Tom Szaky, TerraCycle CEO Interviewed by Huddler

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Huddler users asked Tom Szaky, founder and CEO of TerraCycle, all your trashy questions (ha ha) over the past few weeks, and Tom answered.
In a nutshell, TerraCycle takes what others call trash, upcycles those materials, and turn them into brand-spanking new products. Who thought you could make a hot little tote bag from KoolAid containers or a sweet homework folder from Capri Sun juice packs?
And just a little fun fact to brighten your day, Tom was named “The #1 CEO Under Thirty” by Inc. magazine in 2006. Eat your heart out, Mark Zuckerberg.
We’re lucky enough to have Tom sticking around for a few days – so if you’ve got any follow-up questions, don’t be shy! Jump in!
Q: Hi Tom, thanks for taking questions. You’ve got a pretty big range of products I see (everything from rain barrels, to tote bags, to cleaning products). How did you get there from just starting with your original plant food product? (by Eli)

A: Thank you for participating! Our development and growth is definitely faster than your average company. At TerraCycle, our mission is to find a meaningful use for waste materials (read: smelly garbage). That mission led us to identifying so many different waste streams that needed addressing. From drink pouches to wine barrels to plastic bags, so much material is wasted. Because no one wants these materials, they are easy for us to come by; because sustainable products are ‚Äòall the rage,’ retailers welcome us with open arms.
This combination has allowed us to develop an incredible number of products quickly. Unlike most companies, which spend years in product development and testing, TerraCycle moves through these stages very quickly. First we identify a waste stream, then we figure out what we can make from that material. This is our strength — creatively solving the “what the hell do we make from it” issue. If a retailer bites, we are in full production in a matter of weeks.
Q: What is the typical product development process for TerraCycle? I’m especially interested in material selection. Do you start by selecting the ideal material for a new product and then do some product design and testing? How do you evaluate if there will be sufficient quantity of the waste (while there are obviously more than enough 20oz. plastic soda bottles, I imagine it’s a lot tougher to determine if you will be able to reclaim enough cookie wrappers)? Where do the materials ultimately come from? (combined question by teej and dana1981)
Great follow up question to build off my answer to Eli. Actually, contrary to traditional manufacturing, our first step is identifying the waste materials. Because we are upcycling, not recycling, we have to come up with a finished product that utilizes the original shape and composition of the material. Once we have a material identified and product concept in mind, we test to see if our production costs and needs are environmental and economical.
Great observation, waste stream sourcing is difficult because its not consistent. If you need to order 1000 rolls of a cloth, it can be made for you, but we are restricted to using materials that already exist. The waste streams we use by definition are in abundance. We are address the largest waste streams, the ones that are doing the most ecological damage, so that means there are 100’s of million if not billion being produced every year.
Still, the issue remains that we must make a ship date for Target and how can we assure the collection of enough cookie wrappers in time? Luckily our partnership with Kraft Foods solves that issue. In addition to Kraft, or in this case the brand Nabsico specifically, providing enough funding to collect millions of wrappers post-consumer. We also have deals to take all of the brand’s post-industrial ‚Äòkick offs.’ Any packaged goods manufacturer has some small percentage of off-spec, end run or unused packaging. That small percentage translates to millions of unusable impressions. These post industrial streams help us solidify our manufacturing needs and are just as eco-friendly. If not upcycled by TerraCycle, these ‚Äòkick-offs’ go to a landfill or are incinerated to create energy.
Q: We all know that the upcycling is an amazing idea, and very important, but when you calculate the net cost of collecting, cleaning and using an old seltzer bottle for housing your cleaning solution, is it also cheaper for you as a business than manufacturing all your own packaging? Keep up the awesome work! (by Deej)
A: Thanks for the kind words! Surprisingly it is much much cheaper. Keep in mind the following figures are rough estimates. To buy a standard plastic bottle to package your cleaners is (let’s say) 5 cents. To get a 50% post consumer plastic bottle, it jumps to 9-10 cents, for a compostable bottle made from corn plastic you are now talking 20-25 cents per bottle. For our reused bottles, we pay an average of one half cent per bottle, all purchased from local recycling centers. We can clean 100’s at a time and are left with a bottle that cost about the same as a regular bottle, but is the most eco-friendly version possible. This is why TerraCycle prides itself on providing eco-friendly alternatives at no premium.
Q: I hear you retail through Wal-Mart and Home Depot. That’s great you’ve gotten them on board. How do you keep your prices competitive with traditional products? I imagine that’s important when you’re working with national chains. (by smallone)
A: Definitely. We are able to make eco-responsible products at big box prices because we build our products from waste. More often then not of base materials cost us nothing or close to nothing. It is our unique business model that allows to make truly eco-friendly products at such a low price. That is how I define eco-capitalism. Those same factors that make us so eco-friendly also make us affordable and, in our case, profitable. Often though, it is an issue and we make much less on a product then your average manufacturer, but a smaller profit margin is a small price to pay for helping retailers, consumers and manufacturers get more involved in the green revolution.
