Welcome to the 125th edition of Deep Tech Catalyst, the educational channel from The Scenarionist where science meets venture!
This week, I sat down with Steve van Zutphen, former CEO of Magpie Polymers, acquired by Italmatch Chemicals in 2017, and current CEO of Swan-H.
Drawing on his experience building and leading Magpie Polymers, Steve joined us for a practical conversation about what it really takes to build a business around an advanced material.
We explored why a scientifically credible application can still be the wrong market, how technical founders can improve customer discovery, why industrial sales is fundamentally a process of reducing risk, and how pricing, pilots, and customer collaboration shape the path from laboratory validation to market adoption.
Key takeaways from the episode:
💰 A Real Problem Is Not Always a Market Willing to Pay
Technical relevance is not enough. The strongest entry markets are those where the technology creates measurable economic value and supports premium pricing.
🧪 Stop Pitching the Chemistry and Start Listening
The goal of a customer meeting is not to impress with the science. It is to understand the process, identify where value is being lost, and uncover problems worth solving.
⚠️ Industrial Sales Is a Process of Managing Risk
Customers evaluate the downside of adoption as carefully as the upside. Winning the sale means proving that the solution works without disrupting the wider industrial process.
📈 Pricing Should Support Company Building
Pricing must reflect the economics of an innovative specialty material. Strong margins matter, but early commercial repeatability can be more valuable than maximizing a single contract.
🤝 Grow With the Customer, Not in Isolation
Early-stage collaborations should reduce uncertainty, build customer confidence, and move the relationship toward recurring sales. The goal is adoption, not a business built around paid experiments.
What is your core competitive advantage?
5 strategic questions for deciding where to compete, what to prioritize, and what to build around.
BEYOND THE CONVERSATION — STRATEGIC INSIGHTS FROM THE EPISODE
Find a market that is willing to pay
The first key takeaway from the conversation is that a technology can solve a real problem and still struggle to become a viable business.
At first, the polymer seemed naturally suited to wastewater treatment and pollution control. It could selectively capture metals, and the environmental need was easy to understand.
The team met potential customers, attended trade shows, received samples, and ran tests. Companies were interested enough to engage, but those conversations did not develop into a clear path to paying customers.
This is an important distinction for advanced materials founders.
A customer may be willing to discuss a technology, test it, or provide feedback without being willing to pay enough.
The problem was not the technology, but the economics of the application. By entering this market, the startup was effectively asking customers to pay more for a better way of managing an existing expense.
That did not mean the market had no value. It meant that the commercial dynamics worked against premium pricing.
For an early-stage chemical company, this is a difficult position.
The company is still producing limited volumes, and manufacturing costs are relatively high. It’s rarely ready to compete through large volumes and low prices.
It needs applications where small quantities of product can create enough value to support healthy margins. This is where product design and market positioning become critical.
Moving from waste management to value recovery
The opportunity became more attractive when the company shifted its focus from removing unwanted metals to recovering valuable ones.
The underlying technology did not need to change substantially. Its core function remained the same. What changed was the customer’s reason to buy.
In a pollution-control application, the polymer helped manage a liability. In precious-metal recovery, it helped recover an asset.
Gold, platinum, and palladium leaving a production process are not simply contaminants. They are materials with a clear value. Recovering them can create a measurable economic return.
This made the commercial proposition much easier to understand.
The customer was no longer being asked to pay primarily for the management of a waste-related cost. The customer was being offered a way to recover value that was already being lost.
Precious-metal recovery also matched the realities of an early-stage materials company much better.
The startup did not need to sell enormous quantities of polymer for the product to matter. Small volumes of a high-value specialty material could support an economically attractive application.
This supported a low-volume, high-value business model.
The broader lesson is that the first market should not be chosen only because the technology can work there or because the need appears important. It should be chosen because the economics fit the company’s current capabilities.
Let the customer talk
Another interesting insight from the conversation was how the team conducted its early customer meetings.
