Tom Szaky Terracycle

In mid-November, it was time once again for Tom Szaky to rehearse his sales presentation. Szaky is the 25-year-old Princeton-dropout CEO of TerraCycle, a garden-products company based in Trenton, New Jersey (see "The Coolest Little Start-up in America,"). Through constantly refining his pitch, he's managed to get his products into Wal-Mart (NYSE:WMT), Target (NYSE:TGT), and Home Depot (NYSE:HD). Sales in 2006 were $1.5 million, and he's projecting $6 million this year. In fact, his sales presentation is so good that Wal-Mart Canada recently brought him to its supplier fair to instruct would-be vendors on how to approach the retailer.

Szaky's an energetic charmer who's constantly selling TerraCycle. To everyone he meets, he gives an easy smile and the one-liner that what TerraCycle does is make stuff from worm poop. Then, usually, he'll ask for feedback--what did you think of that? What fertilizer do you use? Do you use organic stuff at all? Whether the responses come from buyers, from VCs, or from his seatmates on flights, he incorporates the comments into TerraCycle's presentation. "Every time we get some feedback," he says, "it's like, what can we do better?"

Szaky has had his main product, all-purpose plant food, in Wal-Mart for a year, and it has performed well enough that Wal-Mart reordered it for 2007. He has also recently convinced Wal-Mart buyers to sell his fertilizer and seed starter (Wal-Mart assigns buyers to narrow product categories, rather than to, say, garden as a whole). He believes his new product, potting mix, is maybe his coolest product yet, and he can rattle off why it beats its competitors in quick sentences, barely pausing for breath. He was recently in Bentonville, Arkansas, the Wal-Mart hometown, trying to persuade another Wal-Mart buyer.

Szaky, dressed in a John Deere cap, corduroy jacket, and frayed oxford for the big meeting--"I don't know, the way I look at it is, I'm all about the product and not about how we dress," he explained amiably--had already gone through several dry runs of this meeting, considering pacing, thinking about when he'd tell jokes and what role Eric Smith, his VP of sales, would play. Now, after touching down in Bentonville, Szaky wanted feedback from TerraCycle's distributor, Central Garden & Pet (NASDAQ:CENT). He and Smith met with John Emmons, the VP of Central Garden's Wal-Mart team; Emmons's job is helping suppliers sell to Wal-Mart, so he'd have up-to-date information on what the retailer wants.

This rehearsal started, as do all TerraCycle presentations, with Szaky chatting excitedly about his company, and why he dropped out of college to start it. His theory is that if a buyer sees a TerraCycle product right away, he'll decide yes or no on the product without understanding why it's special. So he starts with an explanation of why TerraCycle is unique--its packaging is reused soda bottles, its products are organic and made from worm poop. "We're not just organic," Szaky said, his eyes darting at a slide that outlined TerraCycle's selling points. Only late in the trial presentation did he show the potting mix.

"Okay. So at this point I'm going to pull out the binder," Szaky said, referring to a one-and-a-half-inch-thick binder filled with press clippings, with all mentions of Wal-Mart highlighted in yellow. He was making the case that TerraCycle brings Wal-Mart good press, and he clicked to a slide that showed a newspaper clip headlined "Marietta Wal-Mart helping with charity," which discussed how TerraCycle and Wal-Mart rewarded schoolchildren for recycled bottles.

Then, to illustrate that TerraCycle attracts new shoppers to Wal-Mart, Szaky showed a video of him talking at a Canadian college. He asked who in the room liked Wal-Mart, and no one raised a hand. He then talked about TerraCycle and showed attendees saying it made them think differently about Wal-Mart, and yes, they'd shop at Wal-Mart now. Emmons gave a big smile and nod. As the presentation continued, Szaky pulled out the mix itself, then a tomato plant grown with it to show how well it works. Szaky's slides are simple, but his lively chatter made the presentation energetic; he seemed so taken by the potting mix that the listeners became interested in it, too.

Szaky's zeal extended to the details of how they'd price the mix. Emmons didn't think TerraCycle's suggested price of $4.97 would work. Wal-Mart disperses its pricing among specific price points, Emmons explained. It generally avoids .95s and .99s, both because other retailers like Target and Kmart use them and because it doesn't think their shoppers are fooled by those prices. The .97s had lately been added to the list, Emmons said. He suggested $4.88, which Szaky liked--"Doesn't it feel like every penny is being squeezed?" After punching some numbers into the calculator, Smith agreed they could afford the cut. They'd use the fact that their slide still said .97 as a selling point--Szaky would say they'd been working on the price and had managed to knock it down.

The actual presentation took place in a one-story Wal-Mart building with low ceilings, dim lighting, Fox News on a TV overhead, cheap-looking maroon chairs, and two ATMs. It looked more like an underused regional airport than the nexus of American commerce. As 2 p.m. approached and one group of salesmen headed out, dropping their orange supplier badges in the depository, another group--including Szaky, Smith, and Emmons--clipped on their badges and headed in. Inside a tiny, plain room, they rolled through the presentation as planned, making note of the buyer's concerns and questions. When the three men emerged an hour later, they strode directly to a table in the waiting room. One of Smith's tasks during all pitches is to watch the buyer and note whenever he looks bored or disengaged and to bring those observations to an immediate postmortem. Szaky picked apart what had gone well and what had gone badly. The buyer had seemed bored by a video clip discussing how Wal-Mart is embracing sustainability. Szaky also castigated himself for not preparing a merchandising mockup to show what a display might look like, something the buyer had requested during the meeting. Smith was nervous that the buyer didn't commit then and there, but Szaky saw it differently: "I think he's sold on the brand; his objections were more, go figure this out for me so I can say yes."

Within three minutes of walking out of the Wal-Mart building, Szaky was on his cell and his BlackBerry working on the merchandising mockup. Two weeks later, Wal-Mart agreed to do a test in 100 stores.

Stephanie Clifford is a senior writer.