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The Honolulu Advertiser
Posted on: Wednesday, December 14, 2005

This can-do entrepreneur hopes the worm turns a profit

By Bonnie Pfister
Associated Press

TRENTON, N.J. — Tom Szaky is wearing what he calls his "greed hat," turning worm excrement into profit.

The 23-year-old Princeton dropout set out to be a smart entrepreneur, not an environmental hero. His growing business is built on organic fertilizer made from worm feces, then bottled in recycled plastic bottles.

The company, TerraCycle, markets plant fertilizer created by "vermicomposting" — harvesting worm excrement. It sells the product in 20-ounce plastic bottles, many gathered by schoolchildren. It employs 10 people in a warehouse in economically depressed Trenton.

Those business choices were born not of idealism but to maximize efficiency and keep costs down.

"We're in Trenton because the rent is very cheap and labor is abundant," said Szaky. "The decisions were made by wearing the greed hat ... but ironically we're doing the right thing."

TerraCycle Plant Food has sold for around $7 since early 2004 in organic groceries and independent garden shops. Earlier this year, it began appearing on shelves in Wal-Marts across Canada and Home Depots there and in New Jersey.

Sales for 2005 are expected to reach about $500,000.

Szaky hopes to triple that next year with a planned launch in Home Depots and Wal-Marts nationwide. TerraCycle will go up against fertilizing powerhouse Miracle-Gro.

"We don't want to just be an organic plant food sold in little organic stores," Szaky said. "We want to compete on their playing field."

Born in Hungary, he moved with his physician parents to Toronto at age 9. He entered Princeton to study behavioral psychology and economics in 2001.

While visiting a friend in Montreal that fall, Szaky was intrigued by the success his plant-loving pal was having with homemade fertilizer generated by a box of compost and some worms.

"It wasn't an environmental thing. It was 'Wow, this is a cool business model,' " Szaky said. "The light bulb went on, and it never went off."

Szaky and Princeton colleague Jon Beyer submitted their idea to a campus business plan project and were rejected. Undaunted, they used their credit cards to borrow $20,000 and purchased a "worm gin" — equipment that houses red worms while they chew their way through decomposing food scraps. By summer 2002, the fledgling company was near failure.

Szaky went on an AM radio station to talk up the concept and fielded a phone call from an investor offering $2,000 to keep TerraCycle alive. Szaky accepted, quitting school at year's end to devote himself to the business.

The company took up residence at Rutgers University's EcoComplex, an environmental research facility run in partnership with Burlington County Landfill near Bordentown, about 12 miles south of Trenton. While a TerraCycle researcher there is still tweaking specialized formulations for orchids and African violets, the company purchases the worm waste from suppliers and focuses on packaging and marketing.

A private investor in Florida owns a 40 percent interest in TerraCycle, which is purchasing the 20,000-square-foot Trenton warehouse as a permanent headquarters. TerraCycle spokesman Barry Brinster said the company is not yet making a profit, but expects to break even in 2006.