I'm a water snob. Always have been. So when Mike Cessario told me on this week's show that less than 20% of Liquid Death's sales are now plain water, I almost stopped him there. The brand is Liquid Death. The thing that made you stop in the grocery aisle and pick up the can in the first place was water. And now water is a fifth of the business?
That's the moment I understood why this company exists.
Cessario didn't build a water brand. He built a brand and put water in it because water was the easiest commodity to disrupt. Water just happened to be the launchpad. The thing he was actually doing — the bet that's worth a billion dollars now — was something different and, when you really look at it, contrarian to almost every piece of startup advice I've ever heard.
The standard advice goes: find a great product, then build a brand around it. Cessario did the opposite. He started with the marketing capability he knew he was world-class at, then went hunting for a category where that capability was the deciding factor.
That's the whole thesis. And almost nobody is investing this way.
The category test most founders fail
Most CPG founders I've looked at over the years come in with the same pitch shape: we've made a better version of [X]. Better-tasting protein bar. Cleaner-ingredient seltzer. More functional kombucha. The product is the moat. The brand is the wrapper.
Cessario's frame inverts it. His category test is one question, asked honestly:
"In this category, does brand determine the winner — or does product?"
Most categories, product determines the winner. You can't out-brand bad coffee, broken software, or a protein bar that tastes like dirt. In those categories, marketing is amplification — it makes a great product visible. It doesn't compensate for a mediocre one.
But in a few specific kinds of categories, brand does the heavy lifting. Cessario's example was water — in a blind taste test, almost no one can pick Fiji over Aquafina over tap. So when you walk into the cooler at a gas station, you're not buying based on the product. You're buying based on what the can communicates about you. Brand is doing 90% of the work; the water inside is 10%.
His other example was the one I keep coming back to: fashion. Gucci sells an $800 t-shirt with the same functional material as a $15 Target t-shirt. Brand has value. There's not irrational reasons people will spend it. It's an emotional reason.
Once you accept the test, the founder question reframes entirely. It's not what product can I make better. It's what category am I uniquely positioned to win, given my actual edge? For Cessario, the answer was: a commodity beverage category, because his edge was funny brand marketing, and water was the category where that edge mattered most.
The reason this insight is contrarian is that most founders don't want to admit their edge isn't the product. They've spent years on the product. They love the product. They want to compete on the product. So they end up in categories where their actual edge — branding, distribution, ops, whatever — is irrelevant, because someone else has a better widget.
The honest version of the question is uncomfortable. Cessario answered it honestly, and that answer was worth a billion dollars.
PULL QUOTE: "I wanted to find a product where there was an outsized weight on marketing and brand determining the winners." — Mike Cessario
The other inversion: don't create a category. Disrupt one.
The second contrarian piece of his thesis: go big, not new.
The standard pitch deck framing is "we're creating a new category." Investors love a new category because there's no incumbent and no benchmark — just upside. Cessario's view, which I think is correct, is that new-category bets are mostly suicide for early-stage CPG.
His argument: in a new category, you have to spend money educating customers on what the product even is. They aren't already buying it. They aren't already in the aisle looking for it. You have to convince them the category should exist and then convince them you're the version of it to buy. That's two sales, in sequence, on a marketing budget you don't have.
In a huge existing category — water, in his case — everyone is already buying. The aisle exists. Velocity exists. Your job is just to convince a small percentage of those buyers to pick you instead of the can next to yours. One sale, not two.
This is the part I most wish someone had told me when I was younger making investment calls. I've passed on category-disrupting bets in favor of category-creating bets more times than I'd like to admit, because the category-creating ones felt more interesting. They almost always burned more cash and converted slower than the disruptive ones.
The unglamorous truth is that disrupting a $200 billion category by taking 0.1% of it is more valuable than creating a $2 billion category by taking 10% of it. The math is the same; the path is wildly different. Disrupting is the path that doesn't require you to also be a missionary.
Pre-product, the marketing has to be the product
The third thing Cessario said that I want every founder I work with to internalize: he raised the first round on a fake commercial.
Before there was a real can. Before there was a co-packer. Before there was an order placed for the minimum-viable 250,000 cans you have to buy to even make canned water — Cessario filmed an ad. His wife's friend, an actress. A camera guy he knew. Photoshop-rendered can designs printed onto a Miller Lite can with the labels stripped off. The whole shoot cost $1,500.
The ad ran on Facebook. Within five months, it had three million views and the page had more followers than Aquafina. People were leaving comments asking where do I buy this. Distributors were reaching out, wanting to talk to a sales team. None of which existed yet.
That's what he raised the first $150K on. Not a product. Not a deck. A piece of marketing that proved demand for a can that wasn't real.
The lesson here is sharper than "test before you build." The lesson is: if your edge is brand and marketing, prove it with brand and marketing, before you've spent a dollar on product. The ad was the MVP. The water came after.
For most founders, this is impossible because their edge isn't marketing — it's engineering, or operations, or some technical insight. Their MVP has to be a product. Fine. But if your real edge is the brand, build the brand asset first. The product is the carrier wave. The brand is the actual signal.
What I'd actually do, taking this back to my own portfolio
Three things I'm going to do differently after this conversation:
- Run the category test on every CPG deal I see. Not as a vibe check, as an explicit question: in this category, does brand determine the winner, or does product? If product determines the winner, I want to see why this team has a genuine product edge, not just better marketing intentions. If brand determines the winner, I want to see the team's brand instincts demonstrated before I see the product.
- Stop rewarding category creation as a default positive. When a deck says "we're creating a new category," my first reaction should be skepticism, not interest. The follow-up question is who else has to invent this category for you to win? If the answer is "nobody, we're alone here," that's usually a tell that there's no demand yet. Demand existing is the precondition for capturing it; you can't conjure it cheaply.
- Look for founders who can prove demand before they've built anything. The Liquid Death origin story isn't unique — RxBar, Dollar Shave Club, plenty of others — but it's still rare among the founders I see. The ones who can construct a marketing artifact that generates real-world demand on a $1,500 budget are demonstrating something nearly impossible to fake: they understand brand at a level deep enough to make money before they make product. Those are the founders to back.
Cessario closed the conversation with a quote from RxBar's founder that he was given early on: until you find something that's not working, you are not moving fast enough. That sentence works as a tactical instruction for an early-stage founder. It also works as a philosophy for an investor. If every bet I'm making is reasonable and most of them work out, my returns are going to be fine but unremarkable. The bets that move the portfolio are the ones at the edge of what looks like it might not work — and the only way to find that edge is to keep moving until you actually hit it.
I'm not done thinking about this conversation. The category test alone has me re-examining a few deals already in motion. That's the highest compliment I can give a founder interview: it changes how I look at the next ten that come in.