How I Built This with Guy Raz - Liquid Death: Mike Cessario

Episode Date: January 22, 2024

Mike Cessario came up with the idea for a viral water brand by asking himself “What is the dumbest possible idea we could have?” His answer was Liquid Death: an aluminum can of water that looks like a cross between beer and poison. While it seemed self-destructive, the idea turned out to be brilliant: Liquid Death connected with customers who don’t typically buy bottled water, and built a moat around itself by being entertaining and edgy—something most brands struggle with. As a former ad-man with one failed business behind him, Mike initially sidelined his idea when he couldn't find a co-packer to put spring water in aluminum cans. But seven years after launch, Liquid Death is both a water and an entertainment company, with annual revenue well above $100M.This episode was produced by Kerry Thompson with music by Ramtin Arablouei.Edited by Neva Grant, with research from Casey Herman.Our engineers were Robert Rodriguez and Josh Newell.You can follow HIBT on Twitter & Instagram, and email us at [e-mail] Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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They're like, that's the dumbest idea ever. No retailer will carry it. You know, this might be a lot harder than I thought it was going to be. Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how Mike Cessario turned store-bought water upside down by putting it in aluminum cans and calling it Liquid Death. You've probably heard the adage, there's no such thing as a saturated market, which, I don't know, is that really true?

Have you visited the energy bar aisle at the supermarket lately? There must be hundreds of brands. But still, it is true that a smart approach can break through in even the most crowded aisle. And if you don't believe me, well, today's story is just for you, because today's story is about. water, bottled water, and that market is huge worth over $300 billion globally. In the U.S. alone, there are more than 80 different brands, so many that it would seem almost foolish to try and break into that market. But a little over seven years ago, one foolish entrepreneur decided to do just that. He had no experience in water, but what Mike Cessario did

have was very good instincts and almost two decades of experience in advertising. And Mike knew that if he tried something so utterly weird, so totally outlandish, it might just work. Seven years on, the brand he built, Liquid Death, sells more than $100 million of water a year. And what is Liquid Death? Well, it's just water. But what makes it so weird, so different is how it's packaged.

First off, it's in a tall boy can that at first glance looks like malt liquor or an energy drink. It's got a grisly looking skull on the front with a gothic horror movie font that spells out liquid death. A name that you have to admit is kind of unforgettable, which is just what Mike Cessario intended. For years, Mike worked on creative ad campaigns for different clients. He loved putting edgy humor into his pitches, but he was often frustrated by clients who didn't get the joke. So he decided to make his own ad campaign. In fact, before Liquid Death was an actual product, it was just an ad, which Mike posted on Facebook as a test, a test to see if people would want to buy an aluminum can of water called Liquid Death.

And as it turned out, they did. Mike grew up in the 1980s and 90s in Delaware and Pennsylvania. His parents divorced when he was young. His dad worked for various companies, and his mom was a respiratory therapist. And from a pretty early age, Mike was into two things, skateboarding and punk music. I kind of went down to punk rabbit hole, got a guitar, started playing music, started playing in a band with some of my friends that I skateboarded with in, in like eighth grade. And then that kind of defined me as a teenager going through high school. Like I played in a band and I skateboarded.

And I was always into creative. Like I did art, uh, drawing all of that since I was like really young as well. So what were you drawing? I drew a lot of cartoony stuff. Like when I was probably 10 years old, my older cousin Eric gave me his whole like collection of mad magazines. Like some as early as like late 70s. Mad Magazines all the way up through the 80s. And I just thought that was the coolest thing I'd ever seen.

So that kind of like comedy is what drove my creativity and how I drew stuff like funny cartoons, funny scenarios, little bite-sized things that felt like Mad Magazine. Yeah. I guess after you finish high school, you sort of bounced around for a couple of years and played in a couple of bands. And from what I understand, you were sort of trying to decide whether. to get into music full time or to go to college. But eventually, you did leave home, you left the East Coast, and decided to go study graphic design in California in Pasadena, right? Yeah.

And it was not because I didn't love music as much. It was more because I realized the reality of a band is four or five people, and you need everybody to be on the same page. Like, I was all in, but I kind of knew, I didn't feel confident that everybody else was. And then once I was in Art Center, that's when I all my first time probably my life, I was fully focused on one thing. I'm like, done with the music thing. I've been burned too many times that way. I know that I can't just go get a job and design. I need to get great at this. This is where I really got to get my life together. And I focused 100% on design and advertising and, you know, was getting straight A's and was at the top of my class.

And yeah, that's when I then went into advertising. And I guess one of your, or maybe your first job out of there was working for a pretty sort of well-known agency, Crispin Porter Bogusky. Yep. And this is like, tell me, I mean, for people who don't know advertising, they're like a pretty well-known, was a sort of a particularly creative agency, right? Yeah. They did a lot of funny, disruptive marketing.

That resonated far more with me than like, the graphic design world that's like measuring pixels and designing to a grid and all this very meticulous stuff. You know, I was always into the moral. Let's make stuff that's funny and clever. But, you know, I think people will tell you like a year at Crispin at that period is like five years anywhere else because again, it was like, you know, people called it a sweatshop. Like, it really burned me out after a year. I mean, doing that where, I mean, I think there was a period for three months. I didn't have a single day off. So it was, after a year, I kind of was starting to look at some other spots.

And of course, because I had a year of Crispin under my belt, there were some other agencies willing to pay me a lot more money than I was making as a junior, you know, creative. So you would, after that, I think you went to another agency in Seattle after that, and you would spend the next sort of seven years, at least eight years, kind of bouncing around different agencies living in the Bay Area and Seattle. But I want to kind of ask you about this time, because it's around 2009. Yep. What do you got invited to see the Vans Warped Tour? And I mean, presumably, you did like, this is your jam. And these are like punk bands, Vans Warped Tour, skater culture. And I don't, you know, I don't know if it was apocryphal,

but it seems like that was a moment that would, in some ways, kind of, a slightly foreshadow what we're obviously going to eventually talk about later on, but tell me about the van's warp tours lands in Denver. Yeah, Denver, yep. And when they were coming through on the warp tour to Denver, like I, you know,

they hit me up, hey Mike, we're going to be in Denver, you should come out to the show. So I came out, they gave me, you know, wristband passes. Like I was hanging out back on the, on the, on the, their tour bus where they have like this kind of city of tour buses for the Warp Tour where they all park. And people were just sitting out and lawn chairs back there,

bands like, you know, drinking, playing games, that kind of stuff. So just hanging out with them there. And yeah, I saw they had these, you know, they were all drinking these cans of Monster Energy, but really small on the bottom of the can, it said Torwater. And they were like, yeah, because I thought they were drinking energy drinks. They're like, no, no, no, like, this is water. Like the energy drink sponsor, you know,

they don't want us drinking any other products besides, monster on stage and like clearly people aren't going to drink energy drinks all day in the hot sun and so they said so the brand had to create water for the bands that look just like their product that they wanted to promote so it wasn't like they were they were opening it on monster energy pouring it out and refilling it with water it was literally water but it just had monster energy on it yeah they were never pouring it out like monster had to create this for the bands um but but the point is is that like the the image was of these like punk rockers who actually were probably healthy and like looking a vegan lifestyle on stage with monster energy, which is just packed with sugar and more sugar. And that's not what they were drinking. They were actually drinking water out of those monster energy cans. Exactly. And it's like, that's kind of weird.

