'The Elf on the Shelf' brand's magical story started with co-founder's family and its own Christmas elf

Santa’s sneaky elves donned in red suits with crisp white collars have been making chocolaty messes on kitchen counters and dangling dangerously from Christmas tree branches — all while unsuspecting children are sleeping.

"Families and children look to us to be the voice of the North Pole," Christa Pitts, founder and co-CEO of the Lumistella Co., maker of The Elf on the Shelf, told FOX Business.

"They write us, they call us, they send us letters, they contact us through social media — any way they feel that they can have that one-on-one connection with the North Pole," Pitts said.

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More than 25.5 million The Elf on the Shelf scout elves have been causing mischief and magic in homes across the country and the world. 

And the tradition grew in 2023 with a new character, Noorah the Arctic Fox, and a new TV series, "The Elf on the Shelf: Sweets Showdown," currently airing on Food Network.

Since 2005, the global sensation with elf prints in 24 countries has grown out of one family tradition that started in Atlanta. 

"My mom had a small elf in her childhood and her mother, my grandmother, used to say, ‘You know, you guys better cut it out because that elf is watching.' It worked for Santa, and it was just living in the Christmas tree," Pitts said. 

When Pitts’ mother, Carol Aebersold, had children, she continued the tradition and added to the excitement by giving the elf a name: Fisbee.

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She also created stories around its appearances each day leading up to Christmas. 

"We would race out of bed every morning to go find him," Pitts said. 

"He was always in a new place. And there were rules. I mean, we weren't allowed to touch Fisbee because he could lose his magic. We could talk to Fisbee and tell him anything we wanted for Christmas. So, it was just those good positive reinforcements that were part of our childhood."

When Pitts’ twin sister, Chanda Bell, had her first child, she wanted to continue the tradition in her own home but said she could not find anything on the market like her treasured Fisbee.

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Then one day in 2004, Bell and Aebersold, both former schoolteachers, sat around the kitchen table and penned the story of The Elf on the Shelf.

"They were both very passionate about children's literacy and being educators, they understood that world of young minds," Pitts said. 

"The two of them together were a real dream team, in terms of knowing how kids like to interact with their materials."

Pitts, a former QVC program host and branding expert, teamed up with her mom and sister to develop The Elf on the Shelf into a book and character combo — a journey that wasn’t all magic as it took grit, determination and plenty of rejection.

"We had been turned down by everybody," Pitts said. "We had the book and we had it illustrated, but nobody wanted it. No one saw value in it."

"We were rejection central," she added. "We heard everything from, ‘Kids don’t like rhyming’ to, ‘It’s destined for the damaged goods bin’ and everything in between."

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The team decided to self-publish. 

"We actually understood this concept from the mind of a child and we believed in it. From an entrepreneurial standpoint, it's one of the things that sets you apart, which is you have to believe in your business or your idea because no one else is going to do it for you."

Pitts said she and her family had to find the cash to get the idea off the ground. 

They turned to proceeds from the sale of her house, money from her parents' 401(k) — (d)and the rest was charged to credit cards.

"And that's how we got our first The Elf on the Shelf units," she said.

The minimum order was 5,000 and by the fall of 2005 they had their first book signing. 

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"We started very small at a few local Christmas markets," Pitts said. "We had to tell every single person that passed by what this was because there was no frame of reference for this idea."

Pitts said they sold all 5,000 units that year, but it wasn’t easy.

"It was waking up at the crack of dawn and then not going to bed until late and getting the website together," Pitts said.

"The more we sold, the more we continued to believe."

Every penny they made went immediately back into the company to support the next year and the next, Pitts said. 

They did not make any money for three years — but that didn't stop them. 

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"I think there's always going to be an element of optimism in any successful entrepreneur story," Pitts said. 

"If you took everyone who told you ‘no,’ or was a naysayer or doubter and believed them, you would never conquer your barriers," she said. 

"The obstacle is kind of the way entrepreneurial mindsets work. There's always going to be an element of optimism. That said, the challenges are enormous."

From a business perspective, Pitts said a growth mindset and a willingness to evolve are key. 

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"One of the great opportunities for any entrepreneur is that you can move faster and be more nimble than any established brand or company out there," Pitts said. 

"The larger they become, the more difficult it is to be a disruptor or a change maker," she added. 

"I had a dear friend of mine say to me one time, ‘You guys improved Christmas. You made it better. You've improved a holiday." 

The Lumistella Co. has about 115 full-time employees, scaling up with part-time and temporary workers during the Christmas season.

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The company is still based in Atlanta — and Pitts and the team aren’t resting on their snow drifts. 

New characters and content continue to connect Santa and the North Pole to children everywhere.

Pitts’ advice for budding entrepreneurs is simple.

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"Don't be afraid to follow your dreams," she said. 

"We are the classic example of how if you work hard enough and you focus and you are very clear about what you're wanting to accomplish and why, with persistence and optimism, you can do it."

Relationships, Pitts added, are a key component to building a business.

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"Get on a plane, get in your car, go travel, meet people — because typically people are willing to help you out," she said. 

"You just have to be willing to spend time with them and to talk about what it is you're trying to do."

That includes family relationships, Pitts said.

"We have a family that’s wild on trust and love and an incredible mom who told us we could do anything," Pitts said. 

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"We knew from the beginning of our existence just how magical this imagination and the magic of the season can be if you lean into it. And it's not about Santa per se, but it's about the spirit of the season," she said. 

"Kindness, generosity, thoughtfulness, giving. Those are the things that drive us. Those are the things that I think make this time of year so special. I think Santa's proud of us."

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