Yanni Hufnagel, Founder and CEO of Lemon Perfect, Discusses his Entrepreneurship Journey
Yanni Hufnagel, a self-taught entrepreneur and former college basketball coach, launched Lemon Perfect, an enhanced flavored lemon water beverage, in 2017. The brand is now at a $100 million-plus valuation, and Hufnagel’s goal is to reach a $5 billion valuation by disrupting the enhanced water market with a new, scalable beverage.
On a recent episode of the podcast “The Joe Pomp Show,” Hufnagel talked about his unlikely journey from coaching hoops to heading a wildly successful startup.
‘Magic Inside the Bottle’
“There’s nothing in the category with our flavor profile, the freshness of our flavor profile, our nutritional deck, and zero sugar,” Hufnagel said on the popular sports-oriented podcast. “We’re bottled in 100% recycled plastic, and we’re organic. I think we’ve got magic inside the bottle. When people drink the brand, they come back in a big way, and the data would suggest that.”
Few could have predicted Hufnagel’s career trajectory. He coached college basketball for 10 years for the California Golden Bears, Vanderbilt Commodores, and Harvard Crimson but left in 2017 to launch Lemon Perfect. During his last year coaching at the University of Nevada, Reno, he recalls when he was on a recruiting trip and entered a sports nutrition store in a strip mall.
As he tells it, “I walked in and went to get a couple of protein bars, and the man working behind the register saw my Nevada basketball polo, and he said, ‘Do you work for the team?’”
Hufnagel answered, “Yes,” and the man divulged, “My dream is to be a strength and conditioning coach for an NBA basketball team.” After their chance meeting, the man sent Hufnagel a draft of a book he’d written about the ketogenic diet. Hufnagel noted that this book included sample meal plans, and every day started with a glass of pure water with the juice of half a squeezed organic lemon as part of an intermittent fasting routine.
Hufnagel found the process of cutting and squeezing lemons every morning to be messy and annoying.
His eureka moment came later, as he watched the basketball players he coached drink Bai, an infused water drink. He asked himself, “Can you take organic lemon water and give it the flavor profile of Bai?” For months, he wondered if it was possible to achieve great flavor that’s also healthy in a lemon-infused beverage and says that this concept “has been the bedrock of the brand from day one.”
Capturing Someone’s Daily Routine
Hufnagel told podcaster Joe Pompliano that he pitched the idea while having lunch with an entrepreneurial friend one day. The friend said, “I love it. Anything that you can do that can capture a piece of someone’s daily routine—what they do in the morning when they first get up, what they do at night when they go to sleep, or any point B, C, D, E in between—is worth going for.”
On The Joe Pomp Show, Hufnagel revealed, “That night, I googled, ‘How to start a beverage company,’ and here we are.”
The name Lemon Perfect came to him as he stood on a street corner in Paris. He immediately registered the domain name on godaddy.com, then figured out whom to work with to build the formula.
He soon realized creating a beverage made a significant dent in his bank account (he put in the initial $50,000). A friend recommended he raise some capital—another avenue about which he knew little.
“My first investor meeting was so bad,” he says. “I got back in the car … I put my head into the dashboard and started crying.”
That was a Monday morning. By Friday, he had met an interested potential investor in New York City who wanted samples of the drink.
“I ran across Central Park to get some more,” he recalls. “I’ll never run that fast again. I had little 4-ounce bottles that I was pouring a gallon jug into. He called me and said, ‘My wife and kids love it! I’m in.’”
This lucky break led to a seed round of 40 investors.
“I’ve been very fortunate that we’ve always prioritized having cash in the bank,” he says. “It’s a very capital-intensive business—beverages. It’s bordering on insane—the capital pressures of this business—especially early, when you don’t have Big Soda distribution behind you. You’re just trying to win the street fight without a weapon.”
‘I Put the Brakes On’
While in the laboratory creating Lemon Perfect, Hufnagel knew he wanted to win everywhere, from Beverly Hills, California to Baton Rouge, Louisiana—from a taste perspective. He also wanted to hit on every relevant nutritional circle while determining what flavors resonated with the consumer.
“I wanted to create something that had a really big [total addressable market],” he says.
