Scarcity, Clout, and Michelin-Star Ambition: Inside Last Crumb’s $120 Box Playbook

0:00There was so much clout around the box that we probably could have had dirt in these things in the beginning and we still would have sold out.

0:07Derek Jaeger:What happens when you treat a humble cookie like a limited edition exclusive brand? Everybody can say they use the best ingredients to use the best flowers, chocolates, all that jazz. Derek Jaeger combined his science background with his interest in baking to launch Last Crumb, building a cult favorite cookie empire driven by viral streetwear drops and massive weightless. I want you to have the best childhood experience. If you have banana cream pie, I want you to go back to the time where you had your first banana pudding and the way you felt having that. Now expanding into brick and mortar retail with a flagship in Brooklyn, Derek joins us to share what it takes to transition a direct consumer sensation into the physical world.

0:44Derek Jaeger:I'm Adam Levinter and this is Shopify Masters, your companion for starting and scaling a business. Derek, welcome. Thanks, guys. I appreciate you guys having me. So you have this science background, which you parlay into entrepreneurship. So what is the background here? How did you get into this world? You know, family really wanted me to get into a healthcare field early on in life. And that was most of my college studies. So a lot of biology, chemistry, was looking to get into dentistry. And it just wasn't for me very early on. I was able to parlay some of those classes and learnings. Food science was actually one of them and, you know, really fell in love with the creating of food and creating meals early on.

1:32I was in the health and fitness space for a while and kind of an odd transition to cookies. But a lot of that translated into, you know, creating recipes, especially on the baking side. And that's how I really got into it at an early age.

1:47Derek Jaeger:Yeah, my understanding is at some point you're a personal trainer. So are you baking on the side for yourself? Is this the hobby? Are you thinking that you're going to transition into this world and make it a career? It was interesting. So in college, I was a personal trainer for a little bit. But some of our initial projects in the entrepreneurship program in college were building a business. And one of the first ideas we had was a cookie business. And it was a little bit ahead of its time, just coming up with a bunch of different flavors. you know, I think 20 years ago, didn't really have a plethora of cookie flavors out there.

2:21And so that was our business plan. So I was baking for a friend during his main entrepreneurship program. And we actually took that to San Diego to build our first cookie company.

2:33Derek Jaeger:So that's circa 2009. You launched the Cravery in San Diego with just$1 ,000 in your pocket. You're selling at farmer's markets. You then go on to open two stores. This becomes a real business at some point. When did you feel like this was working? I think, you know, early on, we were just so young. We were happy with anything at that point. You know, we had like four or five farmer's markets the first year. Ended up bootstrapping that into an online business and then turned that into two stores in San Diego. So I would say about year three, when we first popped into our first store, we saw some success.

3:14But it was a grind. You know, we were self-funded, no investors. Every dollar kind of went back into the business. And it was fun, but it was a grind.

3:25Derek Jaeger:Got you. And you end up leaving the cravery and getting into marketing, specifically paid ads. And you step back in. Obviously, we'll talk about the last crumb today in a moment. But what does this transition look like for you from the Cravery into the marketing world? It was a tough transition in a sense of, you know, Cravery and cookies was all I knew. I did see that Facebook was kind of the Wild West at that time. And a lot of people were getting in on paid ads very early and everything from affiliate marketing to starting their own brands. And it just felt like a good transition at that point in my life.

4:05Like it was still very young. Cravery was good, but it wasn't the thing that I felt was going to take us or take me to the next stage of my career. So I ended up selling my shares of Cravery after about five years and got into internet marketing and kind of ran with Facebook and Google side for quite some time.

4:27Derek Jaeger:And are you doing paid ads for different brands as a contractor? Are you an agency resource? What did that look like? And what did this teach you about, I don't know, the process of brand building? Yeah. So early on, we were essentially an agency that ran affiliate ads for a plethora of products. So everything from skincare to nutrition, anything. We could sell ice to an Eskimo. It was the early days of Facebook and clicks were one cent, two cents. just a very different time than it is right now. So it taught me a lot about scale. And I think that was the biggest thing that we were not seeing as a small business owner with a brick and mortar shop and being only in San Diego like this.