But this was not, to be clear, this was not like an aha light bulb moment. This was just an observation that you had of these guys drinking water out of monster energy, and you just kind of filed it in the back of your head. It wasn't like, I'm going to change the world tomorrow. Exactly. I mean, I was so into brand and marketing and, I mean, deep, deep, deep in the weeds, especially like when you're working for such a top agency like Crispin. It's like everybody eats, sleeps and breeds, like advertising and marketing, and everyone knows what's the new campaign and what's been done before and what hasn't. Like, yeah, that was my career. So I was hyper-tuned into all the nuance of brand and marketing.

Mike, I'm curious about the kinds of ad campaigns you did during this period, like what your personal style was. Yeah. Because at one point, I know you were living in San Francisco and you're working for an ad company there. And I guess your clients didn't always appreciate your sort of peculiar sense of humor. So what kinds of suggestions? Like, do you remember making a suggestion that didn't get made that you were like, God, this is so good? Yeah. there was one.

It was funny. What's funny is it didn't get made. And then whatever it was, 10 years later, I finally made the idea myself for Liquid Death. And it's one of our most successful things that we've done. There was a golf club company, Callaway. And they released this golf club called Diablo. Literally had devil horns on it and flames. And we were trying to come up with, you know,

A campaign around it. Yeah, a campaign or just like, you know, because golf world, it's sort of like, they would joke, like, the marketing is so stale and unchanged. She knows and polo shirts. Yeah, and literally, you just say four yards longer. Like, that's the campaign. It's four yards longer. Show a pro. Show the club.

That's golf marketing. And one of the ideas I had, I'm like, okay, well, it's this, you know, whatever it is, $400 golf club with devil horns on it. It's called a Diablo. And I said, what if we ran a magazine ad that was like a contract where if you ripped out this ad and sold your soul to Callaway, you would get like the first, whatever it was, the first 20 people to do it would actually get a free Diablo club. And I'm like, think about it. Like how much press attention will that get? How many people will talk about that for free that is not going to talk about an ad with a golfer that says four yards longer on it? So it would be to add in a magazine, like a golf magazine?

Yeah, like a golf magazine. Exactly. Yeah. Yeah. Right. And I thought that was, I just thought it. I'm like, man, this is gold. How do you not do this?

Like it's, I mean, and my boss wouldn't even present it to the client. He's like, we're not even showing the client this. I'm like, all right, fine. But yeah, it was those kinds of things. And, you know, we also were working at that time on the airline Virgin America when that was kind of a new hot airline. And we were their agency. And, you know, I presented like all different kinds of, I think kind of cool ideas. But, you know, again, they just ended up only wanting to show the client just like very straightforward, like semi-clever headline on a billboard.

And, you know, not anything too disruptive. So, yeah, it was very frustrating to just. really not be able to kind of, I guess, hone into what I felt like my creative potential was. Yeah. And then that's when I started thinking. I kind of was at this crossroads of, man, I'm deep in it. Yeah. So I literally had the thought, okay, if I have to depend on clients to buy the ideas that I think are the smart things to do,

or I have to depend on my boss to be willing to be, to passing those truth. that's true, that I'm like the only way, my only solution is I need to create my own product that I control what the marketing is for. That's the only way. So then I really started thinking about, okay, if I'm going to create my own product, like, what would it be? Yeah. It's almost like, it's almost like you were saying to yourself, I don't really care what the brand is. I just want to do cool ads. And that's like, and so the product doesn't matter. It's just, I can't sell these ads to clients. So I've got to make something myself and just it'll be a bit of a, be like an outlet for me to make cool ads.

So what were you thinking about? Like, what kinds of products could you sell around, you know, like, yeah. So I was actually really inspired by this guy. He was a creative advertising agency owner in Philadelphia named Steve, Steve Grass. And he had this agency called Quaker City Mercantile. And they actually helped create and launch. Two of the most successful Spirits brand launches of like, at that time, like almost the last couple decades.

What were they? Hendricks Gin. Oh, yeah, sure. And Sailor Jerry Rum. Rum. Okay. Yep. So he was kind of like a punk, sort of like a punk rock sort of guy that, you know,

ran this agency in Philadelphia for years. They had partnered with this big liquor conglomerate called William Grant and Sons that was based in Scotland. And they asked them to help launch a gin brand. And they were like, hey, as a Scottish company, it's really unique that we would ever launch a gin, you know, worse. Everyone sees as a scotch. So they helped them, they kind of helped them create this entire Hendricks gin brand. Which was groundbreaking.

Groundbreaking. That was everywhere. All of a sudden, everybody was drinking Hendricks gin and they were talking about botanicals and, like, all, you know, right? I remember. And at the time, I was just very surrounded in the spirits industry. Like, at the time, I was dating someone who was like a. you know, mixologist, bartender. In San Francisco.

In San Francisco, yeah. Like, I was really into whiskey and bourbon and trying all these different unique things. And my brother was a bartender at the time. So I just felt like I'm more connected to this world and probably know more about it than the average person. I think that was my sort of, you know, litmus test for like what kind of product to make, you know. Yeah. So, yeah, when I thought, okay, it's going to be liquor. And literally, I just started looking and doing my homework.

But yeah, the one kind of category that I thought that I couldn't find one cool brand in really was brandy. And I was like, you'd go to the liquor store and you look on the shelf at the brandy section. And there was literally dust on some of the bottles. And I started, I was like, so then I bought some brandy and was tasting it. And I was like, oh, wow, this actually tastes a lot like bourbon, just a little bit sweeter. Why is this such a dead category? yet a very similar tasting spirit is like the hottest thing there is right now. Clearly, that is a brand and marketing problem that needs to be solved.

So then I started kind of developing a brandy brand. That's always the funniest thing to say. A brandy brand that felt more like a whiskey brand, you know, because I felt, hey, people understand like the design and branding aesthetic of whiskey and they associate it with a flavor profile. How do we bring more of that to brandy? Because it really is closer to that kind of profile. People thought brandy was like ultra-sweet liqueur,

but it's not at all. So when you say we, it was- It was me, really. It was me. I created this brand that was packaged and marketed more like an Americana whiskey. What was it called? Western Grace. Yeah.

So, yeah, we kind of created this thing. It felt like a whiskey. but it was American brandy. And I found a distillery in Yucaya, California. Sure. Yeah. And these guys have been making some of the best brandy in the world for like 20 years. They were making wine.

No, they were making brandy. They were making brandy. Yeah, yeah. They had made like this craft brandy, you know. And I think when they saw this young marketing guy who was passionate and excited about the category and had this cool idea on how. to market it and branded. I think they got excited about it. And they were like, yeah, you know, we'll, you know, we're down to kind of make it for you. All right. So you find this distillery north of San Francisco. And then to get more help, from what I, from what I read, you did something really smart, which is you reached out to the folks from that, that ad agency, Quaker City Mercantile, that you just talked about that helped launch Hendricks Gin. Yep. And I guess you connect with the creative director. He used to work there. and some other people,

and they actually agreed to partner with you to help you launch this brandy. And I guess you moved back east to where they were based, which is Philadelphia, to kind of work with them. Is that right? Yeah, so I moved back to Philly.

We started figuring out the details of, you know, working with this distillery, how much they wanted to charge us, how much we were going to create. And that was really like, we were just going to create a really small amount. Like, I want to say, like, the first batch of this stuff was maybe like 15 grand or something like that.

It was like not many cases. I don't know, 60 cases or something like that. And then literally it was, you know, these guys, I mean, they were creative directors and like VP level account people at agency. So they had probably pretty high paying jobs. Like they were homeowners. Like they kind of had their own independent money where I did not. Like I'm still paying student loans.

