For-Profit Businesses Can be Superheroes Too
September 12, 2011
Alex and Nikhil proudly display their mushroom kits
Now that North Americans have begun to recognize the energy and nutrient potential in organic waste, entrepreneurs have found new ways to make money from this still under-the-radar resource. Organic waste-related businesses that turn a profit while doing good at the same time have begun to spring up across North America.
Back to the Roots in California’s Bay Area and New Jersey-based TerraCycle both use organic waste in unusual ways to create very different products. What do these companies have in common? They divert a whole lot of material from landfills and recycle them back to the community.
Back to the Roots
As Alejandro Velez and Nikhil Arora neared graduation from UC Berkeley in 2009, neither of them planned on making a career in organics. They wanted jobs in the worlds of banking and consulting, and neither of them had any background in agriculture or waste management. But when they learned during a lecture that mushrooms grow well in used coffee grounds, their business sense was keen enough to recognize a potential moneymaking idea. A little over two years later, Alex and Nik find themselves waist-deep in spent coffee grounds.
It turned out that the lecturer was correct: mushrooms – specifically expensive gourmet oyster mushrooms – grow exceptionally well in used coffee grounds. Alex and Nik’s company, Back to the Roots, now markets a boxed kit containing coffee grounds and mushroom roots that allows consumers to grow over a pound of oyster mushrooms in their own home. The boxes are smaller than a shoebox, but now that Whole Foods supermarkets sell them, all those coffee grounds really add up – to over 20,000 lbs a week! If Back to the Roots keeps up their current pace, they will divert over 1 million lbs of coffee grounds from landfills in 2011.
Nik and Alex have built an unusual, but successful business model around organic waste. Peet’s Coffee and Tea (a large chain that supplies most of Back to the Roots’ coffee grounds) pays Back to the Roots to haul their grounds away every day, so one of the most important inputs to their business (a big expenditure in most lines of work) actually produces revenue. Back to the Roots also sells its own organic waste (mostly excess coffee grounds and mushroom parts) to local nurseries as a nutrient-rich soil amendment rather than paying a waste hauler to cart it to a landfill. Finally, Back to the Roots’ core product – the mushroom kits – sell for about $20 apiece. For those keeping score at home, that’s three revenue streams, only one of which derives from a true final product.
As Nik and Alex’s business grows, they’re not forgetting their roots (excuse the pun). Every box of mushrooms they send out contains instructions to compost remaining coffee grounds and mushroom parts or sprinkle them on a home garden. They also launched a school donation project: for every photo of a growing mushroom box posted on their facebook page, Back to the Roots donates one of their products to a school classroom.
Back to the Roots looks forward too: they’ve already begun experimenting with growing new types of mushrooms in spent brewers’ grains, soy waste products, and recycled tea leaves. But this is just the beginning, Nik says. The true dream behind Back to the Roots is to start a food revolution, to have people producing multiple types of organic, sustainable crops in their homes and apartments, all of them growing in recycled organic materials.
TerraCycle
Tom with one of his main source materials in the background
Though they sell completely different products, Tom Szaky’s story of founding TerraCycle sounds remarkably similar to Alex and Nik’s creation of Back to the Roots. In 2001, as a business student at an elite university (Princeton in Tom’s case, rather than UC Berkeley), Tom discovered that worms can turn organic waste into an incredibly rich fertilizer. He borrowed money and spent his life savings on – there’s really only one way to say this – a worm poop conversion unit. Essentially, the unit provides a system to house and feed earthworms: organic waste goes in, “worm poop” comes out. From the machine’s output, Tom created multiple kinds of organic fertilizers, from an all-purpose plant food to plant foods tailored to specific flowers such as orchids or African violets.
Once TerraCycle had a product, Tom needed a way to package it. He stuck with his recycling approach and used locally recycled bottles, juice pouches, and other consumer waste to package TerraCycle’s plant foods. The company eventually realized that fertilizer containers weren’t the only thing they could make out of recycled materials. Today, TerraCycle manufactures products ranging from bags to notebooks to flowerpots, and non-garden products have become as big a part of their business as fertilizers.
TerraCycle has outgrown Tom’s old worm poop machine – the worm poop now comes from various local farms – but like Back to the Roots, TerraCycle hasn’t forgotten its beginnings. The company designed school curricula to help teach kids about the value of all types of recycling, especially composting. TerraCycle continues to expand: the company now produces over 1,500 different products and collects organic waste in 14 countries. But Tom and his team remain true to their vision of diverting waste from landfills and making a profit at the same time.
Keeping one eye on the bottom line and the other on the environment makes both TerraCycle and Back to the Roots this week’s superheroes.
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