Shai de Toledo: 0:03

What if you could create such a smart ecosystem or such a smart supply chain that will allow me the consumer to be able to be immersed in the rough stage. And then basically co-create the desired outcome which will yield either the ring that I would wed in or a present or celebration

Tom Raftery: 0:25

Good morning, good afternoon, or good evening, wherever you are in the world. This is the digital supply chain podcast. The number one podcast, focusing on the digitization of supply chain. And I'm your host global vice-president at SAP Tom Raftery. Hi everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery with SAP and with me on the show today, I have my special guests Shai. Shai, welcome to the podcast. Would you like to introduce yourself?

Shai de Toledo: 0:52

Hi, Tom. And thank you for having me. My name is Shai de Toledo. I'm the co-founder of a company which is building an ecosystem called HB Antwerp and the co-founder of an experience brand for the consumer called Signum.

Tom Raftery: 1:07

Okay. Super. So Shai, why did you set up Signum and HB Antwerp? And what's reasoning behind them?

Shai de Toledo: 1:16

The reasoning behind is relatively simple. We have been a part, me and my partners are having a part of the diamond industry for a very long time. My father is first generation and he used to bring work with him home. And from a very young age, I would be a part of this journey of diamonds. There was no doubt in my mind that this is the direction that I want to go for whatever reason. When I became a bit older and after the army and I moved to Belgium then I saw it for what it was. That can't be right, the idea of what I had as a child of what something is and what it truly, what it really was, was such an amazing gap in between. What do I know? I mean, I just arrived here. Obviously, this industry is going for a very long time. It's massive giants that every day Monterra is looking at them and almost praying to them in the morning in the afternoon, in the evening. And surely thousand people cannot be wrong choosing these as the gods. You realize that it's basically, lots of family businesses that are very good at one thing. And that is, they're very good at this very specific point of trade and a very good in building walls. They're so good in building walls that you can have a thousand offices in what then was the capital of diamond trade which was a part of Tel Aviv. And then moved to Antwerp, with another thousand offices. And they're all doing just exactly the same thing, but they're very good in putting these walls that will not allow information to flow. And that is basically the result of what the consumer is seeing as this opaque industry, which I'm never sure about. When I hear about it, I don't hear great things. and at the end of the day, and I'm sure we'll come back to it, but other than your car and your home, that is probably the most amount of money that the average person would spend on something that she or he have no clue about as opposed to buying a house or buying a car The disconnect between the amount of information that exists when you buy another high value item and the diamond is so big. And the result of this disconnect of this lack of information is because the industry is built in such a way that will not allow the guy next to me to ever know what I'm doing to never know who is my supplier, and to never know who are my other clients. This industry has not been pretty and we've all been a part of it. And we knew that when you come home it's like this beautiful story of this coal guy works in the coal mine. He's fully dirty and obviously he consumes all the coal. When he comes home, before he goes to see his children going to have a shower and he's going to scrub himself to death. And then he's going to come out to say hello to his kids. But there's always, small part that you can't clean under your fingernails. This terminology that you bring home with you that you are home as corny as it may sound, it's a beautiful mission. So it was definitely time to do something different. And the only thing that we knew how to do different was to look at the positive

