Mike Cessario

Mike Cessario is the founder and CEO of Liquid Death, one of the fastest-growing non-alcoholic brands and healthy beverage platform built on comedy. An advertising veteran-turned-entrepreneur, he has grown Liquid Death into the #2 most-followed beverage brand on social media through viral, entertainment-first campaigns. Scaling across categories including mountain water, soda-flavored sparkling water, iced tea, and energy, the rare brand has been most recently valued at $1.4 billion under Cessario’s leadership. He has been named to TIME100 Next, and Liquid Death has earned accolades, including Fast Company’s Most Innovative Companies (#1 in advertising), Bain Insurgent Brands, and Ad Age’s America’s Hottest Brands. ------ Thank you to the sponsors that fuel our podcast and our team: LMNT Electrolytes https://DrinkLMNT.com/tetra Use code 'TETRA' ------ Athletic Nicotine https://www. AthleticNicotine.com/tetra Use code 'TETRA' ------ Squarespace https://Squarespace.com/tetra Use code 'TETRA' ------ Sign up to receive Tetragrammaton Transmissions https://www.tetragrammaton.com/join-newsletter

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:23Speaker 00

  Advertising is something that most people universally hate. And I think it's the one connective tissue with Liquid Death specifically that I think resonates with people is, it's not about, "Do you think skulls are cool?" It's we're sarcastically using death and skulls to bring a humorous approach to something that's really innocent and healthy. The reason Liquid Death is working at Target with like Target moms who are not metalheads is, I think that's funny that they're using a skull to brand something healthy and I can participate in something funny. And hey, the way that they market, like, I mean, we really think about advertising like entertainment.

• 1:09Speaker 00

  And if you can entertain people, which is hard, anybody trying to make it an entertainment, like writing a hit TV show, a hit album, a hit anything is really difficult. Advertising is easy. Anybody can make a good commercial because the bar is so low. It's all just kind of garbage. But if you can actually entertain people, they will follow your brand, like they will seek it out. And there's a lot of data showing it. Like if you can make someone laugh in marketing, it's like 91% of people say that they have a better feeling towards the brand. Because I think you've given them something of value. Like, marketing has no value.

• 1:51Speaker 00

  You're paying to force someone to watch something. So it has no barrier on whether they like it or not. They're so used to getting something that has no value when finally something that is advertising gives them something of true entertainment value, they remember it, they kind of appreciate the brand. Like, "Oh, you didn't just waste the 30 seconds of my life just now. Thank you."

• 2:14Rick Rubin?

  Like everyone else.

• 2:14Speaker 00

  Like everyone else. Right.

• 2:16Rick Rubin?

  How do you see advertising and marketing as same or different?

• 2:22Speaker 00

  They're kind of the same. It's basically communication that is bringing awareness to a product. I think traditional advertising, people probably think more of like TV commercials and big stuff like that, whereas marketing is maybe a little bit more general. Like you can look at branding as a part of marketing. You can look at all these different, different aspects of it. But yeah, at the end of the day, it's how do you get more people to know about your product? Because when people are buying things, especially in a store, everyone's busy. They don't have time to sit there and look at a whole section and think, what brands are available to me today? Should I buy this one? No, it's like they're going, they're making quick decisions.

• 3:05Speaker 00

  So when someone's looking at a shelf and you've got two to three seconds to get somebody, you kind of have to occupy some little place inside their mind where they've seen something in the past repeatedly, or you made them laugh or something memorable that when someone gets to the flavored sparkling set, it's like, oh, Liquid Death, like, I've heard of that, like, maybe I'll try that, right? And there's a lot that goes into like getting that level of what we like to call mental availability.

• 3:38Rick Rubin?

  And mental availability means just by seeing the product, the person has a connection.

• 3:46Speaker 00

  I think of mental availability as in you are somewhere near the real consideration set when they want to buy this particular thing. Not everybody is in the mood to buy flavored sparkling water every time they go to the grocery store, for example. But for that one time, when shopper A is like, hey, I want some flavored sparkling water today, that Liquid Death is at least maybe in one of the five brands that they know of, because you're going to be that much closer to actually getting them to a customer, where it's a lot harder, where if they've never, ever heard of you before at all, getting them to then buy you over something else is really hard.

• 4:24Rick Rubin?

  So it's like understanding of the brand or an awareness.

• 4:26Speaker 00

  Awareness of it, yeah, totally.

• 4:28Rick Rubin?

  Tell me about working at an advertising agency. What's that like?

• 4:33Speaker 00

  It was a fun job. It's funny, like when you start out playing in bands and you have tattoos and stuff, they're kind of like, your natural career path is either musician or like creative, you know, marketing, design, whatever that might be. So. For me, it was, hey, this is a place where, you know, you can wear a T-shirt and jeans to work and they don't really care what you look like. And you can make decent money actually doing it. You're not just like an artist, you know, where you're really trying to struggle and find what it is. But it's also, you're making corporate art. And it gets a lot of creative people that go into this, but it ends up just kind of killing your soul because you're just making corporate art.

• 5:17Speaker 00

  That was my reason for wanting to leave advertising was just like, I had too much of a creative spark to want to make really interesting things. And it just wasn't happening with clients who just don't want to buy interesting things. They're just like, no, no, just, we're a frozen pizza company. Just get the shot of the cheese pool. That's all we need, you know, we don't need anything creative. And I think I found myself, I'd been working for agencies for maybe four or five years and I'm just like, yeah, I'm making good money, but I kind of hate everything that I'm making every day. And the way I looked at it was in advertising, the creativity is determined by the client.

• 6:00Speaker 00

  If they don't want something really cool, you're not going to make something really cool. So I'm like, rather than waiting around for the perfect client and the perfect person, why don't I just make my own thing? And I can control all the marketing for it and no one can tell me what to do. And you can actually make a living doing that if you find like the right thing. Agencies were fun for a bit. They were ultimately a grind, just given the nature of it. The other thing that's interesting about agencies on the creative side, 95% of what you work on is never made. Like you're thinking of all these cool ideas and you're putting them in presentations and you're showing them to clients and like 98% of what you show never gets bought

• 6:44Speaker 00

  or produced or anything, they're all just like theory. And then once a year, like a client's like, okay, we want to make that one thing. And you get to make that one thing. So that was another thing. It was like, you spend so much time working on stuff that never actually sees the light of day, which was always tough.

• 7:00Rick Rubin?

  Can you remember any campaigns you came up with that you were excited about that never saw the light of day?

• 7:05Speaker 00

  Yeah, and there was one that, it was one of the first campaigns I did for Liquid Death years later.

• 7:10Rick Rubin?

  Oh, great.

• 7:10Speaker 00

  Which was, there was a golf brand called Callaway.

• 7:15Speaker 00

  And they had this golf club called the Diablo and it had like devil horns on it. It was all black and sinister looking and their competitor, tailor made, released the first white golf club and it was outselling it. You know, they were like trying to figure out, hey, what can we do to like really make a splash or whatever? And I had this idea, I'm like, let's run a magazine ad of this scary devil driver and say, if you sell your soul to Callaway, we'll give you a free golf club.

• 7:51Speaker 00

  And it's only like the first, you know, hundred people that do it or whatever. And it was going to be like a real contract.

• 7:56Rick Rubin?

  Yeah.

• 7:56Speaker 00

  In the magazine, you would rip this thing out, sign it, mail it in and you get your, you know, these things were like $500 golf clubs. And my boss was like, I'm not even presenting this to the client.

• 8:08Rick Rubin?

  Yeah.

