GO
Loading...

I Am American Business

Tom Szaky

Producer Notes

Tom Szaky, now 25 years old, showed a serious talent for marketing when he renamed what the agriculture industry has long known as vermicompost and sold it as worm poop. We saw his first worm gin, a series of metal beds for worms, which filter off worm excrement, while continuously feeding them organic waste. It sits unused in his greenhouse lab. Terracycle goes through way too much worm poop to make its own anymore. Now they have worm poop deliveries trucked in, from an agriculture industry supplier. Not everyone would be happy working in a rough neighborhood in Trenton, New Jersey making products out of worm poop, in a factory building filled with garbage. Tom Szaky makes it seem like the end of the rainbow. As he puts it, it's great for society to locate his business in Trenton, since he's providing jobs. But he's doing it because the rent is cheap, and because there’s so much access to labor. And the garbage? It’s all recycled bottles used for packaging, or free raw materials for some of the many new products he's working on. He's a living example of his idea of Eco-capitalism, helping society while making a profit. Also very talented, Tom’s girlfriend Soyeon Lee is a classical pianist and performed the Hadyn track for the spot.

Video Interview

The "I Am" Q&A

What kind of car do you drive?
I drive a normal car, not a hybrid.

What's your favorite place to go?
Just home, sleep, and have a great time with my family.

What website do you like to visit?
Google. It's got everything.

What was your worst moment in business?
Being broke, having no money, and thinking about what the hell am I going to do to pay everyone back for all the money I spent. It was at the very beginning. We were completely broke, when I was shoveling thousands of pounds of rotting, maggot-filled garbage, and I didn't know what to do. We were going to eBay everything off, and it was going to be hell.

What's your favorite drink?
I like a vodka tonic.

What is your favorite food?
Korean food.

What's your idea of fun?
My idea of fun is seeing people enjoying what they do and relaxing with the people I love.

What's your idea of fun at work?
Inventing, creating, and changing the world in a big way.

What personal weaknesses do you forgive in someone?
I would forgive anything except not being true to yourself.

What about business weaknesses? What business weaknesses would you forgive?
I'd forgive anything except lying, except not being honest.

What movie star do you like?
I'm actually a big fan of Tom Cruise.

Who's a business hero of yours?
Richard Branson.

What personal qualities do you admire in someone?
Passion, excitement, hard work- those are things I really admire.

We asked this to other people, but in your case, it's actually very funny. Are you doing anything green? Anything for the environment?
We're doing everything green.

What was your greatest moment in business?
Walking into a random store in Wichita, and seeing our product on the shelf.

What is your dream?
To change the world. To walk in and become the Eco-friendly Proctor and Gamble.

Do you have a motto?
Better, greener, cheaper.

What is your present state of mind?
That anything is possible.

Transcript

CNBC:
What is so great about worms?

TOM SZAKY:
Worms are amazing in the sense that they eat their bodyweight in garbage, everyday, and then they also double in population every ninety days. So, they eat and they multiply, and they just go through garbage like crazy. And what's even better than that is that their poop, worm poop, is just the most amazing fertilizer that exists. So you get this amazing creature converting tons and tons of garbage into tons and tons of worm poop, that makes just the best fertilizer.

CNBC:
Have people known that worm poop is great fertilizer for a long time?

TOM SZAKY:
I think gardeners have known for a long time that worm poop is fantastic. And worms really are nature's fertilizer. I mean, they've been around for millions of years. The only thing that really Terracycle did is we took it to a really big scale, and we made worm poop huge.

CNBC:
What about using the word "poop"?

TOM SZAKY:
Well, I think one of the great things about worm poop- it's been really sort of the thing that's catapulted our company. Terracycle wasn't such a sexy name, but worm poop is. And I think one of the big reasons is that the word "poop" is the only fun way, where - whether a four year-old can say poop, or an eighty year-old, and it's really a great way to say it. Any other way to say that word would be offensive to somebody. And it's just a great word, and it really captures what we do. Terracycle makes products out of garbage, of poop, or things people don't want.

