Thomas Harman: “We’re in the ‘Help You Create Memories’ Business”

Thomas Harman is the founder and CEO of Balsam Brands, the largest online seller of high-end artificial Christmas trees as well as holiday and other home decor. Balsam designs and manufactures the trees it sells, most of which Harman designs himself. Harman says he always had real trees when he was growing up but decided to get into the fake tree business when he learned his brother-in-law was allergic to the real thing. Founded in 2006, the company reported revenue of $75 million in 2014 and employs 120 people. Harman graduated from Stanford Graduate School of Business in 2005

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Thomas Harman | Courtesy

In 10 words or fewer, what is the big idea behind your business?

Purveyor of the world’s best Christmas trees and holiday decor.

What is the best advice you’ve ever received?

My father, who ran a small business, said, “If you come across a truly exceptional person, you should hire them and create a role for them, even if you can’t justify it.” More than half our leadership team at Balsam Brands came from that advice. When we met them we didn’t have a role for them and it was a stretch to bring them into the company.

What was the most difficult lesson you have learned on the job?

You can’t move Christmas. That matters in a number of ways. For one, Christmas may not move, but Thanksgiving does. A lot depends on how many days there are between those two holidays. Eventually you learn to embrace it. Unlike most retailers, we don’t have the chance to learn things all year and then implement when it matters. We get one chance, so we test everything we can. It forces you to learn when it is important to “measure twice and cut once” and when you just need to “throw spaghetti at the wall to see what sticks.”

Gearing up for my first season, I was working out of my apartment. I never left and all I did was work. I fell asleep working at my desk and woke up with the phone ringing. I had to get everything ready in time or we would be a year behind. It meant skipping diligence on some things. For example, I picked a warehouse fulfillment partner that missed shipments and didn’t track inventory properly. We had to make a change.

What advice would you give other entrepreneurs on how to build a great business?

Make sure all the key stakeholders have an aligned vision for the company. Too often, it’s not the case and it can destroy relationships, value, and even the business. Some people take venture capital, the VCs push at the small chance of it being huge, and it flames out trying to be a $100 million business. Yet it otherwise might have been a very good $10 million business. We have $75 million in revenue and no venture financing. I raised money from friends and family and bootstrapped. It gives us great alignment and flexibility.

If there was one thing that has enabled you to be successful as an entrepreneur, what would it be?

Willingness to take risk. In this business you need to take on a lot of inventory risk. You have to order products 9 to 18 months in advance, yet you have no idea how much you will grow or whether the economy will go up or down. You have to commit. We have grown 50% a year for the past five years. That is a direct result of pushing ourselves to be uncomfortable. If we are only comfortable doing the same thing each year, we will stagnate.

I believe people who have come from hardship — whether you are an immigrant or you have physical challenges or you have lost a friend or family member — are able to have a perspective on life that frames business risk in the proper context.

How do you come up with your best ideas?

All my best ideas come when I’m in the shower.

What is your greatest achievement?

We have built a business in Silicon Valley that is counter-cultural. While there are days I wish we were a subscription software as a service business, we are growing the old-fashioned way — the way you would do it in the rest of the world. It can be a challenge to find talented people in this area who want to join that journey.

What do you consider your biggest failure?

Poor judgment in the abilities of other people.

What values are important to you in business?

I’m Christian and my faith matters to me a lot. Most of my values come back to the Golden Rule of always doing the right thing.

What impact would you like to have on the world?

Helping people think about what really matters in life. Life is too short not to enjoy it. I lost my father early and I lost a close friend early. I don’t know how long I have here and I want to make sure I make the most of it.

Why are you an entrepreneur?

I started my first business at the age of 3. My dad played tennis. I took his old used tennis balls and sold them to neighbors who used them to play catch with their dogs. I also planted, grew, and sold decorative gourds. That was not as successful as selling popcorn and lemonade door-to-door out of my wagon.

What was your first paying job?

I worked at a company that designs ski areas. I organized their maps and hiked around forests looking at evergreen trees. In my second job, I did geology research in an Idaho forest. I learned I didn’t want to be a geologist. I guess I’m still working with trees!

Do you think there is such a thing as balance? How do you achieve balance in your life?

We are in the “help you create memories” business. By far our busiest time of year is Thanksgiving weekend. It’s a monstrously critical period for us. So is Christmas and New Year’s. How do we help our customers celebrate their friends and family and make sure we are able to do the same thing with our own friends and family?

What is the best business book you have read?

The Billionaire Who Wasn’t, which is about Chuck Feeney, a man who quietly made a fortune and then secretly gave it all away.

What businessperson do you most admire?

People who build and run small everyday retail businesses. I admire their grit and determination.

What is the most valuable thing you took away from your time at Stanford?

I soaked up every talk by a founder or CEO about creating and maintaining the right culture.

What do you think is the greatest innovation in the past decade?

Realistic artificial Christmas trees.