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(Based on an interview aired on the Rising Coaches Podcast)
The zesty and healthy Lemon Perfect drink was born of a simple yet unappetizing experience entrepreneur Yanni Hufnagel had every morning. After following the nutrition protocol found in a ketogenic diet book, he began each day with a ritual of infusing a glass of pure water with the juice squeezed from an organic lemon and drinking it—despite its dreadful tartness.
“It became a nonnegotiable part of my daily routine,” he explained on the “Rising Coaches” podcast. “And I hated it.”
Hufnagel felt there had to be a better delivery system for an organic lemon beverage, which has nutritional benefits but is too sour for most people to drink without a sweetener. While he pondered this conundrum, he noticed the athletes he worked with as an assistant college basketball coach drank vitaminwater and Bai, two popular enhanced water drinks, in the locker room.
“The light bulb just went off,” Hufnagel says. “I thought, Can I take this powerful superfruit, the organic lemon, and give it the flavor profile of Main Street, America?”
The simple answer is yes. In 2017, he created Lemon Perfect, a 5-calorie, zero sugar, lemon-infused water that he calls “the magical intersection of good for you and great flavor.”
An incredible network of friends is one of the perks of being a former university coach. After learning about Hufnagel’s potential beverage startup, a savvy entrepreneur friend of Hufnagel’s told him that anything you can do that can capture a piece of someone’s daily routine is worth going for.
‘Why Not Dream?’
Hufnagel dove into the crowded enhanced water category. Filled with forerunners Bai, Hint, and vitaminwater, the functional water category is wildly popular and has been gaining steam for years. According to food and beverage market researcher Fortune Business Insights, analysts expect the global functional water market to grow from $13.80 billion in 2021 to $22.97 billion in 2028.
Lemon Perfect, an idea that arose from observation, turned into Hufnagel’s first major entrepreneurial pursuit after a decade of coaching college basketball. Now he thinks Lemon Perfect has the potential to reach a $5 billion valuation. He reminds people that The Coca-Cola Company acquired vitaminwater when it bought Glacéau for $4.2 billion in cash in 2007. Why not dream?
“Why not dream?” could be Hufnagel’s motto. His unwavering optimism—a necessity in the chancy world of college basketball—is like a lamp he holds against the dark. It isn’t unwarranted. Since its formal market debut in 2019 in New York and California, Lemon Perfect has won taste buds, accolades, and awards. It’s also caught the attention of top-tier investors who know the global water market is growing faster than other beverage sectors.
Lemon Perfect flavors include Just Lemon, Dragon Fruit Mango, Peach Raspberry, Kiwi Star Fruit, Blueberry Açai, Strawberry Passion Fruit, and Pineapple Coconut. The company sells the drink starting at $1.99 per bottle, a low entry point that makes it accessible to all audiences. Hufnagel’s startup, Atlanta-based The Lemon Perfect Company, is headquartered within walking distance of beverage behemoth The Coca-Cola Company.
‘No Idea What I Was Doing’
Hufnagel admits he went into the beverage market knowing nothing.
“I had no idea what I was doing,” he says. “I was blind. The first beverage formulator was in Louisville, Kentucky. In July 2017, I shared the idea with them. They said, ‘I’m sorry. We don’t do anything that is made from real fruit.’ That meeting lasted 15 minutes.”
That first setback prompted Hufnagel to call his mother.
“I remember calling my mom and telling her, ‘I think I probably need to take a high school job because this isn’t going to work.’”
But persistence wins. The following week Hufnagel made a few more phone calls and found an outstanding beverage formulator in California.
“I knew that flavor was going to be key, so we had to have a product that tasted great and checked off all the prevalent consumer boxes,” he explains. “Everything must start with a great product. You must be passionate about it.”
Hufnagel set a high bar for the boxes he wanted to Lemon Perfect to check. The drink had to be zero sugar, low-calorie, organic, non-GMO, keto, gluten-free, and made from real fruit.
“We really have an opportunity to affect millions and millions of lives now by offering something on a shelf that’s truly better for you than everything else around it,” he explains.
Hufnagel sampled the first iteration of Lemon Perfect on August 28, 2017. Only one revision followed.
“When I tasted it for the first time, I knew that we had something,” Hufnagel recalls, noting that the beverage is like no other.
“Our bottle doesn’t look like anything on the shelf before us,” he says. “There was never a product created even in the same realm as Lemon Perfect. No one ever said, Can we take something made from real fruit and give it the flavor profile that America craves and do it with no sugar?”
