Pulkit Agrawal - Co-Founder & CEO of The 5th Ingredient

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You want tech and tacos? Tacos in tech you know we got tacos and tech is on smash border green guacamole keeper captains counting beans Contador Quentan frijoles found us trying to raise some queso la vida San Diego school of rappy rapping fire tortillas round jalapenos in these modern times a crappy my coding yoga posse fold the body origami we be surfing coronado eating tacos El gordo the taco stand in puesto lucha libre and sombrero Got a shout out to cost angels by the ocean Watch the sunset La Jolla shores Entrepreneurs trying to get funded When San Diego Startup Week is popping in the summer Oceanside to Tijuana Estee be full of hustlers from couch surfing to penthouses right on the beach Tech leaders believe stars are within reach we interview and founders who be shooting for the Moon SD TechOS with your host, Neil Bloom.

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And welcome back to the Tacos Tech podcast. And I'm very excited to have founder and CEO of the fifth ingredient, Polkad Aggarwal. Thanks for being here.

Hey, yeah, welcome.

Yeah, we also have in the house.

Co hosts and sitting in in the neighborhood.

We've got Ashok Kamal from Tech Coast Angels. Thanks for being here.

Good to be back. And back again. It's my third with you.

Yeah, I love it.

We'll keep it going.

In these modern times of craft beer.

And coffee, what a perfect segue because we're talking about beer today.

Craft beer specifically.

Exactly. And in San Diego, the mecca of beer.

Yeah, definitely.

So polka give us the high level. What is the fifth ingredient?

So the four ingredients in beer are water, malt, hops and yeast. And the fifth ingredient is data. And so we've developed a platform that breweries can use to track their data from grain to glass. So we're looking at everything from raw materials, where the grain, where the actual yeast, where everything comes from, all the way to the brew process, the entire quality behind it, all those different metrics, and then going into sales and distribution. So our system is a way for breweries to track their data from grain to glass. And just like that, it's called beer 30. With that mentality of it's always beer 30, it's always drinking time.

Yeah.

Awesome. That's the name of the product. Beer 30.

Yeah, beer 30.

Cool. All right, well, we're going to dive deeper into the company, but we want to get to know you a bit more. How'd you find your way to here?

Yeah, so I went to undergrad at Harvard University and studied mechanical engineering. And at that point, as I was recruiting during my senior year, I really wanted to get into a field where I could do stuff hands on and with mechanical equipment. And so at that point I got recruited to work at Ballast Point in particular as a process engineer. As everybody knows, Ballast Point is one of the largest breweries in San Diego, has a really strong presence here, really strong history. And so it was really cool. I knew nothing about beer when I came in. I made that very clear. But I knew packaging equipment and I knew stuff about bottling lines and just in general how mechanics work. And it was a great way for me to learn about bottling can and kegging. Helping Ballast Point launch their entire nitrogen brand. So really how to make nitro beer in bottles and kegs and then also help them out in the expansion into Virginia. And so it was really cool taking on a bunch of these projects, helping out with some cool robots in the kegging side, helping out with liquid nitrogen. And so just all around, just getting into that beer industry was a really nice segue from undergrad into now loving beer and learning all about it.

Yeah, super cool. Shout out, fellow mechanical engineer.

Love it. There you go.

Did they really? Ballast Point was like recruiting at the college level.

Yeah.

Wow, that's cool.

So your pitch was. I don't know anything about your product. Hire me.

It was like, I drink, I like beer and I know mechanics. So we'll figure something out.

So that was what brought you to.

San Diego, Literally recruited to work at Ballast Point.

So another Boston connection here with Harvard, coast to coast.

Yep.

What was Ballast Point? Give us the time frame. What year was that that you came out to San Diego?

So I graduated May 2015, came out here July 20to work. They got acquired in November 2015, worked through them all the way to October 2017.

Okay. So I was kind of, like, at.

Their height in a certain regard, right?

Yeah.