I have like nothing in my bank account. So they were able to kind of put up like a little bit to kind of help it going. Like I had, you know, I basically asked my dad like, hey, I got this thing. And I think they let me like five grand, like just so I could like put in a little bit also. And we got like the first production going where we, you know, went through all the legal head, you know, of like dealing like getting an actual, you know, through the red tape of having an alcohol brand. And we got it into a warehouse in Philadelphia. Yeah.

What I realized then was with alcohol, so much of it isn't marketing. It's like this getting it into like the cool craft cocktail bars and getting bartenders on board and doing tastings. Like it wasn't really at that level about, you didn't have the money for like brand marketing. It was just like, okay, you just got to get this in the right people's hands. And they're basically like, yeah, we're not going to have any money to do real marketing for a while. And it's social media. And, you know, you can't market alcohol to anyone under 21. So you have to be careful about what you can put on social.

And then after two years, I had just butt heads with the two folks that I had started it with. You know, we just weren't on the same page about so many different things. Totally different vision. And then they kept the brand going for a while. And it wasn't until, I think it was two summers ago during COVID that they, officially sort of shut the company down. Right. And so you never made any money off that. No, no, it didn't make any off that.

I mean, you probably were spending a lot of your time just on like the mundane, you know, logistics of just getting it distributed even. Oh, yeah, it was such a headache. I mean, the legal paperwork, background checks, like it really was such a nightmare. And that was part of the reason where when I was thinking of my next thing, I'm like, Okay, whatever it's going to be is there's going to be almost no regulations, like, no complicated ingredients or manufacturing processes. Like, it needs to be very simple because that stuff just, it's, yeah, it was really difficult. Were you, did you feel like, I don't know, like you failed?

I mean, did you feel bad? Did you feel like, God, I poured the last two years into this thing that I really thought was going to be the thing. And now I'm like back to square one working, looking for agency work again. I mean, it was, yeah, I mean, it really was a tough time for me. It was like, you know, I worked at one agency that wasn't great, and then I got fired from that agency because they kind of, I think they realized my head just wasn't in it, and I was literally just like phoning it in. So it's like, I'm fired from a really crappy agency, or what I thought was a crappy agency at the time, and I just had this whole, like, what does it

all mean? Like, where, you know, what am I going to do with my life? I have no interesting work in my portfolio. There is no cool agency that's going to really hire me. But eventually you do get hired by an agency that was, I guess, based in Chattanooga in Tennessee is called Human, Humanaut,

like astronaut, humanaut. And you wind up doing an ad there, which kind of turns your career around, which I've seen. You can still see it on YouTube. The client was the dairy company, Organic Valley. And you make

this video for them. It's actually so funny. It's so good. I didn't know about it until I did research on this for this interview was like a parody of protein drinks and they were trying to market a protein drink. Can you tell me the story about that, like the idea

that you came up with? Yeah, so protein shakes in culture were so associated with like muscle-bound growth, right? Guys who were jacked. Yeah, yeah. You tell anyone And that's the whole culture that they were going to be launching into.

So, yeah, we had this idea, oh, you know, if all these bros keep drinking all these chemical-laden protein shakes, like, how long are they going to be around? And they might become extinct and then like, you might miss bros if that happened. So that was kind of the seed of the idea that we then turned into this like, you know, it's sort of a format that's been done a million times, like the parody PSA. And it's just a video of a bunch of guys like, you know, pumping iron at the gym, no body fat, just, you know, muscles, and then drinking these really sugary, you know, or whatever chemically protein shakes. You know, the premise is that they were going to die. Yeah, right. Yeah. But our bros are in serious danger.

Every day, millions of bros drink protein shakes in order to get jacked, yoked, and totally swole. But most bros are unaware of the scary kids. chemicals and artificial ingredients inside these shakes. If bros keep pounding this stuff at this rate, we could face a total bro colony collapse. And what did they think? I mean, were they at all reluctant about this idea? Were they like, oh, I don't know, this little edgy? So I think they liked it at first.

And then once we had the final cut of the video, and then they started, you know, sharing the video with some of their, you know, family farmers because it was like a, you know, it's a company as a co-op. So it's like, you know, partially owned by the farmers. So they've run the stuff by the farmers. And of course, that was the wrong thing to do because these guys just totally didn't get it. And they literally almost didn't run it. But they were nervous. They were nervous, yeah.

So then we launched it. It goes totally viral. Everyone loves it. And then, you know, organic valleys calling us, guys, we need bros at trade shows. We need bros everywhere. We need more bros. What's the second bro video we're going to do? Yeah, I mean, you look at it and you think this is a no-brainer that's going to go viral,

but obviously it's impossible to know, but it looks like an S&L skit. It's just so funny. Yes. Yeah, it was, I mean, for not much, they got millions and millions of dollars worth of, you know, eyeballs out of it. Yeah. So that was, I mean, it sounds like, you know, that was a sort of an important turning point. I wonder whether when you went to this agent. humanaut, right? This is around 2014.

You know, did you think that your time as an entrepreneur was over, that you had tried this brandy brand and it didn't work out and maybe you should just keep, you know, and now you're getting some momentum in this agency? And did you think, okay, this is, this is good. I'm good. This is going to work. Yeah, I felt like I had found my lane again, you know, like I was making stuff that I was actually proud of. then that started bringing in more people, you know, more companies coming to us for that like viral YouTube video, you know, especially from the health food space.

So that kind of became like our specialty. We started doing it for, you know, other brands. Meantime, this is now like eight, you know, six, seven years after that Vans Warp Tour show where you saw people like these rockers pounding water out of monster energy cans. That idea was kind of in the back of your mind, but you weren't admittedly thinking of this.

as a brand. But I guess what around this time, around 2015, this idea comes back to you. I think not initially as something you wanted to make, but like is part of an ad campaign for a client, right? Yeah. So at Humanaat, we had the opportunity to pitch ideas to this company called, I think they're called the Center for Science and Public Health. Yeah. And they wanted to do a commercial that really, like, brought to attention, like, the dangers or unhealthy elements of soda. And I think it was called the Real Bears. And you know how Coca-Cola, like, their icon is like polar bears. So you couldn't say Coca-Cola. You couldn't disparage a brand.

But they just had this little cute cartoon where they had polar bears that were drinking soda. And it was, like, kind of very happy, like, you know. go lucky. But then it's like they start getting diabetes and then they get their arms amputated. Then they said, hey, guys, we want to do something like this, but now we want to call out the dangers of energy drinks because that was such a big thing.

The danger is because they're just packed with sugar. And caffeine. And caffeine, yeah. Yeah. And the thing that we landed on was that, and that kind of came from, you know, some of my, experience, you know, from the Warp Tour, which was, the reality is, you know, these guys use all these, you know, action sports athletes to market this stuff. It seems like they're

drinking this stuff. But the reality was, it was all bullshit. Like, yeah. These guys are actual athletes. Like, yeah. They have trainers. They will, they will not be drinking this much caffeine and sugar. Like, they take their stuff very seriously. So, you know, we, you know, we came up with, like, a couple different ideas. And, like, the, you know, the idea that I had, and I think partially because I had just come off of like an entrepreneurial thing of creating a product. So my brain first goes to, oh, what if we created a water brand that looked like an energy drink? And it was all about making fun of the fact that this is what these guys actually drink. So maybe we do like a funny video that almost feels

like it's like, I don't know, like a commercial or something for this ridiculous product where I think, You know, we were saying something like 100% water, zero percent bullshit. Like, that was like the line. Yeah. Yeah. And what did they say? What do they think about the idea of doing a, you know, a spoof ad like that? Yeah, so I wasn't there to actually present the idea.

