Mike Cessario 0:00 

Almost all truly innovative ideas are almost laughable at first, because anything that's truly new and never been done before almost seems ridiculous. If a new idea seems like, oh, this makes perfect sense to most people. It means there's probably already 10 companies who have been working on this for five years already.

David Novak 0:30 

They made a candle with Ozzy Osbourne's DNA. They sold a coffin shaped cooler. They produced the horror film. And believe it or not, they're a healthy beverage company. Welcome to how leaders lead. I'm David Novak, and every week I have conversations with the very best leaders in the world to help you become the best leader that you can be. Today, I'm talking with Mike Cesario. He's the founder and CEO of liquid death. It started out as an irreverent water company, and now it's a healthy beverage company, and he has built this business from scratch to $1.4 billion and he's done it in an industry dominated by giants. Let me tell you, this is a brand you simply can't ignore. The packaging really breaks through the clutter and is unlike any you've ever seen, even though they're selling water. The liquid death approach may seem pretty wild, but as you'll see today, there's a whole lot of discipline behind the scenes. Mike is super thoughtful about everything from product rollouts to ad spend to team culture, and if you ask me, his thinking on all those fronts is so impressive to go along with his marketing acumen. If you want to see what it looks like to disrupt with discipline, this is the episode to watch. So here's my conversation with my good friend and soon to be yours. Mike Cesario,

you know, it's great to talk to a fellow marketing guy, but I feel kind of, kind of, I don't know, I'm humbled by you. I mean, you know, because, you know, I used to run marketing for Pepsi Cola Company, and when I was there, we launched our first water brand. Is Aquafina, you know, pretty traditional. And then here you are. You've got a canned water, liquid death. Now you know how to break through the clutter. There's no question about it. I am boring. You are exciting. What is it about you that that got you into this mode where you could really break, break through the clutter and think differently? Well,

Mike Cessario 2:35 

yeah, I think it's breaking through, especially as a new small brand is a necessity. I mean, Aquafina is a great example. I mean, Aquafina currently is doing like a billion in sales selling a water for whatever it might be, $1.59 there's no other company who can make money selling a 20 ounce water for $1.59 because Pepsi owns the supply chain and all the scale and efficiency. So you have to come in price higher, or you would just run out of money in like three weeks. So how do you compete with the big guys who can price everything at this price that nobody else could could do. You've got to be premium. And then what is required of a brand to get people to actually pay a premium. And I think people can understand it easier in the world of fashion than they can in food and beverage. Like most people can understand why Nike can charge so much more than, let's say, Skechers. It's not because of the quality. No one believes that Nike's last 49 days longer than Skechers. It. It's emotional when it comes to brand and premium and that kind of thing, and it goes far beyond just the functional differences between the products.

David Novak 3:53 

Yeah, absolutely. And you know, but I love what you've done with liquid death. As a marketing person, you have truly broken through the clutter. There's no question about it. And when you have a name like liquid death, you know, it's it's controversial, and I understand, you actually get some hate mail, but you've actually taken that hate mail and you've had a lot of fun with it, with your customers, you've turned it into actual music tracks, and you've got an album on on Spotify, you know, tell me about tell me the story behind that.

Mike Cessario 4:22 

I recently did an interview with one of my creative idols, Rick Rubin, the famous music producer who's produced everything from Jay Z to Slayer to the Beastie Boys. And he had a really good quote where he says, especially in music and entertainment, all great work, divides the audience. Anything that's been truly great and a big hit, there are people that love it more than anything, and there are also people that hate it. It's kind of not possible to just have every single person in the world love something. You can have everybody in the world not really care that much either way about something. Thing, but to have people who truly love something, by almost definition, you have to have some people that really don't like it. So with a brand like liquid death, there's that small group of people that tend to be the loudest on social media. I think what we've seen in social the the average person, like probably you or I, are casual observers of social media, you're looking at the circus, but you're not really getting super engaged in it. You're not leaving tons of comments on every post, but the small fringes of people, they're the ones who are actually writing the comments and leaving the post, so they're more vocal. But when we saw some of those folks in the early days that just really didn't like liquid death, we're like, hey, let's find a funny way to show that. Basically this doesn't bother us, because we know when you have a post that has 20,000 likes and then five angry comments, I'll take that ratio of 20,000 to five all day, every day, right? So it's in a way, I think this is true with regular people, like kids who are on social media. People like they can, they can let it get to them emotionally, if someone's saying something negative about them on social media. And I think people have to remember, like, hey, that's just one comment like that. They don't represent the masses of people. The masses of people just don't say anything. It's the small fringes that are vocal. And you have to be able to, like, let that roll off you a little easier. Like, don't take it to heart. And I think that was a bigger thing happening in culture, and that's why we wanted to lean into that. So we said, hey, rather than be afraid of it, let's embrace it. So we took all of the or a bunch of the funniest negative hate comments that we got on social and we turned them into lyrics for an actual music album that we had legitimate musicians write, record and produce. So it's actually legitimate songs, but the lyrics are just these ridiculous worst name for a water company and all these kind of hate comments that we got on social. And the first album we did was a metal album that did really well. We pressed the album on vinyl records that we sold out of then we did a punk album

that did really well. And then, most recently, last year, we did this, like 80s female power pop album that kind of sounded like Madonna. And then that did really well. So yeah, it's kind of been come this cool thing that we sort of just keep, keep building on, that people love,

David Novak 7:47 

yeah? Well, I think track thing on your original Spotify album was fire your marketing guy. When did you first learn the importance of of not taking yourself too seriously.

