The story of Sydney-born, Denver-based 34 Degrees Crackers is a classic tale of the American Dream. What began as nothing more than an idea propelled itself into a multi-million dollar business, showing sales growth in the double digits. Yet the company originated as something entirely different: an importer of Australian specialty foods. The strategic pivot, implemented in its fourth year, has turned it into the artisan cracker company known nation-wide today. Many entrepreneurs will admit that being able to reevaluate and change the original vision of a business is not easily executed, and the attachment that many have to that vision often leads to failure. Innovator’s Peak sat down with founder Craig Lieberman to discuss the journey: from bringing an idea to life, to revamping it completely and watching it flourish.
Innovators Peak: Tell me about the backstory of the company. What inspired you to take it in the direction that you did?
Craig Lieberman: I started the business in 2003. I had gone to graduate school in Sydney, Australia and fell in love with the food and wine scene over there. After coming back to the U.S., living in San Francisco and working for specialty food importers, I decided to go out on my own and launch an importing business. There was this cool opportunity to launch some of these amazing Australian specialty foods and share what I had gotten to experience. That’s where 34 Degrees was born, which is the latitude of Sydney. I’ve personally always loved cheese, entertaining, and things to pair with wine, so the initial focus of the business was to import a range of specialty foods like artisan cheeses, olives, and different spreads and dips. While I was in Sydney checking out some different products I came across these unique wafer thin crackers called crispbread. I’d never experienced anything like it before—they were super thin and light and they really paired well with the products I was importing. I started off bringing in an existing brand along with all the other products, and the crackers are what took off. Four years in, I decided we had a hidden gem of a product, but that it made more sense to produce them locally in Colorado. In 2007 we completely evolved and decided to invest in our own brand. Over a four-month period we phased out all of the importing side of the business and began developing the crackers here. Seven years later, we’re still doing it.
Lieberman outside 34’s office in the Taxi Building
IP: You created a very profitable company out of something that started as an idea. What would you say contributed to your success?
CL: Getting the model right was very important. A lot of times, or at least in our case, we had this great idea but the execution of it proved difficult because there were so many things that were out of our control. There were many challenges in bringing products in from 7,000 miles away. There was the perishable nature of many of the products, and the U.S. dollar also dropped 40% in the first year of my business. Products that were already expensive increased in cost even more and I wound up absorbing a lot of that to keep prices reasonable for my customers. I decided that the business model was becoming unsustainable, but that led to the germ of an idea of what the business could turn into. Being willing to change the model and perfect it over time was a truly crucial factor for us. Another thing is knowing where your strengths are, and more importantly: where they’re not. We were always excited about the sales, marketing, branding, and developing aspects of the business, but we weren’t manufacturing experts. Even though I wanted to make my own product I knew I didn’t have the experience to do it. Partnering with a really great manufacturer here in Colorado turned out to be a significant move in our company’s success. Being in business with someone who excelled at the production side allowed us to focus on building the brand and distribution very methodically in a short amount of time. The third key to all of this is the team. Putting together the right people certainly didn’t happen overnight, but we just hired our tenth employee. The team is exceptional because we all share the vision and passion for the business.
IP: What did the process of shifting the business entirely entail?
CL: More than anything: being willing to change. You put your heart, sweat, and tears into one idea, and being able to say there are parts that aren’t working is not easy. Mentally and fundamentally speaking, doing that was a lot harder than I expected. We had to start developing our own formulas, purchasing our own equipment, and investing in production, even though we weren’t the ones controlling it. Financially speaking, being able to come up with the money in 2007 was very challenging to execute. At the time the business was a lot smaller than it is today and wasn’t yet profitable, and a lot of those changes were very expensive. Even though I believed in it, it was a huge hurdle. And then finding a really great manufacturer that was willing to invest in this process was challenging. We were asking them to dedicate people and space to this product that hadn’t even proven itself in the market. We spoke to a lot of manufacturers in Colorado, probably 15 or 20. Either they didn’t get it or just weren’t the right fit, and this was all while the ovens were being shipped here so we had a very narrow window to find the right partner. There were some moments in that process that were very stressful.
