Morning Brew Daily - Liquid Death Worth $1.4B & Boeing's Problems Keep Adding Up

Episode Date: March 12, 2024

Episode 277: Neal and Toby break down the trajectory of Liquid Death and explain how the canned water company is now worth $1.4 billion. Plus, Boeing's woes continue with another incident in New Zealand and Biden reveals a budget plan to challenge Trump's. Toby shares his favorite trends and why are automakers sharing your data with insurance companies? And finally why the UK loves vinyl records. Use code MORNINGBREW50 to get 50% OFF your first Factor box at https://bit.ly/3UUZGG0 Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

Marketers, tell us if this sounds familiar. You invest in something that seems incredible like millions of views, but then don't see any revenue. Instead, invest in what looks good to your CFO. LinkedIn Ads generates the highest row ads of all major ad networks. Spend $250 on your first campaign on LinkedIn ads and get a $250 credit. Just go to LinkedIn.com slash MBD. That's LinkedIn.com slash MBD.

Terms and conditions apply. Good morning, Brew, Daily Show. I'm Neil Fryman. And I'm Toby Howell. Today, Hal automakers are sneakily sharing your driving data with insurance companies. Then, after a recent funding round, there's a new billion-dollar beverage brand on the block. It's Tuesday, March 12th. Let's ride.

If you have ever been afraid to ask for a raise at work, allow us to introduce you to NFL quarterback Kirk Cousins. The very much not elite QB has exactly one playoff win in his career, but just agreed to a four-year $180 million deal with the Atlanta Falcons yesterday. When you combine that with his $231 million in previous career earnings, he's on track to make over $400 million total, which would put him in the top three highest paid NFL players in history. Neil, what can we take away from this? Take away from the Kirk Cousin story is you do not have to be the best at your job. You just have to be better than the previous person. But even more importantly, always be available. While the better quarterbacks have been locked down into long-term contracts by their

teams, Kirk has always been the best quarterback available during free agency, and he's earned himself a fortune despite just not being that great. I think it also shows how if you're willing to hop around jobs, you can make more money each time you switch. That's something we saw a lot during the pandemic. Not that it's advisable to constantly be switching jobs, but it is a way to maximize your earnings potential. And soon, this guy, Kirk Cousins, will have made more in the NFL, than Tom Brady ever did. I feel like I just read a full LinkedIn think piece on what we could take away from Kirk Cousins' negotiation strategy.

To me, it was also kind of like the adage about outrunning a bear. You don't need to be faster than the bear. You just got to be faster than the person next to you. Now let's hear a word from our friends over at Factor. So you've heard us tell you about Factor's delicious chef-made meals, but we haven't really gotten into the customization aspect of their meal plans. Yeah, Factor has a range of dietitian-approved options. If you're looking to pack on muscle, go with their protein plus plan, where each meal has 30 plus grams of protein, or if you're like Toby who's training for a marathon, maybe their keto meals make sense to get those fat burning systems firing.

I'm personally a fan of their chef's choice plan, which fits any lifestyle. I'm so down to just put my dietary fate in factor's hands and let them show me the way. You're so trusting, Toby. Hey, I've never been let down so far. Whether you're looking to eat healthier or just put your dietary needs on autopilot like me, head to, factormeals.com slash morning brew 50, then use code morning brew 50 to get 50%

off. That's factormeals.com slash morning brew 50 with code morning brew 50 to snag that tasty 50% discount. It's time to refresh your yard during spring backyard days at the Home Depot.

Get low prices guaranteed on propane grills starting at $179 like the next grill three burner gas grill. Or get $50 off to select Weber Spirit Grill and pay. bring big flavor to your backyard, then set the scene with Hampton Bay string lights that bring it all together.