Full steam ahead to get sold. And you got to work and opening a new lot, a new location, which is pretty cool, too. What were you taking in, though, about the beer industry while you were jumping in at Ballast Point? Because obviously no one else was as big in San Diego.

Yeah, I think the coolest thing about the craft beer community in general is that it's very collaborative. And so one of my first weeks here, my boss said, hey, let's go over to Stone and go check out their packaging equipment and learn from them. And it was so interesting. Right? You're telling me to go to Ballast Point's biggest competitor in San Diego at that time to go learn about how they do packaging. And it was so interesting. And so just starting off with that. And then from there, as I started exploring more of the San Diego beer community, it's just so collaborative and so friendly where you go to a brewery like, hey, I want to try this beer. I work at Ballast Point at that time, and people are just so, so eager to show you their latest beer, give you their latest lager, their ipa, their stout, and just talk to you about what you're brewing, what you're working on, and just a really cool way to get into the scene here in San Diego. So that was my first thing that I took away, and I absolutely loved that.

Super cool. When did you start thinking you may want to do your own thing?

So it was actually after I left, I wanted to get into the world of consulting and so consulting for breweries in particular. When I was at Ballast Point, I was doing a lot with keg lines and a lot with the kegging data and understanding, you know, how kegging metrics are going, how clean a keg is. You may not think about that when you pour that beer, but there's so much data science that goes into that.

Right?

There's so much when it comes to the quality side, so much when it comes to raw materials. Like so many over 300 different data point checks that Ballast Point used to do per beer. That's insane to think about. And so I wanted to get into consulting. And as I started working with some of my vendor friends in the industry up in la, and just around, it became clear that when you go to a brewery and you're like, hey, I want to do some consulting projects, they were like, yeah, here's some pieces of paper, and here's some spreadsheets. And it was just so difficult to try and do proper data analysis when most people were using paper logs, spreadsheets and whiteboards to track their data. And so as I started getting into that, I went to visit some friends in Canada for American Thanksgiving that year and I hit up a couple more breweries. And what I realized was that no matter what, everybody kept saying the same thing, that maybe there were some softwares out there, but nothing that was focused towards the brewer and the quality side for the breweries. And that was my background. And so like, all right, cool, I'll give this a go. And at that point decided to start coding some things, use my basic coding background from undergrad and see if I could launch something. And basically built out an MVP. And the timeframe of this was around January 2018, all the way up until April 2018. Hit up a couple breweries around town, was like, hey, working on this project, think it could be cool. Are you interested in helping out? And yeah, met up with one of the early adopters, Protector Brewery, which is San Diego's first and only organic beer company. Oh, cool. And they're pretty awesome. They're in Miramar. If you haven't checked them out, you really should check them out. Really cool beer. Sean Haggerty, CEO there is great. And that's actually a little fast forward. That's actually how I met my co founder and business partner, Ryan Ellis, who is one of the co founders of Protector Brewery as well. So it's been really cool to have that connection again. It's all about this industry, which is all about relationships and building that trust between people. And I think that's just been a really cool way to see that progression happen, which is, hey, there's a need for this with having an all in one software system and building that out.

San Diego obviously has a rich history of microbreweries and beverages. Now, kombucha being born in San Diego, hard kombuchas are coming online and growing. Do you feel like the DNA of San Diego has been supportive, particularly for the beer tech emerging companies like you or Tap Hunter that have been born here?

Yeah, I think that the San Diego community in general in the beer industry is super interested in a lot of these new products that are coming about because they can see the validation that comes from somebody that's saying, hey, I used to work in the beer industry myself. I think that's a really big difference. When you start looking at other softwares out there where maybe they don't have the Founder who has come from that beer background. There are some of our competitors who have their founders who come from the accounting world and that's great. But if you're trying to really dive into the beer industry, coming into a meeting and saying, oh, hey, by the way, I remember when I was packaging and I was doing that and this is how I did it, it really adds that sense of valid and adds a sense of camaraderie where it's like, oh, cool, you've been on the brew deck with me, you've been on the packaging lines and you understand where we're going as opposed to somebody externally coming on. And that's what I think San Diego, given how most of these breweries are really tied in with that, really find value of having somebody that comes from this industry giving back to the San Diego community.

