Yanni Hufnagel is the Founder and CEO of The Lemon Perfect Company, maker of Lemon Perfect, a delicious and refreshing flavored lemon water with zero sugar and no artificial flavors or sweeteners. Lemon Perfect is the fastest-growing brand in the Flavor-Enhanced Water category and is widely considered one of the most innovative emerging beverages in the marketplace. The company’s mission is to sustainably reimagine bottled water by promoting great-tasting, healthy hydration—anytime, anywhere, and for everyone.
Before starting Lemon Perfect, Hufnagel served as an assistant men’s college basketball coach, with stops at Nevada, California, Vanderbilt, Harvard, and Oklahoma. Hufnagel earned the reputation as one of the most dogged recruiters in America and was consistently lauded for signing nationally ranked recruiting classes. In Hufnagel’s 10 years coaching college basketball, his teams reached the NCAA Tournament six times.
What is Lemon Perfect all about?
Lemon Perfect is a delicious and refreshing flavored lemon water with zero sugar and no artificial flavors or sweeteners. Every bottle contains half a squeezed organic lemon and only 5 calories and is high in immune-boosting vitamin C. Also, we are proudly certified Plastic Neutral. We have 84 people at Lemon Perfect who—to use one our favorite expressions at the company—”bleed yellow” and are the bedrock of what we strive to do every day.
This year, the company will do over $60 million in retail sales, with a plan to do over $100 million in 2024. We’re very excited about what we’re building.
Tell us a little bit about your background and how you started your company?
I coached college basketball for 10 years, which paved the way for my becoming an entrepreneur. At every stop—whether Harvard, Vanderbilt, or Nevada—in recruiting, I had to tell a story. I had to sell our head coach, facilities, conference, and player development program. Lemon Perfect is a sales-focused business. We are selling an incredible product every day, but we still need to tell a story. We believe we have a great product and great packaging, which helps us tell a great sales story. And we’re not only selling retailers and distributors—we’re selling consumers, future teammates, and investors. But we feel great about our vision and what we’re selling every day.
My last year coaching, I was at the University of Nevada, Reno, and a friend of mine, Matt, wrote a book on the ketogenic diet, which at the time was becoming a very popular diet—certainly in the natural channel of retailers like Whole Foods or Sprouts Farmers Market. In the back of Matt’s book are sample meal plans, and every day begins by drinking organic lemon water. I was searching for structure in my diet and exercise routine, and I told Matt, “I’m in, A through Z—let’s go.” Lemon water in the morning became a non-negotiable part of my routine, but I hated it—buy an organic lemon, cut a lemon, squeeze a lemon, juice all over the place, bland taste. Most mornings, I just threw my hands up in the air; I said, There has to be a better way.
Fast-forward: I’m in the locker room toward the end of the season at Nevada, and all of our players are drinking Gatorade and vitamin water. Our coaching staff was drinking a product called Bai, which is now one of our biggest competitors. This was at the height of Bai’s growth story, and I had a moment: I said, Hold on—can we take organic lemon water and give it the flavor profile of what I call “Main Street, USA?” That was the seed of Lemon Perfect.
The season ended, and I was having lunch in Santa Monica, California with a friend, Jon, who is in venture capital. I said, “Jon, what do you think of this idea?” He said, “I love it. Anything you can do that can capture a piece of someone’s daily routine—what they do in the morning when they get up, what they do at night when they go to sleep, or any point in between—is worth going for. I jumped up and said, I’m going to take a year off and build this, and that night, I googled how to start a beverage company.
What would you say are the top 3 skills needed to be a successful entrepreneur, and why?
You must be able to lead with conviction, and the foundation for that skill is product-founder fit. You must believe in what you are building: you must believe in and be believable in your enthusiasm for the product you’re selling. It starts with perfect product-founder fit. You must be incredibly organized, so you can drive efficiency across the organization. It’s all about the people, so you must recruit and retain the best talent in—and outside—your industry, especially in beverage, where the odds are so stacked against you to be able to cut down the nets and be the last team standing. That might be the most important skill of all—the ability to recruit and retain and get your team to buy in to your vision.
What are your plans for the future, how do you plan to grow this company?
We want to be number one in the Flavor-Enhanced water category by dollar share, and that’s a big dream. But day by day, month by month, year by year, we’re focused on executing a plan to get there. Right now, that brand is vitaminwater: 20+-year-old brand, owned and distributed by Coke. But we believe we have an opportunity to get there because of how innovative and disruptive our product is within the Flavor-Enhanced water category. We think we can sell a billion bottles a year and change the way people drink water, and we are very excited about that.
How do you separate yourself from your competitors?
