I just read the words "worm poop" in The Wall Street Journal. This is disturbing on a number of levels, some that have to do with journalistic integrity and others that have to do with general business practices. But mainly because it's raised my interest in a classic underdog story.
Tom Szaky, the 25-year-old CEO of TerraCycle, has gotten some good press over the last few years. He's part of a growing green movement that is looking to offer improved products made with organic materials and marketed to convince you to open your wallet. TerraCycle's main product is an organic plant food made from worm droppings. Last year, the company posted revenue of $1.5 million and is on the path of profitability. So far, so good.
Enter the villain, 139-year-old Scotts Co. Seems Scotts has taken issue with TerraCycle's packaging, product claims and advertising practices. So much so, in fact, that it has filed a lawsuit against TerraCycle seeking damages to include that TerraCycle destroys all existing labels and signage and asking that "all gains, profits and benefits generated from the alleged infractions be awarded to Scotts," essentially wiping out tiny TerraCycle.
For its part, TerraCycle insists that its natural product is superior to "a leading synthetic chemical fertilizer" and claims that Scotts' hold on yellow-and-green packaging is flimsy, at best. A point that would be easily demonstrated with a walk through your local lawn and garden store, says TerraCycle.
So what do you do if you're a 4-year-old startup, struggling to find profitability, and you're getting sued to extinction by a venerable market leader with 139 years of experience and annual sales of $2.7 billion? Panic, probably. But after you've calmed down, you might look to the Internet as the battlefield of choice. The barriers to entry are low; the distribution speed is simply unmatched; and the relevance is paramount. That's exactly what TerraCycle did. It launched a blog called Sued By Scotts (www.suedbyscotts.com).
One goal of the site is to raise funds to help TerraCycle mount a legal defense, but the primary purpose is to win in the court of public opinion. Szaky clearly understands this, and uses the blog to support his product claims, provide details on the suit and persuade visitors to join the fight.
The site contains such gems as a "David and Goliath" portrayal of the battle, delineating TerraCycle's corporate perks (unlimited worm poop) vs. the CEO of Scotts (use of the company-owned jet), photos of company headquarters (Trenton, N.J., versus Marysville, Ohio), and market share (infinitesimal versus 59 percent.) It also does a great job of helping TerraCycle make its case. (One classic quote from Scotts CEO Jim Hagedorn sets the stage brilliantly: "If people don't want to fight, and you want something bad enough, they'll let you have it. Without even fighting you." TouchÃ©.)
The site notes that, as part of the discovery process, Scotts wants documentation from TerraCycle, including everything related to product development, business plans, details on what they're feeding the worms, among other things. So even if TerraCycle manages to win the suit, the damage may be done, as it'll have already turned over a great deal of its intellectual property.
So far, the site has only generated about $500 in legal donations, but product sales are up 122 percent since the site launched. Of course, this may just turn out to be part of the "profits and benefits" that may be forfeited to Scotts. On behalf of little guys everywhere, I hope not.
Cota is creative director of Rare Bird Inc., a full-service advertising agency specializing in the use of new technologies. His column appears monthly. He can be reached at firstname.lastname@example.org.