Cloud computing has given rise to a new breed of startups — companies that are agile and flexible and, most importantly, that can instantly scale up to meet customer demand. That’s why, at York IE, we’re focused on investing in B2B SaaS startups.
We do make occasional exceptions, however.
Recently, we were approached by a founder with nearly 200 years of experience and a proven track record of scaling up an on-premises business to meet seasonal customer demand, and we just couldn’t say no. We’re so excited to announce our investment in Santa’s Workshop — our first investment in the North Pole, following other recent international deals in Canada and the United Kingdom.
The Company
Santa’s Workshop was founded in 1823 by Santa Claus, whose vision, as laid out in the famous press release “A Visit from St. Nicholas,” was to fill all the good girls’ and boys’ stockings with toys on Christmas Eve.
To realize this vision, Santa relied on eight magical reindeer to fly his sleigh from house to house. This breakthrough innovation immediately set the company apart in a market reliant on horses, trains and ships for shipping — and continues to do so in the era of trucks and airplanes.
By 1866, following years of rapid growth, Santa established his workshop headquarters at the North Pole, and it has since become the leading business in the region, employing tens of thousands of elves (and the occasional human) who build toys, make cookies, repair and improve his sleigh and tend to the reindeer.
In 1939, after several struggles with toy deliveries in inclement weather, Santa’s Workshop hired a red-nosed reindeer, Rudolph, to help guide the sleigh through fog. Not only did this strategic hire improve efficiency, but the corresponding marketing campaign became the workshop’s most successful of all time — spawning movies, songs and merchandise, all of which are significant revenue drivers to this day. This was a promising development, as a red flag we initially observed is that Santa’s Workshop is still trying to nail its monetization strategy.
The Leadership
Santa Claus’ operational innovation, eye for talent and marketing genius are all reasons why York IE is excited to invest in the workshop. He has served as CEO and president since the workshop’s founding and shows no signs of slowing down, and his jolly demeanor makes for a terrific founder to work with.
Santa is joined in the workshop’s leadership by Mrs. Claus, who serves as COO. Following her marriage to Santa in 1851, Mrs. Claus officially joined the workshop in 1878, where she helped identify candidates for the Naughty and Nice lists. Her role expanded over the following years to include baking cookies and managing the elves, and today she is responsible for all of the workshop’s day-to-day operations, from logistics and supply chain management to finance and human resources.
Together, Santa and Mrs. Claus are an exceptional team that we’re thrilled to support.
The Market
Other Christmastime traditions and gift-givers existed at the time Santa’s Workshop was founded, but they were mostly regional in nature. By taking a market-in approach, Santa Claus discovered there was a global appetite for a friendlier, merrier character, and his aforementioned flying reindeer innovation enabled him to quickly fill that market need.
By the end of the 19th Century, Santa Claus had become the leading figure in the Christmas market, and he has not faced substantial competition since. The Elf on the Shelf was briefly a threat upon its debut in 2005, but Santa’s Workshop wisely signed a partnership agreement to outsource some of its Naughty or Nice determinations.
In closing, Santa’s Workshop may not be a B2B SaaS company, but it has everything we at York IE look for in investments: a scalable business model, a leadership team we love to work with, a great market opportunity and a mission to make a positive impact on the world.
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