CNBC:
It's kind of funny, isn't it?

TOM SZAKY:
Yeah, it's got- it's something that's catchy- and you remember it. I bet you there's no other product out there, that's made of poop. in a big way. In Wal-Mart, when you walk in, there's a bottle of poop.

CNBC:
But, this poop is special?

TOM SZAKY:
This poop is the best, it's- it's totally better than any of the chemicals that are out there. It's the best way to fertilize your garden. So it's a very serious product. I mean, it's got a lot of amazing things. It's full of beneficial microorganisms, like seventy thousand different species of bugs that live in it. It's got PH regulators, all this very serious stuff, but really, it's a bottle of poop.

CNBC:
Let's talk a little bit about how you started the company.

TOM SZAKY:
Well, I'm twenty-five now. The company started when I was twenty. I came down from Canada to Princeton, to go to school. And one of the challenges, being twenty in America, is you can't really drink. So my buddies and I- we got in our car, Fall break, freshman year, went up to Montreal to enjoy being able to drink at twenty. And one of the, Canada's also very relaxed with certain plants, and my buddies were growing these plants in their basement, and they were having a really hard time. chemical fertilizers and hydroponics...

CNBC:
Is growing pot actually legal in Canada?

TOM SZAKY:
More or less. You could carry, I think, up to an ounce on you, and you're not going to get in trouble, really. And in Montreal, you're allowed to grow one plant per person. That's sort of the rule. So, it is.

CNBC:
It's such a good story.

TOM SZAKY:
But you know what - we once had an article run in Guidepost Magazine, which is the biggest Christian magazine in the country, a full page. And then right- the next day, the same month- High Times wrote a full page. And I compared the two articles- they were identical. And one's this evangelical, and the other is High Times. It was the funniest thing I've ever seen. But, it's worm poop, right? It translates.

CNBC:
So you went up to Canada, and what happened.

TOM SZAKY:
So, my friends were growing these plants in their basement. They were having a really hard time. And, I was expecting to come in and just see this really bad group of plants. And by the time I got there, they were doing amazingly well. And it turned out that one of my friends was taking worm poop, and feeding worm poop to his plants, and that fixed the plants. And, what got me really inspired was the fact that he was taking garbage in his kitchen, and feeding it to worms, and that was what made this amazing fertilizer. And really, what is garbage? Garbage is something that people are willing to pay to get rid of. It's sort of one of these magical commodities that have negative value. So people actually pay you to take it. And it's just a commodity, you know? A lot of anything that ends up in a landfill is garbage. And so making products out of waste is what really inspired me at that moment. I then came back to Princeton, in my dorm room, started working on the business. And that summer, found myself shoveling about a hundred pounds- or no, excuse me. We were shoveling about a thousand pounds of rotting garbage every day that summer, proving that we could turn lots and lots of garbage into lots and lots of worm poop. And we couldn't really find money. So to finance the company, we actually just entered in a business plan contest.

CNBC:
Did you have the idea because you had to do a school project, or did you have the idea because you wanted to start a business?

TOM SZAKY:
Oh no, I've always been interested in starting businesses. My first company I started when I was fourteen, and it was, a web design company, and it was fun. We had two employees and we did about twenty thousand in sales, which is minimal, but at fourteen it was awesome. I had a great time. And so that idea of really- having the American dream and building a company, is something that's always inspired me- it's- it's amazing. Coming to America, really- is- it just blew my mind. Because here is where opportunity exists more than anywhere, even Canada or Europe, where I was originally born. I mean, it's- in America, you can have a crazy idea, like worm poop, and get people to give you millions of dollars, and turn it into an amazing company. I have never seen that anywhere else except here. And so, when I came down, I mean, that just hit me right in the face. And as soon as I found something that I really wanted to get into, I just jumped right into it. And so within my- middle of my sophomore year, I dropped out of Princeton and started, uh- I moved into a basement office, and started working full time on the company. And since we couldn't raise any money, really aggressively, we started entering and winning business plan contests. And that's how we financed our company. We won seven of these in a row, and every time you'd win five, ten, twenty grand. And the biggest turning point for Terracycle- really, where I think the company truly formed, was in April, 2003. We had five hundred dollars in our bank account, and we'd entered a contest for a million dollars. It was an offer of funding. We went in and we won, which was amazing. But the venture capitalist that put up the money, wanted us to change the model- wanted us to move away from garbage, just launch another organic fertilizer. It's a big decision. And we ended up turning the money down, and came home broke. Proud, but broke. And so, since we couldn't afford packaging to start sell our product, we decided, well, we make a product out of waste, why not package it in waste? And we went around to everyone's recycling container, and sorted out all the used soda bottles, and at that point, became the world's first and only company to package, literally, and use packaging, and we became, really the most Eco-friendly product that exists. And still today- now we're shipping millions of bottles to the world's biggest retailers, and we're still the only company in the world to package in used packaging. Whether it's an old milk jug or an old two-liter soda bottle. And that's been an amazing paradigm. And from there, we've been able to just explode and pretty much triple our company every year, since that day.

