This Week in Startups - TikTok planning to build US fulfillment centers + Liquid Death CEO Mike Cessario | E1584

Episode Date: October 13, 2022

First up J+M discuss TikTok's apparent plan to build an e-commerce business via US fulfillment centers! (8:57) Then, Molly is joined by Liquid Death CEO Mike Cessario to discuss the genesis of a great brand and more. (17:26) (0:00) J+M tee up today's segments! (2:13) Starlink, 5G, and the rapid advancement of internet connectivity (8:57) TikTok appears to be hiring for product fulfillment centers in the US (16:11) OpenPhone - Get an extra 20% off any plan for your first 6 months at https://openphone.com/twist  (17:26) Molly welcomes Liquid Death Co-Founder and CEO Mike Cessario; they discuss Mike's background pre-Liquid Death and his advice for brand building (28:27) LinkedIn Jobs - Post your first job for free at https://LinkedIn.com/unicorn (29:53) Irreverent marketing approaches pre-Liquid Death, building the Liquid Death brand before launching the product (38:00) Paperclip - Go to getpaperclip.com/twist to get the app free for life (39:06) Describing the genesis of the Liquid Death brand, what CPGs have historically gotten wrong, building a brand based on comedy; understanding flavor demand Check out Liquid Death: https://www.liquiddeath.com FOLLOW Jason: https://linktr.ee/calacanis FOLLOW Molly: https://twitter.com/mollywood Subscribe to our YouTube to watch all full episodes: https://www.youtube.com/channel/UCkkhmBWfS7pILYIk0izkc3A?sub_confirmation=1

All right, everybody, it's Wednesday. We made it, Molly. We're literally at the top of the mountain, and I've got my skis on, goggles, and I am ready to hit the slopes. I'm only five weeks away from the opening of ski season. So let's go. Some people look forward to Christmas and Hanukkah. Pretty much. Daycow's just counting the days. Count in the days. You got your little like calendar with the chocolates in it. When the snowpack lands in Tahoe, that's when I celebrate baby Jesus coming. That's truly when Jesus arrives for me in the form of fresh pow-pow. I need the po-p-pow. Oh, my goodness. Well, we're kicking off the show with a little bit of talk about internet access in the mountains and how pretty soon we're going to have redundant internet. It might not be from 5G.

It might be from space. Yeah, Starlink and Amazon's new satellite system is coming. And then we talk about TikTok. Some interesting jobs were listed. That's how a lot of journalists find out these story angles. they look at the jobs, and it looks like they're going to have fulfillment centers. So we talk about what TikTok might be up to in terms of e-commerce. God, we will buy so much stuff from TikTok.

I'm almost terrified to contemplate it. Then we have another next unicorns interview with Liquid Death CEO, Mike Cesario, one of my new favorite interviews that I've ever done. It's going to be a great show. So stick with us. This Week in Startups is brought to you by Open Phone. As a startup founder, a lot of mistakes are easy to roll back. but using your personal cell phone number as your company number isn't one of them.

Open phone makes it easy to get business phone numbers for you and your team, right on top of your existing devices. Visit openphone.com slash twist to get 20% off your first six months. LinkedIn jobs. A business is only as strong as its people, and every hire matters. Post your first job for free at LinkedIn.com slash unicorn and paperclip. In a downturn, every dollar counts. See where your firm's cash is going and stay on top of your runway with paperclip.

Go to getpaperclip.com slash twist to get the app free for life. Such a fun interview today. Some good news. We're halfway through the week. Good. I'm spending the back half of the week. So when you see me in a different location tomorrow, going on a little Southern California leaf peeping girl strip.

Love it. I know. But don't worry. optimized for an Airbnb with Starlink. Oh, how nice. It can be a little jittery on the uplink, depending on what neighborhood you're in. I have a Starlink right there, there.

And that's going to go up in a week. And I got a router. I'm obsessed with these Unify, I think they're called routers, where you can put two internet connections and it fails over. Oh, amazing. I love that. That's such a good life. Yeah.

Or you can have specific ports, you know, in your house, go to specific places. So I could say, hey, put all the TVs where we're just downloading, put those on Starlink, but then things that are uploading like our desktops where we're doing Zoom, have those be on the, you know, cable. Yeah. But it doesn't do it dynamically, or I think you can do dynamic, where you can load balance. So if like, you know, a bunch of people there are, so I got to play with it. But I think that this is going to be the future.

I realized, you know, Amazon's coming out. I think that's going to become the standard. Amazon is having their, I don't know if you saw, their Starlink competitor is going up and there's a third one. So there'll be three of these.

I bet you somebody creates a satellite dish that allows you to connect to all three and then bundles it and you give, you know, this is like corporations

or whatever or corporations will just put three of them on the roof of their buildings or hotels. They'll put three

them on the roof of the buildings and then they'll have a fiber line or a cable line and you'll have four different interconnections coming into a hotel

into the router and then, you know, hey, if one connection starts getting jittery and you start to see the pings going up, you deprecate that when you use the other ones. And then the idea that you would lose internet is going to go away. I could see it being bundled. I could see you buy Starlink and infinity, and you get both to your house.

Now you never have to worry about, just like people are going to be off the grid and have solar battery packs and generators. This resiliency in your home is coming. It's so, that's so true and so overdue, and it is so interesting that 5G was supposed to be that, right? It was going to be this like home broadband redundancy. And it's taken so long that's being leapfrogged by stuff being shot into space.

