February 27, 2024 • 51 mins
In 2016, Joe Lemay's balance sheet for Rocketbook was -$400k, and no VC would touch him. Bootstrapping was his only option. After four years of sweat and tears, he and his co-founder, Jake, built the company to a +$50M exit. This is the story of Rocketbook.
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(00:00):
And then we just, like, ran out of money.
(00:01):
And I owed, one of our vendors, like, over$400,000 before they were re released the next
batch of books as well.
So it was, like, kinda stuck.
Right?
And what were we gonna do?
We do tell the rest of the backers that sorry.
We're just bankrupt.
We can't deliver a product.
You just heard from Joe Lemay.
(00:23):
He's the founder of a company you might haveheard of before.
It's called Rockabook.
A reusable notebook company that exited to BICfor over $50,000,000.
This is a story of how he and his co founderJake took the company from over $400,000 in
debt to an 8 figure exit.
And without any further ado, This is myconversation with Joe Lemay.
(00:48):
I'm gonna start this episode with one of yourposts on LinkedIn.
It starts with in 2016, my balance sheet wasnegative $400,000 and no VC would touch me.
You were receiving death threats from peoplewho funded your crowdfunded campaign.
But just 4 years later, you climbed out of thehole and sold rocket book a reusable notebook
(01:08):
company for over $40,000,000.
To understand that journey, I wanna start withwhat you were doing before rocket book.
When you're working at Salesforce, you'reactually one of the first people selling
software licenses when you came up with theidea for a reusable notebook.
Can you tell us a little bit more about thatstory and how rock the book gets started?
(01:29):
Yeah.
When I I was, You know, I I spent most of mycareer in technology, first as an engineer, and
then over on the enterprise sales side, youknow, always always like technology that was
selling into businesses, right, as opposed toconsumer technology.
But as an engineer, as a salesperson, I was anotebook person.
(01:50):
I was a whiteboard person, even though I hadtechnology, I'd I really gravitated to those
media in terms of, like, jotting down orsharing ideas.
And I even remember really taking a flight toSeattle just because I was, as an engineer,
partnered with, Microsoft on a partner, on a,on a project we were working on.
And I just, like, felt like I had to get in theroom with a whiteboard with these other
(02:13):
engineers.
It's like, and something online wasn't good,wasn't gonna cut it.
So that just kinda got my, like, got myinterest in solving a problem around, like,
whiteboard.
That's actually what I started to solve first.
And, I started working on a project that Icalled Rocket Board at the time, which was all
about just being able to share an ordinarywhiteboard, just your markers, just your
(02:37):
whiteboard, no electronics, except yoursmartphone, and be able to sort of turn that
into something that feels like a Zoomexperience with your whiteboard.
It went pretty high one day on product hunt.
It went to, like, number 2 when it was listed.
And I got, like, 20,000 email sign ups for it.
But the problem was it didn't really work verywork well in its first iteration.
(02:59):
There was a lot of image enhancement, streaminggoing on, and it's just it was its first
version.
So I was churning users, and this was justsomething I was for a while, just doing on the
side.
But I was, like, running out of money, waitingfor this thing to create, like, product market
fit, Brian.
I was like, how can I use this things app I'vebuilt to actually, like, make some money before
(03:22):
I have to, you know, for when the towel?
And at one point, I had quit my job and beenfocused on this.
And then I was like, you know, focus a short,short runway based on how much savings I had.
I just had a few $100 in the bank, and I wasspending on, on developers to help me build
this too.
And then that started to become, like, prettyclose to nothing.
And I when I was like, how can I actually takethis technology and do something with it?
(03:46):
I just, like, took a walk, took some space awayfrom what I was building.
And, after just a few days of just, like, justthinking and and, like, I'd I literally just,
like, woke up with the idea of, like, anotebook.
So I had built an app that that did somescanning of of a whiteboard.
Why not scan paper and make like a scanningapp?
(04:09):
And Then I thought, how can I make it really aspecial notebook so that the the paper, the
pages itself, maybe had some special markingson it?
Right?
Is at the time, I was in love with the idea ofcrowdfunding.
And, and I knew I wanted to be able to sell aphysical product that people could buy on
crowdfunding.
(04:29):
And maybe that's something that, you know, Icould, you know, maybe raise a $100,000 on
crowdfunding if I came up with a cool coolproject and then be able to go back to rocket
board.
Right?
So that's where I was where I was.
And and so I was like, alright.
If I take a notebook, and I build my ownscanning app for it, but it does some special
stuff.
Maybe I'll have, like, some special, like,markings down at the bottom of the page here.
(04:52):
If you mark it and then scan it in, it'llinstantly send it to somewhere where you've
preset, like, your math, folder notes inside ofDropbox or your some email address based on
these 7 markings on the bottom of the page.
And that's that was the first idea that I hadthat would make it a proprietary notebook that
worked with a proprietary scanning application.
(05:14):
And then from there, I was thinking, like, howcould I, you know, make this even a more badass
notebook?
So you know, through through the years, youknow, doing things like, like OCR and character
recognition, auto titling your pages andetcetera, etcetera.
Doing more things with your handwritten noteswas the name of the game.
But I really just had the idea for just aproprietary markings on a page and notebook I
(05:38):
was thinking maybe now that I'm scanning it in,I could wipe it down like a whiteboard.
So I was looking at whiteboard, technology, youknow, just to be able to, you know, make your
notebook like a whiteboard.
And I thought that that would be the firstthing that I'd launch.
And I went, Madan Calicanas, who is well knownfor, you know, now for the all in podcast and,
(05:59):
you know, a lot of startup stuff.
He was having a launch festival And he invitedme, he basically, I got an invite to launch
this product on stage at his launch festival.
And as I was demoing it to him and to some VCsat, at Sequoia, who were just like like helping
(06:20):
him out during some some rehearsals for the bigevent, he he asked me, or they asked me, you
know, what's going on with the notebook?
Is it gonna, you know, you're gonna have, like,new versions of it?
I said, yeah, I think maybe we'll launch onewhere you wipe it off.
Another one, you know, we've got otherinnovations for the notebook coming.
And and he said, stop right there.
Like, who the fuck do you think you are?
Do you think you're the Elon Shamus ofnotebooks?
(06:41):
Like, don't be vague.
Right?
A soy collier venture capital and asked youabout your, your roadmap.
I said, okay.
Well, one of the ideas I have is that I'vefigured out a way to make this notebook such
that when you wanna erase it all, you couldactually just put it in the microwave for,
like, a minute, and it'll all erase.
And you can reuse that notebook over and over.
(07:02):
And he was just like, stop.
That's the only cool thing you said all day.
Like, that has to be your product.
You're not allowed on my stage.
Unless that's, like, your product.
So just make that your product and announce it,you know, in a couple weeks when you go on
stage.
And I went back through an Airbnb.
I was staying in with my friend Jake at thetime.
And I said, I think I could we could make thishe wasn't even officially my co founder at the
(07:26):
time, but he was like, I think we could do it.
I just if we launch a crowdfunding campaign,which we were gonna do right on when we're on
stage, And we just give ourselves a lot oftime.
We can figure out how to really make this thisnotebook, because I had already figured out the
prototypes of it, just making safely and doingit at scale and things like that and properly
testing it was was was gonna be a trick.
(07:46):
So we're We're on stage.
It's like 2015, right, at the launch festival.
And at the end, like, I show everyone how thisthing works, You put it in the microwave at all
erases.
People are like, are you kidding me?
This is crazy.
Right?
It's just a paper and pen notebook, but it allerases in the microwave.
And I tell everyone, Now, who here wants arocket book?
(08:06):
And I get people to raise their hands.
I'm like, great.
You can buy it now or pre order yours now onindiegogo.
Go get it.
And then Jason kind of made a noise.
Like, he did not think that that was a coolthing to do, like, to use the stage to launch a
crowdfunding campaign, I think.
But But so be it.
We did we did it.
We pulled it off.
I think, you know, that day, we got, like,somewhere, like, $2000 worth of preorders.
(08:28):
The next day, you know, maybe another $3000 andwe're like, that's pretty cool.
But and it would it's very cool when you have acrowdfunding campaign and then you get a a
backer who, you know, paid for your product,even though you're not ready to send it to
them, and the little notification comes up, ading on your phone.
It's super cool.
But Saturday woke up, and it was like ourphones went berserk.
(08:50):
It was just we we sold $99,000 worth ofmicrowave to erase no no book presales that
day.
Quick question.
So before we get to you raising that money andand and going viral and indiegogo, How did you
get that invite from Jason Calakanas to speakon the stage?
(09:11):
Cause I'm sure it's it's pretty difficult forstartup founders, to do that.
Right?
Or
Oh, yeah.
I saw a tweet by him saying, hey, I'm lookingfor stealth startups to launch on my stage, you
know, tweet treat at me, which he got.
And at the time, my product that I call therocket board had been out there.
(09:32):
So it wasn't it wasn't stealth.
But this idea of Rocket Book, I had not reallyshown to anyone.
There was no website.
So I, I tweeted out him, and I said, I'll havea video at you by the end of the weekend.
And then I just spent the weekend, like, makinga video of this thing.
I made it kinda look like it worked.
Like, I had it scanning.
(09:53):
I had it doing things, organizing things, butit was a complete paper tiger.
It did not actually work or do anything.
You know, I put it in the microwave press go,cut You take it out, and it and it's all
perfect, etcetera.
Right?
Or maybe there wasn't a microwave in the video,but, but, like, the app looked like that
worked.
It was it was a complete, you know, just just avideo, MVP.
(10:14):
And he's like, perfect.
This is great.
You're in.
I love it.
You know, he's like, I've tried to get my teamto use live scribes.
I've tried to get them to use other note takingapparatus.
You know, if you can make this work as aproduct, I'd like to see this like, happen in
the world, you're invited to San Francisco.
And you have to be out here a couple weeks inadvance in order to, you know, rehearse and
(10:35):
you're not you know, you have to do a good jobin rehearsals to actually make it on stage,
etcetera, etcetera.
So long story short, got that invite and andgot on stage there.
And he was he was pretty excited.
He was like, hey.
You know, you guys, you guys are gonna have agreat demo.
You could win, like, best, demo.
You know, he had he had various or bestpresentation or something like that if you guys
(10:57):
crush it.
And we worked really hard, and we gave a greatpresentation.
I mean, it was it was just like, it was just sofun.
It's available on YouTube.
But I think the the move of us launching ourcrowdfunding campaign, like, while we're on
stage was a little bit too much for him.
So nobody got a best presentation award thatyear, when everything was said and done.
(11:18):
And during that process of the demo andactually meeting Jason and all that kind of
stuff, what is one thing about that processthat surprised you or you thought?
That was unique.
Yeah.
I mean, it was really cool for me to meet himwhen I, started my startup and, like, when I
started working on stuff in 2013, 2014, therewas not a lot of media about startups.
(11:42):
Right?
And so, you know, I had promised myself to juststop listening to any news, not not sports guy
anyway, but just only pay attention to contentthat's gonna educate me and inform me and make
me a better founder.