IP: I can imagine that having somebody else carry out a part of your dream could be difficult.
CL: There was certainly a loss of control there, and the other part of it was that I had 50 products that I imported. To phase out all of that in four months and focus on four boxes of crackers is a big gamble. We do two big trade shows every year, one in the summer and one in the winter. Summer of 2007 is the last time we had all of our Australian products and I brought all of my suppliers over. We had this huge booth and everyone sampling the products—it was this big presence. And then in January 2008 we went down to a tiny little booth with four boxes of crackers and nothing else, and all my customers were asking if they could buy us lunch because they were so concerned about us. They didn’t realize that was a very strategic, thought-out, expensive decision. They thought we were doing it because we weren’t able to have a sustainable business model. It was a funny period because it took people a while to see what we saw.
IP: 34 Degrees recently released 2 new, limited edition flavors—poppy seed and toasted onion. How have they compared to the original flavors?
CL: They’ve been really unique, especially because they’re our first limited edition flavors. We have five core flavors now and we felt that a lot of our customers couldn’t handle seven different ones in a single line of crackers. So it was a way to test new ideas and gauge the reaction, and then because they were limited edition it was a chance to build some motivation and excitement to try them. They’re different in certain ways, particularly the toasted onion, because it’s definitely our most robust, flavor-forward product. Our history has always been a focus on more subtle flavors for pairing, so this is our first attempt at proving that we could have a cracker that could be a snack on its own. We launched in it the fourth quarter of last year and the response has been phenomenal, to the point where people on social media are begging us not to get rid of it. It blew us away. The poppy seed is a more traditional cracker for us as far as being flavorful yet still versatile. We wanted a mix of something a bit more familiar and something that was more of a stretch. It’s been very exciting that the stretch product is the one that really resonated with people. It shows the flexibility of what we can do with our brand– that people are willing to accept different things from us, as long as it’s still in line with our overall positing.
IP: Can you talk a bit about your experience collaborating with companies like Haystack Mountain Goat Cheese and Gnarly Head Wine?
CL: Being a small team of ten, partnerships are a huge part of every facet of the business. We focus on what we believe we do best, so having those key relationships in other areas has been really critical to our growth. By nature we have a product that needs to go with other things. Those cheese, dip, and wine partnerships have been a cornerstone of our marketing strategy on both a local and national level. They work on lots of levels, like doing joint marketing and sampling to build brand awareness. The synergy between the brands makes a lot of sense for us. In the past year or two as we’ve built our brand nationally and into larger retailers like Kroger and Target we got noticed on a larger scale. Since then we’ve been approached by bigger brands like Gnarly Head to do co-promotions with them. They really drove it, promoting us with their vast marketing reach, but it’s also a way for them to bring consumers into the competitive wine market. From an execution standpoint, there was a coupon for our crackers that they promoted on their wines. For us it was awesome, because we had all of Gnarly’s Heads consumers driven to buy our crackers. It was a creative way for us to expand our reach without significant investment.
IP: Last year 34 Degrees donated 3.4 million crackers to hungry Coloradans through the Food Bank of the Rockies “Totes of Hope” program. How did you decide to get involved with them?
CL: We try to be a really authentic business. Many businesses use that term and I think it has different meanings for everyone. For us it means being true to what our business is about. Working with a local food bank is just a no-brainer. There’s such an amazing natural foods community in Colorado, and so much we’ve gained from being part of it. Giving back locally just made sense. Beyond financial contributions, we’re lucky to have a healthy food product that we felt people could benefit from. We do other things besides the food bank, but we’ve had such a great partnership with them over the years. To be able to work with a program that feeds kids in need is everything that we believe in. We also go and donate our time quarterly to pack the totes, which is a great team-building exercise and really a way to put our values in action. Our contributions are tied to our growth, so every 1% of production gets donated to this cause. The more we grow the more we can donate.
by Kerry Gallagher