Santa Claus has a list. At least that’s how he describes it. To be honest, given the scale of his operation, referring to it as just “a list” is something of an understatement. But then Santa repeatedly undersells himself. Elsewhere he claims that he only checks it twice. When you think about how few mistakes he makes, across the billions of entries it contains, in countries across the world, you see how massively he downplays what his QA team achieve.
The planet houses around 2 billion children under the age of 15. Santa has all of their details. Twitter, Facebook, Google – the giants of the internet pale into insignificance compared to Santa’s database. Even the databases of nation states can’t match the scale of Santa’s system; he spans political borders and ideologies. Santa’s “list” is no simple list: you don’t just store 2 billion names on the back of an envelope. And names and addresses are just the beginning of the data that Santa collects.
During December, children submit a so-called “Christmas list”, which they provide in a largely unstructured format. One of the most common ways they do so is by producing a hand-written, paper copy and physically posting it to his headquarters at the North Pole. I find it incredible that in 2019 he still runs his business this way. Santa also schedules in-person drop-in sessions where he receives requests in person. Even more unusually, he has added the stipulation that the requestor must be seated on his knee in order to submit the list. People say that the Apple store experience is strange and cult-like, but that is nothing compared to Santa’s process.
Unlike many other services, Santa has no prescribed format for submissions. Even more incredibly, for a team that seems to run so efficiently, he doesn’t allow the list to be submitted online. On one hand this means Santa has avoided any large scale, embarrassing IT catastrophe. Compare it to the launch of the healthcare.gov, an embarrassing failure for Obama with the website collapsing under the load on the first few days. While Santa’s approach avoids this risk, it does mean he has to convert millions, perhaps hundreds of millions, of handwritten, inconsistent letters into structured lists. Computer scientists talk about the Robustness Principle (“Be liberal in what you accept and conservative in what you send”) but Santa has taken this to an extreme that Jon Postel could only dream of. If it’s not broken don’t fix it, Santa may say, but it would be helpful, at the very least, to start accepting submissions via email.
Santa’s secrecy is extreme, surpassing even that of the famously-private Apple, but given what we know, we can make a few informed guesses at how his operation functions. To be able to process those written letters he must scan them, OCR them to convert them into text, and then parse them to match the requests against products. He doesn’t write notes during the knee-given requests, so must record the audio by some other means, and process it in a similar way. Without anyone noticing, Santa has built up a system that rivals Alexa, Google or Siri.
Alternative theories posit that Santa’s technology use is minimal, and instead he uses a vast army of zero-hours, gig-worker elves, who manually go through the letters and recordings, manually entering data into the system. Wizard of Oz-like; behind the curtain there are just a series of snowy Mechanical Turks. While in some ways this seems more achievable, the scale is so vast that it’s hard to comprehend how Santa can achieve his ends without a level of automation. It’s true that, like Netflix, Santa doesn’t consider himself a tech company, but even with the first mover advantage, what he is able to achieve gives him an edge that prevents other start ups disrupting the market. He may be a logistics company, but without his technology he would be nothing more than a seasonal FedEx. You can see why he is so secret about how his business functions.
Once he has amassed and parsed the data, Santa matches the requests against actual products. Years ago, Santa had a bespoke production line, that assembled products based on the requests, usually in wood. But these days, the vast majority of the requests are fulfilled by third-party suppliers. In fact, many shops rely on Santa for much their business and would not be economically viable without him.
One much overlooked achievement is Santa’s ability to maintain the integrity of vast amounts of data. There are around 360,000 births a day. That’s 360,000 new entries Santa needs to make into his ‘people’ table every single day of the year. And that is not to mention the moves, deaths, and migration into non-Santa-supported countries.
To achieve this, Santa must have integrations into governmental and state databases across the world. Having worked with government databases, I’m truly shocked that he’s been able to do this. The different technologies and systems he had to implement is astonishing and makes Santa’s IT department one of the most sophisticated on the planet. And that’s to say nothing of his ability to make commercial arrangements to access some of the most sensitive data on the planet. I don’t know what’s more impressive: the technical prowess of his development teams, or the negotiation abilities of his business development department.
