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10 Tips from an Eco-Capitalist: Tom Szaky Shares TerraCycle's Secrets to Success

Tom Szaky has created a new form of capitalism, eco-capitalism, in which waste is re-conceptualized as a raw material and becomes an economic driver. In his new book, "Revolution in a Bottle," Szaky reveals the secrets to TerraCycle's success as well as its twists and turns along the way to becoming a national consumer products company, renowned for creating products from -- and packaged in -- waste.

I first learned of TerraCycle when reading "Stirring It Up: How to Make Money and Save the World" by CE-Yo of Stonyfield Farm, Gary Hirshberg. I was so intrigued by the company, I requested an interview with Szaky and to my astonishment he agreed (this was at the very start of my still fresh blogging career -- you can read that article here). And, full disclosure here, as a result of what I learned, I decided to invest in the company.

Here are 10 pieces of advice I gleaned from Szaky's new book, which will be of interest to entrepreneurs, environmentalists, business people and TerraCycle-fans alike:

  1. "You can't study to be an entrepreneur, you learn by fire." Szaky is the ultimate American Dream success story. He dropped out of Princeton in his second year to found TerraCycle and has since been named the No. 1 CEO under 30 by Inc. magazine in addition to many other accolades. But he never went to business school, nor completed his undergraduate degree. He learned everything on the job.
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  3. When something isn't working, try something new. This sounds intuitive, but many business leaders will run their heads into the same wall time and time again without considering the option of changing. In Szaky's case, TerraCycle was originally envisioned as a food waste hauler -- they would be paid to haul waste and feed it to worms. The worm poop fertilizer was just a nice byproduct. When waste-hauling wasn't scaling, they shifted focus to the worm poop itself. TerraCycle Plant Food became a huge hit.
  4. "Never dismiss an opportunity." Throughout the history of TerraCycle, Szaky has followed this piece of advice. His sitting down with me for an interview is an example. Our conversation ended up being the basis for four blogs and, as noted above, I also became an investor in the company. So it was worthwhile for him to give a brand new blogger 30 minutes of his time, but he had no way of knowing this at the time.
  5. You need to sell the sizzle to give the steak a chance. When selling your idea to investors, don't neglect the sizzle along with the steak. If investors aren't excited, they won't invest. Szaky learned this the hard way through trial and error in business plan competitions early on.
  6. Run your business like a tree, not a fire. A tree is the ultimate sustainable enterprise -- living off sun, soil and air and returning what it's used (for the most part) at the end of its life. The typical company runs more like a fire -- consuming resources quickly, leaving behind waste, and burning out when there's nothing left to consume.
  7. Look for value in waste -- reuse is more profitable than recycling. This is a fundamental tenet of eco-capitalism -- if you can find value in something people are willing to pay to get rid of (i.e. trash), you can make products at significantly lower financial and environmental cost. When Szaky and his company were searching for a package for his worm poop fertilizer, they turned to used plastic soda bottles because they had no money to buy new ones. But they decided to continue this practice because it was both cheaper and made their product the first product both made out of and packaged in waste. Since then, every product TerraCycle has created has come from that same mindset -- finding things people throw out and making something useful with it. Used Napa Valley wine crates become rain catchment systems, juice pouches become tote bags, and so on.
  8. People won't pay more for green, so don't ask them to. "It seems fairly clear to me that everyone wants to buy organic, eco-friendly products, but it's equally clear to me that they don't want to pay more for them," Szaky writes. A key tenet of eco-capitalism is that you don't charge more for your products, and you don't have to because they are made from waste (cheaper than virgin materials). This is one of the most important aspects of TerraCycle's success.
  9. No need to pay for advertising when you can get great publicity for free by telling a good story. Szaky is a master of PR. He relays many valuable tips for building buzz around your product and brand without paying for it in his new book. The center of all his advice is this: Tell a good story, and the publicity will come to you. While large companies see publicity as a risk to be mitigated, Szaky views is as a powerful tool. Szaky explains: "Publicity is the greatest asset you have ... America is built on the American dream of starting your own business, the rags-to-riches story even when you don't have the riches yet. The media will treat you as their hero if you can demonstrate how you are fulfilling that dream."
  10. Turn problems into opportunities. Scott's, maker of Miracle-Gro, brought a lawsuit against TerraCycle, which could have destroyed the company. Szaky used this as an opportunity to build his brand. He started a website to rally supporters around TerraCycle. By the time they came to a settlement ending the suit, TerraCycle had gained national media attention and emerged stronger than ever.
  11. Involve buyers in product development; involve customers in marketing. Szaky has developed a new model for both product development and marketing. When developing new products, Szaky involves his buyers directly in the process, knowing that if they are involved in developing a product, they will be sure to buy it. Each product he develops solves a waste problem as described by the retailer (which are mainly big-box in TerraCycle's case). For example, someone at Target jokingly asked him to solve the plastic bag problem. Szaky came back to Target with a reusable bag made from plastic bags, the reTote, which Target now carries. As for the end customer, Szaky finds innovative ways to involve them in marketing. For example, Bear Naked Granola sponsored the cover of "Revolution in a Bottle," which doubles as a mailer such that all readers are invited to remove the book cover, fill it with empty plastic bags and return them to TerraCycle for upcycling. For every cover returned, Bear Naked and TerraCycle will donate $1 to the Arbor Day Foundation. TerraCycle did something similar with Newsweek for the Target reTote and more than 40,000 consumers returned the mailer with 800,000 Target plastic bags. If that isn't a new model of end-customer engagement and marketing, I don't know what is.

To learn more about TerraCycle and "Revolution in a Bottle," check out the review by's John Davies and see Szaky is a featured speaker at the Greener By Design Conference on May 19 and 20 in San Francisco.

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