Handler and his business partner, Harold "Matt" Matson, formed a small company to manufacture picture frames, calling it "Mattel" by combining their names ("Matt" + "El"liot). Later, they began using scraps from the manufacturing process to make dollhouse furniture. The furniture was more profitable than the picture frames and it was decided to concentrate on toy manufacturing. The company's first big-seller was the "Uka-a-doodle", a toy ukulele.
Ruth Handler had noted that her daughter Barbara preferred playing with paper dolls that looked like adults rather than like children. When in Europe, she noticed a German doll named Lilliwhich was not meant for children at all. Rather a gag gift for men. and bought it for Barbara.
Ruth Handler says that when she bought Lilli for her daughter, she was ignorant of its adult nature. Mattel bought the rights to market Lilli: with a hair color change from blonde to brunette, and a name change to Barbie (after Ruth's daughter Barbara) she was sold in the United States starting in 1959.
Ruth Handler had stated that she thought it "was important to a girl's esteem that she play with a doll with breasts," and Barbie was certainly qualified to be that doll. If the doll originally marketed were human-sized, her measurements would have been 39"-18"-33". These measurements were based on male fantasy rather than actual human metrics, and the unrealistic size of Barbie has been controversial, with many suggesting that playing with Barbie decreases rather than enhances a girl's self-esteem. In response to criticism, Mattel adjusted the chest measurement down, and the waist measurement up, though the proportions are still uncharacteristic of most women.
Barbie became a big seller, and Ken (named for the Handler's son Kenneth) was introduced as her boyfriend in 1960.
Mattel continued to diversify its toy line, which grew to include Chatty Cathy, See 'n' Say, Hot Wheels, Creepy Crawlers and Incredible Edibles.
Ruth Handler became president of Mattel in 1967. She developed breast cancer and had a mastectomy in the 1970s, and irregularities in reporting to the Securities and Exchange Commission during her illness led to her resignation at Mattel.