Opportunity

The diamond industry today faces numerous challenges related to diamond sourcing and quality. Lab-grown diamonds are infiltrating the natural diamond market, both illegally and legally. Because of this, both consumers and suppliers are increasingly wary of claims of authenticity. Compounding the problem, consumers are increasingly aware of and sensitive to social issues affecting supply chains of everything they purchase. Diamonds are no exception. The image of diamond jewelry has been tarnished by awareness of “conflict diamonds”, diamonds from regions of strife such as Sierra Leone and Congo that come with negative social externalities. This changing consumer preference has led to industry decline for nearly a decade

Certifying the authenticity and origin of each diamond is a big challenge. The supply chain is several layers deep, with diamonds changing hands and crossing borders several times before reaching the end user. In 2017, wholesalers and distributors bought over $5.7 billion worth of rough diamonds from De Beers. Next, the diamonds are sold to various polishing and cutting companies, smaller retailers, and to big retailers. With the diamonds changing hands several times from mining, sorting, distributing, cutting, polishing, manufacturing, and finally to retail stores, end-customers do not confidently know where diamonds originally come from. Even when diamond jewelry changes hands, often in the process it is easy for a diamond to be replaced with a lab-grown or lower quality diamond. Our solution is to utilize blockchain to track these diamonds and with the use of smart contracts to make diamonds traceable.

 Solution

By allowing each step in the diamond supply chain to verify and track their product in an immutable ledger, we can add significant barriers to fraudulent diamond sources. At each point that a diamond changes hands would involve an entry into the blockchain, creating a record of which diamonds each entity was responsible for. This entry would include the id of the source, the recipient, and id of the diamond being sold. Each diamond could be given a unique id number by laser engraving. These engraved ids are already in place in many certified diamonds, but finding out what the origin of the diamond is based on this inscription is a not an easy matter. By logging each step of the supply chain in a trustworthy, public ledger, an individual considering a diamond purchase can easily verify that the diamond is represented throughout each step of the supply chain.

Commercial Value and Promise

Our next step in testing this idea out would be to consult with industry experts about its economic promise, build out the blockchain system, and begin building buy-in with consumers to incentivize producers and retailers to join our system. Once we have interested parties in at least one place in the entire supply chain, we would want to create our first entries, from mine to ring. Ideally this test would come with as much buzz and publicity as we can generate to get more consumers interested, giving incentive to suppliers to join, getting our flywheel moving.

For the system infrastructure, we would need to incentivize someone to run the mining computers to generate the nonces. This could be done by charging a small fee for each transaction on the chain, much like is expected to happen once final bitcoin has been mined.

Product Promise

For our initial discovery phase, we have conducted interviews with several experts in the diamond industry to verify our idea and proposed plan. This has led to some good feedback and it seems like it is a possible solution.:

Aman Parikh, owner of diamond wholesale business: “Definitely some scope to use this technology. The Kimberly Process modeled by the UN has tried to execute this to prevent nations with blood diamonds from selling their products. This could be more efficient to implement once the diamonds have been cut and polished as creating an ID on a diamond which is larger when extracted from the mine, will be harder”. Further, insight from Aman, led us to understand that currently on purchasing diamonds from a wholesaler, companies do not know how many times the diamond exchanges hands or is sold in between. This process would also have the potential to eliminate some middlemen from the process which would help the end customer.  

Name Withheld, First year student at Booth who recently purchased diamond ring for his to be fiancé – “Sounds interesting, I would have an easier time purchasing a diamond and not paying an unnecessary premium at a Tiffany’s. I struggled with making a decision about my diamond purchase because I wasn’t sure that the jewelry store on Wabash was giving me a legitimate diamond.”
As for the technology’s promise for tracking a commodity product throughout the supply chain, we can look to a proof of concept from another industry: Tuna. This industry is using blockchain to help reduce the amount of illegal fishing in a similar way to our own proposal. This lends credence to the idea that we can use blockchain to reduce another negative externality of an industry.

Opportunity

As of 2017, indoor rock climbing in the US was a $402.9MM industry by revenue, with an annual growth rate of 3.9%. This is an industry that sees growth with the growth of disposable income, and sees its growth driven primarily by younger consumers. Consumers age 35 and below comprise 83.6% of the market, with 47% of the market aged 25 to 34.

Despite this growth, safety concerns often dissuade new climbers. Additionally, high costs in the form of the climbing gym needing liability insurance and knowledgeable staff to train and keep an eye on the climbers, increases the barriers to entry in the market.

Further, to keep climbers continuously engaged, climbing gyms employ route setters – people who redesign the patterns of the climbing holds every few weeks. To communicate the level of difficulty of a route, routes are graded. While most indoor gyms are two standard grading scales – V Scale and Font Scale – grading is very subjective and there can be a high level of variance of how routes are graded across gyms. Further, individual attributes of the climber – such as height and weight distribution (men and women for instance, may have different weight distributions which will cause them to approach a climb differently) can make routes more difficult for some people than others. While there are six main forms of rock climbing holds, there can be a high level of variation on the main forms.

Solution

We believe an algorithm can be developed, factoring in types of holds, height and pitch of the climb, attributes of the climber, such as height and weight, to create new rock climbing routes with personalized ratings. Using artificial judgment in this way will create a more objective standard of route rating that will allow climbers to practice safely. Gyms across the country could then communicate a standardized definition of route difficulty, accessing a database of infinite climbing routes. We shall imbed the algorithm into a mobile app we named PocketClimber, both after the name of a rock climbing hold (Pocket) and the ease of using the app for setting new climbing routes.

Our solution reduces the time and cost for route setting. It will reduce the dead time between climbers as well as likelihood of injuries due to route-setting judgement error. Additionally, having routes analyzed by computers according to a person’s fitness and physical characteristics (such as height and weight) may make people feel more safe, thereby attracting new people to the sport.

Commercial value and promise

Our solution targets a rapidly growing international market and is scalable, as it can be used by individual climbers as well as large gym chains, such as Gold Gyms. PocketClimber can establish the standard for climbing and be adopted by all accredited gyms. We will design a prototype app to demonstrate the potential capabilities of the PocketClimber, pitching it to investors such as GoPro founder Nick Woodman who have a vested interest in adventure and sports. Live demonstrations will prove the viability of our product. Currently, no customized solution exists in the market. The closest is the app Vertical Life, which provides standard guides to climbing.

Pilot

We will start our pilot program with the demonstration of a prototype app to climbing gyms across Chicago and get feedback from climbers from our network and from the gyms. Additionally, we plan on hosting events around the app – such as human vs AI setters, and different climbing competitions sparking an interest in the app and in the concept. Climbers may be intrigued by the unusual routes designed by AI, so there could be an event-based opportunity here. After we collect enough data, both from the human setters and the climbers we will be able to refine our algorithm and demonstrate to investors the advantages of using PocketClimber with optimized routes and less accidents for beginner climbers.

Additional:

Features:

•      Wall scanner, some features of a climbing wall are not changeable. The app uses the phone camera to assess inherent difficulty of the wall
•      Hold Inventory:  Route setters can input the types of holds they have and how many holds
•      RouteBuilder: You can specify the level of difficulty you want, and RouteBuilder will make a route for you. Additionally, could provide further insight such as range of difficulty climbers will face, so that routesetters are taking diverse body types into account when setting  
•      RouteFinder: On the other side of the market, consumers could use the app as well to input personal metrics such as height in order to get personalized gym and route recommendations

Sources:

http://clients1.ibisworld.com.proxy.uchicago.edu/reports/us/industry/productsandmarkets.aspx?entid=4377#MM

https://www.99boulders.com/bouldering-grades