And so this weekend startups was just on my onmy rotation constantly.
And I love that podcast because it just beingin a room virtually, another podcast other
(12:07):
founders.
I just felt like maybe I could absorb stufffrom them.
Right?
You're you're you're a lot like the people youspend time with, as they say, but even people
you, like, you know, listen to podcasts with.
So that was just my my thing of educatingmyself and putting myself in in that.
And so when I met him, actually in person.
It was really cool.
You know, he's a very, he's a very directcandid, provocative type of guy, you know,
(12:33):
calls, like, when he said to me, like, who thefuck do you think you are?
Elon Musk and notebooks.
Like, that's so on brand for him.
What I really appreciated about him, was hejust has a lot of opinions.
And he's like, he would just Someone would givea pitch.
She'd like, stop.
No.
Here's how you need to pitch it.
You need to highlight boom boom boom boom boom.
(12:54):
You'd break it down, and, like, that founderwas just left better off.
Because his opinions were, you know, for themost part, really good because he spent so much
time in media and with startups that he's seeneverything, right, in his neural net for how to
pitch a startup is super strong.
And I really appreciated that about him.
And, you know, the fact that he gave us an toget some exposure on the stage, I'll, I'll
(13:18):
always appreciate, you know, him him for that.
And after you got that exposure, you got the II believe he said those 2000 initial backers.
You launched on indiegogo.
How did you go from those 2000 initial backersto then raising, I believe, like, a $1,000,000
in funding from that campaign.
Yeah.
We, a couple things were instrumental.
(13:39):
One is we had a a product that was reallyworthy of of, like, people talking about really
worthy of word-of-mouth.
So a paper and pen notebook is something thateveryone has used.
And now taking that product and inventing it,such that it has an app that goes with it, and
you put it in the microwave to erase Like, thatwas just fundamental to be able to create buzz
(14:00):
about this, a gimmick, if you will.
Right?
It was it was gimmicky.
But it but a good gimmick that really worked.
That day where we got $99,000 worth of sales,what had happened was indiegogo had decided to
us to, like, feature us in their, in theirnewsletter.
So it went out to all these indiegogo backers,and they just jumped aboard.
(14:23):
Madan then once that had, you know, got intothe 6 figure range, then when we started
emailing people in the press, just there wasreally good uptick for people wanting to cover
this product, and we got just a ton of coveragefrom it.
And this was probably this is back in the day2015.
(14:46):
People were starting to no longer cover crowdfunding campaigns because so many people have
been burned on failed crowd funding campaigns,but it wasn't a hard rule at the time with a
lot of reporters.
And this was a zany enough product that plentyof reporters would cover it.
And then our conversion rate was really, reallygood.
Our copy, our our, our video was effective.
(15:09):
We used things to, like, pull people in, on thevideo and even just starting off the video
with, like, what if question What if you could,you know, write an a pen and paper notebook?
And then instantly, all of those notes were,you know, available to you in the cloud.
What if when you were done with that notebook?
Just with the push of a button, it wasinstantly erased available to reuse, right,
(15:31):
that type of stuff that what if questions getpeople intrigued and interested in, like,
learning more and pulled them further andfurther into the to slip inside of watching the
video.
And then by the end of the video, people werelike, boom click by, I've got a their thought
process was more like, hey.
I've gotta try this product.
It's so unique.
And there are actually some of the videos thatyou did were actually super unique, especially
(15:55):
compared to other product videos at the time.
I believe one of which was in Staples where yougot kicked out.
Could you tell, could you tell that story?
Yeah.
Yeah.
So We this was our 2nd big product.
We had, decided when we came back from sharktank and and and been basically laughed off of
(16:17):
off of shark tank.
I decided we've gotta get another product outthere ASAP.
And so we launched our next product, and thisone is now called the rocket book core.
It is the one that, you know, 99% of people buywhen they buy a rocket book today.
It's a product that you don't put in themicrowave, but rather, just a little bit of
water and your writing comes off perfectly onthe page.
(16:41):
Because it's like synthetic paper with proper,coatings on it to make it a good writing
experience.
So when we launch that, video, we decided wewanted to, like, go down the staple do it on
the isle of Staples.
So it's me and Jake just walking down theisles, pulling notebooks, off of the aisle and,
like, making fun of the notebook industrybecause all these notebooks have just been
(17:04):
sitting here collecting dust.
While other products have been innovated, youknow, the smart helmets, the smart shoes,
they're smart everything.
Right?
But the notebook was Notebook industry has beenasleep at the wheel, and we're making fun of
them and pulling up, you know, a mole skin offof the shelf and saying, Hey, what is this?
The notebook that Heminway wrote in, that'scool, I guess, and tossing it.
And so we're we're, we did not have anypermission from Staples to do this.
(17:28):
So we just dressed in our orange astronautoutfits that we got off of Amazon, right, and
we just decided to do it until we got kickedout of staple.
But it took a surprising long time to getkicked out of Staples.
I think it was like our our 12th take or our13th take where I was saying to myself, like,
when are they gonna kick us out?
But finally, the manager came over, and he wasactually pretty cool.
(17:51):
He was like, hey, guys.
Like, I see what you're doing here.
You can't do this anymore.
And so, we're like, alright.
Thanks, buddy, and we got out of there.
But that was just a fun way to, like, use wedidn't really have any marketing budget.
Right?
So we had to be irreverent.
We had to stand out.
We had to capture people in the first you know,10 seconds of the video, and we thought a good
(18:13):
way to do do that would be, like, 2 dudes insunglasses, in an astronaut outfit, throwing
notebooks around the notebook aisle of Stapleswas a good, was a good start.
Right?
And then we got into, like, we made peoplechuckle and then, boom, hit them with what the
product actually does when they're open, andthey they think that these guys, at least can
(18:34):
entertain them.
And maybe enough to to to listen to what wehave to say.
And then we've thought about the notebook andhow to reinvent it and you know, then we got
great conversion rates off of that.
Yeah.
And even like you said, the video was lowquality, but the script was actually excellent
as storytelling.
And I think that's sometimes something foundersmiss.
(18:54):
And is that they think they need the bestequipment, the best editors, and I think
although that could certainly help, it's morelike icing to the cake.
It it none of that really matters if the storyor where the cake really isn't there.
I wanna get to, 2015, in November of 2015, youguys plan to launch the rocket book wave.
(19:14):
But when November comes around, the backerswere anxiously waiting and still crickets.
That's when the heat started to turn up whathappened.
Yeah.
So you could imagine, we had launched thiscrowdfunding campaign in March and had given an
estimated delivery day of November.
(19:35):
We thought that that would be any of time.
We had some work to do to build out the app andand complete the the app and the scanning
process.
That was harder than expected.
As you can imagine, you know, building an yourun into issues and delays and things like
that, but that wasn't like a major thing.
But the the the notebook itself and getting itto work reliably in various microwaves was a
(19:57):
problem.
So the problem there was that that, you know,if you took a notebook, one of our prototypes,
and I put it in your microwave for a minute.
Maybe it would all the the the, heat to eraseink would all turn clear and everything would
work great, but the same notebook in mymicrowaves It might not erase completely after
(20:20):
one minute.
And if you put it in someone else's, it mayburst into flames within a minute, right,
because there's just different power powerlevels, different hot spots in every microwave.
So as we tried everything, and you gotta Madan,we're trying every combination of paper, every,
as you can imagine, like, every thickness ofpaper, every coating of paper, every
(20:45):
combination of that with different covers.
We tried synthetic papers.
We tried synthetic papers with, silicone coverssilicone doesn't actually turn warm in the
microwave neither do a synthetic, but if wecould embed it, the silicone with a little bit
of, graphite, for example, then it could absorbsome just the right amount of, the energy.
(21:05):
And then maybe it would turn everything, youknow, and turn everything and get to the right
temperature.
We tried something called Garelite.
Like, we have product development firms we wereworking with.
We were spending a lot of money trying to comeup with something that worked fairly reliably.
And, finally, we found a system that was wouldproduce a reasonably effective cost of goods
(21:29):
sold.
So we sold this thing for, like, I think it was$27 something like that, 25 or 27 bucks.
Some of the prototypes we made would have hada, after we're doing development, would have
had a cost of goods sold for, like, over $30.
So we would have been bankrupt immediately.
If we decide to go into that direction, like,with something called Garrelate that I
mentioned.
So we had to cross different things off of ourlist.
(21:51):
But I gotta give my cofounder Jake a lot ofcredit because he came up with a lot of this
solution, but, just the idea that you could putthis thing in the microwave.
And then but if you put in with it and on topof it, a little mug of water, What that would
do is that water would absorb a lot of themicrowaves, and it would just slow everything
(22:12):
down.
Right?
And then instead of giving somebody an amountof time, like, hey, after one minute, which
would which wouldn't work in some microwavesand would be too hot on others, we said, just
watch it.
And we we put a chroma, a thermochromic logo onit.
So when that turn went from a from, blue toclear, now it was ready to take out of the
(22:34):
microwave.
Right?
So now we finally had a universal system thatworked with cellulose paper and worked very
reliably across, you know, a huge spectrum ofmicrowaves.
And then we were ready to ship.
And then we were, We basically had, we wereable to get about, like, maybe half of them out
(22:56):
a third or half of them out until we just,like, ran out of money completely.
And We, yeah, we we ran into some problemsthere just, like, fulfilling it, getting it
manufactured, and then we just, like, ran outof money.
And I owed one of our vendors, like, over$400,000 before they were re released the next
(23:17):
batch of books as well.
So it was, like, kinda stuck.
Right?
And what were we gonna do?
We tell the rest of the backers that sorry.
We're just bankrupt.
We can't deliver your product.
One thing we did to get out of the situationwas we went over to Kickstarter, and we we
started a new Kickstarter over there.
(23:38):
And we almost got kicked off on Kickstarter fordoing this.
So what we did was all of the rewards were thewas the same product.
You would get for $27 a rocket book wave.
But the project that we were funding was, Youknow, some integrations with slack, with
Dropbox, things that we hadn't didn't haveintegrations for before.
(24:01):
And fortunately, thank god, you know, thatthing raised just enough money to, like, get us
out of the hole.
So we were able to deliver on that crowdfundingcampaign and use the profits of it to fund the
stuff that we, like, couldn't ship, and we justsqueaked out of bankruptcy.
It was, like, so close.
And we were able to ship everyone their booksthat got.
(24:23):
And during that delay, in November, how did howwere backers adding to it.
What what was the feedback you were gettingfrom them?
Some were patients.
Some were like, cool.
This happens in crowdfunding.
Others were like, I want my money back.
And I'm not, you know, I just said no toeverybody if they wanted their money back.
Like, this is a crowdfunding campaign.
I'm sorry if you're mad at us, but we're tryingto use all the funds to get everything out.
(24:46):
For everybody, and some people got extremelyangry about that.
But I just made the decision.
You know, I didn't have I would have liked tohave said, oh, customer service comes first.
And I need to take care of my customers.
