3 More Questions (Mike Cessario) with David Novak and Koula Callahan

0:04David Novak:Happy Monday, everybody, and welcome to How Leaders Lead. I'm Koula Callahan, here to bring you another edition of Three More Questions with David Novak. And David Novak, today I'm going to need you to lean into your most punk rock version of yourself because we're talking about your conversation with the CEO of Liquid Death, Mike Cessario. Well, I don't think I can go punk rock as far as I could go as a country, but I'll try to be as off the charts as I can. Your conversation with Mike is so fascinating. I mean, this guy is a marketing genius and he actually does have a punk rock background, which is really evident when you look at the packaging of his products with Liquid Death.

0:44Oh, absolutely. I mean, his packaging breaks through the clutter, but everything he does breaks through the clutter. I mean, this guy basically wants to shock the system. He started out with the water and, you know, water could be pretty boring. So he said, how do you make it exciting and make it something that kids want to drink and, you know, gets attention off the shelf, which you got to do when you're a small brand. And so he came up with the name Liquid Death. And then he's got all kinds of great line extensions and different categories like tea with names like, I think, what, Pina Colada.

1:17You know, he's a really big thinker and has a lot of fun with his brand. And everybody on the team does, too.

1:22David Novak:Absolutely. If you are looking for a way to make your brand stand out, you really need to listen to this episode and study Mike's strategy because he doesn't just do this stuff to be edgy, like for edginess sake. There's real discipline and strategy around how he is using language and visuals to disrupt the space. And it's just an amazing episode. So go back and listen to it if you haven't. David, today, we're going to go punk rock with our questions. Are you ready for it? All right, let's fire away.

1:54David Novak:Question number one. A lot of brands today, like I said earlier, try to be edgy kind of for edginess sake. And a lot of the marketing for brands that try to be edgy doesn't land. Liquid Death, though, has done it better than maybe any brand recently. And Mike thinks about edginess differently. He reframes edginess as entertainment. David, what's your take on that? I think, first of all, I give Mike a lot of credit because he understands what his brand is. Liquid Death is an irreverent brand. And if you're a reverent brand, you've got to be edgy. You've got to be out there. You've got to get people to think about you differently.

2:32Now, the approach that he takes to do that is not just to do wacky stuff, but to do wacky stuff that's actually funny and entertains. And so if it doesn't entertain, he doesn't do it. The key point here is he understands what his brand is. Once you understand what your brand is, you have to put guardrails around it and make sure that everything you do reinforces what your brand is. You know, and when I've studied all the great companies that have built great brands, they try to differentiate their brand in everything they do around what they stand for. So if you're a real conservative brand like Rolex, I don't think it's going to make a lot of sense for you to be edgy.

3:13I mean, you want to be high quality, premium, prestige, you know, it's a whole different thing. But if you watch Rolex advertising, They understand who they are and they stay within that lane. And I think that's the real point here. And sometimes, Kula, you can be edgy and think you're edgy and think it's really cool. And consumers might think it's cool, but it doesn't work.

3:37David Novak:David, do you have an example of that? Taco Bell, certainly when I was the CEO there, and it continues to be, in the quick service restaurant business, we think that Taco Bell is an irreverent brand. You know, we think outside the bun. We live moss. You know, we try to go out and really do things differently. Early on, when we were trying to be irreverent and trying to be edgy, we created this campaign that was famous, quite famous. It was with a chihuahua. And the chihuahua was our spokesperson. And he had the line, Yokiera Taco Bell. And I love Taco Bell. Now, this was a talked about advertising campaign.

4:16Everybody loved it. They love these ads. They couldn't wait to see the next one. But guess what? We didn't sell any food because I believe people don't want to eat dog food. They want to eat good food. And this really reinforced dog food versus good food. And that's one of the reasons why it failed. You know, I never did like that campaign because as soon as we launched it, sales did nothing. And in our business, if you had a good campaign, you'd immediately see sales growth. and we never ever saw it because the advertising itself overwhelmed the product and didn't really take the brand forward.

4:50And we already had 100 % awareness of Taco Bell. Everybody knew Taco Bell. What we had to do was sell our food and make it legitimate and still have fun with it. And we did that later with Think Outside the Bun, Live Moss, and Taco Bell, I think, is leading the industry today in same-store sales because they understand what the brand is and they reinforce it in everything that they do.

5:11David Novak:I remember you telling me that, and I was shocked that the Chihuahua campaign failed because you're right, everyone was talking about it. Well, I got in trouble with animal rights groups because I said we killed the Chihuahua. And we didn't literally, but we definitely took it off air. PETA came after you. David, when I was writing this question, I was thinking to myself, what examples of edgy brands I really like? And I was driving from Louisville back to Nashville a couple of days ago. And on 65 South, there's a giant billboard that said, your wife is hot, get your AC fixed. And I thought that was hilarious.

5:45David Novak:I mean, it's edgy, right? Like who's telling you that your wife is hot? Usually you'd be like, all right, man, like that's not cool. But then it was an ad for an HVAC company. And I thought that was so great. Well, to each his own, Kula.

