Latest / Startup Stories with Fexingo: Conversations About Founders, Funding, and Building Companies from Zero / How Liquid Death Made a Billion-Dollar Brand from Canned Water
Transcript
- Lucas: You see a can of water at a convenience store. It's tall, matte black, with a skull and crossbones. The brand name is Liquid Death. And it costs about double what a bottle of Poland Spring costs. Luna: Right, and somehow it's become a billion-dollar company. I've seen kids wearing their T-shirts, people posting about it on Instagram — it's a whole culture. How does that happen with plain water? Lucas: That's exactly the question. Liquid Death was founded in 2017 by Mike Cessario, a former Netflix creative director and ad agency guy. His insight was simple: the bottled water category was boring. Every brand sold purity, health, hydration — all the same message. Luna: So he went the opposite direction. Instead of serenity, he gave it punk rock aggression. Lucas: Exactly. The product is literally just mountain water, sourced from the Austrian Alps, canned instead of bottled. But the branding is pure heavy metal. The tagline is 'Murder your thirst.' The cans say 'Death to plastic.' Cessario understood that in a crowded market, you don't compete on the product — you compete on the story. Luna: And the story worked. They've raised something like $200 million, valued at $1.4 billion as of last year. But the real question is: did they build that on marketing stunts alone, or is there a real business underneath? Lucas: Let's dig into the marketing first, because that's the part everyone talks about. Their early strategy was built on shock value. They launched with a music video featuring a heavy metal band crushing cans. They ran ads on late-night TV that looked like horror movie trailers. One of their most famous stunts was selling a 'casket cooler' — a coffin-shaped cooler that holds 200 cans — for $499. Luna: And that casket cooler sold out almost immediately, right? I remember reading that it generated millions of dollars in revenue and went viral on social media. Lucas: It did. But here's what's smart: the casket cooler wasn't just a stunt — it was a merch item that reinforced the brand identity. Liquid Death sells a lot of merch. T-shirts, hats, hoodies. In fact, their merch line is a significant revenue stream. It's a way to turn customers into walking billboards, but it's also a high-margin business. Luna: So the water itself is almost a loss leader? Or at least, the profit comes from the brand extensions? Lucas: The water is profitable on its own — they sell it at a premium, roughly $1.50 to $2 per can, depending on the pack. But the merch amplifies the brand and creates a halo effect. Cessario has said that people who buy the merch are more loyal and more likely to subscribe to the water delivery service. Luna: And subscriptions are a big part of their model. They offer direct to consumer delivery in bulk. That locks in recurring revenue and bypasses retail margins. Lucas: Right. But retail is still the bulk of their volume — they're in 7-Eleven, Whole Foods, Kroger, Target. The subscription business is a smaller piece but a higher-margin one. And it gives them a direct relationship with customers, which is gold for data and repeat sales. Luna: I want to talk about the influencer strategy. They didn't spend much on traditional advertising, did they? Lucas: Almost nothing. Cessario's background is in creating shareable content. They leaned heavily on influencer partnerships — but not the typical paid posts. Instead, they'd send a casket cooler to a comedian or a musician, and the unboxing would go viral. They sponsored a punk rock festival, created a 'Death Token' NFT, even had a fake feud with actor Jack Black. All of it earned media. Luna: So the cost of customer acquisition was basically zero, but the ROI was massive. That's the dream for any startup. Lucas: It is. But there's a flip side. The same irreverence that got them attention also invites skepticism. Critics say it's just marketing fluff — that the product is essentially the same as any other canned water, and the brand premium is a gimmick. And there's some truth to that: if you strip away the skulls and slogans, you have a commodity. Luna: But isn't that true of almost every consumer brand? Nike sells sneakers, but you're paying for the swoosh. Apple sells phones, but you're paying for the ecosystem. The brand is the value. Lucas: That's fair. And Liquid Death's numbers suggest the brand has real staying power. Revenue hit $130 million in 2023, and they've been growing rapidly. But the question is whether they