Ahead of IPO, Moleskine Evolves From Notebooks to Apps

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Just inside Moleskine’s New York office, Pablo Picasso stares down anyone who enters. The artist is a long-time Moleskine favorite, and the notebook company prominently displays a huge black-and-white portrait of him right at the office’s entrance.

For years, Picasso and writerly counterparts Ernest Hemingway and Bruce Chatwin have been part of the company’s highly successful marketing strategy, which tied great artists and writers to a brand that wasn’t even around when they were alive.

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But Moleskine and its marketing are changing. The Italian company, which in 1997 revived the classic notebook that guys like Picasso and Hemingway used, is set to go public, expected by the end of the year. It’s focusing more on accessories like journals, bags, pens and reading glasses than standard notebooks these days. It’s looking for ways to bridge the divide for those who still enjoy taking notes by hand but live much of their lives on smartphones or tablets. And in doing so, they’re quietly pushing Picasso and friends back into the 20th century.

“There’s been an evolution in the way we talk about the brand,” says Moleskine CEO Arrigo Berni. “Years ago, there was a significant emphasis on Hemingway, Chatwin and Picasso. We’re not doing that anymore. We’re just talking in general of Moleskine as a legendary notebook. Any brand that has a heritage, unless you find a way to keep that heritage relevant and contemporary, you run the risk of just becoming old-fashioned.”

Writing by hand is about as old-fashioned as it gets. The company began as Modo&Modo in 1997 and created the Moleskine trademark, reviving the famous notebooks. Nine years later, Modo&Modo was bought by SG Capital Europe – now known as Syntegra – and renamed the company Moleskine.

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But while it’s often known for its funny name (there’s no consistent way to pronounce it, by the way), it doesn’t want to be recognized merely as a notebook company. Their vast catalog now includes hundreds of niche products like beer journals, pencil sets, reading lights, and postal notebooks that turn into ready-to-mail letters.

The most significant shift is the company’s attempts to gain ground digitally. They’ve released an app. They have a line of cases designed for iPads. Their latest offering, announced last week, is a new notebook designed specifically to work with Evernote, an app that allows users to digitally archive just about anything physical. The Moleskine notebook includes specially designed pages that make digital photos of them clearer and includes stickers that Evernote reads and uses to organize those files. As Berni describes it, the product is for those of us who straddle the analog and digital divide every day.

“You have to absorb the fact that moving between these two worlds is not obvious and it’s not simple,” he says. Over the last year and a half, Moleskine has released a number of products related to digital devices, including cases for tablets and e-readers and bags to keep them all in one place.

Moleskine will be just the third company to float an IPO in the last 18 months on the Italian market, but it’s been one of the bright spots in the stationery industry overall. According to industry research organization IBIS World, revenue for Moleskine increased about 25% in 2011 and annual sales have risen at a rate of about 26% over the past five years. By comparison, revenue for the stationery manufacturing industry is expected to decline 2.1% this year.

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While the company is focusing on non-notebook products, they’re still not a substantial part of the business. Only 6% of Moleskine’s overall sales in 2011 consisted of non-paper products (though 30% of sales at stores were non-paper items). And while one analyst has valued Moleskine’s shares at more than $300 million, does it make sense for a company that is still primarily a notebook maker to go public in an age that is moving increasingly towards the digital world?

“Because you’re a more traditional company doesn’t mean you’re barred from success,” says IBIS World senior analyst Kevin Culbert. Moleskine’s brand name and reputation for making higher-end products should translate to items like digital device cases, even though those products aren’t normally associated with the company.

“Products like that will help them continue to grow,” Culbert says.

As Moleskine evolves, 20th-century figures are making room for contemporary artists and architects like Zaha Hadid, Ross Lovegrove and Zhang Yuan. Notebooks of their personal drawings, notes and sketches are some of the company’s newer and more interesting offerings.

“Nowadays, the most effective way to keep conveying the fundamental values of the brand – culture, imagination, creativity – is to nurture our association with contemporary figures from the creative community,” says Berni.

No slight to Picasso or Hemingway, of course. It just would’ve helped if they used smartphones.