From their base at the Rosewood Sand Hill Hotel in Menlo Park, Calif., Stephen and Jared Silver, the father-and-son team behind Stephen Silver, Silicon Valley’s go-to jeweler for haute horology and rare gemstones, have direct access to the world’s brainiest thinkers and most successful entrepreneurs. Between academics affiliated with nearby Stanford University, policy wonks headed to the Hoover Institution, and the scores of venture capitalists who make up the region’s world-famous tech community, the clients who patronize the Silvers’ two boutiques inside the Rosewood are eclectic, informed, and poised to spend.
“A $3 billion tech acquisition got agreed upon on our patio,” says Jared, a former strategy consultant with Ernst & Young who officially joined his father in the family business on January 1 of this year, when he became president.
The Silvers cater to those big spenders with a rarefied selection of timepieces, all sourced from independently owned brands, including Bell & Ross, F.P. Journe, Greubel Forsey, Hermès, HYT, Laurent Ferrier, MB&F, Ressence, Richard Mille, and Urwerk. “And we just received our first De Bethune last week,” Jared adds.
For all the company’s success with timepieces, however, the watch business is nascent compared to Stephen Silver’s 30-year career in the high-end wholesale jewelry business. Below, Stephen and Jared reveal how the company parlayed its expertise in fine jewelry into a thriving retail business that includes one of the nation’s most prestigious selections of timepieces—and why they believe accepting cryptocurrency is the most effective way to service their high-net-worth clientele.
Tell us about your decision to accept cryptocurrencies starting in 2014.
Jared: Before I joined the company, while we launched a whole retail division, I was a strategy consultant for Ernst & Young, specializing in developing a process on how to drive disruptive innovation into Fortune 500 companies in repeatable processes. So when we opened the store, we’d been tracking the development of cryptocurrency from the first moment Bitcoin was announced back in 2009. I’d been fairly deep into this, consulting on how to leverage blockchain technology. Here in Silicon Valley, it’s dinner conversation. And the Rosewood Hotel is located right next to 40 of the top VC funds in the world, including Andreessen Horowitz. I said we should start accepting it. And we did in 2014.
But there wasn’t a lot of action with cryptocurrency for years. In the last 12 months—when Bitcoin went from $1,400 a coin to $5,000, $6,000—it became a conversation. We got introduced to a client with a large appetite for interesting watches who had made a considerable fortune in cryptocurrency—he’s now a close personal friend. He bought an MB&F LM2 in titanium and was traveling abroad and wanted to get a wire to us for the watch. He said, “Wouldn’t it be so much easier if I could pay you guys in Bitcoin?” He spends about 85 percent of his time on the road. I called an industry leader, Bitpay, and we had to go through a whole compliance assessment. Then they gave us unlimited processing a day. I saw this as an opportunity to be a flag bearer and set the standard for how to use technology to be beneficial for customer experience and for the company as a whole. We are the first jewelry company in the world to accept cryptocurrency. I can say that with a pretty high degree of confidence.
How have your clients reacted to that decision?
Jared: We’ve done over eight figures in crypto sales within the last 12 months. I see multiple customers who are choosing to use this as a benefit now that they know it’s available. A lot have been holding cryptocurrencies for years as an investment, and now they’re saying it’s time to cash in on their investment. I think people respect that we’re a leader in this space, and we’re embracing these new and emerging technologies.
How did you get started in retail?
Stephen “Steve” Silver: We opened the initial store in 2009. Somewhere along the line, the architect who designed the hotel neglected to carve out a large enough space for us. If it weren’t for my relationship with Stanford, pointing out that a retail space, if done right, would add tremendous value to the environment and stature of the hotel, [we wouldn’t be here].
So we wound up taking what was supposed to be a closet for the restaurant, and we made it into a 100-square-foot treasure-chest store. It’s amazing how successful we were. For the first six years, we never generated less than a seven-figure volume per year with one-and-a-half employees (one was part-time). So it was extremely easy and efficient to run because of the clientele the hotel attracted and the type of merchandise we put in there. We averaged over $10,000 per foot per year, over a six-year period.
We started to think: How can we build more space to accommodate a different clientele than we initially targeted, which was primarily a female buyer or female influencer influencing her partner to buy. My son, unbeknownst to me, started taking in a lot of data about what was going on at the hotel. He got into the restaurant and studied the kind of clientele eating there by day or night. We had a count of how many people came into the store, what their gender was, what were they looking for.
What did you discover?