Shop spring backyard days for seven days at the Home Depot. Now through May 6th, Exclusion supplies to homedipo.com slash price match for details. There's a new unicorn from VC land, but it's got nothing to do with artificial intelligence and everything to do with your compulsive need to hold something in your hand at concerts. Liquid Death, the Buzzy and Bubly beverage business is now worth $1.4 billion after its latest round of fundraising, more than double its previous valuation. Neil, this brand has been inescapable recently. Its founder started it back in 2017 because he wanted to provide something that musicians or other fringe punk rock audiences like skateboarders could consume to stay hydrated. That wasn't some cheap beer or sugary energy drink.

the heavy metal branding and taglines like, Murder Your Thirst were partly a joke at first, but then this thing absolutely took off. One catalyst was a partnership with concert promoter Live Nation, which made the brand the official water of huge music festivals like Governor's Ball and Austin City Limits. And now it's raising additional funding to broaden its product offerings,

to loop in new flavors, and even foray into the electrolyte drinking powder game. Neil, this brand is cool. Toby, when your kids arrive at Stanford Business School for their MBA. Their first class will be about liquid death because this company is just a perfect case study of how you build a brand that resonates with consumers. When it launched in 2017, everyone thought it was a gimmick. This guy, Cesario, who started Liquid Death, spent $2,000 worth of Facebook ads. That's it. He had manufactured a single can. Everyone thought it was kind of a joke.

And then they started building buzz around that particular niche community, skateboarders, tattoo parlors, all of that. It caught on like wildfire. And now it did, in 2022, it did $130 billion in sales. And last year it was projected to do double that. I think the big insight that lots of people overlook with kind of the fun branding that it has is that people really do want to have something that they can hold onto at a place like a concert. But beer, energy drink cocktails, these things are expensive. They make you feel awful as well. I mean, you could hold water. But again, no one wants to be the person holding like an aquafina or just sani at like a heavy metal or just a cool music concert. So Liquid Death comes in, gives you a good tasting water with fun branding that fits kind of into the environment.

And it gives you something. You don't stand out in the crowd, but you are, have that thing to hold on to, have that thing to sip, but it doesn't make you feel bad. I think also Liquid Death's been very good at expanding into new business lines. This is something that has tripped up a lot of D to C emergent companies over the past few years where they do. One thing really well, and then when they try to get into a new product category, they fall in their face. I'm thinking not to shade Albirds, but Albers is a good example of they had this particular shoe. They tried to do a bunch of other stuff. It didn't do really well.

But liquid death has expanded into drinking powder called Death Dust. They've had, they have bubbly water two, Seltzer, and they also have this new iced tea, which is number one on Amazon right now in the entire iced tea category. So they've been very smart about growing their business beyond canned water. I think that iced tea, there's another story about it that is emblematic of the brand. They first got in trouble when they released their ICT because they named it Armless Palmer, which is obviously a play on Arnold Palmer. It got sued by the dead golfer's estate, so they changed the name to dead billionaire. And again, they are walking this very fine line.

It kind of goes in the whole brand ethos of their punk rock, their heavy metal. They pushed back against the establishment. And only someone like Liquid Death could pull off calling. their iced tea brand, Armless Palmer, and then changing it to dead billionaire. Overall, I think it just shows the power of brand and marketing. And Mike Cesario, who started Liquid Death, admits this. He says, 98% of purchases are emotional. Why would I buy this particular water over another particular water?

And he says, it's because we have a brand that resonates with consumers. So what is the exit strategy here? I mean, what do you think is going to happen next? Are they going to IPO? Are they going to sell? He says that they're positioned in the non-examination. alcoholic beer industry, which is a huge booming industry right now. So I could totally see someone like AB, InBev, or Molson Coors, a huge brewer conglomerate that wants to expand beer sales

are shrinking right now. So they want to expand it to non-alcoholic areas. I feel like liquid death would make a lot of sense there. Yeah, that does make a lot of sense. I also look at Comps like Celsius, whose market cap is $20 billion. Monster Energy is $62 billion. So I could see it debuting as kind of this Nice beverage brand that just goes nuts once it hits the point. public markets. Okay, moving on. A plane rolling off a runway into the grass, an engine catching fire, a tire falling off shortly after takeoff, two pilots falling asleep for a half an hour at the same time. These are just a sample of incidents that happened in aviation in the past week alone. And just yesterday, 50 people were treated for injuries after a Latum flight going from Sydney to

