Pandemic, Other Woes Lead Santa Claus To Sell North Pole Industries To Private Equity

Photo image by The Mirror

Santa (“Sandy”) Claus, the legendary CEO of North Pole Industries (NPI) who is widely credited with bringing commercialism to Christmas, stunned the world by announcing yesterday that he is selling the closely held company to an unnamed private equity firm. The timing was especially surprising coming in the midst of the holiday season for which he had built his vaunted and much-beloved organization.

In a press conference yesterday, Claus, known for his usual “jolly” disposition, appeared subdued and spoke frankly of the challenges and headwinds which led to the decision to sell NPI. “The pandemic and its resulting disruption for my elf workforce, the changes in the competitive landscape, especially with Amazon, the recent hacking of my naughty-and-nice list, it’s just been an awful two years. And the change in peoples’ overall belief systems has taken its toll. We will make the annual delivery this year because we don’t want to disappoint our millions of young clients but then I’m parking the sled for good. The Santa Claus brand is tired and I am tired. It’s time for someone else to take NPI to the next level.”

There was not a single ho-ho-ho in his prepared remarks.

At the press conference, CEO Claus mentioned the following details in response to the many questions from the shocked press corps who covered the event:

• His North Pole toy-making facility was hit hard by The “Great Resignation” as many of his elves opted out of coming back for this year’s seasonal work. “Like many other employees worldwide, the two-month shutdown of the toyshop because of COVID led many of the elves to reprioritize their career aspirations and many disappointingly decided that they wanted to pursue other interests,” he said. Some elves apparently also pushed hard for Work From Home (WFH) options. As a result, he said that some Christmas lists will go unfilled. “It will be a sad Christmas morning for many little boys and girls. That breaks my heart because people depend on us.” In a flash of rarely seen anger, he called his elfin workforce “a bunch of whiney, self-centered little bastards!”
• The supply chain challenges also impacted Santa’s operations. While Claus has never made it a secret that he contracts out many toy components to keep costs down, this year there is a backlog of container ships at the Port of North Pole, hindering his assembly operations. “I’ve never seen it this bad,” he said;
• He failed to innovate. While his best-in-class one night delivery system showed he could execute, it has been years since his toyshop has come up with a blockbuster “must-have” toy, exacerbated this year by the chip shortage. “Wooden soldiers, sleds, and dolls are so last century” scornfully remarked one analyst who follows the industry. Amazon and other forms of e-commerce also undermined his business model;
• Claus has had trouble adopting new social media and info technology in general. It was hugely embarrassing when the NPI site was hacked back in April and confidential information about who was naughty and who was nice was compromised, forcing a number of public figures to disclose indiscretions before leaked news became public. Also, Claus’ archaic website has been overwhelmed several times in past holiday seasons because of the millions of email and text letters to Santa. His plans to build a dedicated server farm have languished because of capital budget shortfalls the last few years;
• Another trend that Claus unsuccessfully struggled with over the years was the growing number of children of the world who no longer believe in him, a key performance indicator. The much-watched CPI (Claus Plausibility Index) has had a downward trend for the last 9 years and this past quarter Santa barely edged out The Great Pumpkin in the Index’s category of “Belief and Credibility;”
• Claus also admitted to having to invest an “inordinate” amount of his time and resources to battling animal rights activists who have long demanded he not “abuse” his reindeer by forcing them to make the exhausting global delivery every Christmas eve night. He reportedly has been looking into converting his sled to battery power and has publicly feuded with Elon Musk about the battery range constraints that have prevented his adoption of that technology;
• In the press conference, the CEO confided that his board has been pressing him hard for several years to name a successor and that he has failed to do so, citing a lack of viable internal and external candidates. One leadership expert observed that “celebrity entrepreneurs” like Claus “often find it difficult to think that anyone else could do their job. That puts the future of the enterprise at risk;”
• Claus also cited the intellectual property challenges he has lost in the courts worldwide. “Anyone can put on a red suit and fake beard and be featured in a movie or in a parade,” said Claus. “They are stealing my image and my brand and they need to pay for that asset. It’s incredibly frustrating…” He continues to battle Ed Asner’s estate in court for what he calls the actor’s “outlandish” portrayal of him in the 2003 movie Elf.

Claus did not indicate what he would do once the sale goes through and he steps down but did not rule out writing his memoirs or creating a Santa Claus-themed TV reality show. “We’ve had some very promising focus group results testing out that concept” he revealed. Netflix has reportedly expressed interest.

One thing that looks certain is that the private equity firm buying NPI will make some dramatic changes which include relocating operations to a low-cost/low tax country that also has a more attractive supply chain. One might also expect the firm to borrow from the Amazon playbook and create a system of global distribution centers instead of the current North Pole centralized toy-making and warehousing facility. It’s unclear how many of the elves will be offered relocation packages.

The North Pole headquarters is also rumored to be razed soon after the sale goes through, as there are newly discovered oil reserves in that area of the Arctic and the land is seen as far more valuable as an energy investment. Claus had no comment about that and called it “wild speculation” and “fake news.”

He closed the press conference by stating that “it has been a good run” but that someone else could more effectively “unlock the value” of the enterprise. With that, he wished everyone a Merry Christmas and “to all a good night” and exited.

It signaled the sad end of an era.

About the author: Mike Hoban is a business topics writer and leadership coach/ advisor. He is actively working at becoming a world-class grandpa to his five young granddaughters. In addition to his 35+ years experience as a leader, consultant, and business owner he has also published extensively in Fast Company and wrote a business column for 12 years. His recent commentaries — including many about leading during the COVID crisis — can be found on his LinkedIn page: https://www.linkedin.com/in/mike-hoban-b5756b6/He can also be reached at mjhoban99@gmail.com.