part of the industry and say: 4:25

Okay, how can I just solidify and how can I create such a narrative for myself first? That would be able to be as clear as that I'll meet you in the elevator on ground zero. And when we are on level five you know what I'm doing and you know that what I'm doing is different than somebody else. And that narrative is that in order for this to work, it has to be about the most amazing type of supply chain that would replace everything that was in the past. And that has created a product that does not appreciate on the contrary. We have phenomenal amount of luxury in this world and for the great majority of it whether it's watches or bags or if you spend a good amount of money on luxury, it retain its value, except for diamonds. So, whether you like the previous story of how the industry is so segmented and the proof is in the pudding and the pudding says the diamond is not worth as much as you paid for it in the beginning. So how do you create this perfect narrative and therefore a supply chain that will be able to capture just the great things and the great things are many. One great thing is you have a phenomenal community whether it's in Canada or whether it's in Sub-Sahara Africa, which are heavily relying on diamonds. And this is nothing to do with what we have seen, which is 0.01 of areas which have conflict in. I'm talking about the great majority where diamonds are mined, basically in Canada and in Botswana. And these two countries, Canada don't need to say anything, but Botswana is the longest ever democracy. it's a tiny place that never had any bloodshed. It's a country that, around 50 or 60% of the GDP is pure diamonds. They've built all the schools, all infrastructure. Every person is getting paid to get higher education to do a higher education degree. It's a country, it's a tiny place of two and a half a million people that controls a big chunk of where diamonds are coming from. And their community is amazing. So their community is something to celebrate. The whole experience of taking something from the ground that was in the belly of earth for 3 billion years, and then erupted in a volcano. The story of how you tell this national asset is a beautiful story to tell. For the moment it's very generic and it's almost bought by the by the kilograms and with zero emotional attachment. But what if you could create an environment where you actually start the consumer starts from the rough? The rough is beautiful. And majority of the people in the trade in the industry has never seen a rough diamond before because they only see the polished outcome. But what if you could create such a smart ecosystem or such a smart supply chain that will allow me the consumer to be able to be immersed in the rough stage. And then basically co-create the desired outcome which will yield either the ring that I would wed in or a present or celebration. And there comes the third part of this story. So the first part was the community that mines at and now how we can celebrate it and benefit it at most. Then comes the experience of creating something. And the third part, which is diamonds are typically used to celebrate something. And there's not a lot of occasions where you can say, you know, I will attach something physical to an emotional journey that would last me hopefully for the rest of my life at least twice or three times. You have this celebration and you have this journey of experience of how to change a rough rock into a polished item and you have the community. So HB ecosystem is concentrating on those three. And so we've partnered with the government and with the miner, and then we've built an entire ecosystem that nothing leaves us. We've bought everything. We've built everything from technology to robotics to knowledge through actual manufacturing to distribution, we've done everything under the roof of HB. and in this process, we removed something like 25 players that were just doing their small part of it. And the biggest change was, is that we came to the government. In this case, governor of Botswana and we're willing to talk with other government. We've partnered with Microsoft as well. And we've gave them a pad and that pad would say, look at your national assets. And this is where it was when it was in the ground. And you can visually see and throughout the supply chain, see where it is now. Which kind of function it goes through, what kind of process it went through and more importantly, how did the value appreciate over time? So for the first time you come to a government or to a miner and to other stakeholders and you tell them, look, look at this pad. You are able to track your commodity that until now it was like something was beyond anybody's dream. And you can track it. And then you, come to the government and tell them, you know, if you can do it with something so complex as this organic matter, which is diamond, which is changing its form so many times doing production until fruition to polished. If you could that with diamonds, surely you can do that with rare metal and you could do that with gold, and you can do that with so many of your commodities that for the moment selling raw material. And it is the jump basically what Signum would represent. We're not buying any more raw material from you, but rather you are a part of the entire journey until the consumer. So you are aware of what price the consumer is buying it, at which market, how she, or he looks like, what age they are, the entire show. And what does this mean for your visibility? For you being a part for you, the community for you, the government for you, the minor being a part of the entire supply chain, rather just selling it as a commodity.

Tom Raftery: 10:55

Ok so as you said about 25 players out of the supply chain. So it's just a end to end all under the HB umbrella. It's just HB is doing the whole thing. Start to finish buying from the community or the government and selling to the end consumer. And there's no one in the middle and you're documenting the entire process on a blockchain so that there's full transparency for everyone in the whole system, right?

Shai de Toledo: 11:25

Yeah. And thanks for pointing it. Cause I was blubbering before and I didn't. uh, it's in order to achieve this level of transparency for the stakeholders, we've basically dissected the entire show into hashes. And then from the essence of this ecosystem, there are three things. There is the quality of the hash

Tom Raftery: 12:20

Right.

Shai de Toledo: 12:20

or the quality of the input of the transaction or how the transaction is manifested into zeros and one. And then the second thing is obviously the hush itself, that every transaction needs to have that point of reference. It doesn't matter if the transaction is very big in terms of the effect it'd have them stone or whether they just me giving the stones to you and you're giving it to me back or me giving it to QC or back. So it can be as easy as it just change the location of a hundred meters or 50 meters or something happened to it. And then it's the hash rate. So how many times am I able to produce this? And the result is, a quality hash, which is being produced at the hash rate of a thousands of times per diamond. And in order for this to happen in order for all the hashes, not just to be events, but rather that they could not be an event without first confirming that the first event is suppose to follow the second one so that there is a sequence and there is a logic and the one hash cannot exist without first verifying previous ones. Obviously then as you mention it goes into this immutable form of a blockchain. But what allows thousands of hashes to speak to each other in the core is this investment that we've made in hardware and software and that every piece of the hardware that we have speaks exactly with the same language and that we own it. So in other words, we're not relying on third parties willingness to upgrade or to store it or to visualize it or all the other issues that come with the reliance in manufacturing on third parties. So it's really how to be our own bubble, and how to make sure that every piece of hardware that we are developing is having the same level of code and the same level of language that we'll be able to speak in the most perfect way to each part of the transaction in the supply chain.

Tom Raftery: 14:28

Okay, and so the outcome for the consumer is that they get a diamond which has full traceability around its origins. And also, doesn't depreciate in value. Is that the value?

