How reMarkable Grows?
How did an overpriced tablet with limited functionality sell with a 678% growth rate over 4 years? Unwrapping the secret sauce behind reMarkable's success.
reMarkable launched in Norway in 2013. They started reporting first revenues in 2017 and rapidly grew from €18.1m to €297.0m in 2023 (1541% growth rate). Those guys crawled into the Financial Times 1000 fastest growing EU companies, ranking #128 in 2023.
When you objectively look at their product and the value proposition it’s literally paper thin (pun intended). It’s an outlandishly expensive tablet (full package with folio goes for €677) that performs only a single function - taking notes. Everything else is either missing (backlight), clunky (reading e-books) or comes under a paid subscription (basic sync with your laptop).
How on earth do those guys sell 500k of those devices a year and keep on growing? What’s the secret sauce there? Let’s figure it out.
📊 Market
Depending on the lens reMarkable falls both in the E-Ink tablet (€2.6b in 2024) and E-reader ones (€7.0b in 2024). Since e-ink tablet market is pretty noisy and includes the hardware produced for other purposes (e.g. bus stop signs), let’s stick with the e-reader ones.
Market is forecasted to grow to €10b, but still it’s moderately sized and the growth rates aren’t extraordinary (6.3% CAGR).
Additionally, the market is pretty saturated. You have large players like Amazon Kindle (selling up to €400m of Kindles a year) and a long-tail of other smaller businesses like Kobo, Boox, Pocketbook (the long list of obscure names goes on).
The full prices vary from ~€370 to €50 depending on the screen size and functionality.
From this perspective, reMarkable takes roughly ~4% of the market share, has the worst price tag and subpar functionality. Crappy place to be in, but those folks still grow. How?
🎯 Positioning
Ok, e-reader market is noisy and overloaded with complex functionality. How do you disrupt it?
Folks at reMarkable identified a very specific niche. We won’t be just another dull e-book reader, we’ll become a note-taking device. While other companies offered swiss-army knife products, those guys created differentiation. Additionally, there’s focus. We’ll be extremely good at note-taking at the cost of everything else (fancy functions, book reading, even customer support e.t.c.).
So you get a novel niche (a micro blue ocean) with a focus on excellence in this niche.
💎 Value prop
💰 Price
You might say that €677 for a note-taking device is outlandish. It’s true, that’s a huge premium for such a marginal utility. You can make notes on paper at a fraction of the price (even the fanciest Moleskine is going to cost /20 less than the price).
But there are two factors that work in reMarkable’s favor. First, since it’s a micro blue ocean of a market, there’s literally no price anchor (nothing to compare this device with). Second, it’s an object of desire (more on that later).
🛍️ Convenience
If you browse over the Reddit threads, people are claiming that it’s much more convenient to carry a single reMarkable instead of countless notepads.
But is that really so or is there a bias?
The average Moleskine weighs ~180 grams while the weight of reMarkable 2 tablet is ~403 grams (almost half a kilo). With the Folio, the weight jumps up to 878 grams, which is getting closer to a laptop and 22% higher than an iPad (685 grams).
Another argument would be that you can store endless notepads in your memory and open them anytime you like. My counter-argument here would be that people on average open ~5 of their last written notes and hopelessly forget about the ones made long ago. It’s a nice theoretical argument, which doesn’t really stand ground.
Thickness is where it beats the analog-world alternatives - with 4.7mm versus ~10+ mm of Moleskine.
All things considered, it’s not dramatically more convenient to carry and use reMarkable instead of an analog notepad. So I’m biasing that there’s a bias towards emotions.
❤️ Emotions
reMarkable is definitely an object of desire.
There are two major factors contributing to this. First, it delivers an experience with its sleek design and writing capabilities. Secondly, the company employs trendsetters in select local groups (e.g. writers, tech influencers e.t.c.) to cultivate that social proof and exploit our motor neurons.
Experience.
reMarkable stands out among a vast array of unimpressive e-book readers. Design is minimal and sleek. Even the cases have a premium vibe. There’s really nothing to compare this device to in terms of aesthetics.
Writing and sketching experience is where the team has invested a lot of focus. The response rates are the fastest and even the sound the e-marker makes resembles that of an analog pencil.
The team has over-invested in experience and even employs two Design VPs - one responsible for Visuals (Didrik Rasmussen) and the other for UX Applications (Brynjar Barkarson).
Social proofing.
The company invests to build social proof through targeted communities. With novelists (Margaret Atwood), personal growth trainers (Guy Kawasaki), techies (Tim Kendall), and even Olympic medalists on board (Brandi Chastain), the team purposefully aims to influence specific communities.
Those influencers create a perception of higher status, efficiency, focus, and achievement. Everything you can be if only you have purchased a reMarkable.
💰 Financials
Are those guys profitable? Sustainable in terms of business?
📈 Funding and EV
Up to date those guys have secured 24m+ in disclosed funding and recently took on a €43m debt with 11.7% interest (in Oct 2023) (assuming a 15-year timeframe, it’s €6m principal+interest payouts annually).
It’s a smart move as VC money is expensive (considering their current valuation of €1b with revenue of €244m in 2022). As the CFO statement goes this money will be channeled into US and UK expansion.