How Liquid Death's Founder Started A $700 Million Water Brand | Founder Effect

An exercise we still do today is the question: what is the dumbest possible idea we could make about this? Because our brains are programmed to repeat things that we have seen successful in the past. You have to trick your brain into coming up with a bad idea and actually thinking in kind of innovative territory. This is businessman Mike Cessario, 40, and when he came up with the

brand

ing of his product, he came up with something unconventional. What's the silliest possible name for a super healthy and safe drink? Liquid

death

. Probably the silliest name. Yes. Liquid

death

. Canned

water

.

Silly name. Skulls on the packaging. But according to Mike, co-

founder

and CEO of Liquid Death, that's part of the reason his company has generated nearly $130

million

in sales this year alone. If I saw that in a store. Or if someone I know saw that in the store, I'm pretty sure they'd have to pick it up and say, What is this? And once someone picks something up, you've basically won. There are three numbers to look out for in Mike's story. 3

million

s. The number of views the first Liquid Death commercial got on Facebook. 100,000, the amount of sales Liquid Death made in its first month and 195 million, the total amount of funding Liquid Death has raised.

That's how Mike Cessario took a fun idea he once had for a commercial and turned it into a $700 million

brand

. For CNBC, do it. I'm Zach Green. This is the

founder

effect

. As a child, Mike remembers being gifted his collection of MAD magazines by an older cousin. It turned out to be a formative moment for him. I just totally ate that stuff and it was a little rude and vulgar, but it was art and it was very funny and it was a parody. Mike began playing guitar in punk bands and says one of them received several offers from record labels to release a record, but he also found himself drawn creatively elsewhere.

He was making the flyers for the show, designing the album covers. All business creative material. Instead of pursuing a music career, Mike chose to attend the Art Center College of Design in Pasadena, California, where he studied graphic design and, eventually, advertising. He just wanted to make people laugh, which is what really attracted me to advertising, because it seemed like it was more of a place for humor and comedy than graphic design. In 2009, a friend of Mike's put him on the roster backstage at the Warped Tour in Denver, Colorado. Many of the bands were sponsored by Monster Energy.

I was hanging out with them and we saw these piles of what looked like Monster. These guys are drinking it, and it turns out, oh, it's not really Monster, it's

water

because these guys don't really want to drink these energy drinks. I remember thinking that was a bit complicated. I'm like, man, that's a little sneaky. As if at that point only energy drinks were throwing money at these guys. So they had to accept it. But at the same time it

started

to make me think about why aren't there more healthy products that still have fun, cool, irreverent brands?

Because most of the funniest, most memorable, most irreverent brand marketing is aimed solely at junk food. Bud Light, Dos Equis, Snickers, Doritos, Red Bull. And I think that was what planted the first seed of what probably ended up becoming Liquid Death. Early in his career, Mike began working at advertising agencies across the country. While the work wasn't always creatively satisfying, his clients helped him hone his own marketing philosophy. We were working at Virgin America, the airline, and I

started

getting involved with Richard Branson. I love Virgin's kind of business strategy, which was to find a really obsolete product category and be the only really interesting and exciting product in it.

And they were able to get all this market share very easily because they were so disruptive and they stood out like a sore thumb in any type of category. Mike put his theory of funny advertising to the test while working at a company in Nashville, Tennessee. Health food brand Organic Valley wanted them to come up with an advertising campaign for their protein shake. They were talking, like buddies in the gym looking to gain muscle like it was a big part of the protein market. And they knew they had to market those guys differently than they did organic moms, like they did most of their other products.

So, venturing out of your comfort zone, we present to you this Save the Bro's idea. Every day, millions of brothers drink protein shakes to stay toned, ripped, and totally blacked out. But most siblings are unaware of the scary chemicals and artificial ingredients these shakes contain. And they almost killed the idea right before it got going. And then we release it and it goes completely viral. But despite the success in advertising, Mike still had creative difficulties, so he decided to create his own brand where he could control the marketing. After a failed attempt at craft brandy, he remembered a speech he'd once made for a canned water ad mocking the energy drinks that Warped Tour bands definitely weren't drinking.