We start with product. We believe there’s nothing in the Flavor-Enhanced water category with our level of flavor and nutritional deck. Further, our product is organic and Plastic Neutral, so from a product perspective, we think we are very innovative and way out ahead. But our magic is our people—that’s how we separate ourselves from our competitors. It’s our team, talent, and focus on taking care of our people and getting them to believe in what we are building. And talent is what scales businesses.
What were the top three mistakes you made starting your business, and what did you learn from them?
We didn’t have the right packaging at the beginning. One of my greatest lessons early on is that what a package looks like on a computer screen is so different than what it looks like in a retail environment on a shelf. We made a mistake with our packaging initially. Fortunately, before we sold one bottle, I changed our packaging. We were ready to roll—the first bottles came off the line, and I said, We can’t launch Lemon Perfect with this packaging. I called 40 investors. We had raised over $1.2 million (pre-revenue) from a group of friends and family—the smallest check was $5,000, and the largest check was $100,000—and I said, We need to delay this launch and change our packaging. And it is probably the best decision we’ve made, so it was a mistake avoided, candidly. Now what we didn’t do is launch with a shelf-stable product. We launched as a keep-refrigerated item in the produce set, and I learned very early on that you can’t build a billion-dollar beverage business without being shelf-stable because you just don’t have the distribution or the ability to create incremental displays on the floor that really drive trial.
That is the second mistake that we corrected. I think the third mistake is that we were chasing brand marketing magic before we had distribution, and we overspent in brand marketing before we had widespread distribution. That’s probably the biggest reason why we weren’t as capital-efficient as we should have been in the early years.
Tell us a little bit about your marketing process, what has been the most successful form of marketing for you?
So far, we’ve been very product-focused in marketing, and we’ve invested our resources as close to the point of purchase as possible. There is no better trial-driving marketing than what happens under the roof of the retailer at or near the point of purchase. So we’ve been very focused on product marketing and on driving trial. The next challenge for us is, How do we build a brand behind the product? And with a full book of distribution across multiple channels of trade—whether Natural, Conventional, Convenience, Retail, Drug, or Club—we now have the book of distribution and the coverage to start investing in brand marketing, and that’s probably what we’re most excited about as we venture toward 2024.
What have been your biggest challenges and how did you overcome them?
I think we struggled hiring—particularly, figuring out how to hire the right people—in the first few years of Lemon Perfect. We’ve really tightened the screws on our process. We take our time, and we rely on the strength of our network and people’s networks to recruit the best talent. But when it was just me, we hadn’t established a culture or any meaningful momentum in the business, and hiring was very hard at the outset. We’ve gotten better here, which has changed the way we feel about Lemon Perfect’s future.
Also, finding a viral moment in marketing has been hard for us. We haven’t been able to do it yet. Competitor emerging beverage businesses, like a Liquid Death, or a Poppi, or an OLIPOP—they’ve been able to find that marketing magic, that viral moment, and we haven’t yet. It’s something we need to find because we believe it will change our business.
What was your first business idea and what did you do with it?
After college, I built a college campus-specific reviews site called Loud Campus. Think Twitter meets Yelp. But I didn’t know anything about building a product on the web. Now I realize how important product-founder fit is. You need to have a great feel and gut instinct for what you’re building, and you need to be able to coach a team that believes in your decision-making. With Loud Campus, we never found product-market fit, but ultimately, I started something about which I wasn’t that passionate. We felt there was a void in the marketplace for a product like it, but I realized that my passion was not in building a web-based college reviews site. Ironically, my co-founder at Loud Campus is now the biggest investor in Lemon Perfect.
What are you learning now? Why is that important?
I’m learning now that you must hire great leadership and let them run, let them sprint. That’s the key: hire great leadership, the right culture-fits, those who believe in the product, and our vision that we can change the way people drink water and mission to promote healthy hydration and deliver the joy of flavor—anytime, anywhere, and for everyone.
I think monthly and quarterly meetings are very important, but I’m learning that perhaps fewer recurring meetings is favorable. We want to let people go and build and sprint—and it’s all about the people.
If you started your business again, what things would you do differently?
I’ll say this somewhat tongue-and-cheek: I wish we raised our first convertible note financing at a higher valuation cap, so I didn’t have to take such a dilution hit on day one. That was long before we even sold our first bottle—and fortunately, I’m a single founder—but most of the dilution happens the earliest on in the journey. So, raise less, get product-market fit, proof of concept—or do it on a higher valuation cap. I say it all the time—the best time to raise capital is pre-revenue. Build a great story, sell a big dream. But if I were to do this again, I would probably try raising our first note round on a higher valuation and preserve some of that heavy dilution that I took on at the very beginning.
Again, I would also try to be a little more efficient with our marketing spend before acquiring a full network of availability because those dollars just don’t stretch as far as they do when you have a full book of distribution.
What are the top 3 online tools and resources you’re currently using to grow your company?
The top three online tools we’re currently using to grow our company are Slack, Zoom, and ChartHop.
