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Interview with Tom Szaky, CEO and founder of TerraCycle
There is more than one road to success. Here is one formula: Dropping out of Princeton + Growing Pot = Potentially the world’s greenest consumer products company. Here’s another formula: Imagination + Things People Don’t Want = $3.5 million company. Yes, we’re talking about Tom Szaky and TerraCycle, a company that develops products made of and packaged from waste and sold at large retail chains.
Since 2001, TerraCycle products have received a Zerofootprint Seal of Approval, and the company has been inundated with a host of other awards. Its products include plant fertilizer, cleaning products, school supplies and bags - all made using trash.
CEO and founder Tom Szaky discusses how it all began, what has been most challenging, what he loves about his job, his views on greenwashing and more.
AMIE VACCARO, GREEN BUSINESS INNOVATORS: How did you come up with this idea for TerraCycle while at Princeton?
TOM SZAKY: My friends and I were trying to grow better pot and it turned out worm poop did the trick. It was also inspiring in that it was using garbage.
GREEN BUSINESS INNOVATORS: What are some of your favorite products or projects?
TOM SZAKY: I love the Target plastic bag project. And we make world’s first bag that is made entirely from recycled plastic bags. Over 40,000 people sent in bags through an ad we ran on the cover of Newsweek which doubled as an envelope and we requested people return it with their plastic bags. It was a win-win. A really fun product too. I really enjoy our TerraCycle juice pouch products using Capri Sun and Honest Tea packaging as well.
GREEN BUSINESS INNOVATORS: What is your favorite part of your job?
TOM SZAKY: Creation of big partnerships. Seeing your creations on the shelves of Target, Home Depot etc. I was grocery shopping this weekend and picked up a Capri Sun [juice] and saw that my logo was on the side of the package. That gets me.
GREEN BUSINESS INNOVATORS: What has been biggest surprise about the job?
TOM SZAKY: The realization of what you can do with waste. Fundamentally there is almost no waste that cannot be upcycled and no product that can’t be made from upcycling. We can create a solution.
GREEN BUSINESS INNOVATORS: What have been consumer reactions? Business reactions? Has it been hard to get retailers to carry your products? Hard to get consumers to buy your products?
TOM SZAKY: People are really into green products right now. So they are much more receptive. The education piece is critical. A lot of sponsors are really into that piece as well. Once people are educated they will do a huge amount of other things.
GREEN BUSINESS INNOVATORS: Do you see Kraft or other partners making changes to their packaging based on your work together? (it seems to me a big piece of the answer is reducing packaging and rethinking it for easier re-use)
TOM SZAKY: We can take it all. We work with world’s biggest retailers and collect crazy volumes. We will collect 50 M drink pouches this year. Which is not enough. We don’t see the issue of not being able to use the waste. They should use more reusable stuff. But people aren’t great at recycling. Across the country we see low recycling rates. It is better to have lighter packaging that is not recyclable. At the end of the day the argument environmentally is to package juice in a pouch that’s lighter than a bottle.
GREEN BUSINESS INNOVATORS: Where do you see TerraCycle going? What sort of growth do you envision?
TOM SZAKY: We will keep doubling every year. At least. I think this is very very manageable.
GREEN BUSINESS INNOVATORS: What challenges have you come across?
TOM SZAKY: The volume of work is the hardest part of my job.
GREEN BUSINESS INNOVATORS: How many employees do you have?
TOM SZAKY: Over 60 employees. Most of our work is outsourced with partners.
GREEN BUSINESS INNOVATORS: Do you have any concerns about the process of changing plastic into a usable product regarding energy use, waste, toxicity?
TOM SZAKY: Upcycling never takes more energy than making something out of virgin materials.
GREEN BUSINESS INNOVATORS: Has Terracycle been profitable?
TOM SZAKY: TerraCycle had revenues of $70,000, up to $0.5M in 2005, $1.5M in 2006, $3.3M in 2007 and projected sales of $7.5M in 2008. Most of our money is invested in growth. It is definitely profitable. We are backed by a venture fund.
GREEN BUSINESS INNOVATORS: When collecting trash for your products, who do you work with?
TOM SZAKY: Sometimes we work with recycling and disposal companies, but we typically create our own models to collect trash.
GREEN BUSINESS INNOVATORS: Discuss some of your partner relationships - how did they come about, any concerns on your side about being used to help greenwash a large company?
TOM SZAKY: They are absolutely trying to greenwash. Like when you claim something is 96% natural, when it’s just water, or claiming that packaging is recyclable, which all of it is. That is greenwashing. Or BP ads, about kids swimming near oil rigs with dolphins. But the Kraft thing is a serious step. If that is perceived as greenwashing, then everything is. What these companies are doing should be encouraged.
GREEN BUSINESS INNOVATORS: What are your current projects?
TOM SZAKY: Exciting launch of trim and packaging line made out of garbage. Like bows, gift wrap.
GREEN BUSINESS INNOVATORS: How do you come up with ideas?
TOM SZAKY: We have a design team that comes up with ideas. We also work with stores to think about what products they want.
GREEN BUSINESS INNOVATORS: Any other interesting stories like the pot growing one?
TOM SZAKY: We packaged the worm poop used soda bottles, which crystallized the “made and packaged with waste” idea. We used soda bottles because we had no money. This was the central lever behind one of our biggest innovations. We realized that this was actually the best way to do it. I was not a big environmentalist, I just wanted to use waste as an economic driver.
GREEN BUSINESS INNOVATORS: Are there other companies in this field I should be aware of?
TOM SZAKY: We are the leaders. No one has quite the scale we do.
September 4th, 2008 at 7:33 pm
[...] recently posted the transcript to my interview with Tom Szaky, CEO and founder of TerraCycle to Green Business Innovators. Below is the intro for [...]
October 15th, 2008 at 10:23 am
Anybody who can build an empire on worm poop deserves props, in my opinion! Seriously, there are many useful lessons here, especially that necessity really is the mother of invention.