Auckland experienced a strong shake that felt to passengers like the plane took a brief nosedive before leveling off and landing safely. The airline industry and Boeing specifically has been under intense scrutiny since a door panel blew out on an Alaskan airline 737 Max 9 in January. And of the five mishaps that happened last week, all but one involved a Boeing plane. If all that wasn't spooky enough, the BBC reported last night that a former Boeing employee who was known for raising concerns about the company's quality controls was found dead of a self-inflicted wound over the weekend. Toby, what is going on?

the question everyone wants to know is, are these airline incidents happening more frequently? Are we just way more aware of them now? It seems like Kate Middleton and Boeing are locked in a war right now to see who can have the worst PR cycle. And honestly, I'm not sure who's winning. But I think you're totally right. It is a sense of increased scrutiny on the airline industry right now. A lot of those instances like the engine catching fire or the wheel falling off were captured

by someone with a smartphone. Because now when you're at the airport or you're on a plane or you're on a plane. or something like that. You're a lot more on high alert, whereas previously you would hear about a maintenance issue, and it doesn't even really cross your mind because the airline industry has been so safe. Now everyone is certainly focusing on these instances, and they just keep coming. That's what it seems like. They do. And so Boeing, obviously, is the target of a lot of this scrutiny, and the Justice Department just last week launched a criminal investigation into the company over that Alaska Airlines blowout. the National Transportation Safety Board head testified in front of Congress last week, really lambasting

the company for not being transparent with sharing documents, sharing video footage of how this door panel was assembled. So there's a lot of tension right now between regulators and Boeing over what happened. And Boeing has just been absolutely crushed in the stock market as well. Its stock is down over 25% just to start the year. It's the worst performer in the Dow. Yeah, and if we look at some of that regulatory scrutiny, the FAA just conducted the six-week audit of Boeing's production of the 737 max. How about this for some of the audit scores? They conducted 89 product audits. The planemaker passed 56 of them, but failed 33 of them.

They also looked at, they did a product audit of Spirit Aerosystems, which makes the body of 737 max planes. It passed six and failed sevens. If you dig into this FAA report, some of the ways that they feel. failed this product audit are ridiculous. In one, they found an air safety, they found a mechanic using a hotel key card to check a door seal. In another instance, they saw a spirit air assistance mechanic apply liquid dawn soap to a door seal as a sort of lubricant. So, clearly things are not up to snuff and the FAA audit is exposing Boeing for a lot of these. Yeah. Meanwhile, you said, though, the U.S. aviation industry is very serious.

safe. I mean, getting on a plane is very safe relative to a car. There's been no fatal crash in the U.S. since 2009, which is the longest stretch on record. So overall, you know, if you get on a plane, you're likely to land safely. You're overwhelmingly likely to land safely. But the increase in incidence is obviously spooking people. Yeah, Boeing's got to get its ducks in a row. Let's move on. President Biden dropped his $7.3 trillion dollar budget proposal for fiscal year 2025. And like Paul Atradis trudging through the desert of Iraqis. He's got a vision, folks. The proposal lays out a lot of Biden's familiar beats.

It aims to lower health care, child care, and housing costs by increasing taxes on the wealthy corporations and giving the IRS some of its bite back, all with the intent of shaving $3 trillion off the deficit in the next decade. Now, before Neil and I get into the details, it's important to remember that this is as much a campaign tool as it is an actual budget proposal. Remember, Biden might not even be around to a real. enact it, should he lose the election, if it passed a Congress, which is a gigantic if. So even though realistically, not much of this budget stands a chance of becoming law in a divided

Congress, it's still worth discussing because it gives a sense of how Biden aims to appeal to voters. With all that said, Neil, what jumped out to you from Biden's big budget? Yeah, this is like when a character in a movie gazes off to the side, the chimes come in and they daydream of their happy place where everything is as they want it. But what stood out to me, where the initiatives to lower cost for families. I mean, a bunch of my friends have young kids and literally the cost of raising them and how much money they have to spend is the number one topic of conversation. So I know this is a topic that people care about.