5:21It was pretty eye opening to have a team and grow that pretty quickly. And then it was a fun transition, especially getting on Facebook pretty early.

5:32Derek Jaeger:Yeah, let's timestamp this for listeners. So I think this is a very key piece of information that a lot of founders overlook, which is that there was a time where you could build a D2C business online for very little money in terms of customer acquisition cost. Because to your point, Derek, traffic was so cheap. CPC and CPM rates were a fraction of what they are today. So relative to 2026, where, in your opinion, was the heyday of brand building? What year was this? I missed, like, everybody says they missed the heyday. But, you know, if I talked to people today, they would say that our time was the heyday.

6:13And I think if we're talking about, like, cost of traffic and cost of acquisition, it was a fraction, like you said, you know, a hundredth of what we're talking about today. And ads were a lot more surface level. You know, you can put up three cool pictures and, you know, you might get one cent clicks. You, I think there's just a lot more availability to what you could sell, how to sell. As long as you were creative, as long as your copy was creative, you could make pretty substantial businesses kind of out of nothing. And, you know, we didn't sell any of our own products. We were selling products for everybody else.

6:49So our business was essentially the middleman. And we built that up for like six or seven years. It was a good time.

6:56Derek Jaeger:So what inspires you to launch the last crumb? Like what was the moment that you said to yourself, I'm not going to rely on paid ads as a third party resource anymore. I'm going to jump back into my own thing and grow something on my own. A lot of factors. I think the main one, you know, I've always loved food. I think food has always been a passion for me. I always said I wasn't going to get back into the food industry after the Cravery. It's a tough, tough business. I really want to build a brand that I felt proud of, selling other people's products. I think the main thing that I saw with all the products we were selling is if you turned off the ads, there would be no brand left.

7:37These brands, these products would just disappear into thin air. But if you put out$10 ,000,$20 ,000 of ads a day, Like, obviously, like they're going to, you know, they're going to do well. I want to do the opposite. I want to have a brand that people cared about and could talk about and were excited to be a part of. And so that's kind of what started the idea for Last Crown.

8:02Derek Jaeger:So if your thesis is that you need to build something that doesn't rely on paid ads or that paid ads isn't sustainable as a brand grows, what is your brand thesis then? What are the cornerstones of building a brand? I think just a connection was the biggest one. We knew we had to find a niche first. We wanted the highest end product in the cookie market. I was very confident in the product. I've been toying around with the recipes for 10 to 15 years. And I think we knew we had this product, but how do we show people that this is something completely different? And so we spent a year building the brand.

8:41and that's just not just you know the copy and the visual part of the brands it's everything how do you how do you make people feel when they get last crop so you know we spent a year on photography we had 20 different boxes that we tested out we tested out the angle of the cookie the way the cookie looked at you when you opened the box how it felt to open the package every little detail went into building this brand and you know i don't want to say we also got lucky but But COVID happened right at our launch. And, you know, being a direct consumer brand during that time was a it was it was a great time to have an online product.

9:24Derek Jaeger:Yeah, you've said the pandemic actually created what you've called the perfect storm for launch. What do you mean by that? And how much of that early success do you think was timing versus planning, so to speak? There wasn't any stone left unturned when we launched this brand. I was 100 % confident in it, whether it was a local delivery brand or a brick and mortar or a DTC company. But we launched with the direct consumer model first. So I think COVID helped for sure as people want something to connect to. but I think the brand would have done done well just because it was so polished when we launched it that it just came out of nowhere like people it went from no presence to in everybody's face and they're like what is this what what is this cookie brand that is two times at least the cost of every other brand out there and people just can't get enough of it yeah I mean you're not kidding these cookies are expensive you've got your core collection price at 120 dollars which for a dozen cookies.

10:33Derek Jaeger:So let's call it premium priced cookies. But these are, to your point, incredibly special. As you say in your copy on your website, the last crumb cookies are wildly delicious handcrafted cookies that you'll obsess over. Why do you think people obsessed over these cookies? Like what makes them so different, so special? I know you use specific ingredients, you've got a specific aging process, but talk to me about the product itself. I mean, everybody can say they use the best ingredients to use the best flowers, chocolates, all that all that jazz. I think we really focused on creating the best bite for each of the cookies.