Mike Cessario 8:01 

I think I've always been that way since a kid. You know, my dad's a really funny kind of joke cracking kind of guy, and, you know, we didn't take a lot of things super seriously in our house, like we were always watching comedies, and so I was always about humor, and sort of, yeah, like just not taking the world too seriously, which, you know, I learned a lot from my father, and I've just been able to kind of incorporate that into the brand. And especially now, I think in a world that, especially over the last several years, I think most people would agree, the world kind of started taking itself a little too seriously. And there was a period where so much comedy was off limits, and comedians couldn't they're so worried about what you're allowed to joke about and not joke about. So I think it was just kind of the right time to have, you know, a brand come along that sort of reminding people, like, hey, like, Let's laugh a little more. Like, let's not take things so seriously.

David Novak 8:58 

You know, I one of the things I really do take seriously. I love to watch marketers do things that are really cool. And, you know, this packaging is, is incredible, I mean, and you know it's, it's so different for someone who hasn't had the experience of of liquid death. Tell us what makes this, this water brand, different, and what you're what you're trying to do

Mike Cessario 9:21 

with it. I think the most interesting thing now, that even a lot of people still don't realize yet, is that we've really become a healthy beverage platform, and not just a water company. Still water sales that can you're holding less than 20% of our sales now, so most of our sales now are from our soda flavored sparkling water that's really like a healthy alternative to soda. And then we launched low calorie iced tea a couple years ago, and we're now the number one iced tea brand on Amazon. So really, what liquid death for me is about is we want to make healthy beverages. That market in the same irreverent way as junk food and alcohol traditionally. Market like you think of the funniest commercials or ad campaigns of the last 20 years, it's all Snickers, Cheetos, Bud Light, you know, Carl's Jr. Like, it's all stuff that's kind of not great for you is the funny, irreverent stuff. We want to be a healthy really good for you, better for you type brand, but that we market in that same funny and fun way as junk food, basically. How'd you

David Novak 10:32 

come up with the name liquid death? With a marketing

Mike Cessario 10:35 

background? I knew in the early days, when you launch a new brand, you're not going to have real marketing dollars to pay for media and eyeballs, so we needed to bake so much of the shareability and Buzz worthy factor of the brand into the packaging itself. And your brand name is probably one of your most valuable assets on your packaging. So when we were looking at, okay, we're not going to be able to pay for marketing for a long time. So if someone sees this on the shelf, what are we betting on? Is going to force somebody to stop and say, Wait a second. What is that? Pick it up off the shelf, maybe read a little bit of what's on the can. Because if you can get the product in someone's hand, you are light years ahead of 95% of other brands because a busy consumer walking through a store. They're not in a store to go explore all the new brands that have launched. They're there to get what they normally get, get in and get out. How are you going to actually stop them with two seconds of their time, to divert them from what they normally do? And when you look at it that way, that's where names like liquid death start being like, Well, I think that might actually stop somebody in their busy day when they're going to give me two seconds of their time. And yeah, yeah, that's kind of how we got

David Novak 12:01 

there. What was it that made you want to get in the water business in the first place?

Mike Cessario 12:06 

Well, I knew I wanted to launch a truly healthy beverage, and water was the healthiest thing you could drink. And, you know, I had drank a lot of water. I thought people didn't drink enough water. And it just in the early days. It seemed simple, because I had actually, in a years earlier, was involved in creating a alcohol company that we got off the ground. And, you know, it was an okay thing, but the amount of red tape and legal with launching a spirit brand, with every state having different laws. And, I mean, it was insane. So when I had when I was going to do my second sort of product, I'm like, I want something very simple. You know, what's the simplest thing? Now, it turned out that there was not a single co Packer in North America who could put non carbonated spring water in cans. It did not exist in 2018 when I was launching this. So it actually was harder to produce than I thought it was. But that was the idea was very healthy. Then the more I did my homework on it, it was like, wow. Bottled water just passed carbonated soft drinks for the biggest beverage category by volume. So, okay, huge category. That's a good start. And then all these water brands, all kind of market and look the same exact way. So, okay, easy to disrupt check there. So really, you know, it really just started checking all the boxes. So, you know, getting into the bottled water space with canned still water as our first sort of product just made a lot of sense.

David Novak 13:42 

You mentioned earlier, Nike. You know, Nike doesn't really outperform Sketchers, but people, they can command a premium price because of what their brand really is. You know, what do you think is most important? The brand or the product? Both

Mike Cessario 13:54 

are very important. I mean, you can't there was, I forget who told me this. There was a great quote. They were like, nothing can kill a bad product faster than great marketing. Because, yeah, great marketing will get everybody, at least curious to go try it, but if it's not something that people enjoy, they're never going to buy it again, and it's just going to be up and down, and that's it. So you have to have a quality product. I think where people get confused is in the nuance of product quality probably matters less like this water versus that. Water has point seven more electrolytes than this one. The perception that people have between product quality across a category is not as dramatic as people think, but it has to be above that level of what you would consider good. But the idea between good and great is too blurry, and what one person thinks is great one other person hates. So it's hard to get there, but as long as it's good, I think you can be successful, and that's what's important. And then, yes, of course. Brand in most categories is really important, because most categories, whether people realize it or not, are commodities, whether that's water, whether that's soda, whether that's beer, whether that's shoes, it's and if you're just a commodity without the brand, the only way you can really win is price, and as a small company, you're limited on what you can do on price, because you only get margin if you've got the economies of scale where you own factories and you own trucks and all that. So it's not a one size fits all. It's like, Hey, if you're in an industry like Lacroix, great example, they've owned their manufacturing for a long time so they could go right in and price lower than everybody else. So brand is probably less critical, because you can just instantly undercut everybody on price. But if you don't have price as an advantage, you better have a strong brand that's going to get someone to choose you as the more expensive item where you are.

