We caught up with the brilliant and insightful Yanni Hufnagel a few weeks ago and have shared our conversation below.
Yanni, thanks for joining us, excited to have you contributing your stories and insights. Coming up with the idea is so exciting, but then comes the hard part – executing. Too often the media ignores the execution part and goes from idea to success, skipping over the nitty, gritty details of executing in the early days. We think that’s a disservice both to the entrepreneurs who built something amazing as well as the public who isn’t getting a realistic picture of what it takes to succeed. So, we’d really appreciate if you could open up about your execution story – how did you go from idea to execution?
My last year coaching college basketball, I was at the University of Nevada, Reno. While on a recruiting trip to Santa Rosa Junior College, I stopped at a Starbucks in Petaluma to get an iced coffee. In that strip mall, out of the corner of my eye I saw a sports supplement store called Max Muscle Nutrition. I figured I’d get a couple of protein bars for the game—Quest Nutrition bars, actually—which were incredibly popular at the time. I walked in, and, as I was wearing my Nevada basketball polo, the man behind the register said, “Do you work for the team?” I said, “Yes, I’m an assistant coach.” He said, “That’s incredible. My dream is to become a strength and conditioning coach for an NBA team.” I gave the man, named Matt, my business card.
About a month later, he sent me an email and asked if I would read a draft of a book he was working on called The Ketogenic Diet. This was right before Keto had its meteoric rise in the diet psychology of the American consumer. In the back of this draft of his book were a bunch of sample meal plans, and every day began by drinking organic lemon water. At the time, 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 nonnegotiable part of my routine. But I hated it: buy an organic lemon, cut the lemon, squeeze the lemon, juice all over, 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 or vitaminwater. Our coaching staff was drinking a product called Bai, which is now one of our biggest competitors. I had a moment—I said, 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 asked him what he thought of this idea, and 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 think we can build this.” That night, from his couch in Santa Monica, I googled, “How to start a beverage company.”
To go from idea to launch was filled with false starts and a lot of pain, and as a first-time beverage entrepreneur, I didn’t have the playbook. I had to figure it out through trial and error. We found the right beverage formulation team. I was determined to create an incredibly good-tasting product. Once we had the final formula, it was about the packaging. I often refer to these “four P’s” that have been critical to our success: product, packaging, pricing architecture, and people. We didn’t have the right packaging at the beginning, and one of my greatest lessons early on is that what packaging looks like on a computer screen is so different than what it looks like in a retail environment on the shelf. We made a mistake with our packaging initially. We were ready to roll: the bottles came off the line, and I said, “We can’t launch Lemon Perfect with this packaging.” 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. I called 40 investors and said, “We need to delay this launch and change our packaging.” It’s probably the best decision we ever made, so it was a mistake avoided, truthfully. And when we ultimately achieved bold packaging that creates a fashion show on the shelf and is full of color, I felt like we were ready to launch the brand. We sold our first bottle at the Westchester location of Bristol Farms in Southern California.
Yanni, love having you share your insights with us. Before we ask you more questions, maybe you can take a moment to introduce yourself to our readers who might have missed our earlier conversations?
I coached college basketball for 10 years, which paved the way for my becoming an entrepreneur. At every stop in my coaching career—whether it was Harvard, Vanderbilt, California, or Nevada—in recruiting, I had to tell a story. I had to sell our head coach, facilities, conference, and player development program. Similarly, Lemon Perfect is a sales-focused business: we’re selling an incredible product every day, but we need to tell a story. And we believe we have a great product that will change the way America drinks water. We’re not only selling retailers and distributors—we’re selling consumers, future Lemon Perfect teammates, and investors. We feel great about our vision and what we’re selling every day.
Lemon Perfect is a delicious and refreshing flavored lemon water with zero sugar and no artificial flavors or sweeteners. Powered by half a squeezed organic lemon in every bottle, Lemon Perfect contains only 5 calories, is high in immune-boosting vitamin C, and is proudly certified Plastic Neutral. 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. The Lemon Perfect Company is headquartered in Atlanta, GA.