It was like our boss who presented the idea. And, you know, they just, they had zero interest in creating a real product. They're like, no, guys, like we don't want to create anything like that. Like, we literally just want a funny video like the real bears thing, but for energy drinks. Yeah. But I just knew there was something there. I'm like, regardless of these guys were going to do this, like I think I stumbled on to something really interesting here.

And I kind of just kept it in the back of my head. And like I started just flipping that entrepreneurial switch again because I finally found something that got me excited that I thought I saw white space there again. How do you remember that happening? I mean, it was an idea. You first encountered this kind of weirdly in 2009. Then you pitch it as a spoof,

But then how do you make the leap in your mind to be like, wait a minute. No, maybe this is a real product. Like maybe there is something I can do here. Well, I think I was already in the, what's my next entrepreneurial mindset constantly. And I started just really doing my, when I kind of focus on something, I just go into this like deep dive of homework, like where I just become obsessed where I'm like, okay, let me research the, you know, the bottled water market. But let me read. Well, would you find out? I mean, I mean, this is like 2015.

Yeah. What, I mean, there's a lot of water brands on the market, a ton. I mean, you go to the aisles of Safeway at that point now. I mean, still, there's everything. I mean, from Voss to Fiji to Mountain Spring to Avion and Perrier and Poland Spring. And, you know, there's a lot of brands. Yeah. And I think a lot of brands that are all very much the same and not fun or interesting.

You know, when you compare it to something like Monster or Red Bull or, you know, Bud Light or like these, you know, brands that are associated with hilarious commercials, exciting packaging, you know, youth culture, like all of that kind of stuff. There was nothing like that in water. When we come back in just a moment, how Mike comes up with the brand name and a logo that do not evoke Springwater. In fact, think poison. Stay with us. I'm Guy Raz and you're listening to How I Built This. Hi Guy, this is Stephen Council. I'm in a small workshop in Queenstown, New Zealand, where I listen to how I built this.

Perhaps that's why I relate so well to my favorite episode, Burton Snowboards with Jake Carpenter, because he was in a small workshop by himself as well. I admired how he was open about his loneliness, he showed his emotional vulnerability, and he was so modest having created an alive. Olympic sport and a whole new industry that reached so far it impacts the town I live in here in New Zealand. We're a ski and snowboard destination in winter. It's a beautiful episode. Thanks for such a great show. If you want to share your favorite episode of How I Built This, record a short voice memo on your phone telling us your name, where you're from, what your favorite episode is, and why? A lot like the voice memo you just heard.

And email it to us at hibt at id. wundery.com and we'll share your favorites right here in the ad breaks in future episodes. And thanks so much. We love you guys. You're the best. And now back to the show. Hey, welcome back to How I Built This. I'm Guy Raz. So it's around 2015 and Mike is thinking of launching a bottled water brand that's unlike anything that anyone's ever seen before. Starting with the idea that it won't even be bottled. The original idea for a can or a tallboy can was like, hey, this looks like something like a beer or energy drink that feels fun, but what's inside is actually really good for you, which is rare. There's rarely anything inside of a can that's really good for you.

The concept from the beginning was canned water, not bottled water, not plastic or glass. But in an aluminum can, it would be a tall boy, so it could look like a malt liquor or an energy drink. Yeah, exactly, yeah. And then, so I'm trying to find, like, okay, where's there a water source? like who can actually can water. So I'm like Googling, you know, water sources in Kentucky or Tennessee or places like, hey, who can maybe actually produce this stuff? Then I also started seeing that, you know, the more news articles about how bad plastic is.

Like that was, like those were starting to pop up in a big way then where, hey, you know, how much plastic ends up in the ocean? And companies were starting to say, hey, we're just going to stop using, you know, plastic, you know, bottles in our companies. And it was kind of a hot button topic that was starting to kind of, you know, sizzle up at that time as well. So it's like, oh, great. Not only is the can really cool. Now there's actually, there's like a deeper reason why, you know, aluminum's infinitely recyclable. It's a way better alternative to plastic.

Like, all these moons just started aligning that this was the right path. Okay. So while you're researching this, right, first of all, imagine there's lots of, It's a place that bottled water in the United States in North America. So I imagine it's not that – it's sort of like cosmetics, right? You go – there's tons of white label manufacturers and you stamp your brand on it. So was it – was it relatively easy to identify, you know, a bottler that could take water and then just put it in a can in the U.S.? I had the same exact thought as you had, and it was the opposite of that.

It was impossible, didn't exist. And that's kind of... Because why? They were only using plastic? So when you create a bottled water or a canned water, the only way it makes economic sense is you have to basically bottle it at the source. And you did not want to use city water. You wanted to use spring water. Right, right.

And even if I wanted to use city water, there's a whole other thing that you'd have to do there. But no, I wanted this to be like a premium spring source because you knew that based on the cost of aluminum, you're not going to be able to use city water. sell this for the same price as a piece of trash plastic bottle, right? It's like this is going to have to have a premium price point, so you're going to have to justify it with at least the product inside feels like there's a premium story. Oh, it's from a mountain. It's from a natural source. This isn't, yeah, city water. And most spring water is bottled at the source because presumably it's very expensive to truck it down somewhere. Yeah, yeah. It's like you have to find a source. Yeah, you'd have to tanker truck it, you know, spend money on fuel. So nobody does that.

No one does that. Spring waters. And so presumably there are places that are bottling water at the source in cans, right? Presumably, but no, because it was not a category that existed. So every single, you know, water source that had bottling capabilities, they only had plastic capabilities. Maybe a couple of them had glass. But even that was rare. So it was all plastic.

Like the whole industry. You could not find, you could not find a spring in North America that had a. had the ability to bottle this or to can it. So that's probably discouraging, right? There goes your idea. Yeah, that kind of slowed some of the momentum of my idea down. When I realized how hard it was going to be to produce, like what started as this like fervorous, oh my God, I found something.

I found something. I'm researching. Yes, all this stuff makes sense. And then, yeah, it's kind of this big roadblock of, well, literally there's no one that can make it. So this, you know, this might be a lot harder. I thought it was going to be. And meanwhile, I guess around this time, you decide to move back to California, this time to L.A.,

and I guess you get a job as a creative director at a skateboarding company down there. But this idea, this canned water idea, is obviously in your head. It's like gnawing at you. I mean, you think that there's something there, of course, obviously. And at a certain point, you come up with a... name for this thing and a concept for how you want it to look. Yeah, so I think once, you know, once we're in like, I think it's like 2017 early, I think when I'm like, I finally have kind of landed on, you know, what the general concept

for liquid death was going to be, because it wasn't always going to be, look like a beer. It was kind of like, you know, does it look like an energy drink? So then when I finally decided, hey, I want this thing to look. like a beer. Like that was kind of the concept. I remember calling one of my best friends and telling him, I'm like, hey, I think I have the new business ideas. Like, what is it? I'm like, I want to put water in cans that look like cheap beer. And that felt right to me because I'm like, you know, everybody wants stuff they're not supposed to have. You know, it's like they say, hey, if you want teens to think something's cool, you actually market it to people in their 20s. You know, it's like

energy drinks, they kind of market to teens, but 17-year-olds don't think monsters the coolest but 12-year-olds do, you know? Yes. Oh, yes. Yeah. So it was like, hey, if we actually want, you know, teens or even people in their 20s them want something, like let's not make it look like a kiddie energy drink that 12-year-olds think is cool. Let's make it look like a beer that like everyone between, you know, 15 and 50 think is cool. So then I just really started pulling all these beer references for like, hey, what does classic beer

design look like. What kind of fonts do they use? You start making like a mood, mood board. Mood board, exactly. Like pulling all these references of like, I used a lot of craft beer inspiration, not so much in the design, because craft beer design, part of what makes it great is it doesn't look anything like typical big beer. But it also just, it almost is like craft beer is cool because it kind of looks like a soda or energy drink most times and not a beer. That's what makes it interesting. Yeah. So then, but from like a naming perspective, I thought some of the craft beers had some of the most interesting, like, brand names compared to regular beer, where it was like, there was like a skull crusher IPA. There was, like, arrogant bastard ale.

