As we process applications for the 2010 Inc. 500 | 5000, we thought it would be worthwhile to shine a spotlight on some of the companies that are vying to appear on our ranking of the fastest-growing private companies in the U.S. One that caught our eye was the Georgia-based Elf on the Shelf.
Scout the Elf was a staple in the Aebersold household when Christa Pitts and her sister Chanda Bell were growing up. The tiny elf doll would come out every Christmas, and when the girls went to bed, their mother, Carol Aebersold, would move Scout to a different spot in the house. In the morning, she told her kids the elf had just returned from a trip to tell Santa whether they'd been good or bad. The nightly ritual would continue until Christmas Day.
Now, Christa and her sister are fully-grown and, in collaboration with their mother, they've managed to turn this family tradition into a toy and book business that has grown faster than the kids who read the story.
In 2005, Pitts left her job at QVC and moved back to Atlanta where her mother and sister had already drafted a storybook about the so-called elf on the shelf. They sent the story and a pitch to a literary agent in New York, and though the agent saw the story's potential, publishers were less impressed.
"They told us it was destined for the damaged goods bin because children don't like rhyming books," Pitts remembers. The women's response to mounting rejection was to launch their own publishing company.
They call the company Creatively Classic Activities & Books and held their first book signing that same year at the Marietta Museum of History in Marietta, Georgia.
"We invited every person we had ever met for five minutes," Pitts says. "We ended up selling 300 Elf on the Shelf: A Christmas Tradition Activity Book books."
The three entrepreneurs then showcased their books and the elf doll at a holiday trade show, which was put on by their local junior league chapter. "It was our first opportunity to see if people outside our family and friends loved it as much as we did," Pitts says. Before long they had built such a following at holiday shows that retailers actually began calling them.
"The first person we ever approached about the product turned us down flat," she says. "But later on that year, in 2005, he called the office and said, 'Today I've had three people come in and ask for The Elf on the Shelf. I've been in this business long enough to know that if people are asking for it, I should sell it.'"
That same business owner shared the product's success with a buying group he belonged to, and soon, the company was selling the books and dolls wholesale. The company now works with 8,000 retailers nationwide, including Barnes & Noble. Pitts reported 1,335 percent growth in revenue in the last three years, from earning just under $500,000 in 2006 to more than $7 million in 2009.
As part of their growth strategy, the company has developed new product lines, including smaller versions of the elf doll, a clothing line for girl elves called Claus Couture and an entirely new book and product line titled A Light in the Night.
Still, Pitts believes it's the beauty of the tradition itself that has enabled the company to grow.
"The important part was to share this tradition with as many people as possible," she says. "It's wholesome, it's fun, and it's about the magic of Christmas. Those things helped us grow."