As told to Adam Hanft

It wasn't that long ago that knitting was a pastime whose time appeared past, like model airplane building or needlepoint. But then David Blumenthal -- the fourth-generation CEO of a 126-year-old family-owned company named Lion Brand -- became the yarn industry's one-man ringleader, cheerleader, and thought leader. Today, knitting is cool. Celebrities do it. It's in the culture. There's even an indie video called Gangsta Knitter. And Lion Brand has gone along for the ride. If current sales trends hold, its revenue should reach $200 million this year, approximately double its 2003 level.

Lion Brand was started in 1878 by a group that included my great-grandfather Reuben. 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. We're still here.

I started on October 1, 1969. Two months later a crochet fad hit. It grew out of the hippie movement. For two years the problem was getting enough yarn. My dad [Isidor] 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.

I wanted to buy a mill. 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 -- because our strength is as a marketing and distribution company.

There was a long dry spell after the crochet fad. The trends were against us. Women started to go into the work force; they didn't have time to sit home and knit. The craft was disappearing. Gap was selling beautiful cable knits for $29.

"We were covering." That's how my father described the late '70s. We were just paying our bills.

Luckily my Uncle George, my cousin Dean's father, was smart enough to see the emergence of the discounters. So we were in Target's fourth store, and in the first stores of Caldor, Ames, and Jamesway. We've sold millions of units to Wal-Mart.

The craft retailers Michaels and Jo-Ann helped replace Woolworth, S.S. Kresge, W.T. Grant, and other retailers that have gone by the wayside.

I would travel to Europe to meet with the mills and look for trends. On one trip to Galeries Lafayette in Paris I saw a ball of yarn with a photograph of a person. A light bulb went off! A year later we were the first to put a photographic label on our yarn here. Within a year, we had nearly 40% of the market. The other guys sell a pound of yarn; we sell a pound of love.

We started realizing things had to change. My dad was in the autumn of his years, and he had bought GE stock in 1937 and was pretty comfortable. 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.

Eventually, I started to run the company. My cousins felt, along with my father and his brothers, that I was the most qualified. I also had been with the company the longest. Family businesses aren't always easy. My father's Yiddish phrase was shalom bais, which means "peace in the house." My cousins Jack, Dean, and Allen are my partners. I don't feel like their boss.

In 1992 we had a breakthrough. My cousin Jack called all excited, telling me that Vanna White was on The Tonight Show, and she said her favorite hobby was crocheting. I sent her a package of our products the next day, and she wrote me back. I still have the letter. Turned out 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 Coughlin, who is now vice chairman of Wal-Mart, and I were having dinner. I said, "Tom, what can we do to get our yarn up by the register?" He laughed and said, "Why not use the people greeters?" 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. The council had $250,000 in the bank. It wasn't enough for advertising, but I knew we had to do something to make knitting cool. So I hired a public relations woman named Alice Kasman 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 30,000 in Union Square in Manhattan. I want it to be as big as the Macy's Thanksgiving Day Parade.

We're making a push on the Internet. Over a million patterns have been downloaded from our site. We have a Lion Brand gallery that lets people display their handiwork online and a Lion Brand boutique, like eBay, where they can sell things they've made with our yarn.

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 'N Bitch that's getting young women to knit. 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 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."