Student turns worm waste into a business

"It wasn't an environmental thing. It was `Wow, this is a cool business model,' " Szaky said. "The light bulb went on, and it never went off."

Szaky and Princeton colleague Jon Beyer submitted their idea to a campus business plan project, and were rejected. Undaunted, they purchased a "worm gin" - equipment that houses red worms while they chew their way through decomposing food scraps - with $20,000 borrowed on credit cards. By summer 2002 the fledgling company was near failure.

Szaky went on an AM radio station to talk up the concept, and fielded a phone call from an investor offering $2,000 to keep TerraCycle alive. Szaky accepted, quitting school at year's end to devote himself to the business.

The company took up residence at Rutgers University's EcoComplex, an environmental research facility run in partnership with Burlington County Landfill near Bordentown, about 12 miles south of Trenton. While a TerraCycle researcher there is still tweaking specialized formulations for orchids and African violets, the company now purchases the worm waste from suppliers and focuses on packaging and marketing.

A private investor in Florida owns a 40 percent interest in TerraCycle, which is purchasing the 20,000-square-foot Trenton warehouse as a permanent headquarters. TerraCycle spokesman Barry Brinster said the company is not yet making a profit, but expects to break even in 2006.

Along with the full-time laborers, TerraCycle has about 10 professional staffers - including chief technical officer Beyer, now a Princeton graduate - working for "nonprofit wages." A number of those looking after the startup's research, legal and financial concerns are relative grayhairs.

In August Eric J. Smith, who spent 15 years in top sales positions at such companies as Procter & Gamble Co. and SC Johnson & Son joined TerraCycle full-time.

Smith, 39, working from his Atlanta home, compared Szaky to the founder of Wal-Mart Stores Inc. for his willingness to rely on his staffers' expertise.

"He is our Sam Walton. He has surrounded himself with individuals that were leaders in their respective fields," Smith said. "I've worked for 55-year-olds who couldn't hold a candle to him in empowering people to do their jobs."

An 80 percent pay cut has been a bit of an adjustment.

"My wife is confused and my mother-in-law won't talk to me," Smith joked. "But I kind of got addicted to what he was doing. Tom's one of the best I've seen in knowing his product, having a passion for it, and being able to communicate it."

On the Net TerraCycle www.terracycle.net

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