CNBC:
How do you get people onboard when you're launching a product or launching a company?

TOM SZAKY:
I think every company has specific things that they're really excited about, that make them special. For Terracycle, it's that we produce products that are the most Eco-friendly, yet perform extremely well, and even better, are cheaper than the chemicals. That's sort of our thing. Every company has different things, but I think the most important thing, if you're going to start a business, and really just grow with it, and have excitement, is first of all, you have to believe deeply in the business, yourself. And then your job just becomes to make other people the same way you do. And it's very easy once you fully believe in your idea, to do that. 'Cause fundamentally, whether you're selling people to come work for you, or whether you're selling to a store, to buy your product, or whether it's investors, fundamentally, it's the same thing. You just have to make people believe.

CNBC:
Is that your role?

TOM SZAKY:
I think my job, as CEO, is to make people believe in the idea. The overall idea. And for me to be able to accomplish that, I need to believe in it, fully myself. And then my job really just becomes to share that belief, and share that excitement. Whether it's a retailer buying the product, or whether it's someone who wants to consider working for us, or whether it's an investor investing a million dollars, it's all about having them believe and share the same vision. 'Cause from there, everything is easy.

CNBC:
But still, you could have an idea, and not be able to get people to support it.

TOM SZAKY:
I think if you fundamentally don't believe in your own idea, you will not succeed at all in having anyone else believe, and that is, at the beginning of an idea, the core of the business. Once you get to become a big business, it evolves. But at the very beginning, if you don't believe and feel passionately about what you're trying to do, no one's going to share that. And then your business isn't going to go anywhere. It may not even go past that idea. I mean, the other really important thing I think too is once you have an idea, whether you're in your dorm room, or whether you're, in an office, and you come up with a great idea, really, you gotta do it. Most people I think just come up with something and think it's cool, and nothing ever happens. But, just pick up the phone. Make a phone call. Try it, and just start doing whatever it is. That's the most important thing.

CNBC:
What would you tell them to do, once they have an idea?

TOM SZAKY:
Once you have an idea, then start working on it. Then once you work on it, think about what are all the reasons you wouldn't want to drop everything in your life to dedicate yourself fully to it. And fix all those reasons. Answer all those questions. Then, at that point, you should fully believe in what your idea is, and be able to move forward and to start your business. And then really, all you do is you have to talk to people to get them- them to share the idea, and that- again, whether it's an investor, or whether it's someone who's buying something, or whether it's someone who's going to work for you, those are the people who are going to make your business real. The business depends on people wanting to participate in the idea, and at the end of the day, the customer is the last one who really needs to believe in the idea, or they're not going to buy whatever it is that you're selling anyway. And that's what your job fundamentally becomes because, as a CEO, day one, when you're the one person, in your dorm room or in your basement, you're doing everything. You're your accountant, you're everything. But then, very quickly, you stop doing anything, and you have people doing everything, and are excellent at doing those things. And, to be able to really have that vision grow, they are the ones who have to really know what it is that we're all working towards.

CNBC:
So that becomes your job.

