IVEntrepreneurshipArticle
Margarete Steiff: A Founder Against All Expectations
A young woman in a wheelchair, in a small Swabian town in the 19th century, without capital and without commercial training. A sewn pincushion became a company that still bears her name today. This portrait asks what made this path possible.
Key takeaways
- Margarete Steiff (1847 to 1909) contracted polio at 18 months, became a seamstress, and opened a felt clothing shop in Giengen an der Brenz in 1877.
- An elephant pincushion made from a pattern in a fashion magazine became a toy. 1880 is considered the official founding year of the manufactory.
- In 1907 the company produced around 1.7 million toys and 973,999 teddy bears, with 400 employees and 1,800 home workers.
- Her path fits the effectuation model remarkably well: she started with what was there, risked only what she could afford to lose, and built on people who joined in.
Why Margarete Steiff is more than a teddy bear story
The name Steiff stands for plush animals with a button in the ear. The story behind it is often told as a tearjerker: the paralyzed woman who founded a global company against all odds. This narrative is not wrong, but it obscures what is interesting for entrepreneurs today. Margarete Steiff did not simply defy adversity. She built a business with very limited means, step by step, making decisions that can be described systematically.
This portrait therefore pursues one question: How was Margarete Steiff able to found a lasting company under conditions that spoke against her, and what does her approach teach about starting a business with the means at hand? It relies only on publicly documented information, above all the company chronicle and accounts by the German Patent and Trade Mark Office. Where sources differ, I say so.
To answer it, I first trace the milestones, then present the effectuation model as a mental model, weigh two readings of her success, and finally ask what owners can take from it.
The milestones: from seamstress to manufacturer
Margarete Steiff was born on July 24, 1847, in Giengen an der Brenz. At 18 months she contracted polio. Her legs remained paralyzed, and one arm was also weakened. She depended on a wheelchair. Nevertheless she attended school and learned to sew, a craft she mastered with skill. In 1877 she opened a felt clothing shop in which she made garments and household items. She soon employed several seamstresses.
1880: the elephant
Using a pattern from a fashion magazine, she sews a small felt elephant intended as a pincushion. It becomes popular as a toy. The company names 1880 as its official founding year; other sources date the pattern to 1879.
1893: the factory
On March 3, “Margarete Steiff, Filzspielwarenfabrik Giengen/Brenz” is entered in the commercial register. The toys are shown at the Leipzig fair. Four seamstresses and ten home workers are employed.
1895 and 1897: abroad and nephew
The first business relationship abroad begins with the London department store Harrods. In 1897 her nephew Richard Steiff joins the company; his animal sketches shape many designs.
1902 and 1903: the bear
Richard Steiff designs the “Bear 55 PB,” according to the company the first plush bear with movable arms and legs. At the Leipzig fair, an American dealer orders 3,000. The company chronicle links this to 1902; the Patent and Trade Mark Office names the 1903 fair.
1904: the button in the ear
Her nephew Franz Steiff develops the “button in ear” trademark to distinguish the animals from imitations.
1909: death
Margarete Steiff dies on May 9, 1909, aged 61, of pneumonia. Her nephews continue the company.
Source: Steiff: company history
Within 14 years, the company thus grew from 14 to around 2,200 people. According to the company, in 1907 it produced around 1.7 million toys, including 973,999 teddy bears. The guiding principle attributed to her is: “Only the best is good enough for children.”
The mental model: effectuation
The researcher Saras Sarasvathy studied how experienced entrepreneurs act when the future cannot be predicted. She calls this way of thinking effectuation. The article effectuation: how experienced entrepreneurs act under uncertainty describes the model in detail. Five principles form its core: start with available means, commit only an affordable loss, secure commitments from partners, leverage surprises, and shape the future rather than predict it.
| Principle | Core idea | Trace in the sources |
|---|---|---|
| Start with what is there | Who am I, what do I know, whom do I know? | Her own sewing skill, felt as a material, family nearby |
| Set the affordable loss | Commit only what you can lose | Small shop, pincushion instead of a large investment |
| Commitments instead of forecasts | Partners who commit to taking part | Seamstresses, home workers, the nephews in the company |
| Leverage surprises | See the unexpected as a pointer | A pincushion is bought as a toy |
| Shape rather than predict | Form the part that is in your own hands | Brand and quality promise instead of dependence on chance |
Source: Sarasvathy (2001), own assessment based on the Steiff company history
The mapping is my interpretation. Margarete Steiff did not know the model, and the sources say little about how she herself justified her decisions. But the pattern is striking. The elephant was not a planned product but a by-product of her craft that customers used differently than intended. Instead of holding on to the original intention, she followed demand. This corresponds to the principle of reading surprises as a pointer to a better direction.
Margarete Steiff did not invent a toy she wanted to sell. She noticed what her customers made of her pincushion and built a business from it.
Two readings: lone fighter or family business?
The first reading puts Margarete Steiff at the center as an individual. She overcame a severe disability, acquired a craft, founded a business at a time when women rarely did business independently, and expanded it into a factory. From this perspective, her success is above all a matter of will and skill. The company chronicle and most accounts tell the story this way.
The second reading emphasizes the surroundings. The best-known product, the Bear 55 PB, came from her nephew Richard. The trademark that protected the animals was developed by her nephew Franz. Without seamstresses and a growing number of home workers, the growth would not have been possible, and after her death the nephews continued the company. From this perspective, Steiff was a family business early on, whose founder laid the foundation while others took decisive steps.