I always knew there was something to that idea, and it kind of stuck with me, and also over the next few years working at random agencies, I always kept developing this concept of canned water. and what can it really be? But how could a new product break into the saturated bottled water market, valued between $146 and $350 billion, according to Pitchbook? The only way the brand would have a chance of surviving is if the product itself has to be so incredibly interesting that a lot of the marketing is built into the product and if someone sees this on the shelf, am I willing? to bet that he will have to do it?

They pick it up because it's so weird or interesting and then they'll probably take out their phone, take a photo of it, and post it on their social channels for free to their hundreds of followers. To prove that the idea was viable, Mike decided to produce a commercial. Despite not having cans in production. We designed a 3D rendering of a can that looked real. I came up with a business idea for this brand that we shot for about $1,500. We invested a few thousand dollars in paid media to get the video out there and publish the post over the course of about three or four months.

Don't be fooled by marketing. Water is not yoga. Water is

liquid

death. Four months later, the video had 3 million views. The page had almost 80,000 followers, more than Aquafina on Facebook at the time. And we got hundreds of messages and comments from people saying, "This is the best thing ever." Where do I get this? Is this real? A 7-Eleven franchisee in Michigan is reaching out. How do I get this in my store? So I use all that kind of social traction to get people to take me seriously. And we raised the small round of funding to produce a minimum run of actual product.

Mike was able to raise $150,000 in seed funding and, after finding a water supplier in Austria, he sold the first cans of Liquid dDath online as a direct-to-consumer business. Our first month we made $100,000 in sales and spent about $2,000 on marketing. We sold out of a product. We didn't place orders close enough to what the demand was. We were exhausted for over a month. The first major retailer to become interested in Liquid Death was Whole Foods. They are very important in terms of sustainability. They loved our death to plastic message to bring death to plastic bottles, infinitely recyclable cans and they liked that we were talking about these things in a way that no other brand in their store really did.

They said, hey, we want to launch it fully nationwide in March 2020. So we literally loaded up on Whole Foods on March 15, 2020, the week the pandemic lockdown started. That brought with it its own set of problems. But we still started to see real growth at Whole Foods during the pandemic year. While still well behind brands like Dasani and Aquafina, Liquid Death's sales have increased from $2.8 million in its first year to $45 million in 2021. Mike says they're on track to hit $130. million dollars by the end of this year. One of the most surprising things to everyone was how broad the audience really was for something like this.

Hundreds of parents sending us messages on social media thanking us for Liquid Death. You finally got my nine year old son excited about drinking water instead of soda because he thinks he has something he's not supposed to have. The construction worker who goes to a 7-Eleven and normally buys two energy drinks might now be buying one energy drink and actually buying a Liquid Death. For me, Liquid Death is how to reach all these people who don't normally make healthy choices and now all of a sudden they want to be involved in a healthy brand purely from a brand standpoint at first, and they just start incorporating it into their day. a day. .

Liquid Death has raised $195 million in funding and is valued at $700 million. Much of that growth has been fueled by Liquid Death's appearance on the shelves of more than 60,000 retail stores across the United States, including 7-Eleven, Wal-Mart and Target, where it sells for about $1.89 a pop. can. But more than anything, Mike says what motivates consumers is creating an emotional connection with a brand. People think that taste is the reason why things are successful or unsuccessful, or why one brand is better than another. All the data shows that it's not even close to the case. Monster didn't become a $50 billion company because it knows so much better than Red Bull.

Most people probably couldn't choose an energy drink in a blind taste test if their life depended on it. Our brand is all about comedy and making people laugh. We don't tie our brand to any specific niche like action sports. So I think as long as we're constantly talking about culture, we can basically continue as long as something like Saturday Night Live is relevant because you're literally part of the culture and you make people laugh. At the end of the day, we are actually creating an entertainment company and a water company, since we do not want to create marketing, but to entertain people, make them laugh in the service of a brand.

And if you can do that, they will love your brand because you are giving them something of value.