TOM SZAKY:
Yes. Fundamentally, very quickly, within two years of starting the business, I actually stopped doing the work I was doing before. I don't do any accounting anymore. I don't do any experiments. And great people do that. But they have to really have fun and know what they're doing, and how it plays into the bigger picture. And that's all about, what is the vision? What is it that we're all trying to work towards and accomplish.

CNBC:
Let's talk about this concept of Eco-capitalism. What is Eco-capitalism, and what is an Eco-capitalist?

TOM SZAKY:
I think Eco-capitalism is the idea to look at the triple bottom line, which is, people, planet, and profit. And make sure that every one of those wins. Now, I think the real trick to Eco-capitalism is, most companies, profit is the most important thing. Making money. Which is super-important. And many times, people say, "Well, what are you doing for the environment? What are you doing for society?" And they sacrifice profit to make those other things work, to make a bigger improvement for the environment, or for society. I think true Eco-capitalism is where the more you benefit the environment, the more money you make. The more you benefit society, the more money you make. So for example, we make products out of waste. That's a cheap raw material. And that is the most environmentally friendly thing to do, so the more of that we do, the more money we make. If we made it out of anything else, we'd spend more money. Our factory is in the heart of the inner city, in one of the most dangerous cities in America, and that's great for society, to locate business there, provide jobs, but we're doing it because the rent is cheap, because there's so much access to labor. And so, you're doing the best thing for society, but you're making more money. That I think is true Eco-capitalism.

CNBC:
People, planet, profit?

TOM SZAKY:
What's interesting if you look at business, is how it's evolved. When business first started in the industrial revolution, you had companies that the sole purpose was profit, right? And really, the sole purpose is profit. And even for us, profit is king. And that's so important. And, so you had, in a sense, you had not-for-profits that offset that and they're not for profit- they lose money. But then they help the society, or they help the environment. Whether it's the AIDS foundations, or whether it's like the World Wildlife Fund. But at the beginning, business didn't care at all about society, or the environment. That's why you had child labor. You had all these nasty things. Now, as people started coming up with laws and rules, you suddenly had unions and child labor disappeared. But still, if you look at big companies that have been around for a long time, they had this big issue where it's all about money, and they usually have negative returns for the environment or society. Then, twenty years ago, you had companies- amazing companies like Patagonia, Seventh Generation, start emerging. Now these companies said, "Look, we're going to care about the environment, we're going to care about society." But in the way they did it, they still, I think, function in the old paradigm of doing business, which means that to give a greater return for the environment or to give a greater return for society, they have to spend money. That's why Eco-friendly products cost more. Seventh Generation retails for twice the price as Windex. And that's because they're spending more money to become that good. And I think the real twist to all of this is what I'd call Eco-capitalism, right? Where, actually, to accomplish a great return for people, planet and profit, actually- all of them win together. The more money you make, the greater return it is for the people, and planet, and the better you are for people and planet, the more return you make in your profit center. And that is sort of like an ultimate win/win, 'cause you can sit back, make millions, and save the world, at the same time. That's pretty cool.

CNBC:
Where did the people, planet, profit, idea come together? Where did that come from?

TOM SZAKY:
Well, for me, I just fell into it. I wasn't starting a business saying, "Look, I'm going to care about, people, planet, and profit." I just very quickly realized that when we fell into the idea of garbage, that garbage is like the most amazing raw material, and yet it's the best raw material to help the planet, and profit. And then we had to set up a manufacturing facility, 'cause no one would manufacture for us, 'cause who would make something out of garbage? So we had to do it ourselves.

CNBC:
What products did you start with?

TOM SZAKY:
Terracycle- the first product we ever launched was really liquid worm poop in the used soda bottle. And it was very cool. It was an organic indoor plant food. And we started with that - we got into all the major retailers. And then we started launching other types of worm poop in a soda bottle, orchid plant food, African violet, tomato, and so on. Then really, we realized the true power of waste. And we tried our- we are trying to take this model now and apply it to every different product we can come up with. We've recently launched a line of bird feeders, a line of composters. We even launched a line of drain cleaners that clean your drain with microbes instead of caustic chemicals. Terracycle cleaners, out in a lot of retailers, now. And even pencil cases made from old juice pouches, or tote bags. I mean, anything and everything we can do, made out of waste, falling onto the paradigm of better, greener, cheaper, is what we're launching now. And there's no limit.

