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How the Tacky Sweater Holiday Novelty Became Big Business Tipsy Elves has moved beyond the national ugly Christmas sweater phenomenon and into bigger markets.

By Peter Gasca Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.


As offices clamor to think up unique holiday party ideas, and as coworkers stress over finding the perfect gift for their cubicle mates, one holiday tradition has grown in popularity and may provide a solution to both.

Tacky holiday sweaters.

What was once a thoughtful but misguided gift idea -- one that was immediately dispensed to the Salvation Army in order to avoid extortion opportunities -- tacky holiday sweaters have become a popular source for holiday theme parties and team building opportunities. They have even garnered their own official "national ugly Christmas sweater day."

Related: The 'Short Guy Problem' in Clothing Stores Spotlights the Limits of Big Brands

These recent trends have made tacky holiday sweaters a big business. Just ask Nick Morton and Evan Mendelsohn, two friends from San Diego who saw an opportunity in 2010 to capitalize on the popularity of tacky sweater parties among fellow millennials and created Tipsy Elves, a website that sells sweaters with unique and purposely tacky -- and sometime obscene -- designs.

The biggest benefit of Tipsy Elves' sweaters? No lingering stale smell of your Uncle Frank.

The partners launched Tipsy Elves while still working their day jobs -- Mendelsohn as a lawyer and Morton as an endodontist. Orders grew quickly, however, and the two sold and shipped 6,000 sweaters by the end of 2011.

Seeking to capitalize on the growing popularity of their company and the industry, Morton and Mendelsohn decided in 2013 to take their company to the next level, applying and being accepted for a spot on the popular ABC investment show, Shark Tank. During their appearance in Season 5, the team struck a deal with Shark Tank investor, Robert Herjavec, receiving $100,000 in exchange for a 10 percent stake in Tipsy Elves. With the deal in hand, the visibility of their appearance on Shark Tank and the partnership with Herjavec, Tipsy Elves' growth accelerated, and the company boosted sales to over $3 million.

Related: How One Seasonal Company Manages The Full Year

Of course, managing a highly seasonal business is risky. Regardless, Morton and Mendelsohn resigned their lucrative day jobs and committed to their business full-time. With a goal to become a year-round company, Tipsy Elves expanded its product line to include accessories, T-shirts and jumpers and now covers holiday themes throughout the year such as Valentine's Day, St. Patrick's Day and even Independence Day. They also secured licenses with college sports teams for a large selection of university-themed apparel.

With all of these efforts, the company this year relocated to a spacious new office, expanded to 20 full time staff and anticipates closing the year with revenues of $10 million.

That is a lot of Rudolph sweaters.

As a true novelty company, Morton and Mendelsohn also wanted to do something significant with their success. They therefore launched a charitable campaign called "Sweaters 4 Sweaters." Through this initiative, the company donates one new hoodie to a domestic child in need for every sweater purchased. To date, the company has donated over 155,000 hoodies.

So if you are planning something special for your staff this holiday but falling short on creative ideas, consider a tacky holiday sweater party. Finding new sweaters -- and giving back to charity -- has never been easier. Of course, you could just suggest they swallow their pride and dig out their vintage yuletide pullover.

Just be ready with your camera -- those extortion pictures always come in handy.

Related: 10 Funny and Heartwarming Quotes to Help You Survive the Holidays

Peter Gasca

Management and Entrepreneur Consultant

Peter Gasca is an author and consultant at Peter Paul Advisors. He also serves as Executive-in-Residence and Director of the Community and Business Engagement Institute at Coastal Carolina University. His book, One Million Frogs', details his early entrepreneurial journey.

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