And if someone asked for a refund, give it tothem, but I Madan wanna start, like, a run on
the bank and actually have it jeopardize thewhole project.
And give a few people a refund and thereforejeopardize giving everyone else their product,
(25:10):
right?
My job was to get this product out even ifpeople are pissed at me along the way.
That was what I decided.
And then others were just absolutely livid.
They're like, I can't believe this.
This is outrageous.
You know, you clearly have a $1,000,000 in yourbank account and you're, like, taking off for
Jamaica.
I wanna kill you.
You suck.
You know, all these, like, direct messages orcomments or comment threads.
(25:32):
And, I didn't even have time.
I didn't between, like, making the product.
I didn't even have time to, like, respond toall of the comments because I just decided I'm
gonna focus on the product.
If I have, you know, if I have to spend 15, 20hours in a day working on It's gonna be working
on this emergency, which is the product.
And these other people are gonna have to dealwith, you know, terrible customer support until
(25:53):
until I, you know, found somebody to help uswith customer support.
So, yeah, they were at super some of them weresuper super angry.
And then others, you know, that They don't careat all.
Right?
They spent $27 on something many months ago,and they didn't notice.
But the people who are vocal, they want tocatch your attention.
So they'll say things that, like, they'llaccuse you of being a scammer.
(26:16):
So that just so that you'll respond, right,probably.
But it getting, like, death threats, basically.
And then when we launched that Kickstartercampaign, and I did reach out to some press
that I thought was friendly in the Boston area.
Boston O was one of them.
And they just, like, wrote bad press about us.
And we probably deserved it.
Right?
We're launching 1 crowd funding campaign whenwe hadn't fulfilled the other crowd crowd
(26:40):
funding campaign, and Kickstarter did not likewhat we were doing at all.
They're like, you can't do a crowdfundingcampaign for a product that already exists,
right, that you previously did.
And my explanation was, no, the project thatwe're funding doesn't exist, the new
integrations.
The rewards are the same.
So they were like, we are really close tokicking you off, but we're gonna let this fly.
(27:03):
But they didn't promote us.
They kinda, you know, subdued us in the searchresults and things like that, but we're still
able to raise, I think, well over $400,000.
And so you were receiving these death threatsbeing called a scammer.
One reality, you and the rocket book team wereon the other end, putting out fires almost
literally.
Literally.
Yeah.
(27:24):
And everything was on the line to get productout to backers.
Yeah.
Did that impact what you were feeling at thetime in your emotional health?
Yeah.
Definitely.
My emotional health was that it's at a reallylow point.
I was at a point where I was, like, takingAdderall during the day to, like, keep going,
right?
And then at night, like, late at night to comehome and have some drinks to to, be able to
(27:50):
comp myself out.
That was a really terrible pattern.
I I was just terrified that we wouldn't make itthrough and that, you know, I just would look
like a disgrace and look like a loser.
And have to go get a a a real job, but now witha big, you know, loser mark after having tried
to sell, like, having tried to create a companyand failing.
(28:12):
And I was like, just suicidal thoughts came up.
Right?
I mean, I'm not saying I was on the brink ofsuicide, but It was one of the few times in my
life where, like, these intrusive suicidalthoughts were in my head at times.
And I remember I would often go to other crowdfunding campaigns that were struggling and read
(28:33):
the comments on their on their project, whichwere terrible, which were mean and terrible and
horrible.
And, it would give me solace to know that Iwasn't the only one.
Everyone else out there was struggling in in asimilar way for the most part.
Yeah.
And then I but I do remember when we wereactually, like, when we got most of them out,
(28:55):
like, 90% of them out, and we were no longerbankrupt.
That was an amazing feeling.
And, but, you know, we still had peoplemessaging us from time to time who had,
problems with the product.
Sometimes it would not burst into flames intheir microwave, but maybe get a little brown.
Right?
And we'd have to ship them a new one.
(29:16):
Sorry about that.
Be careful.
Time, things like that.
When we came up with our next product, which wewith the crowdfunding campaign, we called it
the EverLab but now that there are sometrademark issues, so it's now called the rocket
book core.
That did not go in the microwave, and it workedreally well.
Like, the erasing of the ink work very, verywell.
(29:37):
And it is a very highly rated, product to thisday on Amazon elsewhere.
And that was a gigantic relief to me that ourmain product was no longer something that
somebody could put in the microwave.
And potentially, like, burn down their house oror something like that.
Right?
Yeah.
So If
you could give, like, one piece of advice toyourself during that dark time, what would you
(30:02):
say?
You know, part of me wants to tell myself,like, it's gonna be okay.
But I don't know if if that would actually beproductive because I think part of the panic
(30:25):
and having our backs up against the wall isactually what made all of this possible.
In hindsight, if we had not done thiscrowdfunding campaign in this way, the product
may never have existed.
Meaning, let's say my intent was to, like,let's say I had a $100,000 in a bank account or
a couple $100,000 to to make the book, and Ididn't need crowdfunding.
(30:47):
And I set out to make a microwave to erasenotebook.
I think eventually I would have just given up.
It was hard.
It was really, really hard.
Easy in hindsight, but it was really hard to tofigure it out.
But what kept us going was that tens ofthousands of people had preordered thing and
had expected it that we had promised it tothem.
(31:07):
And just we had we were we had our backsagainst the wall.
And the idea of not delivering freaked me out.
Right?
So just that pressure actually got us to tofigure out the problem.
So, I mean, if I could really go back in time,I would maybe hand the design that ultimately
(31:29):
worked to Joe Lemay, so he didn't have to gothrough this.
Right?
But that's not really, like, universal advice,is it?
Maybe I would tell myself, like, to relax.
Maybe I would tell myself to, I would tellmyself to figure out how to get cut drinking
out of my life, which I I did later.
(31:49):
But I've I've definitely used it as a crutch,and in healthy and unhealthy ways.
And I think it's, then something that I don't Idon't abstain from it completely.
Anymore.
Like, I'm not a a total, a 100% sober, but Ikeep my distance from it now.
Whereas before, it was a daily part of my lifeand part of my, a coping mechanism.
(32:14):
And that was not something that was serving meat all, even though I thought I needed it.
And after you were able to get out of thathole, you raise some of that money from from
Kickstarter.
And then you eventually launched on Amazon withthe rocket book core.
With this show, we've had, like, episodesskyrocket with all time high downloads and then
(32:34):
boom back to normal levels.
And It can sometimes take a lot of work tocreate that new catalyst for growth.
And some companies just never can.
What were some of the things that you did tocontinue growing sales and revenue after those
campaigns?
Yeah.
Yeah.
Good good question.
One thing You know, we never got, like,scalable paid ads to work for us.
(32:59):
Right?
We never got, any big, like, marketing channeljust to, like, really, really work for us like
that.
But what we did have going for us was veryreasonably good word-of-mouth.
And for a few reasons, one was the productdelivered and said what it would do, but we we
(33:23):
did build, messaging, all of our assets, all ofour videos.
We put a ton of time into making sure that theywere portraying a brand that people could
really feel great about getting behind.
We took an attitude that we don't we we scoffedand made fun of the the industry and the
seriousness of a notebook company.
(33:44):
And we, ourselves, like, had a ton of fun anddidn't take ourselves seriously.
Right?
So there are just a ton of space jokes,notebook jokes, dad jokes, wearing wild,
ridiculous stuff, sunglasses, etcetera, wewould do, live shows where we had our fans be
able to call in and talk to us.
(34:05):
Right?
So we we tried to be the the in alright.
So since we couldn't spend money on marketingin a way that we could measure would would pay
off in a positive way.
We over invested in anything that would amplifyword-of-mouth.
So, like, when we did, a live stream, we we hada call in number, and everyone would call in
(34:28):
and talk to us.
We'd We'd have a little sketch, and we make itfunny.
And there'd be, like, little little, jokesgoing through through the whole thing, and we
we just, like, make it really, like, a a funnylittle party.
But we wanted to be the the company that was,like, most accessible and most connected with
our customer base in our industry.
The other thing that we had going for us is ifyou buy a pen or a notebook off of the isle of
(34:57):
Staples.
Right?
You don't pilot who might might have sent yousold you the pen doesn't have your email
address.
Or Mead who sold you that notebook doesn't haveyour email address.
However, we did, for the most part, becausewhen you buy a rocket book, you go and register
for the app and give us your email address.
And so for a long time, we didn't actually haveto because we didn't actually have to ask
(35:22):
people to opt in but we started delivering, youknow, email to them, and we just made sure that
those emails were awesome.
They were not just talking about the theproduct which they were, but not just that.
And we were really trying to make them fun andfunny and engaging.
We had really great open rates.
When we created media, like, social videos andthings like that, we decided we're not really
(35:47):
using organic social to find new customers.
My idea was we're gonna build a content enginein house and do it to amplify word-of-mouth.
So our existing customers may now berecommending us to 2 or 3 of their friends.
Right?
Let's put content out there and so that ourexisting customers see it.
(36:10):
And now they're just more likely to make that 2or 3, like, 5 or 6 friends because we're just
in their brain a little bit more, and we'reentertaining them and telling them how do you
get the most out of the product.
Right?
And that worked for like, our whole duration ofa company while I was there.
It brought us up to, like, $50,000,000 in, inrevenue until I, you know, I ultimately sold
(36:31):
the company.
And we just never really were able to, forbetter or worse, get Facebook ads or, for
example, which a lot of have been reliant on,but I, I wanted them to work.
I really did, but we, we couldn't.
So we just had to do guerrilla marketingtactics over and over and over and never let up
on the the DIY, marketing angle.
(36:54):
When did you decide that you wanted to sell thecompany, and it was a good time to do so.
I think when so when we did sell it, we weresomewhere around 50,000,000 in revenue.
It was a couple years before that when we wereprobably closer to, like, $20,000,000 in
revenue.
And I had a conversation with Jake.
(37:16):
About it was my cofounder, and we we discussedit.
And the cut we both agreed that, like, we atleast wanna see what we could get for this
company, right, and begin that process becausemaybe we wanna sell it now, or maybe we wanna
sell it 5 years from now.
I don't think we're gonna, put ourselves intoservice to, like, test the market right now.
(37:37):
So our lawyer, our our corporate lawyer wasalso a really, experienced M and A lawyer, and
we asked him for some, recommendations forbankers.
Investment bankers who, you know, are basicallylike, like brokers for your business, you know,
like real estate agent is for houses as aninvestment bankers for, through your business.
And we we interviewed a a bunch of them.
They said, this is what we think you should beable to sell your company for.
(38:01):
We agreed to go with one of them and bring thecompany to market And what they do is they have
a huge email list of family offices and privateequity and and then more that they develop of
strategic buyers that they that they then getin touch with and send, like, a teaser out to
that an NDA might go out to get moreinformation, etcetera, etcetera.
(38:22):
And we got a few interested parties.
But it was really that's that's sort of how itworked out.
And we we really thought, like, hey.
We've heard of companies who turned down offersand, like, really regretted it.
So why don't we at least see what the marketwill bear, fortunately through the whole
process, which took at least a couple of years,to actually turn into a sale, we just kept
(38:46):
growing and growing and growing.
