Hire Santa – Santa Claus Network
DEAL
EPISODE SUMMARY
🕓 Air Date: December 2, 2018
Asking For:
$200,000 for 10%
Investor:
Barbara Corcoran
Deal:
$200,000 for 50% until money back, then 10% in perpetuity
PRODUCT SUMMARY
Hire Santa connects people with Santa entertainers for various events, spreading Christmas cheer. They offer personalized visits and have a diverse roster of Santas.
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Background Story
Mitch Allen, the entrepreneurial elf and founder of Hire Santa, is based in the Dallas/Fort Worth area. His journey into the world of Santa entertainment began about a decade ago when a friend asked him to play Santa for their child. This experience marked a turning point, as Mitch witnessed the sheer joy and magic that Christmas brought to children. The radiating love and happiness inspired him to pursue a professional career as Santa. Mitch’s journey as Santa took off rapidly. He found himself in national TV commercials and major parades worldwide.
However, the demand for his Santa appearances quickly surpassed his capacity, leading to a pivotal entrepreneurial decision. Recognizing the need to expand and delegate, Mitch established Hire Santa, a company dedicated to spreading Christmas cheer by connecting people with professional Santa entertainers. The business model involved sourcing Santas locally, initially in the Dallas/Fort Worth area, to fulfill the growing demand for Santa appearances. This local success laid the foundation for a global expansion.
Mitch created an extensive database of thousands of Santas, enabling Hire Santa to provide Santa entertainers not only across the United States but also internationally, including destinations like China, the Caribbean, Canada, and Mexico. Mitch’s background as an entrepreneur played a crucial role in the evolution of Hire Santa. Faced with overwhelming demand, he strategically delegated responsibilities, finding other Santas locally to cover gigs he couldn’t personally handle. This decentralized approach became the catalyst for creating Hire Santa as a platform connecting clients with a diverse roster of professionally trained Santas.
The Product
Hire Santa offers a unique and festive service, connecting individuals and businesses with professional Santa entertainers for a variety of events and occasions. The process is straightforward and tailored to meet the specific needs of clients looking to infuse their gatherings with the magic of Christmas.
The service operates on a flexible model, accommodating both short-term and long-term engagements. Clients can request a personalized visit from Santa to their homes for special occasions, such as family gatherings or holiday parties, at a negotiated rate starting from $200-300. For businesses, particularly retail and office spaces, Hire Santa provides Santas for longer-term contracts, spanning up to 300 or 400 hours during the Christmas season. Prices for these contracts vary, starting at approximately $50-60 per hour, negotiated based on the duration and specific requirements.
The key benefit of Hire Santa lies in its ability to spread Christmas cheer wherever and whenever it’s needed, even to those on the “naughty list.” The service takes care of all the details, ensuring a seamless and joyful experience for both clients and the hired Santas. The extensive database of professionally trained Santas allows for a diverse range of choices, including personalized visits, retail events, and corporate functions.
How It Went
The company’s position before Shark Tank
Hire Santa’s performance reflects a robust and growing company, showcasing a remarkable trajectory in the Santa entertainment business. Over the past two years, the company has experienced substantial financial growth, evolving from a revenue of $189,000 to a projected $1.2-1.4 million this year. This meteoric rise underscores the increasing demand for professional Santa entertainers and the effectiveness of Hire Santa’s business model. One of the indicators of the company’s health is its strategic partnerships. Hire Santa has secured contracts with major retailers, marking a significant milestone in its expansion.
These partnerships contribute significantly to the company’s revenue and are indicative of its ability to meet the needs of large-scale clients. The exact identity of the retailers is not disclosed in the provided transcript. As for funding, the company’s founder, Mitch Allen, sought a $200,000 investment on Shark Tank in exchange for a 10% equity stake in Hire Santa. The funding was intended to support strategic hires, particularly in marketing, and to enhance the quality of their training videos. Barbara Corcoran eventually offered the investment, settling on a 15% equity stake for $200,000.
The company’s customer base spans a diverse range, including individuals seeking personalized visits from Santa for private events, as well as businesses, retail outlets, and offices looking to enhance their holiday festivities with professional Santa entertainers. The appeal of Hire Santa lies in its ability to cater to both short-term and long-term needs, offering flexibility and adaptability to different customer segments. Regarding the company’s structure, specific details on internal organization, employee count, or operational structure are not provided in the given transcript. Similarly, information on profits and losses, apart from revenue figures, is not explicitly detailed. However, the profitability of the company has increased over the years, with net profits of $70,000 on $189,000 revenue two years ago, and $154,000 on $331,000 revenue last year. This year’s projections estimate a net profit between $450,000 and $550,000.
The Negotiations:
The negotiations for Hire Santa on Shark Tank were a festive yet strategic affair. Mitch Allen, the founder, entered seeking a $200,000 investment in exchange for a 10% equity stake in his Christmas-inspired venture. The sharks were immediately intrigued by the holiday spirit and the unique business model. Barbara Corcoran was the first to make an offer, proposing $200,000 for a 20% equity share. However, Mitch countered, aiming for a 15% equity stake. After a brief back-and-forth, they settled on a deal — Barbara invested $200,000 for a 15% stake in Hire Santa, showcasing her belief in the company’s potential for growth and profitability.
Kevin O’Leary, the shrewd investor known as Mr. Wonderful, also expressed interest and put forth an alternative proposal. He offered $200,000 for a 50% stake in the company, emphasizing the simplicity and transparency of the arrangement. Despite his persuasive pitch, Mitch opted for Barbara’s deal, valuing the lower equity stake and recognizing the strategic value Barbara could bring to Hire Santa. Mark Cuban, Lori Greiner, and John also bowed out during the negotiation, expressing concerns about the seasonality and competitive nature of the business. The negotiation showcased Mitch’s ability to hold his ground and secure a deal that aligned with his vision for the company.
In the end, the festive atmosphere prevailed, and Barbara Corcoran emerged as the chosen partner for Hire Santa. The negotiation not only highlighted the potential profitability of the holiday-centric business but also emphasized the importance of securing a partner who could contribute not just capital, but also valuable expertise and connections to fuel the continued success of Hire Santa.
