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Fighting Seasonality and Amazon, This Brand Built $100M Business on Fake Christmas Trees

Shortly after graduating from Stanford Business School, Thomas "Mac" Harman noticed his in-laws' fake Christmas tree didn't look much like the real thing.

Fighting Seasonality and Amazon, This Brand Built $100M Business on Fake Christmas Trees

Sensing that there could be a market for high-end artificial trees, he designed 16 models based on varieties like Norway spruce, found a Chinese manufacturer, launched a website and opened a pop-up store in the Stanford mall in 2006. Since grossing $3m in its first season, Balsam Brands has expanded its selection of trees, some of which sell for upwards of $2,000, and added dozens of other products, from wreaths and ornaments to a year-round line of fake floral arrangements.

In contrast to the venture-backed, Silicon Valley businesses that surround Balsam’s headquarters in Redwood City, CA, the company has grown into a profitable enterprise without taking outside capital beyond a small initial investment from friends and family. Revenue hit $115m last year, and Balsam now has 160 employees in four offices, including 75 in the Philippines. In this interview, which has been edited and condensed, Harman talks about the challenges of dealing with Amazon and his hit-and-miss attempts to overcome the seasonal nature of his business.

Susan Adams: Is selling fake Christmas trees as seasonal as selling real ones?

Mac Harman: We’ll operate at a $1.5bn run rate in November. We’ve tried from the beginning to not just be a fourth-quarter business. But very few things we’ve tried have been successful. The year we launched ornaments and tree skirts, we thought about servicing the whole family and we launched pet beds. The reviews for the beds were incredible but they didn’t sell.

Adams: What do you think the problem was?

Harman: Our customers saw us as a Christmas tree company. Pet beds were too much of a leap.

Adams: Did you try other products?

Harman: In 2009, we bought a Catholic products business that we divested three years ago. We sold Catholic medals, prayer cards, rosaries, jewelry and something called a scapular you pin on your pajamas. In case you die during the night it’s supposed to help you get to heaven.

Adams: What were your hopes when you bought the business?

Harman: We saw an opportunity to take our e-commerce and direct-to-consumer best practices and grow a business that had been run out of a garage. But scapulars sell for $5 and with each order, you’d spend all this time searching in the warehouse and then the sale would come to $12. Also, Catholic interest in products was declining. The business was a nightmare. It was never going to scale.

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