After falling in love with the Lemon Perfect beverage formula, Hufnagel invested $50,000 into the company. In 2017 and 2018, he spent his days learning the beverage business and attending trade shows.
“Then I was staring American Express charges in the face,” he says. “I said, Well, we have got to go raise some money here.”
Hufnagel rang up Vasu Kulkarni, a basketball fan who founded Courtside Ventures, an early-stage venture fund investing in tech and media companies at the intersection of sports and gaming. After talking with him and others, Hufnagel decided they would raise $650,000.
“Our first check came from Spencer Dinwiddie,” he says, referencing his friend, a professional basketball player currently playing in the NBA for the Dallas Mavericks. “That was a cool moment.”
It wasn’t all roses at the outset, but luck came quickly. Hufnagel met Danny Stein, an operating partner at Volery Capital Partners—a private equity impact investment firm based in Greenwich, Connecticut—in New York City to get him on board. After sipping Lemon Perfect, Stein said, “I love this.”
One catch: Stein wanted his wife’s opinion before signing on the dotted line. He asked Hufnagel to give him some Lemon Perfect samples for her, but he didn’t have more with him.
“I ran across Central Park as fast as I could,” Hufnagel remembers. “I’ll never run that fast again. I brought them back. He called me that night, and he said, ‘I’m in.’”
Hufnagel says 40 people wound up echoing Stein’s, “I’m in.”
He says, “We ended up ripping up the note three times. We raised more than $1.2 million with 40 investors in the first round. I’m proud those investors got six times the return on paper in less than three years.”
A year later, Hufnagel wanted to raise $2.2 million and wound up raising $3.7 million. He raised $6.6 million in the the next round.
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 boldface names in basketball and entertainment, including superstar Beyoncé Knowles-Carter, Washington Wizards power forward Kyle Kuzma, Portland Trail Blazers guard Josh Hart, NBA champ Channing Frye, and former NBA shooting guard Nick Young.
‘Moments of Challenge and Adversity’
Hufnagel has advice for budding entrepreneurs who seek capital: “Find investors who will dream with you. I think that’s the most important thing. Find investors who understand it’s not always going to be a straight line up and to the right. There are going to be moments of great challenge and adversity.”
After creating an exceptional product and getting supportive investors on board, Hufnagel says a great story is the bedrock of a winning company. He learned all about storytelling from coaching basketball at legendary universities.
“At Harvard or Vanderbilt, Cal or Nevada, you’re trying to build a great story,” he says, ticking off names of the universities where he has coached. “Why is Harvard a better option than Princeton or Yale? It’s the same thing for us [at Lemon Perfect]. We must build a great product and a great brand. Then, at least that gives us the potential to build something that can scale.”
What scales a business in the end, he believes, is talent. He hires dynamic, experienced employees who can propel the business forward and take Lemon Perfect to the next level of growth. He believes that going from coaching to running a startup company has been a natural transition because he’s still recruiting, just as he did in his coaching days.
“I’m recruiting dynamic talent now every day,” he declares. “There are many parallels between coaching and building and running a company, namely around storytelling, recruiting, and sales.”
When Hufnagel was recruiting college basketball players, he felt he could get anyone.
“I didn’t care if it was Harvard or Nevada or anywhere in between—we made it feel like people couldn’t walk away,” he says. “We always wanted to put kids in a position where they literally would have to almost get sick over saying no.”
Hufnagel says he brought that energy, passion, and intensity into selling Lemon Perfect to investors and recruiting talent to The Lemon Perfect Company. The goal, he says, is to make people feel they can’t walk away.
“You’ve got to have great enthusiasm for what you’re building,” he says. “Sometimes you get one opportunity to build something that can be ubiquitous in the way that Lemon Perfect can—probably even beyond America. I’ve got to be relentless in that pursuit, and we’ve got to drive our team daily. We must work incredibly hard and have an unrelenting will to win. That drives me.”
Today, Lemon Perfect sits on the shelves of iconic conventional retailers across America, including Publix, Ralphs, and 7-Eleven. The seven flavors are also sold on Amazon and Lemon Perfect’s direct-to-consumer platform (lemonperfect.com).
Hufnagel believes his lack of experience in building a beverage startup was an asset.
“I came in with no idea what to build or do,” he muses. “I think any time you can go into something where you’re not framed by experience, but you’re buoyed by a network that can help you get there—that’s the secret.”
He remains bright-eyed about the future.
“We always want to dream,” he says. “I want to dream about selling this company. I want this to be the largest transaction ever. I want this to be a $5 billion transaction. I want to change the world.”