If the founder speaks for most of the meeting, the company may leave without learning the most important things: how the customer’s process works, where the real problems are, and whether solving them is important enough to justify testing a new technology.
The arrival of an experienced salesperson changed the way these meetings were conducted.
The salesperson did not need to understand the chemistry better than the scientists. The value came from knowing how to guide the conversation.
Instead of explaining the product at length, the team began asking simple questions:
How does the production process work today?
Where are materials being lost?
Which steps are expensive or unreliable?
What has the customer already tried?
These questions helped uncover problems that would never have emerged from a traditional technical presentation.
A productive meeting is therefore not one in which the founder explains everything perfectly. It is one in which the customer shares enough information for the startup to understand whether there is a real opportunity.
Let the problem come before the product
The order of the conversation matters. In the case discussed, the sales team created space for the customer to describe where value was being lost in the process.
Once the problem was clearly understood, the technology could be introduced as a potential solution.
This approach changed the direction of the sale.
In other words, the startup is not asking the customer to test an interesting new material without context. It is proposing a possible solution to a problem the customer has already described.
This makes the next step easier. A pilot is no longer a generic experiment. It becomes a practical test of whether the technology can reduce a specific and measurable loss.
However, as discussed in the conversation, scientific expertise does not automatically make someone effective in sales.
Scientists are trained to explain ideas clearly, and demonstrate technical depth. Customer discovery requires a different skill set: listening, asking useful questions, and waiting before proposing a solution.
For an advanced materials startup, adding commercial experience can therefore be as valuable as adding technical expertise.
Customer adoption means managing risks
Industrial customers do not evaluate a new material only by asking whether it performs better. They also ask what could go wrong if they adopt it.
From the founder’s perspective, the value of the product may seem obvious. The material can reduce costs, recover more value, improve efficiency, or solve a meaningful technical problem.
But the customer sees the decision from a different angle.
An industrial process may not be perfect, but it is already running. Introducing a new material means changing part of an existing system, and that creates risk.
The downside often matters more than the upside
In the discussion, an example helped illustrate the dynamics of adoption in industrial B2B markets. A factory manager may be interested in a solution that reduces costs by 10%. However, if the same solution causes the production line to stop for two days, the loss can be far greater than the expected savings.
This is why the potential benefit and the potential risk do not carry the same weight.
For Deep Tech founders, this helps explain why a technically superior product can still face resistance.
The customer may understand the technology perfectly well. The hesitation may come from the fact that the operational risk has not yet been reduced enough.
This is why it is so important for the startup to understand how the material behaves inside the customer’s full process.
The customer wants to know that solving one problem will not create another, potentially larger one elsewhere in the system. The more the startup understands the customer’s process, the more credible its case becomes.
De-risking comes before price
One of the most useful points from the conversation is that, once the solution has been sufficiently de-risked, price often becomes less central in technical B2B sales.
Customers may spend relatively little time negotiating the final price compared with the time required to evaluate whether the solution works reliably without disrupting the process.
This does not mean price is irrelevant, but before discussing small differences in cost, the startup has to build confidence.
The customer needs evidence that the material performs consistently, fits into the existing process, and does not introduce risks that are difficult to manage.
Once that confidence exists, the commercial conversation becomes much easier.
The broader lesson is that industrial adoption is rarely driven by performance alone. It is driven by the combination of measurable value and acceptable risk
Pricing and business models
As we’ve discussed many times on this channel, for a Deep Tech startup, the question is not only how much to charge. It is also what the company should sell.
In advanced materials, this is particularly important.
The offering may be the chemical itself, a machine that doses it, a packaged system, or a service built around the result. Each option creates a different level of operational complexity, resource requirements, and customer support.
The most attractive model on paper is not always the most practical one for an early-stage company.
Selling a product is often a practical choice.
The customer can receive the chemical and introduce it into the process directly. In some cases, the startup may also provide a machine that doses the material.
This can be useful during early adoption because it gives the company more control over how the product is used and allows it to work more closely with the customer.
