[Photo: Jeffrey Camp]

In Gemesis Corp.’s cavernous warehouse on the outskirts of Sarasota, hundreds of washing machine-sized pressure chambers emit a series of squeaks and puffs. The gentle chorus belies the violent process playing out inside the machines: A tiny shard of a natural diamond has been placed into each steel sphere along with a metal solvent and a carbon source — usually graphite. The machines are squeezing, generating 850,000 pounds of pressure per square inch, with the temperature inside the spheres soaring to 2,800 degrees Fahrenheit.

Crystals have begun growing at a rate of about half a carat a day. Within four days, they will be diamonds. Real diamonds. The Gemesis stones aren’t imitations or “simulants” like moissanite and cubic zirconia. They may emerge from machines, but they’re visually and chemically identical to those produced naturally.

“Everything that happens below ground in nature happens here — the only difference between our diamonds and mined diamonds is their origin,” says Britta Schlager, Gemesis’ marketing manager.

Just how do you make a real diamond in days? To see how Gemesis does it, click here for photo tour.

Gemesis, which has been in business since 1996, can produce tens of thousands of carats’ worth of diamonds in a year, and it can sell its stones for a fifth of what mined stones cost. All that additional low-cost supply creates interesting dynamics in an industry where the ability to charge big prices for tiny stones depends on their scarcity.

How, for example, does Gemesis market a manufactured product in a way that establishes it as both identical to and different from its created-by-nature counterpart? More to the point, how does Gemesis prosper without bringing the very industry it’s a part of to its knees?

Rock Garden: Hundreds of Gemesis machines grow diamonds at a rate of about half a carat a day. The company plans to market pink diamonds next year and then introduce blue diamonds. [Photo: Mark Wemple]

Ink quest

Now headquartered in a Lakewood Ranch office park, Gemesis had its genesis nearly 12 years ago. In 1995, former Brig. Gen. Carter Clarke was looking for a new product for his electronic security business, a Clearwater company called Security Tag Systems. The firm produced electronic tags that stores attach to garments to prevent shoplifting, but the tags were clunky and tended to damage fabrics. Clarke envisioned a new anti-theft device — an invisible ink printed onto clothing and merchandise that would trigger an alarm if removed from a store.

Clarke recounts how his ink quest led him to Russia, which in the post-Soviet era had become a flea market for high-tech devices. The invisible ink never materialized, but while Clarke was in Moscow, a Russian contact, Yuri Semanov, asked him if he had any interest in diamonds. “I’m an entrepreneur. I’m interested in almost anything,” Clarke told Semanov.

The next day, Clarke was driven to an explosives factory two hours outside of Moscow, where a burly Russian scientist showed him the blueprints for an apparatus that the man said would make diamonds. Selling price: $57,000. Clarke initially declined the offer but found himself obsessing about it on his long flight back to New York.

Synthetic diamonds were already well-known commodities. General Electric, for instance, had been making synthetic diamonds for drill bits and other machinery since 1964, but those stones were small and fragmented. The Russian invention supposedly could produce a large mono-crystal suitable for jewelry at a very low cost. If the diamond machine worked, Clarke thought, it would create a whole new industry. A few months later, he returned to Russia with a suitcase of cash and an order for two more machines.

While waiting for his machines to be built, Clarke researched the jewelry industry and consulted with several University of Florida researchers who had been working with synthetic diamonds. Dr. Reza Abbaschian, then chairman of UF’s materials science and engineering department and now dean of engineering at the University of California-Riverside, agreed to provide scientific expertise — to verify that the Russian diamond machine really worked. Meanwhile, Clarke worked on financing, rounding up capital from investors to start what became Gemesis in 1996.

"The industry didn’t like us. DeBeers was not very favorable. They’d pound me on the head and say nobody’s going to buy this thing. ... But the customers liked us." — Gemesis founder Carter Clarke [Photo courtesy Gemesis]

Clarke’s diamond machines arrived a year later, but the crystals they produced were small and an ugly brown color. The yields were terrible. Abbaschian and a small team of Russian scientists had to help Gemesis re-engineer the equipment. Meanwhile, Clarke, currently co-chairman of Gemesis and still actively involved in the company’s operations, faced another obstacle: Opposition from the natural diamond industry, which feared the impact of lab-made diamonds with the same physical, optical and chemical properties as earth-grown diamonds. Big quantities of lab-produced diamonds selling for a fraction of the cost of mined diamonds could cripple the $60-billion industry.

When diamond giant De Beers learned that Clarke had gotten his hands on the technology, De Beers representatives tried to persuade the American entrepreneur to abandon the venture, Tom Zoellner reported in his 2006 book, “The Heartless Stone: A Journey Through the World of Diamonds, Deceit, and Desire.” They told Clarke “his enterprise was doomed to fail,” that the public would never accept a lab-grown diamond, Zoellner reported.

DeBeers has a different take. “Years ago a meeting did take place between DeBeers and Carter Clarke at Carter Clarke’s request. There was absolutely no attempt to ‘try and persuade him to abandon his venture,’ ” DeBeers spokesman Lynette Gould says.