And Biden also doesn't want to be associated with inflation anymore. So lowering cost for families is a big part of that. A few of these initiatives are subsidized health care. Families making less than $200,000 a year would be guaranteed subsidized child care. Affordable housing is another big one. He's proposing building or preserving more than 2 million housing units and offering a series of tax credits for first-time homebuyers, which are the ones that really are stretched for money. And then he also wants to reinstate the expanded child tax credit that came into force in 2021, but then was peeled back in the past few years. He wants to reinstate that to help people raise children.

Now, the big question is, how are you going to pay for all that? So Biden did lay that out as well. it would increase a minimum tax on billion-dollar corporations to 21% up from 15%. It would also raise the tax on U.S. multinationals for an income to 21% up from the 10.5%. It would also impose a minimum tax on billionaires, including on that very hot topic issue of unrealized capital gains of 25%. He thinks that would bring in an estimated $500 billion a year in tax revenue over the next decade, or $500 billion total over the next decade. Also, the taxing capital gains at the same rate of those making more than a million dollars.

So again, you did the chimes looking off in the distance. Again, this is a perfect world for Biden. And if everyone was on board with everything he wanted, again, not necessarily going to happen, especially given the state of Congress. Yeah. And speaking of Congress, I mean, there is, it is, the House is controlled by the GOP right now. And House Speaker Mike Johnson, after this budget released, basically staked out the Republican position, which is that Biden, Biden's budget was a glaring reminder of this administration's insatiable appetite for reckless spending.

I think what Biden wants to do with this budget, though, is draw a distinction between him and Trump, especially when it comes to Social Security and Medicare. Trump went on CNBC yesterday morning and said that he floated the concept that maybe he could peel back spending on Medicare and Social Security, which is kind of the third rail for American voters. You cannot touch those programs, especially because Social Security. is expected to be insolvent by 2033. Biden hopped on that and said, look, I'm going to protect Social Security and Medicare. Trump wants to take it away.

Then Trump's campaign a few hours later said, no, no, no, no, no, you can have Social Security and Medicare. We're not going to touch it. Shows those two programs are so important to voters. Yeah, battle lines are being drawn. Up next, Neil is going to tell you about some of the sneaky ways your car might be spying on you. We're the Hartford, with decades of experience ensuring millions of unique small businesses. When it comes to your small business insurance,

thank you. One size, absolutely, does not fit all. Get a quote or find an agent today at thehartford.com slash small business. Who cares about your poops? Ollie does. That's why Ali's science-backed gut health lineup helps support your family's regularity. From daily probiotics to fibergummies your kiddos will love. Find it all on ali.com. That's OLL.com. These statements have not been invited.

by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease. In this era of high-tech internet-connected cars, automakers could be sharing your driving behavior with insurance companies without you knowing it, leading to a spike in what you pay for car insurance. This startling finding came from a New York Times report, which found that automakers like GM, Kia, and others are selling your driving history to data brokers such as LexisNexis. These data brokers use the data, for example, heartbreaking, sharp turns, speeding to help insurance companies create personalized risk profiles for drivers and then set prices. In some cases, drivers have consented to this data sharing.

Insurance companies have started to offer incentives for drivers to install dongles in their cars or download smartphone app that monitor their driving. But in many other cases, the data collection is far more nefarious than New York Times found. with automakers, partnerships with insurance companies buried deep in the fine print and convoluted privacy policies. The practice has caught the attention of powerful lawmakers who are investigating whether this data collection violates consumer protection laws. These data collections are way, way deeper and more robust than you could possibly imagine. So this guy that the New York Times talked to, he saw his insurance jump up by 21%. One of the insurance agents say, hey, you should request your LexisNexis report. He didn't even know it existed.

