Garbage mogul makes millions from trash

Link of the day - I will pay you $25, if you come up with a cool domain name for me.

http://www.terracycle.net/

TRENTON, N.J. (Fortune Small Business) -- In a sprawling former suitcase factory in New Jersey, a camera crew is filming entrepreneur Tom Szaky and his company, TerraCycle, for a new reality TV show. Ten of the recycling firm's 46 employees sit around a table awaiting Szaky's next challenge. "So, guys," says Szaky, reaching into the pocket of his corduroy jacket and tossing a used toothbrush onto the table. "What are we going to do with this?"

You could ask the same question about every piece of trash in this 250,000-square-foot warehouse. Those boxes of Capri Sun juice pouches will become pencil cases. Circuit boards will be reincarnated as picture frames and clocks. Oreo wrappers will morph into kites.

"We want to be the Wal-Mart of garbage," says Szaky, 26. Today's order of business: Toothbrush manufacturer Colgate-Palmolive (CL, Fortune 500) is prepared to ink a recycling deal if Szaky's team can dream up the right product. Their ideas include bending the toothbrushes into bracelets, purse handles and toothbrush holders.

Creative recycling like this has helped double TerraCycle's revenue every year since 2004. Sales are likely to hit $15 million this year. Meanwhile, Garbage Moguls, the reality-show pilot, will air on the National Geographic Channel on Earth Day, April 22, and may be turned into a series. Szaky's TerraCycle memoir, Revolution in a Bottle, was published by Penguin in February. And he can boast new agreements to make tote bags out of cloth scraps from Brooks Brothers, coffee sacks from Starbucks (SBUX, Fortune 500) and film from Warner Bros.

Yet all is not well in the land of garbage. Despite its brilliant business model - shipping free junk in by the truckload, then spinning it into gold - TerraCycle is low on cash. In 2008 the company lost $3.5 million. TerraCycle's capital levels are always trailing behind Szaky's restless ambition, and the company's short history is filled with crises.

As the cameras roll, Szaky strikes a dire note. "We are not stable," he tells his team. "We're on the edge of bankruptcy and of being a huge success at the same time." Right now, he estimates, the company has six weeks before it runs out of cash.
A man obsessed

Both Szaky and TerraCycle reached this point via circuitous routes. Born in Hungary under the Communist regime, Szaky fled with his parents to Toronto in 1986. They were both doctors, but Szaky had entrepreneurship in his blood. At the age of 14, he started a business designing Web sites. One of his clients, serial entrepreneur Robin Tator, would later co-found TerraCycle.

In 2002 Szaky was a freshman at Princeton when he heard about a friend's discovery: If you fed organic waste to earthworms, they produced fertilizer that cannabis plants seemed to love.

Szaky smelled a strong business model. First, if it worked for pot, it would work for other plants. Second, he could create a salable consumer product out of garbage. TerraCycle was born.

From that point on, Szaky was a man obsessed. He paid a Florida inventor $20,000 for a contraption that housed millions of worms and fed waste to them on conveyor belts. He won business plan competitions, found investors, dropped out of school and ramped up production. Only then did Szaky realize he had no money left to design and make packaging for his precious worm poop.

That led to his second breakthrough. Out of desperation - and not knowing it was illegal - Szaky started raiding recycling bins for soda bottles. The bottles came in four standard sizes, which meant he could run them through a bottling machine. To build up a surplus of bottles, he persuaded church and school groups to form "bottle brigades," which would collect bottles in their neighborhoods - legally - in return for small donations.

The unusual recycled packaging - worm poop in Coke (KO, Fortune 500) bottles! - helped TerraCycle's fertilizer stand out from the crowd. By 2007 it was being sold at Home Depot (HD, Fortune 500), Target (TGT, Fortune 500) and Whole Foods (WFMI, Fortune 500). But Szaky had decided that worm fertilizer was a niche product that would never grow faster than 20% a year - not bad, but not the explosive growth for which he had dropped out of Princeton.
Talk back: Do you think TerraCycle will succeed?

