How Tipsy Elves built a $125m ugly Christmas sweater empire

Eight years ago, a dentist and a lawyer quit their high-paying jobs to make sweaters. Today, business is booming.

December 28, 2019

 

’Tis the season, in the words of a popular ugly Christmas sweater, to “Get Lit.”

If getting lit is a sign of Christmas cheer, then holiday spirit is off the charts this year. Sloshed Santas and inebriated elves have been spotted drinking heavily, urinating in public, and pole-dancing on subway cars.

And Santa himself isn’t missing out on the Christmas debauchery: On sweaters made by the ugly sweater company Tipsy Elves, Santa writes “Merry Christmas” in yellow snow and dances dirty in his Christmas “twerkshop.” 

Decades ago, Santa was a jolly old elf known for nothing naughtier than eating one too many cookies — and ugly Christmas sweaters were mostly just gifts from Grandma that ended up in the back of the closet. 

But today, Santa’s a hard-drinking horndog who asks for nudes, poops down chimneys, and brags about the size of his package on millions of best-selling Christmas sweaters — and Christmas itself has developed a whole new tradition of unholy degeneracy.

So, how did Christmas sweaters get so ugly?

It all started with a lawyer, a dentist, and a dream

 

Evan Mendelsohn wasn’t feeling very festive at the start of 2011. 

The 27-year-old had gotten business and law degrees and landed a job at a prestigious California law firm. 

But Mendelsohn quickly found that law school hadn’t prepared him for how boring it would be to actually practice law.

“I spent hours talking with the partner or the supervising attorney about the meaning of one or two words,” Mendelsohn said in a recent interview. “And I had this sick feeling that this could be where I’d end up the rest of my life.”

So he threw himself into side projects that scratched his entrepreneurial itch. He used SEO to create informational sites — like Day-Finder.com and How-Tall-Celeb.com — about highly searched topics. These started making big money, which inspired Mendelsohn to try to apply his SEO skills to something bigger.

After scouring the internet for trending search terms, he found something interesting: Interest in the keyword “ugly Christmas sweaters” seemed to be rising. Google search traffic for ugly Christmas sweaters doubled between 2010 and 2011 — and had 5x’d from 5 years before. 

Search data for “Ugly Christmas sweater” over time (Google Trends / The Hustle)

One partial reason for this spike was SantaCon, a Santa-themed event that had started out as a Christmas-themed anti-consumerist prank in San Francisco in 1994 (with roots in Dutch ’70s counterculture) and had become a massive, booze-filled Christmas bash in New York by 2011. 

Mendelsohn, who had gone to a theme party or two in his fraternity days, thought costumes were the key to a great party. 

He believed the trend of SantaCon-style Christmas parties would continue — and whoever sold outfits to the drunk Santas and tipsy elves would make a killing. 

It smelled like peppermint-flavored opportunity. 

So Mendelsohn called up his former fraternity brother and college roommate, Nick Morton, and pitched an idea: What if they rebranded Christmas sweaters?

Morton had just finished dental school and, like Mendelsohn, he was bored. On that very first phone call, he agreed to give it a shot. 

Tipsy Elves’ first buzz

 

With a few months left until Christmas in 2011, the duo learned Photoshop and began creating ugly sweater designs.

They wanted their sweaters to get people talking — so the more outrageous, the better. They made designs they thought would be hilarious at parties: Santa peeing in the snow, a reindeer with buck teeth, Santa posing au natural with nothing but a gift covering his package…

Tipsy Elves’ first Instagram sweater picture from December 2012 (via Instagram)

“Our core customer … is a person who had a good time in college,” Mendelsohn explained. “[Someone who] has a little bit of disposable income, is pretty socially inclined and likes to be around their friends and attend different events and parties.”

The 2 former frat brothers dipped into their savings to launch, praying their SEO would work. Then came the moment of truth: Would people buy Tipsy Elves sweaters? 

The blizzard of online orders was immediate. In a week and a half, they’d sold out their entire inventory of 5k sweaters. Mendelsohn had been right: Tipsy Elves was a Christmas gift that would keep on giving.

Christmas sweaters, disrupted

 

Mendelsohn and Morton weren’t the first people to sling ugly Christmas sweaters.