Yes. That's pretty embarrassing on the part of the 5G rollout. I saw somebody. I think Verizon 5G is the gold standard on this. And it's so cheap. So I think what they're going for is like, hey, we'll give you like 5G at home for 25 bucks a month, 30 bucks a month. Exactly. And that would be great redundancy.

but it's just not widespread enough yet. I mean, the fact that we are, you know, filling up low Earth orbit faster than we're rolling out 5G, I think is an slightly underreported story for other folks to do. If you just search, I've been seeing this in my Twitter feeds. I don't know if you're on this website, thetwitre.com. People can post what's going on in their lives. And, you know, I've been seeing people with Verizon because they're so like,

whoa, check this out. I got 400 megabits down with this thing that's, you know, on my windowsill. And it's pretty dope for people who are city dwellers to have this. Right. I want that, but I just live on a, in the urban part of a major freaking U.S. metropolis, so I don't have this. Yeah, it's kind. All this is, what's great about this is, this is going to create downward pressure on prices.

So all this idea that you're paying $100 for your internet. internet is going to go, you know, to 50 to 25. And in places like Korea and Japan, $15 fiber, $30 fiber is kind of the standard because it's gotten to be so dogged. Yep. And I'm really rooting for Verizon and for Starlink to really give it to, you know, Xfinity. Xfinity and all the the ones in New York that's always down, always. And then there's like Spectrum in L.A. that's always down. Like your days are numbered out long last. I also feel like they don't. give great service, you know, and now all the service is getting better.

I noticed with my Xfinity now, when they do go down and you go to the website, Molly, they're on top of it, you know, and the downtime is like, okay, this is going to be 30 minutes, and it's, we know that you're, it's just accurate. Like, they seem to have invested in customer support

as opposed to being like, you have no choice. Why would we pick up the phone and tell you what's going on? Because they do know. I do think they sense that this competition is coming, because every couple of months, too, I'll get an email that's like, your speeds are faster now.

No reason. Oh, I love. that one. But your peers are faster. And I'm like, oh, super. Thank you. Yeah. All right.

Let's do a little news. Can you tell me what's going on in the news there, Molly? Because we do have today, as we mentioned in the intro, another next unicorns. Yes. And you want to stay tuned for this. Yes. Because it is the interview with the Liquid Death CEO. And I think like, it's just a great interview.

He's such an interesting person. And it also fundamentally is just so we talk all the time about backing builders, right? That's our slogan. We back builders. Yes. This guy, Mike Cesario, he's a brand builder. It's just a completely different type of builder that I think our founder audience is really going to appreciate. He's just a brand genius.

I just love that as you have to be really great as a brand builder to have that actually be a superpower. Like any developer, any U.X developer, a good salesperson, like a good developer, a good designer, a good sales executive. like, okay. Right. Good product manage. You're like going to make a good contribution. But for brand, you have to be elite for it actually to move the needle. And Liquid Death is clearly elite.

Yeah. That's kind of what I like the startup takeaway. That's kind of what I love about this conversation is that like it's a different kind of building. But not everybody can be a founder. Not everybody can be a developer. Hardly anybody can be a brand genius at this level. Hey, Nick, this is something I wanted to do for ski season. I got some criticism.

Somebody's like, oh, I love J-Cal. I love the swing starters, but they talk about the news too much. Not enough. I like the old days of this weekend startups when J-Cal would interview a founder. For ski season, I want to lock in, Nick,

to doing a series A solo doll or interview. Maybe do it like Monday afternoons or something. Then we can book that for Thursdays or something, and then Molly and I get the day off. We don't have to do news that day. We recapture a day. And that means I can ski in the morning. Molly's giving me hearts. Thank you.

I'm giving him hearts. I'm giving him hearts. What's in the news? Quickly. That just means I get to invest more. Okay, TikTok appears to be planning to build product fulfillment centers in the U.S., according to Axios, and may be trying to compete with Amazon. Axios reported this story, citing more than a dozen job openings related to this potential

project on LinkedIn over the past two weeks. This would mark TikTok's first move into e-commerce and could potentially be a whole new revenue stream and obviously a whole new business for TikTok, who apparently is on the march to complete domination of the U.S. economy. Yeah. Okay. So I think what they've realized, you know, this is a Chinese company. What?

Yeah, TikTok's the origination is China. What? And that's where they made. They make fast fashion and fast gadgets, Amazon basics, all this stuff, you know, originates in the factories in China. So these founders and they understand this dynamic, what they probably have also put together is that a lot of products are trending on TikTok and then resulting in sales. Whereas Amazon hasn't been able to figure out social media and Instagram was not able to figure out commerce, right? Remember Amazon was Instagram was going to own this business and they just gave up? They just recently, very recently, right?

Just totally backed away from Instagram shopping. They were like, we're not doing that anymore. And TikTok was like, thanks, guys. We'll just sco-ch-on-in- here. You could have made it work if you went full-stack. And so that's probably the issue here is going full-stack is hard. And then there was also the, they might have given up because of the Apple, you know, stopping the retargeting and making it harder to do ads or whatever.

I'm not sure exactly what the reason Facebook gave up and Instagram gave up commerce, but this seems like a pretty good idea. That's a great idea. I mean, it really is. Like local fulfillment, if you're not afraid of infrastructure, then this is brilliant. If you're meta and you're just focused on the metaverse and you don't think the real world matters and that people still want to buy real stuff. And to be clear, half of the reason that we still have supply chain issues is because of

too much demand. People are still shopping for so much stuff. that we have backups as a result. And TikTok is like, yeah, I think we've figured out the American psyche, which is that they don't want to just be in the metaverse. They actually want to buy real stuff and they want to get it quickly.

And right now, there's really kind of only the one place to do that. I mean, people don't, turns out everyone, just side note, you can get free one or two day shipping from Target. Just throwing that out there. Like, I know no one knows, but you can.

But everybody defaults to Amazon. And so it's very interesting and clever that TikTok would basically do. One of the Nodies just said it's effectively fulfilled by Amazon, but it would be like fulfilled by TikTok, just localized drop shipping. You know, all of these big companies start to dabble because it seems easy. Remember Google Go? Google had a shopping app that was going to be started on Google and all it's like, now we're going to try this, and this and this. Well, and then they give up, right? And there was that whole thread on Reddit where starting is easy. Some PM,

some product manager, some talented people do stuff at Google. It gets some traction. but not enough. And it just looks small compared to Google Chrome or Gmail or YouTube. You know, you just have this problem of things looking tiny in comparison to the largest decade-long or multi-decade products in the world. And then people give up. And it's just a hard thing to focus for a decade on something.