That's when Seth Goldman, the founder and CEO of Honest Tea, came along. Goldman had recently launched Honest Kids, a new line of organic juice in pouches, but feared that the nonrecyclable packaging would end up in landfills. "You guys are the trash people," he told Szaky. "Can you help me?"

Szaky bought some pouches and a sewing machine and got to work designing tote bags and pencil cases. Goldman loved them and agreed to fund "juice pouch brigades" at a penny per pouch. Szaky convinced Safeway (SWY, Fortune 500), Target and Walgreens (WAG, Fortune 500) to place orders for the bags and cases. The only problem: He had committed to manufacturing so many of them that he would need 10 million used pouches. The brigades were then delivering just 1,000 pouches a day.

After a few weeks of panic, co-founder Tator discovered the solution in British Columbia. The province, which required retailers to pay consumers who returned used juice pouches, was storing 20 million of them, pressed into sticky, smelly blocks. Tator persuaded the Canadian officials to let him take every last one to the U.S. in a fleet of rented trucks. "They looked at me like I was on crack," he recalls.

There was only one problem. The pouches Tator had procured were Capri Sun juice bags. A nervous Szaky booked a meeting with food giant Kraft (KFT, Fortune 500), owner of Capri Sun. The brand manager was charmed by his product ideas. Soon Szaky was fielding calls from the managers of other Kraft brands, such as Oreo and Chips Ahoy, who wanted to get rid of their waste packaging and bask in TerraCycle's green halo.

"The guy is full of great ideas," says Jeff Chahley, Kraft's senior director of sustainability. "How could you not like this?"

TerraCycle doesn't have the trash design market entirely to itself. Preserve, based in Waltham, Mass., has been making toothbrushes and razor handles out of Stonyfield Farm yogurt cups since 1996. Ecoist, which has its headquarters in Miami, started turning candy wrappers into handbags in 2004. But both remain very small plays.

"We're not the first people to think of this," admits Richard Perl, an executive coach who specializes in green companies and advises Szaky. "We are the first to scale it."

Two years after that first call from Honest Tea, TerraCycle sells 50 different products and is bringing more out at the rate of one a week. Szaky has agreements with nearly all of the 50 corporations that produce most of the world's nonrecyclable trash. (No other company holds the rights to reuse Coke and Pepsi (PEP, Fortune 500) bottles, for example.) The contracts are nonexclusive, and the original manufacturers reserve the right to nix products, especially when their branding is visible. But TerraCycle doesn't have to give them any kind of share in sales.

Meanwhile, the company's inventory is exploding. Szaky now gets help from 17,000 trash brigades with a total membership of 2.6 million, all working exclusively with his company. TerraCycle is set to install recycling systems in front of 10,000 big-box stores. Its suppliers are paying to have their brand names on the bins.

From the outside, it looks as if TerraCycle can do no wrong. "I think this is one of those rare instances where what seems too good to be true is actually that good," says Joel Makower, a green business consultant in Oakland.

But insiders know from experience that Szaky's frenetic dealmaking can lead to costly gambles. In 2008 Szaky reached an agreement with Target to collect its plastic bags and fuse them into a superstrong carrying bag, the ReTote, which Target is now selling for $5.99.

The ReTote was TerraCycle's highest-grossing product last year, but all 142,000 units were sold at a loss. Szaky decided that the only way to produce the ReTote in time was to outsource it to a domestic manufacturer that charged him $20 a bag. That accounted for much of the company's $3.5 million deficit in 2008. Szaky has since shifted ReTote production to Mexico, and he projects a $1 million profit for 2009 - assuming that TerraCycle can survive until the end of the year.

One brisk January evening, soon after the reality show wrapped, the cash-strapped Szaky made a presentation to a group of angel investors at an exclusive Manhattan club. He was looking to raise $3 million, which in turn would trigger the release of $2 million from other investors.

"If this meeting goes south," he fretted beforehand, "I'm in a boatload of trouble."

