June 5, 2020

MFM #81: The Genius Way Liquid Death Sells Canned Water

On today’s My First Million, Liquid Death’s founder Mike Cessario explains:

  • Just how he raised millions for a canned water company.
  • The opportunities he sees in other product segments.
  • And why his company might be starting a death-metal yoga studio

🎸💧 The punk-rocker who raised $12m

  • Who is Mike?: Mike Cessario founded Liquid Death, a canned-water startup. Liquid Death is the result of everything Mike’s done. Mike played in punk and heavy-metal bands which influenced Liquid Death’s branding. He then got into the ad business doing ads for Toyota, Nestle and Volkswagen. He worked under Gary Vaynerchuk in 2016.
  • Where did the idea come from?: At the 2008 Warped Tour, Mike noticed energy drink companies heavily sponsor rock bands and rock tours. However, when speaking to the bands, he noted they prefer to drink water while performing, but have to put the water in an energy drink can. He thought: why not make water that bands would actually like to be seen drinking?
  • Cash: Liquid Death has raised $12m total. It’s last round, led by Science Inc, raised $1.6m. Also invested: Dollar Shave Club’s founder and CEO, Michael Dubin; Twitter co-founder Biz Stone; and Away co-founder Jen Rubio.
  • Crazy enough to work: Mike lives by this mantra from the Master’s of Scale podcast host, Reid Hoffman: “Great ideas often seem silly at first. If the idea doesn’t seem silly, people are already doing it.”

🤘 Making boring sh*t cool

  • Marketing: Liquid Death’s strategy is simple, give a boring product awesome branding. All the funniest ad campaigns are for junk food, alcohol and energy drinks. Healthy foods are generally marketed to moms. Instead of listing features about their water, Liquid Death wants to create a “human brand” that people can relate to and laugh with. “I like to think of our brand as a professional wrestler…no one thinks The Undertaker is real…we’re just playing a character”.
  • Stopping the scroll: In the age of social media, the bar has been raised on what catches people’s attention. Competition is fierce and old school ads don’t work. “It’s not about making something cool, it’s about making something interesting”.
  • Charity Water is another example of what Mike is talking about. The founder of the company, Scott Harrison, was a party promoter who decided to go into charity. His thinking: “What if you can sell charity with 1/10th the budget of toothpaste?”. He brought cool branding and design to an industry that didn’t have any. Charity Water became one of the largest charities by making a boring industry interesting.

🚰💰 You can make how much selling water?!

  • Test: Because the idea was so crazy, Mike knew he had to prove the concept before raising. He shot a commercial for $1.5k and spent $3k on paid Facebook ads. Within 3 months, Liquid Death had more Facebook followers than Aquafina, and the ad had 3m views. This generated interest in the product from distributors and retailers. He used this interest to raise a small round of funding from friends and family to fund his initial order worth $250k
  • How big can this get?: Even though Liquid Death launched on March 7th, just as the pandemic hit, it is already the fastest-growing water brand in Whole Foods. Bottled water is a $20B business, with Aquafina (Pepsi) and Desani (Coca-Cola) both doing over $1B, each. Water isn’t a cash cow though, as retailers often take large margins. Industry margins average around ~40%.

🧘 🎸 How to day trade attention

  • How to find great businesses idea?: “Look for white space” Mike says. Find a category that’s been neglected from a marketing standpoint (ex: cottage cheese) and make it really fun.
  • Branding is more important than people think. Most companies are started by business people, not creatives, who think very rationally. But that only gets you so far. Business people eventually have to hire creatives to grow the brand.
  • Virgin Group: Mike loves Virgin. He has studied the company intensively. Virgin took a boring business (airlines) and made it fun. The brand now has a cool enough cache that whenever they enter an industry, they are able to bring a cool factor with them.
  • Hacking attention: Liquid Death sold 700 vinyl records by turning social media hate comments into songs. This cost $12k to do, but generated tons of free press and eyeballs. The company’s next marketing move might be heavy metal yoga studios. These non-traditional marketing plays align with the company’s irreverent branding.
  • Profitable marketing: A 30 second ad at the Oscars costs 500k, but Liquid Death was able to generate as much buzz for a fraction of the cost with their non-traditional marketing. They’re even profiting off their own marketing.
  • Gary Vaynerchuck: Mike is inspired by what his former boss says, “Marketing is day trading attention.”
  • Elon Musk: Mike notes that this is exactly what Elon does. His Boring Company cap and flamethrower campaign brought attention to his companies and generated profits.

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