So then by the time somebody got reallyinterested in it, it was life changing money
for us, where it just it just felt like wecouldn't say say no to such a big acquisition
for us because we we raised very little moneyfor the company.
We, we took some money from Techstars, but theywere all just, you know, convertible notes and
(39:10):
common shares.
We never raised any VC money.
We did it at a time, like, well after we weresolvent.
We didn't really need it.
It was just kinda part of the TechstarsAccelerator program.
So I still go around, like, saying that webootstrap the company because we we really did
in spirit, but we we took about a $100,000, inequity and sold it for what was ultimately over
(39:31):
$50,000,000.
So
when you sold for over 50,000,000, was BIC thecompany you sold it to?
Was that the highest offer?
Or
big There were other comparably high offers,but they all had different facets to them.
But it was, like, among the highest offer.
(39:52):
Right?
It was, like, maybe the highest or 2nd highest,right, but others were interesting too.
So it's it's hard to set because There was one,for example, that offered to buy 49% of our
company, and we would continue to run it for awhile.
And they put some money into it, and then wewould go for a much larger acquisition down the
road where the investor and us would maybe 5years then later sell it.
(40:16):
Right?
So that was it was hard to say whether that onewas more or less because it had a higher
valuation, but a lower lower liquidity now,things like that.
So, yeah, the, ultimately, the company thatthat put what was to us the most attractive
offer was the deal terms, you know, being ableto get liquidity for all of it and and exit
(40:38):
completely.
We, we decided that was important to us, andthat we didn't want to, you know, go another 10
years.
And they also, like, made it clear that theycould be a good home to the company, right,
that they would take the company and do smartthings with it that we could be, you know,
proud of and they had, you know, they they havea a gigantic stationary line.
(41:02):
You know, a Bic pen, is a is a well knownhousehold item.
Right?
You mentioned why you eventually went with BIC,but what are some of the things in that M and A
process that you learned about selling abusiness and getting acquired and stuff like
that?
Yeah.
Yeah.
I'll
Oh, boy.
(41:22):
So quite a bit.
Sometimes, like, your previous agreements thatyou do when you're a young scrappy founder that
you don't pay a lot of attention to, can reallybe tricky when it comes to M and A.
When it comes to, like, you know, due diligencein getting over the line.
I'll I'll give you an example of what wastricky for us.
(41:44):
We had a, every rocket book right now, andbefore it's sold with a friction pen by pilot.
Right?
And pilot is technically a competitor of thepeople who we were selling our company to.
And a rocket book really doesn't work withanything but a pilot pen, and they've got some
(42:05):
good patents around that, at least in the US.
Right?
So it's not like we could say we don't needpilot anymore.
Right?
We really needed them for it to, to sell ourproduct.
In fact, that was one of the reasons I wasinterested in selling the company because if
Pilot ever decided to, like, we're not gonnasell you pen anymore, our company would, like,
essentially evaporate.
It was a big risk point of risk.
But it also became an issue in our acquisition,as you can imagine, because we had a supply
(42:29):
agreement with them, that said we have theright to to, like, basically refuse depending
on, like, if you get acquired, right, And, but,sort of, the game theory didn't work out that a
really pilot should, like, cancel our contract.
Right?
But they didn't like us getting acquired byPick.
They didn't, they didn't love it.
(42:49):
And they didn't make it a bid on they couldhave made a bid on the company, but they
didn't.
And it just took forever for them to approve ofthe sale of our company so that our supplier
agreement would transfer over to rocket bookonce owned by BIC.
I mean, forever.
Like, they weren't taking my meetings.
They wouldn't talk about it months and monthsmonths would go by.
(43:12):
We're working on other parts of the deal.
We're making progress.
Why is pilot not not answering us about this,etcetera?
They're a Japanese company that I have all mycontacts were in the US.
One day, I was talking with my one of mycontacts And she said, yeah, Dennis, the CEO is
gonna be leaving to go to Japan for a while.
And I was like, but we need to get this done.
(43:33):
And she's like, well, he's leaving on Friday,so we're not gonna be able to do it for a
while.
I was like, you know what?
I'm gonna be in your office tomorrow.
I'm gonna be in your off, and you're gonna haveto figure out, like, to get a conference from
him and get me a meeting with Dennis or callsecurity?
Because I I gotta do this.
Like, the 6 months have gone by, and we've madeno progress.
And this is personally important to me.
(43:53):
So I just need help.
I need this urgently.
And she said, don't do that.
Do not do that.
Like, don't do that.
And Dennis I'm doing it.
Dennis at Bick?
Or And Dennis was, like, the CEO of the USBick.
Right?
Okay.
I needed to get signed off from.
And, and I did.
I just hopped on a plane and went there, andthey were pissed at me.
(44:15):
But I got in a room with him, and I explainedto him that we had every intention to continue
being his customer and partner that, beingbought by BIC would only grow the rocket book
line, which would be good for the line becauseit introduces a lot of people to friction,
etcetera.
And I made the case for him, and that gotthings unstuck.
(44:35):
And we ultimately got the agreement signed andgot past all of that.
Right?
That was really big.
I would say another thing I've learned throughselling a company is, sometimes you you think
as a small company is selling to a largercompany, you don't have a lot of leverage, but
I I I learned that I did have a fair amount ofleverage.
(44:58):
And there were some times to kind of test thatas well.
One is that, you know, basically, we we had anLOI on the table and then COVID happened.
Right?
And then they came back to us with a completelyrevised offer that just wasn't comparable.
(45:18):
And I just I just sensed it in my gut that Ishouldn't make a counteroffer.
Because it would be a sign of weakness.
And I just said, thank you for everything.
We had already both spent 100 of 1000 ofdollars on lawyers seeing the due diligence.
It had gotten done really far.
And I was like, we're not gonna be making acounteroffer, but thank you very much.
This has done a great experience.
We'll maybe we'll reconvene in 5 years or sowhen we're you know, and I might have said
(45:42):
something cheeky, like, when we're interestedin buying you.
Right?
And, and You know, then they came back to us.
They took a little while, but they came back tous.
You know, just walking away was helpful.
And, you know, what we had going for us was wewere We had a digital capability and an analog,
(46:02):
consumer packaged, good arena, stationary.
That was really important for them, and we werevery profitable.
And what they they had looked at, a lot ofdigital writing companies that were just not
profitable, but we stood out.
And so I knew that we had that leverage.
I also knew
that if you think
about BIC, right, they sell lit liters, diversand pens.
(46:26):
And they really saw us as sort of like the, thedollar shave club of the sedationary industry.
And, you know, Dollar Shave called came alongwith something that they perceived.
I don't know anything about shavers, butsomething that was not higher quality but they
had a new go to market, a new way to talk tocustomers.
And they went in there, and they really causeda lot of havoc in the, in the, the shaver
(46:48):
market.
Right?
They saw Asa as somebody who, like, also hadthese irreverent fun videos that talked to
customers with this amazing brand.
We also had that direct to customerrelationship.
Meaning, even if you bought us off the shelf atWalmart, we still have your email address.
We're talking to you about, you know, how toget the most out of the product, talking to you
about other products, etcetera.
(47:08):
So having that sort of direct to consumerrelationship, even in something that has a
wholesale, you know, retail environment, wassuper interesting to them to acquire and to
learn.
And we have, and rocket book still has the, Ibelieve, the, the biggest asset of the biggest
database of email addresses of people who writeby hand.
You know, we have 1,000,001,000,000 of emailaddresses who are, who open our emails at a
(47:33):
really high rate.
And they all have one thing in common.
They they have a rocket book, right, and theywrite by hand, and they care about writing my
hand.
So, with all these, we were we were a strategicinvestment to to them, and it gave us, you
know, a good amount of leverage to get throughthe process, even when we had some some
problems in the process.
The only thing I think is really important forgetting acquired is having at least 1, but
(47:56):
several champions in the company who need tosell you to the rest of the company.
Right?
There's always gonna be people in the companywho aren't so sure about this acquisition, And
I'm not in front of them to handle theirobjectives, objections, but you need to make
friends with a few powerful people in thecompany who can say, We're doing this.
(48:18):
This is why, and here's the assets that thiscompany has that will totally transform and be
additive to our company.
And be able to arm those champions to go backinside their company and handle the objections
that they're inevitably gonna handle, and justbe completely excited.
So we had them in for visits.
We got them.
We showed them a lot of behind the scenes andthings that we do inside of our team.
(48:41):
But they then could, like, really understandthe value that we had strategically, but also
be able to articulate it back to the people intheir company and their board who they had to
sell it to.
And how did it feel when the deal closed andyour company sold for over $50,000,000?
It was such a mix of emotions.
(49:03):
It was surreal in some ways, you know, a a bigwire transfer hit my bank account.
We were still kind of in COVID.
Right?
It was December 2020.
So it was still, like, kinda COVID year.
Right?
So couldn't couldn't plan any, like, crazy bigtrips or anything like that.
(49:23):
But also I had, you know, earnouts on the linetoo.
And I was on board for another two and aquarter years to be able to hit these earnouts
for me and my employees Madan And, and so Ifelt, you know, it's still very much, like,
buckled in.
One thing I've I think I learned from it was Iwas on for 2 and a quarter years.
And that was something that we had, like, codeveloped, in terms of a timeline.
(49:46):
I think that's too long.
I think, if a founder is going to exit thecompany, I think it probably should be done in
about a year, something like that.
I think having somebody who's on for two and ahalf years, and then it just it's I got checked
out.
I wasn't I wasn't up for it anymore.
I wasn't, incentivized to think big and thinklong term.
(50:09):
And If we got somebody in there a year earlierand they started taking the reins for me
earlier, I think it would have been a bettertransition.
It would have been for me personally, for Joe,it would have been better for the employees.
It would have been better for the acquirer aswell.
And I think maybe that's something that Biclearned too.
But, something that I I learned, I think, 1 1year earn out period is is plenty.
(50:32):
Anything longer than that, unless you reallyhave you really wanna stay on for a long, long
time, and that's what the founder's trueintention is.
I think 1 year, that's it.
Do the transition.
And, and hand it over to somebody who'sincentivized to really push this thing for 5
years.
And one closing question that we like to wrapeach episode up with what's the best piece of
(50:55):
advice you've ever received?
Well,
I remember somebody just saying to me, like,Look, Madan, you're gonna work hard no matter
what you do.
You better just be good.
Like, just go put that extra 1% in every day tobe a little bit better than everybody else.
(51:16):
And it's gonna pay off And, and if you don't,you're still gonna have the same struggles and
the same difficulties in in your career atwork.
You might as well kick ass.
And I just remember somebody telling that tome, and it really stuck with me.
And sometimes when I wanna get off my desk, AndI'd be like, maybe I can get one more thing
(51:36):
done today, in the the 1% better, Joe, thathelps to drive me.
Awesome.
Well, thank you very much, Joe, for taking thetime to join the episode of a link to rocket
book in the episode description.
If you want, take a look.
Check it out.
