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.

Interview by Adam Hanft

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.

For the retailers, it's all about what's new. Tom Coghlan, who is now Executive VP of Wal-Mart and I were once having dinner. I said, "Tom, what can we do to get our yarn up by the register." He laughed, and said, "Why don't we use the people greeters?" Well, that fall, every one of Wal-Mart's people greeters was wearing a scarf made with our Homespun yarn and a button that said "Ask me about my scarf." We had a 68% sales increase in eight weeks.

In 1998 they made me head of the Craft Yarn Council, our trade association. I told them my job would be to spend their money. They had $250,000 in the bank. It wasn't enough for advertising, but I knew we had to do something to make knitting cool. The boom was starting, but it hadn't hit the media. So I hired a public relations woman named Alice Fixx.

There's no one like Alice. She got us into InStyle magazine. But the biggest breakthrough was a three-quarter page story in Time. It established the knitting phenomenon.

I also came up with the idea of the Knit-Out, to get knitting out into the streets. We had our first one in 1998 and 1,000 people came to Lincoln Center. This year we had over 20,000 in Union Square in Manhattan. It's a yarn carnival. I want it to be as big as the Macy's Thanksgiving Day Parade.

A couple of years ago I met Milton Glaser in Woodstock, New York. I asked him if he would work with us, and he agreed. He does our packaging, our advertising, and works on keeping our brand fresh and contemporary.

We also do custom publishing. It's a way for us to control our message. Last year we put out a new publication called Knit.1 for the 18-25 group. It's a little edgier. It's distributed at retail, and you can buy it at Barnes & Noble.

We're making a big push on the Internet. Over a million patterns have been downloaded from our site; we had 900,000 unique visitors last year. We have a Lion Brand gallery where people can share their results. And we created a Lion Brand boutique, like eBay, where you can sell your product.

I never doubted that there would be a resurgence of knitting. But I never expected this. People like Sarah Jessica Parker and Julia Roberts and Cameron Diaz are knitting. There's a popular book called Stitch and Bitch that's getting young women to knit again. I still remember when knitting was something your grandmother did. If I went to a cocktail party and could find one person who knitted, I felt great.

There's even a book called Knitting Into the Mystery: A Guide to the Shawl Knitting Ministry about the spiritual part of knitting. We'll be offering it through out catalog. We deal with hundreds of knitting ministries. The craft is everywhere.

Mario Andretti says if you're in control you're not going fast enough. I'm not in control anymore. Things have changed so tremendously in the last two years. I had a dream of being a $50 million company. Meanwhile we did around $150 million in 2004, more than a 30% increase over 2003, which was a 40% increase over the year before. We're looking to be a $200 million company by the end of 2005. We're getting another 50 SKUs at Wal-Mart this year. Amazing.

Someone asked me how we didn't implode. Last year I went to shul and said Kaddish for my father almost every day. It gave me time to think and reflect about how he would do things during this enormous growth period. We have functioning teams working here: It's not just family. And everyone is charged up.

The experts we brought in have helped us tremendously. We have a great accountant who deals with family businesses, and other wonderful outside advisors. One of them once told us that a family tree is not an organization chart. Our banks have been great; we have a fabulous relationship with JP Morgan Chase that goes back more than 70 years.

We are dealing with passionate consumers -- these are people who are not buying a finished product. It gives them tremendous satisfaction. They celebrate life with our yarn: birthdays, the arrival of children. We get love letters from them.

I want to get medical research done about how knitting calms people down, but it takes a lot of bucks to fund, and many years. Teachers around the country are finding they give 5th,6th and 7th graders knitting and it calms them down. It's better than Ritalin.

In the future, I'd like to do a flagship store, but we're just too busy this year. We have a model that Milton created. We want to show our retailers about how to romance and merchandise the category.

My son is doing a great job. His supervisor wants to give him a bonus, and I said don't do it because he's my son. He's the fifth generation. The sixth is in the business, too. He's Dean's grandson, and he's on a label of yarn.

There is something inside that makes us want to knit. I remember my wife was pregnant with my middle guy, and she was lying on the beach and said, "David, you'll never guess what I feel like doing now. I feel like crocheting." I said, "Wait till you get home, I'm not buying retail."