We have a team of 92 people who—to use a Lemon Perfect company expression—“bleed yellow” and have an unrelenting will to win. They are the bedrock of the billion-dollar brand we are building. In 2023, the company will do over $60 million in retail sales; we have a plan to do over $100 million in 2024. We want to be number one in the Flavor-Enhanced Water category by dollar share, and that’s certainly a big dream. Day by day, month by month, year by year, we’re going to execute a plan. Vitaminwater is currently number one in the Flavor-Enhanced Water category. It’s a 20+ year-old brand, owned and distributed by Coke. But we believe we have an opportunity, given how innovative and disruptive Lemon Perfect is within the category.
Finally, I want to make America—and hopefully at some point, the world—a healthier place. I think Lemon Perfect can play a 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. I think sugar is the root of so much of the destruction of health in America and beyond. We need to find a way to fight sugar, but at the end of the day, it’s a powerful ingredient in making food and beverages taste good. So we have to find a way to use all-natural alternatives like stevia leaf extract or monk fruit extract. I believe minimization of sugar is a big part of good health.
How did you put together the initial capital you needed to start your business?
Beverage is very hard because it’s capital-intensive early on. The key was to have a vision. Early in this journey, nothing mattered more than the ability to dream big. I believed we had big TAM (total addressable market). I don’t care where you live, where you shop, how much money you make—flavor knows no boundaries. That has really been the gas on this fire for us: the size of the marketplace.
Further, I’ve always told aspiring entrepreneurs in Food and Beverage that your margin story doesn’t matter at the beginning—what matters is that people love the product and come back and that you have great repeat. Trial and consumption are paramount. Your gross margin story must come, but it can come later. It’s simply not about the bottom line early on—it’s about share of stomach and share of category.
We aim to disrupt the entire still water ecosystem and build a billion-dollar-plus business. Early on our investors made a bit of a blind bet on us. We raised our first dollar on a one-sheet of a bottle design and 4-ounce sample bottles that I was filling in my kitchen. We had a great-tasting product from day one, and I was able to leverage a network in which I had built equity over 20 years, whether it was high school or college friends, my basketball network, or extensions of these networks. Anyone who makes a pre-revenue bet in any business, any start up, bets on the jockey, and I’m very grateful that we had 40 people in our first seed financing say, “I’m in.” Now we have over 300 investors, and we’ve raised $80 million—but it had to start with a single dollar and an audience that got behind the idea that we had something potentially magical on our hands and that I would just go figure it out.
Do you have any insights you can share related to maintaining high team morale?
In striving to maintain high morale, first, any leader must try to convey unparalleled enthusiasm for what they’re building. You’ve got to walk into a room and be flying off the walls. You’ve got to bring great energy, passion, and intensity, as these transfer to the rest of your team.
Managing a team starts with recruiting and retaining the best talent in—and outside— your industry and getting your team to buy in to your vision. In recruiting, you need to make someone believe that you will do whatever it takes to help them achieve their dreams, and you must be authentic in that process.
Further, I encourage each separate team within our organization—and its members—to impact plans and have a voice. I think it’s important that leaders empower their teams and build trust—that’s how you get buy-in. Then you need to hold your people accountable to high performance standards for what they signed up to do. I think it’s important to allow people to be unfiltered and passionate in debating ideas.
In addition, I think making sure your various teams are connected and communicating is critical in managing a team and maintaining high morale. You must have what we call “CCEE”: constant communication and elite energy. How do you get people to be connected, especially in a post-COVID environment, where many workplaces—ours included—are hybrid or remote? How do you tighten the lines of communication? I talk to our leadership team almost every day on unscheduled calls, so we don’t get bogged down by recurring meetings. We have biweekly Zoom meetings with our entire organization that drive communication, so everyone feels engaged and updated on what’s happening and future key initiatives of the business. In addition, I travel more than anyone in the entire organization, and I’m in the trade, or what I often call the trenches. So I’m listening and learning, and I relay information to our leadership team.
We have a plethora of sayings or expressions at the company that everyone can buy into. Some of these, for example, are “Paint it yellow,” “Together, we attack,” and “10 Hands” (which describes the idea that it takes ALL of us to win).
One of my biggest motivations to keep going in this business is our people. I want Lemon Perfect to be a yellow trampoline of growth (yes, I’m referencing 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.
Contact Info:
- Website: http://yannihufnagel.com
- Instagram: https://www.instagram.com/yanni
- Facebook: https://www.facebook.com/yhufnagel/
- Linkedin: https://www.linkedin.com/in/yhufnagel
- Twitter: https://twitter.com/yhufnagel
Image Credits
Images courtesy of Yanni Hufnagel and Lemon Perfect