The story of a pearl trader who redefined an industry through technology, sales and marketing.
For over 70 years ‘black’ pearls with their gleaming colours, from iridescent green through gunmetal grey to midnight black, were considered an oddity by the jewellery industry in the 20th century. Salvador Assael, the Pearl King changed all of that.
In 1978, Salvador Assael, who, according to his peers, had an uncanny ability to be in the right place at the right time, offered 18 strands of Tahitian black pearls exclusively to his old friend, Harry Winston, the legendary American jeweller.
Assael thought Winston would buy only 3-4 necklaces worth of black pearls but to his surprise, Winston not only agreed to take them all, but the jeweller also transformed the most flawless of them into stunning necklaces and displayed them in the window of his salon on Fifth Avenue in New York. Even though each displayed black pearl piece was priced at $1 million all of them sold almost immediately.
Up till that point, there had been no stated demand for Tahitian black pearls, yet suddenly no one could get enough of the world's newest must-have gem. Black pearls that Assael hadn’t been able to sell at a price he wanted just a few years earlier suddenly became more coveted by the elite than their brilliant white cousins, or the big, buttery South Seas pearls found in Australia and Burma.
What had happened? How had Assael managed to ignite such desire in the cream of Manhattan society, convincing them to hand over large sums to acquire pearls they had previously scoffed at?
According to David Brinkley, the late American NBC and ABC newscaster, "A successful man is one who can lay a firm foundation with the bricks others have thrown at him." Salvador Assael saw the first brick flying towards him shortly after World War II.
During the war, Salvador’s father, James Assael struck a lucrative deal with the American army. He supplied the troops with waterproof Swiss watches, which he managed to get through the German Swiss watch export blockade using his connections. When the war ended, James Assael’s business dried up and he was left holding the bag (containers) of unsold timepieces.
Salvador, upon his return to New York from the 78th Infantry, joined his father’s business. In search of a market for the remaining stock, he tried to sell the watches to GIs stationed in Japan. He soon realised that the Japanese also needed instruments that could tell time. Then a new brick flew Salvador's way: the cash-poor Japanese could only barter for goods. The Assaels decided to trade their watches for Japanese cultured Akoya pearls.
By 1950 Salvador, the accidental pearl trader had managed to barter all the remaining watches for the finest cultured pearls that the Western world had ever seen. As the business grew, so did his ambition. He wanted statement jewels; jewels that were bigger than the modest, 10-millimetre Japanese Akoya pearls.
Salvador’s hunt for bigger pearls took him to the South Seas where the Japanese pearlers had operated prior to the war. Off the coast of Thursday Island, he found farms producing pearls as large as 15 millimetres in diameter. The American market’s hunger for large pearls was growing, Salvador broadened his search for large white pearls that could sell for $50,000 per strand. (The Japanese Akoya pearl strands could only fetch $3000 wholesale.)
By the 1960s Salvador had become the world’s biggest buyer of large Burmese pearls. Harry Winston and Van Cleef & Arpels, couldn’t sell his large white pearls fast enough. The business was booming and Salvador became known as the Pearl King.
When political instabilities threatened Burmese pearl production, another brick flew Salvador's way. Whilst he was looking for new production areas as a contingency, Jean-Claude Brouillet, a friend and a multimillionaire developer, urged him to consider the far-flung atolls of French Polynesia, and particularly a Tahitian atoll called S. Marutea which Brouillet owned. S. Marutea's farmers harvested odd-looking pearls from oysters that thrived on the coral reefs there.
Historical Backdrop
Prior to the late 1960s, the only black pearl pieces had been owned by Royals. A necklace made up of 30 black pearls had featured in the Austrian crown jewels. Mathilde Bonaparte had owned a necklace with 7 additional drop pearls, auctioned after her death in 1904. Some of the finest black pearls in Europe belonged to the German house of Anhalt-Dessau. Only Empress Eugénie’s black pearls could compete with them. These passed into the hands of Princess Clotilde, the daughter of Prince Napoléon Victor after the death of Empress Eugénie. However, despite their niche appeal in some royal circles, black pearls were still overlooked by the mainstream and languished in the shadow of their brilliant white cousins.
This began to change in 1969, when the three-strand necklace of Nina Dyer, the wife of Baron Heinrich Thyssen and later of Prince Sadruddin Aga Khan, was sold for $168,000 by Christie’s auction house in Geneva. The piece made a splash, but the opportunity to leverage the media and public attention evaded most pearl traders.
Keys to Success: Spotting a gap in the Market
One dealer told Stephen G. Bloom, the author of Tears of Mermaids, Assael had “a brain like a computer.” That brain, now primed with experience, was scanning the pearl industry for gaps.
