422 00:22:15,125 --> 00:22:15,959 [laughs] 423 00:22:17,961 --> 00:22:18,962 Thank you. 424 00:22:20,047 --> 00:22:24,384 I think the value of a diamond is zero. 425 00:22:24,468 --> 00:22:27,846 It's entirely the value you have, 426 00:22:27,929 --> 00:22:30,932 uh, in regards to the person who gave it to you. 427 00:22:33,352 --> 00:22:35,354 [closing music playing]