The Coolest Little Start-Up in America
At the moment, TerraCycle seems to have everything going for it. And yet, looking at it today, you would never guess how often the company has come close to failing. On each occasion, however, an angel appeared in time to rescue Szaky and his project. In the end, TerraCycle proved to be the company that refused to die--and a case study in the power of a big idea.
Tom Szaky is giving a tour of the house he bought in 2004 to accommodate the college interns he brings in each summer to work at TerraCycle. The house is large--10 bedrooms, four stories--and has various touches hinting at faded elegance, including a stained glass window in front, but the bars on the windows testify to its location in a crime-ridden neighborhood of Trenton, New Jersey. "There was a $10 million heroin bust a few blocks from here three months ago," he says. "Last week there was a murder two blocks from here. I heard the gunshot."
Inside, the house has the ambience of a college dorm. Szaky is particularly proud of the furniture. "No entrepreneur should ever buy furniture or mediocre computer equipment," he says. "Everything here is garbage. Princeton renovates one dorm a year, so we get all that." He points to a large fan and a 52-inch TV set. "That's all student waste. You find it in Dumpsters on move-out day. We get our computers from big companies, which throw them out once a year."
He is not so proud of the plants in the house, most of which appear to be dead. "We have no time to take care of them," he says. "So now we've invented a product that allows plants to go for days without water." On the walls are large swaths of canvas filled with colorful paint swirls. Szaky says he keeps paints and canvases handy to encourage creativity among the interns.
What Szaky does best, in fact, is to get people, especially kids, working together on creative projects. When he was in the third grade, fresh off the plane from Amsterdam, where his family had fled from Hungary, he enlisted his Toronto classmates to help him set a record by folding 5,000 origami cranes. In the sixth grade, he got students involved in videotaping stories they'd made up. In the eighth grade, he returned to the school and worked with the graduating sixth-graders on putting together the city's first CD-ROM yearbook. In the 10th grade, he came back again, this time bringing along his high school friends, to teach rocketry and set up a rocketry club.
It was another high school project that led to the creation of TerraCycle. The project involved certain plants that Szaky and his friends had tried to grow in hopes of being able to harvest the buds, but instead they kept getting seeds. They still hadn't solved the problem when they all went off to college, Szaky to Princeton and his friends to McGill University in Montreal, taking the plant setup with them. There one of the friends learned about fertilizing the plants with worm poop. He proceeded to create a little compost heap in a box in his kitchen, bought a squirm of red worms to put in it, and started feeding them table scraps. By the time Szaky came to visit during the fall of his freshman year, the plants had produced a bumper crop of buds.
As it happened, Szaky had been searching for a business to enter in Princeton's annual business plan competition to be held in early 2002. The answer came to him as he and his friends were enjoying the fruits of their labor. Worms! If these worms could turn table scraps into such terrific fertilizer, just think what you could do with an army of worms! You could recycle all the organic waste in North America! You could solve the problem of dwindling landfill space! You could replace chemical fertilizers with organic fertilizers! And you could make a fortune!
The idea sounded great at the time, and when Szaky returned to Princeton and discovered that his friend Jon Beyer actually knew something about worms--thanks to his father, an ecotoxicologist who had studied them--it was a foregone conclusion that their business plan would center on worm waste. Although they failed to win any prize money in the competition, they kept working on the project. To do the kind of recycling they had in mind, you needed machinery that could handle tons of waste at a time. Beyer knew of an inventor in Gainesville, Florida, Harry Windle, who had developed something he called a worm gin, which used stacks of conveyor belts to deliver waste to the worms. Szaky and Beyer contacted Windle, who agreed to build them a prototype they could use to test their concept. The cost would be about $20,000. Beyer contributed $1,000, while Szaky put in $4,000 of his own savings, maxed out two credit cards to raise another $6,000, borrowed $5,000 of bar mitzvah money from a friend in Toronto, and then told his parents that he'd lose it all if they didn't pony up the $4,000 balance--which they did, reluctantly. While Windle went to work on the worm gin, Szaky began lobbying the university to get garbage from the dining halls and an outdoor space in which he and Beyer could conduct their recycling experiment. For better or worse, he got both.
