Although it seems an unlikely success story, TerraCycle -- the company famous for turning worm poop into a household name -- points the way to success in how we address many of our environmental issues.
TerraCycle takes waste of all kinds -- discarded electronics, soda bottles, drink pouches and of course worm poop -- and turns it into household cleaners, office supplies, backpacks and other unexpected products. By looking in new and unexpected ways at the waste that people and companies create every day, TerraCycle has found a way to turn the production cycle on its ear and turn trash into gold.
Tom Szaky, the CEO of TerraCycle, spoke to GreenBiz Radio about how the company got its start and how it plans to expand no matter what comes down the waste stream.
Matthew Wheeland: Tom, thanks for taking the time to speak with me today. I guess the first thing that we should talk about would be the OfficeMax announcement from last week.
Tom Szaky: Yeah, right on.
MW: Can you tell me a little bit about that?
TS: Well, so OfficeMax is very exciting. TerraCycle is a company where we make and package products entirely out of waste. And we started with worm poop in a soda bottle, and that was a big success at places like Home Depot, Target and Wal-Mart, and we decided, "Well, look, could we extend this idea of made and packaged out of waste into more things than just simply worm poop or lawn and garden products?" And Office Max represents the first major expansion, which is into the category of office products.
With them, they actually launched four categories of products for us, our cleaners, like all-purpose window, bathroom cleaner. They also launched our super eco-friendly binder and pencil cases and trash cans. And what's unique about each of these items is, for example, the pencil cases are made by sewing together used juice pouches that we collect through our juice pouch brigade, that were drink pouch brigade. The trash cans are made from e-waste, from crushed computers. The binders are actually made from 100 percent recycled paper and 90 percent recycled steel. They have no vinyl on them, and it's really durable. And then finally, our cleaners, which are plant-based extracts that are packaged very similar to our fertilizer, which is in used soda bottles and leftover trigger heads, so you sort of have that big TerraCycle brand expansion that OfficeMax really enabled.
MW: So I want to come back and talk about the products, the sort of second level of products. But let me just back up and say, you said, "Worm poop in a soda bottle was a big hit at Target." That to me sounds like a very unexpected result. Was this a surprise how quickly these things took off?
TS: Well, it's been a lot of work. We've been working on the worm poop thing here for about four years now. And it started slow, and then it started really picking up. I think the reason we've been successful is, most of the time, eco-friendly products are more expensive. And what's ironic is that we arguably have the most environmentally friendly products in the categories we're in, and you can go to our website and judge for yourself, but I believe very strongly that these are probably as eco-friendly as you can possibly go. Yet, what's ironic is because they're made from waste and because of the cool economics of waste, it actually retails for the same price as your chemical versions on the shelf. And that's what I think was a major reason for its success.
MW: And how did you go from worm poop to cleaners or office supplies?
TS: We're not as much a worm poop company. What we always were, and we started with worm poop as a company that was fascinated with making products out of garbage, and we just started first with worm poop and soda bottles, TerraCycle plant food. But then, that model could be applied fundamentally to anything, whether it's cleaner, office products, Christmas products, winter products, bags, just anything. And we're launching aggressively in all of these categories, some incredibly cool products.
MW: I was looking over the list of products on your website. And some of the things, like the binder, for instance, seem fairly -- maybe not straightforward, but not a huge leap of imagination, like, let's make a binder out of entirely recycle materials.
TS: Right. Sure.
MW: Other things, like the drink pouch -- explain that a little bit, and tell me how does that idea go from an idea to an actual product?
TS: So where it starts is we look at the waste stream, and we say -- and we found this very cool waste stream, which is used drink pouches. What's interesting about drink pouches is that there's 4.5 billion to 5 billion produced every year, and they all end up in a landfill because there's no choice. There's no recyclable choice on them.
What we do is we go in and work with companies like Honest Tea, Capri Sun, Kool-Aid -- these all became our sponsors -- and enabled them to help us run a nationwide collection program. So, today, if you have kids, and they're drinking Capri Sun or Honest Tea juice pouches, and you'd like to get paid to reuse them, you go to our website, you sign up, and for free, we send you collection boxes. You send them back, and then we donate $0.02 per pouch to any organization you want. Typically, it's like your school or something. And that's where it begins.