• 8:08Speaker 00

  This is too out there. Like they'll never go for it. I'm like, I think that's a great idea. So then in the early days of Liquid Death, we created this imaginary club called the Liquid Death Country Club. And the only way you could get in was to legally sell your soul to Liquid Death on our website via this legally binding contract. And I actually had a real lawyer. I'm like, how would you draft it? Let's just pretend here, like you could legally sell your soul. How would you draft that contract really legitimately? And yeah, we ended up cut to six months later, we've had like a hundred thousand people then sold us their soul, you know, to join this club. So.

• 8:48Rick Rubin?

  Can you think of any others?

• 8:51Speaker 00

  There was one campaign that it was like my first real job working in advertising and I got to work on Volkswagen. They released this new car called the CC and they had Dr. Phil as like a celebrity that they were maybe going to work with to make like a TV commercial with that was kind of funny. So they were like, hey, what are funny ideas to do with Dr. Phil? And I came up with this idea of.

• 9:18Speaker 00

  Well, this car is so cool looking. And it's going to get so much attention when you drive it around. You might not emotionally be able to cope with it. So let's have Dr. Phil help you deal with all the attention you're going to be getting from driving this new Volkswagen. And the client loved it and then we started like, I'm like, oh my God, like we're going to make this. And this is his campaign I came up with and we're like in like the early stages of like production planning and all of that. And then all of a sudden this news thing came out that something about like Dr. Phil was caught cheating on his wife. So they like killed the whole campaign and like all went away. And it was like an early lesson for me of like, how many moving parts there are in this whole thing to get something actually made.

• 10:01Speaker 00

  And so much is out of your control, like you could be a really, you know, brilliant, creative person, but there's so much other stuff that just can get in the way of something kind of becoming reality.

• 10:10Rick Rubin?

  Did you have the idea for Liquid Death before leaving advertising or no?

• 10:16Speaker 00

  I started working on it as like a side project in advertising. I was working for a small agency in Chattanooga, Tennessee. And we started doing some of the first funny marketing for the organic industry. Cause organic had always been like picturesque family farms and like family farmers and that kind of thing. And um,

• 10:41Speaker 00

  there was this company, Organic Valley, a big organic company, and they made the first organic protein shake. And they were like, we know we're talking to kind of muscle bound gym guys. And we know that's a different audience than our normal like organic butter and milk and that kind of thing. So we came up with this funny campaign called Save the Bros. So like all these jacked muscle guys, if they keep drinking all this chemical protein stuff, they might not be around very long. And then who's going to bring the beer pong table? And we were a nine person agency. I think we were able to shoot this video for like 60 or 70 grand. We shot half of it in my apartment in Chattanooga.

• 11:24Speaker 00

  Right when we had the final edit and we showed it to the client, you know, they made the mistake of showing it to their family farmers to see what they thought. And they came back and they're like, oh guys, I don't know if we can run this. And we're like, they're like, they're the farmers. They don't get it. They're nervous about it. Like, look, you guys spent almost nothing on this. It's going to go on YouTube. It's not going on TV. If it doesn't do anything, you can just take it down. And we finally convinced him to run it and we ran it and it was like millions of views. National press pickup on every media outlet was talking about it. And for me, that was kind of my light bulb moment of how come things that are healthy and good for you, don't use the same funny irreverent marketing as all the junk food?

• 12:08Speaker 00

  Cause you think about what are the funniest, coolest ad campaigns? It's like Snickers, Chinos, Bud Light, like it's candy, it's, it's fast food, it's alcohol. Everything healthy is always just very quiet where it's like, how can you make health fun? I felt like a lot of healthy brands were preaching to the choir. They're marketing to people who already are healthy. How can we use brand to get people who don't typically buy healthy things to maybe start a little bit? Because the brand identifies with them in some way or like, oh, that's cool. Maybe I'll try that. So that's kind of how the seed of Liquid Death started was I started thinking about,

• 12:52Speaker 00

  okay, if I'm going to create my own product, let's do something healthy. And what's the healthiest thing you could possibly drink? Which started off with is just water. We launched with water, then eventually we did flavored sparkling, then we did iced tea. And everything we did just kind of became more successful than the next. And I think that's where we are now of like, we're a healthy beverage company that just markets like a junk food company and that's, that's kind of what it is.

• 13:19Rick Rubin?

  How long was it between water and the next product?

• 13:23Speaker 00

  It was about three years. We started selling the first still water in cans, January 2019. And then we launched the first flavored sparkling in January of 2022.

• 13:37Rick Rubin?

  Tell me about figuring out manufacturing. You've never done this before, right?

• 13:41Speaker 00

  Never done it. And surprisingly for still water, manufacturing was way harder than I imagined. It turned out there is not a single manufacturer in North America at that time who could put. Non-carbonated mountain spring water in cans didn't exist.

• 14:00Rick Rubin?

  Why is that?

• 14:01Speaker 00

  Because with bottled water, you have to basically bottle or can it at the source. Because if you try to tanker truck water from a source, a far distance to a bottler, the cost becomes so high, like it doesn't make any sense. So, most of the water sources in North America that had manufacturing attached to them was all plastic bottles. And that was kind of our big thing with cans was like, single-use plastic was this terrible thing that was getting more and more sort of steam in the media and, you know, aluminum cans are infinitely recyclable. It's one of the few things that actually gets recycled. So, we were pretty hard, fast on cans and not plastic. But yeah, there just wasn't anyone who could do it.

• 14:43Speaker 00

  So, I started literally Googling outside the US. And sure enough, I found a manufacturer in Austria that had their own mineral water springs and massive canning capabilities. And we started producing it in Austria and shipping it here.

• 15:01Rick Rubin?

  And is that still how you make it?

• 15:02Speaker 00

  No, we moved everything to the US. We started about two years ago and like fully completed earlier last year where fully kind of domestically produced.

• 15:14Rick Rubin?

  And now, when you do it domestically, did you build the factory yourself?

• 15:17Speaker 00

  We found a partner in the mountains of Virginia, in the western portion of the state, that was great spring and then it had a facility and they were willing to invest in the canning infrastructure because we had enough scale at that point. It was worth it to them. And then, now that we've moved into soda-flavored sparkling water and iced tea, you don't need a spring mountain source for the water you use for flavored products. And those have become a much bigger part of our overall business than just the plain water. So, we have tons of co-packer options that we can use to produce those things, whereas like the actual mountain spring water, that's the trickier one to do.

• 15:53Rick Rubin?

  In terms of mountain spring water, do you test it, like taste test?

• 15:57Speaker 00

  I think that's the thing that most people don't realize with products, like. Almost every product category, whether it's water, mustard, whatever, the differences between products are almost imperceptible. It's all brand and you can ask someone, I'm a diehard Jack Daniels fan. That guy is not picking out Jack Daniels in a blind taste test.

• 16:22Rick Rubin?

  Yeah.

• 16:23Speaker 00

  If his life depended on it, right? It is all brand. So for us, it wasn't about like, how do we find the perfect tasting water? Cause taste is so subjective. You have one person says, this is amazing. Another person says, I hate it. As long as it's good, like, hey, yeah, this tastes good. It tastes like water and that the experience of the product is good. So for us, when someone had a freezing cold can of water, they were like, I like this. Like it feels colder. Is it actually colder? Physics wise, probably not, but the can feels colder in your hand. And it's just like a, it was a nice experience for folks. It was different than a plastic bottle. So I think that helped us as well.

• 16:59Rick Rubin?

  Did you grow up drinking bottled water?

• 17:01Speaker 00

  I didn't, no.

• 17:02Rick Rubin?

  Tap water.

• 17:04Speaker 00

  Tap water, yeah. I mean, I started drinking bottled water later though in life. And I never was, even though I, you know, growing up in the punk and hardcore scene, where it was kind of owned by energy drinks like Monster, like the Warp Tour, all of that. But even then it was like my friends that were in bands, like they didn't drink that stuff. Like half of them were vegan, like they cared about health. Some of them didn't even drink alcohol. So there was always this like healthy movement, I think, within the counterculture that was always there. And I, I didn't drink soda for years and I hardly ever drank energy drinks or any of that. So I always cared about health. I drank a lot of water instead of, you know, other things.