I love their books.
But thank you very much, Jeff.
I appreciate it.
Cool.
People can find me on LinkedIn.
(51:57):
I'm pretty active on there.
And then we just, like, ran out of money.
(00:01):
And I owed, one of our vendors, like, over$400,000 before they were re released the next
batch of books as well.
So it was, like, kinda stuck.
Right?
And what were we gonna do?
We do tell the rest of the backers that sorry.
We're just bankrupt.
We can't deliver a product.
You just heard from Joe Lemay.
(00:23):
He's the founder of a company you might haveheard of before.
It's called Rockabook.
A reusable notebook company that exited to BICfor over $50,000,000.
This is a story of how he and his co founderJake took the company from over $400,000 in
debt to an 8 figure exit.
And without any further ado, This is myconversation with Joe Lemay.
(00:48):
I'm gonna start this episode with one of yourposts on LinkedIn.
It starts with in 2016, my balance sheet wasnegative $400,000 and no VC would touch me.
You were receiving death threats from peoplewho funded your crowdfunded campaign.
But just 4 years later, you climbed out of thehole and sold rocket book a reusable notebook
(01:08):
company for over $40,000,000.
To understand that journey, I wanna start withwhat you were doing before rocket book.
When you're working at Salesforce, you'reactually one of the first people selling
software licenses when you came up with theidea for a reusable notebook.
Can you tell us a little bit more about thatstory and how rock the book gets started?
(01:29):
Yeah.
When I I was, You know, I I spent most of mycareer in technology, first as an engineer, and
then over on the enterprise sales side, youknow, always always like technology that was
selling into businesses, right, as opposed toconsumer technology.
But as an engineer, as a salesperson, I was anotebook person.
(01:50):
I was a whiteboard person, even though I hadtechnology, I'd I really gravitated to those
media in terms of, like, jotting down orsharing ideas.
And I even remember really taking a flight toSeattle just because I was, as an engineer,
partnered with, Microsoft on a partner, on a,on a project we were working on.
And I just, like, felt like I had to get in theroom with a whiteboard with these other
(02:13):
engineers.
It's like, and something online wasn't good,wasn't gonna cut it.
So that just kinda got my, like, got myinterest in solving a problem around, like,
whiteboard.
That's actually what I started to solve first.
And, I started working on a project that Icalled Rocket Board at the time, which was all
about just being able to share an ordinarywhiteboard, just your markers, just your
(02:37):
whiteboard, no electronics, except yoursmartphone, and be able to sort of turn that
into something that feels like a Zoomexperience with your whiteboard.
It went pretty high one day on product hunt.
It went to, like, number 2 when it was listed.
And I got, like, 20,000 email sign ups for it.
But the problem was it didn't really work verywork well in its first iteration.
(02:59):
There was a lot of image enhancement, streaminggoing on, and it's just it was its first
version.
So I was churning users, and this was justsomething I was for a while, just doing on the
side.
But I was, like, running out of money, waitingfor this thing to create, like, product market
fit, Brian.
I was like, how can I use this things app I'vebuilt to actually, like, make some money before
(03:22):
I have to, you know, for when the towel?
And at one point, I had quit my job and beenfocused on this.
And then I was like, you know, focus a short,short runway based on how much savings I had.
I just had a few $100 in the bank, and I wasspending on, on developers to help me build
this too.
And then that started to become, like, prettyclose to nothing.
And I when I was like, how can I actually takethis technology and do something with it?
(03:46):
I just, like, took a walk, took some space awayfrom what I was building.
And, after just a few days of just, like, justthinking and and, like, I'd I literally just,
like, woke up with the idea of, like, anotebook.
So I had built an app that that did somescanning of of a whiteboard.
Why not scan paper and make like a scanningapp?
(04:09):
And Then I thought, how can I make it really aspecial notebook so that the the paper, the
pages itself, maybe had some special markingson it?
Right?
Is at the time, I was in love with the idea ofcrowdfunding.
And, and I knew I wanted to be able to sell aphysical product that people could buy on
crowdfunding.
(04:29):
And maybe that's something that, you know, Icould, you know, maybe raise a $100,000 on
crowdfunding if I came up with a cool coolproject and then be able to go back to rocket
board.
Right?
So that's where I was where I was.
And and so I was like, alright.
If I take a notebook, and I build my ownscanning app for it, but it does some special
stuff.
Maybe I'll have, like, some special, like,markings down at the bottom of the page here.
(04:52):
If you mark it and then scan it in, it'llinstantly send it to somewhere where you've
preset, like, your math, folder notes inside ofDropbox or your some email address based on
these 7 markings on the bottom of the page.
And that's that was the first idea that I hadthat would make it a proprietary notebook that
worked with a proprietary scanning application.
(05:14):
And then from there, I was thinking, like, howcould I, you know, make this even a more badass
notebook?
So you know, through through the years, youknow, doing things like, like OCR and character
recognition, auto titling your pages andetcetera, etcetera.
Doing more things with your handwritten noteswas the name of the game.
But I really just had the idea for just aproprietary markings on a page and notebook I
(05:38):
was thinking maybe now that I'm scanning it in,I could wipe it down like a whiteboard.
So I was looking at whiteboard, technology, youknow, just to be able to, you know, make your
notebook like a whiteboard.
And I thought that that would be the firstthing that I'd launch.
And I went, Madan Calicanas, who is well knownfor, you know, now for the all in podcast and,
(05:59):
you know, a lot of startup stuff.
He was having a launch festival And he invitedme, he basically, I got an invite to launch
this product on stage at his launch festival.
And as I was demoing it to him and to some VCsat, at Sequoia, who were just like like helping
(06:20):
him out during some some rehearsals for the bigevent, he he asked me, or they asked me, you
know, what's going on with the notebook?
Is it gonna, you know, you're gonna have, like,new versions of it?
I said, yeah, I think maybe we'll launch onewhere you wipe it off.
Another one, you know, we've got otherinnovations for the notebook coming.
And and he said, stop right there.
Like, who the fuck do you think you are?
Do you think you're the Elon Shamus ofnotebooks?
(06:41):
Like, don't be vague.
Right?
A soy collier venture capital and asked youabout your, your roadmap.
I said, okay.
Well, one of the ideas I have is that I'vefigured out a way to make this notebook such
that when you wanna erase it all, you couldactually just put it in the microwave for,
like, a minute, and it'll all erase.
And you can reuse that notebook over and over.
(07:02):
And he was just like, stop.
That's the only cool thing you said all day.
Like, that has to be your product.
You're not allowed on my stage.
Unless that's, like, your product.
So just make that your product and announce it,you know, in a couple weeks when you go on
stage.
And I went back through an Airbnb.
I was staying in with my friend Jake at thetime.
And I said, I think I could we could make thishe wasn't even officially my co founder at the
(07:26):
time, but he was like, I think we could do it.
I just if we launch a crowdfunding campaign,which we were gonna do right on when we're on
stage, And we just give ourselves a lot oftime.
We can figure out how to really make this thisnotebook, because I had already figured out the
prototypes of it, just making safely and doingit at scale and things like that and properly
testing it was was was gonna be a trick.
(07:46):
So we're We're on stage.
It's like 2015, right, at the launch festival.
And at the end, like, I show everyone how thisthing works, You put it in the microwave at all
erases.
People are like, are you kidding me?
This is crazy.
Right?
It's just a paper and pen notebook, but it allerases in the microwave.
And I tell everyone, Now, who here wants arocket book?
(08:06):
And I get people to raise their hands.
I'm like, great.
You can buy it now or pre order yours now onindiegogo.
Go get it.
And then Jason kind of made a noise.
Like, he did not think that that was a coolthing to do, like, to use the stage to launch a
crowdfunding campaign, I think.
But But so be it.
We did we did it.
We pulled it off.
I think, you know, that day, we got, like,somewhere, like, $2000 worth of preorders.
(08:28):
The next day, you know, maybe another $3000 andwe're like, that's pretty cool.
But and it would it's very cool when you have acrowdfunding campaign and then you get a a
backer who, you know, paid for your product,even though you're not ready to send it to
them, and the little notification comes up, ading on your phone.
It's super cool.
But Saturday woke up, and it was like ourphones went berserk.
(08:50):
It was just we we sold $99,000 worth ofmicrowave to erase no no book presales that
day.
Quick question.
So before we get to you raising that money andand and going viral and indiegogo, How did you
get that invite from Jason Calakanas to speakon the stage?
(09:11):
Cause I'm sure it's it's pretty difficult forstartup founders, to do that.
Right?
Or
Oh, yeah.
I saw a tweet by him saying, hey, I'm lookingfor stealth startups to launch on my stage, you
know, tweet treat at me, which he got.
And at the time, my product that I call therocket board had been out there.
(09:32):
So it wasn't it wasn't stealth.
But this idea of Rocket Book, I had not reallyshown to anyone.
There was no website.
So I, I tweeted out him, and I said, I'll havea video at you by the end of the weekend.
And then I just spent the weekend, like, makinga video of this thing.
I made it kinda look like it worked.
Like, I had it scanning.
(09:53):
I had it doing things, organizing things, butit was a complete paper tiger.
It did not actually work or do anything.
You know, I put it in the microwave press go,cut You take it out, and it and it's all
perfect, etcetera.
Right?
Or maybe there wasn't a microwave in the video,but, but, like, the app looked like that
worked.
It was it was a complete, you know, just just avideo, MVP.
(10:14):
And he's like, perfect.
This is great.
You're in.
I love it.
You know, he's like, I've tried to get my teamto use live scribes.
I've tried to get them to use other note takingapparatus.
You know, if you can make this work as aproduct, I'd like to see this like, happen in
the world, you're invited to San Francisco.
And you have to be out here a couple weeks inadvance in order to, you know, rehearse and
(10:35):
you're not you know, you have to do a good jobin rehearsals to actually make it on stage,
etcetera, etcetera.
So long story short, got that invite and andgot on stage there.
And he was he was pretty excited.
He was like, hey.
You know, you guys, you guys are gonna have agreat demo.
You could win, like, best, demo.
You know, he had he had various or bestpresentation or something like that if you guys
(10:57):
crush it.
And we worked really hard, and we gave a greatpresentation.
I mean, it was it was just like, it was just sofun.
It's available on YouTube.
But I think the the move of us launching ourcrowdfunding campaign, like, while we're on
stage was a little bit too much for him.
So nobody got a best presentation award thatyear, when everything was said and done.
(11:18):
And during that process of the demo andactually meeting Jason and all that kind of
stuff, what is one thing about that processthat surprised you or you thought?
That was unique.
Yeah.
I mean, it was really cool for me to meet himwhen I, started my startup and, like, when I
started working on stuff in 2013, 2014, therewas not a lot of media about startups.
(11:42):
Right?
And so, you know, I had promised myself to juststop listening to any news, not not sports guy
anyway, but just only pay attention to contentthat's gonna educate me and inform me and make
me a better founder.
And so this weekend startups was just on my onmy rotation constantly.
And I love that podcast because it just beingin a room virtually, another podcast other
(12:07):
founders.