And while DeBeers has invested in a company called Element Six, which manufactures synthetic diamonds for industrial applications, DeBeers downplays the potential that “synthetics” have as gems. “Synthetics and diamonds are very different products. Diamonds are unique, ancient, natural treasures — the youngest diamond is 900 million years old,” says Gould, who spoke of DeBeers’ confidence “that synthetics will not have the same emotional and financial value as diamonds because the value of diamonds is inextricably linked to how they were naturally formed billions of years ago.”

"We’re getting very close to basically funding our own way through operations." — CEO Stephen Lux [Photo: Jeffrey Camp]

Today, conflict continues over exactly what to call Gemesis’ stones. Gemesis uses the term “cultured diamonds” — arguing that its stones are identical to mined diamonds in the same way that cultured pearls are man-made but chemically identical to natural pearls. De Beers and other diamond industry leaders, however, would prefer that Gemesis call its product “synthetic.” Last December, the Jewelers Vigilance Committee and 10 other associations filed a petition with the Federal Trade Commission to amend FTC guides so that the term “cultured” could only be used to apply to pearls, not diamonds or other stones.

But Gemesis believes that calling its stones “synthetic” would signal to consumers that its diamonds are not real. The FTC has yet to issue a statement on the dispute.

Marketing

As the dispute over what to call Gemesis’ stones evolved, so did the company’s business plan. By 2002, Gemesis had solved its technical issues and began producing stones. The company started out by cutting and polishing its own diamonds and distributing them directly to retailers. That changed, however, after Clark McEwen, Gemesis’ chief operating officer and a veteran of the diamond industry, joined the company in 2005. McEwen convinced the management team that Gemesis would be better positioned if it sold uncut, unpolished diamonds in the rough, as De Beers does.

The company also experimented with a marketing campaign that played to consumer awareness of so-called “conflict diamonds” — mined diamonds that are illegally traded to fund conflict in parts of central and western Africa.

Within two years, however, the company abandoned that marketing strategy. For one, most of the jewelry designers using Gemesis diamonds create pieces that also contain mined diamonds. “We’re part of the diamond industry, so something that is bad for the diamond industry in general is not going to help our case,” says Stephen Lux, CEO and president of Gemesis.

Perhaps the biggest strategic decision for Gemesis has involved what kind of diamonds to produce. So far, the company has chosen only to produce fancy colored diamonds — stones ranging from yellow to orange that are scarcer in nature than traditional “white” diamonds. Gemesis plans to begin marketing pink diamonds sometime next year and then blue diamonds — both rare commodities in nature.

Lux says the company may introduce cultured white or colorless diamonds in another five years, when a projected shortfall in mined white diamonds is expected. In the meantime, Gemesis is taking pains to differentiate its product from mined diamonds — in part to ease fears in the natural diamond industry that lab-grown diamonds might flood the market without being identified as such. To avoid any confusion, Gemesis’ stones carry a unique inscription that says “laboratory grown” or “Gemesis created.” The tiny inscription can be viewed through a loupe, the eyeglass used by jewelers.

Lux says it would pose a “tremendous threat to our business” if unscrupulous individuals tried to pass off Gemesis’ stones as natural diamonds. “We will go to great lengths to make sure that there is no fraud perpetuated by someone who could take our diamonds and try to pass them off as mined because they do sell at a price that’s less than the price of a mined diamond.”

The labeling efforts also have helped Gemesis gain more acceptance in the marketplace. In January, the Gemological Institute of America began grading “laboratory grown” diamonds — with some caveats. The GIA, for the moment, classifies the stones as synthetics and issues grading reports less specific than its reports for natural diamonds. “They’re very, very similar chemically,” says Laura Simanton, a senior public relations manager with the GIA. “Both consist of carbon atoms in a cubic bond, but there are differences so that a trained jeweler, especially our guys, can tell the difference. A normal, everyday person would not be able to.”

James Shigley, GIA’s former director of research and now distinguished research fellow, credits Gemesis as being “quite responsible in helping the jewelry trade to understand this new technology and feel comfortable with this product.” He believes Gemesis’ biggest challenge is not its natural diamond competitors in as much as it is the public. “I think their production is small compared to natural diamond production, but I think they also have the challenge of just educating people about what their product is. It is a diamond. It’s not an imitation material like cubic zirconia.”

To that end, Gemesis is pursuing an aggressive marketing push that has included hiring former De Beers’ executive Joan Parker as its “ambassador” and signing golf phenom Morgan Pressel to a multiyear endorsement contract. The teen golfer — the youngest winner of a major LPGA golf tournament — now hits the links wearing a pair of Gemesis cultured diamond earrings and a necklace.

The company currently has fewer than 10 customers, jewelry manufacturers who take the diamonds, cut and polish them and laser inscribe them to note that they’re lab grown. The company won’t talk about revenue. “We’ve been through a few rounds of fund raising,” says Lux, who joined the company last October. “We’re getting very close to basically funding our own way through operations. We are spending money beyond that because of continuing the investment. We expect to continue this investment beyond this building when it’s full.”