Cheong-Choon Ng

The Rubber-Band Millionaire

August 13, 2013: 4:55 PM ET

How a former crash-test engineer for Nissan turned an ancient handicraft into a nationwide craze.

By Iris Mansour

130813161801-rainbow-loom-614xaFORTUNE—The hottest tween frenzy this summer isn't a boy band or an excessively priced American Girl doll accessory. It's, well, weaving.

Nine-year-old girls across the U.S. have apparently fallen head over heels for a centuries-old craft form, threading together colorful bracelets with the aid of a makeshift loom. Okay, this time, rubber bands are involved. Lots of them.

Michaels Stores, the huge, private arts-and-crafts retailer, began stocking the $17 Rainbow Loom in the first week of August. The kit is now selling ten times better than the chain's next kids bestseller, says Philo Pappas, Michaels' Executive Vice President of Category Management.

Already, a million or so of the rubber-band hand looms have sold through various outlets, according to Cheong-Choon Ng, the product's 45-year-old inventor, who until recently was a senior crash-test engineer for Nissan Motor Co. (NSANY), in Detroit.

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Three years ago, Ng's two daughters—Teresa, then 12, and Michelle, then 9—were sitting in the family den making bracelets from rubber bands. The process reminded Ng, who grew up in Malaysia, of making jump ropes from rubber bands as a child. Hoping to impress his kids with his bracelet-weaving skills, he grabbed a few tiny elastic bands and tried to mesh them into a pattern. They were too small for his fingers, however.

So the engineer went to his garage and cobbled together a primitive loom—an old wooden board lined with rows of pushpins. With that, he began looping rubber bands into bracelets. At first his daughters weren't impressed. But once they saw him weaving intricate patterns in breakneck speed, they changed their mind.

It was Teresa who saw the potential for transforming this into a business, when other kids in their Novi, Mich., neighborhood began obsessively playing with the looms Dad was assembling. That was when Ng decided to take a leap of faith—guilt-ridden though it was—staking the $10,000 he managed to save for his daughters' college fund on building a marketable product.

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He spent six months refining the design. (The kit that's in shops today is the 28th iteration.) Then he set about finding suppliers in Southern China, getting their first shipment in June 2011. By then, the rubber bands had already arrived. He remembers standing with his wife, staring fearfully at the giant crate in their garage: it weighed 2,000 pounds, as much as a small car.

Sales were glacially slow at first. He went to trade shows and children's camps to show off the plastic loom. When Ng went to pitch store managers in person, he was often asked to leave.

That changed after a single store in The Learning Express Toys chain picked up Ng's invention in July 2012. The shop, in Alpharetta, Georgia, offered bracelet-making classes to show off what could be done with the inexpensive loom. "Suddenly, they were calling us, saying they sold out 24 products in one week," says Ng. "Then they sold out 96 pieces within a week." Then, when kids started taking their kits to school, good old network effects kicked in.

By October, Ng realized that something big was happening. In the run up to Christmas, demand soared. "Lots of orders were coming and we were trying to get help left right and center," says Ng, who was still assembling the kits at home with the help of his family.

He'd taken a three-month sabbatical from Nissan, but by then it was clear he was never going back.

Newfound wealth hasn't stopped him from working around the clock, he says, a bit ruefully. "My daughters sometime miss the old days when I spent lots of time with them." Ng still drives his 12-year-old SUV and his wife regularly clips coupons. All of their profits, meanwhile, get reinvested into the business as the family searches for the next killer rubber-band app.

Maybe maps, Ng says. Again, it was his daughter Teresa who showed him the way—after making a colorful elastic map of the island nation of Haiti.

Hey, it might work. Map-making, after all, is an even older craft than weaving.

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