I just felt like maybe I could absorb stufffrom them.
Right?
You're you're you're a lot like the people youspend time with, as they say, but even people
you, like, you know, listen to podcasts with.
So that was just my my thing of educatingmyself and putting myself in in that.
And so when I met him, actually in person.
It was really cool.
You know, he's a very, he's a very directcandid, provocative type of guy, you know,
(12:33):
calls, like, when he said to me, like, who thefuck do you think you are?
Elon Musk and notebooks.
Like, that's so on brand for him.
What I really appreciated about him, was hejust has a lot of opinions.
And he's like, he would just Someone would givea pitch.
She'd like, stop.
No.
Here's how you need to pitch it.
You need to highlight boom boom boom boom boom.
(12:54):
You'd break it down, and, like, that founderwas just left better off.
Because his opinions were, you know, for themost part, really good because he spent so much
time in media and with startups that he's seeneverything, right, in his neural net for how to
pitch a startup is super strong.
And I really appreciated that about him.
And, you know, the fact that he gave us an toget some exposure on the stage, I'll, I'll
(13:18):
always appreciate, you know, him him for that.
And after you got that exposure, you got the II believe he said those 2000 initial backers.
You launched on indiegogo.
How did you go from those 2000 initial backersto then raising, I believe, like, a $1,000,000
in funding from that campaign.
Yeah.
We, a couple things were instrumental.
(13:39):
One is we had a a product that was reallyworthy of of, like, people talking about really
worthy of word-of-mouth.
So a paper and pen notebook is something thateveryone has used.
And now taking that product and inventing it,such that it has an app that goes with it, and
you put it in the microwave to erase Like, thatwas just fundamental to be able to create buzz
(14:00):
about this, a gimmick, if you will.
Right?
It was it was gimmicky.
But it but a good gimmick that really worked.
That day where we got $99,000 worth of sales,what had happened was indiegogo had decided to
us to, like, feature us in their, in theirnewsletter.
So it went out to all these indiegogo backers,and they just jumped aboard.
(14:23):
Madan then once that had, you know, got intothe 6 figure range, then when we started
emailing people in the press, just there wasreally good uptick for people wanting to cover
this product, and we got just a ton of coveragefrom it.
And this was probably this is back in the day2015.
(14:46):
People were starting to no longer cover crowdfunding campaigns because so many people have
been burned on failed crowd funding campaigns,but it wasn't a hard rule at the time with a
lot of reporters.
And this was a zany enough product that plentyof reporters would cover it.
And then our conversion rate was really, reallygood.
Our copy, our our, our video was effective.
(15:09):
We used things to, like, pull people in, on thevideo and even just starting off the video
with, like, what if question What if you could,you know, write an a pen and paper notebook?
And then instantly, all of those notes were,you know, available to you in the cloud.
What if when you were done with that notebook?
Just with the push of a button, it wasinstantly erased available to reuse, right,
(15:31):
that type of stuff that what if questions getpeople intrigued and interested in, like,
learning more and pulled them further andfurther into the to slip inside of watching the
video.
And then by the end of the video, people werelike, boom click by, I've got a their thought
process was more like, hey.
I've gotta try this product.
It's so unique.
And there are actually some of the videos thatyou did were actually super unique, especially
(15:55):
compared to other product videos at the time.
I believe one of which was in Staples where yougot kicked out.
Could you tell, could you tell that story?
Yeah.
Yeah.
So We this was our 2nd big product.
We had, decided when we came back from sharktank and and and been basically laughed off of
(16:17):
off of shark tank.
I decided we've gotta get another product outthere ASAP.
And so we launched our next product, and thisone is now called the rocket book core.
It is the one that, you know, 99% of people buywhen they buy a rocket book today.
It's a product that you don't put in themicrowave, but rather, just a little bit of
water and your writing comes off perfectly onthe page.
(16:41):
Because it's like synthetic paper with proper,coatings on it to make it a good writing
experience.
So when we launch that, video, we decided wewanted to, like, go down the staple do it on
the isle of Staples.
So it's me and Jake just walking down theisles, pulling notebooks, off of the aisle and,
like, making fun of the notebook industrybecause all these notebooks have just been
(17:04):
sitting here collecting dust.
While other products have been innovated, youknow, the smart helmets, the smart shoes,
they're smart everything.
Right?
But the notebook was Notebook industry has beenasleep at the wheel, and we're making fun of
them and pulling up, you know, a mole skin offof the shelf and saying, Hey, what is this?
The notebook that Heminway wrote in, that'scool, I guess, and tossing it.
And so we're we're, we did not have anypermission from Staples to do this.
(17:28):
So we just dressed in our orange astronautoutfits that we got off of Amazon, right, and
we just decided to do it until we got kickedout of staple.
But it took a surprising long time to getkicked out of Staples.
I think it was like our our 12th take or our13th take where I was saying to myself, like,
when are they gonna kick us out?
But finally, the manager came over, and he wasactually pretty cool.
(17:51):
He was like, hey, guys.
Like, I see what you're doing here.
You can't do this anymore.
And so, we're like, alright.
Thanks, buddy, and we got out of there.
But that was just a fun way to, like, use wedidn't really have any marketing budget.
Right?
So we had to be irreverent.
We had to stand out.
We had to capture people in the first you know,10 seconds of the video, and we thought a good
(18:13):
way to do do that would be, like, 2 dudes insunglasses, in an astronaut outfit, throwing
notebooks around the notebook aisle of Stapleswas a good, was a good start.
Right?
And then we got into, like, we made peoplechuckle and then, boom, hit them with what the
product actually does when they're open, andthey they think that these guys, at least can
(18:34):
entertain them.
And maybe enough to to to listen to what wehave to say.
And then we've thought about the notebook andhow to reinvent it and you know, then we got
great conversion rates off of that.
Yeah.
And even like you said, the video was lowquality, but the script was actually excellent
as storytelling.
And I think that's sometimes something foundersmiss.
(18:54):
And is that they think they need the bestequipment, the best editors, and I think
although that could certainly help, it's morelike icing to the cake.
It it none of that really matters if the storyor where the cake really isn't there.
I wanna get to, 2015, in November of 2015, youguys plan to launch the rocket book wave.
(19:14):
But when November comes around, the backerswere anxiously waiting and still crickets.
That's when the heat started to turn up whathappened.
Yeah.
So you could imagine, we had launched thiscrowdfunding campaign in March and had given an
estimated delivery day of November.
(19:35):
We thought that that would be any of time.
We had some work to do to build out the app andand complete the the app and the scanning
process.
That was harder than expected.
As you can imagine, you know, building an yourun into issues and delays and things like
that, but that wasn't like a major thing.
But the the the notebook itself and getting itto work reliably in various microwaves was a
(19:57):
problem.
So the problem there was that that, you know,if you took a notebook, one of our prototypes,
and I put it in your microwave for a minute.
Maybe it would all the the the, heat to eraseink would all turn clear and everything would
work great, but the same notebook in mymicrowaves It might not erase completely after
(20:20):
one minute.
And if you put it in someone else's, it mayburst into flames within a minute, right,
because there's just different power powerlevels, different hot spots in every microwave.
So as we tried everything, and you gotta Madan,we're trying every combination of paper, every,
as you can imagine, like, every thickness ofpaper, every coating of paper, every
(20:45):
combination of that with different covers.
We tried synthetic papers.
We tried synthetic papers with, silicone coverssilicone doesn't actually turn warm in the
microwave neither do a synthetic, but if wecould embed it, the silicone with a little bit
of, graphite, for example, then it could absorbsome just the right amount of, the energy.
(21:05):
And then maybe it would turn everything, youknow, and turn everything and get to the right
temperature.
We tried something called Garelite.
Like, we have product development firms we wereworking with.
We were spending a lot of money trying to comeup with something that worked fairly reliably.
And, finally, we found a system that was wouldproduce a reasonably effective cost of goods
(21:29):
sold.
So we sold this thing for, like, I think it was$27 something like that, 25 or 27 bucks.
Some of the prototypes we made would have hada, after we're doing development, would have
had a cost of goods sold for, like, over $30.
So we would have been bankrupt immediately.
If we decide to go into that direction, like,with something called Garrelate that I
mentioned.
So we had to cross different things off of ourlist.
(21:51):
But I gotta give my cofounder Jake a lot ofcredit because he came up with a lot of this
solution, but, just the idea that you could putthis thing in the microwave.
And then but if you put in with it and on topof it, a little mug of water, What that would
do is that water would absorb a lot of themicrowaves, and it would just slow everything
(22:12):
down.
Right?
And then instead of giving somebody an amountof time, like, hey, after one minute, which
would which wouldn't work in some microwavesand would be too hot on others, we said, just
watch it.
And we we put a chroma, a thermochromic logo onit.
So when that turn went from a from, blue toclear, now it was ready to take out of the
(22:34):
microwave.
Right?
So now we finally had a universal system thatworked with cellulose paper and worked very
reliably across, you know, a huge spectrum ofmicrowaves.
And then we were ready to ship.
And then we were, We basically had, we wereable to get about, like, maybe half of them out
(22:56):
a third or half of them out until we just,like, ran out of money completely.
And We, yeah, we we ran into some problemsthere just, like, fulfilling it, getting it
manufactured, and then we just, like, ran outof money.
And I owed one of our vendors, like, over$400,000 before they were re released the next
(23:17):
batch of books as well.
So it was, like, kinda stuck.
Right?
And what were we gonna do?
We tell the rest of the backers that sorry.
We're just bankrupt.
We can't deliver your product.
One thing we did to get out of the situationwas we went over to Kickstarter, and we we
started a new Kickstarter over there.
(23:38):
And we almost got kicked off on Kickstarter fordoing this.
So what we did was all of the rewards were thewas the same product.
You would get for $27 a rocket book wave.
But the project that we were funding was, Youknow, some integrations with slack, with
Dropbox, things that we hadn't didn't haveintegrations for before.
(24:01):
And fortunately, thank god, you know, thatthing raised just enough money to, like, get us
out of the hole.
So we were able to deliver on that crowdfundingcampaign and use the profits of it to fund the
stuff that we, like, couldn't ship, and we justsqueaked out of bankruptcy.
It was, like, so close.
And we were able to ship everyone their booksthat got.
(24:23):
And during that delay, in November, how did howwere backers adding to it.
What what was the feedback you were gettingfrom them?
Some were patients.
Some were like, cool.
This happens in crowdfunding.
Others were like, I want my money back.
And I'm not, you know, I just said no toeverybody if they wanted their money back.
Like, this is a crowdfunding campaign.
I'm sorry if you're mad at us, but we're tryingto use all the funds to get everything out.
(24:46):
For everybody, and some people got extremelyangry about that.
But I just made the decision.
You know, I didn't have I would have liked tohave said, oh, customer service comes first.
And I need to take care of my customers.
And if someone asked for a refund, give it tothem, but I Madan wanna start, like, a run on
the bank and actually have it jeopardize thewhole project.
And give a few people a refund and thereforejeopardize giving everyone else their product,
(25:10):
right?