Szaky screened a rough cut of Garbage Moguls and delivered a treatise on the economics of garbage. Former Targus President Brett Johnson, the group's head and a new TerraCycle board member, told the group Szaky was "the most unique entrepreneur I've ever known."

Afterward, Szaky slumped against a wall, drained. "Let's see if they ante up," he said quietly.

It would be almost a week before the call came: The group would kick in up to $4 million. For now, the Tom Szaky reality show will go on.

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How Chef Nobu built his sushi empire

http://www.nobumatsuhisa.com/

As a young boy growing up in Japan, Nobu Matsuhisa dreamed of becoming a sushi chef in a restaurant where he could create his own menu. It took more than 30 years of experimentation, failure and incompatible business partners to reach his goal, as he worked his way from dishwasher in Tokyo to co-owner of a small sushi establishment in Lima, Peru.

And on one snowy night in Anchorage, Matsuhisa literally watched his dream go up in flames.

Today, Matsuhisa and his business partners, who include actor Robert De Niro, operate 22 restaurants around the world. The newest launched in Dubai late last year. Mexico City, Moscow and Cape Town are slated for restaurant openings this spring.

Matsuhisa, who continually travels the world to check in on his restaurants, recently sat down with Fortune Small Business to share his story.

When did you first know you wanted to be a sushi chef?

When I was 11 or 12 - a young boy in Japan - one of my older brothers took me to a sushi restaurant. I had never been to one, and it was very memorable. Back then sushi was expensive and hard to come by, not like today, when there's a sushi restaurant on every street corner and you can buy it in supermarkets.

I recall walking through the sliding glass doors into this tiny restaurant and immediately feeling the energy of the place as the sushi chef yelled out, "Irasshai! Welcome!" It was a very open, brightly lit place that smelled like vinegar and soy, and I remember the chef calling the names of fish and food - "toro! gyoku!" - for each order. You know how kids dream of being soccer players or actors? Well, my dream was to be a sushi chef.

After graduating high school in Saitama, Japan I moved to Tokyo and took a full-time job at a sushi restaurant called Matsuei, where I worked for nearly seven years. I didn't start cooking right away: For three years I washed and cleared dishes and cleaned the entire restaurant. I also went to the fish market every morning with my mentor, the master of the restaurant. I carried the basket, and he bought the fish. Back at the restaurant I would clean the fish. For three years every day was like this until one of the sushi chefs left and the master promoted me to fill his spot.

The days were long. There were times I wondered when I would be able to move behind the counter and start making sushi. But whenever I got fed up, I would remember why I chose the job in the first place: I wanted to prepare sushi for customers and make them happy. Also, doing all those jobs - dishwasher, busboy and so forth - made me tough, and today I am able to empathize with my workers.

Your early career included many hops to overseas places. When did you first decide to leave Japan, and why?

At Matsuei I met a Peruvian of Japanese descent who used to stop in for sushi about twice a year. One day - I was about 24 - he asked me quite seriously if I would consider moving with him to Peru to open a sushi restaurant. It was a dream come true, and I agreed at once. My father was a lumber merchant who died when I was seven. Whenever I felt sad, I used to stare at a photograph of him taken on the Pacific island of Palau, where he had once traveled to buy lumber. I wanted to be like my father. Staring at the photo I knew that I too would go overseas some day.

Lima was the perfect town for a sushi chef. With the Pacific Ocean nearby, fresh fish was never in short supply. And at the time - about 35 years ago - there were only three or four other Japanese restaurants in town. Yet Mitsubishi and many other big Japanese corporations had invested in Peru, so there were plenty of Japanese businessmen looking for good sushi.

I was a 49% stakeholder in the restaurant, but I had to do everything. Just as I had done during my apprentice days in Japan, I opened and cleaned the restaurant, put together the menus and made basic sauces. Back then you couldn't jog down to the corner store to buy fish paste or other specialized Japanese ingredients, so I created everything from scratch, through trial and error. A lot of what I experimented with in Peru became part of my repertoire later on.