Then we get this material in, and we say, "Look, well, what can we do with it?" Well, juice pouches are cool because they're very durable, and if you sew 'em together, you can make it into a material that could be made fundamentally into anything, or anything you want. And that's where it really begins.
Then we go and we mock up some ideas. We meet with some retailers. And this year -- and the juice pouch idea is only seven months old -- we have backpacks, homework folders, locker organizers, pencil cases, and all these products available in aggregate in over 15,000 stores.
MW: It's really amazing to see what you can do with waste, with just sort of turning the production model on its ear a little bit.
Beyond just like purely reuse of an old drink pouch, turning it into something new, you're also taking waste in the form of -- well, e-waste, and then turning it into a waste receptacle. Explain to me a little bit about how the waste bins came about.
TS: So there, we were looking at e-waste. What's interesting about e-waste is that it's like 30 different polymers together. And typically, recycling centers have trouble recycling a bunch of different polymers. And so what we did is we worked with a company, and we created a method where we could take used -- or all sorts of mixed polymers and make it into a finished product.
And that first started by us launching a pot, an eight-inch pot. And what we did to sort of make it even more unique is we had all these graffiti artists painting our building all the time, so we hired them, and we created the graffiti pot where all these inner city artists painted these plastic pots made from crushed computers, and that became the TerraCycle Urban Art Pot.
Then from there, we took an expansion and said, "Well, what if we did waste bins?" And we took the exact same concept. We didn't do graffiti with OfficeMax, but they have these waste bins made from 100 percent recycled plastic, all from crushed computers. And we now have this division of plastics, if you will, that we're growing and developing into all sorts of different products that are made in this concept.
MW: What can you tell me about product lines that may be in the works? Do you have any waste streams in mind that you're trying to look at how to incorporate those into new product lines?
TS: Yes. We get approached all the time by major companies to say, "Look, we have a waste stream. Can we make a solution with it? Can we do a collection program? Can we get into the sponsored waste thing, and then can we have TerraCycle turn it into some cool product?" And so we get a lot of that.
MW: That must be like a revelation for companies to realize that there's somebody out there who actually wants to take all the waste and turn it into something new. Is there a benefit for the companies beyond not having to deal with this potentially toxic waste?
TS: Yes. Typically, we don't really work as much on the toxic waste side. The real benefit to these companies is right now -- take like a Clif Bar, for example. They produce hundreds of millions of Clif Bars. And the wrappers all end up in a landfill. Today, when you have a soda bottle, you have a choice on that. It could either become waste, or you can recycle it. And that choice is created by having a recycling logo, and that enables you to recycle it.
What we are becoming is the reused logo on these packages. And now, because Clif is engaged with us this program, we can take those Clif Bar wrappers and collect them and turn them into other products. So what it does is it changes the waste stream from just garbage to a reusable commodity, if the customer chooses to do that.
MW: Let's switch more from the manufacturing side to the consumer side. I am really intrigued by the whole nature of products made just from reused waste, not from recycled and remanufactured and disguised waste. But you are literally taking a soda bottle and turning it into a container for another product.
TS: Yes.
MW: Is that something that is hard for consumers to adjust to? Is it a shock when they see something that's so obviously just something they threw away yesterday, and now, they're going to Target to buy it again?
TS: I think that the customers really dig when they see the TerraCycle bottle, and it's all used soda bottles together. I think that is really an appealing aspect to the customer. What's interesting is, many times, people don't realize it 'til after they buy it. And that is even more exciting when someone bought a product and then realizes all of the super green eco-friendly aspects of it and bought it just because of price and performance.
MW: Are there ways to encourage consumers to re-recycle this again or to bring it back? Is there a collection program?
TS: Sure. Every one of our products has a return program on it where we will take it back and reuse it. And many times, we give credit, not full credit, but some credit back for giving us the material that we can use again, so that's absolutely there, and it's something that we look forward to on each of the products.