Having no prior experience in beverage, Hufnagel made two big decisions after the initial product production that gave the startup a better chance to become highly successful. One was to rebrand and redesign the bottle—a six-month process. The other was to reformulate the then “keep refrigerated” drink into a shelf-stable beverage that would scale more easily. Both decisions paused the startup’s strong momentum in the first year.
Hufnagel explained on The Joe Pomp Show: “I put the brakes on the whole thing because I felt like we were driving a really nice car down a one-lane road in the middle of the night—and putting the foot on the gas—and it was going to crash.”
Lucky Breaks
Today, Lemon Perfect comes in 7 flavors: Just Lemon, Dragon Fruit Mango, Peach Raspberry, Kiwi Star Fruit, Blueberry Açai, Strawberry Passion Fruit, and Pineapple Coconut. Lemon Perfect contains zero sugar and no artificial flavors or sweeteners. It is made from pure ingredients—including squeezed organic lemons and organic plant-based sweeteners—and it contains electrolytes and is packed with vitamin C.
While Hufnagel had confidence in his product, he admits a little good fortune played a part in his meteoric success. Early on, while at a trade show, the buyer for the Northeast Division of Whole Foods stopped by the Lemon Perfect booth and “fell in love with the product,” Hufnagel says. That chance meeting got Lemon Perfect into Whole Foods in the New York Metropolitan area, and the product did well there.
Another lucky break: the category manager at Publix took the drink home to his wife, who said, “My God, this is the best thing I’ve ever had.” A week later, Lemon Perfect was in all 1,250 Publix stores.
“Now we’re the most productive brand in the entire category at Publix,” he says. “That’s versus Vitamin Water, Bai, Hint, and Vita Coco.”
So, what does Hufnagel think is behind Lemon Perfect’s kismet?
“From minute one, we’ve had a story to tell,” Hufnagel says. “That has allowed me to maintain my energy and fight through the darkness, especially early on, because I’ve been able to dream big from the time I registered the domain name.”
Success in the beverage market begins with the product, Hufnagel says. Then the packaging and pricing architecture must be tight.
“We think we’ve got those three P’s: product, packaging, price,” he says.
The company has not raised the price of the Lemon Perfect beverage since its initial production. It’s a psychological barrier to go even one penny more to $2, Hufnagel says.
“We sit on the shelf at $1.99,” he says. “We have made a very conscious decision to compress our margin story today to build a big one for tomorrow.”
‘Coaching Was Easier’
Hufnagel says there are parallels between coaching college basketball and running a startup, but “[c]oaching was a lot easier,” he admits. “But when I was coaching, I had a chance to impact 13 lives in a locker room. Suddenly, the impact can be 13 million, 130 million, or 1.3 billion.”
The Lemon Perfect Company has raised more than $40 million at a $100 million-plus valuation. It recently closed a $31 million Series A. Investors included some bold-faced names in basketball and entertainment: superstar Beyoncé Knowles-Carter, Washington Wizards forward Kyle Kuzma, Portland Trail Blazers forward Josh Hart, former pro ballers Channing Frye and Nick Young, and Mavericks guard Spencer Dinwiddie.
While demurring to give details about the connection to Beyoncé Knowles-Carter, Hufnagel said, “She is an authentic fan of the brand in a big way. The dots were connected, and we’re just super excited that she’s a part of our story and that she believed enough to invest in the brand and take a really meaningful seat at the table.”
‘Joy in Every Sip’
Hufnagel wants Lemon Perfect to be the enhanced water category leader by market share in five years. He thinks it could hit a $5 billion valuation, too.
“Vitaminwater was north of a $4 billion transaction,” he says. “If you want to put a dollar sign on it, I think we have a chance to be the biggest one ever.”
Hufnagel wants to see people sipping Lemon Perfect everywhere in five years. He wants to be a ubiquitous brand, for good reasons.
“I want us to deliver the joy of flavor in every sip,” he says. “I want us to have an impact on the health of the American consumer. The beverage ecosystem is dominated by high-calorie and high-sugar options.”
Hufnagel maintains boundless optimism when talking about Lemon Perfect and its bright future.
“Flavor knows no boundaries,” he says. “Old and young, rich and poor, black and white, male and female, gay and straight—I don’t care what you look like, where you shop, how much money you make—we can be a product for you. How exciting is that?”