No VC under the tree: Inside a revolutionary Christmas company

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Mac Harman (CLE 98-01) – founder and CEO of California-based Balsam Hill, a maker of high-end artificial Christmas trees, wreaths, and garlands – never thought he would start his own company.

He should have known better, as he showed early entrepreneurial promise. At age three, Mac repurposed old tennis balls as dog toys, selling them out of a red Radio Flyer wagon.

Fast-forward about forty years, and he’s leading a company with $150 million in revenue – a force to be reckoned with in the $1 billion artificial Christmas-tree market in the U.S.

Balsam Hill’s colorful, glossy catalogs start arriving in mailboxes in October, and television ads appear soon after. Its products then start appearing on the holiday-decorated sets of several popular U.S. television shows, including “Ellen,” “The Late Show with Stephen Colbert,” “Today Show,” “CMA Country Christmas,” and “The Doctors.”

It seems fair to say that Balsam Hill is carving out a sizeable space in the American holiday consciousness.

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Beginnings

After three years at McKinsey, a stint in the administration of the Cleveland Clinic, and a few years of running his father’s Cleveland-based wire-product manufacturing company, Mac got his MBA at Stanford, and was looking at starting a direct-selling business.

Why Christmas trees? Mac says that he was laughing one day with friends about starting a Christmas-tree company. But when an online search for high-quality artificial trees proved unsuccessful, he realized that he had hit upon an industry that was ready for disruption.

Working with an up-and-coming Christmas tree factory in China, Mac set about designing products to an exacting standard: Balsam Hill’s trees are based on natural evergreen species, and he has traveled all over the world collecting branch samples in forests and farms to create the most lifelike pine needles.

One could never accuse him of lacking confidence; his initial factory order for the 2006 Christmas season was for $2.6 million worth of trees, financing the purchases himself and with help from friends and family, and selling them online and in a pop-up store at Stanford. His risk paid off: revenue for his first year totaled nearly $3 million.

“I was totally naïve,” Mac says now. “I never felt like I was taking a huge risk, but looking back, I was crazy. I can't believe I took that much risk.” At the end of the day, he says, if he’d failed, he would have landed on his feet. However, he laughs, “I do advise entrepreneurs I mentor that I would maybe take a little bit less risk than I took back then."

He credits the fast pace of the business – and an annual deadline – with improving his decision-making chops along the way. "One of the things that really helped me as an entrepreneur was that I didn't have the luxury of time to overthink things,” Mac explains. “It helped me move so much faster, which was something that I really needed. Because as much as I wanted to, and sometimes wish I could even now, I can't move Christmas back. You just have to be ready."

A hands-on approach

To this day, Mac has never taken venture capital money – something that is particularly unusual since Balsam Hill is headquartered in the VC hotbed of Silicon Valley. Mac even started the company out of his apartment on Sand Hill Road, ground zero for venture capital.

“We're the only consumer-products company I know of here that is not venture-backed,” Mac says. “I didn't want to be in the position where I ceded control of the business I was building and nurturing to someone who had different incentives than I did.”

Mac also takes an unusually active hands-on approach to the products sold at Balsam Hill – a great point of pride for him. “I still design or have a hand in designing all of our trees,” he says. “It's really important that I stay close to our physical product, because it is our value proposition. It's our heritage.”

That, he says, is a lesson he learned while running his father’s business, and growing up in a blue-collar neighborhood in Cleveland. “It comes from who I am. I grew up around things being made in a factory.”

He explains, “It’s very important to me that when one of our customers has a Balsam Hill product, they love it. And I'm able to go out in the media and talk about how great I think our products are. By staying close to them, I know that it’s true.”

Balsam Hill trees

Complexities of a seasonal company

As one would expect, there are some challenges involved in running a business when nearly all of its revenue is made in one insanely busy six-week period.

“This is an exceptional challenge for us,” Mac says. “I have yet to find another business as seasonal as ours. It’s very, very crazy. Last year, over our busiest two weeks, we operated at a $2 billion run rate – meaning that, if we ran at that speed the whole year, we’d be a $2 billion company."

Over time, he’s found a lot of things that don’t work – and many that do. A second company he started handles some of Balsam Hill’s customer service at a call center in Boise, Idaho, while another large global call center absorbs some of the work at peak times.

Another complicated issue is ensuring efficient distribution to customers, which requires working closely with delivery companies. The size of the packages adds an additional challenge: some trees they sell are so tall, they are delivered in multiple boxes. “It’s important for us to have a great partnership with our logistics partners,” says Mac.

Becoming less seasonal by selling non-Christmas products year-round is another strategy he’s tried in order to even things out – something that’s had mixed results. He is, however, optimistic about a recent acquisition of an outdoor furniture company, a solid Q2 performer to add to a heavy Q4.

“Creating a place where people want to be”

Over twelve years, Balsam Hill has grown substantially from its original core team of ten people – and Mac says he believes the company’s culture is part of its success. “We recently crossed the 200-employee mark,” he says. “That growth comes from creating a place that people want to be. I want people to have the trust and autonomy they need to have a big impact.”

As the company grows, he admits that gets harder. “We have a 45% calculated annual growth rate since inception, which is crazy for a non-VC-backed company in consumer products. People ask me, why don't we just stop and grow 5%? My answer is that if we don't grow, we won’t keep creating opportunities for everyone to take on more new things.”

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He takes the development of his employees seriously – and personally. “The times where I've been less effective as a leader have been when I've been slow to give up control of things,” he says, “and I think places where we've had challenges as a company have been because I held on to something too long. So, in terms of a leadership style, I want to be someone who's constantly giving things up to others.” 

Mac says that a commitment to diversity is something he’s also particularly passionate about. “Being the CEO of a stable, fast-growing company is really hard. But I think a lot about how much easier it’s been for me to get where I am as a white, male American. It has been much easier for me than it would have been for someone who's not white, who's a woman, who did not grow up in the U.S.”

He adds, “The people I most respect are those who have made a difference – at whatever level they are – and have done so while not benefiting from the lowest degree-of-difficulty setting, like I did. I am very aware that not everyone in the world is blessed with the kind of opportunities and choices that I've been blessed with.” 

Finding joy in work

Mac puts a premium on finding happiness in one’s chosen career. “I find that way too many people who have the opportunity to choose where they work are working in places where they aren't filled with joy,” he says. “And that's unfortunate. My wish is that at the end of my life, there will be people who are grateful for some piece of advice I'd been able to give them that helped them find joy and meaning in their work.”

One of his biggest sources of satisfaction and happiness is building relationships not only with his employees, but his customers. “We’ve transitioned to being a much more consumer-focused company,” he explains. “Originally, we were like, ‘we have great trees and hopefully people love them’. And that was kind of all we did. Now, we're much more about understanding the needs of our customers – building relationships with them and developing things that work for them over time.”

He adds, “One of the best things about our first year in business is that I was in our brick-and-mortar retail store nearly every day, and I answered a lot of our customer service emails myself.  The feedback we received was tremendous. Now that we are bigger, it is difficult for me to personally take in as much feedback as I did back then. Yet today, when I was visiting our retail store concept in Cherry Hill, New Jersey, I had so many great ideas presented by customers shopping in the store. You can never get too much customer feedback!”

Mac hopes that others will take a cue from him and choose work that is meaningful. “If I retire someday and I'm looking back, I hope that I've been able to encourage people on their journey to make choices so that they find meaning in their work, and that they enjoy it – and that they're able to have a career that's joy-filled.”

Now that sounds like the Christmas spirit.

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Click here to read more about Mac and his team.

Click here to find out how Balsam Hill gives back.