Aug 17, 2023 · 43m · how-i-built-this
Making garbage useful with Tom Szaky of TerraCycle
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of How I Built This Lab, host Guy Raz speaks with TerraCycle co-founder and CEO Tom Szaky about building a pioneer in hard-to-recycle waste management, transitioning from dorm-room organic fertilizer to brand-funded collection platforms, and engineering the circular reuse system Loop.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 31.8% of the talking time here. How this is scored →
Guy as informed peer 3.8 Guest teaching 4.7 Guest disagreement 1.4 Guy pushing back 0.7
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 33:01 Rejecting glass and aluminum as panaceas
Szaky firmly rejects Raz's premise that replacing plastic with aluminum or glass is the solution, pointing out that every material creates major environmental externalities.
Hardest push from Guy ▶ 27:20 Raz presses on consumer responsibilityRaz pushes back on Szaky's focus on producer externalities, insisting that everyday consumers are also getting a free ride by facing zero financial penalties for waste.
Biggest teaching moment ▶ 33:01 Lifecycle analysis and consumption reflectionSzaky educates Raz on the flawed assumptions of material substitution, explaining how weight and extraction emissions mean glass and aluminum aren't inherently cleaner than plastic.
Guy holds their own ▶ 25:45 Raz conceptualizes the lack of market fixesRaz articulates a detailed critique of market failure regarding waste disposal, comparing current practices to historical periods of unregulated industrial chaos.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| The Princeton Worm Composting Discovery and Economic Insight | 3 | 5 | 1 | 0 | Guy Raz prompts Tom Szaky on how the worm composting concept started during his Princeton days. Szaky explains the negative economic demand curve of garbage and how harvesting worm poop provided a free input for an effective organic fertilizer. | |
| Radio Show Lifeline and Formulating Liquid Fertilizer | 3 | 4 | 1 | 0 | Raz asks about the early funding lifeline and product form. Szaky details how a radio appearance saved them from insolvency and explains why worm castings had to be brewed into liquid tea rather than bagged dry. | |
| Reused Soda Bottles and Dropping Out of Princeton | 3 | 4 | 1 | 0 | Szaky recounts scavenging used soda bottles at night due to lack of packaging funds, realizing standard industry bottle dimensions enabled mass production across brands. Raz listens and prompts about dropping out of Princeton. | |
| Pitching Walmart and the High-Stakes Bentonville Journey | 2 | 3 | 1 | 0 | Szaky narrates the frantic road trip and airport security encounter to pitch Walmart in Bentonville. Raz acts as an enthusiastic listener reacting to the successful pitch. | |
| Mid-Roll Break: Shifting Focus from Fertilizer to Waste | 2 | 4 | 1 | 1 | Raz expresses surprise that Walmart accepted non-standardized bottle contours. Szaky explains the DIY hair-dryer shrinking rig and the identical base diameters across bottle variants. | |
| The Pivotal Decision to Move Beyond Fertilizer | 4 | 5 | 2 | 1 | Raz asks why Szaky abandoned a profitable 6 million dollar fertilizer business. Szaky clarifies that cherry-picking premium organic waste contradicted his core mission to solve difficult, dirty waste streams. | |
| Building Brand-Sponsored National Recycling Platforms | 4 | 5 | 1 | 0 | Raz explores how early brand partnerships with Stonyfield and Clif Bar worked. Szaky defines the technical difference between recycling raw materials and direct container reuse. | |
| Corporate Externalities and Voluntary Waste Responsibility | 6 | 4 | 1 | 2 | Raz and Szaky engage in a collaborative dialogue on unpriced corporate externalities, with Raz interjecting to emphasize that consumers also enjoy a free ride at low disposal cost. | |
| Mid-Roll Break: Strategic Consumption and Business Obsolescence | 4 | 5 | 1 | 0 | Szaky discusses the economic disparity between cheap virgin plastic and expensive recycled plastic, sharing research on gamifying train station recycling to increase consumer compliance. | |
| Rethinking Packaging Materials and Challenging Hyper-Disposability | 5 | 7 | 4 | 3 | Raz asks whether switching universally from plastic to glass or aluminum would solve packaging pollution. Szaky directly disagrees, explaining that every material has severe lifecycle trade-offs and hyper-consumption is the root issue. | |
| Financial Profitability and Cannibalizing Recycling via Loop | 4 | 4 | 1 | 1 | Raz probes TerraCycle's profitability and notes the paradox that eliminating waste would make the business obsolete. Szaky fully endorses the point, comparing Loop's cannibalization of recycling to Netflix replacing DVD mailing with streaming. | |
| The Mechanics of Loop and the True Environmental Solution | 5 | 6 | 2 | 0 | Raz and Szaky discuss Loop's deposit-return ecosystem, practical container material choices for bathrooms, and the foundational truth that reduction of consumption outranks both recycling and reuse. |
Statements from this episode (15)
Szaky: Waste businesses can get paid for inputs due to negative demand
“And it turns out it's because there is, while there's massive supply, there's in fact negative demand. And so in this worm poop concept, the simple business model was, wait a minute, we can get paid for the input, because that's in a way the definition of garb…”
Szaky: Four retailers control the vast majority of the US fertilizer market
“And when I looked at the, at who controls the fertilizer market, it's only four retailers control the vast majority of it, which in the U.S. Is Home Depot, Lowe's, Menards, and Walmart.”
