Joe Lemay: How I Built A $50 Million Business Selling Reusable Notebooks

Founder Joe Lemay shares the story:

I remember taking a flight to Seattle because [the company I was working for] partnered with Microsoft on a project. I felt I had to get in the room with a whiteboard with these other engineers. Doing it online wasn't going to cut it.

So, that's what I started to solve first. I worked on a project called Rocketboard, which was all about sharing an ordinary whiteboard with no electronics except your smartphone and turning that into something that feels like a Zoom experience.

After we listed it on Product Hunt it skyrocketed to #2 and got 20,000 email signups. But the problem was it didn't work very well in its first iteration. I was churning users and running out of money waiting for this thing to create product market fit.

And I was like, ‘How can I use this app I've built to make some money before I have to throw in the towel?’

After a few days of thinking, I literally just woke up with the idea of a notebook. One where you can erase everything in the pages by putting it in the microwave for a minute.

[Then Joe saw a tweet from Jason Calacanis that changed everything]

“Jason said, ‘I'm looking for stealth startups to launch on my stage. Tweet at me what you got.’ 

I had not really shown the idea of Rocketbook to anyone. There was no website.

I tweeted at him and said, ‘I'll have a video at you by the end of the weekend.’

Then, I just spent the weekend making a video of the notebook. I made it look like it was able to scan and erase by putting it in a microwave.

But it did not actually do anything.

He's like, ‘This is great. I love it. You're invited to San Francisco, and you have to be out here a couple weeks in advance in order to rehearse to make it on stage.’

When we get on stage, I show everyone how the notebook works. You put it in the microwave, and it all erases.

People are like, ‘Are you kidding me? This is crazy, right? It's just a paper and pen notebook, but it all erases in the microwave?’

And I ask everyone, ‘Now, who here wants a Rocketbook?’ 

People raise their hands.

I'm like, ‘Great! You can buy it now or pre-order yours now on Indiegogo.’

That day we got about $2,000 worth of pre orders. The next day, maybe another $3,000, and we're like, ‘Hey, that's pretty cool.’

When we woke up on Saturday our phones went berserk.

It was just ‘ding, ding, ding, ding, ding!’ We sold $99,000 worth of notebook pre-sales that day.

Q: How did you go from those 2,000 initial backers to raising $1 million in funding from that campaign?

A couple of things were instrumental.

One is we had a product that was really worthy of people talking about, and our conversion rate was really good. Our copy and our video were effective.

We didn't really have any marketing budget, right? So we had to be irreverent, stand out, and capture people in the first 10 seconds of the video. We thought a good way to do that would be two dudes in sunglasses and an astronaut outfit throwing notebooks around Staples.

Because all these notebooks have just been sitting here collecting dust while other products have been innovated. There are smart helmets, smart shoes, and smart everything. But the notebook industry had been asleep at the wheel, and we're making fun of them by pulling a [paper notebook] off of the shelf and saying, ‘Hey, what is this? The notebook that Hemingway wrote in. That's cool, I guess,’ and tossing it.

We did not have permission from Staples to do this, so we dressed in our orange astronaut outfits that we got from Amazon and decided to do it until we got kicked out of Staples, but it took a surprising long time to get kicked out.

Q: In November, 2015 things started to take a turn for the worst. What happened?

Yeah, so we launched this crowdfunding campaign in March and had given an estimated delivery day of November. We thought that would be plenty of time. But the major [issue] was getting the notebook itself to work reliably in various microwaves.

The problem was that if you took one of our prototypes and put it in a microwave for a minute, the heat-erase ink would make it clear, and everything would work great, but if you put the same notebook in my microwave, it might not erase completely after one minute. And if you put it in someone else's, it may burst into flames within a minute because microwaves have different power levels.

We ran into some problems fulfilling it and getting it manufactured, and then I owed one of our vendors over $400,000 before they released the next batch of books as well. So I was kind of stuck. And what were we going to do? Tell the rest of the backers that, ‘Sorry, we're bankrupt. We can't deliver your product.’

Q: How did backers respond to the delay?

Some were patient, some were like, ‘Cool, this happens in crowdfunding.’

Others were like, ‘I want my money back.’ And I said no to everybody if they wanted their money back. I'm like, ‘This is a crowdfunding campaign. I'm sorry if you're mad at us, but we're trying to use all the funds to get everything out for everybody.’ 

Some people got extremely angry about that…

They're like, ‘I can't believe this. This is outrageous. You clearly have a million dollars in your bank account, and you're taking off for Jamaica. I want to f**ing k*ll you. You suck.’

My emotional health was at a really low point where I was like taking Adderall during the day to like keep going. I was just terrified that we wouldn't make it through, and I would look like a loser and have to go get a real job, and suicidal thoughts came up. I'm not saying I was on the brink of suicide, but it was one of the few times in my life when these intrusive suicidal thoughts were in my head at times.

Between making the product, I didn't even have time to respond to all of the comments because I just decided I was going to focus on the product. If I have to spend 15-20 hours in a day working on something, it's going to be working on this emergency, which is the product.

That pressure actually got us to figure out the problem, deliver to backers [and build new products that would help us reach a $50 Million exit].

For the full story, you can listen to my conversation with Joe Lemay on Apple Podcasts, Spotify, or by clicking the image below.