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                                                                   Exhibit 10.12


January 20, 2004

Dear Barbara,

On behalf of Blue Nile, Inc. (the "Company"), I am pleased to offer you the
position of Vice President, Marketing, reporting to Bob Paquin. The terms of
your relationship with the Company will be as indicated herein.

1.    Position. You will become Vice President, Marketing for the Company. As
      such, you will have responsibilities as determined by Bob Paquin.

2.    Base Salary. You will be paid a base salary of $13,333 per month, less
      payroll deductions and all required withholdings, which represents an
      annualized rate of $160,000. Your salary will be payable in accordance
      with the Company's standard payroll policies.

3.    Stock Options. We will recommend to the Board of Directors that you be
      granted an incentive stock option to purchase 120,000 shares of common
      stock of the Company. The exercise price will be the fair market value of
      the common stock as determined by the Board of Directors on the date of
      grant. One fourth (1/4) of the shares subject to such option will vest on
      the first year anniversary of your hire date and one forty-eighth (1/48)
      of the shares subject to such option will vest each month thereafter as
      long as your employment continues with the Company. The Company's 1999
      Equity Incentive Plan, the Grant Notice and the Stock Option Agreement
      shall govern the terms of this option grant in all respects.

4.    Benefits. You will be eligible to receive healthcare and dental benefits,
      life and disability insurance and enrollment in the Company 401k plan
      effective on the first of the month following your date of employment. You
      will begin accruing vacation time on your start date in the amount of 5
      hours per pay period (3 weeks of vacation time per year).

5.    Relocation. We will reimburse you for relocation and temporary housing
      expenses up to $10,000.

6.    Standard Employee Agreement. Like all employees, you will be required to
      sign the Company's standard Employee Proprietary Information and
      Inventions Agreement relating to the protection of the Company's
      proprietary and confidential information and assignment of inventions. In
      addition, you will be required to abide by the Company's strict policy
      that prohibits any new employee from using or bringing with him or her
      from any previous employer any confidential information, trade secrets or
      proprietary materials or processes of such former employer.


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7.    Federal Immigration Law. For purposes of federal immigration law, you will
      be required to provide to the Company documentary evidence of your
      identity and eligibility for employment in the United States. Such
      documentation must be provided to us within three (3) business days of
      your date of hire, or our employment relationship with you may be
      terminated. Documents that can satisfy these requirements are a United
      States passport or a valid driver's license and a social security card.

8.    At-Will Employment. Your employment is at will, as defined under
      applicable law. This means you may voluntarily quit for any reason
      whatsoever simply by notifying the Company. Likewise, the Company may
      terminate your employment at any time and for any reason whatsoever with
      or without cause or advance notice. This at-will employment relationship
      cannot be changed except in writing signed by a Company officer.

9.    References. This offer is contingent upon successful positive reference
      checks by the Company.

10.   Entire Agreement. This Agreement, together with your Employee Proprietary
      Information and Inventions Agreement, constitutes the entire agreement
      between the parties and supersedes all other agreements or understandings.
      This agreement may be amended only by written agreement signed by you and
      the Company.

11.   Start Date. January 29, 2004.

Again, let me indicate how pleased we all are to extend this offer, and how much
we look forward to working together. Please indicate your acceptance by signing
and returning the enclosed copy of this letter. This offer is valid until
January 21, 2004 and will terminate if not accepted by such date.

Very truly yours,

BLUE NILE, INC.


    /s/ Mark Vadon
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The foregoing terms and conditions are hereby accepted:


Signed:       /s/ Barbara Rybka
        --------------------------------
                  Barbara Rybka


Dated:         January 20, 2004
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