Founders' Stories: Caleb Nicholes and TJ Semanchin

Founders' Stories: Caleb Nicholes and TJ Semanchin

Making a big impact from a small town.
by Randy Miller | April 21, 2021

We're talking to the folks behind the coffee you love to find out how they got there. How they turned their individual passions for crafting the perfect cup of coffee into small businesses sharing their coffee within their communities and beyond. The road is long, often challenging, but always well worth it — this is how they made it happen, these are their Founders' Stories.

Today, it's common to see the name of the co-op that produced your beans right along with the taste notes on your bag of specialty coffee. When Wonderstate was first starting out in Viroqua, Wisconsin over 15 years ago, such wasn't the case. With dual backgrounds in the food industry and agriculture, Wonderstate's founders Caleb Nicholes and TJ Semanchin didn't necessarily set out to change the industry, but they were certainly a big part of it with their equal emphasis on supporting a sustainable supply chain and roasting really tasty coffee. This is their story every step of the way.


Getting a taste

Caleb: Okay, yeah, this is a funny question. So, my parents always really love coffee. I would say quite a bit more than average. And my dad got really into coffee forever ago. I remember them cold brewing these coffees and like just sitting on the counter and smelling it and I got curious in high school. One coffee I remember was Maxwell House Dark Roast. And that was the first actual specific coffee that I remember consuming.

TJ: Yeah, I go back to high school, too. I have a very vivid memory — I'm sure I've tasted coffee before this, but I don't have a memory of it — but late night, sitting in The Perkins in the town that I grew up. Loading the bottomless cup with cream and sugar, probably while mowing a huge plate of fries, and drinking coffee starting at like 11 pm. And sitting there for hours, drinking coffee late into the night. So definitely was not a morning beverage introduction to me, but it brings me straight back to Perkins.

Caleb: I have similar memories of Perkins, really. They were kind of crushing that scene when we were in high school — the diner coffee.

Turning wine into coffee

Caleb: Gosh, for me, it was kind of like a five-year trajectory towards my career in coffee. Started out with a kind of quick turn after college, away from academia and into a curiosity and love for food and beverage. I was interested in maybe owning a restaurant or a café and the year I graduated college year in 2000, I brought a home coffee roaster and started buying really good coffees from Sweet Maria's and playing around with coffee, roasting, thinking I might maybe have a café one day. I started working in nice restaurants and got a little bit more interested in the culinary restaurant world.

I was home coffee roasting for many years, but started to get more interested in potentially owning a restaurant. And then, as time went on working in different high-end restaurants, I fell more in love with the wine world. And I was just collecting — I was reading everything I could, studying and tasting every opportunity, working very deliberately in wine-focused restaurants. Then the restaurant I was working for went out of business and I took that opportunity to travel to Europe and visit a bunch of really cool winemakers.

When I came back, I jumped over into working in the field of higher end boutique wine. I did that for three years. And while that was happening, I also started a family, had a son whose mother was from this little town that we have a roastery. And we split up in that time, and she, my son's mother, really wanted to move back to where she grew up (Viroqua) to be closer to family. And I ended up following her. And you know, just being committed to living in this area, being close to my son, and not knowing exactly what I wanted to do.


I was considering a few different options living here. I was actually considering either starting like an ice cream company or coffee. And at that time, there was a little organic dairy that existed. So yeah, I decided to jump into a career in coffee even though I knew very, very little about it. I bought a coffee roaster on a credit card and just went at it. And then meeting TJ maybe six months after that happened in 2005.

TJ: Mine is quite a different avenue of how I went from bottomless cup at to where we are today. I had studied abroad in college and landed in Costa Rica. I was actually living in coffee country, like right in the heart of it, their coffee fields, you know, within a stone's throw distance from where I was living in Costa Rica. I was living, working, and studying at the Center for Sustainable Development Studies. So it was not just living in coffee country, but looking at international examples of sustainable development and we actually used coffee in one of the case studies.

So, I got to look at coffee in a new light, from a pretty intense academic perspective. And in the little town we were living in, there was a cooperative — the cooperative scene in Costa Rica is extremely well developed and protected by the government. So I got to see a community-run, farmer-owned cooperative. That was really my introduction to coffee — looking at it from both the social development, economic, and also the kind of environmental perspective. That was in the mid ‘90s. At the time, globalization was a hot topic. Coffee for me in that regard was really held up as this potential for a way of doing international trade that could respond to local communities and be focused on small-scale production

After graduating, I actually went back to that center and worked there for a year. I almost stayed in Central America and probably could have kept going for quite some time, but decided to move back to the states and landed in Minneapolis. And through connections, through that program in Costa Rica, landed a job with a startup coffee company that was owned by a non-profit, Peace Coffee. At that time, it was just the two of us. So I was literally working out of a basement of a non-profit. We weren't roasting, but we were focusing on importing coffee from cooperatives. And this coffee was one of the first early adopters of the Fair Trade labeling.