CNBC:
Tell me about the "better, greener, cheaper" plan.

TOM SZAKY:
I think the holy grail of green consumer products is a paradigm of better, greener, cheaper. It has to be as good as or better than what it's replacing, 'cause no one wants something that's green, but doesn't work. Then it has to be the greenest possible way to make it, and actually, making it out of waste, you accomplish that. But most importantly, beyond all that, it cannot be premium priced. It needs to be the same price or less than what it's replacing. And once you can come up with a green product in that framework, it's a homerun.

CNBC:
How quickly are you managing to launch these new brands?

TOM SZAKY:
We're now launching a national product, roughly every two to three weeks. Consistently, for as long as now we can see horizon. So every two to three weeks, Terracycle launches a new product. And it's random. It's whether it's a tote bag or a composter or a rain barrel, or a new pot, or- a new way to do anything, as long as it fits that idea.

CNBC:
So, what some of- are they- aren't these new products also made out of waste?

TOM SZAKY:
Every product- we tried to accomplish this idea of better, greener, cheaper, the best way- the best place to look, is waste. So many times, waste comes up with that solution, because it's this commodity that has great characteristics, and is incredibly cheap, or even negative cost. So we actually, most of the products revolve around waste. But every once and awhile, like take our cleaners, for example, our cleaners are packaged in waste, the trigger sprayers are waste. The contents are not waste. They're made in the greenest possible way we can make that, 'cause they're not- isn't a solution in waste yet. But it still, at the end of the day, fits that paradigm of better, greener, cheaper. And one interesting thing that we've recently launched is this concept of sponsored waste. Where big companies, recently Kraft, Honest Tea, Stonyfield Yogurt-are coming around and paying us to collect their waste. Whether it's plastic grocery bags, whether it's yogurt containers or juice pouches at schools. Thousands of schools, all across America. And we take those waste streams- they pay us for them, and then we turn them into new products. Whether it's tote bags, or pots out of yogurt containers, or new bags out of old grocery bags.

CNBC:
So, you just start with the waste, and then figure out the product?

TOM SZAKY:
So, many times what we do, is we look at waste at the beginning. A company will call us and say, "Hey, we are throwing out billions of juice pouches," for example. And, then we'll figure out a way to collect it. Usually it's through a big national collection program, where schools can just sign up to our website, and then collect these waste streams, and they get paid for it, even the shipping gets paid for. And then we bring them in, and figure out what we can do with them to make them into a new product. Juice pouches, for example, like Honest Tea, or Caprice Sun Juice pouches, are not recyclable. There's five billion of them going into our nation's landfills every single year, but they're very strong. You can't rip them, they're amazing material. You can sew 'em together and you can make all sorts of objects, whether it's a backpack or a tote bag, or a pencil case.

CNBC:
What are you making out of juice pouches?

TOM SZAKY:
Out of juice pouches, we're making pencil cases, we're making tote bags, and we're making knapsacks. All sorts of different things. It's amazing waterproof, super-durable material, that today is just going into our dump. Out of yogurt containers we're making plant pots. We're just taking them and painting them, and you're going to see plant pots out of old yogurt containers, 'cause those aren't really recyclable. Grocery bags are an amazing problem, and there are hundreds of billions of grocery bags thrown out every single year. And nothing's been done with them before, so we figure out a technology where we can fuse them together, and melt them together into one solid material, where the logos are still there. It's not really melting, it's more like fusing- and then turn that into a new bag, that you can then reuse many, many times. It'll be sort of our, "I used to be a plastic bag" bag

CNBC:
A lot of people who are making Eco-friendly products charge a premium.

