Recycling Old Computer Disks Makes a Business, Trims Trash

EACH day, Americans drop an estimated 4 million computer disks into the trash.

David Beschen sees all that trash as an opportunity. Two years ago on Earth Day, he founded GreenDisk, a company that recycles floppy disks.

For Mr. Beschen, a sandy-haired former advertising executive, the key to his business's success he says is making a top-quality product and not just a product with an environmentally friendly label.

''Recycling has to be mainstream'' to be effective, he says, and that means keeping standards high. GreenDisk, with 25 full-time employees, is based north of Seattle in Woodinville, Wash. Much of the work occurs in a warehouse, where each month about 1 million disks are processed.

On this day, workers open boxes of obsolete software that customers never purchased, separating out paper guidebooks for recycling and running disks through a ''degausser'' that magnetically erases them. Several employees examine each disk to weed out any that are warped or cracked.

The blank disks are then farmed out to software manufacturers where the disks are reformatted (prepared for use and tested). GreenDisk labels are added and the disks are repackaged for sale.

GreenDisk does collect disks that have been used. But it focuses on the never-opened packages of pristine software (which amount to about 60 million disks a year) primarily because software publishers use higher quality disks than those typically sold to PC owners for personal use. So the recycled product is actually better than most disks sold in retail stores.

To assure suppliers their software won't get into black-market channels, GreenDisk provides firms with audit records to show that the disks have been erased before resale.

In the last 12 months GreenDisk drew in 5 million pounds of this software, which Beschen calls WORN (written once, read never). The company also recycles the clear plastic ''shrink wrap'' covers -- into a durable filling for archery targets.

So far customers are largely government agencies and companies that have ''buy-recycled'' mandates, from Chrysler Corporation to the states of Pennsylvania and Oregon. Currently dealers in 14 states sell GreenDisks. This month Egghead Software, a computer retail chain, will begin stocking the disks in many of its stores.

''There's been no problem with them,'' says Elizabeth Sumption, a purchasing specialist for Recreational Equipment Inc. The Seattle outdoor-gear retailer buys GreenDisks for its internal use in 40 stores nationwide.

Now GreenDisk is embarking on new lines of business: recycling disks that have been used by consumers and recycling CD-ROM disks, which are used increasingly alongside ''floppies'' as a storage medium for software.

Since used disks cannot provide the quality standards Beschen wants, they are broken down into their component parts and remade from scratch. The plastic and metal will be melted down for recycling. New data-storage media will be used in these GreenDisks.

''From the user's standpoint, they will function the same'' as other GreenDisks, says Joel Petersen, GreenDisk vice president. ''The difference is just the story behind them.'' The old storage media is shipped to China where it is cut into magnetic strips for credit cards there.

Several companies interact with GreenDisk on both sides of the recycling ''loop.'' Battelle Pacific Northwest Laboratories in Richmond, Wash., for example, buys GreenDisks and also has a contract with the company to take used disks for recycling.

''They give us that recycling service at a very cost-effective level,'' compared with dealing with it in-house, says Michael Kanyid, a technical administrator at Battelle.

Eventually, Beschen plans to have collection boxes in stores such as Egghead for people to drop off used disks.

The business promises to expand not only with the growing market for computers, but also as software products become larger, taking up more and more disks.

Beschen plans to open facilities in other computer hubs, such as Chicago and California, within the next 60 days. Within a year, he plans 10 facilities that will be financed with a private placement of equity. Beschen and a few other insiders financed the company's start-up.

Currently, two Seattle-area facilities process about one million disks a month, of which more than 98 percent are recycled or reused.

Promotional videotapes, for example, are run through the magnetic degausser and then returned to software companies. Three-ring binders are given to schools.