Worm War I

Sued by Scotts, worm poop start-up makes a stink on the Web.

Terracycleheadquarters
Pooh Corner: TerraCycle headquarters, at the intersection of Hillside & New York avenues in Trenton, New Jersey.

TerraCycle Inc. is a small company in a decidedly unglamorous business; it sells all-natural plant fertilizers derived from worm excrement. But there is big money in bottled worm poop, which explains why the three-year-old Trenton, New Jersey-based start-up has attracted the attention of Scotts Miracle-Gro, a multi-billion dollar company that is the acknowledged leader in plant food. In March, Scotts sued TerraCycle in federal court, claiming trade dress infringement, false advertising, and believe it or not, unjust enrichment. With its survival suddenly at stake, TerraCycle took its story to the Web, launching suedbyscotts.com in a bid to garner public support and attract media attention.

At suedbyscotts.com, TerraCycle presents the conflict as a classic David vs. Goliath-type confrontation, complete with a stark side-by-side comparison of the two companies. Among other things, the site highlights annual sales ($1.5 million for TerraCycle v. $2.7 billion for Scotts), annual profits (none v. $132.7 million) and major perks for the respective CEO's ("unlimited free worm poop" v. personal use of company-owned aircraft).

According to TerraCycle CEO Tom Szaky the goal of suedbyscotts.com is simply to create awareness. We haven't posted anything that is not public [information] and not factual, he says, although Szaky readily concedes we did lay out some of the information in a cheeky way.

The CEO comparison is illustrative: Szaky is described as a 25-year-old Hungarian-born refugee college drop-out and pictured sporting casual clothes and a spiky haircut. Meanwhile, Scotts' bald, fifty-something chief executive is pictured in coat and tie and described as a former jet pilot, son of multi-millionaire Miracle-Gro founder.

While the content on suedbyscotts.com might leave TerraCycle vulnerable to additional legal claims, it does appear to be having its desired impact. The site has already received coverage in The Wall Street Journal and BBC News recently paid a visit to company headquarters. More importantly, if sentiment in the blogosphere is any indication, consumers appear to be empathizing with TerraCycle. Some gardening blogs have gone so far as to advocate a boycott of Scotts products.

Certainly, Scotts has put its proverbial green thumb on one of the most socially and ecologically endearing targets imaginable. Not only does TerraCycle make its products out of waste, it sells them in used plastic soda bottles (collected by 3,300 different school and church groups around the country via its Bottle Brigade program, which pays five cents for every bottle).

TerraCycle even chose to locate its headquarters in Trenton's Urban Enterprise Zone (UEZ), which Szaky matter-of-factly describes as an urban ghetto. While TerraCycle's motivations for putting down roots in Trenton's UEZ were selfish (tax breaks, inexpensive labor), the company is providing jobs in an area famous for its crime and economic challenges.

Scotts' public relations challenge is further complicated by the fact that overtly green products are on the way in, and hardball business tactics are on the way out. Regardless of the strength of Scotts' legal claims, consumers are likely to perceive the lawsuit as a corporate giant using the legal system to try to put a fledgling competitor out of business.

Perhaps that explains why plant food users are now aggressively supporting TerraCycle with their wallets. While the PayPal donation box at suedbyscotts.com has collected a mere $515 for the TerraCycle Defense Fund, sales are up dramatically since the lawsuit was filed. In the past five weeks our in-store sales have gone up 122 percent, reports Szaky, who is well aware that this trend must continue indefinitely if TerraCycle hopes to pay its anticipated legal bills. To date, TerraCycle has incurred approximately $50,000 in legal fees, but costs could ultimately exceed a million dollars.

The best case outcome is that there is so much publicity generated and so much negative will generated [toward Scotts] that they drop the lawsuit. The next best case is that we win in court and recover our legal fees, says Szaky. But despite the already acrimonious relationship the young Princeton University dropout claims that TerraCycle is open to mending fences and collaborating with Scotts. We're a very flexible companyvery open to collaboration, he begins. But that's something that Scotts doesn't seem to be interested in.

In the meantime, Szaky is doing his best to avoid the distraction of the lawsuit and focus on his daily responsibilities, which include steeling himself against the inevitable poop jokes. The jokes get a little old sometimes but I love worm poop, he admits. I'm glad it's funny and that people enjoy talking about it.