Have you ever been to Mexico City and haggled with the locals over souvenirs? Well, in Peru you had to negotiate like that to get the freshest fish at the market. But the fishermen didn't sell everything they caught. Peruvians didn't seem to like eel, for example, which was a very common sushi topping. So one day I saw a beautiful piece of eel just sitting there, unpriced, and I asked the fisherman for it. He asked me what I wanted it for.

"Well," I said, "it's for my dog that I brought here from Japan. He's accustomed to eating eel every day, and now, because he hasn't had any, he's very homesick." The fisherman laughed and ended up giving me the 20 or 30 kilos of eel for just a few dollars. The next day at the restaurant, I made the eel into tempura and sushi, which sold really well.

I bought eel this way for a couple of weeks. Then one day the fisherman winked and asked me, "How's your dog?" It turned out that a chef from another restaurant had shown up looking for eel. The fisherman asked that chef if he had also brought his dog over from Japan. I wasn't surprised to see that the eel had been marked up to an astonishing price.

It sounds as though you enjoyed Peru. Why did you leave?

The restaurant did very well. We attracted loyalists from the Japanese embassy and lots of major trading firms. My wife and I had a daughter. (I had married before we left for Peru.) We lived in a palatial house with maids. Things were great, except that my business partner and I couldn't agree on how to run the restaurant.

I wanted to make people happy with my food. This meant buying high-quality ingredients and using only the freshest fish. But my partner was more concerned with profit - he told me to rein in food costs by buying cheaper fish. This was an ongoing fight for about three years, after which I decided to leave the restaurant entirely. Chefs are artists, and I couldn't be happy with my art if I was forced to use cheap ingredients.

You then moved to Argentina...

I floundered a bit for the next four years. I moved to Buenos Aires, where a friend found me a job as a sushi chef in a local restaurant. Having been a partner in my last restaurant, it was tough to work as an employee - especially in a country where the staple protein is meat, not fish. You could lead a wonderful life in Argentina because the cost of living was low. But so were wages, and the money that I had saved up began to disappear. I moved back to Japan after a year, when my wife became pregnant with our second child. I helped my brother at his factory and worked once again as a sushi chef in someone else's restaurant. But I knew I wanted another shot at working overseas.

I started asking acquaintances if anyone was looking for a good sushi chef. A Japanese actor who frequented the place where I was working recommended Alaska. He had friends in Anchorage, which was starting to boom because of the oil pipeline and because so many airlines had minihubs there; Alaska was the pit stop for planes flying from Asia to the Lower 48. He suggested we open up a sushi restaurant together in Anchorage, and I agreed. At that time I didn't really care where I was going. I just wanted to get out of Japan.

For months we worked without taking any time off. I helped with the construction, secured supply channels for ingredients and created a menu. I plunged into debt to launch the restaurant. But when we opened our doors a few months later (in October), it was busy from the start, very well received. My staff and I worked for 50 straight days.

That Thanksgiving I decided to close the restaurant and give all of us a little break. I went to a friend's house to eat turkey (and sushi!) and was having a great time when the phone rang. It was my business partner. "Nobu, the restaurant's on fire!" he yelled. I thought it was a bad joke, but he said it again. That's when I heard the sirens.

Dressed in only a T-shirt and jeans, I borrowed my friend's car and drove to the site, thinking it was a small fire that would be contained by the time I got there. But when I drove up, I was overwhelmed by smoke. Flames engulfed the building. You couldn't see anything but smoke.

The restaurant was finished. I had no insurance. I was deeply in debt. Two weeks after the fire I returned to Japan. I had nothing to do and no way to work off my debt. Alaska had felt like my last chance to make something of myself. It was as if all my hopes and ambitions had gone up in smoke with the restaurant. I fell into depression and started to think that the only way to get out of it was to kill myself.

But my wife and daughters depended on me. I decided to try one more time. If not for myself, I had to do it for them. This time I stayed in Japan for only a week. A friend in Los Angeles had just opened a sushi restaurant with his family, and he told me to get on a plane and fly to California. Leaving my family behind in Japan, I hunkered down and worked for my friend. Because of my debts, I was starting from below zero.

