The toys began as elephants, and were originally a design Steiff found in a magazine and sold as pincushions to her friends. However, children began playing with them, and in the years following she went on to design many other animal-themed toys for children, such as dogs, cats and pigs. She designed and made most of the prototypes herself.
Steiff's nephew Richard joined in 1897 and gave the company an enormous boost in popularity by creating the teddy bear in 1902. By 1907, Steiff manufactured 974,000 bears, and has been increasing its output ever since.
The Steiff company motto, as styled by Margarete Steiff, is "Only the best is good enough for children". Steiff products are subject to meticulous testing and inspection. They are required to be highly flame resistant and, among other things, smaller pieces such as eyes must be able to resist considerable tension, wear and tear, etc.
The most common materials used in Steiff toys are alpaca, felt, mohair, and woven plush. Eyes are generally made of wood or glass, and the stuffing is commonly wood shavings or polyester fibers. A large amount of the work is done by hand, from design sketches to airbrushed paint. The final touch on any Steiff toy is the trademark "button in ear" (assuming the animal has one; in any case they'll find a spot for it).
The famed "button in ear" was devised by Margarete's nephew Franz in 1904, to keep counterfeits from being passed off as authentic Steiff toys. It is metal and originally had the symbol of an elephant, later replaced by the name "Steiff". The button is still used to distinguish Steiff toys from fakes.