In 2001 Tom Szaky, a Princeton freshman, founded TerraCycle with the hope of creating perfect eco-capitalism. His idea was a company built on waste – worm waste to be exact. To help fund his fledgling company, Tom entered and won several business plan contests – though he turned down his biggest prize of US$1million because it came with strings attached that conflicted with his aspirations for the firm. Eventually, Tom dropped out of Princeton to pursue his dream of eliminating waste and the company expanded into upcycling – making products from waste that would otherwise have been sent to landfills. Eventually, the company moved into sponsored waste, whereby companies would pay it to set up collection sites, or brigades as TerraCycle called them, for used packaging associated with their brands. TerraCycle would take challenging-to-recycle packaging and turn it into affordable, high-quality products. Ten years later, TerraCycle’s eco-friendly products had received numerous environmental accolades, partnerships with multinationals such as Kraft, SmithKline Beecham and L’Oréal, and the company’s upcycled products were sold at major retailers from Home Depot to Walmart. But profits continued to elude the company, and Tom found himself at a crossroads.
Learning Objective
The case addresses five key managerial issues at crucial points in the company’s evolution. It provides an excellent illustration of the transformation process entrepreneurs go through to ensure their company not only survives but also thrives during each phase of its development. The case lends itself perfectly to active participation by students. The five principles of effectuation are demonstrated through the decisions as well as some of the successes and some of the mistakes Tom and his team made. Each crucial decision point in the case will push students to think hard about: 1) the role of resources (investment and non-cash resources) in new venture creation; 2) the tradeoffs of ownership and control; 3) Building partnerships with consumers, multinationals and government; 4) the importance of the role of management as ventures evolve; 5) effectual partnership and contingency. This case is ideal for a single 90 minute teaching session. There is also a five-part version of the case, which works well in a four-hour session. (or two 120-minute sessions or three 90-minute sessions).
Keywords
Entrepreneurship, Social Entrepreneurship, Effectuation, Strategy, Competitive Strategy, Non-market Strategy, Innovation, Sustainability, Sustainable Development, Environmental Management, Waste Management, General Management
Settings
United States of America
2001-2011
Available Languages
English
Related material
Teaching note, Video
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