Yeah, yeah. They had all these really interesting. Fat tire. Fat tire, yeah. I think, like, one of the early, like, really bad names that I had was, like, Southern Thunder. I think was terrible men. Terrible men. But I think when I really started thinking about, like, again, it's like, okay.

okay, let's take a step back. Like, if I launch this thing, for real, what I learned from Western Grace, there's going to be no dollars for marketing. And the only chance this has that survival is it has to be something that people naturally want to share on social. So then I started thinking, like, okay, what are some of the names where if someone saw this, they have to share it. And that's where it's like you literally start trying to think of, what's the dumbest,

craziest thing you could think of. Like, start there. Yeah. Like, liquid death, like, liquid death was one of these names. It was just like, what sounds like something that, like, you would never want to drink? And it's like, you know, liquid death. Like, do the opposite of what you think you should do. But I remember thinking, like, yeah, liquid, like, a beverage called liquid death, like, there is no chance someone's not sharing that if they see that in a store.

Yeah. And so once I had the name liquid death, kind of had, like, rough. sort of package design came up. You designed it. You came up with like a skull design. Well, no, I worked with a buddy. The buddy of mine I mentioned a while ago who was like the intern Crispin years ago, who was a designer. He kind of helped me out because he's way more of a designer, I think, than I was.

So he kind of helped throw together some canned designs based on like some kind of clear direction I had. Like, hey, kind of want this color is this thing. I actually kind of made the type like I found the typeface for Liquid Death and kind of did that. You wanted old English typeface. Yeah, yeah. Because it looks almost like a malt liquor. Well, what they call that, it's called German black letter font.

And that's why so much beer, because beer came from Germany really to the U.S. All these old brands, they use like that very German-inspired look and feel. So then I started thinking of, okay, we don't have any money. It's going to cost a lot of money to produce. Like you can't make them because I knew I knew a little bit about what it cost to make aluminum cans

because I think I got a quote from one of the, like, ball or one of these aluminum can manufacturers. Like, hey, what does it cost to produce, you know, 16-ounce cans or 24-ounce cans? And it's like, oh, wow, the minimum you can produce is like $200,000. And so you're talking about a quarter million dollars or $150,000, something like that,

just to do the bare minimum run of a canned product. So I'm like, okay, I don't have anywhere near that kind of cash and there's nobody who's going to write me a check for the idea at that time. Well, I want to put water in a can and call it liquid death. They're like, that's the dumbest idea ever. No retailer will carry it. So I'm like, okay, I'm going to make a funny kind of commercial for this that feels like it could be viral, like the stuff we had done at Humanod and things like that. And then the original idea was, but I'm going to use this video to be like a Kickstarter or Indiegogo thing. Right. Oh, yeah.

You would build an Indiegogo page with a video on it. Yeah, exactly. Okay. And I think, yeah, we set out to raise, like, it was like, you know, like $150,000. On Indigo. On Indigo. So we made this video, you probably saw where it's the woman who's pouring out a can of liquid death the entire time. She's kind of giving this monologue about water has been, like, misbranded.

And people think that, you know, water is some, you know, yoga thing when really water is deadly. Like, you know, it kills. surfers and, you know, whatever. And then there was... Avalanches. Avalanches, yeah. And then there was this funny idea of like trying to position water comically as extreme. And the closing shot, which is quite shocking and very risky, is of a guy duct taped to a table.

Like, she pans out. This woman pouring the water is actually pouring it onto a guy who's being tortured, wearing a, like being waterboarded, basically. Yeah, yeah. Yeah, it's a guy in a business. suit, a business suit, basically being waterboarded by liquid death. So this, and you basically hired some actors and just made this. It wasn't expensive to make this video.

No, we made this whole thing for $1,500. My wife, Carly, edited the whole thing. She actually edited almost all of the early liquid death video stuff. Just using like whatever software you use on your Mac. Yeah, yeah. And then that was actually me being waterboarded. to Sunday. Okay, so I want to just break down the two things because the video would be very successful. But the Indiegogo campaign did not actually, was not successful. No, it was like we set out to raise $150K and I think we raised like $1,500. So now I'm like, okay, now I'm just going to put it on social media. Like I'm going to make a Facebook page for Liquid Death. Make it seem like it's a real company. I'm going to put this video on there. I'm going to make a couple funny social posts about it. So I put maybe a couple thousand dollars in paid media behind the video and behind some of these little social posts over the course of like four months or so.

Yeah. So then like after four months, the video had like almost three million views. It was like two and a half million views. The page had like, you know, 50, 60,000 followers. I have hundreds and hundreds of comments from people that range anywhere from like, this is the greatest thing ever. How do I buy this to this is the dumbest? Yeah, is this a real thing? Yeah, is this a real thing?

Yeah. This is the dumbest thing I've ever seen. Because there was no link at the end saying order liquid debt. You did not have a product to sell, right? No, didn't have a product to sell. And then eventually I made like a pre-order page where it's like, oh, you could still pre-quote, quote-unquote, give your email and pre-order this. Yeah. I'm wondering, Mike, how did you, so the idea was, like, because there's different ways of doing things.

Usually people will make like a trial run. They'll try to maybe sell it at a farmer's market or like at one whole foods. You started with the ad campaign. You didn't even have a product ready to go. But when you made this video, did you have the infrastructure in place? Like did you identify a potential copacker, a place that could bottle the water for you? Because you mentioned earlier, it was impossible to find anyone who could do this. Yeah, no, I had none of that.

And I knew that the one thing I did know, if I did want that or if there was going to be a way to produce it, it was going to be probably at least $150,000. It's going to be really expensive. Yeah. So I knew that the only way to get the capital was to really kind of prove out and de-risk the concept. So when I had all of a sudden, early at 2018, I had a Facebook page with a lot of followers. I had a video with millions of views. I had tons of comments of people seeming genuinely interested. I literally had a 7-Eleven franchisee from Michigan who said,

hey, I own three 7-Elevens. How do I get this in my stores? I had the biggest non-alc distributor in New York called Big Geyser. One of their people reached out saying, hey, can I talk to a sales rep about carrying your product? So I use all of that to then say, okay, maybe I can actually now go raise, you know, a friends and family kind of round.

You know, my family was not wealthy, so it was not like I could just go get money from my family. So, but it was like, hey, former bosses that were big marketing executives that I had good relationships with, who maybe, like, you know, them writing a $5,000 check for something wasn't a big deal. So I basically cobbled together all these, like, you know, 2,000 to, I think the biggest two checks I got were each, like, 20 grand. But everything else was small, and I've kind of put together this round of, like, 150K. So you wanted to prove that you could gain virality and then you could raise the money that you would need to actually produce the product. But where were you going to do that? You said that nobody was doing this. Nobody was canning water. It was all plastic bottles. Yeah. So before we actually started raising the round, I did have a couple different leads on who could produce it and roughly what it would cost. So there was, you know, there was one place that was, I think like, outside of Las Vegas that said, hey, we can do it, but it wouldn't be spring water.

