Sustainability’s skeptics keep declaring victory. Tom Szaky keeps proving them wrong
It has become a point of pride in some circles to declare the era of environmentally conscious business over. ESG is in retreat, the skeptics tell us. Sustainability was a nutty crunchy belief, indulged in bull markets and abandoned the moment capital got expensive. Companies that organize themselves around environmental problems , the argument goes, are destined to be outcompeted by companies…
Initially, it seemed that the era of environmentally conscious business was over, according to some skeptics. They argued that sustainability was a passing fad, indulged in by companies during bull markets, and abandoned when capital became expensive. However, one company, TerraCycle, started by Tom Szaky as a Princeton dropout, has proven these skeptics wrong time and again.
TerraCycle initially gained recognition by selling fertilizer made from worm castings, packaged in used soda bottles, despite Scotts Miracle-Gro suing the company for misleading claims. Despite the legal battle, TerraCycle received valuable publicity and captured the interest of consumers who became more interested in organic products.
In "The End of Competitive Advantage," Tom Szaky argued that sustainable competitive advantage was giving way to waves of transient advantage. Companies that could catch a wave, ride it, and disengage in time to catch the next one would be the winners.
TerraCycle's latest venture, a national collection and recycling service for nicotine vape devices, has received more attention than a typical recycling press release would usually get. Vape devices contain lithium-ion batteries that pose a fire hazard when crushed or overheated, leading to costly fires and regulatory challenges.
TerraCycle's approach to tackling this issue is a testament to its mission-driven strategy. Instead of simply pledging to address the problem, they delivered a turnkey container program for households, schools, hotels, and municipalities. The program disassembles devices and recycles their components while incinerating nicotine pods to comply with laws.
Szaky's strategy of discovery-driven growth, where investments are staged to convert assumptions into knowledge cheaply and scale only what survives reality's test, has proven successful. TerraCycle has expanded its waste streams to include over 400 different items across 18 countries, all while maintaining a mission to eliminate waste.
What sets TerraCycle apart is its ability to abandon categories and remain anchored to its mission. The company's mission doesn't constrain it; instead, it guides it to new transient advantages as competitors defend their established categories.
In this instance, Szaky is funding the expansion using a mission-anchored strategy, demonstrating that financial gravity cannot undermine a company with a stable center and a clear purpose.
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