Shai de Toledo: 14:46

Absolutely. if I tackle your first point there is always type of a plaster solution that relies on, a traditional supply chain that will basically, third parties will say, you know what? You can just upload your information. And then you're sort of relying on the goodwill of businesses, to deposit information into a third party. And that is not a sustainable proposition and that and that's where we had to build everything from the ground up. And yes, you're right. The result of it is a type of all diamonds are equal, but some are more equal than others and that it may look some of them the same, but you have suddenly a physical asset that has a digital twin, a perfect digital twin. And then what you could do with that digital twin. This is the obviously the exciting part or that we call it the afterlife in our ecosystem. It's the transaction of exchanging hands between A to B and the final consumer in between Signum and the final consumer doesn't stop there, but rather that is just the beginning. And the ledger and the blockchain and everything that was done before, basically give the consumer the possibility to keep on writing her story in it. Whether she's going to get married with it or whether she's going to leave it to her children or where she's going to do a transfer of ownership. All this is being done on the same infrastructure that was created in order to build the product or to transform the product. And this is where the IoT devices that we have created and the family of IoT devices that we've created are sort of moving away from the transformation from the production into the experience form of the client.

Tom Raftery: 16:34

Okay. And you mentioned earlier as well, and we didn't tease it out that people could design their own diamond. So you get to see a rough diamond and you decide, well, I want a particular shape of diamond from my end product. Is that how it works?

Shai de Toledo: 16:51

Absolutely. And even now when you say it it's so logical. And Tom it's basic. But the industry currently, the way it works is that me as a manufacturer not HB, but the industry is that every month I get a phenomenal amount of stones from the miner. And then I have this phenomenal pressure on me to convert it as much as I can to cash because I know, the next cycle is just around the corner. And, I need to run a business. So I'm, as a manufacturer will take decisions based on what I think you would like or what I think the client would like. And therefore, if there's one manufacturer that's what he will think. And even there's a 1,000 the full 1,000 will think exactly the same way. So you have this glut of things that they thought that you like the fact and have carry no narrative, no story, no transparency. And in the year of 2022, people want to know where the diamond are coming from. Anything is coming from whether it's your vegetables or your diamond, but certainly something that you would be your or third or fourth biggest expense. You want to feel good about it because diamonds are vanity at the end of the day. Yes, they're a store of value, but you don't need it to survive. And when you make an expenditure on something that you don't need it to survive, you want to feel good about it. And you want to know where it comes from. And now in more specifically to your question is that when you build a community that want to be a part of this experience and therefore come Signum, and want to be a part of and want to register it to this way of life of, ' I want to take my time, I want to do it right whether it takes two months or whether it takes eight months, depending on the complexity of the stone, I want to be a part of it'. And so you need to create a language or a software that will be exactly the same software as your designers and your planners are using on your facility and suddenly you can lend it to the consumer to be immersed in basically seeing what you seeing in the stone. And instead of you, as the designer being presumptuous to know what I want as a consumer for the first time, have the ability to design together with you and to take calls on that piece of rough, that was in the belly of the ground for 3 billion years. And I am part of the experience that I'm paying for, and part of the experience that I want is that I was one of the script writers in that movie that the end result of it was something on my finger, on the finger of my wife or whoever.

Tom Raftery: 19:27

Okay. So how does that play out in practical terms? Do I go to a website? How do I visualize it? How do I decide the design that I want? Because I know nothing about diamonds. How does that all work?

Shai de Toledo: 19:41

Over the summer we're launching Signum. And Signum would be as I mentioned before, a type of a community that you need to work a bit harder in order to get there. We have one goal and goal is to see that the diamonds are not being used for anything else, other than what they meant to. That is part of the value preservation is to know that it gets into the hands of the right people that actually we want as clients. And I know that it's a bit of a gap between someone who says I just want to sell and I want to set as much as I can. I want my stakeholders, and to have the return on investment as quick as possible. And in order for us to build a different community, we have to think differently. So we've told everyone who put his faith in us, that it's going to take time to build the right community. So first of all, there's going to be a level of scrutiny. But let's say you're in this community. You're, starting your journey and you say, as you mention Tom I know nothing about diamonds. So there's going to be some level of immerse in how the process looks like. It could be while you wait for the stone to be associated to you as a client, or it can be a part of the process and, the beautiful things about the program that we've built is that it gives a script. So is a script of let's say 500 possibilities of what could be done from one single stone. Now typically the manufacturer would get four or five options. He will go for the first option, because that makes more sense yield versus money-wise or yield versus speed. And then that is the decision they would take. And here we are visualizing all of the 500 options. And then you said, you know what, it's too much. And then start the process of where does the CRM comes from. So where does the CRM input and where does the metadata, and where's all the smarter algorithm comes from, look for why you need it for. How would you use it for, is it for investment? Is it for celebration? Which part of your life you are? And therefore we would be able to somehow direct you more towards and remove the 500 scenarios, scripts, or 500 algorithm into just 50.