• 17:47Speaker 00

  So why is it that, yeah, it's only the unhealthy stuff is trying to like invest in this culture? Again, what helped spark the idea?

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• 19:34Rick Rubin?

  Where did the name come from? And did you have alternative names?

• 19:38Speaker 00

  You know, learning from my marketing days, you know that when you start a company, you have no money for marketing. I think so many brands are created where the brand name and the product is just, you know, it's okay, nothing crazy. You get that going for a little bit, then you have enough money, then you pay an advertising agency to build this campaign around it to make your not very interesting thing, all of a sudden, very interesting or relevant. Hey, let's attach this celebrity to it. Let's do this crazy campaign. Where I knew that that costs a lot of money and we weren't going to have time to do that. So we needed to bake the marketing into the product itself. Like, I need this can.

• 20:21Speaker 00

  When someone picks it off the shelf, it's so interesting that they're going to take their phone out, take a photo, share it for free to their 200 followers on Instagram or whatever and say, oh, my God, have you seen this? And when you start using that as the bar for what the name needs to be or what the packaging needs to look like, you realize how hard it is to get someone to actually do something. Like, nobody is taking photos of beverages they drink and sharing them with their friends. Like, it's hard. It's going to be really interesting. So when we were going with that, what am I betting on? If this was on the shelf, someone has to pick it up.

• 20:57Rick Rubin?

  Did you already know it was going to be water at that point?

• 20:59Speaker 00

  Yeah, I did. Yeah, yeah.

• 21:01Rick Rubin?

  Did you know it was going to be in a can as opposed to plastic?

• 21:03Speaker 00

  Yeah, yeah. That was the two things from the beginning. It was going to be in a can, a tall boy can specifically.

• 21:09Rick Rubin?

  Yeah, which is the same as like, energy drinks.

• 21:11Speaker 00

  Yeah, or beer.

• 21:12Rick Rubin?

  Or beer.

• 21:13Speaker 00

  And that was kind of why we designed Liquid Death to look more like a beer.

• 21:17Rick Rubin?

  Yeah.

• 21:17Speaker 00

  Because it's like, we learned in marketing, if you want 16-year-olds to think something's cool, you actually market it to people in their twenties. Because people kind of like, look up to like, aspire, right? So we were like, energy drinks kind of market to almost like 16-year-olds, but 17-year-olds don't really think Monster's cool, but 12-year-olds do. So we were like, how do we make something that seems like it's even older age demographic than energy? Oh, let's make it look like beer. Let's make water look like something that you're not even legally allowed to have. That's the thing I didn't expect with the brand was like, that so many moms and parents.

• 21:58Speaker 00

  Would love the fact that they're like, "Thank you, Liquid Death. Finally, my nine-year-old's excited to drink water for the first time because he feels like he has something he's not supposed to have."

• 22:07Rick Rubin?

  Feels dangerous.

• 22:08Speaker 00

  Feels dangerous. Yeah, yeah. And that was all kind of by design. You know, how do we make something that's so good for you and safe and innocent feel dangerous?

• 22:18Rick Rubin?

  So you know it's water, you know it's gonna be in a tall boy, and then you start coming up with names. Do you remember any of the alt names?

• 22:25Speaker 00

  There were some bad ones.

• 22:28Speaker 00

  Yeah, I think one was Hells Well. There was another one we called Southern Thunder. Because the original sort of inspiration was craft beer specifically. Because I thought craft beer had some of the most interesting creative branding. Like, I mean, there was like Skull Splitter IPA and like, you know, all these cool things happening in craft beer. So that was kind of the original inspiration. So I was kind of making it feel like a craft beer. But then ultimately, when it came more about, "Hey, this is about being funny. We're not trying to really be badass." Like, you start thinking, "What makes it funnier?" And you just keep, "Well, it's actually funnier if we make it seem like this giant corporate beer brand, but it says Liquid Death on it."

• 23:14Speaker 00

  Like, you've seen punk rock drippy death. You've never seen like giant corporate beer death. Like, it creates this like, we often joke about it. It's like, we almost pretend like Liquid Death is a character.

• 23:29Rick Rubin?

  Yeah.

• 23:29Speaker 00

  And it's like, in this dystopian future where death metal is the biggest music genre on Earth, is some of the biggest companies called Liquid Death, you know? It's like, it's entertainment and we're kind of building this funny narrative. And it all sort of fits together in this interesting way where, again, you're trying to show somebody something that they've never seen before. That's what we're always trying to do, whether it's a video, whether it's the packaging. And that is, I think, what inherently makes something interesting. And that's what we shoot for.

• 24:03Rick Rubin?

  Did you start promoting it before it existed?

• 24:06Speaker 00

  We did.

• 24:07Rick Rubin?

  Tell me about that.

• 24:08Speaker 00

  So when I first had the idea for Liquid Death, everybody told me it would never work.

• 24:14Rick Rubin?

  They always say that.

• 24:15Speaker 00

  They always say that.

• 24:16Rick Rubin?

  About everything.

• 24:16Speaker 00

  Yeah. It's never gonna work. That's crazy. Retailers will never put it on the shelf. You're gonna confuse people. They'll think it's beer. I was like, okay, I need to find a way to prove this out that doesn't cost much money. Cause even at that time, it's like, I had maybe a couple grand in my bank account. I was still paying student loans until deep in my thirties. And to create a limited run of a canned product, it's not like you're making your own protein bar. You can make that in your garage, go sell it at the local farmer's market, get some slow build. If you're making a canned beverage, the minimum run is basically a quarter million cans.

• 24:51Rick Rubin?

  Wow.

• 24:52Speaker 00

  So you're talking about one hundred and fifty, two hundred K just to even start. So I was like, okay, let me try to prove this out. So we designed a can in Photoshop that looked real. We came up with an idea for like an internet commercial. And it was my wife's friend who was an actress. She was willing to like be in it. And we literally, we used a white Miller Lite can that we filled with water. And the whole video, she's pouring the can of water out while she's talking. So she's talking, she's going on about how water has been misbranded for so long. And the whole time she's pouring water out. You're kind of like, oh, that's a lot of water.

• 25:32Speaker 00

  And what we thought was funny was jokingly trying to position water as dangerous. Where it's like, water is responsible for thousands of deaths every year. Energy drinks only kill like, what, one or two kids? And then the big reveal at the end, it cuts wide and you realize she's been waterboarding a guy the whole time.

• 25:56Rick Rubin?

  Really?

• 25:56Speaker 00

  With the product.

• 25:57Rick Rubin?

  That's great.

• 25:57Speaker 00

  Yeah. And then we put that video on Facebook. We made a couple little social posts of the can. We made it seem like this was a real product. And then cut to like, five months later, the page had eighty thousand followers, which was more than Aquafina on Facebook at the time. You know, the video had a few million views. We had hundreds of comments from people. Is this real? How do I get this? We even had like distributors. Hey, I'm the biggest distributor in New York. Can I talk to a salesperson? So then I used all of that real traction to go raise that first hundred and fifty K round of funding just to actually produce real product.

• 26:38Rick Rubin?

  And then once you had that real product. How did you distribute the first round?

• 26:43Speaker 00

  So again, retailers were still like, no chance we're putting this on the shelf. So I said, okay, we're going to sell it direct from our website and Amazon because you can sell whatever you want there.

• 26:53Rick Rubin?

  Would you sell a six pack on Amazon or how would you sell it?

• 26:56Speaker 00

  We sold it as a 12 pack.

• 26:57Rick Rubin?

  12 pack.

• 26:58Speaker 00

  And it was actually, it took a lot of figuring out to know, it costs a lot of money to ship something that heavy.