I worked there for two years, until I received my green card. That's when my friend turned to me and said, "Okay, you've graduated now." He kicked me out. But that was a good thing, a little push to help me get on with my life.

Was that when you started to think again about opening your own place?

Well, first I moved on to yet another restaurant, where I took a sushi chef position, with a bigger salary and more responsibility. I worked there for six and a half years and was able to save a little money. When the owner put the place up for sale, I knew it was time to take another plunge.

But I still didn't have all the money. Luckily an old friend loaned me enough to start my own restaurant. That was in 1987, nine years after the disaster in Alaska. I named the place Matsuhisa. My wife was my only business partner, and I was finally able to create my ideal cuisine. I bought the finest fish, so food costs were always high. For the first two years we accepted only cash - we couldn't afford a credit card machine. We didn't make a profit; at the end of each month we were able to pay rent, our vendors and our bills at work and at home, but that was it. I didn't mind as long as the customers enjoyed the food.

And they did. I didn't do much advertising, but we started to build up a reputation for great quality and service. Repeat customers brought in their friends. Our prices were reasonable, the food was interesting, and I was featured in Food & Wine magazine.

So you were finally happy?

Yes. We had seven employees including myself, and I had no business partner to argue with. It was a small place, but I loved it. Because of our Beverly Hills location, Hollywood stars starting visiting us soon after we opened. Robert De Niro was one of them. A year later he asked me to open up a restaurant with him in New York City.

I flew out to see the building he had bought - a big, warehouselike place - and stayed three or four days. He showed me the location again and started talking about the dream. But after all my bad experiences, I wasn't quite ready to take on another business partner. I agonized for a few days before thanking him and turning him down; he said he understood. And each time he visited L.A., he would stop by Matsuhisa and ask how I was doing.

Four years later De Niro called me at home. "How about it, Nobu?" he asked. I said no, not yet, maybe someday. But he came into the restaurant the next day, and I realized that he was waiting for me. I started to think, If he believes in me this much to wait for me all these years, then maybe he would be a good business partner.

In 1994, Nobu New York became our first joint project. The concept was the same as Matsuhisa, and the food had a big impact. It was always lively inside. We were able to serve delicious food without worrying about the cost.

People loved it, and I don't for a minute regret the effort I put into making both Matsuhisa and Nobu what they are today.

Budgeting 101

A Simple Way To Make A Few Bucks

NewsAlpha.Com Story

Budgeting 101

This really doesn't have anything to do with documentaries, but my friend Matt started free online budgeting tool that helps people spend less money and get out of debt faster. It's called Weekly Envelope. The idea is brainlessly simple - check it out - and it works (I use the very same system with one exception, I don't budget online, I have 4 physical envelopes with cash inside. Almost all my transactions nowadays are cash only, but you don't have to be a 'budgeting fundamentalism' like I am)

A Simple Way To Make A Few Bucks

PickyDomains.Com is a perfect example of how to turn one’s talent into a profitable business. With ever expanding Internet and tens of millions existing websites, finding an available domain name that’s not already taken by cybersquatters can be a real nightmare.

But one man’s problem is another man’s solution. Rather than to shell out hundreds or thousands of dollars for a domain name on the aftermarket, an increasing number of web entrepreneurs turn to professional “domain namers�?.

While most naming agencies charge a non-refundable fee that can be as high as $1500 for a corporate domain, one service that unites 17 professional domain namers from countries like United States, Russia, Australia and New Zealand, decided to offer a risk-free service that costs only 50 dollars per domain.

After 50 dollars are deposited, clients start getting a list of available domain names via e-mail for a period of 30 days. If they see a domain they like, they register it and notify the service about domain acquired. The individual, who came up with the name, gets $25, the other half going to the service. If no domain is registered, the money is refunded in full.

While the idea is brainlessly simple, it appears that PickyDomains.Com has no competition with its risk-free business model. But that is almost certain to change as more people find out that finding available domain names for other people can be a profitable business.