I think that's a great point. As we often talk about the identity of SDTechOS, San Diego Tech. And of course we have genomics and now genomics software and next gen semiconductors being born out of the Qualcomm kind of soil. There are these other verticals, whether it's agtech or beverage, that present opportunities for tech entrepreneurs as well. Specifically in this town.

Yeah, I think we've got this maturity phase. We've obviously had billion dollar exits in the beverage world. We've got our own unicorns in there. It's an actual mature industry. You could say that you got to work in a sense at an enterprise kind of brewery.

Right.

And now you're going back and taking that playbook and helping build a process around it and build software into that. You know, I think there's a lot of parallels, which is kind of interesting to see from the software world.

Yeah, One of the coolest things about that statement is that our entire product roadmap is designed based on feedback that we get from current customers and from potential customers. And so that's really cool because every single demo that we do, and at this point we've done over 150 demos over the last two years. And every single demo that you do, you get feedback, right? You get people that say, oh, I love this, or I really think you could do this better. And I think that's been one of the key differentiating factors with us, which is that it's not just like the San Diego breweries, but it's basically this crowdsourced software now that from that enterprise level all the way to the small breweries that say, hey, we do it this way. Can your software adapt to make that Happen. And so it's been a really nice challenge to come up with a software that can scale very nicely from the smallest breweries doing like 60 barrels a barrel is 31 US gallons. 60 barrels a year, all the way up to like the ballast point size that is doing 400,000 barrels at their high day.

Right.

And so it's really interesting to see that if you approach the problem in that manner of, hey, that enterprise mentality that needs to scale down and scale up, it becomes super cool to have your customers actually develop your roadmap for you.

Yeah, really interesting.

Wait, the customer development, lean startup methodology, best practice. Can you talk a little bit about how you go about having those conversations and getting those feedback loops to drive the product development?

Yeah, absolutely. So it's more of like an internal matrix that comes up from it, so it becomes an aspect of, okay, how often is this product request coming up? You know how many breweries are bringing this up? Is it something that's more of a showstopper or is it something that's more of a, hey, it would be a nice to have functionality behind it. Looking at prioritization based on how many breweries are asking us this, right? How often is it coming up in conversation, is it a show stopping piece for them? Is this something where it's like, hey, without this, I really can't brew and I can't use your system because that's it. And then from there coming to effect with how big is the brewery that's asking us this? So if it's a bigger client, they're paying more money, then you kind of prioritize that a bit more because you want to keep those customers happy. And so what we basically realize is that we have an internal log of how often we get this request. And at some point when it's, hey, six, seven, eight of our breweries are mentioning this, we should probably prioritize this and get this rolled out because it could be as simple as, hey, we can't make this update in your system right now, one of us, either Ryan or I have to go into the back end and go into the database and make that change, Right? And sure, we can do that once in a while, but as you start scaling, you have 100, 200, 300 breweries, you're not going to be able to keep doing that tech support of, hey, I made a mistake, now you have to go fix it for me. And you basically have to prioritize at that point based on how often is this issue happening. And if we do a Fix for it. How many people is it going to impact?

Yeah, I think you touched on two really important points, Pulkit. One is the patterns of feedback, so frequency of pain and then the type of pain. So is it bleeding at the neck or bleeding on the foot? You want problems where companies are bleeding at their neck, meaning they're acute gushing existential threats. That's when you start building companies and where they pay you for your solutions.

Exactly.

I'm curious to hear a little bit like your mentality into entrepreneurship because you said you want to be a consultant. It's kind of hard to make that leap sometimes to be like, I want to build a growth kind of business. And you also change big skill sets.