When he got the report, it was 258 pages of detailing the dates that he had driven, 640 trips that him and his wife had taken, start and end times, the distance they had driven, how fast they were taking corners, how hard they were breaking. Essentially everything except for where they went and where they returned to. But it is just truly, he's like, I felt violated. It felt so invasive. I had no idea this much data was being collected on me. But this is happening everywhere, and it's usually being used to ending. for insurance companies to justify raising their rates. Right.

And there is a concept called usage-based insurance, which you can opt into, and that's basically like your insurance is set based on your personal driving habits. And if you know that's happening, experts say that's actually a, it's not a bad possibility because you are going to be safer because you know this is happening. You don't want to pay more for insurance, so you're going to drive more safely. But it kind of backfires if you don't know that you are on this usage-based insurgency. insurance, your driving behavior is being sold to the insurance, but you don't know it. So it's not really changing or affecting your behavior to become a more safer driver in any way.

Yeah, I could definitely see the FTC getting involved here. I mean, there are laws that prohibit unfair and deceptive business practices that harm consumers. In collecting user info without their knowledge in order to jack up insurance rates, that feels very deceptive, feels like it will fall under the FTC's jurisdiction. Do you remember the report last year from Mozilla? found that cars were the worst of any electronic for product safety. Nissan admitted that they were collecting data on driver's sex lies, but then they refused to explain how or why they get that data at all. And then Tesla was the worst-rake brand in terms of privacy. And again,

remember that story of a guy who totaled his Tesla. It was shipped to Ukraine somehow, but remain connected to his Spotify account so he could see what people in Ukraine. we're listening to a Spotify account. So in this Internet of Things environment that we live in where everything is connected to the Internet, data privacy and consumer privacy are only going to become more hot topic and hot button issues. Especially in cars.

Especially in cars. Let's move on. I want you to imagine your best friend right now, probably a great person, a great pal. You might even live with them already, but would you ever want to own a house together? That is what we're going to dig into for today's edition of Toby's trends where I, a youthful Gen Zier, educate my worldwide co-host, Neil, on a recent trend I've

had my eye on. And today's trend is that more young people are buying houses with someone they aren't dating or married to. About 15% of Americans have co-purchased a home with someone other than a romantic partner, and another 48% say they would consider it, according to a recent survey from JW Surity Bonds. But it put another way, buddies, pals, and even siblings are teaming up more frequently to make their starter homes more like co-starter homes. Gen Z is leading the charge here with over 70% of respondents saying they'd be willing to form a platonic real estate syndicate and co-buy home with a friend. Of course, this trend reflects the absurdly high cost of buying a house in the U.S.

these days that is only getting higher. Co-ownership rates grew 21% on average among non-married partners in 2023 compared to the previous years. Neil, I am very interested to hear your thoughts on this one. In the housing market, like it is, which is the least affordable since 1984, you got to get creative about buying at home. If that's, you know, if you don't have a romantic partner, you're still single. Why not call up your friend and say, hey, let's go in on an investment property? I thought the generational breakdown was pretty interesting because Gen Z wants to co-buy a home primarily for personal residents.

They're okay with kind of living with their friends in a house that they own. Meanwhile, older generations are doing it more as an investment opportunity. they're not, you know, they probably have families of their own. The lawyers that are interviewed for all of these stories say, look out. This could go south in a big way. Make sure you have your ducks in order. Have a conversation with the person about all of your financial goals. Get something down on paper right away because this, you know, who knows what could happen?

Just like a romantic partnership could go, could break up so you could with your friend, especially when your friend now becomes your business partner. Yeah, absolutely. I think part of this too is a reflection that Americans are getting married later, having kids later. So young people still want to take that next step in life, even without an actual life partner to take it with. So the home is coming before the family aspect does in some cases. And it makes sense too because the alternative is waiting for the love of your life to come along and then letting your love life dictate your financial future. So why would you both are hard enough as they are?