Q: How did you guys get the companies that are producing the packaging/waste to get involved? It’s great to see them (e.g. Kraft/Nabisco, Clif, etc.) participating and supporting TerraCycle. What do the companies provide by sponsoring a program? (by teej)
A: It’s really wonderful to be working with these companies. We started working with other smaller, organic brands like CLIF, Stonyfield Farm and Honest Tea. Those companies helped us get these programs up and running, in essence putting our innovative upcycling programs on the map. The sponsorship helps us to run the programs, everything from shipping and donations, to administrative over head and marketing.
The addition of Kraft Food and their iconic brands like Nabisco, Capri Sun and Balance Bar are helping us take these programs to the next level. Their sponsorship dollars open to the programs to thousands more organizations and individuals. By years end, there will be 4,000 people in our Drink Pouch program and 3,500 in our Cookie Program. That is all thanks to the wonderful support of Capri Sun and Nabsico. Working with these companies is great because almost every food store and pantry in America has a Kraft product, so if we are going to make a real difference we need the help and support of the largest manufacturers in the country.
Q: I see you’re working with Kraft, OfficeMax, and Target! Congrats, first of all. That’s very exciting. Do you have any other companies short listed that you’d like to start working with? (by stins)
A: Thank you very much. Yes, we are hoping to work with everyone! Retailers, manufacturers, you name it! Seriously though, our short list includes ramping up our presence at Wal*Mart, who is making big sustainability waves right now and we would love to help them. On the manufacturing side, Frito-Lay, P&G, Unilever, Sara Lee and Purina are next on our list. We are currently in some level of discussion with all of these companies.
Q: Besides leading your company, are you supporting efforts that focus on better waste management on an international level? If so, who do you support? What else does TerraCycle do for social and environmental responsibility? (combined question by letsgrowgreen and smallone)
A: Ha! Unfortunately, I have very, very little time outside of TerraCycle. Most days I spend 14-16 hours working for TerraCycle in some manner. Which leaves little time for much other then sleep and my wife. However I think that more and more companies are building themselves around waste and the extreme success of companies like Waste Management and one day TerraCycle (hopefully!) will inspire more and more to see waste and garbage as an opportunity not a problem.
Our social and environmental responsibility comes in many forms. Our brigades, in addition to saving 2 million soda bottles and almost 10 million drink pouches to date, have donated over $75,000 to non-profits and charities. In addition we are based in an Urban Enterprise Zone in the distressed capital of New Jersey, Trenton. We are a second chance employer and hire regardless of criminal background, drug issues, etc as long as someone works hard and follows the rules here, we are concerned with their past. We employ anywhere from 20-40 people (depending on production schedules) from the local neighborhoods.
While we are not in the financial position yet to have solar power or LEED certification, one day we will definitely do both. In the meantime, we do all the simple things at the office that everyone should do: recycle everything possible, turn off lights and PCs conserve water where possible.
Q: My question pertains to your innovative brigade programs that allow grassroots groups to recycle juice pouches, cookie packaging, etc…, gather them up and send them to you in free shipping pouches; if I understand it right, you pay 2 cents per pouch/package and then cut a check to a charity of the group’s choice. This is an incredible program. My question is, what can we, as individuals do to overcome the resistance we receive to implementing this kind of program? What can we do to “market” this kind of program to friends, family and neighbors? (by jenGreenhance)
A: Great question Jen, a tough one too! You can contact us for letters and flyers pertaining to the program to help promote. Also consider getting a tote bags or pencil case to show people. The finished products bring the programs, the purpose and lesson together very nicely. I know that sounded like a sales plug but it’s true. A good forced viewing of 11th Hour or An Inconvenient Truth is always good to get people motivated.
Q: What influence will “green” social networking have on promoting sustainability? (by letsgrowgreen)

A: I think that is yet to be seen. We are currently working on a social networking space on our website. But I will leave the details out, as not to ruin the surprise. I think the social networking could be a really positive force for the movement. I always looked at Social Networking like the modern pinnacle of peer pressue. If all of your Facebook friends are in a group then you better join that group, right? If we could use the peer influence to become a green influence it might have great results. A crude example would be, if everyone you know on Facebook signs a petition, you’ll probably sign it as well.
Q: Can you tell us what the single most important thing an ecopreneur should know before moving forward? Is there one piece of advice you wish someone had told you when you were starting out? (by jenGreenhance)
A: To a young ecopreneur? To always stay true to your mission. In its formative years, TerraCycle was broke and operating out of a dingy garage. Still I turned down a million dollar business plan contest, because the VCs providing the capital wanted me to move away from used soda bottles and our green focus and instead become a traditional fertilizer company. If I had agreed and gone with the money and the suggestions of the more experienced business men telling me what to do, I never would have moved from fertilizers to all the wonderful items were are manufacturing now.
If you have a plan and a dream and you believe it will work then stick with it, no matter what. It won’t be easy or quick, but the payoff in endless if you see it through.

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