can sustain that growth as copycats emerge. Big beverage companies are starting to notice. PepsiCo has a canned water brand called LIFEWTR, Coke has Smartwater in cans. But neither has the punk attitude. Luna: So the moat is the irreverent culture. That's hard to replicate because it has to feel authentic. If a giant like Coke tried to be punk, it would feel corporate and fake. Lucas: Exactly. And that's where Cessario's background matters. He's a genuine fan of punk and metal. The brand isn't just a costume — it's an extension of his personality. That authenticity resonates with the audience. Luna: So what's the risk? If the founder steps away, does the brand lose its soul? Lucas: That's one risk. Another is that the novelty fades. People might get tired of the schtick. But Liquid Death has been around for seven years now, and growth hasn't slowed. They've expanded into new flavors — like iced tea and sparkling water — under the same brand umbrella. So they're building a portfolio. Luna: And if conversations like this help you think differently about your own branding or marketing strategy — how to sell an attitude rather than a commodity — it's because we dig into these stories without any ads or sponsors. Lucas: Yeah, that's the whole point. We keep the show independent because we believe the best business insights come from unfiltered conversations. If you find value in that, the simplest way to support us is at buy me a coffee dot com slash fexingo. No pressure, just a way to keep the episodes coming. Luna: Exactly. And speaking of selling attitude — let's look at how Liquid Death specifically turned its founder's personal taste into a business. Lucas: Cessario has said in interviews that he approached Liquid Death like a startup that happened to sell water. He didn't think of it as a beverage company — he thought of it as a media company. The product is the content, and the water is just the vehicle. Luna: That's a useful framework. A lot of founders get stuck trying to build a better mousetrap. Instead, he built a better story. Lucas: Right. And the story had to be consistent across every touchpoint. The website, the packaging, the social media, the customer service — all of it had to feel like you were interacting with a heavy metal band. That's hard to execute, but when you pull it off, you create a tribe, not just a customer base. Luna: Let's talk about a specific tactical decision. They launched with a subscription model for their 12-packs and 24-packs. Why not go purely retail? Lucas: Two reasons. First, margins are better direct to consumer. You capture the full retail price instead of sharing it with a distributor and a store. Second, the subscription creates a recurring revenue stream that makes the business more predictable and attractive to investors. Plus, it lets them collect data on who's buying and how often. Luna: So the subscription is a data moat as well as a revenue moat. Lucas: Precisely. And they use that data to inform everything from new flavors to merch designs. For example, they noticed that a big chunk of their subscribers were in the 18-34 demographic, skewed male, heavy metal fans. So they leaned into that with limited-edition collaborations with bands like Slipknot and Guns N' Roses. Luna: That's smart — co-branding with the actual culture they're riffing on. It adds credibility. Lucas: It does. And those collabs drive spikes in both subscription sign-ups and retail sales. The Slipknot can, for instance, sold out in days and was resold on eBay for triple the price. That kind of scarcity marketing creates buzz without spending a dime on ads. Luna: So where does Liquid Death go from here? They've got the cult following, the valuation, the distribution. What's the next frontier? Lucas: International expansion is one. They're already in the UK, Australia, and parts of Europe. Another is category extension — they've launched an iced tea called 'Death' and a sparkling water called 'Death' as well. But the biggest opportunity might be in institutional sales — offices, gyms, hotels — where the brand's anti-plastic message resonates. Luna: And the biggest threat? Lucas: Commoditization. If the big players decide to copy the aesthetic and undercut on price, Liquid Death's premium becomes harder to justify. But so far, they've managed to stay ahead by constantly innovating the brand experience. As long as they keep the story fresh, they might just keep growing. Luna: It's a fascinating case study in how a startup can win not by having the best product, but by having the best narrative. Lucas: And that's a lesson that applies far beyond water.