The 10 tricks Liquid Death used to beat the odds and stay alive

Most new product launches fail. Here’s how Liquid Death defied expectations and earned a valuation of over $1bn, according to founder Mike Cessario.

They say the only certainties in life are death and taxes, but not far behind that must be the fact most new brand launches fail.

Having spent most of my career marketing beverages, and more specifically launching new brands, I can tell you that creating a successful new brand is not as easy as the PowerPoint deck might have made it look.

When I worked at Britvic, I reviewed every soft drink launch over the course of a decade using data from Nielsen, to see exactly how many new brands succeeded. Let me summarise your chances.

Since only about 2% of new products got above £1m in sales in their first year, starting small is almost guaranteed. If you took the top 20 from year one, around 80% were product extensions leveraging the equity of the parent brand. After that it gets even harder, as 50% of the top 20 actually declined in year two, and in the long term somewhere around eight out of 10 had left the market altogether.

As you can see, the odds are not in your favour.

There was, however, something really interesting in the data, if you looked at the most successful new product launches after five years, the list didn’t resemble year one at all. The list was full of brands that had started very small in niche parts of the category but had then grown very fast and overtaken the big launches.

I concluded the study by saying that “it takes on average seven years to create an overnight success”.

‘We win if we make people laugh’: Liquid Death on its unconventional approach

Which brings me nicely to Liquid Death.

The brand was trademarked seven years ago and launched two years later. Its latest funding round this month doubled its previous valuation to $1.4bn, so I thought it was about time to talk to its founder and CEO Mike Cessario on the Uncensored CMO podcast. It was one of the most fascinating and insightful conversations I have ever had and a blueprint for how to beat the product-launch odds.

If you haven’t heard of Liquid Death, then quite frankly where have you been? It has been one of the most successful soft drink innovations of the past decade. Taking the idea of putting spring water in a can for a more sustainable approach to hydration, Liquid Death created a brand that was the complete antithesis of every other water brand on the planet.

Here are 10 tactics that, according to Cessario, the brand used to cheat its own death.

1. Create a story worth talking about

Whether it’s the famous Innocent story about turning up at a festival asking people to try their smoothie and vote on whether they should give up their day jobs, or the Brewdog founders raising money from beer drinkers after being declined by the bank, every successful startup has an iconic origin story.

Liquid Death has many such stories, such as when Cessario discovered a band drinking water from a Monster can to stay hydrated. This gave him the inspiration that eventually led to Liquid Death. There was also the Facebook page he created for $2,500 – just to test the brand idea with nothing to sell – which quickly built a following of 60,000 and became the proof of concept for his first round of funding.

2. Learning from failure

It’s fascinating how many founders talk about the failures that came before the success. In Cessario’s case, he had previously launched a brandy but learned that the industry red tape was a huge barrier, as was the misalignment between him and the other investors. As he told me on the podcast, “choose carefully who you partner with”, which is extremely good advice since it can be more important than what you work on.

3. The outsider advantage

I could give you a million reasons why launching water in a can was a bad idea because I know the market, but sometimes not knowing is the key to success. As Cessario told me on the podcast, “it was better not knowing the rules” and I think that’s why so often people from outside a category succeed. It’s something Adam Morgan, in his book Eating The Big Fish, calls “intelligent naivety”, and it shows the value that category inexperience can bring in helping you imagine something completely new.

4. The opposite of a good idea can be a better idea

This was a concept made popular by Rory Sutherland in his book Alchemy, and Liquid Death is a wonderful example of it. By asking what the dumbest possible idea was, the company actually came up with a better way to sell water. As Cessario says, it set itself the task of inventing the worst name imaginable and starting to imagine how that brand would look.

If it had come up with something too obvious, then the chances are everyone else would have already been doing it. It had to create something the establishment players with major water brands – such as Danone, Coke and Pepsi – would never do, and calling a water brand Liquid Death and putting it in a can is exactly that.

