Pulkit K Agrawal of The 5th Ingredient: 5 Things You Need To Know To Create a Successful App or SaaS

Avoid rabbit holes — innovation should not be limited by an attempt at perfection. It is very easy to try and build a product or update so it’s perfect from the very beginning or launch, but realistically, this is impractical. The amount of time and energy spent on this will result in a product that will most likely be updated shortly after launch anyway after getting customer feedback from those who approach the software differently or find edge cases / bugs. It’s crucial to find the balance to be “good enough” to start the learning process on future iterations, and continue to innovate. We do this confidently and over time, our standards for “good enough” have continued to evolve, but they are always designed to be rolled out in phases, while constantly adapting from feedback.

As part of my series about the “5 Things You Need To Know To Create a Successful App or SaaS”, I had the pleasure of interviewing Pulkit K. Agrawal.

Pulkit K. Agrawal (PK) is the Founder and CEO of The 5th Ingredient®, a leading brewery operations management software company dedicated to helping breweries improve beer quality and consistency. After graduating from Harvard College, Agrawal began working in the beer industry as a Process Engineer for Ballast Point Brewing, where he focused on packaging lines and nitrogen beer. He soon discovered a need in the market for software that expanded beyond standard inventory management systems, where there would be an emphasis on the brewing process and quality, not just inventory tracking. In May 2018, Agrawal launched Beer30®, a brewery data management system that offers grain-to-glass process data tracking. Beer30 focuses on real-time brewing data input, raw material inventory, cost of goods analysis, quality and sensory tracking, sales and distribution and accounting integration. Beer30 is currently in more than 240 breweries globally, helping to #BrewMoreBeer and #BrewBetterBeer across the nation. In his free time, Agrawal enjoys traveling, and speaking about entrepreneurship and using data to improve brewery efficiency and quality.

Thank you so much for joining us! Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

I graduated from Harvard College in May 2015, with a Bachelor of Science degree in Mechanical Engineering. I decided to go a very different career path and became a Process Engineer for one of the largest craft breweries in the United States — Ballast Point Brewing in San Diego, California. During this time, I focused on process efficiency and using data to improve packaging equipment efficiencies, overall brewery losses, and even launched their national launch of nitrogen beer in bottles and kegging. In October 2017, I launched The 5th Ingredient, based on the premise that there are four ingredients in beer — water, malt, hops, yeast — and the “missing” fifth ingredient is data. The overall idea was to help breweries use data to actually start improving their processes and yet, as I approached a few potential clients, I noticed that they would hand over a binder of papers, or show spreadsheets or whiteboards. I started to think that there had to be a better way! In May 2018, I launched the first version of Beer30, a brewery system used to track data from grain-to-glass, and remove the countless sheets of paper, spreadsheets, and whiteboards that breweries are all around are using on a day to day basis. The purpose is to really focus on using data to improve beer quality, save costs and time, and achieve the perfect brew.

What was the “Aha Moment” that led you to think of the idea for your current company? Can you share that story with us?

The original idea for The 5th Ingredient focused on consulting for breweries. As I approached a few breweries to capture as clients, I quickly realized that I was fighting an uphill battle since they would just hand me their faded and water-marked paper logs or convoluted spreadsheets. There was no uniformity. It was during this “Aha!” moment at one brewery in particular that I started realizing the missing link: that there wasn’t a software out there that focused on the process side of brewing. And with that, in January 2018, the beta concept of Beer30 was born, and the system has continued to evolve over the years to be a fully robust system to track the full supply chain and process quality for a brewery.

Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

One of the hardest aspects was to find a few breweries that would be early adopters, try the software, give feedback and validate my idea. Since I was in San Diego at that time, I decided to go through the online brewery listing for all San Diego breweries alphabetically, and tried to connect with over 80 brewery owners via LinkedIn or emails. I was essentially ignored by almost everyone and I definitely felt very dejected. Fortunately, my parents have always been my biggest supporters and told me to be patient and keep trying. Eventually, by the third day of going through breweries, there were three owners that had expressed interest in setting up an in-person meeting. Despite the challenges of launching a startup, I was constantly driven by not only my understanding of the industry, but an innate knowingness that this product could work. But, instead of just going down an endless rabbit hole, I also gave myself a hard deadline of May 28, 2018 — the day my lease in San Diego was expiring — to prove I had an idea that people wanted. If there was traction, I would continue, otherwise I would move on. The hard deadline forced me to be creative at an accelerated rate, which also gave me a safe “out” to call it quits, in case this idea didn’t work out. I highly recommend this strategy for new entrepreneurs.

So, how are things going today? How did your grit and resilience lead to your eventual success?

Today, things are going quite well with The 5th Ingredient. We are expected to have 11 full time employees by the end Q1 2022, and we continue to expand into new breweries globally! We are currently in 240+ breweries across 12 countries. This eventual success came from being super agile and working with others to listen to customer feedback — all while constantly adapting and improving.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?

