How to Find the Right Partnerships

We just did something that some would say is crazy. We -- the company best known for making "worm poop" gardening products bottled in what were previously plastic soda bottles, and for turning billboards into messenger bags -- are creating products based on Huggies and Scott paper products from Kimberly-Clark.

Excuse me?

No, not used diapers and handy wipes, but the packaging that they came in. Oh. Yes. But you see where there might be a bit of a mental leap for people to buy products that are made from brands they associate with very unrecyclable things?

That is, until you look at what we're doing. In fact, what we're doing is tightly interlocked with the Kimberly-Clark brand. If we tried to use their stuff and make what we've made in the past (i.e. the gardening products we're known for), that just wouldn't have worked. Instead, we've directed all our energy into creating products that, as they say, don't fall far from the tree.

Case in point: We'll be making Huggies packaging into diaper bags and other baby/parenting-related products. A short step, not even a leap, for those who regularly use the brand. An organic extension of it, even.

As you can see, it's possible to do this with just about any brand. We're going to do it again with toothbrushes in the coming year.

Just think, how would what we create best make sense to the market that our partner has already established for themselves? But wait a minute here. Does it ever become dangerous to associate yourself with brands that don't target your core consumer? Or may outright alienate those who are your supporters and brand champions?

Turning the question on myself, I can say yes. Take NASCAR. Recently, they've been trying to put a green sheen on things, and wanted us to be a part of that. I'm sorry, can't go there. My aim for TerraCycle is to reach, deeply, into the mainstream of society, making sustainable choices an obvious, not an either/or proposition, or only for the most committed green individuals.

However, NASCAR going green is like driving a car with both feet all the way to the floor. They contradict one another, and cancel each other's progress out. I'm not one to tell people and businesses how they should conduct themselves, but any industry that is based on an activity that by its very nature amplifies waste, I can't play with.

What about you? Do you have a no-go zone when it comes to partnering and associating your brand? Is there a way you can reshape it that will work and for your customers to see it differently?

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Name Your Own Price!

We just made what some may consider either a stupid move or a brilliant move, but it's definitely an interesting one -- we've opened a retail store. But that's not the part in question here. We've got solid product offerings that customers clearly want. No, what makes this launch unique is that we've decided to start out by letting people choose what to pay for their purchases.

Are we nuts? Why, yes, but that's the beside the point. In other sectors, namely music and restaurants it's shown to be quite a success, drawing a lot of media attention, building good will with fans and customers, and in the end, turning out to be profitable.

Will it be so in the retail sector? That's still to be determined. We're trying this, and the store will also serve as a place for people to bring product packaging that we normally collect via our Brigades, getting 2 cents per piece to the charity of their choice.

So what do you think will happen?

There's a number of factors at play here: The economy's in the toilet, which may cause people to pay lower prices, but could also lead to an uptick in brand affinity, because we're offering this option. Then there's the fact that we are a leader in upcycled products, making a tangible impact on the environment, which could cause people to pay more -- their small way of supporting a company making a solid effort. Others, not familiar with our highly competitive prices, may accidentally pay more then we normally charge anyway!

Then there is the very real possibility that people could do the very thing that business owners would fear most: Completely take advantage of this situation, paying pennies on the dollar for gear they clearly know is worth more. It's our hope that it's not the case, but we are being pragmatic about this experiment, doing it on a trial basis.

So what industries do you see this model working in? Do there need to be constraints put in place, or does doing that encourage people to pay the lowest allowable price? What do you think will happen at our store?

Tune in next week to find out...

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Going Global: Risky or Necessary?

In an economy like the one we're facing now, the conventional wisdom is to pull back on the reins, focus on your core business, and economize in every way possible. We've never been a company to follow the conventional wisdom, and a historic recession isn't enough for us to lose our fearless ways.

TerraCycle is about to go where we've never gone before: the United Kingdom. Starting September 1, we joined together with Kraft UK and Think London, a sustainability focused, private/public-funded service whose sole purpose is to effectively locate foreign businesses and help them establish a U.K. presence. We are also being assisted by our first major sponsor here in the United States, Kraft Foods.

We're an unknown in United Kingdom, and so is, for the most part, upcycling. At least anywhere beyond nichey green boutique stores. We're about to change that, breaking the cost barrier to people making greener choices, due to the extremely low cost of our source material -- pre- and post-consumer packaging, in this case from Kenco and Tassimo instant coffee brands, products Europeans enjoy much more then we do here. They will be transformed from a short-lived package to a long-lived umbrella, weekend bag, and coasters, among other things.

Expanding to the United Kingdom was an obvious choice -- our friends across the poind are savvy consumers who know and vocally ask for products that have a higher standard of sustainability and ethics. Yet, they aren't particularly high-percentage recyclers, partly due to lack of infrastructure.