5. Prove the concept, then scale fast

One of the really big challenges facing any startup is investing the money before knowing whether the product will sell. The minimum volume for a single new product launch is often eye-wateringly high, so you need a fair amount of money just to make your first production run.

To overcome this, Cessario set up the Liquid Death Facebook page long before anything had been produced and it amassed thousands of followers who loved the concept. He was then able to do a ‘friends and family’ funding round off the back of that, and when Liquid Death did launch it was sold out in a month.

The next challenge was to scale fast – or, as Cessario puts it, create “escape velocity” – and become big enough that the competition couldn’t just copy its product. This meant getting VC funding, which the brand did with a company that had backed other successful direct-to-consumer brands and knew what to do.

6. Your idea is worth nothing without execution

As Cessario says, “ideas themselves are worth zero dollars”; it’s the ability to execute that makes them valuable. The US beverage market is incredibly competitive, with Coke and Pepsi owning the majority of space in store and delivering product direct to retailers – not through distributors.

To get around that, Cessario started by going direct-to-consumer. It made no financial sense, but it proved there was demand even at $20 per 12 pack. That created interest from retailers such as Whole Foods and 7-11, which then began stocking Liquid Death. Perhaps the smartest move was using on-trade distributors serving bars, restaurants and other establishments, where legislation means there is less domination by a few players.

7. Creativity is born of constraints

As Cessario puts it, “marketing is an attention game – you can either pay for it or create it”, and when you are a startup you have no choice but to create it. In everything Liquid Death does, it is trying to make it so entertaining that people choose to share it with their friends. It’s easy to wish you had more money to spend on your brand, but in my experience the very best creative ideas are born of constraints, not of large budgets.

For example, Liquid Death’s Instagram and TikTok accounts have a greater following than all of the major water brands combined, and this has been achieved by using comedy and parody to create highly entertaining content, rather than just brand communication.

It’s something I learned myself when I was part of a team that acquired Juice Burst and re-launched the brand with no advertising budget. I created the world’s first augmented-reality soft drink brand, which generated a lot of press, trade buyer interest and consumer engagement. The idea would never have happened if I’d had a large budget to spend.

What to do when you have no budget

8. Packaging is your greatest media

One of the conventions that Cessario has truly broken is that you need lots of facings on shelf to stand out. When you are called Liquid Death, look more like an energy drink than a water brand and come in a pint-sized can in a sea of clear plastic, you are going to stand out.

The value of its packaging was perhaps no better illustrated than at the Super Bowl. Rather than spend $7m on a 30-second spot, Liquid Death realised that the same number of people who watch the Super Bowl walk past its packs in Walmart each week. So instead, it spent $10,000 auctioning off its packaging as ‘advertising’ on eBay.

In the end, crypto company Coinbase won the auction, paying just over $500,000 for the chance to have its ad appear on Liquid Death cans, making this the ninth most expensive thing ever sold on eBay. Not a bad financial return besides all the free press and attention the competition created.

9. Entertain for commercial gain

‘Entertain for commercial gain’ is a phrase we often use at System1 when explaining the power of creativity to build a brand, and it’s exemplified by Liquid Death. As Cessario says, “our way to entertain people is with comedy and we make people laugh better than anyone”. The brand set the bar very high when recruiting people to the team, because “anyone can make an ad, but few can make a hit comedy”.

In Cessario’s view, “if your brand owns a functional benefit then you don’t have a brand”. It is this obsession with creating a brand that has allowed Liquid Death to scale, create a business from merchandise and extend into new categories.

10. Hire the best people in every position

I ended our interview asking Cessario for his single best piece of advice, and this is what he said: “Be incredibly honest about what you are better than anyone else at, and then hire smarter people for the areas you are not good at, even if you have to give away part of your company.”

No one can be good at everything and no one has the capacity to do everything, so I think the most important ingredient to a successful scale-up is who you hire.

To hear the full story about how Liquid Death beat the odds and cheated death, search for ‘Uncensored CMO’ on your chosen podcast platform.