MW: And so I guess I should back up. Explain a little bit about how you go from an empty soda bottle to a cleaning product. What else do you have to do to that bottle? What other things do you have to add? I know there's the wrappers, and then there's the spray nozzle.
TS: Yes. So we take the used soda bottle. We wash it out. We remove the label. We fill it up with our cleaner and -- or fertilizer, and then we put on a heat-shrink label made from PET to make the whole thing recyclable, and then the cap is actually a leftover, or off-spec or reject cap that we find. And that finishes it. That's all you need.
MW: And so the wrapper is the only new piece of this puzzle.
TS: That's right, yes. Yeah, that's really all that is new. And we looked at things like biodegradable plastic and different plastics. But one of the challenges with biodegradable plastic is that you have to put it into a compost pile to make it biodegradable. It's one of my big problems, actually, with that whole industry of biodegradable products. And very few people have compost piles to place them into. And things, quite frankly, don't biodegrade in a landfill, even if it's biodegradable. You could find a banana that's 100 years old in a landfill because there's no oxygen passing, so there's no biodegradation.
So we looked at that, and we said, "Well, look, what we want to do is make it easy for the customer, and so if the entire piece is recyclable, that's the most realistic thing people will do." And so that's why we went to using PET film to wrap our bottles.
MW: I'm curious also about the big picture of TerraCycle versus the way things are currently done. Have you found that companies, once they see what is possible with waste, they start incorporating that into their own operations, they start looking at their own waste streams for creative ways to reuse?
TS: Yes. Typically, they engage us to do the reusing. What we haven't seen is people trying to copy our model. So what companies are really excited to do is work with us, so that we can create reusable choices from their raw material. That's been the most typical approach.
MW: Even if they're not copying your model, do you find that maybe they're looking at their own inputs and outputs in a different light, that they're seeing some potential for what would otherwise be waste and coming to you with ideas?
TS: Yes. We definitely -- now, that we've been really pioneering this way to upcycle waste, we're finding a lot of people coming to us and saying -- it ranges from people saying, "Hey, we have this waste stream. Can you guys do something with it?" to "Hey, this is a cool solution to a waste stream. Would you guys want to be a part of that?" And so we're definitely finding a lot of that occurring, and the more ideas that come to us the better. We'd love to grow and use those ideas to do more.
MW: One of the questions I like to ask is, what does success look like? And when I was thinking about how that applies to TerraCycle, it's -- what happens when the waste runs out, which I don't think is really --
TS: Well, that's what -- the waste will never run out because you're always ... there's always something. When you're done with a product, you have what's leftover, and that then needs to keep being reused. So what really it looks like -- what success looks like is that there is no waste because everything is being reused to build something else. That is what success for us looks like.
And what's interesting is that there'll always be a function for TerraCycle, or companies like us, because we'll keep that reuse element growing and going.
MW: Tell me a little bit about the eco-capitalism idea behind TerraCycle.
TS: Yes, so what TerraCycle really revolves around is simply showing that if you do the most environmentally friendly thing, you do the most socially responsible thing, you actually help your profit and that your products end up becoming cheaper.
It's this big twist because typically when you take a product, you make it 5 percent more eco-friendly or 10 percent eco-friendly, your cost goes up. But if you go completely the other direction, and you make it out of garbage, and you're located in the inner city, and you do all this stuff, your cost actually gets driven way down.
So the idea is that you can -- instead of doing things the normal way, you can, if you rethink the business paradigm, you can actually make money and more money and get cheaper products to customers by doing things the absolute best way possible.
And that's the simple way to summarize eco-capitalism. It's obviously a lot -- it could be a lot more complicated, and you can dig into more of the details, but it's all around using waste and the paradigm of waste, the fact that waste is simply an idea, an object, or something that we're willing to pay to get rid of. And the fact that we're willing to pay to get rid of it, opens up a very cool set of possibilities.
MW: Great. Well, Tom, thanks very much for taking the time to talk.
TS: Thanks for having me.