c.2013 New York Times News Service

c.2013 New York Times News Service

Last weekend in Fair Harbor, N.Y., on Fire Island, a few dozen children gathered on the boardwalk for the local tradition of selling lemonade, baked goods and painted seashells to passers-by at sunset. Among the children was Julia Colen, a 12-year-old vacationer from New Jersey, who in addition to hawking cupcakes and drinks was presiding over a stand overflowing with brightly colored bracelets. Julia and a friend had made the jewelry out of tiny rubber bands, using a crafts kit called Rainbow Loom.

“We had a lot, at least 100,” Julia estimated of their inventory, which they priced at $1 to $2 apiece. Sales were impressive that night — “we made like $68,” she said.

Julia is among hundreds of thousands of youngsters — and parents — in the United States who are using Rainbow Loom. The kit consists of two plastic template boards, a hook, 24 plastic clips and 600 multicolored mini rubber bands. From it, 24 bracelets can be woven into patterns similar to those traditionally used in lanyards and friendship bracelets, but more complex and colorful.

Rainbow Loom is the invention of Cheong Choon Ng, a Malaysian immigrant of Chinese descent with a graduate degree in mechanical engineering. He came up with the idea in 2010 and began selling the kit while employed as a crash-test engineer for Nissan.

In the past year, Rainbow Loom’s popularity has soared, spurring hundreds of YouTube fan videos and scores of so-called kidpreneurs like Julia. Now Ng is overseeing a rapidly growing company that he started from his living room in Novi, Mich.

Rainbow Loom began as Ng’s attempt to impress his two daughters, Teresa, now 15, and Michelle, now 12. One afternoon, the girls were making bracelets out of small rubber bands, and when Ng tried to join in, he found that his fingers were too big. He went to work creating a wooden board with push pins, which helped improve his dexterity but was too bulky to win his daughters’ approval.

Ng persisted, adding rows of pins. “I was putting pins on two and three and four rows, crisscrossing the rubber bands and making big bracelets,” he said. Finally, the girls were hooked, and they began to use the board to make gifts for friends and neighbors.

It was Teresa who later suggested that her dad try to manufacture and sell the loom. His engineering background, which includes product design, quality control and manufacturing experience, provided a solid foundation for the project, and his brother, Cheong Yeow Ng, an engineer and inventor living in Wichita, Kan., encouraged him to sell the product online.

As with many new ventures, the first challenge was financial. “All we had saved to invest was $10,000,” Ng said.

When he found that his budget was too small for American manufacturers, he began vetting some in China. He sank $5,000 into the molding for the template and the other $5,000 into the kit’s parts.

A shipment of 2,000 pounds of rubber bands arrived at the family’s home in the summer of 2011. Ng assembled kits after arriving home from the office at night; his wife, Tyng Fen Chan, worked on them during the day.

They had limited success selling Rainbow Loom online, and their early attempts at placing it in major toy stores fell flat. Part of the problem was that people didn’t know what to make of the newfangled toy. To educate potential customers, Ng and his daughters posted instructional videos on YouTube, and he bought Google ads to help spread the word.

In the summer of 2012, Ng’s luck changed. The owner of a Learning Express Toys store, a chain of 130 franchises, placed an order for 24 looms, and, two days later, she called to reorder. Soon, other Learning Express Toys stores were clamoring for Rainbow Looms. The key to selling the kits, it turned out, was educating buyers about how to use them. Specialty toy and craft stores were just the place for loom demonstrations and classes.

For Gary and Molly Fitzpatrick, who own two Learning Express Toys stores in Ohio and one in Michigan, the Rainbow Loom has been a boon for their franchises. “It’s a substantial portion of our business right now,” Fitzpatrick said. The kit is listed as one of the top toys of the summer of 2013 on the chain’s website.

The Ngs initially called on friends and neighbors to help assemble the product, but now that work is done in China. Ng, who left his job at Nissan last fall, manages a staff of 12 and rents a 7,500-square-foot warehouse near his home to handle distribution. In all, 600 retailers carry Rainbow Loom, and just over 1 million units have been sold at a retail price of $15 to $17 each.

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The most popular state for sales is New Jersey, according to Ng. Jennifer Grisafi of Montclair said that her local swimming club was a hotbed of Rainbow Loom activity all summer and that her 7-year-old son now prefers making bracelets to playing video games. “He loves doing technical stuff with his fingers,” Ms. Grisafi said. “It’s exciting to see how creative he can be.”

Summer camps, many of which prohibit electronics, are another place where the Rainbow Loom thrived. And beyond selling bracelets instead of lemonade, children have been busily posting how-to videos online. One YouTube user named Ashley has uploaded four such videos; the most popular, in which she explains how to make what she calls “a starburst bracelet,” has attracted 430,000 views since Aug. 1. The official Rainbow Loom videos have garnered a total of 4.6 million views.

But like any new product in a competitive market, the Rainbow Loom faces challenges, including the tendency of children’s toys to fade in popularity. To keep his brand relevant, Ng is focusing on innovation.

“I am working on new tools to make more exciting rubber bands and more bracelet patterns,” he said. “I’m also expanding into designing accessories.”

Rainbow Loom has drawn comparisons to Silly Bandz, the springy rubber bands that were ubiquitous on children’s wrists several years ago. That company’s founder has branched out into watches and other types of jewelry and has formed partnerships with brands like Angry Birds and Barbie for themed bracelets.

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If Rainbow Loom attracts imitators, the key to keeping them at bay is having “a secret sauce” that no one else can replicate, according to Bill Aulet, managing director of the Martin Trust Center for MIT Entrepreneurship and a senior lecturer at the MIT Sloan School of Management. Rainbow Loom’s community of enthusiasts could be just that sauce.

“If there’s a whole ecosystem around this product, and it becomes very profitable, then someone would very likely come in and buy it,” Aulet said of Ng’s company.

Aside from that possibility, Aulet said he believes that outside help will be required to expand the business.

“He’ll need muscle of some sort,” Aulet said. “He’ll need a stronger team, more money, more expertise, partnerships. The complexity goes up exponentially as he starts to go national. It’s a whole new game.”