The logistics division of Santa’s corporation is similarly impressive: able to deliver packages to over 2 billion individuals within the space of barely 24 hours. And this is even with the unusual decision to power the transportation division not by trucks, planes or trains but by reindeer — a move that surely would have been a complete non-starter for any other company. Other large fleets, such as Uber or Amazon, have not even considered adopting this strategy.
We don’t know much about Santa’s IT infrastructure, but we do know he hasn’t outsourced it to the usual suspects. His servers are not hosted by Amazon, Microsoft or Google. Instead he must have assembled his own private datacenter. This may explain why he sited his operations at the North Pole, not the most obvious location to recruit the best tech talent. The low temperatures may net him significant savings in cooling, although it’s not entirely clear why he needs to collocate his business operations teams with his infrastructure. That certainly isn’t the normal approach, and perhaps hints at a dev ops team that works directly on the hardware itself.
Given this, it’s a surprise Santa’s staff aren’t poached more often by Silicon Valley. Maybe Santa offers incredibly attractive perks to entice them to stay, or perhaps he has extremely prohibitively non-compete clauses (no pun intended). Of course, it’s also possible that the North Pole acts as a tax haven, allowing Santa to avoid state, governmental and corporation taxes. That’s assuming he even ran at a profit. And this leads to the most worrying point of all.
It’s unclear how Santa will ever be able to turn a profit. The service is free to use, isn’t ad funded, has yet to go for Series A funding and Santa seems to have no intention of floating the business on the stock market. You thought MoviePass was bad, selling unlimited cinema tickets for $9.99 a month at a loss of hundreds of dollars per customer, but Santa takes this to the next level: he isn’t charging anything for the service. And while this has allowed him to achieve a virtual monopoly, you have to wonder how much runway he has left for himself.
Is it possible that Santa has done shady deals with intelligence agencies to fund his business? Contained within his vast data warehouse is information such as whether you’ve been, in his words, “naughty” or “nice”. Little definition is given to these terms and I find it hard to believe, for example, that the Kremlin will have the same definition of naughty as the CIA. But it’s not a big stretch to believe that this information is of interest to state intelligence services. Perhaps by siting himself in the North Pole, Santa has escaped the jurisdiction of subpoenas requiring him to turn over data for criminal investigations. Although less clear is whether he’s done this because he values privacy or so that he can profit from selling that data back to governments.
Perhaps the most impressive thing about Santa’s operations is the lack of scandals. He has managed to run an operation order of magnitudes larger than Amazon’s, but with none of exploitation of workers. He has an extremely seasonal workforce, and yet has avoided the criticism that has plagued gig-worker companies like Uber. And he stores some of the most sensitive data on the planet without any breaches or losses. By most accounts, Santa’s workforce is predominantly male, and yet there have been no allegations of discrimination, sexual harrassment or unequal pay. Either Santa runs an extremely tight ship, or something more sinister is happening to suppress dissenting voices. True, there was an account of bullying within his sleigh team, but that was put to bed when Santa himself personally intervened promoting the individual in question. Indeed, Santa has films made about him which portray him in a light other CEOs can only dream of. Compare, for example, Santa’s portrayal in Elf with Mark Zuckerberg’s portrayal in The Social Network. Santa even has songs sung about him, something that even Steve Jobs hasn’t yet achieved.
Santa has also been immune to disruption. He is not your typical tech CEO, although in many ways he follows the mould – male, white, from a wealthy background, and with seemingly endless amounts of capital enabling him to build infrastructure at a global scale. With his gathering of data he is part Zuckerberg. With the ease of use of his service he is part Jobs. And with his flying sleigh he is part Bezos and Musk.
The one mark against Santa is the allegations of alcoholism. His request for a glass of sherry at each house in lieu of payment is extremely unusual, and by all accounts, his BMI is not in the healthy zone. That amount of alcohol, combined with other provided treats, can’t be good. And this does put his whole operation at risk. While it is incredibly well run, he is heavily involved in the day to day running, to a level that is unheard of, going so far as to personally deliver presents to individual houses. He has no natural successor and while everything is seemingly good, one does have to wonder: how much longer can this go on.
If it did collapse, Santa would take down a significant position of the global economy with him. Many businesses rely on the contracts they hold with Santa to keep them afloat. It could be that he is propped up by governments, or bank loans, or something more shady, but however Santa manages to maintain his business he has achieved what WeWork, Uber and many others have tried and failed to do: Santa has become too big too fail.