• 27:04Rick Rubin?

  Yeah.

• 27:04Speaker 00

  So I think at that time, Amazon was charging us just for shipping, every 12 pack we shipped, Amazon charged us like $13.

• 27:13Rick Rubin?

  Wow.

• 27:14Speaker 00

  Yeah, it was a lot. And if you tried to go to a post office right now and ship a 12 pack of water, they'd probably charge you 20 plus bucks to ship.

• 27:22Rick Rubin?

  Wow.

• 27:23Speaker 00

  So it was like, we weren't making any money, but we knew like this was how you had to at least get the brand and build customers.

• 27:30Rick Rubin?

  Was the goal to basically break even and sell a bunch of stuff?

• 27:35Speaker 00

  Well, like most startups, like especially in the tech world, the game is always, you burn cash, you're not making any money until you get into a certain level of scale. And then there's something that switches on. Spotify, for example, it's like losing money, losing money, losing money until they have this massive base. And they're like, oh, we're going to up subscriptions $2 a month. Boom, wildly profitable. Amazon notoriously lost money forever. Now they're one of the most profitable companies in the world. So we knew that we had a runway of, hey, we can lose money for a while as we build customers. Cause as we get more scale, the product gets cheaper to make because you got higher minimums, all of that. You start getting into brick and mortar retail and you're not shipping it anymore.

• 28:18Speaker 00

  You make more money there. So we've kind of, from those early days of just being direct to consumer online, now we're, you know, online is really small part of the business. We actually don't ship anymore. Like we just ship product to Amazon. They buy it from us. They ship it. They own the inventory. We're a wholesale business now, so we just ship to distributors. They sell it to retailers.

• 28:40Rick Rubin?

  What was the first time you ever saw it in a store?

• 28:44Speaker 00

  First real store to carry it. There were like, A couple 7-11s in the very first year because 7-11, they're all franchisee owned. And the average franchisee only owns like two stores. And they control what goes in their store. So you could literally just go to a 7-11. And if you can convince the guy to carry your product, like there's kind of a way that you can get it.

• 29:08Rick Rubin?

  It's almost like a mom and pop.

• 29:09Speaker 00

  Kind of, yeah. There's stuff that happens at the corporate level where they got to get your product in the system. But there was a couple of 7-11s that had it, but our first big retailer to carry it on a real scale was Whole Foods.

• 29:21Rick Rubin?

  That's interesting.

• 29:22Speaker 00

  And literally our load in date was March 15th, 2020, right when the pandemic started.

• 29:27Rick Rubin?

  Yeah.

• 29:28Speaker 00

  Yeah.

• 29:29Rick Rubin?

  And how did Whole Foods decide to carry it?

• 29:32Speaker 00

  They were always big on the sustainability thing and they liked our sustainability. Like we've always had this like death to plastic message that's on every can. And we donate a portion of the profits to help kill plastic pollution. You have loud, crazy stuff. You have do good stuff, but rarely do those two things kind of come together. And I think that's always been our interesting DNA. And I think Whole Foods saw that too. They're like, hey, we really care about sustainability and look at our bottled water aisle. It's still all plastic in Whole Foods. So they're like, we were one of the first canned aluminum waters. Now there's a ton of them, but they liked the sustainability angle. And I think they were willing to, you know, try a edgy brand in their store.

• 30:18Speaker 00

  And the other thing was because we were already selling on Amazon and our website for a year. I mean, our first year in business, just on Amazon and our website, we did like 3 million in sales.

• 30:28Rick Rubin?

  Wow.

• 30:29Speaker 00

  So going into Whole Foods, we could sell them on the story, hey, guys, people are paying 20 bucks a case on Amazon right now. In your stores, you can sell it for 15. And when we tell everybody, hey, now you can get it at Whole Foods for 15 bucks. We have a way to actually drive volume for them that they were excited about. So I think we just had a really good pitch and existing customer base where we weren't just trying to say, hey, Whole Foods, we're a new brand. No one's heard of us. Put us in your stores.

• 30:58Rick Rubin?

  Do you think Liquid Death is really a story about what's possible considering social media? Like if social media didn't exist, could you have done this?

• 31:08Speaker 00

  No, no chance.

• 31:09Rick Rubin?

  So in the old world. This could not happen.

• 31:13Speaker 00

  Could not happen.

• 31:14Rick Rubin?

  Yeah.

• 31:15Speaker 00

  Because the internet is both a blessing and a curse. But I think the blessing side of it is it has really democratized business. I mean, even like music. I mean, there are people who a label probably never would have given a chance, but they can put a video on YouTube and become, you know, it lets the market decide the winners and losers. Whereas before, you had executives that decide.

• 31:40Rick Rubin?

  Gatekeepers.

• 31:40Speaker 00

  Yeah, yeah, gatekeepers who kind of decide what the market gets.

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• 33:23Rick Rubin?

  What did you watch on TV growing up?

• 33:27Speaker 00

  I watched a lot of Married with Children. I still think that show is so funny and could never exist today. My dad was a really funny guy, so everything in our house was about humor.

• 33:39Rick Rubin?

  Brothers and sisters?

• 33:40Speaker 00

  One younger brother. We watched a lot of funny stuff, like not a lot of serious stuff growing up.

• 33:45Rick Rubin?

  Who were your favorite comedians?

• 33:48Speaker 00

  George Carlin's probably my favorite of all time. More modern day, like Tom Segura, Burt Kreischer, Bill Burr. And all those guys have kind of become investors in Liquid Death, which is really cool, too.

• 33:59Rick Rubin?

  Yeah, that's great.

• 34:01Speaker 00

  It's cool because not only can they be ambassadors for the brand, but it's like, we're cool enough with it's like, hey, we're trying to think of a funny flavor name for cherry. Do you have any ideas? You know, it's like you can actually kind of have them contribute the humor of the brand in light ways. It's not taking too much of their time and that's cool, too.

• 34:23Rick Rubin?

  Tell me about the power of humor.

• 34:25Speaker 00

  Humor one is really hard. And I think it gives us this competitive advantage where giant companies like Coke or Pepsi, like with the way the bureaucracy is there, it's almost not possible to generate real humor. Everything's going through layers of approvals, like it just, it can't live that way.

• 34:44Rick Rubin?

  And humor by its nature is edgy.

• 34:46Speaker 00

  Yeah. And I feel like with everything that was happening culturally over the last couple of years, I think there was a lot of good intention for some of like the woke kind of thing, but then I think it just got out of hand where it was like, there was a period where almost like comedy was dead. It's like you're not allowed to make fun of things anymore. And I thought that was really weird and I think the world needs to be able to make fun of stuff always. It's a reason why I think comedy is so, it's so much of a infinite genre, because all comedy really is, is making fun of whatever's happening at the moment. And even in the future, if there's

• 35:30Speaker 00

  Cyborg robots that own us, we'll make fun of those robots that own us, right? And there will be a way to make people laugh by making fun of sort of what's happening. So I think for us, it's like, we could continue to make people laugh forever because there's always going to be stuff to make fun of. So I think there's a power in just the genre as something that has legs versus, I don't know. Will action sports always be a thing that's popular? I don't know.

• 35:57Rick Rubin?

  And how early in the process did you realize comedy was a big part of it?

• 36:03Speaker 00

  From the onset, the name was not about to try to be actually badass. It was, we want to be sarcastic. It's almost like I was making fun of the extreme marketing. That was all kind of BS, like there's no reason that just because something has caffeine in it, that it's extreme. It's like, my grandmother drank English breakfast tea that had the same ingredients as Monster Energy, you know? But it's all just marketing. Once you realize that marketing is all kind of theater, it's easy to make fun of it and to kind of like, expose the bullshittiness of it, you know? It's like, what happens when you try to position water as extreme?

