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Ho Ho Ho: Branding Deal Has Co. Laughing All the Way to Bank

Local ugly-sweater company Tipsy Elves, which landed itself a business partner on the reality TV show “Shark Tank” in 2013, recently signed a deal with the producers of “The Night Before” to sell the three sweaters featured in the movie and worn by stars Seth Rogen, Joseph Gordon-Levitt and Anthony Mackie.

The deal is expected to generate $2 million for the company during the already-busy holiday season and up its existing revenue to a projected $15 million this year. Forbes said it was among “two of the top branding partnerships from 2015.”

The movie, released Nov. 20, has grossed over $38 million as of Dec. 13, according to Box Office Mojo. The filmmakers approached the founders about taking on the role of exclusive retailer of the sweaters featured in the movie.

“It was really cool for us because it was such a natural partnership, and we found it very easy for us to promote the movie and for them to promote us because the sweaters were such an integrative part of the movie,” said Evan Mendelsohn, who co-founded the company with Nicklaus Morton.

Prior to becoming business partners with “Shark Tank” venture capitalist Robert Herjavec, the company had $800,000 in sales. Mendelsohn, a former lawyer, and Morton, an endodontist, both left their jobs to start the company. Herjavec lauded Mendelsohn for this during his presentation on “Shark Tank.”

“I love that you left a $175,000 job to do this because that tells me you’re all in, my friend,” Herjavec said during the episode back in 2013.

Last year, the design and marketing company grew to about $7 million in revenue. The company expanded to become a year-round online clothing brand. The company moved from unisex sweaters to sweaters for men and women, then developed a patriotic line for the Fourth of July and other patriotic holidays, a collegiate line and a ’80s-’90s throwback ski line. Currently, Mendelsohn said they’re working on a summer line for next year.

“Of course, Christmas is still our bread and butter, so during Christmas we really focus on making fun, innovative products and putting a lot of emphasis there, but our goal in a couple years is to be a lot more than just a Christmas sweater company,” Mendelsohn said.

Founded in 2011, Tipsy Elves was a University of California, San Diego fraternity idea well executed. Both founders are alumni. The name came from an attempt to be edgy, not cross any lines, and from looking up synonyms for drunk and placing them next to Santa or elves.

Tipsy Elves, located in downtown San Diego, moved into a new office about four months ago and has about 35 employees, 20 of whom are seasonal customer service representatives. The company is in talks to lease a 30,000-40,000 square foot warehouse in San Diego to eliminate third-party concerns and better control its inventory. Tipsy Elves anticipates moving into the new warehouse space by February.

“Our hope is to continue to grow twofold every year,” Mendelsohn said. “That’s kind of aggressive growth but it’s what we’ve been trying to hold ourselves to. A big part of our strategy of extending into year-round collections is really being able to leverage our existing customers and create new collections that will bring in more year-round sales and help us grow at a pretty quick pace.”

Most sales are online, but a few stores have Tipsy Elves products, including f.y.e. (with “The Night Before” sweaters). Online retailers include Jack Threads and Swell. The company markets with email lists and online advertising initiatives. Tipsy Elves also donates a percentage of profits to make hoodies for children across the country through its charity program, Sweaters 4 Sweaters.

Mendelsohn said the company deals with a lot of copyright infringement. But the difference between Tipsy Elves and imitators is the design and quality of the sweaters, Mendelsohn said.

“We just really go out of our way to make sure every design is unique and funny and creative and sticks to the humor of our brand,” he said. “We would say in five years our goal is to be a nationally recognized brand that sells fun, unique products for different holiday occasions throughout the year.”

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