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The Impact Report

TerraCycle CEO Tom Szaky makes garbage the hero

Here's how one creative startup made the business case for recycling common trash such as paint, gum and cigarettes into everyday commodities.

The following Q&A is an edited excerpt from the Bard MBA’s Nov. 18 Sustainable Business Fridays podcast, which brings Bard MBA in Sustainability students together with leaders in business, sustainability and social entrepreneurship.

Tom Szaky, founder and CEO of TerraCycle, has been working to solve the question: What is garbage? TerraCycle’s premise is that anything can be recycled — but some items pose a challenge. There is a straightforward business case for commonly recycled items such as glass, metal and plastic, but how about cigarette butts, paint or diapers?

TerraCycle’s imaginative approach has taken the company from being called the "coolest little start-up in America" to appearing in three seasons of the reality TV show "Human Resources" to operating in more than 20 countries. Last month, Alistair Hall from Bard’s MBA in Sustainability spoke with Szaky to dig into the question, "Why does garbage really exist?" 

About five years into our business we shifted our model to focus on garbage as the hero, and the solution is what can we make it into. Now we’re able to deal with hundreds of different waste streams.

Alistair Hall: What was the inspiration for Terracycle?

Tom Szaky: I started TerraCycle out of my dorm room with a passion for solving the critical issue of waste. We first started looking at it by making products out of waste and we became quite successful. Over a few year period, we grew into a $6 million business with clients such as Walmart, Target and Home Depot selling products like worm poop fertilizer in a reused soda bottle. It was quite exciting.

Early in our history, we realized that if we focused on the finished product as the outcome, or the hero, of the business concept, then we had to pick the very best waste to make the very best product. We would never deal with garbage that is not optimal or clean, like cigarette butts, dirty diapers or chewing gum — all of which, by the way, we recycle and collect today.

About five years into our business, we shifted our model to focus on garbage as the hero, and the solution is what can we make it into. Now we’re able to deal with hundreds of different waste streams.

We’ve invented a recycling solution for everything from chewing gum to plastic gloves and have grown quite a bit in the process. Today, TerraCycle operates in 24 countries around the world, including China, Japan, countries in Western Europe, Latin America, North America and so on.

Hall: How do you come up with solutions to recycle things like chewing gum?

Szaky: First and foremost, garbage doesn't exist in the natural kingdom because the output of every organism is the input of another organism. There are no useless outputs. To go one step deeper, it’s not like one super organism eats every other organism’s outputs. Instead, there are specific outputs to specific organisms.

One organism eats a leaf that falls off a tree; a different organism eats the carbon and makes it into oxygen. I mention that metaphor because landfills and incinerators today are like superorganisms that are created to eat everything in the garbage. Every type of garbage is different. It has a different heartbeat, like a different animal.

To solve the waste stream, we need to put three things together that may be very different, waste stream by waste stream.

  1. Collect it. To get waste from the point of origin to our warehouses, we have to account for the collection vehicles, health, safety, cost and then of course for whether people will actually even do it.
  2. Process it. We have to process the waste in a circular way, either through upcycling, recycling or reuse. I’ll give some more color on that in a moment.
  3. Finally, we need to weave a business model around it that makes sense, which is important because TerraCycle focuses on recycling only those things that are not economically profitable to recycle.

You can do five things with garbage. Going from the worst to the best options: 5) You can landfill it; 4) burn it for energy; 3) reuse it (circular solutions are very popular in clothing, electronics, textiles and items that are refurbished for their originally intended use); 2) upcycling, which has a wide range but low volume, like sewing juice pouches into backpacks; and 1) technical recycling.

The vast majority of our volume goes through our science department, where it’s technically recycled: taking apart and reconstituting the materials into new aluminum, new plastic or composting organics.

Ultimately it’s about who pays the bills and how you make it all work. We work with five kinds of stakeholders. The big consumer product companies — the P&Gs, Unilevers and Colgates of the world — fund platforms that allow the public to recycle things for free. Retailers are the second stakeholder category. Today, you can go to Office Depot and drop a binder in a TerraCycle recycling bin, take your car seat back to Target or your cosmetics to a Kiehl’s Boutique, all through our platform. 

The third kind of stakeholders are factories for factory waste. The fourth are municipalities, like cities. Small businesses are the fifth. In each of these examples, we have to unlock not just why it’s good for sustainability, but how this reinforces their bottom lines.

For example, retailers do this because it drives more foot traffic. So that’s very important when you bring up sustainability platforms — how does this reinforce the basic function of the business you’re pitching the idea to?

Hall: Does your pitch change from stakeholder to stakeholder on what inspires them to get involved?

Szaky: Absolutely. Retailers are interested in foot traffic, but a city isn’t. A city’s interested in litter reduction to boost tourism, while a brand may be interested in market share increase. 

Garbage doesn't exist in the natural kingdom because the output of every organism is the input of another organism. There are no useless outputs.

Hall: Is there a piece of garbage or a product that you are most proud of figuring out how to recycle or upgrade?

Szaky: I love the crazy stuff because it makes the mind work. In March, we’ll be launching the first national chewing gum recycling program in the world in Mexico. Later next year, we’ll be launching the world’s first city-wide diaper recycling program in Holland. A few years ago, we launched cigarette recycling across 11 countries nationally. The sort of more gross ones really get me, because if you can solve those, you can solve just about anything. 

Hall: What can chewing gum be turned into?

Szaky: Chewing gum is a plastic polymer. It’s like a rubber and it can be made into 35 percent of any sort of plastic product. Think of it as 35 percent chewing gum and 65 percent gum packaging or other plastics.

Hall: Where will TerraCycle go next?

Szaky: We’re opening in China next month. We just set up our office in Shanghai, and that’s a big new area for us. Japan was a big success. We opened there a few years ago and so now we’re really looking to expand more into the Asian marketplace.

And so after China, South Korea. We’ll go live as well in Taiwan, Singapore, India — those are the key areas we’re focused on, and then from there who knows what will be next? Really, anywhere in the world where there’s interest in solving waste, we try to be there. 

Hall: When you launch into these markets, are there specific products you have in mind for certain parts of the waste stream you are looking to tackle?

Szaky: It’s opportunistic. It’s where there’s interest. So in China, we’re targeting oral care recycling and cosmetic recycling, but it could be anything. It’s truly where there’s opportunity and where there’s interest to fund solutions. 

For another look into corporate recycling programs, read an interview with Ada Perez of Cal2Recycle.

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