Meet The Founder Reinventing How Steel Is Made For The First Time Since 1850

[00:00:01][music] Steel produced from iron ore has not been innovated since 1850.

[00:00:11]Our next guest is changing that. She is Loren Marowway. She is the founder of Hera Metals, the only female founder in the steel space. Can we say that? There are others thankfully uh that have come formed their company after me, but I'm the first founder and inventor of a steel making technology. The first founder and inventor of a steel making technology. You know, I did look this up. I was looking at some of the steel corporations in the US and the US steel corporation was founded in in 1901. So, we're we're many years past that. How does one decide to innovate steel? How do you come up with a new way to produce it?

[00:00:53]>> Well, firstly, once you understand how ubiquitous steel is to industry and how foundational it is to everything we've built upon, it's really difficult to not fall in love with steel. It's a material that we will never replace because it's so versatile and so low cost. It's made from dirt, from iron ore. And yet, as you said, we've been making steel from iron ore primarily the same way since 1850. And so looking at that that massive opportunity to innovate, it just called my name and I jumped in. I do have over a decade and a half of experience developing new industrial technologies. And so all of the things that I've touched over those years have allowed for the culmination of what is Hera's technology.

[00:01:40]>> And you do have engineering degrees, multiple.

[00:01:44]>> Yes. So I have a dual civil and mechanical bachelor's degree and then I have a master's in mechanical engineering with a focus on heat transfer and a PhD in mechanical engineering with a focus on material science and a minor in business. Can you talk about how those degrees plus this moment of time in industrial development kind of led to fertile ground for your company? Because I do think there's an element of timing here. This company, your company could not exist if we were talking 30 years ago. Correct.

[00:02:16]>> Yes. In the way that it exists today.

[00:02:19]So, Hertha Metals is a technology enabled steel producer. So, at the heart of it, our value that we create in making the steel comes from the technology in itself that gives us the cost advantage, the metallurgical advantage, the emissions advantage. And the way we do that is by replacing metallurgical coal, which is the way that again we've been making steel since 1850, with a a gas reducing agent, a gas chemical reagent, and that includes natural gas. And so 30 years ago, natural gas wasn't the cheapest uh source of fuel in the US. Uh we only recently had the Shell Revolution. And within the past 5 years, did making power with natural gas become cheaper than when using coal?

[00:03:08]>> So it's cheaper. You also mentioned lower emissions? How does that work?

[00:03:13]>> Yes, metallurgical coal firstly is a high-grade coal. It's not any type of coal. It's not the same coal that you do run your power plants off of. And this metallurgical coal called coke uh is used both for melting iron ore right when you think of steel you think of liquid. You have to transform the iron ore to a liquid steel to do post-processing. And so we use the coke as the heat source. We're combusting it and we use the coke as that chemical reagent. So it's serving two purposes.

[00:03:50]That's a lot of coke. And so simply by switching to natural gas, which is a cleaner source of carbon, we reduce emissions off the bat by 50%. And then there's the 30% cost reduction.

[00:04:02]>> Exactly.

[00:04:03]>> And you're producing one ton of steel already.

[00:04:07]>> Oh yes, we are producing over one ton per day now. And let me tell you the significance of this. So when I founded the company in 2022, this was based off of reading research articles and then having an idea that was built off of those uh for a process that could address the needs of the industry. And those needs are we have lost our competitiveness and cost making steel domestically. We are relying on high grades of iron ore which are depleting and they're also expensive. uh and again we continue to rely on metallurgical coal another expensive resource. So founded the company to solve that problem and spent the first year uh just primarily doing paper studies, right?

[00:05:00]Technoeconomic analysis really using third parties who are unbiased. They have no skin in the game as to whether my technology is going to work to prove out the economics first, right? We have to lead with reducing cost.

[00:05:17]And so we did those studies and uh was convinced all right this will be a lower cost solution this will be lower emissions and then I went out to industry and industry means I went and spoke to the big guys the steel producers they're not so big to me anymore but they were big back then [laughter] and I asked listen this this industry has not innovated in so long why uh what kind of signaling do you all need to believe in the economic projections and feasibility of a new steel making technology? And time and time they said again one ton per day, a one ton per day, you know, integrated semicontinuous pilot plant.

[00:06:04]And so what we did was design our research and development and engineering program to do things in parallel and get to that one ton per day scale in less than two years. of operations at our headquarters and a fraction of the time uh that our competitors take. We're also the first to even demonstrate a singlestep steel making process at this scale.

[00:06:31]>> And it's worth noting that if folks are watching thinking, how did I not hear of this? It's largely because you've been in stealth most of that time. You founded the company in 2022 and you only came out of stealth this summer. Is that correct?

