Raising Prices in DTC: How Last Crumb Sells a $140 Cookie Box

0:00I didn't want to race to the bottom. I wanted to own the upper echelon of cookies. We wanted people to be able to show it off. So we wanted the brand to be wearable. We wanted people to be excited and proud about being a part of Last of Crumb. You could throw tens of thousands of dollars at certain products every single day. And if you turn those ads off, that brand would be non-existent. That's exactly what I didn't want to do. And so my rule in the beginning was no paid ads. We had to go door-to-door, give it away cookies. We would do that, but there was no paid ads. We initially priced it at$110 ,000, and then we're like, let's go to$140 ,000, and we priced it at$140 ,000.

0:35That's when the company actually took off.

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1:33Free tools to set goals and forecast outcomes. Strategy guides and checklists covering ad performance, retention, and conversion. And AI-powered tactics you can put to work before BFCM week hits. The best part? It's completely free and there's no login required. Go to triplewhale.com forward slash BFCM26 and start building towards your most profitable Black Friday Cyber Monday today. Derek, welcome to the D2C podcast. Excited to have you here. We're just a couple ex-affiliates sitting around. One of us has built a cookie empire and we're here to talk about that a little bit. How are you doing today?

2:09Doing good, man. Stoked. It's going to be a good weekend here. It's funny. There's like the old affiliate conferences here, like this week here in New York and I have a lot of old friends come in. So it feels nostalgic a little bit. And affiliates know how to have a good time. Generally, they know how to eat well, drink well, have some good times. How do they get into cookies is the question. How did you get into cookies from being an affiliate marketer? By getting out. So I think that was the main thing. Take me back to those affiliate marketing days. Because I started as an affiliate marketer in this industry, promoting a number.

2:44Basically, you're a mercenary when you're an affiliate marketer, right? Because you're the one having to put your money down. Sometimes you have to put your morals aside slightly because you're promoting diet products or shady dating networks or toolbars, which is what I promoted a lot of. Take me back to those affiliate marketing days and why you felt you needed to get out. I've always been very into food and like working in kitchens was always a passion. I was really into just recipe creation and science was my real background. But I got into affiliate marketing probably in 2013, 2014, somewhere around there, a little bit early on in the Facebook days.

3:25It was a time when a lot of my friends were starting to get into it. And I just kind of piggybacked off that. I was like, these guys are kind of out and about all the time. They seem to be spending a lot of money. hey, what are these guys doing? And started to learn the Facebook side. And it's just so different. We were doing one cent back then. CPMs were like a dollar. You could sell ice to an Eskimo in that day. And so it just seemed like a very easy transition to get into selling other people's products, anything from the diet pills, the skincare, to all that stuff. And it was a fun time. I was young, and it was a good time to get into that industry.

4:06But it left you wanting, which is why you've kind of evolved your career. Talk about your first moves, I guess, into the cookie space. We built up a nice company. We were out in San Diego and then we moved it to Puerto Rico for a couple of years. But, you know, this was near the start of COVID. I was getting pretty stir crazy. And I just really wanted to get back to building like my own brand. I want to have something that I felt excited about to grow and to be a part of. And I always said I wasn't going to get back really into the food industry. But this was, I think it was my call. And I had to get some creative juices flowing and it always kind of led back to cookies.

4:48And so we started putting together what would be Last Crumb in 2019, 2020. What were your first moves when you decided on cookies? We knew we had a product because I've been working on these recipes for, you know, the greater part of 15 years. And so the first move was find a branding agency that understood the vision that I had for Last Crumb. and we were able to find that person pretty quickly in Los Angeles. And then it was just such a fun brainstorming year. So we spent a year putting the brand together. So everything from not just recipe development, but packaging creation, photography, copywriting, social media, everything that a polished company would need before launch.

5:35And when we launched, I think people were pretty shocked to see such a polished product. And I think that's what kind of got us off on a good foot. What was the brief? Explain to me the vision for it because it wasn't you're not talking Oreos here. You're not talking Chips Ahoy. Talk to me about the vision that you went to this branding agency with. The antithesis of every mom and pop bakery in the world. Like I want to be so far on the other side. Like everything was just so pastels and cute and fluffy and big sugar laden cookies and donuts. It just wasn't sexy. and I wanted the opposite. And I think we had to justify the product with a brand that kind of stood on its laurels of being like this premium product.

6:21So we took a lot of inspiration from the Supremes and the Kiths and other fashion brands and then Michelin star restaurants, how they hold themselves. And I think our goal was to bring a online experience that felt almost in person. And so there's a lot of boxes we were checking off and I was like, hey, I want all of these things in Last Chrome, let's see if we can build it and that's kind of the reason it took a year to put it all together. Talk about the price point. Did you know you wanted it to be where it ended up? Yeah. I mean, that was 1A, was we wanted the highest end product on the market and we wanted it by a substantial clip.

