When Diane Irvine was in grade school, her father left his Chicago-area cement company job and moved his family to Harvard, Ill., to start a farm.
"I think about what a risk he took," says Irvine, now 50. "He had a wife and five kids, and he went into a business that was completely subject to the weather. You can't buy insurance for cold or rain, so basically you just have to believe and pray."
The second oldest of the children, Diane was in charge of the eggs from a very early age. Their farm had 5,000 chickens, she explains, laying an average of two eggs every three days. That meant approximately 3,800 eggs daily had to be collected, washed, "candled"-inspected with a light for defects, fertilization or cracks-and sorted according to size.
"This was my after-school job," Irvine says, looking anything but rural in a 1940s-style tweed suit, Jennifer Aniston layered haircut and sparkling diamond studs. "I was the egg girl."
And as paradoxical as it seems, this work may have been the ideal training for a woman who would go on to become chief executive officer of Blue Nile, the largest online diamond retailer in the world.
There could be no more wholesome way for such a powerful woman to begin.
Irvine went from the farm to Illinois State University, where she intended to major in journalism but took an accounting class in her sophomore year and discovered she had a knack for numbers. She graduated from college with a B.S. in accounting and promptly sat for the CPA exam. Then she went to work for Coopers and Lybrand (now PricewaterhouseCoopers) in Chicago, focusing on taxation, and began working on her master's degree.
She met a nice young man from Wisconsin on a ski trip and married him two years later, around the same time he was transferred to Seattle. They spent their honeymoon on Interstate 90 driving out from the Midwest.
They meant to live only a couple of years here, then head back, Irvine says. But then their children were born (Laura, now 18; David, 14; Jessica, 11) and the family settled in. Irvine left Coopers and Lybrand-where she had become a partner-to join Plum Creek Timber Co. in 1994.
"I loved what I did at Coopers, but I thought this would give me more responsibility and exposure to strategic planning," she says.
She departed from the firm five years later, based on-she is tight-lipped as she says this-"some things the company was doing." And for the first time in her adult life, Irvine found herself looking for a job. She put some feelers out and soon got a call from a recruiter who spoke to her about something called Internet Diamonds.
"I was skeptical," Irvine recalls. "I thought, 'Well that's interesting, but how does it work to sell diamonds online?'"
She agreed to meet with the company's founder, an entrepreneur named Mark Vadon, who was not yet 30. Over dinner, the two immediately hit it off. Just as Internet Diamonds was undergoing a branding change and adopting the more upscale, aspirational moniker Blue Nile, Irvine signed on as chief financial officer.
Then the internet bubble burst and she spent 2000 traveling the country, meeting with more than 90 private equity firms, looking for the $15 million Blue Nile needed to continue building its business.
The concept was groundbreaking and-like Irvine herself when she was first approached-most people believed it wouldn't work. Blue Nile proposed to cut the markup on diamonds to about 20 percent from 100 percent by eliminating the costliest elements of jewelry stores: rent, overhead, sales personnel and inventory.
Instead, Blue Nile would deal directly with diamond manufacturers (the entities that cut and polish stones), but rather than buying their wares, the company bartered for the exclusive right to offer them online for sale. No diamond would be purchased until a customer placed an order. Then the stone would be put in a unique, handcrafted setting by a jeweler on the Blue Nile staff.
But the wild card in all this was the consumer. What love-struck man would buy a diamond for his beloved if he could not hold the gem in his hand and inspect it?
Because of this question, not one of the 90 venture capital firms was willing to invest in Blue Nile. So Irvine and Vadon tightened their budget, secured $7 million from private sources and took the kind of risk her farmer father had faced some 40 years before.
It paid off. Blue Nile has gone from $44 million in revenue in 2000 to a projected $300 million in 2009. The company offers (but does not own) more than $450 million in diamond inventory, including 55,000 stones certified by the Gemological Institute of America. It employs 180 people at headquarters in Seattle, and seven in Dublin, its European satellite. That means its revenue is roughly $1.7 million per employee.
As for whether people would buy a luxury item sight unseen, Irvine says consumers have voted: If the price is right, and the product is independently certified, they absolutely will. The average diamond engagement ring sale for Blue Nile is $6,000 but sales in excess of $1 million have been completed, the largest being $1.5 million for a single ring in 2007.
Even today, some business analysts remain unimpressed. Many claim Blue Nile stock has been overvalued; one even called it "the world's scariest stock" in late 2007, after many insiders-including Irvine, who became CEO in 2008, and Vadon, who remains executive chairman-dumped the majority of their shares. But she insists this opinion is a red herring, that stock prices have little to do with the general health of the business and the company will only continue to grow.
"Whereas in the early days, people might have thought this was a crazy way to buy," says Irvine, "customers are referring their friends to us in droves. The best part is the people who will get engaged tomorrow are so comfortable with technology-as-retailer-and tend to be so cost-conscious-they will have no problem buying online."
Blue Nile is in one sense traditional. It markets mostly to men and designs its services to match the rites of marriage, including custom-making rings and offering free FedEx shipping for all diamond purchases, ideal for customers who spontaneously decide to propose. But in terms of its business model, it is more like a big-box discount retailer, Irvine explains. It has found a way to concentrate a vast amount of inventory while offering consumers a bare-bones price.
"We're looking to build the Tiffany of the next generation," says Irvine, "but we think of it more like Costco in terms of structure and cost."
Or, one might posit, like an egg farm, where you bank on the fact that someone is holding the wares up to a light and boxing only those that pass snuff. In the end, Diane Irvine is banking on the world of diamond consumers to trust her. And right now, it seems, they do.
Related: Precious Mettle.