In the late 1960s, no one thought that pearls of any colour but classic white would be worth the risk of investing in farming. Salvador thought otherwise. He recognised the inherent beauty and value of Tahitian black pearls, and the possibilities they could offer. In a world full of snowy pristine cultured pearls, he knew the exotic black pearl could create a sensation.
Considering the developments in the pearl industry and the state of its supporting industries, the large Tahitian black pearls meant an opening in the dynamics of the pearl industry. Salvador recognised that black pearls were still the domain of royals, but not the rich.
He isolated the key economic and other levers in the industry required to exploit that opening. He recognised that the grade and quality of the pearls, feasible culturing and the perception of the black pearls were the key barriers and the key opportunities to reaching the deep pockets of his market. He put all his energy to work and focused on moving those levers.
Keys to Success: Exclusivity
As a trader, Assael was known to be shrewd. He wasn’t willing to be a cog in someone else’s wheel. He wanted to play a dominant role in the market. In fact, he wanted to make certain that he owned the whole wheel outright. Playing by the conventions of the market and relying on the traditional Japanese distribution system could have risked jeopardising control over the Tahitian black pearls he saw such a great opportunity for.
To minimise circumstances beyond his control, and to control the economics of his business, in 1973 he secured an exclusive deal with Brouillet, bypassed the traditional Japanese distribution and became the only dealer in the United States who had access to rare black pearls.
This exclusive deal would play a tremendous role in Asseal’s future success. It became a market advantage and a powerful negotiating tool.
Keys to Success: Advanced Process and Technology
The Brouillet deal secured, Assael took a box of sample pearls to New York and visited Harry Winston’s salon to show off his rare sample. The jewellers suggested that if such pearls could be cultivated larger and rounder, Winston might have a look.
From then on Assael passionately pursued the cultivation of a perfect strand of Tahitian pearls. He hired experienced technicians to elevate the black pearl culturing process. The farmers and the newly arrived technicians at S. Marutea atoll had challenges to overcome in order to achieve the quality and output targets in a feasible way that could put the Tahitian pearls on the map.
By 1976 Boruillet’s team managed to harvest 8000 pearls. In 1977 the number had grown to 14,000. In pursuit of the perfect strand of Tahitian pearls, Assael bought the whole lot for $1 million.
Keys to Success: Reputation and Authority
“In the small world of pearl traders, every established trader has a mythology swirling around him. Like any specialised profession, pearl traders carry reputations that are impossible to shake.” writes Bloom in the Tears of Mermaids.
Assael tirelessly built his authority and managed his strong reputation to gain power in the industry. Since the early days in the pearl industry, he reinforced his brand with stories and anecdotes that supported his personal, political and business goals. According to peers, he took every opportunity to get press attention. Because of his efforts, everyone in the industry who mattered had an opinion about him (good or bad) or some Assael anecdote or story to tell.
Combined with his authoritative position he leveraged his reputation to distinguish himself from competitors, open doors to opportunity (Harry Winston, Van Cleef & Arpels) and move into a stronger negotiating position to strike better deals.
Keys to Success: Stories
In various talks and articles Rory Sutherland, Vice Chairman of Ogilvy in the UK, noted: “once people reach a basic level of wealth in society, most problems actually become problems of perception.”
Through his career as a shrewd trader, Assael must have recognised that value is not set in stone. On top of using stories to build his reputation and brand, he directly promoted his cultured black pearls to the jewellery industry. His other campaigns included promotions to the tourists throughout French Polynesia, articles and advertisements in the media to raise awareness of his Tahitian pearls and to increase their perceived value.
Although it is quite possible to synthesise value from nowhere just by using stories (Rob Walker’s Significant Objects study is a great point to illustrate that) in Asseal’s case, the stories highlighted what he already had: a strong market advantage. He had a good understanding of the market and its history, had exclusive rights to the Tahitian pearl production and had a thriving culturing operation at S. Marutea atoll.
Through his stories, he turned a negative into a positive and to a proof point. He transformed the colour of the Tahitian pearls which were considered a disadvantage in the early 1960s and 70s into a positioning advantage by the early 1980s.
Keys to Success: The Right Nudges
When Harry Winston, showcased the best of Assael’s Tahitian pearl strands in the window of his salon on Fifth Avenue in New York, they knowingly or accidentally leveraged a powerful nudge: anchoring.
