Tipsy Elves on Shark Tank
There was once a time, a long time ago, when ugly sweaters were given and worn without the irony or the insulting moniker. As kids who received gaudy and outrageously festive holiday gifts grew up, they began wearing ugly sweaters as a way to mock what was a straight fashion trend years ago. Evan Mendelson and Nick Morton are two friends who took advantage of the anti-festive statements and used their unique talents to create and grow Tipsy Elves into a successful business.
Evan was amused by his peers, donning colorful, ugly Christmas sweaters at holiday parties. He felt it might be a great business opportunity to capitalize on a unique niche market that, at the time, seemed like a word-of-mouth ironic fashion trend. At the time, Evan was an attorney with freelance experience in Search Engine Optimization (SEO), the digital marketing technique designed to get businesses ranked high on Google and other search engines.
He discovered that Christmas sweaters were being searched online at a high rate leading up to the holiday season and called Nick. The two friends from their undergraduate time at the University of California at San Diego began the necessary preparations to launch Tipsy Elves. They reached out to old business school friends, used Nick’s family connections for an affordable Chinese supplier, and used $140,000 of their own money to get the business off the ground before they knew what they were doing.
Evan and Nick created the sweaters with a combination of silly, tacky, and irreverent designs using high-quality materials. They put them on the market and donated a portion of the profits to Save the Children, an organization that provides underprivileged children with badly needed winter clothes.
Through hard work, valuable connections, and Evan’s SEO efforts, Tipsy Elves sold $380,000 worth of ugly sweaters the first year in business and $900,000 the next. The majority of the orders came from Amazon purchases. Both Evan and Nick had quit their jobs and were working the business full-time by the time they dived into the Shark Tank.
Tipsy Elves on Shark Tank
Shark Tank Season 5 Episode 12
Defying the odds, Evan and Nick were thrilled to make it onto Shark Tank, arriving on the stage in a classically ugly Christmas sweater and bomber hats. The pair tell the judges they are asking for $100,000 in exchange for a 5% interest in Tipsy Elves to help take their successful business to the next level.
The concept of Tipsy Elves is that the sweaters were made by Santa’s elves, who were working after having a little too much to drink. Kevin called the product line “hideous,” which, of course, is the point.
Daymond said that he could give the guys a run for their money in the ugly sweater department, as he still owns the company that made the sweaters Bill Cosby made famous by wearing on The Cosby Show. He said the biggest challenge for that company is the profit margin and asks about the Tipsy Elves costs and pricing. The guys respond that their sweaters cost around $11.40 to make and sell for $65.
Mark thinks Evan and Nick are complicating things by wanting to wholesale their product line, which would bring with it a whole set of new problems and could wind up lowering their profit margins and overall revenue. He wonders why Evan doesn’t just keep working the SEO side of the marketing and increase sales that way. Evan explained that he’s done just about all he can do with the SEO, with all of his top keyword phrases ranking No. 1, including “Christmas Sweaters,” “Ugly Christmas sweaters,” and “Christmas party apparel.”
Evan and Nick put a $2 million value on Tipsy Elves. Mark explains to the two how much money they lost by running out of stock during the Christmas season. He feels the company spread too thinly, trying to do everything at once. He says that scares him, and he is out. Lori doesn’t see anything all that unique about the Tipsy Elves’ ugly sweaters, and she is out, too.
Kevin makes a unique offer of $100,000 in exchange for a royalty of $1 per sweater sold in perpetuity. The friends get to keep all of the equity in Tipsy Elves. Robert counters with an offer of $100,000 in exchange for 10% of the business. Daymond is quite impressed with these two young businessmen and the job they have done so far to make Tipsy Elves a success. Ultimately, he feels there is nothing he can offer them that they don’t already have and exits the deal.
Evan and Nick confer among themselves, and while they appreciated Kevin’s deal, they decide to take Robert’s offer of $100,000 for 10% of the business.
Tipsy Elves After Shark Tank
Tipsy Elves’ sales skyrocketed after Evan and Nick appeared on Shark Tank. Robert still refers to it as one of the best deals he has ever made. An update episode revealed Evan and Nick were anticipating $8 million in sales. The pair hit a bit of a snag when a New Jersey fulfillment center did not deliver upwards of 7,000 units on time. Tipsy Elves received some scathing reviews online, and hundreds of customer complaints. Evan and Nick flew to New Jersey to find a mismanaged facility. They took the experience as a valuable business lesson and made plans to move their order fulfillment process to an in-house facility.
An expanded product line now includes ugly sweaters and accessories for Hanukkah, Valentine’s Day, St. Patrick’s Day, July Fourth, Halloween, and the college football season. The recent addition of ski wear brought the complete product line to about 500 items.
Corporate sponsorships have included a deal with Sony Pictures for a product placement spot in “The Night Before,” starring Seth Rogan and a marketing campaign with Uber. Tipsy Elves has created over 50 American jobs and has announced a substantial donation to Toys for Tots.
Tipsy Elves wound up being one of the most successful deals in the history of Shark Tank, and the two old friends could not be happier about it.
Disclaimer: The information provided in this article is strictly informational; INSIGNIA SEO is not affiliated with Tipsy Elves, SharkTank, or any of its subsidiaries.