Going for the Green

UPDATED: January 28, 2009
PUBLISHED: January 28, 2009

When TerraCycle co-founder Tom Szaky left his
Canadian home to study at Princeton University, he
didn’t know that, less than a year later, he would
be knee-deep in garbage—literally. Visiting friends
in Montréal and seeing their plants flourish with
the addition of worm excrement, Szaky got an idea:
He would start a company selling fertilizer created
by feeding organic waste to the red wigglers
and collecting the product. He called the
company TerraCycle.

“I was shoveling rotting garbage for the summer,”
Szaky says. “Literally, about a thousand pounds of rotting
waste every day.”

The 26-year-old business whiz has never shied away
from hard work. He has been turning his ideas into
realities successfully since he was 14 and running his
own Web-design company, Flyte Design, in Canada.
As a Hungarian-born immigrant, Szaky has an awelike
respect for entrepreneurship and the possibilities
it provides.

By the fall semester of his sophomore year in 2002, the
TerraCycle project started consuming all of Szaky’s time,
and he dropped out of school to pursue his American
dream. “I bankrupted all my credit cards and borrowed
a bunch of my friends’ money and built a monstrous
organic waste-to-worm-poop conversion system. Once I
had spent all the money, I really couldn’t fail.”

After Szaky and his small team outgrew the crowded
basement of an old office building in Princeton where
they were working, he bought a large, rundown
house in a gang-troubled area of Trenton, N.J. He
recruited 35 student interns willing to help the company
grow in exchange for a place to live, fried chicken
and experience.

“I would say one of my skills and one of the reasons
that I’ve been successful is that I’m able to get people
excited about something I believe in,” Szaky says. “They
loved the idea of spending the summer living in a house
building a cool company…. It was just nuts—one shower, by the
way, for 35 people.”

They worked relentlessly to keep the business afloat, and
out of necessity figured out how to make things work (e.g.,
creating a rotating shower schedule). One of the most innovative
ideas behind TerraCycle was inspired by pure necessity. While
producing the company’s liquefied worm poop plant food, they
ran out of money and couldn’t afford
the bottles required to store and sell the
product. So they started using recycled
soda bottles, at f rst swiping them from
private recycle bins.

“We want to convert the
entire idea of garbage.”

With products and packaging completely
from recycled garbage, TerraCycle was able to bring better, cheaper
and greener products to consumers—and establish the eco-capitalism
concepts that brought awards and publicity. Home Depot
awarded TerraCycle its Environmental Stewardship Award twice
(in 2005 and 2008) and Inc. magazine named it “The Coolest Little
Start-Up in America.”

Its Bottle Brigade program now collects used bottles from more
than 4,000 locations and pays schools and nonprofit groups 5 cents
for every 20-ounce bottle. Because of that program, TerraCycle was
able to reuse more than 2 million bottles in less than two years. Now
the company has teamed up with big food manufacturers, including
Stonyfield Farm, Cliff Bar, Kraft and others, to collect yogurt cups,
wrappers and juice pouches for new products, such as eco-friendly
planting pots, tote bags, shower curtains and pencil cases.

Szaky is thrilled with the expansion, which results in reusing
more products and keeping them out of landfills. The green side
of TerraCycle has always been an important aspect of the business.
So important, in fact, that Szaky
once turned down $1 million
in business plan prize money
because the company funding
the contest wanted him to move
away from the environmental
side of the business. That hurt at
the time, but TerraCycle persevered.
The company eventually
landed orders with Home Depot,
which opened doors to other
big-box retailers, including their
first big order with the world’s
largest retailer, Wal-Mart.

There were growing pains,
however. When Szaky and associate
Robin Tator landed that huge
Wal-Mart order for 100,000 bottles worth more than $250,000
to the company, TerraCycle didn’t have the
infrastructure to meet the demand. They had
recently purchased a dilapidated building in
Trenton to use as a factory, but it took two
months to get the equipment and bottles they
needed. During the last two weeks before the
deadline they worked 20-hour days and slept
in the factory to get the order filled on time.
Though the company has had many ups and
downs since then, growth has continued.

Szaky says one of the constant challenges
he faces is sustaining growth in a business
that is always evolving. He shares some of
what he’s learned in his book Revolution in
a Bottle: How TerraCycle Is Redefining Green
published by Portfolio, an imprint of
Penguin Group. “We’re still figuring out what

TerraCycle will end up as in a way,” he says.
“It’s not like we’re a storage company and we
want to add more storage units. We want to
convert the entire idea of garbage, and we’re
learning and figuring it out as we go.”
TerraCycle has seen consistent aggressive
growth, with sales more than doubling for
three consecutive years, and Szaky projects
sales around $17 million next year. But he sees
potential that’s much greater than profits.
“We’re changing the world’s biggest companies,”
he says. “And creating something that is
arguably going to be as big as, or bigger than,
the idea of recycling.”