7:01There's always a market for the cheapest thing in the industry and the most expensive thing in the industry and I think everything else in the middle is just kind of fighting for market share. And to me, I didn't want to race to the bottom. I wanted to own the upper echelon of cookies. You can't just price expensive cookies. So there had to be a lot of other value props to the company. And so we made sure that every little piece added to the value and the aura for that price point. And so when you say you went to market with a really polished product, was the whole unboxing experience built in that first sort of year of working with that branding agency?

7:39and maybe describe what you're going for with the unboxing experience of these cookies, which sounds like it was as big, or if not a bigger part of the value than the cookies themselves. Yeah, I think, you know, it was really, it was a big upswing. And during the TikTok and Instagram days, like early 2020s, we wanted something that was obviously Instagrammable and easily adaptable for social media, but we wanted it to have function as well. So the box itself, the outside of the box was the shipper box. So we didn't have to have a shipper box on top of that, which is great, but it was very interactive.

8:17You had a pull tab and then it opened up perfectly to fit this gift box on the inside. And we've tested even different angles of the cookies. So like, Hey, each cookie, it was like, it has to look at you from a 35 degree angle. You have to be able to see at least 90 % of the lettering from the name. I wanted to see some of the cookie, but I wanted to be kind of faded out. So every little nuance was tested and worked on. And we definitely could have a cheaper box, a smaller box, one that was a little bit easier to manufacture, but we didn't. We had this very egregious box and it made us stand out.

8:58It was a big part of the brand. And then just talk about the visual aspects there. And you mentioned what you didn't want to be, which is the frilly, puffy, baking, mom and pop kind of shop. And you went with something that really, yeah, reminds me of, I think you mentioned Kith and Supreme, really made me feel like Liquid Death when I saw it, which when I think about it with Last Crumb, it has that idea of like, this is your last, like your last cookie, your last meal that you'd have, you'd want one of these cookies. Talk about the badass branding that you brought to it. Yeah, I mean, I think Liquid Death was on the vision board when we were putting this brand together.

9:29We wanted, you know, we took a lot of inspiration from fashion brands. So we wanted the brand to be wearable. Like we wanted people to be excited and proud about being a part of Last of Crumb. So whether it's wearing our merch or getting a box online or seeing it at your doorstep, like we wanted people to be able to show it off. And I think that adds value. So we wanted to make sure that every little nuance of our brand added value to that price point. And, you know, I think having a high ticket item automatically gives you that. If somebody gets a box of last crumb, looks up how much it is, say$140, like you're excited that that person thought about you enough to get you quite a nice gift.

10:11And all those things kind of went into our thought process when we were initially launching the brand. So you've got this incredible looking product. You've got this unboxing experience. You've got a great brand. What was your initial go-to-market strategy like? The initial one was a drop model. And I think we were really the first to do a food drop model on the direct-to-consumer side, at least. It was very structured. We knew exactly how we wanted to drop the cookies. So every Monday noon, we would put the site live. but 99 % of the time the site was just, hey, sign up for a drop, sign up for the notification.

10:49And then you had this very set window and our website would count down to it. And I think everybody's seen that now, but it was really the first of its kind at the time. And so the drop model also took inspiration from the fashion brands like Kith would have drops, Supreme would have drops. And we thought that would be a strong value prop in the beginning. So that's what we went with. And it was all organic too, right? I think we spoke about you sort of, I just saw a post recently that was sort of this bombastic post about how if you're spending over 30 % of your money on ads and you're building a brand, you might as well be a category manager at a traffic platform because that's where all your value is going is into these traffic platforms.

11:30And at least if you worked for a traffic platform, you'd have healthcare, which a lot of brands don't. So talk to me about your organic approach, I guess. I think a lot of that stems from the affiliate being on the affiliate side because you could throw tens of thousands of dollars at certain products every single day. And if you turn those ads off, that brand would be non-existent. These things would evaporate into thin air, but they were able to generate revenue because they put so much money behind the advertising. And that's exactly what I didn't want to do. Nobody talks about those brands.

12:02You and I have seen 500 or 1 ,000 of these products that have come through. Some of them might have done$100 million in sales, and we never hear about them. That's the last thing we wanted at Last Crown. We wanted to make sure that people were talking about us organically. We were able to grow the brand organically. And so my rule in the beginning was no paid ads. Absolutely no paid ads. Anything we had to do, whatever other way you can think of to grow the company, we would think of that. But we had to go door-to-door, give it away cookies. We would do that. But there was no paid ads. And then so how did you get the words out about the drop?