TOM SZAKY:
Yeah, I'm a little pissed off at the way Eco-friendly is done right now, in the sense that great Eco-friendly companies think that they can charge premiums. And, have everyone buy it. And the problem is that most people out there- don't want to spend the premium to do the right thing, and in fact, are not doing the right thing, 'cause they don't spend that premium. And so the real way to save the world is to have Eco-friendly products that don't cost more. And in a way, you're going to make a lot of money in the process, 'cause they're going to buy your products instead of the chemicals. But, I guess just the way it's done right now just doesn't make sense.

CNBC:
So why do you think that this simple idea hasn't occurred to people?

TOM SZAKY:
Well because fundamentally, if you- if you look at the standard way of doing manufacturing, Eco-friendly costs more. Take a bottle. The more recycled plastic you put into that bottle, the more expensive it becomes. So intrinsically, it's more expensive. However, if you take it to the next degree- take Eco-capitalism, and make it out of used bottles- it's actually cheaper. So you gotta take it to the extreme to come full circle, and that's when you can accomplish your better, greener, cheaper philosophy.

CNBC:
You have said that you're not an environmentalist. What was that about?

TOM SZAKY:
I'm not an environmentalist. I think I'm like the average person. I'll do the right thing, if I'm not paying more money for it, but I don't drive a hybrid car. I don't buy organic food. And I don't spend more money on Eco-friendly products. But, I don't want the world to go to hell, either. So, if it's cheap, I'll do it. But, I'm not an environmentalist. And so, that's the solution, is right there- figuring out great ways, where if people don't have to do more to do the right thing. You should be able to do the right thing without being an environmentalist. Because that's what it represents- extra effort. What I'm showing is that there could be a way to do business where you can save the world, do great things for society, and make a phenomenal amount of money. I mean, my goal is to make my investors, my shareholders, a lot of money, and to create products for every American out there, where they spend less money. Everyone wins, and you save the world in the process. I mean, it just doesn't get better than that.

CNBC:
So let's talk about why you went to some of these huge stores like Wal-Mart.

TOM SZAKY:
Wal-Mart, Home Depot, Target. These are actually the retailers that launched Terracycle. We didn't go to little stores. And the reason is, that's sort of maybe the not the most intuitive place to go, because they're seen as big, bad, and evil. But if you're going to change the world, if you're going to have a big impact, that's where you go. Because that's where eighty percent of Americans shop. And that's where you can really make a big impact on the world and take chemicals off the shelf, and put these great solutions on the shelf, and it's how you grow your business at three hundred percent every year. Our goal is to keep this rate of growth, and to become the Eco-friendly Proctor & Gamble.

CNBC:
You have a theory about garbage?

TOM SZAKY:
Garbage, fundamentally, is a commodity you're willing to pay to get rid of. If there was enough demand created for garbage, you're going to start wanting people to pay you for it. And the moment that happens, it's not garbage anymore. You have actually eliminated the idea of garbage.

CNBC:
How do your retail margins compare with other products, and how has that helped you launch your company?

TOM SZAKY:
Our retail margins have been great, because of the idea of doing things better, greener, and cheaper, and out of waste. Because of that, we actually have fantastic margins, even when working with the biggest retailers in the world

CNBC:
And does that make you more appealing to them?

TOM SZAKY:
Of course. The more money anyone makes, the more appealing we become. So the more margins we're able to give to big retailers, the more appealing we become. And that's a fundamentally important idea. Our retail margins are great because we make products out of garbage.

CNBC:
And, your first orders came from where?

TOM SZAKY:
Terracycle was launched by Wal-Mart. And then Home Depot, and then Target. That's how it all started. When I talk about it, people- especially the green people, the tree huggers think that I sold out to the devil. But, it actually is the best way to change the world, is to do it with the word's biggest retailers. It's funny, because I'm not an environmentalist, but yet, I still think it's important to do the right thing for the environment, but to do that in a way where everyone is going to do it without even knowing it. What my favorite thing is - when I hear someone going into Home Depot and buying a bottle of our drain cleaner, and buying it because it's cheap and effective. And not even realizing how green it is. That is the best thing.

Related Links