David Novak 16:00 

You know, I love what you said in one interview. Mike, you said you don't need to invent something new. You need to make something people already love way cooler. Say more.

Mike Cessario 16:10 

I mean, yeah, it depends what you mean by again, if inventing a completely new liquid is what we mean by invention, I mean a brand, and a brand itself is an invention. You're trying to create something new that is solving some kind of problem. Right? For us, the problem I was trying to solve was healthy products are not are only marketed to people who are already health conscious, right? How do you get the guy that doesn't care about health, the trucker that's buying two monster energies a day or drinking just tons of sugar? How do you get that guy to start making slightly or healthy choices through brand? And that's kind of what we were doing. It's Hey. The coolest product for kids to walk around with are things that are bad, because all the cool marketing is really just for sugar and junk, and they're the ones who invest money into youth culture. And men, specifically, like men, don't typically make as many healthy choices as women, so all these healthy brands are really female focused targeting an older demographic, and then sugar and crap is all targeted to kids and men. So our idea was, hey, how do I make healthy products for people that nobody makes healthy products for? And that was kind of our invention was, hey, let's make something that is really good for you, but make it look like beer. Make it look like something that should be full of sugar that you know, whether this inner city kid will walk around with in front of his friends and not feel embarrassed because he's walking around with, I don't know, a Fiji that's got a pink flower on it, right? It's like the emotional things and why we make decisions, like fashion and that do matter. So that was kind of our invention, was we wanted to create a healthy brand for people that don't that nobody makes healthy brands for.

Koula Callahan 18:15 

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David Novak 19:12 

So you basically they have a healthy platform. You started with the water, and now you've expanded into new product lines. How did you decide what to tackle next? When you said, Hey, we're moving beyond water. We're going here. What was your thought process? How did you lead through that?

Mike Cessario 19:28 

Yeah, we were very methodical. Because that was one watch out that, you know, some of our early advisors gave me was, hey, you know, you don't want to go too wide, too fast. You know, it's, in a lot of cases, better to go whatever they say, inch wide and a mile deep in the early days. So we launched with Stillwater for the first year. Then the second year, we added just a sparkling version of our mountain source water. So it was, you know, we had the. Mountain still water, and then mountain sparkling. That was almost like a competitor to Perrier or San Pellegrino, where it's that natural source sparkling that did pretty that did really well. Was all incremental. Then in 2022 which would have been our third year in business, we launched the first flavored sparkling water.

Speaker 1 20:20 

That's why liquid death sent me here, because they have an entire line flavored sparkling

Mike Cessario 20:24 

waters. World where Lacroix and all these flavored sparkling brands were growing really quick and people want flavor. We said, Hey, let's give people some flavor. And then once we did that, that was all incremental, and did really well, because when we made a cool lifestyle brand, it's a brand that people want to walk around with and be a part of. I mean, we sell millions of dollars a year in liquid death T shirts because people actually like the brand enough they want to broadcast it on a shirt. Not many people will walk around with an Aquafina t shirt or pay 30 bucks for that because the brand means something to people that goes deeper than the liquid itself. So when we launched flavors, what we heard from people was, hey, finally. I've always thought the brand was cool, but I don't really like plain water. Now I have something from liquid death that I'll actually drink and buy. And then that went really well. And then we decided to launch iced tea in 2023 because we had people saying, hey, you know, I'd love something with just a little bit of caffeine or a little bit of function to it. So tea has a little, like, really light, natural caffeine to it. And we looked at the tea category, and it was just nothing but Sugar Bombs, basically, like, there's more sugar in a giant iced tea than most sodas, and people don't realize that. So we said, Oh, interesting place where we can go offer a low sugar, low calorie option, have something that's differentiated, and then that did crazy well for us, where that was only been around since 2023 and we're already the Number One iced tea brand on Amazon. So that's kind of how we thought about the product roadmap, and we were always just very methodical about when we and then when we did launch. We didn't launch with 10 different flavors. We launched with three. And we try to stay really focused on how we roll

David Novak 22:12 

it out. You know, I want to read a few of the product names you have. You know, mango, chainsaw, squeeze to death, peanut, killada, slaughter Berry. What's your favorite story about coming up with one of those names, you know? And here's one that I love. Your liquid death severed lime, you know, I'm gonna drink a little bit of this while you tell that story, you know what? What's your favorite story about coming up with one of these names?

Mike Cessario 22:41 

One of my favorites. I think so with liquid death, the way we market is we're kind of trying to blur the lines between an entertainment company and a beverage company. And there have been some really successful beverages that have done this well, like Red Bull and Monster, where the way they market is legitimate entertainment. Red Bull didn't get massive because they just ran tons of television commercials. They got massive because they were doing action sports content that was legitimate entertainment that was also promoting the brand. We're doing the same thing, but we're doing it with comedy. We want to be the best in the world at making people laugh, creating these liquid death commercials, but they're as entertaining as a Saturday Night Live sketch. And because of that, we've also brought lots of professional comedians into the brand. So the way Red Bull was sponsoring, you know, athletes, we do deals with comedians like Bert kreischer and Tom Segura and Whitney Cummings, and then when we have some of these guys in the brand, not only do they help us promote the brand through their audiences, they can help us come up with funny ideas. So one of our flavors, we got the name because we put a little brief out to our comedians that are affiliated with the brand and said, Hey, if you have any funny ideas for some of these flavors, like, send them to us. Because, you know, we need to, we need to get some funny names. And it's hard to get a name that is. One funny. Two works for what it has to be. And then three can actually be trademarked, because there's nothing else out there that's that's similar enough. So it's hard. So we need to get, when we come up with a flavor name, we need, like, 100 names for one flavor just to hopefully get one really good one. And one of our comedians. His name's Pete Lee. He's hilarious. He's great. He came up with the flavor name for one of our top selling flavors now, which is called Cherry obituary. And I just, I mean, yeah, it was great name, and it came directly from a stand up comedian. And I was, I was happy. You

David Novak 24:51 

know, so many brands like, they try to be edgy, but they fall flat on their face. I mean, it's like, but, but you pulled it off with liquid death. And what's the secret to getting it right?

