(Re-)Introducing Our Latest Business Model - NYTimes.com

Almost six months ago I wrote about a new program that I expected to sharply expand our recycling efforts and possibly even shift our entire business model. The program, I thought then, was about two weeks from its introduction.

Turns out, we didn?t quite get there. What happened was a series of huge information technology delays ? so many that the program has only just now gone into beta testing with an anticipated go-live date of mid-April. The goal is to be up and running in time for Earth Day (April 22), which is effectively Christmas for companies like TerraCycle.

If it does come together, it will not be the first major evolution of our business model. We got started selling worm-waste plant fertilizer in reused bottles. Today, we still sell our plant food but we also have more than 30 million people around the world collecting previously non-recyclable waste streams that we turn into more than 1,500 products.

Thus far, all of our recycling programs have been free to the consumer ? including free shipping as well as a two-cent donation to the collector?s favorite charity or school. The bill for all of this waste collection, which is substantial, has been picked up by the brands that have wanted to eliminate the waste created by their products. Inevitably, this has linked our ability to collect and recycle waste to the budgets of our sponsors.

The goal of our new program is to forge a link directly with the collectors, allowing us to recycle even more streams of waste. For example, today we collect about 2.5 percent of all of the drink pouches in America through a program that is sponsored by Capri Sun and Honest Tea and free to all participants. On the other hand, we have not yet been able to secure a sponsor to recycle batteries. The new program ? we call it WOW, as in World of Waste ? will allow us to collect used batteries and a host of other waste streams. But in these cases, the costs will be paid by consumers, at least until we find sponsors.

We think it will work in part because the model has been pioneered by other companies, including LampTracker (which is now owned by Waste Management). We plan to collect all kinds of waste, from human hair (think salon trimmings) to batteries to garden accessories to lightbulbs. The program is tremendously important to TerraCycle and could be a major business model evolution away from being entirely dependent upon sponsors to foot the bill for our services.

Here?s how it will work: You go to our Web site, where you will soon be able to choose between free waste streams (like chip bags, sponsored by Frito-Lay, and oral care waste, sponsored by Colgate) and paid waste streams (like batteries). If you choose a free program, you need to find a box (a shoebox) for collection and we provide you with a free shipping label and in some cases a two-cent donation to your favorite school or charity for each piece of waste you collect.

Soon, if you pick a paid program, you will also get to choose between buying a collection box (small, medium, large and custom) and a downloadable shipping label (to use with your own collection box). The cost you pay will include the cost of shipping and processing and handling of the waste you send us. In the end, all of the waste sent to TerraCycle is either reused (about 5 percent), upcycled (about 10 percent) or recycled (about 85 percent).

So what?s the problem? The constant challenge for us has been IT. Early on, we had a few folks doing IT support internally. As the burden got bigger, and we had more need for programmers, we outsourced everything to two vendors, one that did desk support and another to do programming. But my personal preference is to avoid using outside service providers ? mostly because I think it?s almost always cheaper to hire the resources in house ? and within a year we were transferring the IT functions back in house. We hired a team of desk support folks as well as a few internal programmers.

Then, as we expanded our collection services around the world, we started focusing on Eastern Europe and I had a chance to get reacquainted with Budapest. I say reacquainted because I was born there, leaving when I was 4 years old and my parents moved to Canada. In the years since, I had returned only for weddings and funerals. But when Terracycle started doing business there a year or so ago, my eyes were opened. Eastern Europe is full of amazingly talented and educated people who are looking for their own piece of the American dream.

The upshot is we decided to move our IT team again, this time to Budapest, where we brought on five full-time programmers who replaced our American programmers (we kept the desk-support team in Trenton). And that is where we are: still dealing with IT delays but about to release our new initiative.

We are still shooting for Earth Day, but I will let you know how it goes.

Tom Szaky is the chief executive of TerraCycle, which is based in Trenton.

Source: http://boss.blogs.nytimes.com/2012/03/06/re-introducing-our-latest-business-model/

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