Yes, they technically speak the same language, but in many ways, it's a different world. Thankfully, Think London's services, as they are funded by the Office of the Mayor of London, were totally free to us, and have helped us extensively in every facet of thinking about and getting established in London. With their assistance and the corporate backing of Kraft Foods Europe, we're looking forward to successful expansion into the United Kingdom and ultimately into mainland Europe

Given this, where in the world do you think your business should next be? How can you do it intelligently? Who can help you locally?

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Making Sustainability Sustainable

When you think of socially responsible, sustainable food companies, which come to mind? Ben & Jerry's? Stonyfield Farm? New Belgium?

How about Mars?

Mars? You mean the company that makes Milky Way, Starburst, and 3 Musketeers, among others? Not likely top of mind for you. Yet. And I'd wager it just may be in the coming years. Why? Mars recently made two monumental commitments, with action and money to back it up. They encompass both what's in and outside the wrapper. And they could even serve as an example and even a resource to you. Yes, you, the perhaps-already-sustainable-in-many-ways company. Read on...

Mars recently committed to purchasing 100 million tons of sustainably sourced cocoa beans, certified by UTZ Certified. While not as well known by you and I as, say, TransfairUSA, UTZ's work is of no less substance. Along with source sustainability certification and verification of supportive workplace practices, they actively reach out to farmers and those in the surrounding communities to educate them on the viability of and market for sustainably grown cocoa.

What impact could this have on you?

If a major player like Mars is committing to have all of its chocolate sustainably sourced, this both sets a precedent for others to follow suit, and it will have ripple effects of an increasing supply, as more farmers see the long term viability of choosing to grow in a planet friendly way. Which means more room for new green chocolate companies. Question is, will it remain a niche, or become the norm?

Mars is taking their commitment beyond the bar, to include the wrapper. Not yet going the Sun Chips compostable route, they've made an agreement with us, the largest such for upcycling of post consumer waste. Translation -- 3,000 tons of packaging that would have otherwise been burnt for power will now be turned into new products. Nineteen candy brands, three cat and dog food brands, plus Uncle Ben's, Seeds of Change, and Flavia to be precise.

If a mammoth company like this can make such a huge commitment to repurposing its waste, what's stopping you? Ideas? Money? Creativity? Figure out how you can do it as easily as possible, while profiting at it. Can you do it? How would you do it? We started with a composter and plastic bottles out of our people's curbside recycling bin (unbeknownst to them). You can do it too, in a way fitting for your industry. We'd love to hear your ideas, stories, and successes. Drop me a comment here.

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When Does Partnering Make Sense?

What are you good at as a company? What are you not? Though we at TerraCycle (and I imagine you too) like to think we can do anything we set our minds to, we know what our core competencies are: Branding, materials science and repurposing, and post consumer collection programs.

Anything else, we can do it, but there are often others that do it better. And increasingly, we're happy to let them do it. Why expend a lot of energy trying to up our game in those areas, when we can instead focus on maximizing the amount of "waste" we collect, making the most people aware of the options we offer, and benefiting thousands of people who collect product for our brigades?

Take, for example, FAB. FAB has licenses for a huge variety of today's biggest pop culture brands: Paul Frank, Hello Kitty, Hannah Montana, Nickelodeon, Hello Kitty, Disney, Marvel, and so on. From backpacks to snow globes to "novelty clocks," their collective licensing and manufacturing might create an diverse array of products, cheaply and well. They'll make messenger bags, backpacks, stationary, school supplies, and home decor accessories for us, all out of what would otherwise now be sitting in a landfill somewhere.

Yak Pak makes everything from messenger bags to guitar totes, going on 20 years now. When it comes to making quality gear that has longevity, they're among the best. Now they'll be taking vinyl billboard material we collect and making messenger bags and backpacks out of them -- guaranteed for life. People trust our name to bring them a product with environmental integrity, and Yak Pak to make quality bags.

Our most recent potential partner is American Greetings. We'd like them to make TerraCycle Holiday by American Greetings. Just about any place in North America you see greeting cards and the things that go with them -- they're there, deeply ingrained in the gift-oriented retail landscape. In this case, we'd link them to waste we source and collect, and they'd turn it into bows, ribbons and gift bags. Again, it's the trust that our name imbues combined with the deep and wide reach of American Greetings that would be a powerful synergy.

Some of you may be saying to yourselves that this is a sensible approach, combining our skills and networks to maximize positive impact. Others may think we're making ourselves vulnerable by outsourcing production to others, giving our power away.

So where do you fall in this discussion? What's your company good at, and where could it be even stronger by finding others smarter, better, and faster than you? What other companies do you see TerraCycle partnering with?

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Go Big or Go Home?

As entrepreneurs, we all know the value and necessity of forming partnerships. Little would get done in the business world without a solid network to help grow our companies. Form an alliance with the right organization and your impact is amplified exponentially. But that begs a tough entrepreneurial question: Should a younger, cutting-edge company join forces with an established, more conventional company? It can be a slippery slope. Will the former company's values be in line with those of the latter? Whose mission and ideals will win out?