• 36:44Speaker 00

  It becomes funny and it kind of makes light of anybody trying to position anything as extreme is kind of crazy.

• 36:51Rick Rubin?

  Can you go too far?

• 36:53Speaker 00

  Yes. I think any comedy is about taste. Even talking with Tom Segura, for him, comedy is such a game of fine tuning. He's like, you can change one word and something goes from not being funny to funny. Or you change one little thing is sometimes all you need. So with us, it's a little different because we are a product. It has to be sold in Walmart. It has to be sold in Target and they have their gatekeepers who are very risk averse. So people are like, oh, Liquid Death is so edgy. I'm like, yes, if you compare it to like traditional marketing that people hate.

• 37:33Speaker 00

  But if you compare it to legitimate entertainment, look at the number one comedy special on Netflix that bajillions of people watch. We are tame compared to the jokes in that or the number one horror movie. We don't show anything remotely as graphic as that, but these are still things generating hundreds of millions of dollars and massive mainstream appeal. But because we are a product, if we go too far and a Walmart executive says that's too far, we're taking you off the shelf, there's no more brand. So you kind of have to, like, for us, it is a tricky thing of, we're always trying to toe that line between, we want it to be legitimately entertaining, but we also need to be somewhat mindful of our business partners that we're not pissing them on.

• 38:18Rick Rubin?

  Have you ever had any pushback from any of the business partners?

• 38:21Speaker 00

  Little things, like, we did this campaign where we got one of the biggest adult film stars to deliver a completely innocent message about sustainability. And we made sure, like, she's wearing full dress, there's no skin, nothing. She's just like, hi, I'm Cherie Deville, and even though I'm into getting my bleep, one thing I'm not into, single-use plastic. And she goes to this whole funny thing, and we ended the, the spot with, don't F the planet. And there's data behind this. If you look at the data, there are more people that visit porn sites than any other thing on the internet, including probably the executives that work at these places, right?

• 39:04Speaker 00

  So if you're actually trying to reach a large audience, statistically, that is the way to do it. So you're thinking about it like, okay, you want to deliver an important sustainability message, well, here's someone with a probably larger audience than most celebrities and for a fraction of the cost, because you were just so excited to do something that wasn't adult film. Like, oh, I get to do like a normal commercial? Well, there's, like, yes, I'll do this for free. So we did this thing, it did extremely well, like, millions of views, like, people loved it. But one of our grocery retailer chains had one pastor complain to the corporate office about the video and it became a whole thing.

• 39:46Speaker 00

  And I had to write a letter saying that we won't use adult film stars in our marketing anymore and that, yeah, like these retail executives, like they're so risk averse that one complaint from somebody can create a board meeting for executives. And it's, you know, it's a tricky thing to navigate.

• 40:03Rick Rubin?

  Tell me about data. First of all, is data always helpful or no?

• 40:08Speaker 00

  It's the thing we always talk about. Data can be completely reckless if you're not using it the right way. Like anybody can find a way to use data to make something seem like the right thing. It's more about how do you extract truth from data? And it's not easy to do. You've got to find like, okay, well, how are you parsing the data? Like, where's it coming from? Like, what are you really looking at? So we use data as a way to help guide things or like to gut check like, hey, this is what we believe to be true. Are we finding any data that's really going against that? That should make us, well, wait a second. This is saying this, maybe we're not right.

• 40:52Speaker 00

  Or, hey, we think this and we look at some data and you're like, hey, that actually kind of cooperates this, like maybe we're on the right path. You're never going to know totally. I think intuition is so important. And again, like even as like a music reference, it's like, yes, you could probably make it a great album based on data and likes, but there's just something about the intuition of just knowing this is going to resonate on some level with people and you're not going to have the data that's going to perfectly back that up.

• 41:22Rick Rubin?

  Give me an example of how you actually use data and where you would get it.

• 41:27Speaker 00

  Okay, so good example, survey data. So as we evolve as a brand, as you scale, you have to do something that they call price pack architecture. It's like, yes, people love Liquid Death, but what's the right size case and can that is best when people are grocery shopping?

• 41:47Rick Rubin?

  And you're hiring someone to do this survey?

• 41:51Speaker 00

  Yeah, there's companies that will run survey data. You can go through consulting companies like BCG. I think we actually use BCG. Well, they'll do like full on crazy things with like mock shelves to see what do people pick? But we wanted to figure out, okay, we know people love Liquid Death. What's the right pack size and can size and price point for Liquid Death? In grocery stores so that we can sell as much of it as possible. And that's where you start seeing like, oh.

• 42:18Rick Rubin?

  How many different sized cans do you do?

• 42:20Speaker 00

  We have two different sized cans. We have big 19 ounce tall boy cans that we just sell as like single serve. So when you're in a 7-Eleven and you get something cold, you get this big tall boy.

• 42:31Rick Rubin?

  What other drinks would be next to them that would be that same size?

• 42:36Speaker 00

  Well, you see a lot of big beer cans in convenience stores. We're not merchandise next to the beer, but the other big cans you would see in the store, energy drinks, beer, alcohol, you typically see. You don't see a lot of other Arizona iced tea famously was in like the big giant cans. That's probably the gamut of it.

• 42:55Rick Rubin?

  Okay. And then there's a smaller can as well?

• 42:58Speaker 00

  Yeah, we do the kind of standard 12 ounce can, like that classic beer soda can size. And that was the big change we made this year. Cause what we realized when we were only selling the tall boy, so we sold them as singles. And then we sold them as an eight pack. But when you buy an eight pack at the store, people are taking it home and consuming it at home. And what we learned was like, most people don't want a giant can at home. Like that's more for like on the go. You're going to have it around for a while. So yeah, there was good data to show, hey, when people faced with the decision, more of them wanted to purchase. More small cans for home than less big cans. And then we see some more like customer data from social media.

• 43:43Speaker 00

  We look at data all the time there. People commenting, hey, these big cans. My kid only drinks half of them. I end up pouring them out. When are you guys going to make a smaller can? Like, it's too big. It's too much. We use all that stuff to kind of inform, hey, we're going to make a big decision. Where do we go?

• 44:00Rick Rubin?

  Tell me more about comments. What other stuff comes from comments that ends up being useful?

• 44:06Speaker 00

  So one of my favorite marketing things we've ever done, and it's musical, was with a brand like ours, since the beginning, you had such a great quote I saw recently that was like, "Great work divides the audience." And like Liquid Death, we had a very divided audience in the early days. You had people hate commenting, "This is the worst thing ever." "Are these guys devil worshippers?" You get all that and you get the love. This is the greatest thing ever. And I've always said, there's no such thing as getting 100% of people to love something. It's not possible. If you want people to truly love something, there has to be people that truly hate it.

• 44:47Speaker 00

  And the way the internet works, most normal people are passive observers of the social media circus. You're scrolling, you're looking at stuff, maybe you like something, but very few people are going in commenting angry things.

• 45:00Rick Rubin?

  People don't engage.

• 45:01Speaker 00

  People don't engage. The extremes engage. So the loudest people on either end, the true lovers, "This is the greatest thing ever." And then the true haters, "This is the worst thing ever." That's who you find in the comments. So we had all these hate comments and we did this funny post because literally it costs us nothing. We had an image of our can. We took this hate comment that said something like, "I will never buy this product. I will never support something that is clearly Satan worshippers." We literally screenshot that comment, put it next to the can and said, "People love us on the internet."

• 45:41Speaker 00

  And that post was the best performing post we had done ever. And it cost us nothing. So we were like, oh, this idea of like leaning into the hate could be really interesting. So then we said, what if we gather a bunch of the best hate comments, hire legit musicians and make an album where the lyrics are verbatim hate comments from the internet? And we called it Liquid Death's Greatest Hates.

