GETTING INTO THE BIG BOX BY THINKING OUTSIDE THE BIN

In Business, January-February, Vol. 29, No. 1, p. 14

What started as a business plan in a 2001 University competition is now a company with 40 employees and $6 million sales.

Cindy Rovins

It Seems unlikely that a product that's been rated as the most eco-friendly consumer product in North America could be sold in price competitive big box stores. But TerraCycle, Inc. has proven that it can be done, that is, if it's made from garbage.
TerraCycle is a start-up company achieving a new form of eco-capitalism: where the environmental bottom line meets the economic bottom line. The premise is that while eco-capitalism may be good for the environmental bottom line, it usually costs more to do so. Organic or recycled components can add to product costs, but when you are using waste for your product and packaging, you're leveling the playing field.
What started as a business plan for a vermicomposting enterprise in a 2001 Princeton University competition submitted by two students is now a company with about 40 employees and interns, and a product line of 12 organic gardening products - all except one made from vermicompost tea or the postbrew solids. The products are packaged in reused plastic soda bottles or milk jugs; caps, spray nozzles, and cardboard shipping boxes are overruns.
Tom Szaky, the 24-year-old founder and CEO of TerraCycle took a “permanent sabbatical” from Princeton to start the company, while his partner Jon Beyer graduated and rejoined the company as Chief Information Officer. Their Trenton, New Jersey facility is the brewing and packaging plant, with off-site research done at the Rutgers University EcoComplex greenhouse (see In Business, May/June 2006). TerraCycle produces some of its own vermicompost at the greenhouse, mostly for research, and the rest is purchased from about a half dozen suppliers throughout the United States. The vermicomposts they receive are predominantely from animal manures, while one supplier also uses paper sludge and food waste.
They diverted from their method of keeping costs minimal when it came to obtaining used soda bottles. Rather than obtain the bottles directly from recycling centers, they decided to use schools, churches and other nonprofit groups to collect the bottles for fundraising purposes. Although this adds a slight increase to the costs because of shipping, it's proven worthwhile in terms of outreach and education. Over 1700 organizations in the United States and Canada participate in TerraCycle's Bottle Brigade program, receiving $.05 for each bottle. With their new product line to be launched in Spring 2007, a 1-gallon milk/water jug collection program is being piloted in New Jersey, dubbed “Jugs for Jersey Schools”. Also new for 2007 will be the neck tag program where TerraCycle products sold in Target will sport a tag filled out by a Bottle Brigade student with their first name, state and their idea to help the environment.

MORE THAN A PRODUCT LINE
TerraCycle's revitalizing materials doesn't stop at the product line - it's also what furnishes their building. Their desks, chairs, computers, phones, cubicles, etc. have all had a previous life in other businesses. Even the vats for brewing the compost tea were retrieved from a landfill.
At first glance, TerraCycle might appear to be a company full of idealistic, dumpster diving kids, but a probe into their infrastructure shows otherwise. While the top and lower levels of the company are composed of youth, sandwiched in the middle is a solid core of middle-agers. The gray belt of the company is made up of seasoned corporate and research veterans often with as much experience as their founders have in years. And while treading lightly on the earth is policy, the business is clearly driven by profit.
With sales quadrupling since 2004, the company anticipates $6 million in sales this year, which will be the break even point for the four year old company. They've raised $4.5 million from private investors and anticipate another $2 million this year. The investment funding is for growth, and the company is growing faster than a vermicompost tea inebriated marigold. Their product line started with an all purpose liquid plant food followed by an orchid fertilizer and African violet fertilizer. Their Spring 2007 additions include lawn fertilizer and garden fertilizer with hose application sprayers, liquid plant foods for herbs, tropical plants, roses, tomatoes and cactuses, solid potting mixes and seed starters, and a deer repellent. They also plan to grow into a new facility, using their existing site to produce their own vermicompost and will relocate their offices and brewing and bottling operations at a new site.
As a new start-up TerraCycle managed to get their products placed in Canadian Wal-Mart stores and Home Depot's on-line division. Their product can now be found at Home Depot and Wal-Mart stores in the United States and will be also available at Target stores in 2007.
A huge boost for TerraCycle's success has been all the media attention they attract. Says CEO Szaky, “We actually get so much free publicity that we don't advertise at all.” From local papers to national media, selling a worm poop product in reused bottles with a whiz kid at the helm makes good media fodder. Dozens of local publications like the Sheboygan Press and the Bloomington Pantagraph feature their story - often generated by local participation in the Bottle Brigade program. But the rest of the story has attracted big media - Time Magazine, CNN, CNBC and even landed Szaky on the cover of Inc. Magazine, as “The Coolest Little Start-up in America”. And the icing on the cake is being the first consumer product to be awarded the Zerofootprint seal by Zerofootprint, Inc., indicating that the materials and manufacturing process used in the product have virtually no negative environmental repercussions. They also received eco-friendly product ratings from the Clean Air Foundation, Home Depot and Wal-Mart.

INCUBATOR FIRMS AT ECOCOMPLEX GREENHOUSE
Another essential component to their growth comes from taking root as an incubator business in the Rutgers EcoComplex greenhouse, where they test various feedstocks for potential use as well as different tea and solids formulations for plant development.
The greenhouse is located at the Burlington County, New Jersey Resource Recovery Center and is powered and heated by microturbines running on landfill gas. An indoor aquaponics system recycles water from tilapia tanks by cycling it through hydroponic troughs growing tomato plants.
The Rutgers EcoComplex, a part of the New Jersey Agricultural Experiment Station, serves as home to several incubator firms that are developing their businesses with assistance from Rutgers via research, facilities use and/or feasibility development. TerraCycle is a good fit for the greenhouse, whose primary purpose is to showcase new technologies in real world conditions for economic development. While not actually in practice, the vermicompost operation could close the loop on the greenhouse operation. The solid waste from the aquaponic system is not currently being vermicomposted, but if it were, it would demonstrate an entirely close-looped system within the greenhouse.
TerraCycle's research focuses on plant growth. However, they do not test their vermicompost tea products for disease suppression. Research at Ohio State University shows that vermicompost tea suppressed disease in tomato plants probably through microbial competition with beneficial organisms. TerraCycle's Director of Plant Research, Dr. Joe Willis (formerly manager of the EcoComplex greenhouse) explains that they are unable to introduce disease in a facility that other people are using, and claiming disease suppression on a product has new implications. Labeling legalities would require the teas to be registered as a pesticide with EPA. So for now, this possible product benefit will remain an unknown.
While TerraCycle's unconventional climb to success is strategic to how their company operates, there is one venue where their youthful creativity was completely unleashed - their Trenton facility is covered inside and out with graffiti. Hosting two Graffiti Jams in 2005 and 2006, graffiti artists from around the country were invited to express themselves all over the TerraCycle building. Nestled in Trenton's industrial district, a glimpse of their facility from busy US Rt. 1 may leave passersby scratching their heads. But the message coming loud and clear from those walls, is “We're here to stay, and we're doing it our way!” h

Cindy Rovins is an Agricultural and Environmental Communications Editor for Rutgers Cooperative Extension.

Copyright 2007, The JG Press, Inc.