My job was to get this product out even ifpeople are pissed at me along the way.
That was what I decided.
And then others were just absolutely livid.
They're like, I can't believe this.
This is outrageous.
You know, you clearly have a $1,000,000 in yourbank account and you're, like, taking off for
Jamaica.
I wanna kill you.
You suck.
You know, all these, like, direct messages orcomments or comment threads.
(25:32):
And, I didn't even have time.
I didn't between, like, making the product.
I didn't even have time to, like, respond toall of the comments because I just decided I'm
gonna focus on the product.
If I have, you know, if I have to spend 15, 20hours in a day working on It's gonna be working
on this emergency, which is the product.
And these other people are gonna have to dealwith, you know, terrible customer support until
(25:53):
until I, you know, found somebody to help uswith customer support.
So, yeah, they were at super some of them weresuper super angry.
And then others, you know, that They don't careat all.
Right?
They spent $27 on something many months ago,and they didn't notice.
But the people who are vocal, they want tocatch your attention.
So they'll say things that, like, they'llaccuse you of being a scammer.
(26:16):
So that just so that you'll respond, right,probably.
But it getting, like, death threats, basically.
And then when we launched that Kickstartercampaign, and I did reach out to some press
that I thought was friendly in the Boston area.
Boston O was one of them.
And they just, like, wrote bad press about us.
And we probably deserved it.
Right?
We're launching 1 crowd funding campaign whenwe hadn't fulfilled the other crowd crowd
(26:40):
funding campaign, and Kickstarter did not likewhat we were doing at all.
They're like, you can't do a crowdfundingcampaign for a product that already exists,
right, that you previously did.
And my explanation was, no, the project thatwe're funding doesn't exist, the new
integrations.
The rewards are the same.
So they were like, we are really close tokicking you off, but we're gonna let this fly.
(27:03):
But they didn't promote us.
They kinda, you know, subdued us in the searchresults and things like that, but we're still
able to raise, I think, well over $400,000.
And so you were receiving these death threatsbeing called a scammer.
One reality, you and the rocket book team wereon the other end, putting out fires almost
literally.
Literally.
Yeah.
(27:24):
And everything was on the line to get productout to backers.
Yeah.
Did that impact what you were feeling at thetime in your emotional health?
Yeah.
Definitely.
My emotional health was that it's at a reallylow point.
I was at a point where I was, like, takingAdderall during the day to, like, keep going,
right?
And then at night, like, late at night to comehome and have some drinks to to, be able to
(27:50):
comp myself out.
That was a really terrible pattern.
I I was just terrified that we wouldn't make itthrough and that, you know, I just would look
like a disgrace and look like a loser.
And have to go get a a a real job, but now witha big, you know, loser mark after having tried
to sell, like, having tried to create a companyand failing.
(28:12):
And I was like, just suicidal thoughts came up.
Right?
I mean, I'm not saying I was on the brink ofsuicide, but It was one of the few times in my
life where, like, these intrusive suicidalthoughts were in my head at times.
And I remember I would often go to other crowdfunding campaigns that were struggling and read
(28:33):
the comments on their on their project, whichwere terrible, which were mean and terrible and
horrible.
And, it would give me solace to know that Iwasn't the only one.
Everyone else out there was struggling in in asimilar way for the most part.
Yeah.
And then I but I do remember when we wereactually, like, when we got most of them out,
(28:55):
like, 90% of them out, and we were no longerbankrupt.
That was an amazing feeling.
And, but, you know, we still had peoplemessaging us from time to time who had,
problems with the product.
Sometimes it would not burst into flames intheir microwave, but maybe get a little brown.
Right?
And we'd have to ship them a new one.
(29:16):
Sorry about that.
Be careful.
Time, things like that.
When we came up with our next product, which wewith the crowdfunding campaign, we called it
the EverLab but now that there are sometrademark issues, so it's now called the rocket
book core.
That did not go in the microwave, and it workedreally well.
Like, the erasing of the ink work very, verywell.
(29:37):
And it is a very highly rated, product to thisday on Amazon elsewhere.
And that was a gigantic relief to me that ourmain product was no longer something that
somebody could put in the microwave.
And potentially, like, burn down their house oror something like that.
Right?
Yeah.
So If
you could give, like, one piece of advice toyourself during that dark time, what would you
(30:02):
say?
You know, part of me wants to tell myself,like, it's gonna be okay.
But I don't know if if that would actually beproductive because I think part of the panic
(30:25):
and having our backs up against the wall isactually what made all of this possible.
In hindsight, if we had not done thiscrowdfunding campaign in this way, the product
may never have existed.
Meaning, let's say my intent was to, like,let's say I had a $100,000 in a bank account or
a couple $100,000 to to make the book, and Ididn't need crowdfunding.
(30:47):
And I set out to make a microwave to erasenotebook.
I think eventually I would have just given up.
It was hard.
It was really, really hard.
Easy in hindsight, but it was really hard to tofigure it out.
But what kept us going was that tens ofthousands of people had preordered thing and
had expected it that we had promised it tothem.
(31:07):
And just we had we were we had our backsagainst the wall.
And the idea of not delivering freaked me out.
Right?
So just that pressure actually got us to tofigure out the problem.
So, I mean, if I could really go back in time,I would maybe hand the design that ultimately
(31:29):
worked to Joe Lemay, so he didn't have to gothrough this.
Right?
But that's not really, like, universal advice,is it?
Maybe I would tell myself, like, to relax.
Maybe I would tell myself to, I would tellmyself to figure out how to get cut drinking
out of my life, which I I did later.
(31:49):
But I've I've definitely used it as a crutch,and in healthy and unhealthy ways.
And I think it's, then something that I don't Idon't abstain from it completely.
Anymore.
Like, I'm not a a total, a 100% sober, but Ikeep my distance from it now.
Whereas before, it was a daily part of my lifeand part of my, a coping mechanism.
(32:14):
And that was not something that was serving meat all, even though I thought I needed it.
And after you were able to get out of thathole, you raise some of that money from from
Kickstarter.
And then you eventually launched on Amazon withthe rocket book core.
With this show, we've had, like, episodesskyrocket with all time high downloads and then
(32:34):
boom back to normal levels.
And It can sometimes take a lot of work tocreate that new catalyst for growth.
And some companies just never can.
What were some of the things that you did tocontinue growing sales and revenue after those
campaigns?
Yeah.
Yeah.
Good good question.
One thing You know, we never got, like,scalable paid ads to work for us.
(32:59):
Right?
We never got, any big, like, marketing channeljust to, like, really, really work for us like
that.
But what we did have going for us was veryreasonably good word-of-mouth.
And for a few reasons, one was the productdelivered and said what it would do, but we we
(33:23):
did build, messaging, all of our assets, all ofour videos.
We put a ton of time into making sure that theywere portraying a brand that people could
really feel great about getting behind.
We took an attitude that we don't we we scoffedand made fun of the the industry and the
seriousness of a notebook company.
(33:44):
And we, ourselves, like, had a ton of fun anddidn't take ourselves seriously.
Right?
So there are just a ton of space jokes,notebook jokes, dad jokes, wearing wild,
ridiculous stuff, sunglasses, etcetera, wewould do, live shows where we had our fans be
able to call in and talk to us.
(34:05):
Right?
So we we tried to be the the in alright.
So since we couldn't spend money on marketingin a way that we could measure would would pay
off in a positive way.
We over invested in anything that would amplifyword-of-mouth.
So, like, when we did, a live stream, we we hada call in number, and everyone would call in
(34:28):
and talk to us.
We'd We'd have a little sketch, and we make itfunny.
And there'd be, like, little little, jokesgoing through through the whole thing, and we
we just, like, make it really, like, a a funnylittle party.
But we wanted to be the the company that was,like, most accessible and most connected with
our customer base in our industry.
The other thing that we had going for us is ifyou buy a pen or a notebook off of the isle of
(34:57):
Staples.
Right?
You don't pilot who might might have sent yousold you the pen doesn't have your email
address.
Or Mead who sold you that notebook doesn't haveyour email address.
However, we did, for the most part, becausewhen you buy a rocket book, you go and register
for the app and give us your email address.
And so for a long time, we didn't actually haveto because we didn't actually have to ask
(35:22):
people to opt in but we started delivering, youknow, email to them, and we just made sure that
those emails were awesome.
They were not just talking about the theproduct which they were, but not just that.
And we were really trying to make them fun andfunny and engaging.
We had really great open rates.
When we created media, like, social videos andthings like that, we decided we're not really
(35:47):
using organic social to find new customers.
My idea was we're gonna build a content enginein house and do it to amplify word-of-mouth.
So our existing customers may now berecommending us to 2 or 3 of their friends.
Right?
Let's put content out there and so that ourexisting customers see it.
(36:10):
And now they're just more likely to make that 2or 3, like, 5 or 6 friends because we're just
in their brain a little bit more, and we'reentertaining them and telling them how do you
get the most out of the product.
Right?
And that worked for like, our whole duration ofa company while I was there.
It brought us up to, like, $50,000,000 in, inrevenue until I, you know, I ultimately sold
(36:31):
the company.
And we just never really were able to, forbetter or worse, get Facebook ads or, for
example, which a lot of have been reliant on,but I, I wanted them to work.
I really did, but we, we couldn't.
So we just had to do guerrilla marketingtactics over and over and over and never let up
on the the DIY, marketing angle.
(36:54):
When did you decide that you wanted to sell thecompany, and it was a good time to do so.
I think when so when we did sell it, we weresomewhere around 50,000,000 in revenue.
It was a couple years before that when we wereprobably closer to, like, $20,000,000 in
revenue.
And I had a conversation with Jake.
(37:16):
About it was my cofounder, and we we discussedit.
And the cut we both agreed that, like, we atleast wanna see what we could get for this
company, right, and begin that process becausemaybe we wanna sell it now, or maybe we wanna
sell it 5 years from now.
I don't think we're gonna, put ourselves intoservice to, like, test the market right now.
(37:37):
So our lawyer, our our corporate lawyer wasalso a really, experienced M and A lawyer, and
we asked him for some, recommendations forbankers.
Investment bankers who, you know, are basicallylike, like brokers for your business, you know,
like real estate agent is for houses as aninvestment bankers for, through your business.
And we we interviewed a a bunch of them.
They said, this is what we think you should beable to sell your company for.
(38:01):
We agreed to go with one of them and bring thecompany to market And what they do is they have
a huge email list of family offices and privateequity and and then more that they develop of
strategic buyers that they that they then getin touch with and send, like, a teaser out to
that an NDA might go out to get moreinformation, etcetera, etcetera.
(38:22):
And we got a few interested parties.
But it was really that's that's sort of how itworked out.
And we we really thought, like, hey.
We've heard of companies who turned down offersand, like, really regretted it.
So why don't we at least see what the marketwill bear, fortunately through the whole
process, which took at least a couple of years,to actually turn into a sale, we just kept
(38:46):
growing and growing and growing.