12:34Had you built up a little bit of an Instagram following that you were leveraging? I think a little bit of Instagram following. Not me personally, but the brand started off doing local drops in Los Angeles and getting other friends and family. And we had the branding team behind us, so they were able to push it a bit. And we had a small kitchen. Our kitchen was tiny. This was a passion project for me. It was just kind of a fun thing to do on the side while I was still running the marketing companies. and the first few drops, you know, it was local in LA. We had like 50 boxes. We would sell out the 50 boxes.

13:11And then slowly but slowly, like people would start posting. You know, we get some organic posts and be like, oh, what are these cookies? And then I remember we were at 100. We initially priced it at 110. And then we're like, let's go to 140. And we priced it at 140. And then that's when the company actually took off, which was kind of crazy. Once we had the increase in price point, people saw us a little bit. We had much more of a differentiator at that point, which I thought was pretty interesting because we were testing different price points and we ended up laying at$140. And that's when I think we got the major attraction.

13:50Very cool. And you got some celebrity love early on. Describe how that went down. Being in Los Angeles, there's always that chance, right? to get somebody to, who knows somebody, to get a box in front of an A-lister or a B-lister. Chrissy Teigen got a box very early. And I'm unsure how she heard about it or got it, but she got a box organically. She posted it and it went ballistic. Like it was right during the start of COVID and people were online just looking for something to connect with. And, you know, one small post from her, like the next week we sold out like one second. And then every week subsequently it just got bigger and bigger for the next, you know, eight to nine months.

14:35And so that was fun. It was like probably the most fun time I've ever had as an entrepreneur or a business owner. It was just a really fun experience to see the company grow at a rapid rate. And to sell out, having that drop model and having, it must've been really satisfying. And it's also like, it creates anticipation for the people that don't get it in a way, right? Were you able to sell out even your very first drops? Yeah. So we sold out the first few drops. We had very few boxes. We had, like I said, 30, 40, 50 boxes for those first handful of drops. But then worse than as soon as we even wrapped up, we would sell out even faster.

15:13And I think just the clout we were getting from everybody posting, people were posting their receipts. That was the clout. They didn't even see the box yet. They were just like, oh, I got it. Like, I can't believe I got my hands on last crumb. And it was just crazy. It was like a wild time. And we almost didn't appreciate it enough because it was just so new to us too. Like, we're like, oh, maybe this is just what happens when you have a really cool product and people just want to buy a bunch of it. So we were navigating. Well, we had a small kitchen, so we made as many as we could. But, you know, we were always navigating like, hey, do we try to expand super quickly?

15:52Do we get a second kitchen? And we were just like, you know, let's make sure that the demand is still there. And we ride the demand. We fulfill under the demand. And so we always were growing a little bit week by week. But yeah, it was a cool time. Was it you baking in your 500 square foot kitchen? Did you have a team in the kitchen yet? Or was it still a lot of you sifting flour? Me sifting flour. I had one guy who was us making like me and my co-founder at the time. We were just making cookies in a very small kitchen and box them up ourselves, packing them ourselves. Super bootstrap. So at what point did you decide that you had to scale up from your 500-square-foot kitchen?

16:34We had a lot of early interest in some investors trying to get in and wanted to grow the company quickly. And so once we had those discussions, we were very careful of where to raise capital. We haven't raised too much over the last couple of years. But I think that showed us, okay, let's take this a bit more serious. We ended up getting a larger facility out in Pasadena after about the first year. And then, yeah, that was probably the easiest hearing point. Obviously, the sales coming in was the main factor. We were selling out within one second, pretty much for 30 weeks straight. It was one second, they're gone.

17:24And there was one week where we left, I think, over 1 ,500 orders in the cart. And I wish we had that cash now. I wish we had the wherewithal to take those orders. But that was a pretty cool screenshot. You just couldn't fulfill. Yeah. Yeah, I mean, once you fulfill the number, there's still everybody that's in the queue that has a box in their cart. Thousands. Yeah. Another, you mentioned some celebrity attention from Chrissy Teigen. You mentioned your early seed round there. I think that's one of the other benefits of being in LA is you do get in the front of a couple celebrity potential funders.

18:03Talk about the people that you were able to bring on to the cap table and how beneficial that's been. Yeah, this has really been the first company that I've ever raised capital for. So it was all fairly new to me to even navigate that part of the business. But we were able to get some cool checks, like, you know, small checks from celebrities that just want to be a part of it to, you know, guys that have been lead advisors at Boston Consulting Group. And like, you know, they want to be on the board. And so we were able to take a plethora of different people. and it's great because even if they're a small investor, you get some of their time and you're able to reach out to them and pick their brains.