TerraCycle has recently wrestled with that problem, and because of our dedication to our to eliminating the idea of waste, we've decided to partner with a company that makes whole grain snacks and uses innovative new compostable packaging. They've also begun switching to alternative energy, forgoing the use of fossil fuel at one of their plants and relying on solar power. Worth noting, that partner is PepsiCo's Frito-Lay!

You've likely read that the Frito-Lay brand SunChips has made the switch to compostable packaging and solar power. In addition to these important steps, SunChips has also begun working with TerraCycle to provide a solution to the more traditional chip bags made from "hybrid" packaging. TerraCycle is now collecting both post-consumer and post-industrial chip bags and upcycling those non-recyclable materials into consumer products or into our still-in-development green building materials initiative.

Through this relationship, TerraCycle is reaching a wider audience than it could on our own -- helping to support our mission to make the greatest possible impact on the world. By partnering with Frito-Lay, we enable ourselves to collect and reuse the most possible chip bags and are able to call upon the extensive resources and expertise of Frito-Lay.

So here is my question for the Inc. community: Do you think partnering with much larger corporations is a good, bad, or indifferent idea for young companies? What are the advantages or disadvantages you have experienced or would expect? TerraCycle's experience working with Frito-Lay and other major CPG companies has been wildly positive, but I wonder if everyone has the same experience. I would love to hear about yours.

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Revolution in a Bottle

My book, Revolution in a Bottle, hit the streets this week. It is a quick read that is meant to flow more like a novel, less like a business book. It follows the story of TerraCycle from our beginnings in my dorm room, shoveling maggot filled organic waste, to creating products we sold to Wal-Mart and other major big box retailers, getting sued by Scotts, and creating "sponsored waste" programs to upcycle branded waste. It also offers insights on how we approach media and pursue new opportunities. Here's are two excerpts from the introduction:

TerraCycle would never have succeeded if we had started it in another country. America is a land of unique opportunity, and it happens to produce disproportionate amounts of waste. A maverick with a big idea can go further in America than in any other country, and in our case, we were able to tap into the profound desire of millions of Americans to do good, if given the right vehicles and incentives'¦. The good will we have received from the press, both local and national, speaks as much about the journalists and publishers in the U.S. as it does about our positive story. With its many sizeable challenges, America offers unique hope and possibility. As someone not born here, I am grateful to America for allowing me to incubate TerraCycle in its uniquely fertile soil.

I almost lost control of TerraCycle several times. In each case, friends and angels have shown up at what appeared to be the darkest of moments. Luck and epiphanies were important to TerraCycle's early survival and over time, to our success. I truly believe that the company, like the ideas that inspire and guide it, has a life of its own.

TerraCycle's story is one of getting people interested and involved. One of the lessons I have learned over the years, is people have to care about your business to support your efforts. The more you can get people personally involved in the story, the product, and the program, the more likely they are to become your biggest fan. It has helped differentiate TerraCycle from many other companies over the years. After all, how many other companies pay 15,00 schools to recycle? You can believe every one of the those students, teachers, and parents is a TerraCycle supporter.

To get people more involved in my book, to make them not just passive readers, but an active participant in my revolution, I worked with a favorite partner of mine, Bear Naked, which makes incredible organic granola, to create a consumer involvement program. We decided to print prepaid postage on the inside cover of my book and instruct people to remove the cover, fill with used granola bags and return to TerraCycle, free of charge! For every cover returned, Bear Naked is donating 1 dollar to the Arbor Day Foundation to a plant a tree. Since my book is printed on 100% post-consumer paper, our hope is that with enough returns, we can confidently say that my book help plant more trees than it helped cut down!

I'm curious. Do you agree that America as a uniquely favorable place to incubate and grow a business? Will that diminish or improve in the current economic environment and President Obama's restructuring. (I'm hopeful that it will open up huge opportunities for companies responding to social and environmental needs). Also, do you find that businesses have a life of their own, and that they consistently attract sharks and angels who become part of the drama?

And if you do read my book, I hope you enjoy it. I'll be interested in your reactions, which you can post here.

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Would You Pay More to Go Green?

As I've written in this blog previously, I believe the "green premium" works against green businesses, limiting their growth and thus their collective impact on sustainability. I think that all green producers should cut costs and focus on volume to offset their lower margins.

I can't tell you how many times I've heard someone citing marketing research that concludes consumers are willing to pay more for a green product. Clearly, people are wiling to pay more for what they perceive as a better product (people pay more for luxury cars, nicer homes, better wine, and organics). Many companies that produce green products and charge a "green premium" are viable and growing, though I know of none that are as large as conventional competitors. Yes, retailer Whole Foods Market always seems to be doing a booming business, but it represents a small share of overall retail business and the products sold at Whole Foods Market are limited to certain personal categories where people may be more willing to pay a green premium than generally.

Do me a favor. In the next week, or even better, next month, watch your purchasing decisions. How often do you pay more for something that you perceive to be green? How high a premium do you believe you pay, and in what categories are you more or less likely to accept a green premium? Has your attitude about paying a premium for green changed as the economy has declined? I'd be grateful for any observations and insights.

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