This blog discusses identifying the beach-head application for your new advanced material.
One common mistake advanced materials startups make is assuming that since their technology is better, people will buy it. What startups don’t realize, however, is that there is a supplier switching cost. OEMs and end users already have established products and manufacturing process. Their product is designed based on the material properties of the current supplier. Often to realize any of the gains from a new material, changes in the manufacturing process or product are required. Changes like this require a cross-functional team and integration process. The team requires engineering, operations, testings, and (preferably) marketing expertise. Integration can take months to years, depending on the complexity of the product and industry qualification process. While it is no surprise that selling a new material is difficult, it may be easier than you think. The trick is finding that first application for your technology.
So, you have a multi-billion dollar addressable market. Great. But, a lot of technologies can talk about a multi-billion dollar addressable market. Billion dollar opportunities mean nothing if you cannot sell the first unit. The real question you should ask is where do I start. The first application for your technology is both challenging and rewarding to find. It validates your effort, technology, and company. But a lot of companies struggle to find that first, beach-head application. Here, we talk about some ways to find that important, beach-head application.
Every market has a beach-head application that they are struggling with. Usually, it is a difficult application that is a sub-set of the larger market. But your customer doesn’t have a solution and needs one now. These are a great opportunity to get your foot in the door.
New materials startups often start with an application search because, 1) the company can go into a number of market, or 2) the innovation is a solution looking for a problem. Having a number of addressable markets is a double edged sword. Yes, you have options, but you also have limited resources and testing an application takes time. It is a compound problem that requires prioritization. Alternatively, your discovery was made in a lab, outside of the core industries. This kind of alchemy is exciting, but you have no idea what to do with it. This situation requires a similar search process, but usually starts much more broadly than scenario 1. Sometimes it helps to organize the opportunities into a ranking table and calculate the opportunities. Even if the numbers are arbitrary 1-5 rankings, quantifying the variables forces an internal conversation (debate) about trade-offs between opportunities. Below is a nice template I have used in the past:
Don’t Pitch Open Ended
If you are looking for your beach-head application, it is all too easy to simply vomit technical data into a PowerPoint slide. This is a very risky way to present your technology. It is like throwing up a hail Mary pass in the superbowl. There are too many loose ends and not enough focus. Also, too much technical jargon risks not connect with a real customer need or even lose a potential customer.
Once I was leading business development efforts for an advanced composites company. My pitch was not overly technical but I left the conversation open at the end to see what application the customer wanted to test it first. They went with a high-temperature application that used an extremely brittle resin. At face value, this was a great idea. Our additive improved fracture resistance and there were no other solutions available. We started testing and realized that the chemistry was different, causing problems with handling. Also, the cross-link density of the resin (required for high-temperature performance) required higher weight loadings to show an improvement. The higher loadings meant our low-cost value proposition evaporated, along with the customer.
Looking back at this opportunity, it was a great learning experience for the team. But the learning experience cost us a major potential customer. It would have been better to test the material with a smaller customer or in-house before launching a major customer trial.
Pitching with “Focused Ambiguity”
Finding your beach-head application is more about listening than pitching. Developing relationships with customers, having multiple conversations, and listening to what people say during a conversation. Often, the right answer is inferred or revealed only after talking to multiple people across a particular industry. It is like the “faster-horse” analogy Ford references when he was designing the automobile. Rarely do customer think outside the box, they react to what is infront of them. So, asking them directly is not always the right solution. Instead, it helps to interpret their reactions and listen for their particular pain points. If you start hearing the same complaint from multiple people, you will start to illuminate an opportunity.
There are few points I would like to make about facilitating successful conversations. The best way pitch a technology and gain market insight is through “focused ambiguity.” This mean guiding the customer to a few high-level problems as you introduce your technology. Two ways to do this is discuss the technical advantages before introducing the technology and talking opening about technical limits.
Prefacing the pitch means that you discuss how your technology can solve a customer problem before talking deeply about the technology. This helps guide the customer during the presentation. It helps to do this a couple times in the presentation; once with the introduction slide and again after detailed data review. Introducing the possible applications at the beginning gives context for the conversations. Reintroducing the idea after a technology deep dive brings the pitch up a level and gives an opportunity for the customer to internalize the technology. These are also good opportunities to ask questions, or have the customer ask questions. Encouraging tangents and open discussion helps fill in the gaps left by an introductory presentation. Again, you are trying to get as much information out of them as they are of you.
The other way to guide the applications space is to openly discuss technology limitations. For obvious reasons it is important to know what applications your technology won’t work on. No technology I good at everything and there is often some trade-off associated with implementation. Addressing these head-on can save time but also quickly eliminates bad customer ideas. Yes, customers can have bad ideas.
Going back to the composite additive example, our tests show that our additive did not work in systems with high loadings of filler. Fillers are basically clays used to decrease the price per pound of the material. During our pitch many customers suggested using our material in sheet molding compound, an application that uses a lot of clay filler. I agree that the need is there, but quickly add that these applications do not work with our additive nor is the price-point supported by the market. After a brief pause, I will follow-up with another (better) idea to re-start the conversation in a constructive direction.
Get Them to Pay
Nothing is better proof of need than having the customer pay for a sample of the material. Putting money down verifies need and gives external validation of value. Also, it starts the process of pay-as-you-go testing. If all goes well, testing quantities and (and POs) will increase. Free samples are common in the materials industry, but they should be small quantities and go with a clear delineation of when ‘free’ stops. I like to clearly state a free sample is a one-time deal or up to a certain quantity limit. That way if they like the sample they are primed for purchasing the next round.
If the Trail Goes Cold
There are a million indications for a technology not being a top pain point. Usually, however, these indications are not explicit. In the thousands of hours talking with customers, I rarely have a customer directly tell me that are not interested. This is probably out of kindness or that they don’t want to shut-down an opportunity. Or our technology addresses a problem, but it isn’t the top problem (which is the same as it not being a problem).
Instead, I have learned to read clues indicating their interest level. Reading between the lines is important is helping guide where to spend your time. If it isn’t the top technical issue to be solved, it isn’t going to move fast enough for you or your investors. Save everyone the time and frustration and move to another market. If you can’t tell where you are in the priority list, here are a few guidelines to read interest level:
One time I was try to evaluate if a graphene additive had an opportunity in the coatings market. Since coatings applications used the same material at composites, we thought there would be an equally high need. I spoke with CTOs, sales reps, and engineers in the space. I received a lot of wows and early excitement, but very little follow-up. Eventually I realized that they do have a problem with fracture resistance, but their bigger problem was corrosion resistance. Corrosion resistance drove their product choice and fracture resistance was considered only after. After a few weeks of no responses, we pivoted to other market opportunities.
If your technology is a big deal and your company knows how to execute, you will grow quickly but starting out is often the hardest part. Hopefully the above ideas help guide you in your early pursuits to prime the pump for success.
That’s all for now, thanks for reading!
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