11:12And my idea for every cookie was to kind of reach into that nostalgicness of food for everybody when they bite into each of our flavors. So, you know, if if you're biting into a chocolate chip, like I want you to have the best chocolate chip experience. If you have banana cream pie, I want you to go back to the time where you had your first banana pudding and the way you felt having that or having, you know, grandma's red velvet cake and how you felt eating that for the first time. It's kind of a combination of everything when we're creating these flavors. So all of our flavors, you know, we don't have one base recipe.

11:47All of our recipes are different. And my kitchen team is going to kill me because every time we come up with a new flavor, like it's just a bunch more ingredients to add to the ordering list. It's not a easily scalable business just because we have so many unique flavors, but that's our baseline. We will not skimp on creation. We will not skimp on flavors and complexities just to make a cheaper, better cookie. So all of our cookies are very intricate. Yeah.

12:21Derek Jaeger:And you've got a relatively unique model that I'd love you to dive into more, which is, in effect, I mean, Last Crumb has sort of pioneered this, what I'll call the luxury food drop model, where you're routinely selling out of boxes of cookies in seconds, and then you're amassing a very large waitlist in the process. It's a bit of the anti-scale approach, I would say, to brand building. But what has been your experience with respect to doing these drops? And how does that impact the overall business model? So the drops, this was the idea since the beginning of how do we grow this brand? How do we build some clout without having paid ads?

13:05and our very initial ideas were, you know, build something like Supreme or Kith around these like fashion drops, but how do we turn fashion drops into cookies? Like what are some of the value pillars that people associate with some of these other like fashion and clothing brands? And a lot of it's that, you know, I got something, you didn't. We hadn't really seen that in food. I always thought there was definitely like, if you went to, same as going to like a Michelin star restaurant or a very high end restaurant, It's like hard to get these reservations. You feel good about eating at those places.

13:37And so how do we bring that online? And so that's what we did. We had a very limited drop window every week, Monday, 12 o 'clock, 100 boxes, 200 boxes, 500 boxes. and I think people were enamored with that with the idea of seeing this for the first time in a food brand so in the beginning you know we were a very small kitchen we were out in LA and we would have you know maybe 50 boxes or 100 boxes and we would sell out you know in a couple hours whatever it took but then I think week six is when we started getting some traction from celebrities Chrissy Teigen was able to get her hands on a box very early and she posted organically.

14:22And I think that's one thing we pride ourselves on. We've always had organic influence for the brand, but that blew up. That blew us up. That was a very quick snowball effect. And we were selling out for a good part of a year within seconds after that.

14:38Derek Jaeger:Do you credit those sellouts to the Chrissy Teigen post? Like, do you feel like that was the biggest turning point? I don't know if that was a turning point. I think it was just so organic that people were just enamored with the product. I think there was so much cloud around the box that we probably could have had dirt in these things in the beginning and we still would have sold out. but the fact that they wanted the box so much and then at the end of it they had a great product they were almost in a sense maybe not expecting um you know they had 12 different cookies all flavors that nobody's seen before um and shipped perfectly and then on top of that it was a instagrammable moment a tiktok moment um it kind of checked all the boxes so yes the celebrity backing helped.

15:28But then the organic posting is kind of what took us to that, you know, to that cult like effect.

15:34Derek Jaeger:Do you feel, Derek, like it was pure luck that Chrissy Teigen got her hands on this? Or was there anything intentional about how the brand was growing and or thinking about celebrity influence? We were definitely thinking of celebrity influence at the beginning when we were building the brand. I think, you know, we were in L.A. for a reason. Like it's Hollywood, it's celebrities, it's people that can get your product online and posted about very quickly. And I wouldn't say we were seeking out any particular celebrity, but we, you know, with the drops, we knew we had a chance to get in front of some people pretty quickly.

16:13And she just happened to get a box and she, I think she had a food show. So, you know, it was, it kind of, it was a good timing for her and for us to grab the box.