Mike Cessario 25:05 

It's really all about taste. And I think if you think about, you know, quote, unquote, edginess as entertainment, stop thinking about the word edgy. Just think about what legitimately entertains people. Where is the bar for entertainment like when someone goes on Netflix where they're willing to pay to consume that content? What do they expect from a comedy? What do they expect from an action movie? You know, Red Bull? They know that, hey, if I'm going to be legitimate action entertainment. It better be almost as entertaining as watching Arnold Schwarzenegger blow up a building right like they know that's the bar for entertainment. So okay, we need someone to jump out from outer space. We need the most. It needs to be that level of entertainment. So for us, when it's comedy, you have to be conscious of, okay? You're competing against Saturday Night Live. You're competing against the Dave Chappelle stand up comedy special on Netflix. And if you start seeing that's where the bar is, is your stuff that funny or that entertaining? That's what's important to look at. And I think what happens is, people who try to be quote, unquote edgy, they're not actually comparing what they're doing versus real entertainment. Or you would say, oh, there's no way this thing we're doing is anywhere near this Netflix thing. And that's probably why it's failing, because you're not actually creating legitimate entertainment.

David Novak 26:42 

You know, speaking of entertainment, your iced tea lemonade used to be called the arm armless Palmer, but, but you were forced to relaunch the product with with a new name, because, I guess, some legality or whatever. How'd you use a situation like that to drive even more awareness for the brand.

Mike Cessario 27:02 

Yeah, it's been something that challenger brands have done effectively for a long time. You know, it's big. The big companies will always try to use their might to squash the small companies when they can. But if you're smart as a small company, the good thing is, in America, no one's rooting for the big guy, right? America is all about the underdog, like they want the little guy to win. It's the American dream. It's part of our culture. So small challenger brands, if they're smart, they can kind of try to use the big guy's own might against them, which is kind of what we did. It's like if a big company is going to come and try to threaten you with a cease and desist, with their big, expensive lawyers, thinking it's going to scare the small company, well, if the small company is smart enough to realize, hey, well, if we just publicly post their cease and desist letter, it makes everybody else see them as like, oh, big guy. You're trying to crush the small guy. Screw you. We want to support the small guy. You know, you can use that to your advantage. And famously, Ben and Jerry's ice cream did this in the in the 80s, when Haagen Dazs tried to squash them out of distribution, Ben and Jerry's launched this whole campaign where they were, like, basically calling out the big guy who was trying to get rid of the little guy. And it was this hugely successful sort of campaign for them. So there's a history of Challenger brands being able to kind of leverage, you know, the big guys who were who were kind of trying to use their might against

David Novak 28:38 

so you had a big competitor come after you for the armless, armless Palmer name that you had, and it changed it to dead billionaire. That's amazing, you know. And you know, this strategy that you've had, you know, creating this great entertainment brand that just happens to be this healthy platform. That's which is amazing. You've had explosive growth the past few years. What's been the biggest challenge for you personally in leading through this kind of movement towards scale? The marketing

Mike Cessario 29:11 

part for us is kind of the easy part, because we do that so well, like we can do this marketing stuff in our sleep. A lot of other companies struggle, struggle with marketing. That's a tough place for them. For us, especially in the beverage industry, because of the way it's structured, there's a lot that is out of your control that you don't have a lot of effect. You know, you can't affect as much, for instance, like distribution, to be in every retailer, for the most part, you have to go through a distributor, but there's a limited amount of distributors, like Coke has its own distribution network. Pepsi has its own distribution network, but you can't get into that network unless they own you, basically. So we go through the beer network, because the way the alcohol laws are structured. In the US Anheuser Busch corporate can only own 20% of its distribution network, so we're able to go one by one to 300 unique, independently owned beer distributors and convince them to take us on as a brand. And they're the ones who deliver liquid Death to all the grocery stores and convenience stores. They're the one who put liquid death on the shelf. They're the ones who has to reorder it when it's out of stock. But in that network, they're selling hundreds of other brands, and maybe they get their bonuses selling Bud Light or these other billion dollar brands, liquid death is so far down the totem pole on what they're focused on, so that's a tough part. As a brand growing and scaling. You can't be sitting out of stock on the shelf for three four days at a time, and we don't have 1000s of employees that can go in every single store, the way Coke or Pepsi can, to keep an eye on that. So you really lean on your distributors to execute in retail. Well, for you, and that's been, you know, a big part of our challenge scaling is we're just trying to get more and more mind share with our distributors, where they remember liquid death in the store and keep us in stock, and that they, you know, they understand all that. And then from the retailers, the retail buyer, they are the gatekeeper for shelf space. Why should they give liquid death this space over somebody else, and somebody else paying more money for the shelf space than what we're paying, because they're a big company and they can afford it. So there's all these things that don't have anything really to do with consumer demand that you have to still kind of figure out to get to that level of scale. We could, we could have everybody in the country want our brand, which is what it was in the early days. In the early days, we were ripping on Amazon and retailers were saying, No way. We're putting this on the shelf. It will never sell. Moms will never buy liquid death. Cut to today, we're driving almost all the growth in the flavored sparkling water in target to an 80% female customer, because mom is buying this because she's like, Finally, my nine year old's excited to drink water instead of soda because he has something he feels like he's not supposed to have, right? But it's hard to convince a buyer of that, or it's hard to convince a distributor of that who are not marketers, who are not, you know, culture experts, the way marketers tend to be. So that's really the hard part of scaling, is all the in between, between us and the end consumer. It's a very fragmented, fragmented, complicated puzzle that it takes years and years to years to just get more and more efficient.

