Latest / Startup Stories with Fexingo: Conversations About Founders, Funding, and Building Companies from Zero / How Liquid Death Built a Billion-Dollar Brand Selling Canned Water
Transcript
- Lucas: So there's a brand called Liquid Death that sells canned mountain water with a logo that looks like a heavy metal band's album art. Skulls, gothic font, the whole thing. And this company, which started in 2019, just crossed a billion-dollar valuation last year. Luna: A billion dollars for water in a can that looks like it should be sold at a Slayer concert. How did that happen? Lucas: Exactly. The founder is a guy named Mike Cessario, and his background is in advertising — he worked at agencies like BBDO and did campaigns for Netflix and Jack in the Box. He was tired of the standard wellness-marketing playbook for water. You know, the pristine glacier shots, the yoga poses, the 'hydrate your life' language. Luna: Right, that whole category is so earnest. Evian, Fiji, Smartwater — they all take themselves very seriously. Lucas: Cessario's insight was that there was a huge audience of people — mostly guys, honestly, but not exclusively — who wanted to drink more water but found the branding embarrassing. Like, you're at a punk show or a construction site or a skate park, and pulling out a bottle of Smartwater feels wrong. It doesn't fit the aesthetic. So he created a water brand that looked like a beer. Tallboy can, aggressive logo, taglines like 'Murder Your Thirst'. Luna: That's such a specific niche: people who want to stay hydrated but also want to look cool doing it. And apparently that niche is way bigger than you'd think. Lucas: Massively bigger. Liquid Death did about $300 million in revenue in 2025, up from about $150 million the year before. And they've sold over a billion cans cumulatively. The growth rate has been something like 300 percent year-over-year for the past couple of years. Luna: Wait, a billion cans? That's a lot of water. But I still don't get the pricing. How much does a can cost? Lucas: A single 16.9-ounce can retails for about $2.50. That's more than a 20-ounce bottle of Dasani, which is usually around a dollar fifty. But their core demographic doesn't care because they're paying for the vibe. Cessario has said in interviews that Liquid Death's real competition isn't other water brands — it's energy drinks, beer, soda. They want to be the alternative you reach for when you want something that feels rebellious but isn't bad for you. Luna: So the product is water, but the brand is liquid rebellion. That's a smart positioning. But how do you actually get people to try it? You can't just put a skull on a can and expect a billion-dollar business. Lucas: No, and that's where the viral marketing comes in. Cessario understood early that the brand's visual identity was inherently shareable. He made these absurdist videos — like one where a guy uses a Liquid Death can to hammer a nail into a wall, or another where they 'sell' the water in a dumpster at Coachella. They leaned into the joke. And their social media presence is just unhinged. They'll post a video of someone drinking a can while a car explodes in the background with the caption 'Hydrate or die'. Luna: It's basically the Old Spice strategy for water. Over-the-top masculine humor that's so ridiculous it becomes self-aware and cool. Lucas: Exactly. And it works because it's not trying to fool anyone. Everyone knows it's just water. There's no health claim here. It's pure entertainment and branding. They also did a brilliant thing early on: they launched as a direct to consumer subscription only. You could buy a 12-pack of tallboys shipped to your door. That created a sense of exclusivity and built a community of superfans before they ever hit retail. Luna: That's a classic DTC play, but for a beverage? Shipping heavy cans of water is expensive. The logistics must have been brutal. Lucas: It was. Cessario has said they lost money on every subscription order for the first year. But the goal wasn't to be profitable on those initial sales — it was to build a cult following and generate proof of demand before going to retailers. And it worked. They got into Whole Foods in 2020, then Target, then Walmart. Now they're in something like 100,000 retail locations. Luna: And the retail strategy is interesting too. They're not just in the water aisle. They're in the cooler next to the energy drinks and beer, often at gas stations and convenience stores. That's a very deliberate placement. Lucas: Right, because that's where their target audience hangs out. If you're buying Monster or Bud Light, the can next to it is Liquid Death. And the tallboy format reinforces that association. It's the same size as a beer can. It feels familiar. They even have a 'severed lime' flavored sparkling water that comes in a black can. It's all very cohesive. Luna: I've also noticed they do limited edition runs with bands like Slayer and Guns N' Roses. That's straight out of the craft beer playbook. Lucas: Yeah, the partnership strategy is smart. They do collabs with musical acts, comedians, even the UFC. Each collaboration creates a new collectible can, which drives scarcity and social media buzz. People post pictures of their collection. It's basically what Supreme did with streetwear, but for water. Luna: So at this point, they've built a billion-dollar brand on pure marketing. But is it sustainable? I mean, at the end of the day, it's water. What happens when the novelty wears off? Lucas: That's the big question. Cessario is clearly aware of it, because they're expanding into new