Here's a fairy tale with a happy ending -- or happy beginning, if you're 23-year-old Tom Szaky. It goes like this:

A young man graduates from Toronto's Upper Canada College and heads south to Princeton University. But at the beginning of his sophomore year, he has a brainwave and drops out to start his own company. The company sells liquefied worm poop -- organic plant food -- in recycled pop bottles.

Although composting using red worms ("red wigglers") has been popular for decades, no one has worked the critters on an industrial scale. But the young man sees worms as a golden opportunity; big enough to sacrifice his studies and to sleep on the floor of the company's new office for 18 months while looking for investors.

When his idea wins a business plan contest -- one of seven it wins -- he is offered a cool US$1-million by Carrot Capital, a New York-based venture capital fund. But he and his buddies turn it down. Why? Carrot wanted them to stop using garbage from a New Jersey landfill to feed the worms.

"We actually walked away from a million bucks with $500 in our bank account because we didn't think it was the right business decision," says Mr. Szaky, now CEO of TerraCycle Inc., based in Trenton, N.J. "And the total irony here is we had no money, so that's why we started packaging in used plastic soda bottles."

TerraCycle offers students in more than 100 U.S. schools recycling seminars and half a cent for each plastic bottle they turn in.

The cleaned bottles are filled with organic, ready-to-use liquid fertilizer. In tests conducted at Rutgers University, the worm poop almost always outperformed synthetic fertilizers.

TerraCycle has 30 employees, a slate of investors and projected sales of US$3-million this year.

The plant food will be available at Canadian Wal-Mart stores, which join Toronto-area Loblaws and Fortinos stores in giving those worms their turn.