Daniel Benjano opens up about OGI's products and visions in Rapaport interview

Profile: Daniel Benjano

Jun 1, 1990-2014 3:40 AM By Rapaport News

Name: Daniel Benjano
From: Israel
Company: OGI Systems Group – Founder and CEO

Rapaport News: How did you become an equipment manufacturer for the diamond industry?

DB: I started in the industry in 1990 when someone asked me to make a device using video technology for the purpose of accurately centering diamonds in cutting machines. At the time, I was in the field of medical imaging and had graduated cum laude with a degree in Mathematics and Computer Sciences from Hebrew University in Jerusalem.

The diamond industry at the time had almost nothing from a technological perspective and after the success of my video device I saw there was an opportunity to bring and adapt new technology to this market. I would meet with a lot of people and ask them why they don't do this or that to make the manufacturing process more efficient and maximize their profits. Through this I learned the technological needs of people in the industry and in 1993, I established OGI Systems Ltd., which is the parent company to all of the other companies in the OGI group that are located around the globe.

Rapaport News: At what point did new technology start to make inroads in the local diamond industry?

In the beginning it was hard to sell technology to people in the Israeli diamond industry because the industry operated using very traditional methods. They were hesitant to adopt technologies that could alter the industry and might hurt local diamond manufacturers.

It was very hard to get along with this attitude, but the newer technology began to spread when we sold it to people in the Indian industry. The Israelis then understood that it was impossible to stop technological progress and that they would need to adapt to new technology if they wanted to remain competitive in a global industry.

The Indians were, and still are, enthusiastic about all kinds of technology. They will embrace anything that gives them greater capabilities or a competitive advantage. In contrast, in the diamond industry in Israel the adoption of innovative technologies is still slower and more gradual.

The first Indians we worked with were willing to adopt any technology at any price. Companies such as Venus Jewel invested in technology and that helped them become one of the largest manufacturers in the world. The Indian diamantaires saw the bigger picture more clearly and earlier than people in other centers.

Rapaport News: What part of the industry primarily uses your products?

DB: Everyone buys our machines. Of course, we provide the equipment to manufacturers and dealers but we also sell to retailers and wholesalers, including some of the biggest names in those segments. Today, even the independent jewelers understand that at the end of the day these devices will help them make sales.

Rapaport News: What advice would you give to someone looking to get into your side of the industry?

DB: To be an engineer and say that you will enter the diamond trade is not enough. You need several different traits to succeed. You have to be an engineer and a mathematician, but you also must be a marketing person and someone who is able to recognize what has yet to be created.

It would be difficult to take any engineer off the street and have him work in the diamond industry. Maybe you could hire a group of engineers, but that would cost a lot of money and the market isn’t large enough to support that. This isn't like hi-tech where you develop an application that millions of people use and has the potential to earn millions of dollars.

The diamond equipment industry is a small market that is very tough and the technical demands made of the equipment are only increasing, both from the labs and from clients who want equipment that will enable precise measurements. They will ask you why there is a mistake in the diameter of the stone by one hundredth of a millimeter, or why the angle of the crown is 34.47 degrees when it was supposed to be 34.46. It’s very exact.

Meeting these constantly rising standards requires dedicating a lot of resources to research and development. Any company that cannot meet the necessary level of precision will be pushed out of the market sooner or later.

I wouldn't recommend that someone enter this field unless he loves it. This is why there aren't many players in the market in terms of technological competitors. For me, the ability to continue developing top of the line systems for the diamond industry provides a tremendous sense of satisfaction.

Rapaport News: How do you identify trends in the market to figure out what ideas you should take from the drawing board and develop into an actual machine?

DB: When you are just starting out, you do it by listening to people in order to understand what they want. Once you’ve already been in the industry for a while, you are able to see where things are headed. It’s like building Legos. You build one piece atop the other. Every time you develop a new product you discover what else is missing from the market. A good example would be our FireTrace Fancy system, which enables customers to manufacture diamonds in various fancy shapes while achieving the maximum brilliance possible. We developed this technology as a continuation of our work on the popular FireTrace system for round-shape diamonds.

Or, you could take our decision to manufacture systems for rough tenders. It was an obvious move that began about five years ago, maybe even a little bit before 2008. When I went to my first tender, I quickly saw that people would arrive at tenders to buy rough but they lacked the ability to measure the stones being offered.

Afterward, I built a machine to do just that – help buyers measure rough diamonds. At first the sales came in dribbles. What happened, though, was that the price of rough began to rise and manufacturers and rough dealers needed a technology to figure out how much they were required to get out of the rough to avoid losing money on the deal. Pretty quickly, they started setting target prices for the rough they needed for manufacturing and they realized how important and useful the technology was to them. Today, almost no one goes to a tender without a device.
I think the rough market will continue to gather steam and that is where we are putting our emphasis for the new model. We are now in the middle of developing a new technology for tenders that will be mobile. That is the next trend.

Another product we are developing is a machine that grades polished Hearts and Arrows diamonds for re-cutting. The device tells you if it is worthwhile to recut and how much of the stone you will lose in the process. This is a product that really doesn't exist in the market and that we will launch at the upcoming JCK Las Vegas trade show.

Rapaport News: What distinguishes OGI from its main competitors?

DB: Our machines outshine others in their user-friendliness. Even a person without much knowledge of the field or its technology can operate our machines. Of course, you need someone a bit more skilled to set up the apparatus, but at the end of the day the machines do the work.

Our aim is to make the most precise instruments in the market. Our company's vision is to lead the way by developing the next thing to come to market ahead of our competitors. That is what OGI has done until now and will continue to do for the next 10 years.

Rapaport News: How did the 2008 crisis affect OGI in the way you operate, or in its business model?

The crisis didn't impact us too much because we are a privately-owned company that can rapidly adapt to changing market conditions. Once I understood where things were headed and that things would be a bit quieter from customers for a while, I decided to invest more in research and development to enable us to push forward when things picked up later.

The recession did hurt sales a bit at the beginning. There was a 3-month period where things were really quiet, not just in diamonds but in all sectors of the economy. But things stabilized very quickly and business returned to usual.

When it comes to our business model, we aren’t interested in adopting a leasing or pay per click model. We want the client to be satisfied and return again to buy more machines, or refer his friends to us to buy some machines.

If I were a diamantaire, I would not want someone to have exact information on what I was producing, which is what the pay per click model allows. I view it as an invasion of privacy.

When you buy from me, you can use my machines to produce 100 or 1 million polished stones and I won't know. My hand isn't in your pocket. My motive is to make a product, sell it and let the client derive the maximum benefit they can out of it.

Rapaport News:
What do you expect for OGI in the next 10 years?

DB: What is good about diamonds is that there will always be demand for diamonds; there is always potential to innovate and grow. That enables me to learn something new every day. I thought 10 years ago that we’d reached our limit, but it never ends. There is always some new technology to make or room to improve upon existing products.

Our goal will continue to be to make the most precise instruments in the market and to continue leading the market in developing innovative technologies.

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