So people focus for three to five years. And then they pull the plug because it hasn't broken out. I have a prediction and or recommendation. TikTok basics. TikTok basics. Just start with cameras. and phone related stuff, TikTok cases, TikTok charging, battery packs,

just buy Anchor, knockoff anchor, whatever it is. Don't knock off anchor because I love that product, but you get the idea. Just do TikTok basics. Now, when you're swiping through, you know everything about me. You know I'm into cooking videos. That's my gym.

Chef's Reactions, my favorite channel. Okay, you show me a TikTok basics, you know, a nonstick pan, you know, something to cook eggs, a knife. Yeah. You know, but I wind up buying some of those cooking gadgets. I see them on TikTok and then I go to Amazon. If I was in TikTok, I might actually one click to buy if it was like an interesting unique

product. So I would, the same way TikTok curates interesting content on an algorithm of a basic basis, they should only do really cool viral products, things that you either like that's a staple or, you know, that they can put their TikTok thing on that's related to the TikTok brand or something really cool, right? Man, that would be amazing. And they have a million verticals to work within, right? Like if you're just so you're on cook talk, I'm on pet talk.

And everybody on pet talk has their dogs trained to use those little buttons that that make words. And the dogs will be like, mom, play. So somebody doing that. It was like cookie. B word. Cookie. Right. Totally.

It's eerie though, right? And then the dogs are just like now, now, now. But you could tell me that. I would watch, if I had just watched 13 of those, like boom. That's not real. They're putting the words in after. Well, no, they're, uh. Yes, they are.

No. Yes, they are. They have the dogs come up and just hit them randomly. Then they put the words in, Mom. They do not. Molly, also, you know the people throwing the ping pong balls and it hits like all frying pans and then like lands on the top of the classic Coke bottle and goes perfectly into it?

They have a person on a green screen with a stick with the ping pong ball. and they're literally going, bink, bink, bink, and then resting it on the top. You monster. It's done with the green screen. You're being played. You're telling me those none of the dog.

Come on, some of those dogs are talking. No. And then you know the thing with the Mentos and they put it in the Coke bottle? The Coke bottle underneath has a hose in it. And they put the Mentos in and then they just turn the hose on and it goes shooting.

That's why it doesn't work when you do it. It's all a sleight of hand. you're being duped. It's all post. I like my world. I like my sweet summer child existence where the dogs know how to talk. The dogs are liars. You want the dogs to talk, Molly.

You want the, you wanted the dogs to talk. That's right. And TikTok knows it. And that's why prior to today, I would have bought the crap out of the little dog talker. Anything else in the news that we need to know about? I mean, need is a strong word.

Should? For the sake of the audience, we should For the sake of the audience. For the sake of the audience, I think we could save a conversation about Meta's new VR product. That happened. We all know that was going to happen. We all know it's going to continue to get incrementally better.

It doesn't seem like we have to belabor it, especially since we have such a great interview for you today in the next Unicorn series. Yes. Liquid death. Enjoy everybody. On the program today is Derina Kulia. She is the founder of Open Phone. Welcome to the show.

Thank you so much, Jason. Great to be here. Now, what mistakes do most founders make with phone numbers in their startups? Really, delegation, right? Because what ends up happening is that as a founder, when you're starting, you do everything. You are the salesperson, the support person, the, you make the coffee, you do HR, marketing, sales, recruiting, everything. But then eventually you have people joining the team. And what ends up happening is if, if as a founder, your phone number, let's forget about the privacy, the spam, all that problem. Let's say, doesn't exist, but you're not going to want a year into your company, two years into your company, to have all the support calls or all the questions come to you, because now you've just hired your support team. Why did you hire them? So that's another reason why having that separate number makes so much sense, because you can always delegate those calls to your team as you grow. All right, everybody,

here's your CTA, the old call to action. Twist listeners, 20% off any plan for your first six months. Just sign up at openphone.com slash twist. And if you got an existing number, no problem. They'll put it right over. Openphone.com slash twist. O-P-E-H-O-N-P-H-O-N-E dot com slash twist today for 20% off. Mike Cesario is the CEO and co-founder of the beverage brand Liquid Death, which we talked about recently on the show,

raising $70 million at a $700 million valuation. Congratulations on that. First of all, and welcome to this weekend startups. Thank you. Tell me everything. How? So I'm looking for the, those who are not watching the video, you've got a black brick wall behind you and a Slayer t-shirt on,

like very on brand for Liquid Death, but I wonder like, just as a starting point, how much does this brand represent your own personality? It's pretty close to an exact replica, which, which, you know, even when I worked in marketing prior to Liquid Death, you know, I was a creative director for agencies and, the best advice I would give to companies is your brand cannot actually be that different than the top decision maker because they are ultimately going to kill things like you can't fake things anymore.

You can't say, oh, we're going to be a youth brand. But the guy who has to sign off on all the ideas is not a youth person, doesn't have that kind of personality. You're just going to put out bad versions of that. stuff. So it's always like we would try to get companies to figure out who are the actual people that run your company. What are you into? What makes you you and how do you make your company reflect that? Because then when your brand is a reflection of you, making decisions is so much easier. It's like, no, we're never doing that. Yes, that's good. Yes, this is funny. That's not funny.