• 46:07Rick Rubin?

  Funny.

• 46:08Speaker 00

  So the first one we made was like a heavy metal record where we got this legit guy who's a heavy metal guy. He like played all the instruments, wrote the album. It was like a legit metal record and the lyrics are all just like, fire your marketing guy. And it was cool because we've done it across genres now where it started as a metal record because it was like, oh, they're angry. So doing an angry record made sense. Then we did a punk album, which still was kind of like funny, angry, but the punk album did better because they were singing where the metal record, they're just growling. You can't hear the lyrics as much. Then it was like the punk record, you could hear the lyrics. That was funnier. Then the female power pop album, that was funny because you really hear it. Then.

• 46:50Rick Rubin?

  Can we hear? Do you have it on your phone?

• 46:51Speaker 00

  Yeah, I do. Yeah.

• 46:52Rick Rubin?

  Let's hear a song.

• 46:52Speaker 00

  Oh, okay. Yeah.

• 46:54Rick Rubin?

  What track would you like to hear?

• 46:57Rick Rubin?

  Worst Name for Water Company?

• 46:59Speaker 00

  Yeah, that's a good one. Yeah.

• 47:33Speaker 04

  Some forty-six-year-old ad dude with swallowed tattoos Probably spent fifteen years Of his professional career To come up with this idea Worst name for a water company Worst name for a water company You're hogging their property, have one job

• 48:05Rick Rubin?

  Really funny.

• 48:05Speaker 00

  Yeah, yeah.

• 48:07Rick Rubin?

  And the idea of Just taking the bad comments and making something beautiful out of it.

• 48:11Speaker 00

  Yeah, exactly. Yeah.

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• 49:46Rick Rubin?

  Can you think of many times where you've gotten data back? And you've decided to go against what the data tells you?

• 49:53Speaker 00

  Yes, but more when I don't believe that the data is a good source of data. So for instance, you only have access to so much data. And most data that big companies pay for and they're readily accessible, which almost has become like the standard, is survey data. So someone will say, well, hey, we have this data that we pulled that, I don't know. People don't want this one thing, whatever it might be. I'm like, okay, how big was the pool of people? 200. Okay, that's not a lot of people. How do they get the info from them? Oh, it's a survey. What do you mean survey? Like, you know, like when people call you and say, hey, would you like to take a survey?

• 50:35Speaker 00

  I'm like, has anybody in this room agreed to a telephone survey? Ever? Do you know anybody that's agreed to a telephone survey? Okay, no. So who are the people that agree to surveys when people call them on the phone? Like, this might not be like your average customer or who we're talking about. So you can't put too much stock in something like that, right? So, but if we're looking at, but hey, on social, when we posted a similar thing, it got 10,000 likes. So maybe that's a better view of like real market reaction than not. And same thing with like focus groups. Like focus groups have always been a thing that people use for data.

• 51:18Speaker 00

  But when you put random people in a clinical room and say, what do you think of these things? People say and do things they wouldn't normally do. So you can use it for certain things, but you just have to be careful of like, what are you actually getting out of it? And how big of a decision are you making based on it?

• 51:36Rick Rubin?

  Which social media sites do you use for Liquid Death?

• 51:40Speaker 00

  Liquid Death, we're most focused on Instagram. That's kind of like.

• 51:44Rick Rubin?

  Has it always been that from the beginning?

• 51:46Speaker 00

  It started as Facebook, but I think it's evolved where there's a wider range of demos on Instagram. Facebook's become a bit older in their demo and we still do some stuff there, but Instagram kind of seems to be where so much of the heat is. And then Tik Tok, we've done pretty well there too.

• 52:04Rick Rubin?

  Do you make different content for each place or is it just the same thing in different distribution?

• 52:10Speaker 00

  Some of it's the same, some of it's unique. Instagram's kind of like our main platform. We make stuff for. The other thing that we've done well with is finding influencer types on Tik Tok that have their own audiences. And then finding ways for them to do something with our product for their audience.

• 52:29Rick Rubin?

  And would you pitch them on that?

• 52:32Speaker 00

  Yeah, like we find someone who's interesting or we think is funny or does cool things. We'd say, hey, we'd love to pay you to do like a fun Liquid Death thing. And the minute you tell someone who's not a marketing person to do a marketing thing, they start making bad marketing things. It's like, no, no, no, no, we don't want you to make an ad like just do what you would normally do. And just like find some like, I don't care if you like pour our product out or we're not sensitive. Like do what is natural to why your audience follows you. Don't try to make an ad for Liquid Death that goes outside of that. And that stuff has been successful. And I think with the platforms, you know, it's a better way to leverage audiences than you trying to constantly hit a bullseye on different things.

• 53:15Rick Rubin?

  Do you do that everywhere or just on Tik Tok?

• 53:17Speaker 00

  We do it everywhere. Like there was this Instagram account called Influencers in the Wild. Have you ever seen that?

• 53:23Rick Rubin?

  No.

• 53:23Speaker 00

  Where it's this guy, he posts these videos where it's like, you know, some girl in the middle of traffic trying to get like, you know, the perfect. Selfie video. And had like tons of followers. So we were like, hey, we would love to do something with you guys. So we have this big ridiculous mascot that we call Murder Man. And he's like this muscle bound Conan the Barbarian looking guy, but instead of a head, he has no head and he has a can for a head. And his eyes are nipples because he has no more eyes in his head. So we're like, we went with him and he had our mascot seeming like an influencer on a beach, like trying to take these like, you know, super vain photos of himself.

• 54:07Speaker 00

  And then that did really well, like to that audience. So yeah, you just find ways to insert Liquid Death into the culture in a way that feels natural and not forced. And that, again, it's always funny and people appreciate it. It doesn't feel like, oh, clearly this guy's just getting paid to say, this is the drink that I drink and you should drink it too, you know?

• 54:29Rick Rubin?

  Do you have a whole team of people who focus on that?

• 54:32Speaker 00

  So we've built our own internal creative team and production team that we call Death Machine.

• 54:38Rick Rubin?

  Great.

• 54:39Speaker 00

  Yeah, they can like go and film stuff for cheap and.

• 54:42Rick Rubin?

  Yeah. Have you used Death Machine for any products beyond your own?

• 54:46Speaker 00

  No, it's just for us. And it's not a big team. It's just a couple of producers, but you know, if you don't have your own team, you're going through a production company and they're just marking up the cost of everything because they have to make money. But we kind of own it all. We can do it cheaper because that's the other big thing is like entertainment. It's really hard to know what's going to hit. So you kind of have to make a bunch of small bets and knowing that if two hit, it's kind of worth everything else. Whereas like, I think the old marketing model is like, an agency comes into a client and says, here's three big campaigns, pick one. And then some boardroom of executives say, that's the best campaign. And they pick that campaign and then they spend $50 million on that campaign.

• 55:31Speaker 00

  And you hope that it works. For us, it's like.

• 55:35Rick Rubin?

  Try a lot of things.

• 55:36Speaker 00

  Try a lot of things.

• 55:37Rick Rubin?

  Yeah.

• 55:37Speaker 00

  And I think you're seeing that in some of the Hollywood model like Blumhouse, Jason Blum's company, like they kind of redefine horror because. They were making movies for no more than four to five million dollars. And everybody was doing the movie at whatever minimum wage was, knowing that they would get some upside on it if it was successful. But it enabled really provocative, interesting, outside of the box ideas to get made. Because if those ideas were going to cost thirty million, no studio would take the risk to try to make something like that. But if it's only four million, you can make a bunch of weird stuff. And then some of them become get out and they become these huge successes. So we take a really similar thing of most things that we make videos, like we don't spend more than a hundred K on.

• 56:23Speaker 00

  But the ones that get forty million views and, you know, twelve billion impressions, it's like, oh, the earned media value of that is twenty million.