So I was very involved in kind of the early adoption of Fair Trade in the United States. At this point in the early 2000s, folks really didn't know what that term was. So a lot of my time out in the field wasn't so much about speaking to the finer notes and the acidity — it was really just talking about what is Fair Trade? How is organic coffee different? And educating consumers more on that: social and environmental implications of the coffee trade, speaking to the historical inequity that still exists today — coffee farmers were really at the whim of the international seed market and received very low prices. At the time, coffee was trading at 40 cents a pound.

So it was a really critical moment in the coffee industry. And farmers were just getting battered. That's really how I came into coffee. Yeah, I do have a background and some culinary pursuits as well, worked in different restaurants in the kitchens and been around the food world. But it wasn't until I actually got into coffee through importing and getting involved and working with cooperatives that I actually started to delve deeper into enjoying coffee as a beverage and understanding the finer points in quality and how production impacts that.

And so after a stint, it’s a similar story to Caleb about how we landed in this small town in Wisconsin. My wife and I were ready to leave this city, get out of the urban scene of Minneapolis and start our family. So, we started looking around Viroqua, we had some mutual friends here and it just so happened to be a little town with a pretty vibrant food scene and a food cooperative and some education opportunities. It's kind of a progressive, little sweet spot in the middle of a really beautiful area of Wisconsin. So Viroqua quickly became high in our list.

And my goal was to leave Minneapolis and start my own coffee company. So as crazy as it is, Denise, my wife, and I were looking to set up our own shop in exactly the same moment that Caleb started what was Kickapoo Coffee at the time in 2005. We heard wind of this new little coffee project and coffee company beating us to the punch. So instead of just giving up on the idea, we just introduced ourselves to Caleb, a couple months after he started roasting. And immediately kind of realized that we had a lot to offer. Caleb's focus on quality and his passion for the specialty beverage world mixed with my experience of getting Peace Coffee up and running. So, we kind of recognized that we had a potential for partnership. So Denise and I joined forces with Caleb in 2006.


Community spirit

Caleb: I started the company on my own, with the help of my sister and brother-in-law. Never having owned a business before, certainly I had experience working in the specialty beverage industry, I didn't have any direct kind of business experience. And I think, came into it with a little bit of sort of blind naivety, just like what it takes to run a business, which I think was maybe, in some ways, both serving me and challenging me at the same time. Certainly in the sense of, just feeling like I could do it, I had a certain amount of confidence.

I had sold my wine collection, for what was essentially my seed money. I didn't go to a bank. And I put our first roaster on a credit card and I remember the first order was like 10 bags of coffee. And really it’s a lot of trial by fire, just a lot of guessing. Back in 2005, there were not things like the Roasters Guild and all these cool industry resources that we have now, or courses. There were a few home coffee roasting books by Kenneth Davids, which I remember owning and reading. I think we did a pretty good job of documenting everything we did and learning from those things. And certainly, when TJ came on board, he was really good and helped systematize some of those things for us a little bit better.

As far as reception in our community, I think that most communities are — especially back in 2005 — curious about specialty coffee. Starbucks, for better or worse, did a pretty good job priming the country for this idea that we could craft something that was better qualitatively. So, my experience in the early days was a lot of excitement, intrigue, curiosity. Our local Food co-op was one of our first big customers that jumped right on board. I think they appreciated our approach to sourcing coffee and the fact that we were a local company, family owned, all those things

Certainly, I had no idea starting the company really how long it would take to build something that would start to be generating any kind of financial returns. That was one thing that was my naivety, in starting the company, had I known that it would take three or four years to be making any kind of money — would I have done that? But I just did it.

One of the things that makes us maybe a little bit different than a lot of roasters like us that are a bit more established is the location. We live in a pretty small community. It's a town of like 4,000 to 5,000 people. There was a coffee shop in town when we started the company and the Co-op served coffee, so really our lens as a company — we were both were starting families and really want to make the coffee roasting company that was pretty streamlined and not a business venture that was taking over our lives and weekends and our ability to be showing up for our families. So we really took a lot of pride in having a pretty cemented four-day workweek and staying strictly as a wholesale roaster, selling to the local coffee shop, local restaurant, to the co-op. And we were pretty happy to be doing that.

So for the first 10 years of our company, we remained happily wholesale strictly. And then we saw an opportunity to partner with another coffee professional in Milwaukee who approached us and wanted to start his own shop or help us open one in Milwaukee. That was in 2015 that we made the leap over to becoming a roaster retailer. We continued to serve our community as far as being present in some events, but largely, we were just helping our customers here. And then, as a couple years went by, we did see an opportunity in town to transform an old like service station in a kind of ugly corner of downtown into something that could become a community resource and a coffee shop and a gathering place for the community and our kids. And since then, the coffee shop that I mentioned — that was in business when we started the company — was not there. So really, the town didn't have a good coffee shop. So we made the leap in our little backyard to starting a shop here and the goal of that shop was really to have it there as a resource for our community. To be able to have that as a resource for ourselves, for our kids, for our friends, neighbors, and community to gather and its existence would be a huge boon for our community. And that in and of itself would be a great success. And the town really came out big time and supported that shop in ways that I think are still pretty humbling and surprising, given the size of our community.