NewsAlpha.Com Story

Link of the day - Talent Is Overrated: What Really Separates World-Class Performers from Everybody Else

http://newsalpha.com/

Joe Petviashvili
CEO, News Alpha
Foster City, Calif.
Launched: December 2008
Former job: Programmer, serial entrepreneur

In August, I dropped my previous business idea. Since 2007, I had spend massive amounts of time building a Web site that aggregated and ranked news articles, but that space was already very crowded. Investors weren't crazy about it and it really wasn't going anywhere.

But being a serial entrepreneur, I decided to tweak the idea and immediately launch another venture, this time just focusing on financial news stories. So we got WhoMovedMyStock.com up and running - just in time for the financial collapse. People like hearing good news about their stocks, but they can't bear to look when things are bad. Our traffic fell off with the stock market.

From that experience, my business partners and I discovered that the stock market is influenced by the news, among other factors. So in December, we developed algorithms that analyzed words in the news articles. Out of that came News Alpha. It's an institutional tool aimed at helping hedge fund managers.

None of this has been easy. I have financed these businesses with my own money, mostly savings from my 7-year stint as a programmer for another company. We are almost cash-flow neutral, as we just got our first paying client. But to move forward, we need more and that's tough in this industry. We can't rely on word of mouth - in the hedge fund world, people keep the best things for themselves - and selling our product is a challenge because usually hedge funds think the tools they're using now are just fine. Not to mention hedge funds are not doing well in this economy.

So, obviously, we've had to keep changing our strategy. Ultimately, we'd love to start our own hedge fund firm instead of selling our technology, but right now we're just trying to survive. Expansion capital would be great as it would enable my other two business partners to leave their jobs. But we're not going to give up, even if we don't get it. I know that there's a huge emotional challenge that comes with starting a business. But right now, we're going to push on and ride out the ups and downs.

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California entrepreneur Bob Hertzberg picked a dark, overseas spot to house his bright idea.

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Startups defying the downturn

Link of the day - Talent Is Overrated: What Really Separates World-Class Performers from Everybody Else

http://sartindenny.com/

Chris Denny
Co-founder, Sartin Denny Productions
Santa Rosa, Calif.
Launched: August 2008
Former job: Marketer

Sometimes timing is everything. I had thought about starting a business for a while. My business partner, Dan Sartin, and I wrote a business plan, and I finally made the decision to resign from my full time job in August. But before I could give notice, my company laid off a large group of employees.

I would have liked to have spent another 30 to 60 days at my job, but my last paycheck was $3,600, which was a huge help to move us forward. Sure, starting a business with that money was a risk, but apparently so was being employed. I decided I didn't want my future to be dependent on the decisions of others.

As an event company, we didn't start out glamorous. We were bootstrapping everything. But things were going great. Corporate clients used our services for company events and families used us for large functions. Our client portfolio was really growing. But when the market started to turn, our clients started to scale back. We both have backgrounds in marketing, so we decided to take on side projects for business owners, helping with branding, Web site design, and advertising.

This part of our business was intended to be just a supplemental income, but it wasn't long before we saw some serious growth and decided to launch a spin-off company, The Engine Is Red. People are looking to take advantage of this down economy by expanding their marketing. Because some of our clients can't pay us now, we've taken them on in a profit-sharing arrangement so that our businesses can grow together.

With unemployment rising, we see a lot of opportunity to partner with a large network of artists, copywriters and graphic designers who are both available and affordable these days. This recession has taught us that it's imperative to be proactive and optimistic. It's not just cash flow we're watching, but every business practice - we have to plan with purpose and strategy, even if it means altering our business to adapt to the economy.

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When Giants Fall

Link of the day - I will pay you $25, if you come up with a cool domain name for me.

















Once the embodiment of prosperity, the United States now finds itself in a precarious position. With its financial system in shambles and global standing on the wane, many believe we are witnessing the end of the American era. In When Giants Fall, author Michael Panzner puts the coming age of post-American dominance in perspective, and addresses the far-reaching effects it will have on our lives, as well as the economic opportunities that will arise from it.

