EXHIBIT 10.12

                                                          (BLUE NILE LETTERHEAD)

July 22, 2003

Ms. Terri Maupin
11524 Durland Avenue NE
Seattle, WA 98125

Dear Terri,

On behalf of Blue Nile, Inc. (the "COMPANY"), I am pleased to offer you the
position of Controller reporting to the Chief Financial Officer. The terms of
your relationship with the Company will be as indicated herein.

1.    Position. You will become the Controller for the Company. As such, you
      will have responsibilities as determined by the Chief Financial Officer.
      The Company may change your position, duties and work location from time
      to time as it deems necessary.

2.    Base Salary. You will be paid a monthly salary of $10,000 less payroll
      deductions and all required withholdings, which represents an annualized
      rate of $120,000. Your wage will be payable in accordance with the
      Company's standard payroll policies. The Company may modify your
      compensation from time to time as it deems necessary.

3.    Stock Options. We will recommend to the Board of Directors that you be
      granted an incentive stock option to purchase 50,000 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 a 401(k) plan effective on the first of
      the month following your date of hire. The Company may modify its benefits
      programs from time to time as it deems necessary.

5.    Standard Employee Agreement. Like all employees, you will be required to
      abide by the Company's rules and regulations, and 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.

6.    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.

7.    At-Will Employment. Your employment is at will, as defined under
      applicable law. This means you may voluntarily quit at any time, for any
      reason or for no reason, simply by notifying the Company. Likewise, the
      Company may terminate your employment at any time, for any reason or for
      no reason, with or without cause or advance notice. This at-will
      employment relationship cannot be changed except in a writing signed by a
      Company officer.

8.    Entire Agreement. This Agreement, together with your Employee Proprietary
      Information and Inventions Agreement, constitutes the complete and
      exclusive statement of your employment agreement with the Company. The
      employment terms in this letter supersede any other agreements or promises
      made to you by anyone, whether written or oral.

9.    Start Date. TBD



      This Agreement is also subject to the successful completion of a
background and credit check, which is in process.

      Terri, we are extremely pleased to extend this offer to you, and we look
forward to the opportunity to work together. This offer is valid until July 28,
2003 and will terminate if not accepted by such date. Please indicate your
acceptance by signing and returning the enclosed copy of this letter.

      Very truly yours,

      BLUE NILE INC.

      /s/ Diane M. Irvine
      -------------------------------------------
      Diane M. Irvine, Chief Financial Officer

      The foregoing terms and conditions are hereby accepted:

      /s/ Terri Maupin
      -------------------------------------------
      Terri Maupin

      Dated: July 24, 2003