In the world of beer production, there are many different processes that go from grain-to-glass, including brewing the wort (sugar water liquid), to fermentation and filtration, to packaging. When I was an engineer at Ballast Point, I was focused on the packaging side of the process. When I first built out the brewing side in Beer30, there were a number of brewing metrics that I didn’t quite understand. One of them was the parameter called “time in the boil,” where adding in ingredients at the 90-min mark on a 90-min boil actually means 90 min from the end, and not 90 min from the start. This is a basic brewing concept that I was entirely unaware about when I was starting the software. During my first trial customer onboarding, this came up, and I felt massively embarrassed in the meeting. Fortunately, the brewer and I laughed it off, and I realized that I had to be super cautious on building out the software by asking people who are on the frontlines on a day-to-day basis, rather than going off of my limited knowledge and assumptions. This still holds true today!

What do you think makes your company stand out? Can you share a story?

Beer30 by The 5th Ingredient was built with the brewer in mind. This is massively different than most competitors out there because most others are inventory and accounting focused. By spinning the system to rely more on brewing and quality, we have been able to communicate directly with an audience who understands our validation. We take on a consultative role for breweries, and help them #BrewBetterBeer and #BrewMoreBeer. This in turn leads to an innate trust that we have with our customers.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

Burn out is extremely common as an entrepreneur, and can happen quickly. I’ve been on the cusp of it a few times, but have been fortunate enough to catch myself before it became past the point of it having a negative impact on the company and myself. A few mental checkpoints I have:

1. Am I still having fun in my day to day role as founder & CEO? If not, what can I change to have fun again? Does it mean hiring more people? Does it mean changing my responsibilities? What do I consistently dislike doing but it needs to get done for the business that I can someone else for? Life is too short to be working on a day-to-day basis without enjoying what you’re doing.
2. Are there friends / colleagues / mentors / family that I can voice my concerns to, in order to get a fresh perspective?
3. What can I do to recharge? It could be traveling to new cities, visiting friends, going for a hike / run / swim, or even spending a full day binge watching a TV show.
4. Be diligent about tracking your time. I update my calendar to include all actions I do regarding my company, and use this to see how efficiently I’m working, coupled with hours spent on a weekly basis. I see a high correlation of feeling “sluggish” near burn out and high hour weeks that are in the 70–80 hour range. It’s a good mental checkpoint!

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

Yes, absolutely! I am massively grateful to have crossed paths with Ryan E. Allis, who eventually became The 5th Ingredient’s Co-Founder and Chief Operating Officer. Ryan and I first met through one of my early adopter clients back in April 2018. At that time, what was supposed to be a 45-min meeting focused on some feedback, turned into a solid three-hour session with debates, iterations, drawings, and discussion. It was great! We both left that meeting thinking there was something interesting about the other, and that we could help each other grow. Ryan joined full time June 2018, and has been involved with me side-by-side since then. What’s very unique about our partnership is that our individual strengths and weaknesses complement each other very, very strongly, and that aspect of being able to fill each other’s gaps has been instrumental for our success from the early days to today. Now, as the team is growing, we definitely have more work to do and the dynamics are changing, but we’ll always have a brotherly bond formed from the early days of all night marathons coding, visiting potential clients and going through the workflow from start to finish!

Ok thank you for all that. Now let’s shift to the main focus of this interview. Approximately how many users or subscribers does your app or software currently have? Can you share with our readers three of the main steps you’ve taken to build such a large community?

Beer30 by The 5th Ingredient currently has over 240 breweries with 1550+ active users across the world using the system. Our clients span 12 countries, including 1 in 9 breweries in Australia, and YTD, we have tracked 1.48 billion ounces of beer — all while taking on $0 in outside debt or capital. We are a B2B system, working directly with breweries as our customers, but our impact results in an impact to literally millions of beer consumers in a year. That’s crazy to think about! In order to keep building a community of people who love our services, here are steps we’ve taken:

1. Create a WhatsApp group chat with every customer that can be used for customer support. This real-time feedback or question sessions results in a much better experience for everyone involved, compared to having to start emails and go back and forth over a span of time, which can honestly be frustrating for many users.
2. Create a private Facebook group for our customers and prospects called “Beer30 Legends”. This group allows us to celebrate the wins that breweries are having at competitions, discuss customer requests, and create a platform for people to help each other out with support!
3. Take all feedback into account. Whether it’s feedback from a demo to a prospect on what they like or dislike about the app, to the feedback or product requests from a paid customer, we write down every single suggestion in our product management tool. We then use this list as an internal matrix to weigh out future updates. This approach to customer support and updates helps build trust with our community and is a safe space to constantly keep us, and others, growing!

What is your monetization model? How do you monetize your community of users? Have you considered other monetization options? Why did you not use those?