- We love Slack at Lemon Perfect. Our entire organization comes together on the platform, and team members highlight their field successes and other praiseworthy or newsworthy activity. Slack is a great company culture-driver. It also helps with accountability and motivation.
- Zoom meetings have been great for us. While our headquarters are in Atlanta, we are a hybrid organization. Zoom meetings have become very important for us to drive what we call “CCEE”: constant communication and elite energy. That goes for Slack and Zoom.
- ChartHop has been a great tool for our Leadership team from a performance reviews perspective. It has also been useful for me, as I love to work through our entire organizational chart to make sure I really know our organization today and have a great understanding of how we need to build it and the open roles in our future. I love to work with ChartHop.
What’s a productivity tip you swear by?
A few months ago, I started cold plunging in the morning, and I love it! I find that a morning of weight training or cardio plus cold exposure sets me up for a productive day. Also, for the sake of productivity, we schedule meetings when needed, not as a recurring formality on our calendars. I block my calendar and engage in deep work for 2-3 hours every morning, and I find that that’s very important, otherwise I get pulled in a lot of different directions at the start of the day.
Can you recommend one book, one podcast, and one online course for entrepreneurs?
I love BevNET’s Taste Radio Podcast. As I was building Lemon Perfect, I started at Episode 1, got caught up, and haven’t missed an episode since. Fantastic podcast for any aspiring Food and Beverage entrepreneur. There is a wealth of information from entrepreneurs who are living the fight or have scaled the mountain.
If you only had $1000 dollars to start a new business, knowing everything you know now, how would you spend it?
I would probably spend it on as many good cups of coffee as I could get at my favorite coffee shop to come up with a name because I think the most important thing you can do for your business is naming it something that can not only capture attention but also tell the audience what the product is or what the business does. I would invest all my money on naming and potentially finding freelance help to that end. Put simply, I would focus all my time and energy and $1000 on coming up with a great name.
What helps you stay driven and motivated to keep going in your business?
- First, I have an incredible responsibility to our investors. We have over 300 investors; we’ve raised over $80 million. We must return on capital for our investors. I say the following often in podcasts and interviews. There are two ways out of my office: one is in a box, and two is with some coins my pocket. And I know no other way for this story the end than to make money for our investors.
- Second is our people. I want Lemon Perfect to be a yellow trampoline of growth (see Lemon Perfect Brand Yellow), and I want our people to jump higher every day, every week, every month, every year. I want to invest in the success of our people, and I want them to be happy.
- Third, I want to make America—and hopefully at some point, the world—a healthier place. And I think Lemon Perfect can play huge role in that. We will take millions of pounds of sugar out of the American diet, and if we consider hydration to be one of the most important inputs of good health, we recognize an incredible opportunity for Lemon Perfect. That idea energizes me every day.
What is your favorite quote?
“The man or woman who puts the ball through the hoop has 10 hands.”
This quote describes the idea that it takes ALL of us to win. For instance, if an Area Sales Manager sells in a display at a Mariano’s Chicago, we recognize that our supply chain team helped make the product and ship it to our distributor, our finance team ensured that our distributor paid us for the product, and our marketing team helped create the point-of-sale materials that accompany the display. It’s a whole-team effort. The sales manager put the ball through the hoop, but our entire team is responsible for putting points on the scoreboard—that’s how we look at it.
What valuable advice would you give new entrepreneurs starting out?
Keep going. It’s hard; the journey is arduous. But you’ve got to fight and scratch and claw and battle—and find a way to product-market fit. And try to surround yourself with the right investors and thought partners who will dream with you and understand that it’s not always going to be a straight line up and to the right—there is going to be great challenge and adversity.
Who should we interview next and why?
Sabeena Ladha from Deux. I’ve made two investments—one in Deux and one in Dog is Human—and it’s because of the founders, Sabeena and Kathan Mally, respectively. Sabeena’s energy is unparalleled in the world of emerging Food and Beverage. I think she’s one of the smartest marketers out there, and she found a way to grow Deux through shelf-stable innovation with their donut holes, which I think is genius. I’m so excited for her, and her story is fascinating.
What is your definition of success?
Will there be a time when it doesn’t matter where I am—whether Bangor, Maine, Baton Rouge, Louisiana, or Beverly Hills, California—if I walk into a store, I’ll see someone checking out with a bottle of Lemon Perfect? That ubiquity across America—irrespective of where someone shops, what they look like, how much money they make—that’s success.
How do you personally overcome fear?
When I have moments of doubt, I call someone in our organization and just listen to their enthusiasm for what we are building, their conviction. That makes me feel like we’ll be able to keep going.
How can readers get in touch with you?
You can get in touch with me on Instagram or LinkedIn. I respond to all of my direct messages. It’s @yanni on Instagram and Yanni Hufnagel on LinkedIn. I would love to hear from you.
