When TerraCycle co-founder Tom Szaky left his Canadian home to study at Princeton University, he didn’t know that, less than a year later, he would be knee-deep in garbage—literally. Visiting friends in Montréal and seeing their plants flourish with the addition of worm excrement, Szaky got an idea: He would start a company selling fertilizer created by feeding organic waste to the red wigglers and collecting the product. He called the company TerraCycle.

“I was shoveling rotting garbage for the summer,” Szaky says. “Literally, about a thousand pounds of rotting waste every day.”

The 26-year-old business whiz has never shied away from hard work. He has been turning his ideas into realities successfully since he was 14 and running his own Web-design company, Flyte Design, in Canada. As a Hungarian-born immigrant, Szaky has an awelike respect for entrepreneurship and the possibilities it provides.

By the fall semester of his sophomore year in 2002, the TerraCycle project started consuming all of Szaky’s time, and he dropped out of school to pursue his American dream. “I bankrupted all my credit cards and borrowed a bunch of my friends’ money and built a monstrous organic waste-to-worm-poop conversion system. Once I had spent all the money, I really couldn’t fail.”

After Szaky and his small team outgrew the crowded basement of an old office building in Princeton where they were working, he bought a large, rundown house in a gang-troubled area of Trenton, N.J. He recruited 35 student interns willing to help the company grow in exchange for a place to live, fried chicken and experience.

“I would say one of my skills and one of the reasons that I’ve been successful is that I’m able to get people excited about something I believe in,” Szaky says. “They loved the idea of spending the summer living in a house building a cool company…. It was just nuts—one shower, by the way, for 35 people.”

They worked relentlessly to keep the business afloat, and out of necessity figured out how to make things work (e.g., creating a rotating shower schedule). One of the most innovative ideas behind TerraCycle was inspired by pure necessity. While producing the company’s liquefied worm poop plant food, they ran out of money and couldn’t afford the bottles required to store and sell the product. So they started using recycled soda bottles, at f rst swiping them from private recycle bins.

With products and packaging completely from recycled garbage, TerraCycle was able to bring better, cheaper and greener products to consumers—and establish the eco-capitalism concepts that brought awards and publicity. Home Depot awarded TerraCycle its Environmental Stewardship Award twice (in 2005 and 2008) and Inc. magazine named it “The Coolest Little Start-Up in America.”

Its Bottle Brigade program now collects used bottles from more than 4,000 locations and pays schools and nonprofit groups 5 cents for every 20-ounce bottle. Because of that program, TerraCycle was able to reuse more than 2 million bottles in less than two years. Now the company has teamed up with big food manufacturers, including Stonyfield Farm, Cliff Bar, Kraft and others, to collect yogurt cups, wrappers and juice pouches for new products, such as eco-friendly planting pots, tote bags, shower curtains and pencil cases.

Szaky is thrilled with the expansion, which results in reusing more products and keeping them out of landfills. The green side of TerraCycle has always been an important aspect of the business. So important, in fact, that Szaky once turned down $1 million in business plan prize money because the company funding the contest wanted him to move away from the environmental side of the business. That hurt at the time, but TerraCycle persevered. The company eventually landed orders with Home Depot, which opened doors to other big-box retailers, including their first big order with the world’s largest retailer, Wal-Mart.

There were growing pains, however. When Szaky and associate Robin Tator landed that huge Wal-Mart order for 100,000 bottles worth more than $250,000 to the company, TerraCycle didn’t have the infrastructure to meet the demand. They had recently purchased a dilapidated building in Trenton to use as a factory, but it took two months to get the equipment and bottles they needed. During the last two weeks before the deadline they worked 20-hour days and slept in the factory to get the order filled on time. Though the company has had many ups and downs since then, growth has continued.

Szaky says one of the constant challenges he faces is sustaining growth in a business that is always evolving. He shares some of what he’s learned in his book Revolution in a Bottle: How TerraCycle Is Redefining Green Business published by Portfolio, an imprint of Penguin Group. “We’re still figuring out what

TerraCycle will end up as in a way,” he says. “It’s not like we’re a storage company and we want to add more storage units. We want to convert the entire idea of garbage, and we’re learning and figuring it out as we go.” TerraCycle has seen consistent aggressive growth, with sales more than doubling for three consecutive years, and Szaky projects sales around $17 million next year. But he sees potential that’s much greater than profits. “We’re changing the world’s biggest companies,” he says. “And creating something that is arguably going to be as big as, or bigger than, the idea of recycling.”