Here's more from the February 2005 Inc. magazine interview with David Blumenthal, CEO of Lion Brand Yarn Company.
Presiding over a 125-year-old family business usually requires more of a curator than a work-obsessed CEO. But David Blumenthal, the fifth generation to run Lion Brand -- a company that markets yarn and other knitting-related products -- isn't tending a corporate reliquary. Although that was almost the case. After all, it wasn't long ago that knitting was dying -- a practice that was on the wrong side of history -- marginalized by changing lifestyles, feminism, an entire cultural windshear. But Blumenthal persisted as the industry's one-man ringleader, cheerleader and thought leader.
Today, defying all the odds, knitting hasn't gone the way of needlepoint or the model airplane kit. It's cool. Celebrities do it. It's in the culture. There's even an indie video called Gangsta Knitter. I spoke with David in his office on Manhattan's West 15TH Street, a glamour-challenged building, which is both reminiscent of the past and a furnace for Blumenthal's iron grip on the future. We talked about how he not only saved his company, but his industry.
Lion Brand was started in 1878 by a group that included my great-grandfather, Ruben. They were notions and dry goods salesmen. In those days, the brands were named for different animals. There was Bear brand, Fox brand, Tiger brand. But there wasn't a Lion brand. Lion was a good animal, king of the jungle, and we're still here.
My father was a visionary. He started working in the company when he was 18 and went to law school at night. Back in the 1930's he brought in imported yarns from Europe. No one did that in those days.
I started on October 1, 1969. Two months later a crochet fad started. It grew out of the hippie movement. For two years the problem was getting enough yarn. My dad said this is the worst thing that ever happened. I looked at him like he was crazy. He said "You'll see people come into the business who weren't here before, and after the fad it'll be a mess of price-cutting." He was right. There were once 30 different companies selling yarn; today, there are only four major players.
I wanted to buy a mill when I started. My dad wouldn't let me. He said as long as you have capital you'll be able to buy yarn. Concentrate on finding the right colors and the right textures. He knew about outsourcing before it was a buzzword. Thank God he was running the show.
There was a long dry spell after the crochet fad. The trends were against us. Women started to go into the workforce: They didn't have time to sit home and knit. The divorce rate went up. The craft was disappearing. Also, imports started to flood the market with inexpensive fabrics -- you could go into the Gap and buy a beautiful cable knit for $29.
"We were covering." That's how my father described the late 70s. We were paying our bills but not really growing. But we hung tough -- we stuck by our quality.
Macy's had three-quarters of a floor devoted to needlework and yarns when I got into the business. There were once more than 15,000 yarn shops; today they are 1000 you'd want to do business with.
Luckily my Uncle George, my cousin Dean's father -- was smart enough to see the emergence of the discounters. We were in Target's fourth store, and in the first stores of Caldor's, Ames and Jamesway. Today, the discounters are key for us. We make "PDQ" -- Pretty Darn Quick -- Knit Kits for Wal-Mart. We've sold millions.
The craft retailers, Michael's and Jo-Ann's, have also become very important to us. They helped replaced Woolworth, SS Kresge, WT Grant and all the other retailers who have gone by the wayside. We were vendor of the year with Michael's last year.
I would travel to Europe to meet with the mills and look for trends. On one trip to Galleries Lafayette in Paris I saw a skein of yarn with a photograph of a baby. Wow! A light bulb went off! A year later we were the first to put a photo on our yarn here. Within a year we had nearly 40% of the market. The other guys saw it happening, but were sleepy.
In the late 80s we started realizing things had to change. My dad was in the autumn of his years, and he had bought GE stock in 1937, so he didn't have an issue. But I didn't want to cover all my life, and I'm seeing my colleagues in other fields making a nice living. Marketing was the answer. We had to get out of commodity. So we started upgrading the product. And we never stopped.
Eventually, I started to run the company. My cousins felt, along with my father and his brothers, that I was the most qualified. I was also the oldest of the cousins in the business, and had been with the company the longest. Family businesses aren't always easy. My father's Yiddish phrase was shalom bais, which translates to "Peace in the house." My cousin Dean is my partner. I don't feel like his boss.
In 1992 we had a breakthrough. My cousin Jack called all excited, telling me that Vanna White was on the Tonight Show and said her favorite hobby was knitting. In those days that was huge. I sent her a package of our products the next day, and she wrote me back. I still have the letter. Turned out it she was using our yarn. So we brought her on as a spokesperson. The first year she was on the cover of every major craft publication. She's been with us ever since.