David Novak 32:51 

Yeah, I get the challenge of the scaling, but as a leader yourself, you know, you go from what is very, very small to now you got a billion dollar brand. How have you had to evolve as a leader, as the as the brand is scaled?

Mike Cessario 33:06 

Well, one it's about keep for us, I think it's important keeping the culture at liquid death intact, right? You know, it's a brand that's all about fun and disruption and creativity, and that DNA has to always be a part of the DNA of the company. It doesn't matter if you're 10 people or 300 people, if you lose that spark, you lose the ability to innovate and continually execute against that because again, the bigger you get, the more you have other people that you depend on to lead and run things where I can't be a micromanager in the weeds of every aspect of the company, like I'm like, I had to be when it was small. You have to trust people to run their teams and to to make the right decisions. And if you know it's my job to really make sure that the vision is there, that we're all aligned on what we're marching towards and how we're going to get there, and that we've got the right framework and culture to deliver on that kind of a level of execution. And also remembering, at the end of the day, it's I work for my employees as much as they work for me, I think any great leader, the people that work for you, have to feel like you truly have their best interest in mind, that you want them to succeed, and that you're there to help them figure out, what do they need to be successful. That I think that's at least how I've approached it.

David Novak 34:38 

You know, so many leaders give that comment that you just made lip service. They say, I'm here for my people. I need to serve them. How do you make that become a reality? What do you do that really says, you know, people, a lot a lot of times, we judge ourselves by intentions, but people judge us by our actions. What actions do you drive to really make sure people know that

Mike Cessario 34:59 

we don't. Have a lot of corporate politics the way big companies have, like, we're trying to be very authentic. Now, authentic is also a word that's thrown around a lot, and what does that mean? It's more people that work for me. I don't talk to them or treat them any differently than I talk to my brother or my good friends, you know. Like, I try to be very real upfront and say, Hey, this is what we're trying to do. And, hey, what's happening? Like, I'm free to say I don't have all the answers all the time. Like, hey, I don't know what to do here. Tell me, what do you think? Versus, I think sometimes people try to put on this facade where they think I have to play this character and I can't let anybody see weakness, right? It's like I don't feel that way. And I think people respond to being genuine when they feel like you're not putting on a show, you're not faking who you are, you don't have an ulterior motive, like you're just being very upfront about what you want to get out of this, what you're trying to do. And then people then trust you, and if people trust you, then they believe what you say, and their work hard for you. I think people when they don't trust someone, that's where you have people who, you know they don't want to bust their ass, or they're just always looking for a way out, when when they can, and then when they find one, then they're gone. You know. You

David Novak 36:20 

know, even now as as you're you've got this billion dollar brand, you still operate under this mantra of what you say are small bets, explain,

Mike Cessario 36:31 

yeah, when you've got a small marketing budget that you need to punch way above its weight class. Because, I mean, we're a nationally distributed brand. I mean, we're in every single major retailer, pretty much across the country, in some level. But our marketing budget does not look like a full national marketing budget of typical giant national brand. So when you need our marketing to really have a lot of earned media value, which is really what our focus is. When we make a piece of content, we'll put some media dollars behind it, but we need people to talk about it, share it, spread the message for us, without us paying for every eyeball. So that kind of means you need to have what we call a hit just like there's a hit show that Netflix might have, or a hit show that someone else has. We need hits, and hits are really hard to find. If you just say, Hey, I think this is going to be a hit, and I'm going to put all our money on on this one idea, and we hope it's going to be a hit, but if it's not, then you're screwed, because you're not diversified. And I think you see it a lot more when you look at like stock traders and people who have, you know venture capital firms, that they have a bunch of bets, knowing that one or two big successes will pay for everything else, but you can't find those big successes if you're not diversifying and trying a bunch of different things. So that's kind of what we do. When we create our content, we don't spend a million dollars on any one piece of content. You know, we might spend 100k on average on a piece of content, but that allows us to do a bunch of different things, and we might see, oh, wow, this 100k thing has 20 million views. Let's go move some media dollars behind the thing that we know is a hit and that we know is resonating with people, and really scale that up. So that's how we think about it. Do a bunch of small things to try to find winners and move money to the things that are really working hardest or most successful.

David Novak 38:36 

We'll be back with the rest of my conversation with Mike Cesario in just a moment. One thing I love about Mike is how he really embraces the underdog status of liquid death and uses it to his advantage. That's a quality I see in a lot of great marketing minds, including Wendy Clark, the global CEO of the marketing agency Dentsu International. She says you got to have that challenger mindset no matter what size of company you work for.