Versus when you're trying to be something you're not, you're like, wait, will this be funny to these people? I don't know. I'm not those people. So it definitely makes it makes it easier for us to move as fast as we move. So at what point did you say, I would imagine you ran into a lot of like not very interesting executives

and couldn't build brands around them. And I wonder like at what point you were just like, you know what? I'm going to do my own thing. And that thing, by the way, is going to be making water awesome. Yeah. It's a two-prong question here. Yeah, no, I mean, you know, I grew up playing in bands, you know, I, that's how I got into the, you know, creative stuff. Like, as a little kid, I was always into drawing. Like, I was the kid that could draw in school. And then once we started playing in bands, I was the guy that was like designing the t-shirts and the show flyers and I was silk screening stuff. And it was almost like, in the punk world, DIY has been this thing forever. And it was, and I think that was where I got a lot of that. entrepreneurial, just like you kind of run your own little business as a band, and you're doing

everything. And I always really like that. And, you know, I didn't even know that graphic design was a real job when I was 15. Like, it was a thing I did. I had a friend whose dad was like an award-winning graphic designer in Philadelphia. And I saw all the stuff he did. I'm like, oh, weird, that's like an actual job. People pay you to do that. Because I was always like, oh, what do you want to do, Mike, when you grow up. I'm like, I don't know, like something with business, I think, because, you know, but general. But then I ended up going to school for graphic design and then switched into advertising in college because I was always into just making people laugh. Like, when I would draw stuff, it was like silly cartoons and like I had Mad Magazine as a super early kid and like,

you know, our family is into really funny movies. like, so it's like, I was always into being funny and it was like advertising seemed like the place where creativity and design could be funny, whereas design was very regimented. It was like pixel perfect and it's more like architecture almost. So I switched to advertising and, you know, I went to work for an agency called Crispin Porter and Bogusky in Colorado and they were one of the more disruptive agencies that were doing weird, funny, what the, kind of things.

And as like a, you know, my background personality, that appealed to me way more. I didn't even want to work anywhere else. I'm like, I want to work at that place. I don't want to make, I don't know, like T-Mobile commercials. Like, I want to make cool things, right?

So went there and made some really cool stuff, like really learned advertising and that disruptive approach. and we even use a lot of the things that we do in Liquid Death now. Like, when we worked at that agency, they were always about, will this idea get press? Like, how do you make things that create earned media where they're so interesting that people have to talk about it and spread it for free because it's that interesting. And then once I've left there and worked for these other agencies for years after that,

it really was clear that, oh, that place is a special place and there's no other place like this, even though these other places were offering me lots more money and like, oh, we want the, we want the Crispin guy to come over here. And, you know, even though we're not creative, we want to be way more creative. And the reality is they can't change. It's because, again, the top decision maker, it can't ever be, it can only be as good as the top decision. You can hire all the cool people down below. If the guy at the top doesn't get it, doesn't understand it, it's never going to make it

into the world. So I think after a few years of just doing really uncreative advertising or not at the level that I wanted to do, I just felt really creatively stagnant. And it literally came out of the idea of, and at that time, I was trying to get jobs back at these really creative places. I'm like, oh, took the money to come to the uncreative place. Now I want to get back into the creative places, and they wouldn't hire me because it's all based on your portfolio. And they don't want to see fake work in your book, they want to see real work. So when you have these clients that want to do just really crappy marketing and don't want to buy good ideas, I had nothing in my portfolio to show.

So I couldn't get jobs at these places. Then all of a sudden I felt trapped. I'm like, crap, I backed myself into a corner where I'm not making creative stuff and I can't even get into the places making creative stuff. So I was like, you know what? I think I just have to create my own brand to create marketing for. And that was when I, the very first. thing that I built was actually a spirits company where I wanted to make brandy cool.

And kind of a similar thing, like find a stale category and be the one cool brand in it. And I kind of got that. At that time, I was working on Virgin America, the airline at the agency. And I started reading Richard Branson books. And I loved Virgin's approach of like find a stale category like air travel where there's not one sexy, cool thing about it. make this cool, fun brand that almost changes the industry. And they would do that in all these different industries.

I still have that song in my head, like right now. I can hear that song right now. I'm trying so hard not to burst into song. Anyway, yes, please, please continue. So when was this? This was the brandy attempt. This was like 2012. Okay.

I was working for an agency in San Francisco called 11. and yeah, just was pretty bored there, not doing anything that interesting. And then I was like, okay, I'm going to, okay, what's like a, because I was really into spirits. Like I loved all the different whiskeys, tequilas, mezcals. Like, I was dating someone who was like a mixologist at the time. My other best friend, she worked for a wine distributor. I'm like, oh, I'm more in the world of spirits than the average person. So I feel like I could have an advantage going into that category.

And then it was like, okay, well, what category should we go into within spirits? It's like, okay, well, what is the, where is there no cool brands at all? And it was hard to find because there's like million vodkas, a million whiskeys, a million tequila. And then found brandy where it was literally there was dust on the bottles in the liquor store where I bought the first bottle of it. And then I tried it. And I was like, oh, this is actually really similar to bourbon. It's just like a little bit sweeter. And whiskey was the most popular spirit.

Why is this spirit not as popular? Clearly, it's a brand problem. And found a way to create like a fun, more whiskey-esque brandy brand and then found a distillery in Northern California that had been making some of the best brandy for like 20 years. Pitched it to them. They're like, oh, this is great. We've been waiting for someone to give a shit about brandy. And then they're like, we'll make it. We'll do a partnership.

then I found a couple alcohol industry folks that created Hendricks gin and Celer Jerry Rum. They thought it was really interesting. They joined up. I moved back to my hometown of Philadelphia where these other people were based. And we kind of built, we got a spirit company off the ground, which was a nightmare because it's all legal red tape. It's like every state is different.

And Pennsylvania is one of the worst states. It's still, it's government-owned liquor stores. Right. Yep. So it was just, we never got to the fun part. It was never marketing. It was not brand. It was just like getting through legal stuff and permits.

And then you don't even have the money to do marketing. So it's just about like finding bartenders that want to push it and doing tastings. And it just was, I ended up budding heads with the people I joined forces with. And we didn't see eye to eye on the brand. And I was just like, you know what? you guys take it from here. I'll take my little piece of vested equity or whatever, and I'm going to go back to the agency world,

and I'll figure out my next thing. Best of luck to you guys. Is that it? Is cool brandy dead? It literally just died last July, but it's been around for like eight years. You know, what is that?