In the customers’ mind, the precious gemstones and high priced jewellery in the display served as perceived reference points to estimate/justify the value of the Tahitian black pearl strands which they have never seen before. In essence, the experience anchored those black pearls to the finest gems in the world. Once that connection had been made in the mind of the customer the perceived value of Tahitian black pearl followed the value of the finest gems.
The black pearl frenzy engulfed the customers and the jewellers in Manhattan. As Assael wasn’t someone who would let an opportunity slip, he soon capitalised on the buzz. He commissioned a full-page advertisement that ran in the glossiest of magazines. The ad, which slogan was “A New Gem Is Born”, presented the Tahitian black pearls in the company of diamonds, rubies and emeralds. Soon other similar ads followed and the repetition of the slogan hammered the message away.
In PR pieces and in dealings with other high-end jewellers the Pearl King also leveraged his exclusive Tahitian Pearl trader status to create perceived scarcity. For a good five years to come, he was the only trader who had access to such large, high quality Tahitian black pearls. Since jewellers wanted in and high-status customers wanted to buy, Assael could increase the perceived value of his pearls by feeding the public and the industry with stories about the limited supply.
To grow the black pearl bubble, he also combined word-of-mouth with social proof. In negotiations and dealings with clients, he tended to assume a low key posture, but no one left his company without hearing about some of his prestigious clients. His office environment was also choreographed carefully to serve as the perfect sales environment that primed his clients.
Keys to Success: Sales Skills
Assael had an absolute and total belief that what he was selling was worth more than the price he asked for it. By 1978 he was a veteran pearl trader, he had deep domain expertise of his product and industry. Most importantly, he understood his market. Leading up to 1978, the countless marketing campaigns and sales attempts served as excellent learning opportunities.
He was mentally prepared. There was nothing he didn’t know about his product or how to appeal to his clients’ emotions or logic. His presentation was smooth yet he drove a hard bargain. He could also stay a few steps ahead of the client or negotiating partner. His pipeline was loaded, he moved his pearls fast and he kept his eye on the target all the time. And on those occasions when he couldn’t persuade someone, he called in the cavalry, his partners, to do the selling for him.
No matter how unique something is, if it doesn’t change the way people behave the only dent it will make in history is in the purse of its inventor, purveyor or producer. In fact, many innovations have failed because they couldn't change the behaviour of the intended user or customer.
Salvador Assael, who was primed to look for opportunities and take advantage of them, realised that technology, invention and marketing go hand in hand.
Before his calculated gamble, black pearls were the domain of royalty. To change that Assael doubled down on technological advancement. His resolve to achieve perfection, his perseverance and dedication greatly contributed to the development of the future black pearl culturing industry.
Once the Tahitian black pearl production was under control, he deployed everything in his and his strategic partners' toolbox to articulate and highlight his UPSs and to strengthen his own brand and his pearls positioning.
He leveraged marketing to build his reputation, increase the awareness of Tahitian pearls, grow their perceived value, and increase the sum number of possibilities for a market that mainly used to think about white or buttery pearls and other gemstones. Through luck, experimentation and persistence he managed to influence the behaviour of the buyers and in turn created a market and an industry.
The most important lesson here is that marketing and branding combined with sales, innovation, or technological advancement creates a powerful business weapon. Marketing separated from other functions and downgraded into a simple communication function is nothing more than an expensive sling.
Assael understood that utilised well, marketing is not a cost and support function, it is a value creator function. It is a function that can synthesise value by using stories, turn negative into positive and most importantly influence customer behaviour.
Businesses and brands that use the marketing function to not only communicate the existence of a product/service but to understand their customers and provide them with a mental infrastructure that makes customers comfortable using those products, change the world. And Salvador Assael did just that.
References / Suggested Readings
Nadelhoffer H. (2007) Cartier. San Francisco: Chronicle Books LLC. 334 — Link
Bloom S. (2011) Tears of Mermaids: The Secret Story of Pearls. New York: St. Martin’s Griffin - Chapter 8 - The Traders. 85-114 — Link
Goebel M. and Dirlam D.M. (1989) Polynesian Black Pearls. GEMS & GEMOLOGY. Vol. 25, No. 3, pp. 130-148 — Link
Ariely D. (2009) Predictably Irrational: The Hidden Forces That Shape Our Decisions. London: Harpercollins Publisher. Chapter 2 - The Fallacy of Supply and Demand. 23-48 — Link
Thaler R. & Sunstein C. (2009) Nudge: Improving Decisions About Health, Wealth and Happiness. London: Penguin Books Ltd. Chapter 1 - Biases and Blunders. 23-24 — Link
Glenn J., ed, & Walker R., ed (2012) Significant Objects. Seattle: Fantagraphics Books Inc — Link