Wendy Clark 39:00 

Well, I think the there's a great book written by Adam Morgan, who is a longtime planner in the advertising business, and it's called, I think he's gonna not forgive me. Now it's called eating the big fish. I was gonna say eating the giant fish, but I think it's called eating the big fish. And it's all around challenger branding. And even when I was at 18 t when we were we were the big fish. We always have to take the Challenger mindset, because then if you take the Challenger mindset, you care. You always think of yourself as David going up against Goliath, right? And you try harder. You don't sit back on your laurels, you don't think I've got this done, and then Pepsi comes along and eats your lunch. So I think the challenge of mindset just keeps you hungry. It keeps you focused. It never lets you rest. It drives innovation. It drives ingenuity, it drives excitement. And frankly, those are the sort of the attributes of people you want on your team that you want working for. It doesn't matter that your company is 120 years old, 130 years old you are the steward. Rid of that brand in that moment, you have a responsibility to leave it better than you found it, and you can't rest on past success. You know, the great axiom that I'll say is like today's headlines tomorrow are just yesterday's news. No one cares. So go

David Novak 40:16 

back and listen to my entire conversation with Wendy, Episode 43 here on how leaders lead. Yeah, I'm going to come back to how you're, you're leading liquid death. But you know, you mentioned earlier that your dad, you know, kind of gave you a sense of humor, and you guys could, kind of didn't take each other too seriously, and you kind of picked up that trait. And that's, that's a cool story. But when you think back about your upbringing, do you have a story you know, about what it was like when you were growing up as a kid that really impacted the way how you lead today.

Mike Cessario 40:49 

I mean, I think it was the fact that my my dad always raised us to be very independent and just kind of realized that, you know, everything you do is going to have consequences, and you can't just be expecting that. There's going to be somebody there to just fix everything for you. And I remember there was, you know, I didn't go to college right away after high school. I thought I wanted to be in a band and be in a touring band and do that. I was in a band, and we were pretty good. And it was like, Hey, let's at least give this a shot. I'm like, college will always be there. So, you know, we were playing in a band and, you know, trying to do that whole thing. And I was, you know, living in my own little, cheap apartment that I was paying for myself, had a full time job at a ski and snowboard shop selling snowboard so I'm doing that during the day, trying to play band stuff in the OFF time and try to, like, you know, just support myself. And then I remember my roommate at the time was this, like, you know, pothead kind of kid that just randomly, one day was gone. He just left, took his stuff. I came home, there was no one in the apartment, and I couldn't afford to pay the rent. And my dad could have easily just said, Hey, I'll just kind of make up the difference for you. And he said, No. Said, Mike, if I help you now, it's gonna hurt you, and I have to let you sort of deal with this situation and mess that you've got yourself into. So sure enough, I couldn't pay the rent, got evicted from the apartment, had that go on my credit. It forced me to kind of make other decisions of what I was doing and all of that. And I think that was like a moment I always remembered that was like that big sort of wake up call splash in the face where, I mean, at that. I mean, I was working in like a factory at that time just to make money and realize, like, how hard this really is out there when you don't have the right sort of plan. So ever since then, it really just changed my motivation for how hard I would work and push at something, and knowing how much energy effort and drive is really needed to kind of get to that level where you want to be at. So that was probably one of the scenarios I remembered most at

David Novak 43:11 

the top of the show, I shared that we have a little bit in common. You're a hell of a lot better marketer than I am, but yeah, that was my vocation as well. We both started out our careers in the advertising business. And, you know, corporate marketing can be really safe, and you're you don't really think in a safe way. I mean, how did you navigate? You know that dealing with what a lot of people would be thinking about, let's take the safe route and being a guy who who wanted to go the other way?

Mike Cessario 43:40 

Well, I think the safe route is only safe when you have a lot of capital, because when you can afford to pay for all the eyeballs that are exposed to your message, the message can be safe and you can still get the message out there. But if you need the message to reach a lot of people, and you can't pay to reach all those people safe will not get you there like you'll you'll run out of money if you if you're trying to be safe. So for us, we knew that earned media and getting something that's really shareable, where people will spread the message for you, requires a different approach that would not fit under the normal, safe sort of guidelines of what people expect from big companies.

David Novak 44:26 

As a marketing person and much beyond that now as a leader, you seem to be a guy who really does believe in following your instincts and using a lot of common sense around how things will really work. Do you do traditional things like focus groups or or what's your view of that? That kind of feedback from customers?

Mike Cessario 44:49 

Yeah, we've, we've done focus groups before, and I think they can be very helpful for certain things, but they're all they also will not help on certain other things. If you're trying to figure out, hey, will consumers like this video, and you put a bunch of people in a room and play a video and ask them for their input, you're going to get things that normal people, under normal circumstances, are not going to have the reaction to. And I've seen that when I worked for ad agencies, for big brands, and they would go and test stuff in these focus groups, and it would test well. Then you put it in market, and it doesn't do well, because it's just, it's a clinical environment. Is very different than someone just flipping through a television and coming across a TV ad, or whatever it might be. But I think for things like when we were testing, you know, flavors or pricing, like, Hey, would you buy something at this price versus that price? I think you can get a little bit more accurate info from people there. But when I think, when you start trying to use focus groups to answer all your questions, because you don't have the right intuition or systems to make a hard decision yourself. That's where I think it can start being a slippery slope. But, yeah, getting customer feedback is always important. You just have to be mindful of what's the reality of the situation that they're giving it in. What are you really trying to get out of

David Novak 46:16 

it? You know? And you know, you start up a company, which is always the hardest thing in the world to do, and I've heard you describe startups as in a way of saying you need to explore the absurd and try to make new things happen. How did that mindset come into play when when liquid death was just an idea?

