Let's Talk Trash

Tom Szaky's office could pass for a landfill. Szaky, 24, the co-founder and CEO of plant-food manufacturer TerraCycle, sits in a chair that was at one time another firm's trash, next to a computer on a desk that were both once trash, and, with near palpable enthusiasm, draws supply-and-demand graphs on scraps of paper to show why he's so fond of building his business out of trash. "What is garbage?" he asks, marker in hand. "It's any commodity with a negative value, right? It's something you're willing to pay to get rid of."

And TerraCycle is willing to take it, he might as well add. Negative costs drive the company's bottom line. Only the label on the bottle of TerraCycle's flagship product is new. The product is a ready-to-use organic plant-food spray, made from the excrement of worms fed on compost and packaged in repurposed soda bottles.

In baser terms, the man is selling worm s___ wrapped in used plastic. The company has earned accolades for its minimal environmental impact (and is happy to trash talk competitors on their records). And the plant food is a hit with retailers. TerraCycle rolled out its products en masse in the U.S. earlier this year. They're carried in more than 7,000 stores across the country. The privately owned company took in $1 million in the first quarter of 2006, and sales are growing 300% to 600% each year.

Trash is indeed cash for an increasing number of firms--from 1-800-GOT-JUNK, the garbage collector that's grown more than 400% in five years, to municipal recycling depots nationwide. It's hard to measure the scope of the waste-recovery industry--as Szaky says, garbage is only called garbage until enough people want it. But demand for trash is evident in growing markets and rising prices for by-products that used to be dirt cheap, free or off-loaded with a cash kicker--such things as tire chips and crumb rubber, organic waste, even restaurant grease. "Resource recovery is a dynamic industry right now," says Lou Zicari, associate director of the Center for Integrated Waste Management, an offshoot of the State University of New York. The Environmental Protection Agency estimates that 72 million tons of waste were recovered in the U.S. in 1999, up from 63.9 million tons just four years before 1999, thanks to rising trash piles and recycling rates. And the phenomenon is fairly recent. "Most of this development has been in the last 10 years," he says.

Szaky says he was attracted to garbage because he saw a way to keep costs low while still doing good socially and environmentally. But companies say there are other advantages to reusing. Many consumers prefer products marketed as eco-friendly, recycled or natural. Some investors seek out eco-friendly projects specifically, and many states offer grants for such businesses.