[00:06:43]>> Exactly. At the end of summer. What made you finally come out of stealth? Was it that one ton per day? Was it feeling confident in the operations?

[00:06:53]>> It was in having enough data to support our claims. It was I didn't want us to go out in 2022 and just sell a vision and words to the whole world. I wanted to go out with something to prove that what we're saying is real is actually real.

[00:07:16]>> And so we took that time and you know it wasn't easy. It was painful to be under wraps. Um and especially as a startup having to raise from venture capital sometimes having your name out there is what is attracting the investment. But it was really worthwhile because we were able to spend that time heads down figuring out our business model, figuring out our go-to market strategy, figuring out the best ways to optimize our economics and our technology. So, it really paid off to wait. We'll get into the management of stealth being in stealth mode because I think that's interesting just from an operational standpoint. But I want to kind of take a step back because as I was digging into your company, I was on a train. I was on the subway and thinking about how steel was likely all around me and I don't know what was used to make the tracks, but I imagine it was kind of in every part of my journey on that commute.

[00:08:10]>> I love that you were thinking about it.

[00:08:11]>> You might have said something in the interview I was listening to that kind of spurred that. But for folks who maybe don't spend time thinking about what steel is used for, it's a basic question, but where would a regular person who wakes up in the morning, goes to work, goes to the grocery store, go go goes home, how many times over the course of that journey would they encounter steel? [sighs] You probably touch something that has steel in it at least 50 times a day.

[00:08:40]It's in your cell phone. It's in your vehicle, your your car. It's in your home, your structural beams. It's [sighs] in really cool fashion pieces that might have uh components of steel to it if you have a wardrobe like mine. Um, very on brand. So, it's literally everywhere.

[00:09:00]Um, it's a trillion dollar market and we produce billions of tons of steel every day.

[00:09:07]>> So, what do you see as every year?

[00:09:10]billions of tons of maybe is is every day your goal.

[00:09:13]>> That would be nice. Just steal everywhere. No, we don't want to flood the market.

[00:09:18]>> You don't want to flood the market. But what do you see as the biggest opportunity? Because the United States and and the world at large are building out massive AI data centers that will require steel. Residential home building requires steel. As you look at where HERA should go, what [snorts] is that target?

[00:09:36]>> Yeah. So data centers need steel, right?

[00:09:40]The structure of the data center needs steel. Different components within the data center need steel. The uh transformers need steel, right? EV motors need steel. And the the opportunities I'm pointing out are those in which we have uh under supply right now. So the United States, the last time we built a blast furnace, which is the furnace that takes iron ore to iron, was 1979, right?

[00:10:15]We have now 11 of these operational furnaces compared to 70 furnaces and plants in the US that take scrap steel.

[00:10:26]So, we've done a great job at maximizing our scrap recycling rates, but the reality is you can't make all steel with scrap. And because we have so little uh primary steel making capacity in the US, which means so little of those blast furnaces, we're importing steel.

[00:10:45]>> And so, the US is the largest steel importer in the world. Around 25% of our steel is imported. And so the biggest opportunity hearth the metals has is to displace that imported steel and we do it by again leading with cost. The United States has this abundance of natural gas and low cost due to and and stability in oil prices due to our Henry hub uh pricing and using natural gas in our process with lowgrade ore. Right?

[00:11:18]It's not enough just to use natural gas in terms of cost reduction. It's also the ability to use the lower cost low-grade ore enables us to displace those imports purely by economics.

[00:11:30]You mentioned the meetings with the big guys. So how do they feel when you talk about reducing the reliance on imports?

[00:11:38]Are they pro, are they con? Is it more complicated than I'm making it?

[00:11:41]>> Oh no, they're they're pro. Right. So the steel incumbents, the steel producers today in industry that are making the millions of tons per year already, uh they want a stronger US production base, right? They we don't want to have to continue to compete with the artificially lowered uh prices of Chinese steel on the market. And so if we're able to more cost-effectively make steel domestically, that's what they want. And we help them do that. So, Hertha Metals partners with steel producers so that we can jointly produce that lower emission, lower cost, higher metallurgical purity steel.

[00:12:19]>> I was just about to ask because I think when I first dug into this, I was kind of picturing this I was going to say David and Goliath, but that's a very male metaphor, but nonetheless, small guy trying to go up against the big guys, but it's less about competition from your seat and more about finding ways to partner with the big guys.

[00:12:37]>> Yes. Again, it's it's a capital intensive industry and it's foundational to society.