Mike Cessario 46:37 

The quote I was taking was from this guy, Reid Hoffman, who was one of the founder of LinkedIn, who had his own master masters of scale podcast. I remember him saying that almost all truly innovative ideas are almost laughable at first, because anything that's truly new and never been done before almost seems ridiculous. If a new idea seems like, oh, this makes perfect sense to most people, it means there's probably already 10 companies who have been working on this for five years already. Because, if it makes so much sense, but you look at these hugely successful industry changing ideas like Uber. For example, when the idea for Uber first came out, people thought was ridiculous. Oh, people are going to normal. People are going to drive drunk, people around in the back of their cars, like taxis, like people thought that was ridiculous. Or Airbnb, who is ever going to rent their house out to perfect strangers to go stay in it like a hotel. It sounds laughable and ridiculous at first, but then they end up becoming some of the biggest businesses in the world, because they truly are innovative. So, yeah, something like liquid death, you want to put something healthy in a can that looks like beer that mark, you know, it's like, it sounds ridiculous, but then it ends up actually being this,

David Novak 48:09 

absolutely, you know. And you know, you mentioned culture earlier, you know, as you scaled, you really want to protect your culture. You know, when I was running young brands, you know, the thing that I've focused on number one in terms of just the value or behavior I wanted to see in the company was, was recognition. You know, how would you describe your culture? And what would be the single biggest trait you want to make sure everybody in the company really understands that. This is what makes liquid death work, and this is the behavior we got to exhibit day in and day out.

Mike Cessario 48:42 

It's a good question at this stage of the company. It is about we need to move fast, because that's really our only competitive advantage we really have over the big guys, is we can move a lot faster when we're small, and especially when you have people that join the company from bigger companies, where they have a lot of great experience, but big companies have the luxury of taking their time and moving slow and just sort of waiting for things to happen, Whereas a startup, which we are. I mean, at our level of scale, we're still tiny compared to, you know, a lot of the other competitors. We have to be like, we have to make quick decisions. We have to get things to happen quickly. It's like, from an operation standpoint, it's like, hey, how do we get the capacity and thing we need quickly, because things can change so fast. As a startup, you know, all of a sudden the demand can be way up. And what are we going to do to service that we can't just say, well, we'll take our time and we'll just be out of stock for months and just it'll eventually catch up. It's like, No, we got to move fast. So everything we do from how decisions are made. To even how things are incentivized. It's all about how do we move quickly, and how do we how do we react quickly, too? It's not just about moving quickly. Hey, when there's a problem, how do we quickly react to fix it? So I think that's probably the big thing. Is everyone knows like, Hey, we're all trying to move fast here.

David Novak 50:20 

I've had a lot of questions that I've asked, but I've never asked that question and got a response that's led me into my lightning round of questions like this one. So that's great. So we're gonna do a lightning round here. The three words that best describe you,

Mike Cessario 50:32 

nice, honest and kind of funny.

David Novak 50:36 

If you could be one person for a day besides yourself, who would it be one

Mike Cessario 50:40 

of the big, professional, big wave surfers, because I can't surf, and the feeling of being on one of those giant waves, it has to be the most incredible feeling that nobody except those guys will ever get to experience. Doesn't matter how much money you have. You can't be a billionaire and stand on a surfboard on one of those giant waves. You'll never know what that feels like, unless your biggest pet peeve, it's not one of my biggest, but one that comes to mind is when people misuse the word literally, where it's like, Hey, I literally shit my pants. No, you didn't.

David Novak 51:15 

What's your go to? Liquid death beverage.

Mike Cessario 51:18 

It always changes. My go to right now is our our root beer flavored sparkling water.

David Novak 51:27 

What's something you loved the most about growing up outside of Philly?

Mike Cessario 51:31 

I loved growing up as a kid, living in the woods and just being a kid, and you could literally just run around in the woods by yourself all day, building stuff and finding stuff that was pretty incredible.

David Novak 51:44 

Where do you go for inspiration? Everywhere. What's the one thing you do just for you play drums, besides your family, what's your most prized possession

Mike Cessario 51:52 

my dad gave me his 1967

David Novak 51:56 

Mustang Fastback. If I turned on the radio in your car, what would I hear right

Mike Cessario 52:01 

now, you would hear probably my daughter's playlist that is a combination of like punk and metal and even like little kids songs. She kind of likes

David Novak 52:12 

everything. What's something about you? Few people would know

Mike Cessario 52:15 

that one of my favorite music artists is Adele, who would play you in a movie Adam Levine. I get that all the time, so I imagine maybe they would get

David Novak 52:24 

him to play, what's one of your daily rituals, something that you never miss,

Mike Cessario 52:27 

making my own coffee in the morning. All right,

David Novak 52:30 

we're out of the lightning round. Great job. Appreciate that. Now, is there anything that you've learned at work from a leadership perspective that you try to be you try to bring home so that you can can lead at home in an effective manner as well.

Mike Cessario 52:47 

You know, we had a saying at liquid death that I thought was really valuable, which was always assume best intentions. It's like everybody's always, you know, working hard and under their own pressure to achieve X, Y and Z, and what can come off as someone trying to intentionally screw you or make your life difficult? It's probably not that like they're just trying to do the right thing, and it's coming off that way, and I think it just helps the way you interact with people, where you don't take things so personally that have any friction, and I think that that helps at home, too, is realizing the same thing you know

David Novak 53:27 

in terms of how you interact with people. You know you're obviously a creative person. You deal with all these comedians who are creative people. What's the advice you can give to other leaders on on how do you get the most out of creative people?