Ugly sweaters had been pop culture punch lines since at least the 1980s, having scored laughs in National Lampoon’s Christmas Vacation (1989) and Dumb and Dumber (1994). A few years later Canadian university students started one of the first ugly Christmas sweater parties at a Canadian bar. 

Jim Carrey helped popularize ugly Christmas sweaters in the 1994 movie “Dumb and Dumber” (via YouTube)

Others had started selling sweaters, too: A former stay-at-home mom from Vermont had been selling upcycled ugly sweaters on eBay since 2008 under the name My Ugly Christmas Sweater, Inc. A company called Skedouche had been selling new, ugly sweaters since 2009. 

But Mendelsohn and Morton appeared to be the first to build an entire brand around ugly Christmas sweaters. 

Tipsy Elves’ first 50k sales came from SEO. Investing heavily in SEO upfront paid off for the Elves: As Christmas party-goers across the country scoured the internet for last-minute ugly sweaters, they almost always ended up in the same place — Tipsy Elves’ search engine optimized site. 

But Mendelsohn and Morton didn’t rest on their Christmas wreaths: As soon as they started making big money, the 2 entrepreneurs reinvested brand Tipsy Elves not just as a sweater company — but as a party-focused lifestyle brand.

“Our goal since day one was to build a brand around Tipsy Elves,” Mendelsohn told us. “So it’s not just the product we sell, but it’s the mentality… celebrating events and holidays with friends and doing it in the most memorable way possible by wearing our products.”

Tipsy Elves positioned their sweaters as the life of the party — both in real life and on social media — to advertise their irreverent vision of Christmas.

Soon, their over-the-top branding efforts paid off: In 2013, Shark Tank asked Tipsy Elves to participate in the show’s upcoming holiday-themed episode, an invitation that offered the possibility of funding — and the chance to get in front of millions of eyeballs.

Mendelsohn (red reindeer sweater) appeared on Shark Tank with his colleagues in 2013 (via ABC)

The timing of its Shark Tank publicity turned out to be magical for Tipsy Elves’ business.

On December 9, 2013 — 4 days before Tipsy Elves was scheduled to appear on Shark Tank and, more importantly, 5 days before New York’s SantaCon — Al Roker and the entire Today Show team appeared on air wearing Tipsy Elves sweaters.

That season was a record-breaking one for SantaCon. By then SantaCon had spread to 300 cities and search volume for ugly Christmas sweaters has doubled again

But all that eggnog also started to raise some eyebrows. An op-ed published in The New York Times before SantaCon demanded New York authorities “Bring Drunken Santas Under Control” to curb incidents of “sexism, drunkenness, xenophobia, homophobia and… public vomiting and urination.”

But SantaCon went as expected: Bars filled up with people wearing Santa costumes and Tipsy Elves’s signature humping reindeer sweaters — and by the end of the night, drunken,  Christmas-costumed brawls broke out in the snowy streets of New York.

Tipsy Elves’ sales, however, were far jollier than expected: The company did $3m of sales in 2013. 

As it turned out, sex sells… even for Santa

 

Tipsy Elves walked away from Shark Tank with $100k, the first and last funding they’d ever take. They simply didn’t need it.

Thanks to soaring demand from Christmas party-goers, the sweaters sold themselves.

Of course, Tipsy Elves didn’t explicitly encourage the kinds of Christmas carrying-on that resulted in police intervention at SantaCon. But the company’s products (which featured Santa joking about drinking, sex, and public urination) appealed to many of the naughty Santas that had become a problem in New York.

SantaCon attendees wearing Tipsy Elves gear gather to party (via VICE)

It’s hard to say whether Tipsy Elves would have been so successful without SantaCon, or whether SantaCon would have gotten so big without brands like Tipsy Elves to jingle their bells.

But it’s safe to say that Tipsy Elves cashed in on Christmas keggers — and many Christmas keggers were made possible by Tipsy Elves’ absurd outerwear. 

So Tipsy Elves’ outrageousness wasn’t just a stylistic choice — it was a fundamental part of the company’s business model: Its designs needed to be shocking enough to be shareable — on social media and at parties. 

Tipsy Elves acknowledge its sweaters are not for everyone. Its site says: “We know our humor can be polarizing (or North Polarizing as we like to call it). But that’s just part of the fun. You’ll find out who your friends are and who you can cut from your holiday shopping list by how they respond to your funny holiday sweater.”

