TerraCycle finds value in the lowliest of trash, from cigarette butts to chewing gum.
Humans produce a staggering amount of trash—in the US alone, 2 kilograms per person per day, according to the nation’s Environmental Protection Agency. Yet even the most eco-minded cannot avoid creating waste—that empty ballpoint pen, those yards of bubble wrap—that ends up clogging a landfill or suffocating ocean life.
Recycling maverick Tom Szaky, 35, says it doesn’t have to be this way. He runs TerraCycle, a company determined to be the global leader in the business of recycling the unrecyclable. Szaky co-founded it as a freshman at Princeton University in 2001, after discovering a way to make plant fertilizer from the droppings of worms that fed on organic waste. By 2007, TerraCycle’s plant food was selling at Home Depot and Walmart, and had become a US$3.3 million business.
That year, when the CEO of Honest Tea asked Szaky to figure out how to repurpose used juice pouches, TerraCycle upcycled them into tote bags and pencil cases, then sold them at big box stores. It was the start of a whole new business model. Today, TerraCycle has agreements with some 200 major brands and 100 cities around the world who pay the company to collect different types of waste and recycle it—mostly into plastic pellets, metal alloys, fibers and glass, which it sells as raw material.
At the same time, Szaky has come as close to pop icon status as one can get in the world of sustainability. He is the subject of numerous magazine articles and author of three books. The fourth season of Human Resources, a reality show about TerraCycle, just aired on the US network Pivot. It was shot at the company’s headquarters in Trenton, New Jersey, where a team of young, mostly female employees work in an open-plan setting, furnished entirely with reused items and surrounded by the constantly rotating work of local graffiti artists.
The company focuses on difficult-to-recycle waste (the majority of waste), which is traditionally costlier to deal with than it’s worth. The company figures out how to collect it, then has a team of scientists and designers who find innovative solutions for recycling it. “Most importantly,” said Szaky, “we figure out business models to make the economics work.”
Operating in 21 countries, TerraCycle has collected car seats in partnership with Target, contact lenses with Bausch + Lomb, and musical instrument strings with D’Addario. In Germany, it gathers used deodorant canisters for Unilever and recycles them into bicycles for children’s charities. In Mexico, it partners with Cadbury, turning used chewing gum into a polymer that goes into frisbees. Cities such as New Orleans are working with TerraCycle to collect cigarette butts—the organic parts are composted while the filters are made into plastic products from ashtrays to park benches. Next year, TerraCycle and a leading brand will start recycling used diapers in Amsterdam.
TerraCycle also sells boxes online that individuals and smaller organizations can use to recycle common consumer goods including automotive parts and action figures. To encourage people to collect their waste, TerraCycle awards points that can be redeemed for a donation to a school or charity.
The French company BIC has been a TerraCycle program sponsor since 2011, helping to collect 23 million writing instruments (all brands) in seven European countries, while giving 400,000 euros (US$478,000) to schools and charities. Bénédicte Cusinberche, BIC’s Business Development Director Europe, said the program is important for the brand—as leaders in the writing market, they have a role to play in modifying consumer habits. She mentioned a new project that launched this month, “Ubicuity,” turning plastic from ballpoint pens into urban furniture. “Kids who recycled their pens will see them transformed into the benches they sit on,” Cusinberche said. “This puts us squarely into the circular economy.”
TerraCycle is working on another platform for 2019, helping major brands switch from disposable packaging for their products to good-looking, durable alternatives, which it will pick up from customers and sterilize to be refilled.
Seeded in several stages by angel investors, TerraCycle has turned a profit for the past five years, bringing in just under US$20 million in revenue in 2016 and on target to bring in nearly US$25 million this year. Around 65 percent of the company’s earnings comes from fees from its corporate and municipal partners. Another 30 percent is from the sale of raw materials and some products that TerraCycle manufactures itself, while the rest comes from the new durable platform. In several overseas markets, large local waste management companies have taken a stake in TerraCycle’s operations; last year, for example, France’s SUEZ group acquired 30 percent of its activities in France, UK, Belgium, Holland, Sweden and Finland.
In 2006, when Inc. magazine named Szaky “The No.1 CEO Under Thirty”, he predicted an IPO or an acquisition in five years. Growth has not been fast enough to make that happen, and he said revenue must triple before it does. “Recycling is a tough business,” he explained, “primarily because oil prices are cheap and China stopped importing recycled plastics.” Looking for other ways to scale, the company will soon announce the acquisition of a hazardous-waste recycling company.
In the meantime, TerraCycle has convinced 150 million people to collect waste via its free platforms and has gathered more than $15 million for charities. Szaky, who was expecting the birth of his second son at the very moment of this interview, remains committed to his company’s audacious objective: to eliminate the very concept of waste.
“That’s a big, hairy mission,” he said, “but it’s our mission.”
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