With this timely guide, Panzner describes how widespread economic changes—the product of growing conflict and wars, shortages, logistical disruptions, and a breakdown of the established political and monetary order—will impact businesses as well as investors, and discusses why individuals will be forced to rethink livelihoods, lifestyles, and living arrangements. He makes the case that for many people this will be nothing short of a modern Dark Ages, where each day brings fresh anxieties, unfamiliar risks, and a sense of foreboding.

However, for those enlightened few who understand what is really going on and what will likely happen next, the chaotic years ahead may well represent a singular opportunity—a time when you can realize goals you never thought possible and achieve a level of wealth and security that leaves you head-and-shoulders above everyone else. But to do this, you will have to understand how things got to where they are today and, more importantly, how they will play out in the future. When Giants Fall answers these and many other essential questions. From an examination of key economic, political, geopolitical, and social issues to the realities of earning a living, protecting and preserving wealth, running a business, and looking after loved ones, this practical guide provides a straightforward and comprehensive game plan for surviving—and thriving—in the uniquely unsettling years ahead.

The road ahead will be fraught with challenges that will be impossible for anyone to ignore or avoid—regardless of their current circumstances. But if you understand what's going on, set out a viable plan, and remain focused, you can get through these troubled times unscathed. Engaging and informative, When Giants Fall offers cutting-edge strategies and much-needed direction that will allow you to achieve financial security and stability in an increasingly uncertain and dangerous world.

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Rachel and Andy Berliner of Amy's Kitchen built a leading frozen-food brand by catering to busy vegetarians.

Link of the day - I will pay you $25, if you come up with a cool domain name for me.

http://www.amyskitchen.com/

Like many busy couples, Andy and Rachel Berliner turned to frozen dinners when home cooking wasn't on the agenda. One night in 1987 they came up with a better idea. The result: organic powerhouse Amy's Kitchen.

Based in Petaluma, Calif., Amy's leads the nation in prepared organic food sales and boasted 2008 revenues of $240 million. With Andy, now 61, as CEO and Rachel, 55, as head of marketing, the 1,600-employee company sells 140 vegetarian products, such as frozen black-bean tamales, in chains that include Kroger (KR, Fortune 500), Safeway (SWY, Fortune 500) and Whole Foods (WFMI, Fortune 500). The couple's daughter, Amy - born the same year as the company that bears her name - is training to join the family business. And it all began with a humble potpie.

RACHEL: My parents raised their own organic vegetables. Andy's first business was Magic Mountain, an organic tea company, which he sold in 1981. We were already committed to a healthy vegetarian lifestyle when I got pregnant with our daughter in 1987. Near the end of my pregnancy, I pulled a muscle and couldn't stand long enough to cook or shop, so Andy went to the local health-food store for some frozen meals...

ANDY: ...and they tasted like cardboard.

RACHEL: We had been talking about how to put our child through college and provide her with a certain standard of living, and we knew we wanted to do that by running our own business. We just didn't know what type it would be.

At the time potpies were the most popular frozen meal, so we decided to bake our own. My mother suggested that since we were launching the company to support our daughter, we should name it after her.

My mom, who's an amazing cook, came up with a vegetable and tofu potpie recipe. We spent hours in the kitchen, testing the recipe and then making about 100 pies by hand so we could debut them at a San Francisco health-food show in March 1988. The first day of the show, a handful of natural-food stores signed up for orders. But then we had to figure out how to fill them!

We asked an organic bakery near our home in Northern California to bake the pies for us, and we set up a makeshift office in one of the bakery's kitchens. We found local suppliers of organic vegetables, which were scarce back then. After about a month of searching, we made arrangements to buy veggies in bulk from a few independent California growers as well as Cascadian Farm, a Washington company that sells frozen organic produce. (Cascadian was independent at the time, but General Mills (GIS, Fortune 500) bought it in 1999.)