Like almost 10 years. They were just, yeah, they couldn't figure out the brand. And that was why we butted heads. They kept trying to figure out what is it, what is it? And then finally, before the pandemic, they started getting some traction as they were really focusing on like high-end cocktail bars.

And they got some famous cocktail folks involved with the brand really starting to do well in like Texas and Northern California and some other places. But then once the pandemic hit and all the bars closed, I think that was just like the final blow. And then they just sort of had to have to close up show. Tequila did kind of eat the world. Yeah. Yeah. Yeah. Yeah. But we're off topic. We will end up back on water.

All right, everybody, LinkedIn jobs. We have to talk about the downturn right now. There is one silver lining for all of us running businesses, especially small businesses or nascent companies. You know, when you got that half dozen dozen people, the talent pool is getting stronger and stronger. And people are looking for interesting companies to go work for. And that's where you come in. And that's where LinkedIn's going to solve all your problems. When you run a startup, you run a small business, you know, every single new hire is high stakes. So you have to ask yourself, what if I hire the wrong person?

What is that going to do to my team? My team dynamics. Well, that's why you have to check out LinkedIn jobs. There's so much great talent out there right now. And LinkedIn jobs helps you find the right people for your team. And they help you do it faster. Now, you want to be 100% certain. You have the right candidate pool that you're looking at.

Well, that's LinkedIn. You're talking about over 800 million people are there. Use screening questions. Ask people thoughtful questions. Hey, if you were a podcasting company, What do you love about podcasting? What are your top three podcasters and why? Hey, if you're an app company, have you downloaded our app and what do you think of it?

Then maybe give me some feedback. So that will help you filter the people who really want to come work for you, who have that passion. LinkedIn jobs helps you find the qualified candidates you want to talk to faster. Post your job for free at LinkedIn.com slash unicorn. That's LinkedIn.com slash unicorn to post your job for free. Terms and conditions do apply. Okay. So how much did that inform then the thought, like, you know, it would be way easier here is water?

100%. Yeah. So when I left, once, I was only back in Philadelphia to do the brandy. And then once I was like, okay, now I'm not going to be a part of this anymore, a buddy of mine had an age, a small startup marketing agency in Chattanooga, Tennessee called Humana. And he was like, hey, do you want to come down and kind of. helped me run the agency as a creative director. And I was like, oh, that's interesting. I never thought about Tennessee, but it was interesting. And they were doing some cool stuff.

So I moved down to Tennessee. And then we started doing some of the first funny, irreverent marketing for like the organic industry. So we had this brand called Organic Valley. They're like a massive. Yeah. Yeah, yeah, yeah. Whole Foods, like massive, I think like multi-billion dollar brand.

they were launching the first organic protein shake. Now, all of their other marketing was very like sunsets over family farms. And it's like, our farmers, they care more than anybody else. But they knew that when a protein shake, they're talking to a very different audience. It's like gym rats, like dudes trying to get big. So they knew they had to take a different approach. So they worked with some other agency for most of their other stuff. They kind of came to us as like this one-off sort of thing because we had built a little bit of a reputation of making internet videos for brands that would get tons of views.

So we created this campaign called Save the Bros. Where it's like if bros keep drinking these chemically protein shakes, they're going to go extinct. Then who's going to bring the beer pong table? We made this really funny, heartfelt PSA. And it ended up going totally viral on the internet, all the e-enact. news outlets picked it up. It was mostly because nobody had ever seen organic marketed in this like really cheeky, irreverent way.

And that was like a big aha moment for me as, oh, right, how come healthy things that I care about? A lot of people I know, even in the world of punk rock and metal and alternative culture, lots of people care about this stuff. It's not some niche tree hugger thing that maybe it was 20 years ago. And then that's what I, you know, I knew that I was going to create some other company. Like once I had the taste of the brandy, I was like, yes, I'm an entrepreneur. Nothing was more rewarding than building something on my own and versus just like being a service for other companies, you know?

Right. So I knew it was going to create some other thing. And then, yes, I was like, okay, what is the easiest thing to create where I'm not worried about ingredient sourcing or create? or crazy permits or anything like that. But it needs to be healthy. It needs to be something that I legitimately am a consumer of. And I would drink a lot of water. And a lot of my friends drank water.

So water just kind of naturally became the thing. And then I just slowly started building this concept of canned water to make it feel more like a bad thing you're not supposed to have, like a beer or a soda or an energy drink. Like most people never associate. you're holding a freezing cold can of something totally healthy. Like, doesn't really happen, right? So then, yeah, over the next few years, I just kind of was working random agency jobs and things like that,

moved back to Southern California and was working for agencies. I was just kind of building liquid death as a side project and just kind of refining the name and the branding and the approach. And then finally, once kind of landed on, what it would be, I knew that nobody was going to write me a check for the idea of liquid death because it sounded absolutely crazy

and like it was never going to work. Like a little. Yeah, liquid death. It looks like beer, you're just going to confuse people. They're not going to buy it. You know, folks said retailers will never put that on the shelf, like they're too conservative.

So I, using my design background, we created a 3D render of a can that looked real. And we created a Facebook page, no Instagram, no Twitter, just a Facebook page. I came up with a funny idea for like a video commercial for it that we went and shot for $1,500. And then we put the video on Facebook. We made a couple funny social posts with the product that looked real. And, you know, we put maybe a few grand in paid media behind some of the posts over

the course of maybe four months. And the video had three million views. The page had 80,000 followers, which was more than Aquafina on Facebook at the time. And we had like hundreds of messages and comments from people being like, this is the coolest thing ever. Where do you get this? Or is this real? We had a guy that owned 3-7-Elevens being like, hey, I own 3-7-Elevens in Michigan. How do I get this in my stores? Wow. We had a huge distributor in New York be like, we're one of the biggest non-alc distributors, can we talk to a salesperson? So then I use all that traction to then go raise an actual small round of funding to produce real product. And then once we have real product, then this like funny internet thing that almost seemed like a fake joke where a lot of

people thought it was fake. Now when it was real, it was a whole different thing. And then that's when we kind of got connected with our first institutional investor science ink that was behind the Dollar Shave Club and all that. And then we got connected. We launched it on the internet late January, early February 2019. And we had to launch on the internet because there was no retailer that would touch this to start with. So it was Amazon. Well, yeah, he was into it. But it's like, you know, you're going to make, you know, a few hundred bucks selling three, seven, eleven stores.