[00:12:44]We need to partner. The steel incumbents existing today can't afford to not partner with us. They can't afford to not innovate if they want to remain in business. And we as a company would love to partner with them and share that uh operational and capital intensity. You also mentioned a few minutes ago venture funding and I am trying to picture a group of Silicon Valley investors with you talking about steel. How did those initial meetings go?

[00:13:13]>> We have to pick wisely, right? The the investor group and it not every investor in Silicon Valley is going to be an appropriate investor in Hertha metals.

[00:13:25]uh most investors are used to putting in big dollars but into software in which they can see the revenue returns immediately.

[00:13:34]>> But in uh in industry and especially for industry defining companies like Hertha metals we need a lot of capital to get to scale and we need a lot of patience.

[00:13:45]You don't disrupt an industry overnight.

[00:13:48]As much as it might seem like it on the news, right? Uh the industry disrupting companies have been at it for a while until you actually hear their transformation.

[00:13:58]>> So, we pick our investors wisely. Uh we're really proud about the investors and partners we have around the table today. And really at the end of it, we need more. We need more of those types.

[00:14:11]>> Kla is one of your current investors.

[00:14:13]You have a combination of sorry 20 million in combination of dilutive and non-dilutive funding. Are you raising right now?

[00:14:22]>> We sure are. We uh have just opened our round and this raise will go towards building first the US's first domestic uh high purity iron production facility for rare earth magnets and secondly will also serve as our steel trial demonstration plant uh in which we'll be sending steel trials to our customers.

[00:14:45]So that's going to be a 9,000 ton pure plant.

[00:14:49]>> A 9,000 ton pure plant. How much will that cost to build?

[00:14:53]>> Not too bad. Less than people think.

[00:14:56]>> Less than people think.

[00:14:58]>> More than some people think. [laughter] Less than what others think. [gasps] When we get into what people think, I'd love to talk a little bit about the myths about steel because I think I had one of them. I was asking you about talking to your peers in the industry because I don't necessarily think of the steel industry as one that requires as many conferences and gatherings as something like fintech or even AI where there are conferences and summits left, right, and center? But but you corrected me on that. So is the steel industry in the United States beyond just you obviously innovating more than what the average person would think?

[00:15:34]>> Yes. on a more metallurgical level and and more of a you know solving metallergical challenges here and there uh improving properties less innovation on the we are going to completely redefine how we're making steel. So when you go to these steel conferences, you know, 98% of the talks are going to be about uh how do we improve our operations? Uh how do we we solve different challenges with metallurgical quality, surface quality, etc. And then the rest will be about here's this new biocarbon based approach to make iron from ore.

[00:16:18]And the reason is that the lack of innovation historically results in companies losing their competitive edge. When everyone's doing the same exact thing, at that point their margin is solely dependent on the cost of their input material. It's not process optimization, etc. And we've become complacent that way such that the research and development branches of steel mills have shrunk and almost just completely vanished for a lot of steel companies.

[00:16:52]And so while we're innovating on uh the level that I described, there needs to be a lot more uh big picture innovation, redefining and bold innovation for us to regain a competitive edge in steel making. So speaking of big picture, let's say you build that new facility that this new round will hopefully fund.

[00:17:13]What do you picture on the other side of that buildout? This facility will a serve the rare earth with magnets manufacturing uh industry, but b more importantly tee us up very nicely for our half a million ton per year steel mill. So we aim by 2030 to be on ramp to 500,000 tons per year of production and that will be uh through partnerships with the existing steel producers.

[00:17:41]>> It will require growing your company in terms of employees as well. And since this is the CXO series, I do want to talk to you about management. You have about 25 employees now. And like we said, you were operating in stealth and I don't think I've ever had a CEO for this series come out of stealth. So I would love to ask how do you hire and manage a team under stealth? How many NDAs are involved? What makes leading a team in stealth different than now that you're out of stealth, you can kind of see maybe the differences.

[00:18:11]>> Yeah. So lots of NDAs. Uh we would have candidates sign an NDA by session two.

[00:18:20]So session one, I meet with them personally. I am I'm one of the first and make sure they understand our story.

[00:18:27]make sure they they understand our vision and they're on board with that.

[00:18:30]And then by session two, an NDA is required. Uh which for those that are truly interested, there was no problem signing an NDA.

[00:18:39]It does take more work because you are having to go and scout these candidates.

[00:18:44]The candidates aren't coming to you.

[00:18:45]They've never heard of her medals.

[00:18:47][sighs] So that's a bit challenging. But the pro of it is that it forced us to go find the perfect candidates and not end up complacent and settling on whatever was coming inbound.

[00:19:03]>> And because of that, I have a group of 25 people that are as productive as, you know, our competitors that have 100 plus employees. So the number doesn't define the success. What defines success is what have you done with the talent you have?

