TRENTON, N.J. - Tom Szaky is wearing what he
calls his "greed hat," turning worm excrement into profit.
The 23-year-old Princeton dropout set out to be a smart
entrepreneur, not an environmental hero. His growing business is
built on organic fertilizer made from worm feces, then bottled in
recycled plastic bottles.
The company, TerraCycle, markets plant fertilizer created by
"vermicomposting" - harvesting worm excrement. It sells the product
in 20-ounce plastic soft drink bottles, many gathered by school
children. It employs 10 people in a warehouse in economically
depressed Trenton.
Those business choices were born not of idealism but to maximize
efficiency and keep costs down.
"We're in Trenton because the rent is very cheap and labor is
abundant," said Szaky (pronounced SAH'-kee). "The decisions were
made by wearing the greed hat ... but ironically we're doing the
right thing."
TerraCycle Plant Food has sold for around $7 since early 2004 in
organic groceries and independent garden shops, and earlier this
year began appearing on shelves in Wal-Marts across Canada and Home
Depots there and in New Jersey. Sales for 2005 are expected to reach
about $500,000, and Szaky hopes to triple that next year with a
planned launch in Home Depots and Wal-Marts nationwide.
There, where the majority of Americans buy their gardening goods,
TerraCycle will go up against fertilizing powerhouse
Miracle-Gro.
"We don't want to be just be an organic plant food sold in little
organic stores," he said. "We want to compete on their playing
field."
Born in Hungary, Szaky moved with his physician parents to
Toronto at age 9. He entered Princeton to study behavioral
psychology and economics in 2001.
While visiting a friend in Montreal that fall, Szaky was
intrigued by the success his plant-loving pal was having with
homemade fertilizer generated by a box of compost and some
worms.
"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 http://www.terracycle.net/