categories. They now have an iced tea called 'Dead Billionaires' — which is a reference to Lipton, I think — and a line of flavored seltzers. They're also doing a canned cocktail called 'Death' that's an alcoholic version of the water. But the core thesis is still the same: take a boring commodity, wrap it in a personality, and charge a premium. Luna: It reminds me of how Starbucks took coffee, which was a cheap commodity, and turned it into a $5 experience. Water could be the next coffee in that sense. Lucas: Exactly. And if you think about it, the bottled water industry is massive — it's like $300 billion globally. But most of that is controlled by Coca-Cola, Pepsi, Nestlé. Liquid Death is proving that a new entrant can win just by being different. They don't need to be better water. They need to be a better brand. Luna: I want to go back to something you mentioned earlier — the DTC subscription model losing money. How did they fund that? Because shipping heavy water cans can't be cheap. Lucas: They raised venture capital. Liquid Death has taken in about $200 million in funding from investors like Science Inc., The Chernin Group, and even Live Nation. The thesis was exactly that: lose money on early direct sales to build a brand, then use that brand equity to win retail distribution and eventually make money on volume. It's a classic growth-at-all-costs startup play, but applied to a beverage. Luna: And it seems to be working. But I've also read that they're now profitable on a per-can basis at retail. Is that true? Lucas: According to Cessario, yes. They achieved positive unit economics in 2024. The cost to produce and distribute a can is about $1.20, and they sell it to retailers for around $1.80, which gives them a 50% gross margin. Then the retailer marks it up to $2.50. So the model works as long as they keep volume high and marketing costs reasonable. Luna: That's a good margin for a commodity. But one thing I wonder: with all that venture capital, are they actually building a long-term business, or is this a story designed for an exit — like an acquisition by a big beverage company? Lucas: It could be either. Cessario has said he wants to build an independent brand, but the investors are probably hoping for a big payday. And the obvious acquirer would be someone like Anheuser-Busch or Coca-Cola. But I think the more interesting question is whether Liquid Death can keep growing at 100% plus rates. The market for premium water is still relatively small, and they're already in most major retailers. At some point, growth will slow. Luna: Right, they're going to have to expand into new categories or new geographies. They've started in the UK and Australia, but international expansion is expensive. Lucas: And there's also the risk of cultural fatigue. The whole ironic, punk aesthetic could feel old after a while. They're already doing things like releasing a line of 'Death' hats and shirts, which is fine, but it starts to feel like a merchandise brand that happens to sell water. The challenge is to keep the brand fresh without losing its edge. Luna: That's the classic innovator's dilemma: how do you stay rebellious when you're a billion-dollar company? You can't really be punk rock when you're owned by a multinational. Lucas: Exactly. But for now, Liquid Death is a master class in how to build a brand from scratch when your product is a total commodity. They didn't invent better water. They invented a better story. And that's a lesson every founder can learn from, whether you're selling water, software, or socks. Luna: Absolutely. I think a lot of founders get caught up in trying to differentiate on features or technology, but sometimes the biggest moat is just having a personality that people want to associate with. Lucas: And speaking of that, if you're starting a business and you've found that talking through ideas with smart people has helped you think more clearly, that's exactly why we make this show. We don't run ads on these conversations, and if you want to support that choice, there's a link at buy me a coffee dot com slash fexingo. Just a low-key way to keep it ad-free. Luna: Yeah, it's nice to have a resource that's purely about the ideas, not about selling you something else. So if you find value in that, consider it. Lucas: Alright, back to Liquid Death. One more thing I find fascinating: their environmental positioning. They use aluminum cans, which are infinitely recyclable, and they're constantly talking about reducing plastic waste. That gives them an ethical angle that actually aligns with the brand ethos. It's not a separate CSR initiative — it's baked into the product design. Luna: Right, aluminum cans are actually much better for the environment than plastic bottles. And they can ship them flat to the filling facility, which reduces carbon footprint. So the sustainability claims are legitimate. Lucas: Exactly. But they never get preachy about it. They just say 'We're killing plastic' and leave it at that. It's part of the brand voice, not a separate message. That consistency is probably the biggest lesson for any startup. Luna: So if I'm a founder listening, what's the one takeaway? Don't just differentiate on product — differentiate on personality. And make sure every touchpoint reinforces that personality. Lucas: That's it. And don't be afraid to polarize. Liquid Death's branding turns some people off. But the people who love it really love it. And that's enough to build a billion-dollar business. Luna: I think that's a perfect note to end on. Thanks, Lucas. Lucas: Thanks, Luna. See you next time.