Underwear Model Frederick Mellinger's racy creations made his business a star.
By Paul Lukas

(FORTUNE Small Business) – There's no denying it: "Mellinger's of the Lower East Side" just doesn't have the same ring as "Frederick's of Hollywood." But the clumsier name, unglamorous though it may be, provides a truer glimpse of the origins of one Frederick Mellinger. This Hungarian-American tailor's son from lower Manhattan revolutionized the lingerie industry and created an iconic sex brand along the way.

Mellinger's story begins in the Depression, when he was working for a mail-order operation and suggested selling black lingerie instead of just the standard white. Sadly, the world wasn't yet ready for black underwear--or at least Mellinger's bosses weren't--and he was promptly fired for proposing such scandalous merchandise. He ended up in the Army, where his fellow soldiers displayed racy Hollywood pinup posters in the barracks. Mellinger quizzed them and found, as he'd expected, that they wished women would upgrade from white underwear to something more exotic.

Buoyed by his informal market research, Mellinger left the Army and returned to retailing, opening a Manhattan shop featuring lacy passion fashions (including, of course, black lingerie). But newspapers refused to carry his ads, decrying the illustrations as pornographic. Undaunted, Mellinger countered by running cagily worded classified ads ("Bare Illusion Panties: To wear under your prettiest things when you want to feel extra alluring and just a little naughty too!") that soon caught the attention of Broadway showgirls and dancers. These performers, tired of the boring undergarments at Macy's and Gimbels, became Mellinger's best customers.

But Mellinger soon decided the real action was out west, so in 1946 he moved and reinvented his business as Frederick's of Hollywood, catering to Tinseltown starlets and wannabes alike. He got a break during a 1947 buying trip to France, where he saw a then-startling sight: a bikini. He brought back a large shipment, which sold out almost immediately and resulted in a customer's being arrested on Venice Beach for indecent exposure. It generated tremendous publicity (newspapers carried photos of the bikini-clad woman being led away in handcuffs), and business soared.

But Mellinger wasn't merely a retailer. He was intent on improving intimate apparel. Thanks to his research and innovations--which at one point included hiring a team of industrial designers from the Army Corps of Engineers--Frederick's of Hollywood became known for a number of American lingerie milestones. They included the first padded bra (1947), push-up bra (1948), padded girdle (1951), push-up bikini (1958), and thong panty (1981). Along the way came the tawdry but playful accessories for which Frederick's remains best known: the stiletto-heeled boots, the outrageous wigs, and, of course, the crotchless and edible panties.

Mellinger--or Mr. Frederick, as he became known--remained involved with the company until his death in 1990. Unfortunately that was around the time the Limited helped redefine intimate apparel with its Victoria's Secret brand, finding a mainstream clientele by making lingerie soft and pretty instead of hard and raunchy. Without Mellinger, Frederick's had difficulty adjusting. Despite hitting a revenue peak of $200 million in 1999, the brand had lost its direction. New ownership leveraged the company's assets with more than $15 million in new debt, resulting in a bankruptcy filing in 2000. Frederick's has since reemerged with a reorganization plan but is still seen by some as a relic. Ironically, this is a testament to its success--if Frederick's has become dated, that's just because it was unable to keep up with the sexual revolution it helped create.