So we launched on Amazon and our website. And then it was like the first month we were selling, we spent, $2,000 on marketing and we did $100,000 in sales. And then it just kept going. And then the media caught wind of it, kind of went viral, then it shot up even more. And then, you know, towards the end of the first year, we had a ton of buzz. We were selling a ton of product online. And then Whole Foods was kind of the first retail handraiser actually that reached out and

we're like, hey, this is super interesting to us because we really do care about sustainability and you guys have the death of plastic message, but you're doing it in a way that doesn't sound like anybody else. So they took us full national out of the gate, but we literally, our load-in date for Whole Foods was March 15th, 2020, the week the lockdown started. Right.

So our first year in retail was really, one where people weren't even allowed in stores or it was limited. So really like last year was, really like our first, like, real year in retail where people were in stores. We had a few more retailers. And then now ever since, you know, the retail explosion happened. And now it's just flying off shelves everywhere we launch it and outperforming everyone's sort of expectations. Because, you know, a lot of these buyers, like, they're not the most culturally marketing savvy people. Like, they're like, liquid death. I don't know. Are people going to protest in the parking lot?

Like, are they going to, you know, like, they're always just very risk-averse. And then almost without fail, everyone we've launched with, they're like, it's one of the most successful new beverage launches they've ever done. Now they're all believers and love it. And it, you know, and it just took time. Wow. Founders, when you know your numbers at your startup like the back of your hand, you're going to come across two investors as super credible.

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There's no downside. Go to getpaperclip.com slash twist today. It's such a remarkable story on multiple levels, right? One is the content story. we have talked a lot about how you kind of cannot be a modern brand without an actual content strategy and you basically built an MVP like a minimum viable product out of content which is already fantastic.

Then there's this kind of like, I don't know, brand category that I'm calling unironically ironic. Like describe the process of building this brand and being like, yeah, we're calling it liquid death. It's going to be in a can and there are going to be people who buy it because they think it's a hilarious thing to have it part. But then you were marketing to a specific audience, right? Like straight edge and these shows where you sometimes can't have a plastic bottle or you can't have a lid.

I mean, it seems like the band experience even feeds into, we'll get to sustainability in a minute. But like the benefits of having a can as like you said, the branding that looks like beer, it's a container that can exist in more places, maybe. Yeah, I mean, the way we market, we actually don't market to a specific audience. You know, it's not, we don't market to straight-edge people or punk rock people. It's like, we just think about it. Like, we think about our marketing team more like Saturday Night Live. We are in the business of creating entertainment and specifically comedy entertainment.

We want to make people laugh. The whole brand is built on that. Like, and when you approach it that way, it's like when you think about real entertainment and even like real entertainment on the internet, But, you know, it's like Saturday Live has hilarious skits with Will Farrow were bloods streaming down his head because he's doing something funny. It's like, are they targeting punk rock and metal people with that? You know, it's like, no.

So you weren't. That's a, that's a like misconception. Yeah. Yeah. I mean, I come from that world. So if I think something's funny, there's probably going to be a lot of other people like me that think it's funny. Right.

But I think there is, it's funny because there's this perception that you went out to very sincerely target this audience. And it's kind of awesome that that is not the case either. Like, there's so many ways to understand or misunderstand your brand and it doesn't really matter because either way you're buying it. Totally. Yeah. I mean, we just want to make people laugh.

That's all. And it's like, especially in beverage and CPG, people think way too rationally. But then you look at other categories and people don't like horror movies, for example. Like Jordan Peel does get out one of the biggest movies that there was that year, horror movie. how many different kinds of people go to be entertained by that horror movie? It's not just metalheads and punk rock people. It's moms, women, young, old. It's anybody that, like, and I think that's the thing that CPGs always got wrong.

Like, people think, okay, if you have a product that has a female consumer, you have to put a flower on it, you've got to use pink. But you look at data. and a couple of years ago, the number two most popular scripted show for women was The Walking Dead, a show about flesh eating zombies. Number one was This Is Us,

which is, you know, its own kind of thing. But like, you have data showing that tons of women are entertained by this, but how many female-centric brands are doing a zombie campaign? You know?

But I think that's, but I think you just have to look outside of kind of the I don't know, very myopic CPG industry and look at other industries and borrow from there like entertainment, you know, for one, especially when we're creating entertainment. So yeah, it's just about, we just want to make people laugh. And it's not an easy thing. It's like comedy is hard.

Like you look at very super veteran comedians like Jerry Seinfeld. When he does a 60 minute special, he spends a year or two going around a little tiny clubs testing jokes out because even he doesn't know what's going to be funny or not. It's like he thinks something, oh, this is going to kill and it doesn't work. But then some little aside that he does has the crowd roaring. He's like, oh, that's funny. I'm going to turn that into something. So we kind of feel the same way.

It's like we have to really hit a narrow target sometimes where if it's two degrees this way, it's lame and not funny. Two degrees this way, it's actually offensive and untasteful. and people don't want to laugh at it. It's like, it's really hard to hit that bull's eye, but I think we've got the right sensibility and taste to be able to do it constantly, because that's just what we do. What hasn't worked? Like, what have you tried that you found that, you know, that you just had to spike because it turned out kind of cringe?

