My first novel was sort of "written to order." At my first writers' conference, I met an editor who was a huge baseball fan. He discovered that I had played in a number of baseball fantasy camps, alongside some of baseball's greats. He said, "Why don't you write a novel about a doctor who goes to one of those camps?" Having no better sense than to think writing a novel was something that could be accomplished by anyone who put their mind to it, I did just that. I completed it in four months, and sent it off to him. He encouraged me to revise it, which I did, and then he took it to the editorial board, who turned it down. "Oh, well," I said, "this is easy. I'll just send it to somebody else."
I obtained permission from several editors to send them a proposal. I also sent my proposal off to The Writers' Edge, a web site that judges your work, and if it meets their standards (about half the submissions do), they send it to a number of publishing houses. I was thrilled when a major publishing house contacted me and wanted the full manuscript of the novel. "Aha, they don't do that with every submission." (True) "They're going to accept it." (False). I got a very nice form rejection letter from them.
But the story doesn't end there. Two weeks later, I got a letter from the same publisher (different person), advising that they'd seen my novel's posting on The Writers' Edge, and asking for the full manuscript. So, I got it printed up (again), and sent it to them (again), and it was rejected (again). It doesn't quite measure up to Steve Laube's story of the writer whose rejection notice came FedEx (they really wanted to be sure, I guess), but it's close.
By the time every publisher to whom I'd submitted novel #1 rejected it, I was well on the way to completing #2. Then, through a series of circumstances, and attendance at another writers conference, there was renewed interest in novel #1. So I've rewritten it yet again, and it's under active consideration, as is novel #2.
If there's a moral in there somewhere, it must be that rejection is a way of life for authors. Don't give up. True, write new work, but keep the old one around and pitch it every once in a while. You never know what's going to come of it.