• 56:31Rick Rubin?

  Would you say not related to the influencer side, but at the content generation side? Is there at least a post a day or no?

• 56:40Speaker 00

  No, I think we've moved away from frequent posting. I think that was the original, like when brands got into social, it was like, you have to be always on, always on, constantly posting. And then we took a step back a couple of years ago, let's kind of focus on quality over quantity. I think the internet, that's the problem. It became so much a quantity thing. It's not possible to make great stuff that frequently. Then you started to see the rise of some mega influencers like Mr. Beast, where he would post one video a month. But that video was like unreal and would get a hundred million views. I'd much rather play that game of like, let's do one really great thing or maybe two great things a month and focus there.

• 57:24Speaker 00

  There's just kind of trying to do all this little stuff that often takes the same amount of time to do. It's just not as good.

• 57:31Rick Rubin?

  Walk me through the beverage business in general.

• 57:35Speaker 00

  It's a really hard business because so much is out of your control. So the way the beverage business works, you work with manufacturers who produce your product.

• 57:47Speaker 00

  Then you sell your product to distributors. Distributors then sell the product to the retail stores.

• 57:54Rick Rubin?

  How many distributors are there in the country?

• 57:58Speaker 00

  Thousands. We are mostly in the Anheuser-Busch beer network. Because the way the beer laws work post prohibition in the United States, beer manufacturers are not allowed to own more than 20% of their distribution. For whatever reason, if you make beer, you can't also be the one that is selling the beer to the retailers. They call it the three-tier system.

• 58:21Rick Rubin?

  Coca-Cola, they could own their distribution.

• 58:24Speaker 00

  Yeah, because they're not alcohol. Right.

• 58:25Rick Rubin?

  I see.

• 58:26Speaker 00

  Yeah, so Coke owns all of their distribution, essentially, as does Pepsi, as does these other ones.

• 58:32Rick Rubin?

  So they're less interested in sharing it from that distribution?

• 58:35Speaker 00

  Exactly, yeah. So you can only be distributed, for the most part, by Coke or Pepsi if they own you.

• 58:42Rick Rubin?

  Right.

• 58:43Speaker 00

  And that tends to be what their value proposition is when they buy a brand. They're like, hey, we'll buy you, put you into our network, and you're instantly kind of everywhere. With beer, because corporate Anheuser-Busch only owns 20% of its network, there's, you know, 300 independent, family-owned beer distributors that can make their own decisions for what they distribute. So we literally had to go one by one in convincing them to carry Liquid Death and distribute us.

• 59:13Rick Rubin?

  Are there any other options?

• 59:14Speaker 00

  That's pretty much the only distributors. It starts getting really in the weeds, but it's like they're called DSD distributors, which means direct store delivery. Means they're a distributor that has a sales guy that takes your product into the store and merchandises it on the shelf. There's another group of distributors that they call Broadline or Direct. They're more like a logistics company. They have these big trucks. They have your product, a bunch of other stuff. They drop a pallet of it off in the back of the store. They leave and go to the next store. So you're depending on a store employee to then open that up and then go and put that on the shelf. But what's happening in this retail environment,

• 59:58Speaker 00

  retailers are having a really hard time hiring that low-cost grocery store labor. So they all have labor issues where people who are going direct. The shelf is sitting empty because that stuff is sitting in the back and nobody's actually has the time to put it on the shelf yet.

• 1:00:16Rick Rubin?

  So do you pay a premium for the DSD?

• 1:00:18Speaker 00

  Yes, you do. They need real margins where you make more money going through the direct way, but then you have to hire your own people to go into the store and make sure that the shelves are stocked. So the direct guys really only go for the most part to the big stores. Like all those mom and pop little bodegas, like they're not really going there. So you kind of need the DSD guys to.

• 1:00:39Rick Rubin?

  Are there any places that you want to get your drinks into but can't?

• 1:00:43Speaker 00

  There's one grocery store chain in Texas called HEB that we're not yet in. We may be closer now, but the buyer took us in. Said, yeah, we love this. And then we were in the store. They built some big displays, like our team built some big displays in the store. One VP of HEB, who I think maybe is like super religious, saw the Liquid Death display and said, oh no, this is not the right brand fit for our stores. And they discontinued the brand from the store within like weeks of it actually launching and going through the whole lower end of the system.

• 1:01:24Rick Rubin?

  Wow.

• 1:01:24Speaker 00

  And it's like the only grocery chain in the US, pretty much major one that we're not in yet. But it seems like maybe this person is close to retiring and we might be able to eventually get in there. But that's one. And I think Trader Joe's is one like I love Trader Joe's and I think Trader Joe's is one of the most underrated brands of all time. People are actually fanatical about Trader Joe's. Like I remember during COVID, there's like lines of people waiting to go on the Trader Joe's. Like I talked to my wife about, oh my God, I love the Trader Joe's whatever snacks or the Trader Joe's whatever. And they've built a brand that it doesn't matter what they make. People like it. There's not many brands, especially in the food and beverage space, who have been able

• 1:02:10Speaker 00

  To have a level of fanaticism across multiple product categories. And I think it's just super interesting, just everything they do as a store and as a brand. And they do carry stuff that's non Trader Joe's branded, like they carry beer brands and stuff like that. It would be cool to have Liquid Death in Trader Joe's, but again, they have such a weird, unique way of how they pick products and how they don't. And it's really tricky.

• 1:02:35Rick Rubin?

  Who do you think of as your competition? Do you think of Evian as your competition? Or do you think of Monster as your competition? Or Red Bull as your competition?

• 1:02:47Speaker 00

  It's kind of everything. You take a little bit of share from some of the other premium water brands. You end up taking a little bit of share from brands that people are trying to cut down on. But so is probably Evian too, right? Like people who are trying to cut down on soda, maybe they start drinking more bottled water. So yeah, it kind of depends what the occasion is. But we are seeing that so many people are choosing Liquid Death because it's a legit replacement for something that they want to cut down on. Like our flavored sparkling water, like La Croix, for example, their flavored sparkling, but they have like no sweetener at all. Like it's very bland.

• 1:03:27Speaker 00

  And there's certain people who are trying to cut down on soda and they're like, well, I've tried La Croix, but it's not really a replacement. Like I miss that sweetness flavor. So like we put just a little bit of sugar in ours and like a little bit of natural sweetener. Now we're maybe half as sweet as a soda, not fully, but it becomes a much better replacement. And we've seen tons of people now talking about Liquid Death. You actually helped me stop drinking soda for a whole month for the first time ever. And that's the kind of stuff that gets me excited. It's like getting people who aren't typically healthy to start doing healthy things.

• 1:04:04Rick Rubin?

  Is there any relationship to the color of the can and the liquid or the flavor that's inside?

• 1:04:11Speaker 00

  Sometimes and sometimes not. And I think we've gotten better about like where we would start just making totally crazy sounding things that have maybe not as much connection to the actual flavor. We come up with really funny flavor names for everything, like our cherry is called Cherry Obituary. We have iced tea and we have a half and half, which most people know as an Arnold Palmer. And a funny story, our original name was Armless Palmer. And a month after launching, we got a cease and desist from the Arnold Palmer Estate, saying, you know, you have to stop selling this. This is too close to what it is.

• 1:04:52Speaker 00

  And then our lawyers actually looked at it and they're like, there's this thing that happens. I don't know what that's called, but a certain term can become truly ubiquitous. And if you can kind of spend a couple hundred grand and do a study that anybody can go into a restaurant in America and order an Arnold Palmer and they'll get a half tea lemonade and they have no confusion that that is licensed by the golfer's estate. Once something's become a part of vernacular.

• 1:05:24Rick Rubin?

  It's called that. That's what it's called.