Szaky: TerraCycle used hair dryers on plywood to shrink bottle labels
“And since we couldn't afford a tunnel, like a heat tunnel to do this, we built this little rig where, imagine four hair dryers are placed on, like, this plywood pointing in a center direction, and if you dip the bottle into this hair dryer tunnel just right, i…”
Szaky: 20oz soda bottles share dimensions enabling mixed-brand packaging
“So the heights are the same, diameter is the same, the tread on the cap is the same. So you could do effectively mass production of mixed-use soda bottles, and that way the cases all look the same, everything was moving out, it worked nicely on the shelf”
Szaky: TerraCycle reached $6M in revenue selling worm poop fertilizer
“By then, so we had grown up to about six million in, in revenue on doing worm poop.”
Szaky: Making products from waste forces companies to cherry-pick garbage
“If we become a consumer product company, where our role is to make products from garbage, then the business hero of that equation is the product, which means we're going to have to find the very best inputs so that we can make the very best product.”
Szaky: Mission-driven founders should choose for-profit structure for easier capital access
“My advice to mission-driven entrepreneurs is typically to try to do this, that stuff in a for-profit context, because access to capital, Is way easier in a for-profit.”
Szaky: Virgin plastic is cheaper than recycled plastic, increasing annual usage
“Today, plastic is still cheaper to make new than to collect it and process it and then to use it as a recycled material, which is why we see the use of virgin plastic increase year over year over year.”
Szaky: Switching from plastic to glass or aluminum is not inherently better
“No, I don't think so, because I think every material type has pros and cons. We're in a moment right now where we are I think rightly so, really projecting a lot of negative onto plastic because of microplastics, ocean plastic, all these things that are correc…”
Szaky: Packaging strategy must prioritize reuse over material choice
“The material choices we make, I think, need to be less about is it an alloy or glass or plastic. It's much more about how do we eliminate the need of packaging if we can. Then how do we shift to reusable packaging where the packaging is just cleaned and refill…”
Szaky: TerraCycle Will Generate $75M to $80M in 2023 Revenue
“This year, you know, we'll do about 75 or eighty million in revenue, somewhere between those two numbers.”
Szaky: TerraCycle Reinvests All Profits into Reuse Division Loop
“We've put all of our profits and investment into our third division, which is called Loop, and it's all about transitioning from disposability to reusability.”
Szaky: Loop's success would intentionally eliminate TerraCycle's primary recycling division
“And if Loop were to really succeed in a grand way, our first division, which is focused on recycling, would disappear.”
Szaky: Reusable packaging generates more jobs and revenue than recycling
“The amount of jobs and the amount of revenue created on reuse is bigger than recycling, just like recycling is more jobs and revenue than landfilling.”
Szaky: Recycling is a band-aid; the only real solution is buying less
“Recycling is a band-aid, right? And it's better than landfilling and incineration. It's a step in the right direction. You know, reuse is an even better step than recycling. But in the end, the only answer is going to be a significant reduction of buying thing…”