[00:19:22]>> How do you think you'll take that learning and apply it to life as you scale now out of stealth? Can you afford to take that much time to scout and vet candidates?

[00:19:32]It's something I think about all the time because after this round we will need to grow to at least 60 um ideally even a few more building out some other departments in our our company and there are two things.

[00:19:51]One, I was incredibly thoughtful about my first 10 hires. Also very thoughtful about the following 15, but very thoughtful about those first 10 hires because then when we get to this point of we're scaling. I I can't interview everyone. I'm trusting my leaders and my first five to 10 employees to do that work. And it's proven successful. Um, and I think that's the only way because if you don't have that foundation, your culture will very quickly get lost and muddled when you take that leap of 25 to 60 plus. I was going to say I've heard I want to call it a myth, but I think it might be true for some software companies that when the employee count doubles, the culture changes every single point. So from 10 to 20, 20 to 40, and so on and so on. Have you felt that?

[00:20:47]I would say not 5 to 10. Uh 10 to 20 it was changing and we very quickly had to identify that and adjust course correct. So you have to constantly be in sync. What is the culture on the floor? Especially for us, we run a steel pilot plant. It's a 247 plant, right? We have day and night cruise shifts and it's very easy for the culture for those on night shift that aren't around everyone else to be very different than the culture of our dayshift right when you're around the entire company. Of course, we cycle it so that night shift is also on dayshift sometimes or otherwise. Uh but it takes a lot of thought, attention and proactivity like jump on it. You see the culture is slipping, you see something you don't like, you need to jump on it.

[00:21:39]Have a town hall, fix it, get >> I was just about to ask about the tactical strategies. So, it's not just the shifting of the workforces with day and night. It's it's you showing up.

[00:21:49]It's town halls. Is it >> Yes.

[00:21:51]>> icebreaker activities? Well, it sounds stupid, but yeah. uh identifying someone within so someone more on the ground to be the cultural champion and incentivizing them to be the cultural champion is what it really takes. You have to have someone on the ground doing it. So it takes work. Uh, what I will say is that it amazed me how different the culture on the plant floor was when I had the time to be on the floor with them >> and I was literally cutting refractory bricks, putting them in our furnace, taking part of the actual buildout of our pilot plant because I had designed it and and had put this forth and that cultural shift between me and those that I had that experience with versus me and my new hires is always really difficult. It It requires more proactiveness.

[00:22:51]>> It's different when you're in your case, you're literally using your hands, but I think this is an experience a lot of founders have, right? You're you're deeply embedded on the day-to-day when it's 1, two, three, four employees plus the founder and then the team grows and you step into the more managerial role and then there's just that natural distance, >> right?

[00:23:13]>> How often do you communicate with your teams? You have weekly standups. You mentioned town halls. How frequently do you do those?

[00:23:19]>> So, we have every single week a leadership meeting which includes our director level, VP level, and seuite every single week. Then I have one-on- ones with all of my direct reports again once a week. And then we have a monthly town hall with everyone in the company in attendance.

[00:23:37]We also try to do a a barbecue or something at our facility once every three months or so. Um, and we've created a we call it the oasis. It's outside of our plant. So try to imagine my plant. I've got this steel mill, this amazing singlestep steel making technology right there. It's super hot.

[00:24:02]Uh it we're in Texas. And then we have our office trailer. I don't have a nice office building right next to my steel mill. Uh and then we built out this wooden deck in front of the office trailer because there's not enough room in the office trailer for us to all get together. And so we have a um Houston, we have a barbecue grill on there, we have tables, we have those outdoor couches, and we'll just do a lot of team bonding when we gather there and eat together. That sounds amazing, though. I I might recommend using some of your next round to to build a bigger office.

[00:24:40]>> Yeah, I agree. I agree. I would like that, too.

[00:24:44]>> We've talked about a lot of your future >> scrappy, right? This is how we did it so capital efficiently.

[00:24:49]>> I was going to say I interviewed a biotech founder a few months ago and she's grown to a multi-billion dollar level for her company and she said that they're still in the same office building that they were several rounds of funding before. She hasn't grown with the money the keeping up with the >> keep humble.

[00:25:08]>> It's the Warren Buffett way. I think >> we've got to stay humble. You have to stay scrappy. You never know what the market will look like tomorrow.

[00:25:16]And you don't want that culture of making every dollar count to shift as soon as you get more money.

[00:25:27]Because >> just because we closed on $200 million doesn't mean that dollar doesn't count as much as when we closed on 20 million, >> right? And by keeping things kind of humble and and scrappy, it's a reminder.