Tom Raftery: 21:50

Right.

Shai de Toledo: 21:51

And then start this immersion of look at those

50 and now see: 21:53

are you more of a heart or you're more of a round? I mean, What's more important for you is size? Which is more the American market or purity which is more the Asian market. And then, so all these things will take into place. Hopefully we can do a good job being in relatively minimizing the algorithm and the scripts and enough to make you as the consumer still one that is writing the script and not us sort of directing you to it. it's a bit of a balance.

Tom Raftery: 22:22

Okay. Okay. And you mentioned as well that the value doesn't depreciate using your methodology, whereas it does depreciate, typically. So if I buy a diamond today from a traditional retailer, as soon as I walk out the door, it has depreciated in value. Whereas that's not the case with your system.

Shai de Toledo: 22:46

Absolutely. So, flip side of doing the right thing is that there's certain values, that the community appreciate. So, things like provenance, which are so basic in art. But currently don't exist in diamonds. Things like lineage, which are so, paramount to horses and to lines of horses or dogs or anything that really exists on earth and has a mother or father. So if you combine provenance and lineage, and now for the first time you are able to really manifest them, and market them and brand them. In what sense? In the sense that, which one of those two or three different location of the mine. In Canada, there's five or six different location. Each one of them is the land belong in Canada to the first nation and the people that are owning that land. So it is our responsibility to be able to say a diamond that can show that is benefiting this particular community and has a direct provenance and lineage. We are able not just to speak about it, but to show we can zeros in one to make it auditable in zeros and one to bring a substantial partner to validate it. Not just because I want to tell a great story, but rather because I'm able to substantiate everything I said in real life. Then for the first time you have a diamond that has a provenance and a lineage, and we believe that this diamond is worth more than anything else. This connection that was made to the community and the contribution that was made, and then, very much like luxury. It would be our responsibility to say, the diamonds which are coming from these places are not infinite. They have another 2 years of mine. They have another three years of mine and another four years of mine. And then there is a tremendous cost. To rehabilitate the entire zone in order that water is not affected and greenery is back to where it belongs and that the community is substantially better off then when the whole process started and that takes a commitment. And so the people that would buy these stones that have the provenance and the legion would be a part of this community. And when you have a scarcity of material, it means that every year it is worth more and not less as it is now, which is basically a part of this massive pile. And whether we like it or not in the year of 2022, to which governments, the diamonds are contributing to matters and in the age was 60% of all diamonds are coming from Russia. It matters, provenance matters. Until now until 2019- 20 provenance was a hype word. Especially in the diamond industry, I will not speak about others because I'm not part of that, but in diamonds the whole war and the whole things of work sort of speeds up the entire discussion, which was supposed to be already 10, 15 years ago. But anyway, I guess sometimes we need a traumatic event to make us understand value provenance and lineage.

Tom Raftery: 26:04

Okay, Shai we're coming to the end of the podcast now. Is there any question I have not asked that you wish I had or any aspect of this we haven't touched on that you think it's important for people to think about?

Shai de Toledo: 26:17

I guess how are we doing it. There is always the element of the data mining and AI and the mix or the perfect relationship between hardware and software. But put that aside, the biggest or the best part of my day is that we were able to recruit twenties, 23, 24 and bunch of, women and men, which carries this narrative and carry this torch. And they're all data scientist or supply chain expert but they are telling this story much better than I can and being immersed with them; and the fact that HB is such a young company, we moved from 4 to 115. But the majority of them are young people and you can't fool young individuals you can't just talk the talk. and there's no one that would put a mirror in front of you and tell you, look, you're full of it. More than somebody who was in 20, who still has his idealism, but also smarts. The fact that we've managed to integrate them so beautifully within the last year and a half, two years in the company is by far the biggest, achievement that this company has ever done more than any type of so if I could speak about something, I would speak about that.

Tom Raftery: 27:34

Okay. Super, super. Shai, that's been really interesting. Thanks a million. people want to know more about yourself or about HB or any of the things we talked about in the podcast today, where would you have me direct them?

Shai de Toledo: 27:48

I'll forward you the links for HB Antwerp and for Signum. And we'll make sure to update you on anything that goes on so you can, update your audiences.

Tom Raftery: 27:57

Fantastic. Fantastic. Shai. That's been excellent. Thanks a million for coming on the podcast today.

Shai de Toledo: 28:01

Thank you so much, Tom. Thank you.

Tom Raftery: 28:04

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about digital supply chains, head on over to sap.com/digital supply chain, or, or simply drop me an email to tom.raftery@sap.com. If you like the show, please, don't forget to subscribe to it in your podcast application at choice to get new episodes, as soon as they are published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks, catch you all next time.