We haven't luckily done anything cringe. I think where we found things is like, you know, we built this brand as an internet first brand. like social media, like that's where everyone spends their time. Like that's where you can command attention. It's literally created movie stars, pop stars. Like it's the place if you can really be powerful there, you can win. And I think we started with the very, you know, we made all these internet kind of videos. I think, you know, as you get bigger and you start, hey, we're going to work with this little ad agency to do something.

And it's like, oh, let's do this really produced thing that's got production value. We're like, okay, cool. We go and spend 60 grand to make something, but we never spent more than five before. And you put this high production value thing on Instagram. And it's like, that thing we spent all this money on performed one-tenth of the thing we shot with an iPhone last week, you know? And it's just like sometimes there's those moments we're like, oh, right, let's get back. Let's not get ahead of ourselves.

And let's remember why we're doing things and what works and the space that we're in and not just let what typical marketers gravitate towards, like, try to sway us into places. I think that's where, you know, maybe we've seen things. We're like, oh, maybe we shouldn't have done a different way. Yeah. Talk to me about the business. So it's water. There are flavors now, but it still is like pretty ingredient light, right, compared to soda or tea or something like that.

Like, what do the margins end up being on water in a can? Well, I mean, the reason that a lot of water companies, like especially big billion-dollar ones, are not going to go to cans because plastic is dirt cheap. It's like a plastic bottle. These guys are probably getting those for like two cents. Like aluminum can might be 15 cents, you know. And that's the reason that aluminum actually gets recycled because the material has real value. They can melt it down, resell it at a profit as a recycling facility. and it's actually economically viable, plastic is worth nothing.

So if these guys were to spend the time trying to grind up plastic, they have to sell ground up plastic to people out of profit. They can't do that. And they're not going to do that. So most of them, what they're doing is they get these plastic bottles in a recycling facility. They just send it to a landfill because they're like, we'd go out of business trying to recycle this. It's not actually viable.

But that means that it's going to be less margins for people who are, trying to put things in cans versus plastic bottles. And when you're a multi-billion-dollar brand, nobody wants to take that kind of hit. So yeah, it's, you know, the can's a big part of it. But yeah, you know, we're still water in a can. Our flavors actually do have three grams of sugar from agave in it. So it is kind of like it's sort of this weird kind of fuzzy area, like between flavored sparkling water and healthy soda. But at the end of the day, all Coca-Cola is his flavored sparkling water, it just has 50 milligrams of sugar. Yeah, I was going to say three doesn't sound.

It's not that bad. Three is not that big a deal. And that was how we wanted to go about it. We know that a big reason for liquid death success is like, you know, mom is buying liquid death for her nine-year-old because he's excited to drink water or excited to drink something healthier. And, you know, mom was never buying Fiji or Voss or other premium water. for her nine-year-old prior to liquid death.

So we knew when we made a flavored product, it had to be something that a nine-year-old would actually think is good. Like, if you give a nine-year-old LeCroy, they don't necessarily think it's the best-tasting thing. And in fact, most dudes actually don't really think LeCroy tastes that good. And you look at the data for like Gen Z, the number, like one of the most popular beverages is a Starbucks Frappuccino that's got like 60 grams of sugar.

So it's like, they want, they want sweetness. They want flavor. So you've got to give them some if you're actually going to have them want to be excited to consume it. So yeah, we kind of went into this zone where nobody had really done this before. It was either soda and diet soda that's got tons of like, you know, artificial sweetener trying to mimic the taste of soda or there's zero cal, zero flavor lacroix.

There was like really nothing in the middle. And, you know, we very consciously thought that there was a cool opportunity there. to do something where, yeah, there's way more flavor than LaCroix and you could totally drink three or four a day and you're totally fine. You're not unhealthy. And then, yeah, we are actually, you know, some of the news came out like next year we are going to be launching liquid death ice tea. And it'll be a healthier ice tea where it's like, you know, six grams of sugar for a 19 ounce can. Yeah. But you still get that tall boy can, which is key. Yeah, yeah, yeah. I grew up in that age of

Arizona tea. It has to be a giant can. I don't know why, but it does. Yeah, no, they, I mean, that's the thing. Like, the tea category is like a six billion dollar category and there's like three brands that are all 30 years old. And nobody, and there's not much interesting stuff going on in there. And it's, you know, it is. It's either like 20 plus grams of sugar, even for the quote unquote healthier stuff or it's like unsweetened. There's not a lot in the middle. But in Japan actually, like lightly sweetened iced tea is actually a much bigger thing where it's like four or five grams of sugar. Again, it's like this weird space where it's like low sugar.

There hasn't been a brand yet that's really pushing it because it really is a brand thing. It's like. Right. So yeah, I think it's interesting that we sort of are building this. It's more of like a healthy beverage platform. It's like we can go into all these different healthy beverage categories and be the cool a reverent brand that brings new people into these healthy products that maybe weren't making healthy decisions before.

Yeah. Which I think so. I also, in addition to this show, I run our climate investments here. And I am super interested in the sustainability part of your brand and how hard or not hard you hit that messaging. You know, because it's there. But it's also like, you don't necessarily want to end up in the, the eco bucket.

Well, it's also, the sustainability story is the fact that cans are infinitely recyclable. Yep. But we can't own aluminum cans. It'd be like, why doesn't Red Bull market energy drink in a can? It's infinitely recyclable because every other competitor, you're using your marketing dollars to tell everybody why your competitors are great too. Right. By this can and every other can. Yeah, yeah.

So in a world where there is. going to be multiple canned waters. Like, yes, we're the one who are building the category. I think we're right now of canned still water. We're like over 70% of the market share right now. But it's like there's going to be several others. So why is someone going to pick a liquid death over canned Fiji or canned Dessani or canned whatever other water?

It's the brand. Just like the reason people pick Budweiser over Miller or whatever else or Red Bull over monster. So we always wanted to make sure we led with the brand first and built the brand. And then the secondary thing, which was, oh, and it's all about that the plastic, aluminum's better. So people are buying the product for the brand, but they feel good about being a repeat purchaser because there's something more to it than just the brand.