So why not get your financial future settled with someone that you feel close with, but you aren't romantically tied to, and get the show on the road. And hopefully the romantic piece comes along later. All right. So where are we buying a house? Northwest Arkansas. That's what we always say. All right. Last story.

Sales of vinyl are so hot right now that the UK is adding them to a group of items that uses to measure inflation for the first time since 1992. For some context, the UK and other countries like the U.S. Measure inflation by tracking price increases in a basket of goods that reflect what people are buying. Each year, it rebalances this group of 744 items to reflect changes in consumer behavior. And yesterday, officials announced that among this year's tweaks, vinyl was back in, which is surprising because Spotify exists. Then again, you have to account for the T-Swift effect. Her album, 1989 Taylor's version, as well as the Rolling Stones' new Hackney Diamonds, flew off the record. store shelves last year, pushing UK sales of vinyl LPs to their highest level since 1990.

But this vinyl resurgence is not a one-time blip. Sales have increased for 16 straight years now, and now Brits can blame them for inflation. My favorite quote from this is the O&S deputy director said, often the basket reflects the adoption of new technology, but the return of vinyl records shows how cultural revivals can affect our spending. So usually it's this forward-looking metric, and you have to adjust based off of new technologies being invented. But yeah, vinyl totally deserves me back in this basket. Highest number since 1990, that was 6.1 million vinyl records were sold in Britain. That's a lot of vinyl records,

and it's definitely outselling CDs and any other form of hard physical music right now. Let's also talk about the other items that were added and removed. Overall, 16 were added, and 15 were removed. And it does offer a really interesting snapshot of where the British consumer, and I guess consumers in general, are at right now. What's been added to the basket, a few are rice cakes, spray oil, gluten-free bread, sunflower and pumpkin seeds, and air friars. Air friars sales have jumped 30% in Britain, and they have just become a mainstay of kitchens everywhere. Meanwhile, what is out? Bakeware, sofa beds, hand sanitizer gel, popcorn, and I don't know why this is. I guess people are buying less of it. Hot rotisserie

cooked whole chicken. I guess people aren't buying rotisserie chickens anymore. But What's out does, I think, reflect the lessening of sort of COVID in our lives. We use hand sanitizer gel, bakeware, things that jump during 2020 and 2021, just aren't a big part of people shopping baskets anymore. Yeah, I think just to put a bow on it, it does reflect, the basket reflects a wider adoption of healthier lifestyles. A lot of those foods, like gluten-free bread, pumpkin seeds are kind of in that health kick trend. And then, yeah, hand sanitizer, RIP, hand sanitizer. People aren't using it as much. and it does just show how society evolves over time.

So I love digging into the basket of goods and seeing, although RIP sofa beds, like what I guess the kids in their dorms are just having, also that they call them sofa beds over in England and not just futon. So I don't know, there's lots of differences between cultures. One final stat about the vinyl that I think is funny. 50% of vinyl record buyers in the U.S. did not own a record player. It's purely just for the vibes. It's purely for the decoration.

All right. That is a wrap on our show for this Tuesday, 63 and sunny today here in Manhattan. Make sure you get outside and soak in that vitamin D. As always, our inbox is open for your feedback. You know our email address by now, Morning Brew Daily at morningbrew.com. Let's roll the credits.

Emily Milliron is our executive producer. Raymond Liu is our producer. We have a new associate producer starting today. Olivia Graham, welcome to the crew. Euchenna Waogu is our technical director. Billy Minino is on audio, hair and makeup bought a house together. It's not going.

and so great. Devin Emory is our chief content officer and our show is a production of Morning Brew. Great show today, Neil. Let's run it back tomorrow. Yamava Resort and Casino at San Manuel is California's number one entertainment destination for today's superstars. Catch the Jonas Brothers return to the Yamava Theater stage on April 30th, the powerful vocals of Demi Lovato on May 17th, and the signature Southern Country Rock of Eric Church on July 19th. Tickets on sale now at Yamavaheater.com. only at Yamava Resort and Casino,

celebrating its 40th anniversary. U-N. Must be 21 to enter.