TJ: This summer, it will be four years. I think what was really unique about us in 2005, 2006 was our origin story. Our different pathways into coffee. Caleb through the culinary world and working for an importer of Old World Wines and me coming from living in Latin America and really having a focus on globalization and small farmers. And I would say that the coffee industry at the time, those pathways were being established or were already established. But at times, they were often at odds with each other: quality versus ethics, there was actual animosity in the industry around those topics — you were kind of in one camp or the other. And at the founding of our company, we were very clearly stating that we were going to do both. And that was pretty unique at the time, that we have as equal commitment to small producers and justice, as we did to quality and getting award-level coffee. Over time that that's kind of the claim of every coffee roaster that's popped on the scene in the last five to 10 years. For our company, we've only gone deeper with that pursuit.

We've always resonated with those conscientious consumers, and those camps of consumers has grown quite a bit. Consumers are valuing both where the coffee was grown, how it was grown, who grew it, how was traded? And how does it taste? It's just made the evolution of our business in some ways easier because we're not trying to talk about why Fair Trade is important. Why is it important to think about where coffee is coming from and how the producers are treated? That conversation is much more elevated now. But there's also a level of transparency required now to back up a lot of those claims.

In 2017, we set our minimum price way above the Fair Trade minimum price, at the time it was, as far as we knew, it was the highest published minimum price in the country.

Caleb: It started at $2.75.

TJ: With a commitment to give farmers a raise every year of a nickel. So, we've kind of taken the core of what we set out to do 15 years ago, and just going deeper and deeper with that. And making sure that these claims of quality and ethical sourcing are backed up by our business practices and we're communicating that to the public and our consumers.

Finding a way to move forward

TJ: 2020 was obviously a hugely impactful year for all of us. And for us specifically, it was not just the pandemic, but also with the murder trial of George Floyd happening right now — the racial justice movement and protests that were happening while we were right at the final stages of our name change, which was interlaced with some of these issues around racial justice. For us, it was around cultural appropriation.

So yeah, 2020 for both of those factors. Both the pandemic and the broader awakening of the racial justice movement in this country. It gave us a lot to work with. Our inability to get out there and then keep cultivating our direct relationships with the producers, let Caleb answer that one. But on the other point, we were already on an internal reckoning of sorts, as we had decided in late 2019 to change our name and then started taking action in 2020. And then getting fully impacted by the pandemic. And then the relevance of it also was heavily impacted, again, by the political and social environment we were in last summer.


I think it has refocused us in that regard on some of this, not just how we position ourselves internationally and globally but also as a white-owned company, how are we showing up in our communities? Are we showing up as allies? How do we reflect on the fact that we had appropriated indigenous nation’s name for 15 years? So it's really focused our attention on how are we showing up and recognizing some of the inherent inequalities within the coffee industry. We've been very focused on it from the production of the coffee, but it's given us a new lens of looking at the frontline workers, the café workers, the folks who, on the other end of the supply chain — and recognizing that that's a major part of the coffee industry and needs further attention. And it's certainly brought our attention, way more focused on the inequalities inherent in the business

Caleb: We weren't able to travel at all, you know, of course, which is an important part of our work. I think that there's so much that's possible when we are showing up in communities that we are purchasing from, with curiosity and with eyes wide open and with good questions. And certainly I think we can learn a lot by doing that work and we always will be able to. There's no way to replace having your feet on the ground in those communities, both from a qualitative lens as far as what are the steps that are impacting quality? What do we see? Are there ways that we could enhance or improve those? But also from a cultural lens of how do we show up in meaningful ways for these relationships in person. And certainly we missed that in the last year.

I will say, though, we were very well positioned for something like this to happen, being a company that has been doing that kind of work intentionally with our supply chain for 15 years, and having a lot of very mature relationships where we really know the ins and outs of the dynamics and some of those countries. Going into 2020, I think just situated us really well to be able to pivot and lean in on this sort of trust and relationship that had been established in years visiting previously. So, it was disorienting for sure, but I do think in some ways the industry potentially overestimates the importance of those trips, or perhaps overestimates what we can actually learn and know about these communities when you spend a day or two on a farm.

It's a long process of continuing to show up and ask questions and be curious. And I think, while we miss being in those communities, we certainly still have those relationships. And those feel really good, we were able to — for the most part — not shrink our purchasing footprint for the year, which felt extremely good in a year like 2020. And I know, that was not the case for a lot of companies that really, particularly those that were relying on cafés to be their main selling channels.

In the end, I think our purchases looked very similar to previous years. And I still feel quite connected. I was spending more time on Zoom calls with some of our producer partners and people getting increasingly more comfortable with it. So there was a certain level of relationship enhancement in some ways, really needing to show up virtually as best we could. There were challenges, definitely a lot of unknowns — not knowing exactly how our volume was going to get impacted, was really, really hard. It's a hard thing to be communicating to our producers, if we don't know for sure that we can purchase the volume that we had in previous years. I think we learned a lot, we grew a lot, and our relationships deepened. It's a year like this really when we need those relationships the most, to know that each of us is on the other side of this paradigm, which we're both committed to and committed to showing up for each other in mutually beneficial ways.

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