Right. So it's just another avenue to like feel good about this, basically, a holistic brand experience. So then finally, how do you, when you think about growing into this 700 million valuation, I think we determine that you're like the most popular or fastest growing DDC brand in history or some bananas thing like that. Does that all happen with beverages or does the platform expand? I saw, by the way, you have a candle collab with Martha Stewart, which congratulations on that. Thank you.

That is awesome. We're probably going to just tack that video on to the end of this one because it's amazing. Oh, thank you. But like, how do you think about those brand extensions as a way to grow into, just keep growing? Yeah, I mean, I think one of the parts of that, you know, you mentioned D to C brand. Well, I mean, we're not really a D to C brand anymore. In fact, like, you can't even buy Liquid Death off our website anymore. Like, we just link you right to Amazon to buy it.

Because, and I think that's the problem with a lot. Most beverages have never been successful D to C because it's really expensive to ship a 14-power case of water. Like, if you try to just go to the FedEx and ship a case of liquid death, they charge you $20. And what's someone willing to pay for a case of water? And everyone wants free shipping. So it's kind of like the economics of trying to ship heavy water yourself never really work out. But it helps build the brand before you have retail, you know, exposure. And then now the fact that was like the Facebook or the Apple privacy stuff, you can't target people on social the way you used to or as cheaply or efficiently.

So a lot of D2C brands are struggling where they were really depending on those like customer acquisition costs being super efficient. Now they're not. Retail, it's like you're millions of people walking through stores or seeing your product. You know, you don't have to target them on Facebook to bring awareness. So, you know, I think that was something that's really helped us is, you know, knowing early on that water is something that ultimately needs to be a retail brand. You know, it's not something that people just want to order on the internet.

And I think that that definitely helped us. And yeah, I think we're building a brand. And brands can sell lots of things, you know. And, you know, we sell merchant apparel. You know, like, you know, we did, like last year, we did almost $3 million just in t-shirts and hooded sweatshirts from our site. And we take that part of the business really seriously, just like a band, like Metallica or Taylor Swift, like the amount of money they make on apparel, it's like a huge part of their business. They work with cool artists. They take it very seriously. We're no different.

Like, it's a very serious part of our brand. We don't want to just throw our logo on a shirt, like swag. It's like, no, we want to create a fashion brand, like something people want to wear. and that when we drop something, it sells out in two hours. And then that is evolved into things beyond apparel like candles with Martha Stewart. Or, you know, we did a crazy like metal vintage lunchbox that went crazy. We did a collab with Nixon watches. We did an all-gold watch that had two axe hands as the hands on the watch. It's awesome.

Sold out of that in like a week at like a $225 watch. So I think once you build a brand that stands for something way more than like the liquid that's in your product, you have a reason that people want to participate in the brand, to broadcast the brand to other people, to like covet it in terms of all different kinds of things. So, yeah, I think we'll continue to do all kinds of things that, you know, as a brand, it's like, you can imagine they're being like, we're not doing this, but it's like liquid death could literally have a hotel and people would probably go to it.

because it would be the most insane hotel experience, you know, or funny thing that you can imagine. I feel like we're going to get off this call and you're going to start whiteboarding. Like, actually come to think of it, this hotel thing is awesome. It was a thing that we actually, there was someone who had a connection to like a group that would buy like old shitty motels. And they were like, oh, I wonder if there's a way to make like a liquid death motel somewhere. And it's like, oh, that is interesting. And we just go full like Bates, like Bates motel on it. Yeah.

That's amazing. I mean, I swear I'm going to let go. Yeah. Roughly have 10 to a thousand questions. But last one, like in our industry specifically, right? Like, because we invest mostly in tech startup. So we talk a lot about building and product and engineer and like design and brand is sort of part of it. We want there to be world class design.

But I think there's a lot of value for entrepreneurs in what you're saying about how the brand is the product. And there's something so kind of nothing could illustrate that better than the fact that the core product is water, right? Or underneath the core product. And that the actual product is the brand. And talk about how, like, I think people probably think that's easier than it is. And your proof that it's not. It's a lightning and a bottle kind of thing. Yeah.

I usually use the analogy. Like when you get out of, like, if you ask someone, hey, could you come up? with a great commercial, most people would say, yeah, I think I could do that. Right. Because the bar is so low. But if you say, hey, can you write a hit TV show and sell it to Netflix for $80 million? They're like, no, what are you talking about? I can't create a hit TV show.

So I think that's really what brand, like a hit brand is no different than a hit television show or a hit movie. It's like all these, there's a lot of nuance and detail and experience and things that go into that. and it's rare that they happen. Like, how many shows does Netflix make before they get a hit? Like, how many movies does a studio have to release before they have a massive hit? It's rare. It's hard. You can't often predict it.

So it's a very hard thing to do to build a truly hit brand that can do all these things. Yep. You're the Game of Thrones. You're the Game of Thrones of beverages. Yeah. Yeah. Well, well done. Thank you. Thank you. Well, congrats again on all the success. I really appreciate the time.

I could probably talk to you all day, but eventually we're just going to have to go to other meetings. Mike Cesario, co-founder and CEO, co-founder and CEO, co-founder and CEO, I don't know what the thing is there. It's like if I started by myself, but then I brought on a co-founder, then I'm a co-founder. So I say either. But yeah. We're just going to go CEO of Liquid Death, the Game of Thrones of beverages. Love it. Well done, sir. All right. Thanks, Molly.

Awesome. All right, everybody. Thank you for listening. Hope you enjoyed today's show. I did. Great job on the Liquid Death CEO interview. And tomorrow, tomorrow is Thursday. And we'll be having on Thursday,

but normally would have been our Wednesday Crypto Roundtable with Vinny and Sunny. It's a great discussion about the Yuga Labs issue, board apes being investigated by the SEC. Lots to talk about. A really, really going to be a fun one. See you then.