The founder
- Her own skill and her own shop from 1877
- The elephant as the first success
- A quality standard as guiding principle
The family business
- The bear came from nephew Richard
- The trademark from nephew Franz
- Growth through seamstresses and home work
I do not consider the second reading a diminishment but a complement. Effectuation describes exactly this: a founder's means are not only their abilities, but also the people they know and win over for the venture. Part of Margarete Steiff's achievement was creating a company in which others could contribute their ideas and that carried on without her. How family and business can be cleanly separated and still connected is described in the article leading a family business.
Telling the story of disability without romanticizing it
Anyone writing about Margarete Steiff faces a difficulty. Her disability shaped her life, and it would be wrong to leave it out. At the same time, it tempts one to turn an entrepreneur's life into a hero's story in which the disability is the real punchline. Research has a term for this pattern. Stroe, Sirén, and Vanacker (2026) show in three experiments that entrepreneurs with physical disabilities are perceived as a distinct subgroup when their business ideas are evaluated. Benevolent ableism, that is, well-meant but patronizing prejudice, made them appear warmer and more competent. That, too, is a bias, just a friendly one.
A review by Billion, Sahut, Doussard, and colleagues (2024) arrives at a more sober finding. Entrepreneurs with and without disabilities start businesses for many shared reasons. A disability and the needs it creates can, however, themselves be a motive for becoming self-employed, even if support is needed at various stages. Whether this was the case for Margarete Steiff can only be surmised. The sources used here say nothing about it.
What owners can transfer today
No founder today faces the same conditions as Margarete Steiff. But principles derived from her path and the effectuation model can be transferred.
- Write down which skills, knowledge, and contacts you already have before asking about missing means.
- For every new offering, decide the maximum money and time you will commit.
- Observe what customers actually use your products for, even if it does not match your intention.
- Win over people early who help shape things, instead of designing everything yourself.
- Make your quality recognizable before others copy it.
- Build the business so that it can carry on without you.
How a new offering is tested with pilot customers before it becomes expensive is described in the guide testing a new offering. Another portrait of an entrepreneur who built a large business from little is the one on Estée Lauder.
Limits of this portrait
Three caveats apply. First, much of the information comes from the company chronicle, which naturally tells its own story. Where other sources differ, for example on the year of the Leipzig order, I have named both. Second, little has been handed down about how Margarete Steiff herself justified her decisions. The mapping onto the principles of effectuation is therefore an interpretation from outside. Third, Steiff is a well-known exceptional case. Many women founded small businesses in the 19th century, none of which became famous.
Conclusion: what made Margarete Steiff's path possible?
The guiding question was how Margarete Steiff was able to found a lasting company under adverse conditions. The documented facts show a founder who started with what she had: her craft, a material, and the people around her. She initially risked little, followed an unexpected demand, and created a company into which her nephews brought decisive ideas. The effectuation model describes this approach aptly.
Her path was extraordinary, but not inexplicable. For owners today, the lesson lies not in defiance against all expectations, but in a sober attitude: start with what is available, look closely at what customers want, and let others help shape things.
Frequently asked questions
Who was Margarete Steiff?
Margarete Steiff (1847 to 1909) was an entrepreneur from Giengen an der Brenz. She contracted polio as a toddler, became a seamstress, and founded a felt toy company that still exists under her name today. 1880 is considered the manufactory's official founding year.
Who invented the Steiff teddy bear?
The Bear 55 PB was designed in 1902 by Richard Steiff, a nephew of Margarete Steiff. According to the company, it was the first plush bear with movable arms and legs. An American dealer ordered 3,000 at the Leipzig fair.
What was the first Steiff animal?
A small felt elephant that Margarete Steiff sewed from a pattern in a fashion magazine. It was intended as a pincushion but became popular as a toy. Steiff names 1880 as the manufactory's founding year.
Since when has there been a button in the ear?
Since 1904. Margarete Steiff's nephew Franz Steiff developed the trademark to protect the animals from imitations. The button initially showed an elephant, later the Steiff lettering.
What is effectuation?
Effectuation is a model by the researcher Saras Sarasvathy that describes how experienced entrepreneurs act under uncertainty. They start with available means, commit only an affordable loss, secure commitments from partners, leverage surprises, and shape the future instead of predicting it.
Sources
- Steiff: company history (From the past to the present)
- German Patent and Trade Mark Office: Margarete Steiff
- Wikipedia: Margarete Steiff (German)
- Sarasvathy, S. D. (2001): Causation and Effectuation: Toward a Theoretical Shift from Economic Inevitability to Entrepreneurial Contingency. Academy of Management Review, 26(2), 243-263.
- Stroe, S.; Sirén, C.; Vanacker, T. (2026): Crowd Evaluations of Entrepreneurs with Physical Disabilities: Stereotype Subtyping through the Lens of Benevolent Ableism. Entrepreneurship Theory and Practice, 50(6), 1757-1794.
- Billion, J.; Sahut, J.-M.; Doussard, C. et al. (2024): Qu'apporte l'étude des entrepreneurs en situation de handicap à la littérature entrepreneuriale? Une revue systématique de la littérature (What does the study of entrepreneurs with disabilities contribute to the entrepreneurship literature?). Management international, 28(1), 80-91.
Note. This portrait is based exclusively on publicly available information. Discrepancies between sources are noted in the text, and interpretations are marked as the author's assessment.
