(MONEY Magazine) – It all started with a rash that wouldn't go away. "Nothing worked," says Tereson Dupuy, 33, of her then newborn son's chronic diaper rash. "We were both miserable." Switching from disposables to cloth helped the rash but created a new problem. "They leaked, and he was wet all the time," she says. "Plus, cloth diapers are gross." Dupuy tried to make her own, experimenting with gentle and absorbent materials, from polar fleece to terry cloth. For three months in 1998, she sewed, changed and laundered. Finally, a breakthrough. Using a combination of materials, Dupuy stitched a variation on the familiar two-part diaper--a leakproof outer pant with an absorbent inner core, both reusable. The diaper worked, and the rash cleared up. Then came the classic lightbulb moment. "I thought, I can't be the only one who can use this," recalls Dupuy.

First she gave samples to friends. Then Dupuy began selling the diapers, which she calls Fuzzi Bunz. Sales hit $12,000 in 1999, but she barely broke even.

By 2000, sales were growing steadily, thanks largely to word of mouth. Still able to rely on her husband's salary as a sound engineer, she reinvested what came in. Dupuy found skilled laborers after a local textile factory closed. "We started out by having people sew in their homes," she says, but by October 2000, the company needed a home base. "I spent $125 a month in rent and hired three employees," says Dupuy, who today has 18 employees and ships from four locations.

Last year, the company--named Mother of Eden after the son who inspired the diaper (she also has an eight-year-old daughter and a one-year-old son)--had $500,000 in sales; it's on track to double that in 2003. Her distribution system reflects the company's origin: Dupuy sells Fuzzi Bunz wholesale to 150 small Web and mail-order businesses run by work-at-home moms. She and her husband, who now works for the company, pay themselves modest salaries and pour profits back into the business, which is clearly a labor of love. --ELLEN MCGIRT