Right.

You're a mechanical engineer and now you're a CEO, which is like everything but engineering sometimes.

Right.

And it's software, which you probably don't have any background in.

Yeah. So it's been a very interesting two years for sure. And it's been a lot of personal growth as well. I mean, to start off with just saying, hey, I'm going to build a company. Okay, what does a name look like? How does a logo look like? Getting a friend to help me with the design on it. Making business cards. It takes three to four hours to make a nice looking business card on vistaprint. When you're just like, oh cool. When I was in a bigger company, they just handed me my business card. There's a lot that goes into that, but I think it was more of a trial by fire and you have to do it. So after that first couple months where the software was working, there were some people that were interested. This was like alpha version of the system. I was like, okay, now I need help with sales. And I think what the biggest thing as an entrepreneur that I have a very nice acumen for is just reaching out for help whenever I need it. And so in this case I reached out to a mentor. His name is Chris Nim, she's up in la. And he was a vendor when I was at Ballast Point and that's how I built a relationship with him. And I was like, hey, I have this software I need help selling. I don't know how to approach breweries. And so I learned how to do sales.

Right.

And then met up with Ryan Alice, who is now co founder. We met up in April of 2018. And it's great because he comes from a sales and marketing background, but he also has an engineering background as well with biotech. And so to your point, I'm not that great at software design, but he does have that data science mindset. And so saying, hey, I don't know how to do this. Can you help me out with this?

Right.

So I think that the spin from consulting, where you're just kind of on your own, to saying, hey, I'm going to be a CEO of a company, and I want to surround myself with people that are better than me in all these aspects and being able to just manage what people are working on. I think that's kind of what my role has become. And as we're getting bigger and bigger, yeah, I still have to go in and do some coding aspects because it's just easier sometimes for me to just dive in and do stuff that I coded two years ago. And yeah, there's a lot of tech debt, which everybody, I think, at this point has. And, yeah, there's some tech debt. And you're like, I just got to rip the band aid off and take care of it myself. And other projects where you're like, awesome. We have contractors, we have Ryan, we have other people that are working on it. And so I think with that entrepreneur mindset is to say, what are your strengths? What are your weaknesses? Highlighting that and being honest about it and saying, this is a weakness now I need help and saying, I'm going to reach out to people in the San Diego community, reach out to the Harvard network, reach out to other networks, and really see what we can do to get people's ideas and support on it.

Something you also have chosen so far is bootstrapping.

Right.

So not needing funds to date to keep it growing. What's been that thought process?

Yeah, so we've actually gone around in circles quite a bit, whether if we're going to do a convertible note, whether we're going to do friends and family, whether we're going to do a proper seed round, whether we're going with Tech Coast Angels, going with other people. And I think what we keep coming back to is that our revenue growth has just been phenomenal over the last year. Last year, we started off with four breweries as customers, and that was still like an alpha version. And we ended the year off with 52. Right. And so it was great growth. And what we saw was there was a huge impact in Australia about At this point, 17 of our breweries are in Australia, so we have a nice market size there. And I think what we just realized was that if we were to raise money right now, the valuation that we would get would end up entailing Ryan and I Losing a lot of the company, right? And we're like, okay, if we know that there's key product features that we can roll out, and we're looking at a timeline of 2020 for us, we have a couple key trade shows and conferences every year that are firm trajectory points to really improve our business. Right? So the next one is the Craft brewers conference happening in April in Texas. Then we have another one in September in Australia. And those are the two big ones for the year. And what we've seen every single time is that those really bring a huge push for number of breweries, number of customers and sales. And so because we've been. We have a software that people like and there's revenue coming from it, we decided to hold back on that cash infusion until we're at a point that we're completely strapped in terms of time, strapped in terms of resources, and we're like, okay, we need this cash infusion to go faster, right? And we still think that we're at that cusp. And this is why we've gone back and forth. Because, yeah, I mean, having a million dollar raise, sure, that could impact us massively and hire more engineers, more salespeople, headhunt from the industry. But at the same time, it comes at a cost of what are we giving up for it, how much equity are we giving up? And if we were to just bootstrap and keep going for another four to six months, use the revenue coming in to keep hiring more people and keep going that way, that could be a great middle point to really increase our valuation. And so it just comes down to, at what point is it that you're so strapped in that you're like, all right, it's time to just raise money, get the valuation that there is, or at what point are you able to say, I'm going to keep extending this out?

