Jewelry on Ice: How Four Rabbis Survived the e-Commerce Meltdown
By Keith Randall | March 31, 2002
Have you heard the one about the four rabbis? Wait for the punch line. They run one of the largest online retail success stories, ice.com. The Gniwisch (rhymes with begin-a-wish) boys surfed a family niche in the jewelry trade through the e-commerce waves by remembering something that most people forgot in those crazy late-1990s. "Internet, shminternet," instructed Dad, survivor of the Holocaust and printing entrepreneur Isaac Gniwisch. "A businessman buys at a certain amount and sells at a profit."
The Gniwisch beachhead began 25 years ago when Mom Julie, a designer, founded what is now one of Canada's largest jewelry manufacturers, Delmar International. The careers of thirty-something sons, Shmuel, Mayer, and Pinchas, have included cutting diamonds, developing real estate, managing a wood-recycling plant, and selling postal systems to the Third World. Brother-in-law Moshe Krasnanski ran a wristwatch distributorship and a bartering firm.
Figuring they had a few competitive advantages, the four men launched a website, BuyJewel.com, to sell mid-market jewelry as the e-commerce wave peaked in 1999. "Many dot-coms fail because they're not far enough along the supply line," says Shmuel. "Our strength is being inventory-less. We offer the best price by plugging into other people's inventories and experience. Delmar provides 70 percent of our supply, but the rest is from large companies we've known for years."
Although the Gniwisch boys have never fallen off the Talmudic map, they did stray toward Hollywood glamour when venture capitalist Bill Gross offered $7 million for 60 percent of BuyJewel.com and invited them to California. "At the time, people thought Bill Gross was going to be bigger than Bill Gates," says Shmuel. "As I was taught by my old Talmud teacher, 'Always say yes.'"
Brothers, wives and 16 children headed west to Gross' IdeaLab Internet startup nest near Los Angeles. The name morphed to ice.com, and online promotions and banners drew 150,000 female surfers happy to provide demographics in return for $29 pearls.
Picture four Montreal rabbis in beards and yarmulkes, long black coats and black-rimmed hats on Fridays and Saturdays, lounging around the pool debating the merits of Jamie Lee Curtis or Gwyneth Paltrow as a spokesperson. Although Pinchas has joked that they look like they're straight from the shtetl, neither business nor religion is a laughing matter to them. As a billion IdeaLab dollars and thirty-or-so satellite companies melted in the e-commerce fires, the Gniwisch boys bought their freedom, for what Shmuel describes as a significant amount, and fled home to Montreal. "Unfortunately, Bill Gross and IdeaLab was a lot of self-developed hype that caught on because of the craziness of the time," Shmuel says. "Later, you see that there was really nothing there."
Ice out of the fire
From drab offices in an ancient downtown industrial building, ice.com turned its first monthly profit of $100,000 over Christmas 2000. Internet competition has dwindled to high-end Ashford and diamond dealer Blue Nile. Analysts like the ice.com mid-range price strategy, its 60 percent profit margin, and its cool understanding that business is business, Internet or not. "Everybody here shares the same underlying objective, which is to make money," says President Shmuel. "We've watered it down to a very strong marketing message, a very strong business development message, and a very strong jewelry mix. We know where not to spend money."
Perhaps experience really is the best teacher. Or perhaps years of Talmudic scholarship have kept the Gniwisch feet on the ground. "The Talmud is a map on how to run your business and your life on a day-to-day basis. Every experience has its learning side. In more cases than not, we learned what not to do in order to operate a business. We're operating the business the way it is supposed to be operated, without any dreams and without any visionary issues."