But the company never wavered from its commitment to many of its most controversial designs — “birthday boy Jesus” or “yellow snow Santa” — which were also big sellers.

“At the end of the day, these are judgment calls that a brand needs to make,” Mendelsohn says. “Team Yellow Snow, or Santa bending over a Christmas tree and wearing a thong — that’s kind of playful and fun. We try not to cross the line that we would personally be uncomfortable with. But, with that said, we’ve also learned over the years you can’t please everyone.”

And the eggnog kept flowing

 

In the years since, Tipsy Elves has invested in new product lines — onesies, skiwear — that have reinforced the company’s party-centric brand.

Armed with the constant feedback loop of social media engagement, Tipsy Elves believes it has winnowed its business to a science, including 10 sweater categories ranging from “cats” to “alcohol.”

And since Tipsy Elves sees you when you’re posting, and it knows what you will like — it was able to leverage its knowledge of its audience’s sense of humor to launch successful partnerships with Tinder and Taco Bell.

With Tinder, Tipsy Elves rolled out a “Swipe Right for Santa” sweater; with Taco Bell, they created “spicy” onesies.

The publicity generated even more lift for the brand. This year, Tipsy Elves has done $125m in lifetime sales.

But Tipsy Elves’ farcical formula has inspired imitators, which could slow the company’s growth.

Sweater competition is starting to get ugly

 

UglyChristmasSweater.com collaborated with Popeye’s and sold out of sweaters in 14 hours. Other brands cut out the sweater-making middleman: Red Lobster, Whataburger, and Miller Lite all sold their sweaters directly.  

When Tipsy Elves started, it was outrageous compared to normal, grandma-style sweaters. But now, a whole new crop of even naughtier sweaters feature illegal drug use and curse words (both of which Tipsy Elves doesn’t use).

Walmart recently came under fire for selling a Christmas sweater featuring Santa with cocaine; the so-called “Let it Snow” sweaters became Amazon bestsellers almost immediately. Other smaller producers have launched edgy designs — like the “Epstein didn’t kill himself” sweaters — that Tipsy Elves won’t touch.

A cocaine-themed Santa sweater made by a Tipsy Elves competitor (via Canoe)

So, are these brands a threat to Tipsy Elves? Mendelsohn doesn’t seem to think so — at least, not directly.

“As the market and the demand for festive Christmas apparel grows, there’s going to be growth for those that are looking for the really risque and over-the-top designs as well,” he says. “By being clear about what we stand for and seeing where our boundaries are, we become a stronger brand over time than we would by trying to appeal to everyone.”

But how much more debaucherous can Santa get?

 

But the growth of outrageous designs could pose a risk: If hateful Santa sweaters encourage over-served elves to act out their worst sweater scenes, they could cause a Christmas crackdown.

Already, public officials in some cities have proposed rules to regulate misbehaving Santas — and in several cities residents have circulated petitions to ban Christmas costume events like SantaCon. Bars and restaurants have joined the anti-Christmas chorus by closing their doors during SantaCon and banning Santas.

“Once a Santa threw up on a 5-year-old, we said we’d had enough of the Santas,” a restaurant server in San Francisco explained to SFGate. “That was five years ago. Even since, they implemented a No Santa… clause.”

And even without a Christmas crackdown, it’s possible that the ugly sweater trend could unravel on its own.

But so far, Tipsy Elves’ business is going strong. The company is expected to sell roughly 6m sweaters this year. The company’s pop-up retail location was so successful last year that Tipsy Elves is expanding its network of pop-up stores to 3 cities this season. And the company’s products for other festivities — from Pride festivals to bachelorette parties to other holidays — protect it from a potential Santa slump.

Tipsy Elves also makes festive clothing for other events, like this T-shirt that shows Abraham Lincoln and George Washington playing beer pong (via Tipsy Elves)

“We started selling 100% Christmas sweaters in our first year, and sweaters now are about a 1/3 of our total Christmas sales,” Mendelsohn told us. “For us, it’s just about always innovating and making sure we’re giving people other products to wear when they want to dress up.”

So if the ugly sweater business goes out of style, just remember… EasterCon’s gonna be LIT.

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