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OPERATIONS

The Recyclers

Most people see refuse. These entrepreneurs see raw materials.

Forks and spoons made out of potatoes. Cups made from corn

At Excellent Packaging & Supply, it almost seems as if the plates and tableware themselves are the menu. This small distributor, based in Richmond, California, provides a vital link between the manufacturers of compostable and biodegradable utensils and food packaging, many of them scattered overseas, and a growing number of corporate and institutional customers--including the Gap (NYSE:GPS), Yahoo (NASDAQ:YHOO), and the University of California, Berkeley--that are demanding greater sustainability in their food service operations. Among EPS's offerings: BagasseWare, a sugarcane-based Styrofoam substitute that can withstand both freezer and microwave, and SpudWare, utensils made from corn and potato starch that can tolerate boiling water. Both are as tough and durable as traditional products but, unlike petroleum-derived plastics, will break down into their natural components within months in composting facilities.

Revenue at the company stands at about $6 million but is growing at some 60 percent a year, driven almost entirely by green products, says founder Steve Levine. (The company also stocks traditional plastic products.) And demand shows no sign of abating. Levine says it's all because of the cool factor. "The story of a plastic cup made of corn is much better than one made of oil, and the story is the reason customers support it," he says. "They're not just looking for products, but for stories to connect with."

Where old cell phones go to die. And be reborn

In the late 1980s, Chuck Newman and some partners invested millions in a business centered on leasing cell phones. When the price of cell phones took a dive in the early 1990s, that suddenly became a very bad business model. But that business has evolved into ReCellular, whose 250 employees in Dexter, Michigan, recycle or reuse 75,000 phones per week. Is that a lot of phones? Yes and no. No other company keeps as many cell phones--and their heavy metals, including cadmium and lead--out of landfills. On the other hand, the EPA estimates that as many as 125 million cell phones will be retired this year in the United States alone, and most of them will simply be thrown out.

ReCellular has partnerships with wireless giants like Verizon (NYSE:VZ) and T-Mobile and retailers like Best Buy (NYSE:BBY) and Wal-Mart (NYSE:WMT), all of which collect used cell phones and send them along to ReCellular, which either recycles them or rebuilds and resells them. About half of the rebuilt phones end up with domestic resellers, the other half in developing countries in Africa, South America, and Asia. They typically sell for $16 to $18, of which ReCellular's partners receive as much as $5 to $10 per phone for charities of their choosing.

Never mind that ReCellular has to maintain relationships with giant bureaucratic companies, with nonprofits, and with buyers all over the developing world. The most demanding part of this business is figuring out 500 to 600 different phone models. First, workers must identify which phone they are working with. They then identify the software the cell phone operates on, test the phone, and remove things such as personal information, photos, and wireless company logos. Finally, they offer to reprogram the phone to its client's specifications. Of course, new phone models enter the stream all the time. "There isn't an effective blueprint to follow," says Mike Newman, Chuck Newman's son and ReCellular's vice president. Adds Chuck Newman: "I'm a big believer in the learning curve. We've had to be in the business long enough where we could execute this business model with efficiency and quality. We've processed more than 15 million so far, and we're getting really good at it."

"The point is not to force people to pay a premium to be ecofriendly"

Tom Szaky is the rare recycling nut who doesn't drive a hybrid car or buy organic food. That's because being ecofriendly is too expensive, he says. But Szaky, the 24-year-old founder of plant food start-up TerraCycle (and the subject of Inc.'s July cover story), aims to change the economics of environmentalism. His fertilizer, which is sold at Wal-Mart and Home Depot (NYSE:HD), is made entirely from garbage, is completely organic--and it's often a few pennies less than Miracle-Gro (NYSE:SMG). Szaky started his Trenton, New Jersey-based company as a Princeton undergrad, feeding red worms with dining hall refuse and diving into recycling bins for no-cost packaging. TerraCycle, which is on track to hit $2 million in revenue this year, now buys used bottles in bulk and manufactures worm excrement, the basis of its fertilizer, in giant compost bins. As TerraCycle gets bigger, Szaky hopes to cut costs even more. "The point," he says, "is not to force people to pay a premium to be ecofriendly."

Is the world ready for a recycled toothbrush? Apparently so

When it comes to plastic garbage, Eric Hudson has a nose for the good stuff. He has to. "I'm not able to just call Dow Chemical (NYSE:DOW) and say, 'Ship me 50,000 pounds of virgin plastic," he says. "We have to do a lot of digging and scrapping and putting the pieces together."

Hudson is the founder of Recycline, a Waltham, Massachusetts-based company that makes personal-care products from recycled plastic. Recycline's line of Preserve toothbrushes, razors, and tongue cleaners, plus a new line of tableware, are now found in places like Whole Foods (NASDAQ:WFMI), Stop & Shop, and Target (NYSE:TGT). The Preserve razor, appropriately green, will be seen gliding along Will Ferrell's face in the upcoming movie Stranger Than Fiction.

Americans feel pretty good about recycled goods these days, but for some people, the recycled toothbrush, Recycline's signature product, is a bridge too far. "We basically believe that maybe 15 percent of people won't buy our product," Hudson says. "But I think our dedicated consumer looks at our product and says, 'That's really nicely done." For the record, the plastic is thoroughly tested before use and heated twice to over 400 degrees Fahrenheit in the manufacturing process. It's sterile.

So where does all that plastic come from? Hudson reaches out to like-minded businesses large and small, buying some and receiving some at no cost. Stonyfield Farm, one of the company's largest partners, donates yogurt cups to be recycled. The giant yogurt maker also has donated advertising space to Recycline on the lids of its containers. And Recycline receives about 15 percent of its toothbrushes back from its customers, for re-recycling.

The company will sell almost a million toothbrushes this year--and turn its first profit--and Hudson believes an even larger market awaits. Being a green company, he says, "has been both an advantage and a crutch. Now, we're ready for the mass market."

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