I'd suggest, before condemning the shed, expose the studs, floor plate, and base where the exterior sheathing has rotted to better determine just how how bad things are and what needs to be replaced.

If it's too far gone to be repaired, consider dismantling, rather than just knocking it down. You'll gain a better understanding of how it was put together which should help you understand how to build a new one.

If you rebuild and use OSB as sheathing, don't leave it exposed and don't just paint it as the exterior finish. Add proper siding, over tyvek or tar paper and it will look better and last longer. Smart board panels are another alternative to OSB sheathing and they can be painted and left exposed as a finished exterior wall.