And that's a really important principle because as you alluded to, when you raise money, you lose control. You lose control literally in terms of the ownership and the debt in your company. You also lose control sometimes over decision making. Of course, you want to partner with investors that are hopefully helpful in making you and helping you make decisions. But at the same time, hopefully, nobody knows your business better than you because you're the ones that are running, and that's the kind of founders that investors want to back. But the other important point that you made is you also don't want to raise money until that capital is the only way for you to release the bottlenecks in your business. If you can in the meanwhile, through bootstrapping means, continue to grow the company, continue to develop the product, continue to build your brand without taking in outside capital. You're going to want to do that and it's going to give you that much more leverage if and when you do eventually go and try to raise money.

Exactly, yeah. I mean, if you think about it, right, like this was one of our mindsets behind it was if we even take like our smallest client size that you could have and our smallest package that we offer, because our pricing is modular and it's based on, based on the brewery size and based on modules they're subscribing to. Even if you look at, okay, the smallest being, let's say $100.

Right.

Well, at that point that's looking at $1200 for the year because it's a monthly software as a service. Now if you use a multiplier on that, all of a sudden, if I just get one small brewery, I've increased my company's valuation at least $5,000, right? Like anywhere from three to $5,000. And it's very interesting when you start thinking about that, that there's a lot of 19,000 breweries in the world and so many of them don't have any software right now. And even if you start breaking those numbers down and looking at English speaking breweries, looking at small breweries, etc. The ones that are ideally like the one called closes, even getting a small brewery between $100 to $200 a month coming on increases that valuation massively for investors, that's great.

I mean, I think obviously we hope that we're a collaborative community. Sounds like the beer community is as well too. It's cool to see for us at least being on the outside of the beer community, like see those worlds mix a little bit. Can you give us a little bit of what's going on in the beer community, especially in San Diego? I think we'd love to know, at least from the outside. I read a little bit the bubbles burst a little bit on craft beer. People are moving like cocktails.

I don't know how you gonna fight back. The white claws.

And kombuchas instead of white claw, you can get brown claws. So there's actually really cool aspects, right? I mean, you have juneshine, you have the. These other bigger people that are going from beer into kombucha and going into ciders and going into more of the distilling aspect. And just in general, I think the San Diego craft beer Community, everybody knows it is saturated. But then you start getting new breweries coming up like Protector that are organic. Right. And they have a nice spin on it. I think that's one of the cool things that's happening in San Diego. And just as a software side for us, what's really cool is that we actually got our first kombucha company that is actually using Beer 30 as well. And we're going to call it like Buja 30 for them at some point. And it's going to be really cool to take our beer 30 software and platform and then spin it off into cider and kombucha and going into distilling. And so we have this entire roadmap planned out once the beer 30 stuff is at a really nice stable point. And we have many, many breweries that are just coming in organically from there, spinning off into these other platforms. And I think the San Diego ecosystem with the entire brewing side, it's just as full of people that are willing to help each other out. There's all these collaborative brews that are happening just overall, a really great community. I think from the outside, you're absolutely right. I mean, it's a community that's trying to do and try to make these spins on different beers and trying to come up with new varieties that is always fresh. And that's the cool thing about the craft beer community, where if you just take a stout and add cocoa nibs and add some barrel aging into it, it becomes a brand new beer that somebody's like, whoa, this is really cool. And so it's that aspect of constantly growing. And I think the San Diego community, no matter how many breweries come up, how many breweries shut down, it's just all about that camaraderie aspect that's still present, which is really cool.

