The coolest little start-up in the US

Kate Jones
March 17, 2014
It’s making millions by recycling fag ends and it’s just arrived in Australia.
Making millions from a business that recycles cigarette butts seems stranger than fiction. But Tom Szaky is an entrepreneur bent on making the impossible possible.
Szaky’s company TerraCycle has been described as “the coolest little start-up in America” and “the Google of garbage”. But don’t describe this super eco-friendly outfit as just another recycling company.
About 24 billion cigarettes are sold in Australia each year with an estimated seven billion of those eventually becoming litter.
Szaky, a prominent eco-entrepreneur in the US, says the firm has a much higher purpose.
“Waste is a completely human idea and TerraCycle was born as a way to outsmart waste or to eliminate the idea of waste under the premise of trying to make things that are non-recyclable naturally recyclable,” he says.
Founded in 2001 by Szaky, then a student at Princeton University, the company is now established in 26 countries with Australia the latest foothold.
A warm reception for the eco-friendly firm has Szaky hopeful Australia will be one of the company’s strongest markets.
“I think there is a big concern for the environment here in Australia – not from everybody, but there’s a general concern,” he says.
“The reaction from the people of Australia has been phenomenal.”
Internationally, TerraCycle has diverted over 2.6 billion units of waste from landfill and paid over $US8.8 million ($9.8 million) to charities and schools for participating in their waste collection programs.
The revolutionary program has made millions for Szaky.
“We just sold 20 per cent of our Canadian business to the largest waste management company in Canada and that value is worth $US150 million [$167 million],” he says.
“So sure, on paper I’m a multimillionaire. But my salary is only seven times higher than the lowest paid person in our organisation.
“We have a very tight ratio; we don’t get bonuses, we don’t have company cars and things of that nature.”
Australian TerraCycle headquarters are in Sydney and the company is now in the process of organising national collection programs dubbed “brigades”.
Depending on local commercial partnerships, each country has specific waste products TerraCycle can recycle. In Australia, Szaky and Australia and New Zealand general manager Anna Minns have forged multimillion-dollar agreements with Colgate, Natures Organics , Nespresso and major tobacco companies Philip Morris, Imperial Tobacco Australia and British American Tobacco Australia.
These commercial arrangements mean Australian consumers can send cigarette stubs and packaging, cleaning product packs, coffee capsules, old toothbrushes and used toothpaste tubes to TerraCycle.
TerraCycle scientists and designers then determine what can be recycled or “upcycled”. Upcycled items such as juice boxes can be sewn into bags, while recycled waste such as laundry detergent bottles can be recycled into everything from garden pavers to soap dispensers.
Cigarette butts are shredded and the organic matter, such as the ash, tobacco and paper, is composted. Filters and cellophane packaging is recycled into a mouldable plastic.
About 24 billion cigarettes are sold in Australia each year with an estimated seven billion of those eventually becoming litter, but Szaky says TerraCycle doesn’t solve smoking addictions – it just cleans up after them.
“There are many issues with tobacco, don’t get me wrong. I’m not a smoker and the real answer is people should stop smoking,” he says.
“Tobacco is the number one most littered item on the planet with 4.5 trillion cigarettes littered every year around the world and it accounts for 37 per cent of roadway litter.
“That it is something that is a key concern for the tobacco industry and being able to bring a solution is something that’s very important to them.”
TerraCycle’s 2014 Australian launch is not its first. An earlier attempt in 2012 failed when a partnership collapsed at the eleventh hour, which Szaky discusses in his regular New York Times blog You’re the Boss
“We had a partner, whose name I cannot disclose, who committed to opening in Australia two years ago,” Szaky says.
“We came here, we incorporated, we set up, but then they had a bad year with their performance and their budgets disappeared. They couldn’t fund their commitment, so it was a little bit of a challenge.
“It sort of took a little bit of a speed hump, but we’re really excited with the launch now.”
Finding general manager Minns was a critical step in securing a more stable entry into the Australian and New Zealand markets, says Szaky.
Minns, a solicitor with a background in criminal and industrial law, worked with TerraCycle staff in the US for six months before bringing the business home.
TerraCycle’s next step is to launch in Japan in April, where it hopes to build on the 60 million people around the globe who participate in its waste collection programs.
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