[00:25:43]It's just a natural constant reminder.

[00:25:45]When you talk about making every dollar count, >> we do have a ping pong table, though.

[00:25:49]>> I I I don't think anyone can be judged for that right now. Back in the day, it was only the unicorns and now I Forbes doesn't have a ping pong table. But there we go. [laughter] >> A used ping pong table.

[00:26:01]>> You heard it first.

[00:26:02]>> Capital efficiency at its finest. But when you talk about using every dollar and not knowing what tomorrow holds as you look at 2026, what are your financial projections? So much of what happened with the economy this year felt unpredictable. We we heard in the presidential race tariffs, tariffs, tariffs, but I think a lot of founders and CEOs were surprised by the texture of of what unfolded. How are you planning financially for 2026?

[00:26:31]>> So, we are always conservative on a cash basis for our spend. we keep very tight budgets and make sure that we're purchasing only what we need to purchase. That would be true regardless of what 2025 looked like, right? It was true in 2024. It was true in 2023 when I was buying the equipment for our plant.

[00:26:54]And so, nothing's changing there in terms of the way we think about spend.

[00:26:58]However, what does has changed is the external market and investor weariness and the risk aversion amongst the financial community. Uh and that's due to the unpredictability.

[00:27:13]However, the strategics, right, the corporations, they've got their eyes on the long term and so do we. Right? what happens on a day-to-day basis isn't necessarily indicative of what the economy is going to look like in 10 years.

[00:27:30]>> And so keeping our eyes on on the end goal and what we perceive the future to look like helps us manage that though that's only possible because we have at the foundation of the technology and company flexibility built in.

[00:27:47]>> So what does that mean? We are not reliant on policy to exist. Uh we are a new steel making company that has developed a technology that also reduces emissions. But we don't we're not labeled green steel. And why is that?

[00:28:05]Typically anything with lower emissions now they say is green. But the green nomenclature now has been associated with green premiums, right? And the need for policy to support companies. That's not what I wanted to rely on when building the business. And so we built in the flexibility by leading with cost reduction, being able to use natural gas, being able to also switch to clean hydrogen in the future instead of natural gas when that comes available as that makes us futurep proof, >> right? So you want to hedge against policies and and the political landscape that could result in headwinds or tailwinds.

[00:28:48]and we've baked that into the core of our technology and our supply chains for iron ore, natural gas, power, etc. >> We've covered a lot of ground and I've asked a lot of questions, but I haven't asked the one I probably should have started with, which is where does the name for your company come from?

[00:29:06]>> I love that question. Hertha Metals was named after Hertha Eritin. Hertha Eritin was a scientist in the late 1800s. She was the first physicist to really understand electric arcs. Electric arcs are what delivers the heat in our process and so uh recognizing her for the role that she's played in our company which is the electric arc. She was also a woman suffragette uh so fighting for women's rights in voting and also a pioneer in breaking down barriers for women in science. So she was the first female that was given permission to read her own research articles in front of the Royal Society of Chemistry. They would only allow men to read it when she was in her career.

[00:29:57]Uh and so after multiple times of them saying no, Joe on the right over here will read it for you, they finally agreed and then she went on to win a medal from them.

[00:30:08]>> I really should have started with this question as a editor. She was best friends with Madame Marie Cury.

[00:30:14]>> So cool.

[00:30:15]>> An appropriate name for someone who herself is the first female founder in the steel space. So I normally end with a forward-looking question, but since we ended on on a business sense, like what do you predict for the business, but since we've talked so much about the future of the business, I want to ask because you mentioned at the beginning this of this conversation that there are other female founders in the steel space that have come after you. How do you think the existence of your company has helped women who want to work in steel?

[00:30:43]>> Yeah, so I only know one. [laughter] >> Okay, for now hopefully more will arise.

[00:30:50]Um I know one who co-founded a steel startup um based off of a technology that came out of a university. So slight slight differences. I've invented it from scratch and then founded the company.

[00:31:06]But what I love is we're seeing this boldness and we're seeing the rise of women in this industry.

[00:31:16]Every industry that is on top of the world has a mixture of minds working together, right? Steel should be no different. And so I hope that uh her metals getting out there, coming out of stealth, showing female leadership in the steel industry will encourage others as well. I don't consider other still startups uh that come after us to be competitors. Innovate. We need as much innovation as possible. Um and so I'm looking forward to seeing how we're going to evolve over the next decade in this industry.

[00:31:46]>> I'm super curious as well. You will have to come back and update us on how your company is growing. But in the meantime, Lorine, thank you so much for joining us.

[00:31:54]>> Thank you for having me.