It would be kind of like more of the city water. Yeah. Which I wasn't that excited about. And the guy was basically like, oh, yeah, did you know that like, you're not going to be allowed to call it liquid death. Like the FDA won't let you do that. And I'm like, what do you mean? He's like, yeah, it's death. Like you're saying, you know, it's false advertising.

I'm like, really? And again, I trust some of these people. But yeah. Like I didn't. But so I still kind of knew. okay, I've talked to the experts now. And literally now they're telling me there's really nowhere they can do this. So then I'm like, okay, I'm going to start Google searching outside of the U.S.

I'm going to start Googling Europe, canning water copacking in Europe. And sure enough, I found this place in Austria that said they own for their own springwater springs. They had canning capabilities. Email them. They're like, oh, yeah, we can definitely make this for you. I'm like, really? So then it was, yeah, so then. So just to interrupt.

I mean, everyone told you this is impossible. But essentially what they were saying was it is impossible in the United States. Yes. So my, like if I was you, I would be thinking, okay, even if I was looking at Europe, I would be thinking, that's just going to make the cost so much higher to get this done in Europe. Like, I don't really want to do that. But that was your only option. That was the only option available. Only option available.

But you still needed the capital to make. Yeah. So at that time, like I was already raising the capital because I had the one. source ready to go in pricing, so I knew what it would cost. But then when I started, you know, the money started coming in. And at that time, once I was raising money, I am not a finance guy at all. So a good buddy of mine, um, uh, JR, who I went to high school with, he was kind of like a serial entrepreneur ever since he graduated high school, you know, he, he went to college for finance. So then he came on board with me as like a co-founder. But again,

at that point, so much of it was already like, the brand was already figured out. the Facebook page was already going. I already raised most of the money. It was just like, okay, now I have all the pieces. Now I need you to kind of help me, you know, execute all this stuff and do the stuff that I'm not good at. And he was very cool with that arrangement. And that's what I think works so well with us in the beginning was we never stepped on each other's toes. And so when you, I mean, and even when you were raising money, right, from friends.

And then eventually you were able to raise a little bit from a, a, uh, a, the C-Firm that had, I think, had invested in Dollar Shave Club. Did any of them ever ask you, well, what's the qualitative difference? Like, what makes your water taste better? Or were they all kind of convinced by your argument that that doesn't matter? It's water, you know, spring water is spring water generally. It's all about the branding side. Yeah, I mean, that was always part of my pitch. Like, as a marketing guy who really understands the nuance of brand, that's what I could make clear for people the reality is that in most things, it is brand why things win, not functional differences.

Like, Nike doesn't market because they say, hey, our commercials, our shoes use this type of material that lasts 37 days longer than Adidas. Like, no, no, no, it's all brand or why someone's buying a $700 Gucci t-shirt that has the same functionality and thread or whatever it is as like a $20, Target T-shirt. Might be the same factory. Might be the same factory. But you can more easily understand why brand matters and why that is still successful.

Because I think for me, that's the definition of brand. So there's no point in sort of leaning into this. Our water, you know, mountain spring water tastes so pure and like that, you couldn't really carve out a space in the water category by doing that alone. I mean, it needed to be what people perceived as. at least a premium product, which what we found is like, source did matter to people. So that's why it was like, hey, as long as we have a good source story, like, hey, this is, you know, mountain water.

Like this is from a mountain. That's enough to make people feel like, okay, this is a premium product. I don't need to get into the weeds beyond that. How did you know that? Did you have access to market research? No, I think it was just you could kind of just, you could look at the brands out there. And, you know, it's pretty easy. I think like...

Intuitive. Like, you could talk to average person. Hey, what do you think is more premium? Water from a city or water from a mountain? Mountain. Yeah, okay, got it. It's not rocket math. So you, all right, so you find this place in Austria to package,

and you've got now some money that you've raised. And the idea was to just what, I mean, now that you have 80,000 followers on Facebook, that was going to be your, presumably, these were going to be your first customer. So you were going to sell them direct to consumer from like you were going to, I don't know, have like a logistics or drop shipping or some kind of third party, you know, logistics team that would sell them directly or you would do it through Amazon or what? What was the plan? Yeah, so it was through Amazon and you have your product as a page on Amazon. People can buy it. Amazon ships and fulfills the product for you.

And then Amazon charges you a fee for it. every case that they ship and fulfill. And it was very expensive. That's why, you know, we had to charge $20 a 12 pack in the beginning to even get anywhere, you know, into the black in terms of like making money on a case, which was so expensive. Because it was so expensive to ship a heavy case of water that weighed 13 pounds. Like that's not cheap to ship.

Like if you try to go to FedEx right now and ship a 12 pound case of liquid death, they're going to probably charge you $20 just to ship it. So you had to sell this at a premium. I mean, you had to basically, in order to make some profit, which I guess you could because you already had these 80,000 Facebook followers, many of whom were waiting to order this. Exactly, yeah. We had a little bit of a built-in audience. And again, so many of those people didn't even believe it was real.

Like, they still just thought this was a funny page to follow. And then once we were like, hey, look, guys, it's real. You can buy it. It generated a different level of buzz, I think, you know. And you, so you launched this. It's amazing because we're talking here at the end of 2023. You launch us in 2019 at the beginning of that year. And in the first month, you sell out all your inventory.

You do about $100,000 in sales. So that's a very good sign. Was it all through that Facebook page that you were able to sell it? Or did you, did you like pay for some PR at that point? Because you had some money, did you start to do some of that? No. So, you know, just before we launched, it was, you know, we had real product that was getting ready to be shipped to the U.S. from Austria in, like, October of 2018. At that same time, that's when I met our first kind of venture capital investor science, who, like you said, was behind Dollar Shave Club.

you know, they put in significantly more capital, which actually enabled me to quit my freelance job I was doing full-time to pay the bills to actually go full-time to liquid death at a huge, huge salary cut. So then I was able to just kind of quit my job and spend for the first time ever, like, full-time, full-time focus on liquid death in like late 2018. And I worked with science to kind of help me figure out the tech and digital, aspect of making this like a true D to C brand to start. Wow.

And, you know, we had a strategy for, you know, paid social promotion. But again, I think the first month, we only spent maybe $2,500 in paid media to generate $100,000 in sales. When we come back in just a moment, while log jams force Mike to find a copacker that's closer to home. Stay with us. I'm Guy Raz, and you're listening to how I built this. Welcome back to how I built this. I'm Guy Raz. So it's early 2020, a few years after launch, and Liquid Death is starting to grow and starting to get orders from some big retailers. First, Whole Foods, and then kind of on the opposite end of the spectrum, 7-Eleven.

I was always targeting who are the people that don't care about healthy brands that are drinking soda and energy drinks and beer most of the time. How do you get them to actually resonate with a healthy brand and actually want to make more healthier decisions based on, you know, it's more fun to have this brand walking around than it is, you know, a Fiji or something else? So it's like you get a lot of overlap in terms of like, yes, we bring new people into the category where it's like, hey, these construction workers who shop at 7-Eleven who are buying two energy drinks for the first time ever are coming over and buying a premium bottled water just because of, of the brand. They were never buying Fiji or Voss before. But then you're also getting the people who did buy Fiji and Voss were like, oh, I like premium water and this is just a more interesting brand. Like, yeah, I'll try that. And yeah, it's good. Yeah, I mean, it's, and the other thing that's amazing, so I understand why Whole Foods is interested because they like, I mean, this brand was a purple cow. It was like people were going, you knew that you people were going to stop and pick it up,

especially Whole Foods shoppers, because Whole Foods are not used to seeing something called liquid death. Like, you wouldn't go to Whole Foods and think like, wow, they're selling a sugary energy drink

or they're selling malt liquor at Whole Foods. Like, you're like, right? I mean, so in some ways, it was like the perfect, you know, retailer to launch this brand.

