The company started as a classic start-up which converted waste into something useful. How did they make this profitable?
‘Making money from rubbish’ is the rule number one followed by Tom Szaky, the 33-year-old Hungarian that gave birth to this social enterprise. The project started 13 years ago in the USA, and has quickly spread its operations to more than 21 countries and has currently more than 100 employees. In line with this growth came its fast-growing revenues, which reached £13 million last year. TerraCycle launched in the UK in 2009.
Being born in communist Hungary gave Tom a special perspective regarding waste, which got stronger when he moved to Canada at the age of ten and saw so much ‘waste’ on the streets. This opposite life experiences inspired him to run a business which would make its profit purely from giving waste a whole new meaning.
How did this magic happen? TerraCycle has a quite simple (and successful) business model. They collect waste, specifically those products that are harder to be recycled, and turn them into something useful, for a profit. They work closely with big firms like Johnson & Johnson and McVities, among others, who give them money in return of collecting their waste. TerraCycle heavily relies on big businesses’ waste, so their biggest challenge is to keep them interested in their programmes.
TerraCycle also works with individuals that collect their own rubbish and sends it directly to TerraCycle in return for a charity donation. In this case, the company does not make much profit but contributes to charities.
What happens next? TerraCycle processes the collected rubbish and converts it into a material which is then either sold to manufacturers (most of the time), or less likely, turns them into new products (bags, dustbins, and so). They convert cigarette stubs into plastic pallets for instance.
If you see the company’s offices, you will get a grasp of their mission. They are usually located in not so expensive neighbourhoods, have graffiti on the premises, and have some recycled bottles or something alike as wall dividers.
The two big challenges are to keep big firms providing them with waste and to find the best outcome for these materials. So far, the business has shown great results with this project, which is not only environmentally friendly but also very profitable.