Mike Cessario 53:40 

Yeah, you got to let them feel like they've got the freedom to create, and then you have some process for how you ultimately determine what's the right final product. So it's like going wide and feeling like you're really exploring everything to get to something, versus giving them a really, really narrow lane to say it has to be this specific thing and don't ever even think of anything outside of that. I think when you start to really constrain creative people too much, it doesn't work that well.

David Novak 54:16 

And Mike, you know, you've had a lot of success, but what's the worst idea you ever had, and what did you learn

Mike Cessario 54:21 

from it? It's probably less about what, like, we haven't had any ideas that really, like, blew up in our face or anything like that. I think it's it's more about making the wrong business decisions, you know, like the ideas for that, where it's like, hey, let's just have one package size that every single retailer has, right? And it's like, Oh yeah, that seems like a great idea, but then you realize like, oh wait. Well, when it's the same price as this retailer and they price match them, then you're losing margin there. Then it's like, well, why are they going to buy it? But at Whole Foods for $2 more than the same exact thing is on Amazon, and it was, it was something that we did for a while, and it wasn't until very recently that we actually took the time to develop a proper price pack architecture that I think is really critical, which is a much better idea than just, you just have one thing that everybody has, and you know, it created a lot of problems. So,

David Novak 55:26 

you know. So when you, you know, you hire people now, and you're building this company, when, when you look at someone, you say, This person is going to be a star. They're going to crush it. There's no, no question about it. What's that person? What does that person have that other people don't,

Mike Cessario 55:41 

I think for me, it's when they are, at least in our company, when they autonomously make sure that things are getting done and anticipating problems and having backup plans where it's like, I know when this person is on this thing, they've thought of everything. They know if something goes wrong, they've got the plan B. I don't have to stay on top of them. Asking them, Hey, have you done this? It's like, no. They come to me and say, Hey, here's where we're at. This is what's happening. This is the progress. If this isn't working, I'm doing this. I think it's rare to find those kinds of people that really just, they're very entrepreneurial, meaning they autonomously treat their businesses as if they're their own businesses, and that they're not just wait. They're just just waiting for someone to tell them what to do, or, you know, or that, I think that's

David Novak 56:38 

two more questions. I'm let you go. First one, how do you sharpen your own acts? And what are you working on right now to get better?

Mike Cessario 56:44 

I mean, one i i read a lot, right? I'm trying to always kind of just absorb knowledge, everything from, you know, non fiction, business stuff to actual fiction stuff, because I think there's valuable, valuable things you learn from all of that. I've got a lot of great mentors, whether those are very successful, you know, public company CEOs that are invested in liquid death, and I go to them, and I think it's something that you know, I've been told, you know, by some of our early investors that you know, who have invested in lots of different startups. They're like, Mike, you're one of the few founders that actually listens to our advice. Because I think there's a lot of young startup founders that can be really thick headed and ego driven where it's like, no, I know everything, and I'm going to do this my way, where I've always been very open, especially in the areas where I don't have as much experience marketing. I have a really strong background. I know that pretty well. But when it comes to raising capital, supply chain, retail, sales, finance, all of that that I have less of a background on. You know, I definitely listen to advice from smart people who have been there and done that, so I can just get better and better at those things that I have less previous experience with

David Novak 58:01 

All right, last question, I'll let you go here. What's one piece of advice you'd give to anyone who wants to be a better leader?

Mike Cessario 58:07 

I would say be, you know, again, it's, it's, it sounds cliche, but be yourself, and whether, whatever that means, be your true self as much as you can, because then people will believe you. And there's people who are successful leaders, who are quiet types, and they lean into the fact that they're quiet, and they, you know, they lead quietly, and you've got big alpha, you know, extrovert leaders, who, they can be very successful at that when they lean into that. But if you've got, if you're an introvert trying to pretend you're an extrovert. That's not going to work.

David Novak 58:43 

Well, I have to tell you, Mike, I was looking forward to this because I admire what you've done so much. I mean, you know, to build a brand from scratch, to build a brand that truly does break through the clutter, to have the courage that you've had to take those bold steps. You know, there are not many people like you around that really do that. And you said one of the things that when I think it's the three words that best describes you is nice. You're a hell of a nice guy, and I could see why people follow you. So thank you so much for taking the time to be on this show. I've learned a lot just listening to how you think, and I'm sure everybody else will too. I appreciate it. Thanks. David.

You know, it's easy to look at liquid death and just see the crazy stunts and the chaotic ideas and all the creativity that they throw into that business. And listen, you absolutely should look at how their marketing breaks through the clutter and gets people's attention, because it does, and it is truly remarkable. But talking to Mike, you can also see there's a grounded strategy that drives it behind every crazy piece of content or a reverent line extension. There's a methodical. Way of testing and vetting. Plus, I'm sure you noticed this, Mike is a careful student of culture, and he's always taking notes about what people respond to, and he has his own personal board of directors, and he truly listens to them to really understand whether he's heading down the right track, to me, that's the real magic of liquid death, not just the disruptive ideas, but the disciplined and grounded way that Mike thinks about them and then puts them into action. That ability to combine bold ideas with operational rigor is a hallmark of great leadership, because it creates more than just attention. It creates real momentum. So this week, I want you to spend some time looking at liquid desk marketing, study what they're doing, look for the strategy behind the madness, and just see if it doesn't spark some ideas for how you can thoughtfully disrupt things in your world. So do you want to know how leaders lead, what we learned today is that great leaders disrupt with discipline. Coming up next on how leaders lead is Zach Brown, CEO of McLaren racing. So be sure you subscribe on YouTube or wherever you get your podcasts so that you don't miss it. Thanks again for tuning in to another episode of how leaders lead, where every Thursday, you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business, so that you will become the best leader that you can be. You.