The machine does not necessarily need to be built internally. A specialist supplier can manufacture it, while the startup focuses on the chemistry that makes the system valuable.
The equipment supports adoption, but the chemistry creates the margin
The conversation drew a useful distinction between the economics of the machine and the economics of the material.
Industrial equipment can often be sold with a relatively conventional margin. The machine helps the customer adopt the technology and gives the startup greater control over the application.
But it is unlikely to be the main source of long-term value. The chemical is different.
Its price has to reflect more than the cost of manufacturing a kilogram of product. Years of R&D, testing, application development, and customer work sit behind that material. A simple cost-plus approach can therefore be misleading.
Moreover, at the beginning, founders may focus too heavily on maximizing the first sale.
For an early-stage startup, acquiring a first and then a second customer can matter more than maximizing the revenue generated by a single account.
That matters because early revenue is not just cash. It is proof that the commercial model may be repeatable.
The broader lesson is that pricing decisions should support company building, not just short-term revenue. They should also help the company reach the next customer, prove repeatability, and move toward a business that can scale.
From the lab to the customer site
Product design does not always have to happen entirely inside the startup. In the case discussed, much of the learning about how to use the material happened directly at customer sites.
This created a practical division of tasks.
The startup focused on mastering the production of the polymer. The customer helped validate how the material could be used inside a real industrial process.
This allowed the startup to retain control over material production while developing the application in the customer’s operating environment.
On-site development
The process began with small lab tests. Customers sent samples from their operations, and the team used them to see whether the polymer worked with real process materials.
If the results were promising, testing moved to the customer’s facility.
The team brought small mobile pilot units to the site. Testing could then move to larger or custom-built systems to evaluate the product at a greater scale.
This created a step-by-step path from lab testing to industrial use.
The lab showed that the chemistry worked.
On-site testing showed that it worked under the customer’s actual operating conditions.
The larger system helped the customer determine whether the technology could work at a larger scale.
Moreover, working at the customer’s site meant sharing part of the learning process.
The customer became familiar with the product and developed direct experience with how it worked and which risks needed to be managed.
The co-development phase therefore did more than validate performance. It reduced uncertainty and reduced adoption risk.
By the time the customer considered a larger-scale purchase, the decision was no longer based only on the startup’s claims. The product had already been tested inside the customer’s facility.
Deciding whether to charge for early trials
The conversation also highlighted a difficult strategic decision: whether and how much to charge for early trials.
Charging for early testing or co-development work can help the startup cover its costs. But insisting on full payment may slow the project and delay progress with the customer.
At the same time, the startup has a strong interest in entering the customer’s facility and moving the project forward, even if that sometimes means progressing without charging the full cost.
A practical solution could be to share the investment.
The company can explain what the test will cost and ask the customer to contribute. The payment may cover part of the project, for instance, or later be converted into a discount on a full-scale purchase.
The exact structure can vary. What matters is that both sides have something invested in the process.
The startup needs to protect its limited capital, but the long-term objective is not to build a business around fees from early-stage collaborations. It is to reach full-scale adoption and recurring sales.
Learning to filter the wrong opportunities
The final takeaway from the conversation is that not every customer project deserves the same attention. A CEO must therefore stay focused on the right opportunities.
Early-stage startups can easily become excited by any sign of interest. A customer mentions a technical problem, and the team immediately begins designing experiments around it.
But some projects are more valuable than others.
One customer may have a real problem that needs solving. Another may offer a project only because the startup has repeatedly asked for one. A third may present a challenge that has already been tested many times and may not be realistically solvable.
The first meeting is not enough.
Founders should avoid becoming overly optimistic, let the discussion settle, and see whether the customer still has the same problem the following week.
The broader lesson is that advanced materials startups need to protect their time and focus as carefully as their capital. A promising conversation is not yet a commercial opportunity. The strongest opportunities are those in which the customer has a genuine problem and the startup can realistically solve it.