Yeah, and in a way, it was the only retailer who would even give us a chance. I mean, we had talked to, I don't know, like a broker for Target, and they were like,

Yeah, guys, we don't think this is the right fit for mom. Yeah. And like any of these other big retailers, like, wouldn't really give us the time of day because it says death on it. But at least Whole Foods, what they really identified with was our whole death the plastic messaging. Right. That was part of the campaign because when you launched, I mean, not only did you, when you launched, you also then started making more of these videos, right? Yeah. And one of your videos is an animated video that is also just insane.

I mean, it's basically an animated video of, like, a can, a can, like, axe murderer, just, like, killing people and just slaughtering them. He's murdering thirst, and it's just, like, gory and bloody. And, I mean, it's basically, like, yeah, I mean, it's like kind of an insane video. But, again, designed to get people talking, presumably. And really, I think it's an interesting topic, and I talk about it so much. Like everyone uses the word edgy. Like, oh, you guys do edgy marketing. So all we are doing is we just want to make legitimate entertainment, not marketing.

And it's a tried and true approach that Red Bull was very successful with, Monster was very successful with, where they blur the lines between an entertainment company and a beverage company. Now, their specific type of entertainment is action sports. But that is a very, I think, limited genre of entertainment. Like, yeah, it's really cool to watch skateboarders and snowboarders and skydivers like do crazy stunt like stuff. But there's a lot more entertainment in the world that people consume. So for us, we're like, hey, our entertainment is comedy. Like, that's what we're really good at.

We're really good at making people laugh and making funny videos. And not a lot of companies are. Like, a lot of companies struggle to deliver humor. But that's our unique strength that we have. And if your tagline is murder your thirst and your video is a cartoon giant can on a, you know, muscle-bound beast, just axe-killing people who are drinking, then you're going to get attention. One of the things that I was curious about is you launched in Whole Foods, like the week the pandemic starts. And a big part, I have to imagine, a big part of your whole strategy is that it's such a weird product, liquid death, that people were going to pick it up.

And that's half the battle. Like, once somebody picks up a product, there's a good chance. that they might actually take it to the register and buy it. But now Whole Foods are, you know, mostly, I don't know, mostly, but a lot of the shoppers and there are like, you know, professional shoppers are for delivery services, right? Right. I mean, were you worried that your sales were actually going to be badly affected because people wouldn't be able to physically, like, see it and pick it up? Well, luckily, by the time we had launched in Whole Foods in, you know, the late spring of 2020.

Yeah. We had already built a pretty large Amazon and direct-to-consumer business. You guys, I think, did about, what, in your first year, $3 million dollars already. Yeah, yeah, yeah, just under $3 million. And revenue, yeah. And again, remember, we were selling those cases for like $20 bucks on Amazon. So now I'll... So 12 cans for $20.

Yeah. And then because of all... all the how expensive it was to ship a heavy case of water now when it was in whole foods they could actually sell it for 1499 so now we can tell everyone hey you can go get it at whole foods now for a lot less money so we were able to kind of drive a lot of existing customers that we had from amazon into whole food so that definitely helped and you didn't have any issues getting it to the u.s given that they're you know shipping and all that all those disruptions No, there was, I mean, there was some issue. Yeah, we definitely dealt with some issues where things were held up at the ports.

I mean, we had things where some of the first shipments of liquid death were held up by customs because they see something called liquid death and they want to make sure it's not like a terrorist thing. Yeah, right. But liquid methamphetamine or something. Yeah, yeah. So we definitely had, you know, issues where, you know, our containers were held up for like a month at a port and we had to like wait on product. Like there was, you know, a ton of stuff to kind of to battle. And then the. real pain point was in spring of 2021. If people remember there was that container ship that ended up blocking the Panama Canal. Oh, yeah. Was it the Panama Canal? The Suez Canal. Yeah, you're right. You're right. Yeah. Yeah. And it just completely halted so much. It was such a, like, it kind of started this chain reaction of the ocean freight cost.

Literally, over the course of two months, ocean freight costs went up like 5X or something insane. Yeah. And all of a sudden, we started getting killed on ocean freight costs in the back half of 2021, where, you know, we might have been spending, you know, $3,500 to ship a container from Austria to the U.S. And now all of a sudden it was $12,000. And then 2022, everyone's saying, oh, it's going to come down, it's going to come down. Never went down. And then, like, midway through 2020. it went up again.

So we kind of knew eventually we would move to copacking in the U.S. once there was a good partner for us that could do all the things we needed them to do. So, you know, we got connected with a great source in the mountains of Western Virginia. Not West Virginia, but like Western Virginia. And then we also at that time, you know, we had launched flavored sparkling, which again is more like a healthy soda than it is like a... They're low in sugar, right? Yeah, yeah.

Two, three grams of sugar, four grams of sugar, 20 calories. So that opened up some of our copacking abilities once, you know, we started having a ton of success in our flavored, flavored sparkling. Mike, by 2021, now you're starting to really attract investors, and I'm sure they're banging on your door. By 2021, you raise a series C already at over half a billion dollar valuation, which is, by all accounts, It's just crazy. I mean, you launch this brand with no valuation. And you're at half a billion in a year and a half. And, you know, and you're, you know, as I say, you're attracting all these people who want to work with you. And I wonder whether a part of you started to get nervous about how quickly, I mean, or maybe, I don't know, I mean, I've talked to founders who are like, we're growing too fast, you know, this is too fast or there's too much pressure. But I don't know, was it, but was a part of you worried at all? Were you just like, yes, amazing. Let's bring more of this money in.

No, I think I was excited at how fast it was growing because I think we built the team the right way to be able to sustain the growth. I think, you know, even as an organization, we've taken a very almost top-heavy approach where it's like we want. seasoned gangsters in every position, you know, where they've done things at a much higher level so that right now they can do this level of stuff in their sleep. Versus like you start with, I don't know, a lot cheaper labor to kind of try to save money, but it's less experience and less, you know, talent. And then there's more risk that if you're growing that fast, that they don't even know how to deal with that kind of growth and it breaks.

So I think we built the team the right way to be able to sustain that level of growth. at because yes, it was fast growth for us as a company. But, you know, even in 2020, um, 2021, I think we, you know, we did, uh, I think it was like 45 million in like gross top line revenue. Um, that is tiny for a beverage company. Like you're not even a blip on anybody's radar at that level. I mean, and I think, you know, people had reactions to, you know, whatever it is, over a half a billion valuation for, for water. Like, what's, what's wrong with, with the world? It's like, did you know that smart water, plastic bottles of municipal tap water sells a billion dollars a year of it? Same thing with Aquafina. Same thing with Poland Springs. Like, these are massive categories.

This isn't, you know. I'm not surprised. No, I'm not surprised at all. I wonder, I mean, the thing is, And we've done on the show, you know, we've talked to founders who started a brand or product and really try to build a moat around it, right? Because that's what you're taught. It's like the famous Microsoft documents where you build a moat and then, you know, nobody can compete with you. Your product is protected. It's so hard to replicate. Water is not hard to replicate. Obviously, anybody, you know, with some capital, can bottle water.