ANDY: To launch Amy's, we borrowed against Rachel's car, and I sold a watch and some gold coins. That raised about $20,000, enough to get us going. When we ran through that money and went for a line of credit, almost every bank turned us down. Only our local bank finally approved us, for $20,000. I learned later that when the loan officer reviewed our application, he was so impressed with our product that he predicted we would be the bank's largest customer someday. He was right, and we still bank with them.

A few months after our launch, we had too many orders and our bakery couldn't keep up. Its owners gave us 30 days' notice to find another site. We couldn't locate one that used quality organic ingredients, so we worked out a deal with that first bakery to let us cook potpies in the kitchen that we'd been using as an office. Then we ran a help-wanted ad in a local paper, which brought in five bakers, three of whom are still with us. Rachel, her mother and I all cooked together, with me carrying Amy around.

We could make just a few hundred pies a day by hand, and we had problems distributing ingredients evenly among the pies. I called the engineering department at Swanson - one of the nation's oldest frozen-dinner brands - and asked how they made potpies. I told them who we were and what we were doing, and they didn't feel threatened - it's not like I was asking for recipes!

Swanson's solution to the problem was a complex mechanical system, but the company helped us think about the process and the equipment needed. We couldn't afford a system like theirs, so we hired two extra employees for the assembly line. And when we finally bought a used pie machine from a dessert company, our output immediately increased to about 2,400 pies a day.

Our first real disaster hit in year two. Our freezer died, and our inventory started to thaw. When we checked our pies, only the tops had defrosted; they didn't look soggy or freezer-burned. We went ahead and shipped them. A few weeks later, distributors from all over the country were complaining about moldy potpies. The tops had turned completely black! Fortunately, the pies hadn't reached stores yet, but we had to throw away our entire stock. Thank God it was early enough in the life of the company that our total inventory was only 100,000 potpies. I think 200,000 would have killed us.

We had been pitching regular supermarkets for years, but it wasn't until big chains such as Kroger started carrying frozen health foods in the late 1990s that our business really took off. Sales grew 73% in 1998, to $32 million, after King Soopers in Denver and other grocers started placing orders with us.

We expect to be a billion-dollar company in five years. We're introducing about two new products annually, and we're looking to open an East Coast distribution center that will help reduce shipping costs.

Our daughter Amy, who's a junior at Stanford, will have the opportunity to take over. We've been approached a few times to sell, but we always say no. We want this to remain a family business, one that supports our values and pays Amy's tuition.

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Link of the day - I will pay you $25, if you come up with a cool domain name for me.



Chris Martenson, PhD, presents part of his Crash Course seminar on WGBY-TV (PBS) in Springfield, MA. The Crash Course teaches viewers how our economy, energy needs, and environmental concerns are converging, and will make the next 20 years very different from the last 20. Published in February 2009. Visit www.chrismartenson.com to see all the Crash Course videos.

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Link of the day - How PickyDomains.com Changed The Domain Game For Good

http://www.hotpinkpistol.com/

http://www.naughtysecretaryclub.com/

Hope and Jennifer Perkins are longtime craft entrepreneurs. As kids, the sisters fashioned earrings out of fishing lures and decorated T-shirts with puffy paint to sell at family garage sales. Later, working as a secretary at a stockbroker's office in Austin, Hope painted pictures on purses whenever her boss wasn't around. Jennifer was similarly unfocused on her secretarial duties. So the pair fired their bosses.

Now Jennifer, 34, sells handmade jewelry on her Web site, the Naughty Secretary Club. Hope, 30, sells clothes and handbags adorned with paintings of animals, desserts and dead rappers, among others, on her site, Hot Pink Pistol. The pair co-host a show, Styleicious, on the DIY Network. Jennifer teaches business classes for local artists and co-founded Babes in Business, a monthly meet-up for Austin businesswomen. Her book, The Naughty Secretary Club: The Working Girl's Guide to Handmade Jewelry, came out last August.

The sisters are part of the Austin Craft Mafia, a gaggle of business owners who share advice and ad space they couldn't afford individually. "More people notice you when you're part of a group," Jennifer says. Neither sister will reveal her revenue, but they haven't gone back to those day jobs.

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