Terracycle: Case Study - Worm Boy

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Assignment # 1
Case Study – Worm Boy

The Future of Business – Page 196
February 15, 2011

Collin Nair
TerraCycle was founded in 2001 and is the brainchild of both Tom Szaky and Jon Beyer. At the time both were freshman students at Princeton University. The two envisioned a company that was financially profitable yet ecologically and socially responsible.

TerraCycle does business in Hazardous Waste Treatment and Disposal (NAICS) Their primary business function is manufacturing and selling organic plant food or fertilizer. Incorporated into their main business is an overall corporate strategy of managing waste effectively and meeting financial, social and environmental goals, namely a triple bottom line. TerraCycles’s business model is eco-capitalism i.e. using pre-selected waste to create new environmentally friendly, high margin, marketable products such as organic fertilizer. According to Szaky this type of business model will have a more positive impact than the usual non-profit organization

To keep the company afloat during the early start-up years, Szaky and Beyer contributed their own savings, $4000 and $1000 respectively, maxed out 2 credit cards to raise another $6000, borrowed $5000 from a friend, and $4000 from Szaky’s parents. They continued to keep the company alive by entering and winning business plan competitions, earning between $2000 and $10000 a contest. Despite being on the brink of bankruptcy Szaky did not deviate from his environmental agenda and his vision to “outsmart waste”. Funded by prize money and angel investors TerraCycle survived those turbulent years before their first breakthrough sale.

Current trends indicate that the public at large are shifting toward more environmentally sustainable products. Given the change in consumer attitude with respect to sustainability and the environment, retailers will need to rethink their product, marketing and selling strategy in order to maximum profit and stay in business. Szaky realised that these retailers as well as the public, although fickle will be more accepting of TerraCycles’ products because of its eco-friendly, eco-revolutionary value. In addition the uniqueness of the product i.e. “liquefied worm poop” will help promote consumers awareness and brand recognition.

Szaky understood that competition for market share retention will be fierce from the more established and traditional plant food producers, namely Schultz, Organic Choice Plant Food, Scotts and other lawn and plant fertilizer companies. TerraCyles intends to demonstrate that reuse is more profitable that recycle. They will up cycle and recycle traditionally non-recyclable waste (including drink pouches, chip bags, tooth brushes and many more) into a large variety of consumer products. These products will keep waste out of our landfills and contribute to a cleaner world. TerraCycle produces and markets eco-friendly products and targets consumers who are socially responsible, environmentally aware and want a safe product. The public in general would buy organic, eco-friendly products but would not pay more for them. According to Tom Szaky, Terracycle will produce organic products that are “both better and cheaper than the conventional product.” Its Tom’s intent to distribute and market his product via bid box retailers e.g. Wal-Mart, Target, Home Depot, OfficeMax, Petco, Whole Foods Market and others.

TerraCycle intends to engage the public, to collect non-recyclable waste and turn the collected waste into a wide variety of products and materials. Collection locations will include schools, offices, community groups, theatres, stadiums, restaurants and a wide variety of other organizations. Waste collection programs will be used to collect non-recyclable waste, including drink pouches, chips bags, and toothbrushes etc which are either up-cycled or re-cycled into a variety of consumer products. A coming together of social purpose, social responsibility and...
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