But your whole play was about brand, right? Now, you're in a space with a lot of big players, the Poland Springs and the Aquafinas and the DeSanis and they can go on, not Fiji. Did you start to see any of them even attempt to try and eat into your audience, your market share? No, and I think that, you know, brand is the moat. And I think it's hard for people to wrap their head around what that means. but there's a lot of sort of historical precedence to show that that's the case.

I mean, you've seen that there was a great example. Coca-Cola, the biggest company in the world with all the resources and shelf space in the world, tried to take share in the energy category by creating Coke energy. And it was a two-year experiment that was a massive failure and hundreds of millions of wasted dollars.

And you would think, hey, how could Coke? Coca-Cola fail at creating an energy drink brand. And it's just like it shows that giant companies are really bad at creating brands. Like there's just too much bureaucracy. There's too many focus groups. I'm sure Coke Energy, it probably passed the focus groups. It probably passed all the layers of tests and everything.

And then in market, it just totally fails. Think about the other things people in beverage try to use as a moat. Like, what is your functional ingredient? you can't own that ingredient. Coke can buy that ingredient for way less than you can. Like, you can't own cans. Coke gets cans for a fraction of the cost that you're going to get cans for. So if you're a canned water brand,

marketing it as can water, aluminum, infinitely recyclable, that's your whole brand. You're just, yeah, you're just educating people on why cans are great. So then now Coke can just put it in a can and you've just helped them, you know, break in. So that's why we always led with brand. and what we could own first, which is funny, irreverent brand, making people laugh, murder your thirst. Debt to plastic was always the second thing. Because at the end of the day, we knew we can't own aluminum cans as a brand.

Yeah. Okay. Now, here's, I think, a fair question to ask and probably have been asked a version of this. But, you know, you have this amazing brand that is obviously hit. It's really hit, and I can see it with my kids. And I can see it with your sales. I mean, I think you're on target to do, track to do at least, what, $100 million in revenue this year? Maybe more.

Oh, yeah, significantly more. Significantly more. Okay. So what is what makes this brand sustainable in the long run? You know, I mean, there are so many examples in history starting, you know, and go back to the pet rock, that were phenomenal. These were phenomenon for a few years, and then they just kind of went away. I mean, what makes liquid death have staying power? Like, you know, Perrier's been around forever.

Avion's been around forever. So what makes this brand, or doesn't matter whether it's around in 20 or 40 years? Yeah, I mean, I do think that the era of brands lasting 50 years are no more. because of the internet and technology. Like look at Coca-Cola, like of their, whatever it was, 120-year stint, a hundred of those years did not have the internet. And I think because of the internet and the hyper-speed digital culture, the other difference is you can make, as a brand,

now with digital and virality and the democratization, of media and attention, in five years, you could be a brand that's literally doing billions of dollars in sales, but that used to take 50 years to get there.

Yeah. Like, look at White Claw. I mean, that was a brand that didn't exist. And then all of a sudden, in five years, they were doing, you know, whatever it was,

like over a billion in sales. But that's a good example because they've also declined significantly since then. But it was, that was an interesting scenario because they had hard Seltzer was a new category that had this massive spike during COVID that was kind of

unprecedented. And now it has just kind of settled down to what is still a huge category. It's just not that like in the outer space level that it was during a very particular cultural period. I mean, part of you, maybe, maybe not. I mean, given that, you know, this, as I say, this is like a, it's like an overnight success story that took 25 years, right? Because you were in this space of advertising branding for so long. You were observing. You were watching. You were like trying to push your ideas.

And you couldn't quite convince people to do the things you want to do. And so essentially, you started a brand so you could make funny advertisements. I mean, that's basically the story of liquid death. You wanted to have fun making ads. And this was the vehicle to do that. Exactly. Yeah, it was, yeah, it was, you have a product that generates money to help fund, you know, cool things that people want to see in the world that is. not more crappy marketing that people are willing to literally spend $10 a month and not have to

watch or that they can skip. You know, we're in the attention game. Like, we need to generate outsized attention for our budgets that allows us to swing way above our, you know, our weight class, really, where we can generate similar amounts of attention as, let's say, Coke or Pepsi-type brands can, but we can do it with like one 50th of the budget. You know, like that's the game we're playing. Like if we start trying to play the same game as the big guys where it's like, oh, let's go sign a $2 million athlete endorsement deal or let's go wrap a NASCAR for a million dollars. Like, that stuff is not going to move the needle for you. And you're just going to burn through your money before you ever get to the finish line because now you're trying to play the same game as the big

guys without anywhere near the resources and you'll lose. I mean, you in a very short period of time, because your whole career, you were paycheck to paycheck. You know, you're making a decent living, but you are not a rich guy. But in a very short period of time, you made a lot of money, probably much more than you could have imagined. I mean, it must be kind of amazing to be in that situation, but unanticipated? Or what?

Like in 2019, if I would have told you, hey, you're going to be multimillionaire in like a year and a half. Would you have been like, yep, I know it? No, I wouldn't have. Because I think with all the things that I'd gone through in so long, it's like, you know, I think I had a cynical view of like, man, like every good thing I try, something fucking happens. So I think I, you know, it was, I try not to let myself get too excited about things too early. So I kind of just want it to like play out. So I take everything with a grain of salt. And I've, I've sort of always had to, you know, I've, it was, I've, have that approach. I still have that approach now. It's like, I don't want to ever, like, get too carried away or too comfortable. I think it's so important that you're always hungry and feeling

this could end at any moment. And how does that change the way you think if you know it could end at any moment? Like, how do you approach things differently? How do you take more precaution? How do you not take too big of risk? Because I think that is a fatal flaw as, like, the bigger companies get, you start trying to act more and more like a big company. Yeah. And, you know, it can go south pretty quick. When you think about the journey you took, right? And I use that word journey hesitatingly because it's so overused.

But I don't know. Do you ever think about why it happened? Like, do you think it was because you worked really hard and you're really smart and you thought things through? Or do you think a significant amount of this has to do with just, getting lucky. Yeah, I mean, there's always luck involved. I mean, I think back on so many moments where it's like, man, so good thing we did this

and not that, or this might not even be around right now. But I think, to your point, a 25 year in the making overnight success, I think all of my previous experiences all kind of helped ladder up to help me make the right decisions. And then again, just the hunger of all this failure, I think it just all laddered up. And then the fact that it could be a brand that was truly a reflection of myself in the brand. It's not like some MBA business guy who's like, what are the kids into? Here's what they're into. When it all starts with me as the CEO, it just kind of trickles through the rest of the company.

And decisions get to be a lot easier. It's a lot simpler to have a unified voice and know what to say yes to and what to say no to. I think it's all sort of, I think, come together to make it this successful. That's Mike Cessario, founder and CEO of Liquid Death. By the way, remember back when he was working in advertising how they mixed his idea about selling your soul to the devil to get a Diablo Golf Club? Well, Mike sort of brought that idea back, but to Liquid Death this time. You can now go onto the company's website and sign away your soul for exclusive access to merch and other deals. And on the sign-up sheet, it says, by selecting Sell My Soul, I agree to receive important info and offers from Liquid Death since they will own my soul for eternity.

Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. If you want to contact us, our email address is hibt at id.wondery.com. This episode was produced by Carrie Thompson with music, complete. composed by Rumtine Arableu. It was edited by Neva Grant with research help from Casey Herman. Our audio engineers were Robert Rodriguez and Josh Newell. Our production staff also includes Alex Chung, Chris Messini, Carla Estevez, J.C. Howard,

Sam Paulson, John Isabella, Catherine Seifer, and Malia Agadello. I'm Guy Raz, and you've been listening to How I Built This.