6:02David Novak:Question number two. Mike talks about the early days at Liquid Death and how they stayed focused on just a few products. They stayed an inch wide and went a mile deep. And he believes that's critical to being successful when you're a small company who's just starting out and you don't have a ton of capital behind you. What other advice, David, do you have for leaders trying to build momentum for a brand that's just starting out? Well, I think, number one, you got to do what Mike has done. You got to understand what your brand is, and then you have to reinforce it in everything that you do. And that's just a core principle that you've got to stick to.

6:37And, you know, I think being focused is not just critical for brands that are trying to build momentum. Being focused is critical for every brand, no matter how big you are. You've got to really decide what's important and then put process and discipline around it to make sure that you execute the things that are really important and will drive your business. So what I'd say to everybody is, you know, really understand what the priorities are that will drive your growth. And for me, I always ask the question, what perceptions, habits, beliefs do you have to change, build, or reinforce to grow the business?

7:11You really got to get inside of the heads of your customers and really understand how they think. What perceptions do they have? What are they thinking about your business? What behaviors do they have? What do you have to really address to make sure that you grow the business? I talked about Taco Bell a little bit earlier. One of the things that we learned about Taco Bell as the biggest barrier to growth was that our products were not easy to eat and they were messy to eat. And that's really a problem when your business is 70 % drive-through. So we started focusing on the important thing of developing products that could be more portable.

7:45Products like the Crunchwrap and Quesadilla and the Grilled Stuff Burritas are all wrapped up so that you could eat them in a less messy way than a taco. And that worked for us. So the key thing here is understand who you are, reinforce what you are in everything that you do, and then really understand what the big consumer barriers are and then prioritize your actions up against those. And I guarantee you, you're going to grow your business.

8:09David Novak:Question number three. Mike credits a lot of the brand's success to being able to move fast and make decisions without a ton of pushback and without having to get approval from all these different people. And moving fast like that is an advantage that small companies have. What can leaders of larger companies do to stay agile and move fast in the same way that small companies can? Well, what I did was I basically declared war on bureaucracy and declared war on big company-itis. And I tied those two things together and said, hey, look, we got to move fast. We got to be quicker than everybody else.

8:45I don't care how big we are. We got to act small. By acting small, that will give us the right mindset to stay nimble and quick so that we can out-execute and have more speed than our competition. So I think it's really having that mindset and then doing something about it. If you've got 20 reports and you only need three, get three reports. Decide what's important. If you're working on ideas that have no chance of ever being successful and you know it, kill those ideas and focus on the ideas that can be. The focus is what you got to have. And acting small does that. Because when you're small, you can't afford to waste your time on things that don't work.

9:23And the problem with big companies is you get big and you have more money and you start wasting your time on things that aren't going to work. Now, that's different than making some big bets on some future areas where it can really pay off for the company. And I think in those cases, it takes more time and you got to nurture them and go after them in a methodical way and make sure that you're doing something that can really have blockbuster results for your company. So I kind of always looked at it in two ways. Number one, how do you stimulate the core? How do you take your core business and just grow it by bringing forward all kinds of news that your customers are going to love?

10:00But that's sort of in your wheelhouse. And then you say, OK, what can we do to really break through the clutter, really change the category, change the overall economics of our business that requires much more longer term thinking and longer term testing so that you can really figure it out? I always try to do it like 80-20, 80 % on the quarter, and then get some really smart people off to the side and really have them focused on really maybe disrupting the category or really improving your unit economics significantly with something that's just not just your knitting, it's a blanket that's going to really, you can put over your business and grow it even bigger.

10:40David Novak:I love that concept, David. I hear a lot from people who work at big companies that I have good ideas, but they just never get executed because I have to get this person to say yes and then this person to say yes. And nothing kills momentum faster than red tape. When I hear people say that, then look yourself in the mirror first. Are you breaking through the clutter yourself? Are you really attacking the bureaucracy that's getting away? Are you going to your boss and say you can't get stuff done because of this or that? where you're just sitting in the background whining and trying to explain your results away and your lack of success away.

11:15So you got to take accountability for that. Sometimes, yes, there is a lot of bureaucracy in big companies. And if it's driving you nuts, go somewhere else where you can be creative and make things happen.

11:25David Novak:That's so punk rock, David, of you. Well, there you go. I don't know. He's a punk rocker after all, folks. Hey, yeah, I'm like Kid Rock, you know? I remember seeing Kid Rock at the Derby and he was walking around. and he had his earplugs in. I was talking to him. He says, what are you doing? He says, I'm listening to one of my songs. Wow, wow. You know, I was with Eric Church and Eric Church kind of thought that was kind of funny too. That's so good.

11:54David Novak:Well, David, that does it for our episode of three more questions for today. Thank you so much for tuning in to How Leaders Lead. We're on a mission to make the world a better place by developing better leaders. And if you carve out a little time with us, each and every week, will help you build the confidence you need to lead well. And coming up next on How Leaders Lead, it's my conversation with Zach Brown. And this is a really fun one. He's the CEO of McLaren Racing, and he's one of the gurus in Formula One. And this guy is a great thinker and knows how to make big things happen and build a great team, obviously.

12:36Thank you.