18:45So I know a lot of people say like, hey, having a large cap table can be intimidating or not worth it. I thought it was great. I thought it was nice to have all these people on board. So did the little bit of seed funding you did get, did that go into, because it doesn't sound like it went into paid ads, did it go mostly into production? Yeah, it was a lot into expansion, production, and growing the team. We had a packaging, just getting ahead of orders on packaging. You don't even want how much our initial boxes cost. They were an outrageous amount. When I was building this company, my vision was I just want the best of everything.

19:27I didn't care what it costs. Okay, let's just get it, and we'll figure it out later in terms of cash. but those initial POs were kind of outrageous. So getting out new boxes, negotiating new deals, all that stuff kind of went into that first small pre-seed round. You know that feeling when you're pouring money into social and it feels like you're just fighting everyone else for the same feed space? What if we told you that adding TV to the mix doesn't just add a new channel, but it makes all your other channels work harder? Your social performs better, your search converts better. it's like adding fuel to what's already working.

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20:40That's your first campaign doubled. Terms apply. Head to UniversalAds.com to get your brand on TV today. Talk to me about the limitations of the drop model and what was happening when you decided to pull back from the drop model and go to a more traditional e-commerce model. I mean, you can't have scarcity as a value pillar forever. It's just people will see through that. And we didn't want to manufacture that. So you need to figure out if you have a real company or if you just have a hype company. And one of the reasons we moved to an evergreen model is to see if we had a real company. If the major value pillar for Last Crumb was scarcity, then I don't think it's a real company.

21:25So we were very confident in the product and we had rave reviews on the cookies. And so we're like, let's give people more of an opportunity to get the product and then maybe scale other channels. So corporate gifting, we were always looking eventually into retail, brick and mortar. There were some challenges moving to an evergreen model when people knew us as this hype drop model. but we've since been able to get over those humps. Did it involve having to invest more in paid marketing or are you still largely an organic operation? We are still largely organic. We do have paid marketing. I think the main thing that we saw was acquiring a single customer is tough.

22:08Like we don't have a subscription model. A lot of our boxes are bought as gifts. So you don't really have a gift subscription. You want to buy one-off gifts for people for the holidays or for self-treats, but we were heavily a gifting brand at the time. So I think we weren't able to scale up ads as quickly as we would like to just because your customer acquisition shouldn't just go for a single order. And so we basically focused on other channels for growth, so social media and corporate gifting and things like that. What can you say about how big the company's gotten? What are you comfortable saying?

22:52I mean, we grow every year. I think we are excited to just say we're a real company now with a C-suite team and, you know, multiple managers, multiple bakers. Our kitchen facility is 16 ,000 square feet. You know, we do e-commerce and our retail stores out of there. We're just hoping to grow every year. At what point did you decide you wanted to replace yourself as CEO? Something you always wanted? I think it's a dream that so many founders have is to hire someone who's got maybe more organizational skills than they might have to really take it. What was that process like? And when did you decide you needed a CEO?

23:31I've never been really CEO of the company. I've always had somebody as CEO. And initially, in the beginning, it was because I had my other companies. And that part was easy. I was just very well. I don't really have time to go all in on Last Chrome. And also, I've never built up a brand like this before or a startup like this. So I wanted somebody that was going to take the reins and has been there, done that. We've gone through a few CEOs actually at this company and food's tough. It's a grind. It's not all sparkles and fairy tales. So you have to find the right person that fits the space. Fortunately, we just got our latest CEO, Casey.

24:22He was a former CMO at Blaze Pizza. And we are super stoked to have him. How do you think about it? We're going through this internally right now at D2C in terms of giving people more purview and more ability to affect their particular products P &L in a way. Do you have any advice when it comes to actually balancing, you know, giving a CEO total free reign and also just making sure they're on the same page with what you're thinking? How do you think about managing your CEO? I mean, it's tough, right? I think you want to bring smarter people into the company than you are. And I think for me, it was somebody who just had incredible experience.

25:07You know, he's worked his way up at multiple food brands in the past, different C-level positions. So the best way is you have to know when to step back and when to apply your vision and when to acquiesce to the team and acquiesce to investors and the board. I think that part is the hardest. I think that part is where I'm still learning every day. But I see it more as a partnership. And he's incredibly strong at certain things. I know I'm incredibly strong at the product and innovation. How do we make that mesh together? So I think as long as the team is on the same page, I think that's all I can ask for.

25:55We mentioned Google and Meta. I think in our pre-interview, we talked about TikTok Shop and how you had to sort of change the product a little bit for that environment. Talk about what you did for TikTok Shop. So we don't have TikTok Shop live yet. We're changing the products to go live into TikTok Shop. And so one of the biggest pillars for 2026 for Last Chrome is to be more of that self-treat available products. Treat's a bad word, but mostly we want people to buy the product to eat it. And we get a lot of people to buy the product to gift it. And it's just not an impulse buy at$120. There's no$120,$140 impulse buy unless a fraction.