By Julien B. Booth, Austin Krum
June 12, 2019
We own a modest position in two Gold related operating companies, Goldmoney.com and Mene.com. The following is a short primer on Mene.com.
Mene was founded by Roy Sebag and Diana Widmaier-Picasso with a mission to restore the relationship between jewelry and savings. Mene empowers consumers by marrying innovative technology, timeless design, and pure precious metals to create pieces which endure as a store of value. (per company).
The parent, Goldmoney, is a well-established mechanism for keeping one’s savings in secured-vaulted Gold, but accessible via modern (digital) means. Full disclosure: we own a position in Goldmoney.com.
Mene.com Background: The jewelry industry has steadily grown to a $250 Billion ANNUAL global industry. Almost $1 Billion of jewelry is purchased every day. The positive trend in online retail as a whole is just as prevalent in the jewelry industry. Online jewelry sales are expected to grow by 17% from the years 2018 to 2021, climbing to $30 Billion annually (Technavio). Net, net the jewelry market is a massive total addressable market.
Western and Eastern cultures hold differing views of crafting jewelry, buying jewelry, and the jewelry itself.
In the West (US), jewelry brands focus on consolidating materials and maximizing margins. Dilution of 24 karat gold and platinum creates cheaper metals and drives margins higher. Western jewelry brands establish their goods’ value in the adornment, expression, and seasonality of the pieces, rather than the precious metal they are composed of.
Jewelry in the West has no intrinsic resale value and loses up to 80-90% of its worth at time of purchase. These brands intentionally market their items to appeal to consumers’ emotional side: aesthetics and emotions. Consumers aren’t seeking a commodity that will retain its value when purchasing jewelry; rather, they are making a “feel-good” and often emotional purchase. The East is quite different.
Jewelry is sought out in the East for the precious metals they are made. Accumulating Gold jewelry is a common method of long-term saving by these consumers and has been practiced for thousands of years. Eastern jewelry is primarily high karat (22-24k).
These precious metals store value, making it possible to use jewelry as a method of long-term saving. This type of saving is seen as relatively low-risk in comparison to many currencies with unpredictable behavior. Eastern jewelry brands adjust the prices of their items in accordance to the market value of the respective metals, accurately representing the value of the item in real-time.
Mene is an online jewelry company that crafts pure 24 karat gold and platinum jewelry that is transparently sold by gram weight. Through mene.com, customers may buy jewelry, monitor the value of their collection over time, and sell or exchange their pieces by gram weight at prevailing market prices.
Mene’s business model is differentiated. In the Eastern world, there is approximately $100 Billion of jewelry bought by gram weight annually. Mene offers the transparency and high karat jewelry necessary to meet the demand in this Eastern jewelry market while implementing seamless technologies to vastly improve the customer experience.
Mene sells quality jewelry to ensure that its inventory retains value. Western jewelry brands are dependent upon marking down old inventory and launching new marketing campaigns to generate perceived value.
Goldmoney is one of the largest holders of precious metals worldwide ($2 Billion) and owns 33% of Mene. Mene’s access to these physical metals is what makes US production, an industry-low 20% premium, and earning a profit all possible. Mene’s unique business model would not work for other Western jewelry brands.
Mene.com has demonstrated strong sales growth and prudent financial stewardship in a short operating history. Mene has over 30,000 customers in 30+countries. Mene.com provides a wonderful contrast to many of the present technology unicorns (similar total addressable markets, yet drastically different financial performance). These figures reflect the most recent quarter-end results.
The operating results of Mene.com, while maintaining financial discipline, (vs. the debt-fueled “growth” companies so prevalent today) are impressive. We are customers-shareholders and believe they have a model that is truly differentiated, all without the buyer’s remorse of losing 70% of one’s purchase.
Time will bear out the ultimate acceptance of Mene.com’s business but the short-term results seem to indicate widespread acceptance of a transparent and value-driven approach to a notoriously inefficient industry. Please find additional information at Mene.com.