That's awesome. And you just described one of my favorite kind of beers, stout.

There you go.

You're a downtown guy. East Village.

Yeah, right.

Take us through life there. I mean, there's some great food, great breweries.

Right.

Mission Brewery, right over there. You have a favorite brewery around town. Because that's a hard one for you.

I know.

Put it on the spot. Amplified is a really good one, which is right down the street in East Village. We actually have a lot of meetings right there just because they're very close by. They have really good beer, really good coffee, for sure. Protector Brewery, Latchke Brewery is a really great one as well. So. Yeah, and then there's ones all around town. I mean, Ballast Point is Always a favorite of mine because of my connection there, friends there, clients or customers.

So that's got to be a good question for it.

But it's just really cool because I think that all the breweries that I mentioned, they're all known for some particular beer in particular. And so I wouldn't say I have a favorite brewery. It's just literally just good beer is good beer. And at that point, all it's about is just drinking good beer and just with good people. And I think that's one thing that I realized more so is that as you start getting into the San Diego community and meeting more breweries and you start going national and global, you really start getting a personality associated with each brand. Because as you go to trade shows, you go to meetings, you go to events, you're literally sitting there with the head brewer, or you're sitting there with the owner of the company and you're chatting with them as you have beer. And so all of a sudden, when you put a face to the actual brand behind it, you have some sort of loyalty all of a sudden associated with it. And it's that positive spin that just makes it even better beer than necessarily having a favorite brewery.

All right, well, just as controversial in San Diego, at least. Favorite taco spot?

Yeah, so I'm actually vegetarian. And then with that, I think city tacos in north park is probably my favorite spot right now. I know there's a couple vegan food trucks that have started popping up with really good tacos as well. But my go to is still city tacos for sure.

Okay. They just came up to North County. I'm looking forward to trying them.

Nice Encinitas.

If I could plug a great vegetarian taco, it's the fried avocado. You'll find them in different food trucks or taco shops. But if you ever get a chance to eat a fried avocado taco, you're gonna enjoy it.

Where can we find you on social media or you or the company? What's a good place?

Yeah, so Instagram would be a great one. It's he fifth ingredient with a five. So, yeah, that would be a great spot. Also on Facebook. Definitely follow there. And then you can definitely add me on LinkedIn as well. Always happy to connect with more people. And I think coming back to what we were talking about earlier with the San Diego community, there's a huge aspect of Pay it Forward, which I really love about it. The only reason why we've been so successful so far is because there have been really great mentors along the way that have been doing it without charging us consulting rates or anything like that and just paying it forward. And I'm all about that. I've always been, even in high school and college and just mentorship and things like that. So again everybody, you're more than welcome to connect with me on LinkedIn if you ever want to grab coffee, grab a beer. Always happy to do so chat about what we're working on. If there's anything we can do to help you out. Always happy to do that. So yeah, just connect and go from there.

Or catch you on the San Diego Slack Channel. Maybe we could. If anybody's not on it yet, all three of us are on there. Bulk adventure is active. Neil, what's the best way to get on the San Diego Slack channel?

Startupsd.org Slack and we'll drop it in the show notes too. But Pulkit, thanks so much for being on. Congratulations on all the growth and here's to a big 2020. Cheers.

Cheers. Thanks Ashok. This is awesome. Really, really appreciate that for sure.

Thanks for joining us on the Tacos and Tech podcast with Neil Bloom. Thanks again to Cox Business for helping make this possible by expanding the reach of the San Diego tech ecosystem. Big shout out to School of Rap for our rad intro music. And thanks a as as well to Nest Podcast Network where we are recording live inside their studio at Nest Co working in Bankers Hill. You can find Neal Bloom on Twitter eelbloom as well as fresh brewed Tech and Tacos and Tech Pod on Twitter too.

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