How I did it: grow, not grow

Tom Szaky started TerraCycle in 2002 with high ideals and a great idea. As a sophomore at Princeton, he devised a system that took food waste from college cafeterias and fed it with red worms. These worms produce "molds" (i.e. poo) that make very potent plant food. He packaged his product in repurposed soda bottles fitted with spray caps to fulfill the start-up's mission to "eliminate the idea of ​​waste".

By all accounts, TerraCycle was a great success. Just three years after its launch, the company was selling to Walmart and Home Depot in the United States and Canada with revenues of $1 million. But Szaky saw a problem: there was an upper limit to the organic fertilizer market. Sooner or later, his niche product would hit that ceiling.

There are two types of scalability: vertical, in which you increase the input and output of a single process, and horizontal, in which you replicate a business model in multiple ways. All things being equal, horizontal scalability represents the greatest opportunity with the smallest investment. TerraCycle's first business model relied on vertical scalability for growth. On the one hand, he needed a stable source of packaging. So the company launched a "Bottle Brigade" that challenged consumers to collect soda bottles for recognition and rewards.

This humble beginning would become TerraCycle's model for global growth.

Pretty soon, TerraCycle began recruiting corporate and government sponsors for these initiatives and expanding into different types of packaging considered “non-recyclable,” otherwise destined for landfills. In 2007, it launched a partnership with Honest Tea to collect and recycle beverage pouches. Partnerships with Stonyfield Farm and Clif Bar for yogurt pots and energy bar packaging, respectively, soon followed.

“Every material is recyclable,” says Szaky. "It's just a question of economics. If it costs more to recycle than to use virgin materials, companies will choose the latter.

In other words, "good intentions" were not a lasting incentive to recycle.

In contrast, TerraCycle had discovered a financial equation that made recycling traditionally non-recyclable materials not only economically viable, but actually profitable for its customers:

Develop relationships with Consumer Packaged Goods (CPG) manufacturers, municipalities and retailers to create a recycling stream specifically for a specific product or packaging that would otherwise be non-recyclable – even cigarettes and disposable diapers. Leverage these relationships to create a process at scale to reduce the cost of recycling Provide partners with valuable PR and marketing opportunities that have had a measurable impact on their brands Later, rinse (literally!) and repeat.

As you can see, TerraCycle's vertical growth model is now horizontal: new partnerships. New materials and products. New geographies. New revenue opportunities. Brands that now include Procter & Gamble, Right Guard, L'Oréal and Unilever can boast turning their packaging into playground equipment, tote bags, truck parts, park benches and more in 20 countries worldwide, while TerraCycle generates around $92 million. income.

TerraCycle is unique in many ways, but it's also a classic example of an intelligent enterprise. A smart business can start as small as you want, without requiring huge outside investments. It grows the old-fashioned way - organically, constantly reinvesting profits. It's also rarely glamorous or exciting. This describes the original TerraCycle business to a T. Is there anything less glamorous or exciting than a trash can full of worms consuming garbage and poo...