A Dot.com That's a Diamond in the Rough

Even though we're fighting through a dreadful economy, many men will be making a substantial purchase during the holiday season. These are men who are going to propose and need an engagement ring to complete the ritual. For many men (if not most), they have no idea what they're doing when looking for a ring.

Mark Vadon, founder of online jewelry retailer Blue Nile, was in this position in the late 1990s. He bounced from one jewelry store to the next, facing either salespeople who were too aggressive or got ignored because of his casual appearance wearing shorts and baseball cap. Vadon decided to go online to educate himself on diamonds. There, he came across a small Seattle-based jeweler at the domain InternetDiamonds.com, and found what he was looking for.

"I was struck by the experience," says Vadon, 38. "I wound up paying about 40% less than what they were charging in the stores, and I walked away feeling like I got better customer service through this person I never met than what I was getting in stores."

During the dot.com boom when everything was moving online, Vadon quickly realized nobody of scale was selling diamonds and jewelry. He raised $6 million in financing and purchased InternetDiamonds.com in May 1999. At the time, the Web site was doing sales of a few hundred thousand dollars a month. Vadon reintroduced the site, aiming for a larger audience, and changed the name to Blue Nile. Sales rapidly jumped to $10 million in the last quarter of that same year.