Our monetization model is a monthly subscription that is tiered-based on a brewery’s annual brewing production output, coupled with the modules they select to use. This allows breweries of all sizes to have an a-la carte option to pick and choose exactly what they need from our modules. We also offer unlimited users for each brewery, full support for mobile, tablet, and computer screen sizes, and 24/7 customer support. In order to get to this model, we did weigh out different ideas. One of them was charging by the user — which was avoided since we quickly realized that people would share licenses at the brewery and this would defeat the purpose of full traceability on the actions that each operator is taking. Another was going the full system offering side for a flat fee for a tier, which worked for a few months, but then was quickly updated to be modular since not every brewer needs the exact same solution or end result.

Based on your experience and success, what are the five most important things one should know in order to create a very successful app or a SaaS? Please share a story or an example for each.

1. Set concrete deadlines and targets that you need to accomplish (especially in the ideation stage). I do business mentoring for friends and other entrepreneurs and have witnessed people spend months to years on an app, while not having traction proven by paid customers. There is a key difference between a hobby vs. running a business, and by having a deadline target, it forces you to sink or swim. In my case, I started exploring my idea in January 2018, and gave myself until the end of my apartment lease in May 2018, to have at least proven initial market fit. Five months is more than enough to prove the validity of an idea.
2. Be extremely meticulous of the people in your inner circle. I categorize people into four main buckets. The executive, who is very quick to make decisions, will always follow through on commitments, and will consistently help guide you to iterations of success. The flaker, who constantly commits to meeting or doing actions, but then never follows through. The procrastinator, who will commit and will need a few extra nudges to get the tasks done, but will ultimately result in an iteration of success. The advocate, who is a proponent and supporter of your work and is there for moral support / giving advice / and being a friend. It’s important to surround yourself with executives and advocates, keep procrastinators to a minimum, and eliminate the flakers from your inner circle. Your time is precious and you need to be cautious of the energy people bring to your circle.
3. Understand the signal-to-noise ratio of feedback people give you. Everyone has an opinion — from mentors, to customers, to prospects. At the end of the day, as CEO, the final decision is in your court. You need to parse out what the noise is from the signals and then dive into the reasoning and motivations behind the feedback. A great example is to start asking the “five whys” on why someone is giving you this feedback and why they are experiencing these issues. When a customer brings us feedback, we start asking why they are asking for this update and why their processes are a certain way. This either results in us working together to either improve our process and product if many customers asked for the same update, or we are able to provide the customer with some guidance on how they can improve their current workflows to adapt to our systems.
4. Be extremely diligent with tracking your time for work and meetings. As an entrepreneur, you will not be working the typical “9a to 5p” schedule and will be working all around the clock as business needs change. With that said, no one will be keeping a track of when you are or are not working. When I started The 5th Ingredient, I logged every single time that I was working on anything company related. This could be emails, meetings, code, marketing, demos, etc. I even got into the habit of retroactively updating events in order to track the true hours (more or less than planned). I would input these hours into a weekly spreadsheet to reflect on the items I had accomplished during the week and the hours spent. At the minimum, I had a target of “40 hours” a week, because that’s what society has said is a work week (extremely outdated, in my opinion). But realistically, this helped me see how many hours I was working weekly, what the categories of items included, and also helped in preventing burnout as I could easily correlate my mental health and energy with the hours worked.
5. Avoid rabbit holes — innovation should not be limited by an attempt at perfection. It is very easy to try and build a product or update so it’s perfect from the very beginning or launch, but realistically, this is impractical. The amount of time and energy spent on this will result in a product that will most likely be updated shortly after launch anyway after getting customer feedback from those who approach the software differently or find edge cases / bugs. It’s crucial to find the balance to be “good enough” to start the learning process on future iterations, and continue to innovate. We do this confidently and over time, our standards for “good enough” have continued to evolve, but they are always designed to be rolled out in phases, while constantly adapting from feedback.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be?

A movement that I would love to start would be to remove the barriers for individuals of all backgrounds in order to provide free access to a computer and free education on basic computer science programming. Regardless of whether an individual has financial constraints, other family obligations, or doesn’t “think” like an engineer, by providing free education for programming, everyone would start approaching their day-to-day differently with new ways to think about innovation and improvements. One of my favorite examples from the Intro Computer Science Course at Harvard, CS50, was having person A describe to person B how to make a peanut butter and jelly sandwich, with a loaf of bread, a plate, a knife, a closed jar of peanut butter, and a closed jar of jelly. When you start realizing that every action we take on a daily basis has implicit steps that a computer could not imply, such as opening the jar by taking left hand to hold jar and then taking right hand on top of jar lid to twist circularly while pressing down in a counterclockwise manner, you realize how important specificities are! This is an aspect I think everyone should have the opportunity to experience and learn from.

How can our readers follow you on social media?

Feel free to connect with me on LinkedIn, and follow @the5thingredient on Instagram and Facebook! You can also reach out via email to pka@the5thingredient.com.

Thank you so much for joining us!