The artificial Christmas tree Balsam Brands – the most bizaar thing in Silicon Valley
If we talk about seasonal products, Christmas tree should be among the top list of most people’ mind. A young man who had once worked as a consultant for McKinsey invented the artificial Christmas tree which can be disassembled and reinstalled. It is placed on a wheel, ready to be kept in a bag and put in place, waiting for the festival to come back again in the next year.
Thomas “Mac” Haman was the only son. At the age of 25, he was in charge of overseeing the family’s iron wire mill which was facing some problems. Throughout those seven years, he had gained lot of work experiences and completed an MBA from Stanford University where he sparked the Balsam business concept. He sold the business and learned about business administration and about production of steel wire-related products. He also learned to use the internet to find new customers. He firmly believed that it could be applied in the production and distribution of Christmas trees through online. He viewed that this business depends on the season, and that it could be made as a supplementary business while he could do some other businesses at the same time. So he started his business in 1999.
Noble Fir is the most popular product of Balsam Hill. Although the price is as high as $ 1,349. The Christmas trees with “built-in light” is decorated with more than 1,000 LED lights
After its launch in late 2006, Balsam has grown steadily and is expected to sweep around $ 120 million this year. According to Nielsen’s survey, there were about 100 households in the United States during Christmas, who would install Christmas trees and 81% of them would use aritificial ones. About 90% of the artificial Christmas tree market is worth $1.2 billion and is dominated by major retail chains such as Wal-Mart and Home Depot, which sells many manufacturers’ products at half prices lower than Balsam, while Balsam would target at high-end consumers who are willing to pay for better quality products.
Haman designed 16 artificial pine trees and went to China Christmas tree factory. With funds raised by friends and relatives, plus money collected from working at McKinsey worth U$120,000, he ordered 15,800 artificial trees to sell through the website. He wrote product description by himself and opened a pop-up store at Stanford Mall, made $300,000 in credit card payments to spend on marketing, hire an online marketing consultant, and advertised by pay-per-click. That made Balsam’s first-year sales to hit $2.9 million.
Balsam Brands, the parent company of Balsam Hill, is based in Redwood City, California which is a center for Tech Startups whose businesses have been supported by joint venture partners such as Box, a Cloud Storage service provider and Shazam, an application developer for song searches. Therefore, Balsam looked quite different and as striking as Rudolf, the red-nose reindeer.
This 11-year-old company has never raised funds from investors. Only a small percentage of customers are repeat customers. return. This type of product is rather a seasonal product. “In terms of business, it was quite a crazy idea,” 41-year-old Haman said to Forbes.
Balsam’s headquarter is located on the top floor of a two-storey building built in the 1970s. The ground floor is a bank office. The office is illuminated with glitter and artificial Christmas trees. Haman told his friends in Silicon Valley, who laughed that he was trying to negotiate a lease of up to 14 years (but finalized at 9 years).
“During the past 20 years, all of my friends have switched jobs around four times, but I’m still committed to doing this business,” he said. “And this is the most bizarre thing in Silicon Valley.”
Reference: Forbes Thailand