When a twenty year old drops out of Princeton, maxes out all of his credit cards, and has a run-in with the cops for "dumpster diving", there is normally cause for concern.  Not so in the case of Tom Szaky.  He runs a business that turns garbage into an eco-friendly product that can be used by nearly every household in North America.  The company is called Terracycle and the product is nature's best fertilizer, worm poop.  Terracycle is packaging the liquefied fertilizer in used soda bottles and shipping it out in cardboard boxes that were otherwise headed for the dump (the plastic bottles are collected primarily from schools and non-profit organizations). 


If you're thinking this is likely a smallish operation, visit your local "Big-Mart's" shelves.  Home Depot, CVS, and even Wal-Mart are carrying it, eliminating accessibility and affordability from the list of excuses America has for not being "ecologically correct" in their lawns and gardens.  With eco-stellar products and tremendous reach, Terracycle has created a win-win most thought unobtainable.
Will Terracycle run out of capital?  Will product demand cause this startup's supply chain to collapse?  We will stay tuned to see if it's a success, but compromising doesn't appear to be an option for Szaky.  With $500 in the bank, he turned down a million-dollar prize in a business plan competition when the venture capitalist asked him to change his model.

Perhaps the unspoken beauty of this plan is the example it sets for others.  The concept, unheard of not long ago, unveils an entirely new perspective.  Bottle-collecting school children are learning reuse.  So are discount stores who previously thought they had the cheapest products available, as are growers who thought they had to spray chemicals on plants.   Every aspect of the company is cheap, eco, and groundbreaking. 

We interviewed Tom despite his busy schedule (it turns out slinging worm poop is titillating news for national television as well).

GD: Why didn't someone think of this before?
Tom: The worm industry is a cottage industry with somewhere between 2,000 and 5,000 active worm farmers in the country (though to date we've only located and been able to contact about 150 of them).  These are the type of people that make more worm poop than they need, unless they are farmers and use it on their fields.  There are probably over 250,000 households in North America that have vermicomposting bins in their kitchens--these are the people that make it for themselves.

The main problem has been that none of the serious farmers have been able to market their product.  They have also focused on its benefits as a soil conditioner not a fertilizer.  In general this is the problem with most organic companies.  They are small, have grown slowly and don't have robust marketing and thus an ability to gain strong distribution.  Also, most organic / eco-friendly companies have an aversion to big-box stores.  The problem is that if you don't sell to big-box stores you can't grow above a certain size.  In North America over 35 billion dollars is spent annually on consumer lawn and garden, and 80% of that is sold through Home Depot, Wal-Mart, Kmart, Menards, Target and Lowe's.  The balance 20% is divided up among medium sized big-box chains, large grocery chains, and independent nurseries.  As you can see, if you want to go big and grow quickly it has to be done through the big box stores.

GD: Did you always know you wanted to do something green?
Tom: Not at all.  I also don't consider myself an environmentalist.  Just a normal guy--I don't find myself spending the extra dollars to buy organic/green goods.  That being said, I care about the environment and if it's the same work (or the same price) I will definitely chose the green alternative.  Now, if the price is less, then it's a no brainer and that's what we hope to accomplish with the products that we are launching.

The cool thing about TerraCycle is that it makes good business sense to go green.  It's actually more cost effective for us.  For example, our raw materials are garbage and used soda bottles.  Used soda bottles cost about 80% less than if I bought a new one and garbage, well, let's just say the cost is negative.

GD: What, specifically, caused you to turn down the one million dollar prize?
Tom: The venture capitalist, Carrot Capital, wanted us to move away from the eco-capitalism business model and to just market a "hip" organic fertilizer.  At that point we had invested so much time in creating a product that was made from waste that I wasn't too keen on their vision for TerraCycle.  The irony is that because we had no money after turning down the prize and couldn't afford packaging we decided to use used soda bottles since we could get those from people's recycling containers on recycling day.  (We did have a run-in with the cops--turns out that going through people's trash isn't legal--who knew).

GD: What's the hardest part of running TerraCycle?
Tom: The corporate life and managing people.  As we grow bigger and bigger there seem to be more forms and paperwork that eat up the day, more meetings to create policies and to deal with the mundane minutia of growing a company.  But it's still the most exciting job I can think of.  I get to sit in my office, in the hippest factory I've seen (covered inside and out with graffiti art), in an environment where anything goes and "doing the normal thing" is frowned upon, and dream up the next ultimate eco-friendly product.  In the process [we are] making money, creating jobs in the inner city and replacing chemical products with better organic choices.

GD: What will you tackle after you've conquered composting?
Tom: While worm poop will remain the core of our gardening brand in 2007, we will be launching a Organic Deer Repellent that moves away from compost-based products.  Then in 2008 we're going to go even further and launch a handful of products that have nothing to do with gardening, but are still the ultimate eco-friendly choice for their category, while being extremely affordable.

After TerraCycle… I don't know.  I get excited about creating companies that grow super-fast, create massive change, and are a tremendous win-win for all involved--shareholders, customers, and clients.

GD: If you could get everyone to recycle one item, what would it be?
Tom: There wouldn't be one item.  The big problem we find when we try to create products that are packaged in waste is finding a lot of one specific type of container.  Frankly, if every container was recyclable and recycling centers could sort them by volume, we could reuse everything.  For example, next year we're launching a potting mix that is packaged in reused milk jugs and the year after [2008] we're considering an organic rooting hormone packaged in reused 500ml beer and soda cans.

One of the exciting parts about making products out of waste is that you have to invent entirely new production technologies. For example with our soda bottles we needed to invent a machine that would remove the labels and wash out the bottles; with the milk jug potting mix we had to invent a system that would cut a 3-inch hole in the top.

There's never a dull moment.