Inventor of the Wildly Popular 'Rainbow Loom' Weaves the American Dream With Rubber Bands in a Detroit Basement
Choon Ng is like a lot of other men in one respect: He had to put a ring on his wife's finger before she was on board for the next chapter of their life together.
From the end of the summer into the fall of 2010, Ng tried hard to convince his wife Fen Chan to let him sink all of their savings into a toy loom that turned small, colorful rubber bands into bracelets, charms and other jewelry. “She is the boss, she controls the money. It wasn’t easy to convince her. I was making lots of bracelets, rubber-band hair bands, wearable anklets, chokers, and she was kind of impressed but she wasn’t agreeing to invest,” says Ng, 45, who immigrated to the U.S. from Malaysia in 1991 to attend college at Wichita State University.
Ng would work late into the night in the basement of his Detroit home coming up with new patterns in the hopes of impressing his wife. Whenever he'd come up with a new way to weave the rubber bands together, he'd wake her up to show her. “She would wake up at midnight kind of mumbling, ‘Wow, that’s great. Honey, let’s go to sleep.’ She wasn’t paying attention at all,” he says.
It wasn't until he made a colorful rubber-band ring and put it on her finger that her tune changed. “[From] that point onwards, she was like, ‘Hey, honey, I think you are onto something. We are onto something. I agree this is something that we should try,’” remembers Ng.
With his wife’s formal blessing and access to the family’s $11,000 in savings, Ng spent $1,000 submitting an invention record, a preparatory document filed before submitting a patent. Ng, a crash-safety engineer at Nissan at the time, had generated 28 iterations of what is now known as the Rainbow Loom.
To have his product manufactured in the U.S. would have cost Ng $12,000, more money than he and his wife had in savings. Ng interviewed five factories in China before ultimately selecting one. “I cannot make any mistakes. I knew that a lot of mistakes can be made, but I cannot afford to lose [the money]. I only have one shot, which is very scary,” says Ng. It cost him $5,000 to have the plastic parts made for the looms and another $5,000 for the rubber bands.
Labor of love is an understatement when it comes to describing the process of assembling and packaging the looms. The first order of rubber bands arrived in June 2011 and weighed 2,000 pounds, approximately the weight of a mid-size car. The rubber bands also brought with them the first of what were to be many production hurdles for Ng: they arrived covered in a dust that Ng describes as uncomfortable to the touch. He determined all the rubber bands would have to be washed. His first thought was to dump them into the bathtub with soap and water and swish them around with a boat paddle. Drying them that way took a lot of towels. His next idea was to put the rubber bands through the washing machine in a special bag.
Also, the first order of hooks used to pull the rubber bands through each other that Ng ordered arrived from China the wrong size. And he had ordered 10,000 of them. So, Ng, one by one, hammered the hooks into the shape necessary. He was able to do 500 in approximately three hours.
In the earliest production phase, there were good days and bad days, says Ng. “But most of the times, they are bad days,” says Ng, laughing. Not only was Ng still working his full-time job at Nissan, but he also wasn’t making money. Getting the product packaged required a lot of labor, even once the rubber bands were cleaned and the hooks bent into proper shape. The rubber bands needed to be segmented into small bags, the looms assembled from the various parts and Ng tried to include one completed bracelet in each package, too. At first, his two daughters and the neighbor’s kids came to help out. “The problem though is that after three weeks or so, the kids got bored and they don’t want to do any more,” says Ng.
But Ng and his wife were already in too deeply to back out. “The $11,000 that we had saved up, that was for our daughter’s education fund -- that is all we can save up back then. There is no [turning around] and saying ‘We quit.’ When you go into a business like that, you own the responsibility, you own the problems, good or bad,” says Ng.
Ng and his wife began selling the first Rainbow Loom kits in July of 2011. They would sell kits to anyone who would buy them. Ng would go to the local mall, and stop into every toy store pitching his product. Nobody bit. Actually, Ng was even asked to leave several stores, and in not always the nicest of language. Ng built a web site, still the same one they have today, in an effort to increase sales. The problem, he posited, was that nobody understood how to use the product. So he had his daughters help him make videos. His niece was in the first video. “She can talk much better than I do. My background is I am a Chinese from Malaysia and I don’t think kids want to listen a middle-aged Chinese who speak broken English try to sell them the bracelets,” says Ng.
Then Ng got a phone call from Cindy and Malcolm O’Hara in Alpharetta, Ga. The couple own a Learning Express store and they wanted to try selling the Rainbow Loom. The O’Hara’s ordered 24 looms to start. Two days later, they called and ordered 48. About a week later, says Ng, the O’Haras placed an order for $10,000 worth. “My wife and I were looking at the computer where the orders come in. We were staring at it for three minutes. We were like, ‘Oh my gosh. Oh my gosh. What happened?!” says Ng. That was July of 2012.
Shortly thereafter, Ng quit his job at Nissan to help his wife, a one-time stay-at-home mom now full-time Rainbow Loom producer, keep up with the orders. In June of this year, craft giant Michaels approached Ng and his wife. The store tested Rainbow Loom in 32 stores across the U.S. The product flew off shelves. As of Aug. 4, Rainbow Loom is available in 1,100 Michaels stores nationwide, selling for between $14.99 and $16.99 a set.
Earlier this year, Ng moved production from his basement to a 500-square-foot warehouse. He employs nine full-time staffers and two part-timers who are going back to school in the fall. He has sold over a million looms.
Michaels would not disclose exactly how many Rainbow Looms it has sold so far, but more than 20 stores sold out “immediately,” according to a statement from Philo Pappas, the company's executive vice president of category management. Pappas says the Rainbow Loom is selling 10 times better than the previous bestselling kid’s product at Michaels, attributing its success to the product's inherent customization and social aspects. “With kids and tweens now it is all about creating something unique and personalized, which is exactly what the Rainbow Loom does,” says Pappas. “Plus, kids love to come up with new designs and share them with each other, so there’s a social element, too.”
For now, Ng and his wife are reinvesting all of their profits into growing the company. Not much has changed in terms of their lifestyle; Ng is still driving a 12-year old car and he goes to bed at 3 or 4 every morning because he is dealing with suppliers overseas. While he is intellectually aware that the Rainbow Loom will change his financial status, Ng says he is focused right now on the company. And even when he does cash in, Ng says he doesn’t want his kids to feel it. Teresa, 15, and Michelle, 12, will need to learn the value of money and hard work, he says.
Ng says his product's recent success is "mind blowing." "I knew that not many inventors have their dream come true like this one. But I am living it now. I treasure every moment of it. I would say this is the best time of my life,” he says.
Even though Ng feels his success has a lot to do with luck, he also admits it's the result of determination. “It does not come like in the lottery winning, you know. This is all of the late nights. And I am still working late nights.”
Catherine Clifford is senior entrepreneurship writer at CNBC. She was formerly a senior writer at Entrepreneur.com, the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Clifford attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. You can follow her on Twitter at @CatClifford.