• 1:05:26Speaker 00

  And if you can prove that, they would lose the rights to stop people from using it. And there's been a couple of brand names like that throughout history. Like, I think Teflon was one. Like, that was a brand, but it's also a substance that anybody can make. And I think like, anybody can call it Teflon. So I think we probably scared them off a little bit when we gave that response of like, hey, we think it's become ubiquitous in any place in America, even if we wanted to use the real name. Our names, though, we're close to Arnold Palmer. We don't use any golf imagery or whatever. But even still, we were like, you know, they have a lot more money than we do. If they really wanted to be a pain in the ass and like, drag out a court process, like, you know, do we want to go through that? So we're like, let's just change the name. So we changed the name

• 1:06:11Speaker 00

  to Dead Billionaire. And we posted the cease and desist on social media and told everybody the story. National media attention, everybody loves it. And now it's like our top selling flavor. So again, like when you can find a way to like, turn problems into positive things, like it can work really well.

• 1:06:33Rick Rubin?

  Is it only a domestic brand or are you global?

• 1:06:38Speaker 00

  Especially if you look at our social media following, we have a fairly international following on social. We did a little bit of selling in like the UK and Australia. It's just kind of like a dip our toe in the water. And people were responding to the brand really well. Because one of the reasons we were testing Europe is because we had Austria as a producer. So we're like, hey, we're already producing there. We can just ship some over there and test it out. But once we fully moved the supply chain to the US and we stopped working with our Austrian co-packers. It's like, okay, well, if we want to continue this, we're going to have to start shipping over the ocean back there.

• 1:07:11Rick Rubin?

  Or can you just go back to Austria and do the European stuff there?

• 1:07:16Speaker 00

  The problem is you lose all your scale. So now the cost, because you're only making one tenth of the volume, they raise.

• 1:07:23Rick Rubin?

  It'd still be like starting over in the US. You know, you could start over in Europe and eventually it gets to a point where it's worth doing.

• 1:07:32Speaker 00

  Totally, but it just costs a lot of money.

• 1:07:34Rick Rubin?

  Yeah.

• 1:07:34Speaker 00

  You have to raise capital. You have to be willing to burn cash to do that. So we kind of decided, hey, we have so much to focus on in the US. We're still small. Let's not burn precious capital to get Europe going. Like, let's focus it here. Then once we have more scale, you might even have a better deal where it's like some distributors like, hey, we're willing to invest this just to get Liquid Death here because you're already so massive. Like Red Bull, for example, before Red Bull came to the US, they were doing over a billion in sales in Europe. So when they came here, they had a lot more capital, manpower, scale to make it much more quickly successful than when they just started from scratch.

• 1:08:19Rick Rubin?

  Do you picture growing beyond beverages? Or is it a beverage company?

• 1:08:24Speaker 00

  I think it's a beverage company. I mean, I think one unique thing that we do is, again, from my band days, we sell merch and apparel just like a band. And we actually sell a lot of it because we take it seriously. Like, we designed Liquid Death shirts with. Artists, it's not just about sticking our logo on a shirt. It's like, people will do these crazy Liquid Death looking pieces. And this year, we're probably going to do six million bucks just worth of apparel. As like a beverage company, we've made gold Liquid Death Nixon watches that have little executioner axe handles on it. And we sell out of those. So, you know, like a true quote unquote lifestyle brand.

• 1:09:05Speaker 00

  If you're a brand that people feel like represents something like a band, they will wear it around. Now, it's like, it's crazy. We have all these companies reaching out to us that want to license our brand. So like in Target right now, there's a company that makes pool floaties and they do them for like, one that looks like a big Cheez-It and a big Pop-Tart. Now they have like a big Liquid Death can. And it's like, they just license our brand and then they sell them, they get it on the shelf, they deal with all the hassle. And for us, we're not trying to be a merch company. We're a beverage company. That's just free marketing and awareness inside the store and a different part of the store, just because we're there.

• 1:09:46Rick Rubin?

  What would you say the first breakthrough where like, things were moving along, it was building, but then something happened that was like, everything is different now?

• 1:09:57Speaker 00

  It was probably when we launched Whole Foods. Because in that first year, we were still seen as such a like edgy, heavy metal brand. And when Whole Foods took it nationwide, they weren't even like, no, let's just try it in a region. They're like, no, full national. All these other retailers who were afraid of the brand, once we were like, well, Whole Foods has it, they're kind of like, oh, well, if they have it, what are we worried about? You know? So I think it really became this domino effect of once Whole Foods was the first one to take it and they realized. Okay, there's no one protesting in the parking lot. Oh, and look at their sales, they're growing like crazy.

• 1:10:40Speaker 00

  It just, I think, really opened up the floodgates to other physical retailers, like opened to taking the brand in and giving it a chance. And that's where, really, that's when our growth just started going like pretty nuclear.

• 1:10:51Rick Rubin?

  And has growth been pretty consistent since then?

• 1:10:55Speaker 00

  Yeah, I mean, in the first couple of years, I mean, it was like, I mean, it's all publicly available data, but we went year one, three million, year two, 10 million, year three, 45. So it just kept kind of exponentially going up. Now we're getting to those levels of scale where even like 50% growth is pretty insane for a company our, our scale. So, yeah, I mean, we're just kind of consistently looking at, we don't need to double in size every year. It's more now about, okay, how do we focus on becoming a profitable company? It's like, we have scale now, because that's kind of how it is. In beverage, what makes it hard, especially in non-alk, Coke and Pepsi set the pricing for all the categories. So if

• 1:11:40Speaker 00

  you want to be a water brand, let's say Coke is pricing Dasani at a dollar 49, you can't come in and charge $8 just because that's what your supply chain dictates you to make, to make profit. You have to price somewhat competitive to that and wait until your scale is at a certain point where you have the scale to actually be making money at that price point.

• 1:12:03Rick Rubin?

  And it's not really a fair game because they have the scale.

• 1:12:06Speaker 00

  Yes, exactly.

• 1:12:07Rick Rubin?

  And they're setting the price.

• 1:12:08Speaker 00

  Yeah, which is why beverage in general is such a hard industry to be successful in, because there's so much stacked against you from scale of the big guys who literally own everything. Like, every music venue, every stadium, every ski resort, every casino is locked up in a Coke or Pepsi exclusive contract where that place is only allowed to sell Coke and Pepsi products. So even as a brand getting in from like a marketing standpoint, it's really hard. And now we're finally getting to that level of scale where it's like, oh,

• 1:12:41Speaker 00

  We don't need to hire a ton more people like we have the right team size. Now we can finally like let the revenue pass our costs. And then now finally you start becoming a profitable big boy company as we call it. But it takes a long time to get there and a lot of capital. And that's why a lot of brands, they just kind of end up running out of gas before they get to that level.

• 1:13:03Rick Rubin?

  Do you have any ideas for other product categories of beverage?

• 1:13:07Speaker 00

  Definitely, we're looking at a new category next year, which is exciting. I can't really talk about it, but my focus is anything we go into has to be a better for you play, whether that's a category that's typically not seen as better for you. And we come in with like a better for you version of what that is. Like Liquid Death, I don't think we'll ever make hard spiked Liquid Death that has alcohol. Right? Like, I don't think we would ever do that because it's not healthy. And it would be hard to spin anything with alcohol as like truly healthy. But I think there are things in the world of like caffeine, like you could do something healthy. It doesn't have to be some of these energy drinks now, like it's like 300, 400

• 1:13:53Speaker 00

  milligrams of caffeine, like it's gotten kind of crazy where Red Bull is the conservative one now, you know? So we're looking at all kinds of different things and trying to find like, hey, is there a category that needs a better option for something? Or is there a category that is really healthy? And there's just no interesting brands in it. And we can go and be the one interesting brand in this healthy category and bring it to more people and put our marketing sort of firepower behind it.

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