So then by the time somebody got reallyinterested in it, it was life changing money
for us, where it just it just felt like wecouldn't say say no to such a big acquisition
for us because we we raised very little moneyfor the company.
We, we took some money from Techstars, but theywere all just, you know, convertible notes and
(39:10):
common shares.
We never raised any VC money.
We did it at a time, like, well after we weresolvent.
We didn't really need it.
It was just kinda part of the TechstarsAccelerator program.
So I still go around, like, saying that webootstrap the company because we we really did
in spirit, but we we took about a $100,000, inequity and sold it for what was ultimately over
(39:31):
$50,000,000.
So
when you sold for over 50,000,000, was BIC thecompany you sold it to?
Was that the highest offer?
Or
big There were other comparably high offers,but they all had different facets to them.
But it was, like, among the highest offer.
(39:52):
Right?
It was, like, maybe the highest or 2nd highest,right, but others were interesting too.
So it's it's hard to set because There was one,for example, that offered to buy 49% of our
company, and we would continue to run it for awhile.
And they put some money into it, and then wewould go for a much larger acquisition down the
road where the investor and us would maybe 5years then later sell it.
(40:16):
Right?
So that was it was hard to say whether that onewas more or less because it had a higher
valuation, but a lower lower liquidity now,things like that.
So, yeah, the, ultimately, the company thatthat put what was to us the most attractive
offer was the deal terms, you know, being ableto get liquidity for all of it and and exit
(40:38):
completely.
We, we decided that was important to us, andthat we didn't want to, you know, go another 10
years.
And they also, like, made it clear that theycould be a good home to the company, right,
that they would take the company and do smartthings with it that we could be, you know,
proud of and they had, you know, they they havea a gigantic stationary line.
(41:02):
You know, a Bic pen, is a is a well knownhousehold item.
Right?
You mentioned why you eventually went with BIC,but what are some of the things in that M and A
process that you learned about selling abusiness and getting acquired and stuff like
that?
Yeah.
Yeah.
I'll
Oh, boy.
(41:22):
So quite a bit.
Sometimes, like, your previous agreements thatyou do when you're a young scrappy founder that
you don't pay a lot of attention to, can reallybe tricky when it comes to M and A.
When it comes to, like, you know, due diligencein getting over the line.
I'll I'll give you an example of what wastricky for us.
(41:44):
We had a, every rocket book right now, andbefore it's sold with a friction pen by pilot.
Right?
And pilot is technically a competitor of thepeople who we were selling our company to.
And a rocket book really doesn't work withanything but a pilot pen, and they've got some
(42:05):
good patents around that, at least in the US.
Right?
So it's not like we could say we don't needpilot anymore.
Right?
We really needed them for it to, to sell ourproduct.
In fact, that was one of the reasons I wasinterested in selling the company because if
Pilot ever decided to, like, we're not gonnasell you pen anymore, our company would, like,
essentially evaporate.
It was a big risk point of risk.
But it also became an issue in our acquisition,as you can imagine, because we had a supply
(42:29):
agreement with them, that said we have theright to to, like, basically refuse depending
on, like, if you get acquired, right, And, but,sort of, the game theory didn't work out that a
really pilot should, like, cancel our contract.
Right?
But they didn't like us getting acquired byPick.
They didn't, they didn't love it.
(42:49):
And they didn't make it a bid on they couldhave made a bid on the company, but they
didn't.
And it just took forever for them to approve ofthe sale of our company so that our supplier
agreement would transfer over to rocket bookonce owned by BIC.
I mean, forever.
Like, they weren't taking my meetings.
They wouldn't talk about it months and monthsmonths would go by.
(43:12):
We're working on other parts of the deal.
We're making progress.
Why is pilot not not answering us about this,etcetera?
They're a Japanese company that I have all mycontacts were in the US.
One day, I was talking with my one of mycontacts And she said, yeah, Dennis, the CEO is
gonna be leaving to go to Japan for a while.
And I was like, but we need to get this done.
(43:33):
And she's like, well, he's leaving on Friday,so we're not gonna be able to do it for a
while.
I was like, you know what?
I'm gonna be in your office tomorrow.
I'm gonna be in your off, and you're gonna haveto figure out, like, to get a conference from
him and get me a meeting with Dennis or callsecurity?
Because I I gotta do this.
Like, the 6 months have gone by, and we've madeno progress.
And this is personally important to me.
(43:53):
So I just need help.
I need this urgently.
And she said, don't do that.
Do not do that.
Like, don't do that.
And Dennis I'm doing it.
Dennis at Bick?
Or And Dennis was, like, the CEO of the USBick.
Right?
Okay.
I needed to get signed off from.
And, and I did.
I just hopped on a plane and went there, andthey were pissed at me.
(44:15):
But I got in a room with him, and I explainedto him that we had every intention to continue
being his customer and partner that, beingbought by BIC would only grow the rocket book
line, which would be good for the line becauseit introduces a lot of people to friction,
etcetera.
And I made the case for him, and that gotthings unstuck.
(44:35):
And we ultimately got the agreement signed andgot past all of that.
Right?
That was really big.
I would say another thing I've learned throughselling a company is, sometimes you you think
as a small company is selling to a largercompany, you don't have a lot of leverage, but
I I I learned that I did have a fair amount ofleverage.
(44:58):
And there were some times to kind of test thatas well.
One is that, you know, basically, we we had anLOI on the table and then COVID happened.
Right?
And then they came back to us with a completelyrevised offer that just wasn't comparable.
(45:18):
And I just I just sensed it in my gut that Ishouldn't make a counteroffer.
Because it would be a sign of weakness.
And I just said, thank you for everything.
We had already both spent 100 of 1000 ofdollars on lawyers seeing the due diligence.
It had gotten done really far.
And I was like, we're not gonna be making acounteroffer, but thank you very much.
This has done a great experience.
We'll maybe we'll reconvene in 5 years or sowhen we're you know, and I might have said
(45:42):
something cheeky, like, when we're interestedin buying you.
Right?
And, and You know, then they came back to us.
They took a little while, but they came back tous.
You know, just walking away was helpful.
And, you know, what we had going for us was wewere We had a digital capability and an analog,
(46:02):
consumer packaged, good arena, stationary.
That was really important for them, and we werevery profitable.
And what they they had looked at, a lot ofdigital writing companies that were just not
profitable, but we stood out.
And so I knew that we had that leverage.
I also knew
that if you think
about BIC, right, they sell lit liters, diversand pens.
(46:26):
And they really saw us as sort of like the, thedollar shave club of the sedationary industry.
And, you know, Dollar Shave called came alongwith something that they perceived.
I don't know anything about shavers, butsomething that was not higher quality but they
had a new go to market, a new way to talk tocustomers.
And they went in there, and they really causeda lot of havoc in the, in the, the shaver
(46:48):
market.
Right?
They saw Asa as somebody who, like, also hadthese irreverent fun videos that talked to
customers with this amazing brand.
We also had that direct to customerrelationship.
Meaning, even if you bought us off the shelf atWalmart, we still have your email address.
We're talking to you about, you know, how toget the most out of the product, talking to you
about other products, etcetera.
(47:08):
So having that sort of direct to consumerrelationship, even in something that has a
wholesale, you know, retail environment, wassuper interesting to them to acquire and to
learn.
And we have, and rocket book still has the, Ibelieve, the, the biggest asset of the biggest
database of email addresses of people who writeby hand.
You know, we have 1,000,001,000,000 of emailaddresses who are, who open our emails at a
(47:33):
really high rate.
And they all have one thing in common.
They they have a rocket book, right, and theywrite by hand, and they care about writing my
hand.
So, with all these, we were we were a strategicinvestment to to them, and it gave us, you
know, a good amount of leverage to get throughthe process, even when we had some some
problems in the process.
The only thing I think is really important forgetting acquired is having at least 1, but
(47:56):
several champions in the company who need tosell you to the rest of the company.
Right?
There's always gonna be people in the companywho aren't so sure about this acquisition, And
I'm not in front of them to handle theirobjectives, objections, but you need to make
friends with a few powerful people in thecompany who can say, We're doing this.
(48:18):
This is why, and here's the assets that thiscompany has that will totally transform and be
additive to our company.
And be able to arm those champions to go backinside their company and handle the objections
that they're inevitably gonna handle, and justbe completely excited.
So we had them in for visits.
We got them.
We showed them a lot of behind the scenes andthings that we do inside of our team.
(48:41):
But they then could, like, really understandthe value that we had strategically, but also
be able to articulate it back to the people intheir company and their board who they had to
sell it to.
And how did it feel when the deal closed andyour company sold for over $50,000,000?
It was such a mix of emotions.
(49:03):
It was surreal in some ways, you know, a a bigwire transfer hit my bank account.
We were still kind of in COVID.
Right?
It was December 2020.
So it was still, like, kinda COVID year.
Right?
So couldn't couldn't plan any, like, crazy bigtrips or anything like that.
(49:23):
But also I had, you know, earnouts on the linetoo.
And I was on board for another two and aquarter years to be able to hit these earnouts
for me and my employees Madan And, and so Ifelt, you know, it's still very much, like,
buckled in.
One thing I've I think I learned from it was Iwas on for 2 and a quarter years.
And that was something that we had, like, codeveloped, in terms of a timeline.
(49:46):
I think that's too long.
I think, if a founder is going to exit thecompany, I think it probably should be done in
about a year, something like that.
I think having somebody who's on for two and ahalf years, and then it just it's I got checked
out.
I wasn't I wasn't up for it anymore.
I wasn't, incentivized to think big and thinklong term.
(50:09):
And If we got somebody in there a year earlierand they started taking the reins for me
earlier, I think it would have been a bettertransition.
It would have been for me personally, for Joe,it would have been better for the employees.
It would have been better for the acquirer aswell.
And I think maybe that's something that Biclearned too.
But, something that I I learned, I think, 1 1year earn out period is is plenty.
(50:32):
Anything longer than that, unless you reallyhave you really wanna stay on for a long, long
time, and that's what the founder's trueintention is.
I think 1 year, that's it.
Do the transition.
And, and hand it over to somebody who'sincentivized to really push this thing for 5
years.
And one closing question that we like to wrapeach episode up with what's the best piece of
(50:55):
advice you've ever received?
Well,
I remember somebody just saying to me, like,Look, Madan, you're gonna work hard no matter
what you do.
You better just be good.
Like, just go put that extra 1% in every day tobe a little bit better than everybody else.
(51:16):
And it's gonna pay off And, and if you don't,you're still gonna have the same struggles and
the same difficulties in in your career atwork.
You might as well kick ass.
And I just remember somebody telling that tome, and it really stuck with me.
And sometimes when I wanna get off my desk, AndI'd be like, maybe I can get one more thing
(51:36):
done today, in the the 1% better, Joe, thathelps to drive me.
Awesome.
Well, thank you very much, Joe, for taking thetime to join the episode of a link to rocket
book in the episode description.
If you want, take a look.
Check it out.
I love their books.
But thank you very much, Jeff.
I appreciate it.
Cool.
People can find me on LinkedIn.
(51:57):
I'm pretty active on there.
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