16:24Derek Jaeger:When your weekly drops start selling out in seconds, what does that do to the back end infrastructure of the business? Like what impact does that have on your kitchen operations? What sorts of things do you have to adjust as you scale? It was interesting because, you know, we had a small kitchen. We had a small kitchen. Our first prototype box was gigantic. And so the boxes themselves took up three fourths of the space. So we were just kind of baking and packing around these boxes. But we also wanted to keep the inventory relatively low. So we had that clout every single week. And, you know, our goal was to fulfill a percentage of the demand every week.

17:10And that quickly went out the door because we just couldn't fill. We just baked as many as we could. And we were selling out of those. But infrastructure, it made us think very quickly of how to get a new kitchen and how to increase our staff. And then, you know, even like rethink the model. It's a model that's built on scarcity. You have to always continue to think like, what's that next step look like? And so we are continuing to think about that as well.

17:42Derek Jaeger:Yeah, and you deliberately move away from the weekly drop model in 2023. so what was behind that decision? So we had a pretty interesting cap table of people after our first raise in 2022 and there was a lot of opportunity I think we saw with potentially opening up the availability to everybody at a faster pace. you know maybe it was chatter from internal investors and people that just were interested in in building the brand quicker but it didn't make sense one of your main value pillars can't just be scarcity all the time so we wanted to see what it looked like to have an evergreen model so we moved to the evergreen in 2023 with our goal to start testing retail and brick and mortar yeah you're now in Williamsburg in Brooklyn right so people can visit your storefront What have you learned as you've opened up a sort of multi-channel approach to this brand?

18:47I mean, a lot, good and bad. It's interesting opening a store because a lot of brands, I'd feel like they don't go from direct to consumer to retail. I feel like it's the other way around. Like you have your brick and mortar shops and then you'll start creating some products that you can sell online and ship nationwide. New Yorkers love discovering something. They want to feel like they've discovered the new thing, the new hot thing. and Last Crumb almost feels like this huge brand that put a store up in Williamsburg and we're not a huge brand. So I think we lost that clout of, hey, I've discovered this new thing and nobody's seen it before.

19:28You go onto our socials, we have 200 ,000 followers or 250 on TikTok. So it doesn't feel like a brand new thing. And that was something that I thought was interesting. I thought that we would have this like almost like magnetic appeal, like, oh, I've never seen this before. But everybody's kind of seen it before. So it was kind of like this weird mix of people that knew about us, but also like, oh, I've seen them forever. Everything from the storefront has been amazing. Like we are incredibly stoked to expand the retail model quickly for a multitude of reasons.

20:13Derek Jaeger:Yeah, I mean, it sort of runs in conflict with the early thesis, which was around scarcity, around these drops that are exclusive, that quickly run out, that people feel a part of. But at the same time, if you're thinking about building that sustainable perennial brand that you wanted to do from the days that you were running Facebook ads, you're right that the scarcity model, the exclusive drops doesn't really work at scale. That novelty wears off and people can get quickly tired of that. So at some point, I think it's just part of the brand's evolution of just maturing and becoming something bigger than it was in the early days.

21:00Exactly. Yeah.

21:01Derek Jaeger:How do you feel about it? I mean, 100 % agree. I think we have to, you have to evolve. The brand almost evolved into a gifting brand online. So there are evangelists and people that love the cookies to eat them. But, you know, at$120 price point, you become this gift that that is one is a showstopping gift. It makes it makes the recipient think that they've been thought of and they curated a great food gift for this person. You know, our competition online is really like the Harriet Davids and the edible arrangements and those type of brands. And so, you know, if your options are those or Last Crumb, like it's really a no-brainer.

21:48Like Last Crumb is a great deal at this price point, but it's still$120 to$140. So it's a big leap for somebody to take a chance at a food brand online. So I think that's the great thing about the retail model is that people can come to the store, get one cookie, two cookies, three cookies, justify the brand and the product, and then feel very confident in shipping that box to, you know, let's say their mom in Ohio or their sister in California, and knowing that they're going to get a good product on the other side.