Steve: We determined that despite the success, we were missing about 85 percent of the traffic that was coming into the Rosewood because we were carrying the wrong product. What that pointed to was re-merchandising and creating a new watch division. In order to do that, we’d need significantly more space. As fate or luck would have it, there was an area in the interior of the hotel that was planned as a long atrium—from reception to the library. Because of the way the sun was going over the hotel every day, the area created an incredible concentration of heat. So they had the windows blocked off with shades, and it was never really used or enjoyed. We made a pitch to the city: It’s dead space, not utilized, and we could create an environment inside the hotel that wouldn’t impact the open space and hopefully make it a very good revenue stream for the city of Menlo Park.
The purpose of the store was primarily to develop a watch collection truly curated for a clientele that we believed existed in our community that was so unique we had to be very careful about the product we carried. We had a very thought-out plan about which Swiss watch companies to bring in that would stimulate the high-net-worth and highly educated to be captivated by what we built.
What attracted you to independently owned watchmakers?
Steve: When we first looked at going into the watch business, we were attracted to brands that were richer financially and dedicated a lot of dollars to marketing and positioning. We looked very seriously at brands that were owned by the “big three”: Richemont, Swatch, and LVMH. And after looking at them and them looking at us, it just didn’t feel as synchronous to our core business as looking at the independents. Everything this company has done for 30 years has always been driven by uniqueness and rarity and quality and old-world tradition, using the finest craftsmen to make our jewelry and shopping for the finest gemstones that money can buy. The independents were engaged in the same philosophy and passion.
Jared: They had an ethos that aligned with our core business. We are a jewelry manufacturer at our core—we cut stones, design and manufacture jewelry, we’re in product design. As a family, we really value creativity and entrepreneurship and risk taking. We see risk as opportunity; you have to take risks in order to do something exceptional.
Which brands are most popular among your clientele?
Jared: MB&F is one of the strongest brands we carry.
Steve: [Founder Max Büsser] announces production of limited editions, and they’re gone before we can even take delivery. Our goal is to get as many of those as possible; we’ve literally created demand for a company that didn’t exist here. We have a big collector’s mentality, driven by the DNA of the company. It’s not about selling. It’s about picking up the phone and saying, “This is available.” It’s about understanding the customer and what their desires are and guiding our clientele to understand the art of collecting to create balance in their collections. A lot of the discussion is about why it makes sense to do something, not about if something is pretty—those topics are scratching the surface.
Why are your clients so drawn to MB&F?
Steve: The context of [Büsser’s] designs are driven by his “fantasies.” A lot of inspiration comes out of the ’60s, ’70s, and ’80s, and a lot of the clientele in a position to buy those things also grew up in that era. So when you identify the inspiration, there’s this heartfelt thread of connection—that’s how it starts. Then you get into the Max Büsser world of innovative watchmaking.
Which of your new 2018 models are you and your clients most excited about?
Jared: One of the key things this year is the MB&F perpetual calendar, which is incredible, especially the green one. I personally reserved the green one for myself. Other interesting pieces from this year include the Greubel Forsey GMT Earth; we were the first retailer in North America to receive one. That sold. And the Americas edition of the Greubel Forsey Balancier—the blue polished one. It retails for $215,000. We got a second one in and have interest.
Greubel Forsey Double BalancierWe’re getting a lot of action on Urwerk. We brought them in right before Christmas 2017 and since then have sold more than a handful of pieces. The UR-210 in black platinum is really an amazing piece; we sold a couple of those. We’ve had clients put down multiple deposits on ones they’ll wait potentially over a year for.
What’s fascinating about our dive into the watchmaking world—we’ve only been in the business for three and a half, four years—is that the brands we bring in, people tend to get hooked on them when they move away from traditional watchmaking. With MB&F, if we sell a new customer an MB&F, I usually estimate five to seven months before they’re looking at buying another one. I can’t think of a single customer who’s owned an MB&F for more than six months that doesn’t own two.
Steve: That also points to this general philosophy the company has always lived by: Risk is a measure of understanding stuff. Once people understand the story and why it’s relevant, there isn’t a lot of resistance to why they should be collecting this stuff.
Jared: The reason why we see such an interesting resonance between our brand and brands like MB&F and Urwerk—when I tell Max’s story and explain who he is and where he came from, when people hear the story of him literally being down to his last 1,000 euros—when you say it to someone who’s been there, it resonates. When I express that to a young entrepreneur, who’s self-made, when they hear that story, it’s something they want to be a part of.