Pang: How did you start Hovey-Kelley?
Kelley: Well, I'd realized that I'm not cut out to get a Ph.D., and all these guys are calling me, so I had all these little projects to do, and I'm a much more collaborative person-- if I have a problem, I find a lot of other smart people, I don't go try and solve it myself-- and so I started needing help for this work. Then I thought, "You know, it would be fun to have a company." Stanford's a very entrepreneurial place, and McKim had made a bunch of money in little entrepreneurial companies-- Oxford Laboratories was his big hit, where he was just a consultant, and got stock instead of a fee-- so in order to get this work done, I'd have a more formal business structure, and put a bunch of people together to solve these problems.
So I went to McKim-- I didn't know Dean Hovey, I knew he was one of the students in the program a year or two behind me-- and said, "Bob, I've got this idea for starting a company," and he said, "That's a good idea, except for the fact that it'll be very cyclical, like architecture: you'll hire a bunch of people, then there won't be any work and you'll have to fire everybody." He and I laugh about that, because since then we've never had a slow moment: he didn't see how big Silicon Valley would become, but he was speaking from his experience.
So I said to him, "Okay, but I need some help, I don't have any business acumen. Who's the best kid graduating from the class? Who do you think is the smartest guy in the program?" And he said, "Dean Hovey." So I went and found Hovey, and we'd both worked for McKim's little company, Kimetrix, but at separate times and in separate places, so we had that experience in common, and knew those guys. So we just decided to start. he had a bike frame business-- Hovey made bike frames in high school-- so he had a checking account called "Hovey Design." We didn't have to open a checking account, we just used "Hovey Design," and added Kelley in there later.
That was it, that was the start. We rented a little place downtown for $90/month. We were scared to death, paying $90/month. Actually, it was almost exactly 22 years ago, in July of 1978.
Pang: Did all the early members of the company come out of Stanford?
Kelley: Yeah, Jim Sachs, Jim Yurchenco, Rickson Sun-- It was just a clique, it was like, who did I want to hang around with during the summer? You remember like in high school, you hang with your buddies because you've got nothing better to do? It's the same, it was exactly the same deal. We just started picking people we knew and liked. And then of course those people have people who they like: Hovey had some guy from his church who joined the company. Nobody expected this to last very long, it was just something we were doing until we grew up. But it just kept going.
Hovey was smart enough to get out: Hovey was the business acumen guy, and I was the nurturer of the staff and the design guy, and if you're a business guy you get out pretty quickly. There's no leverage, everyone's working hard, and if you want to make more money, you have to work more hours and hire more people and have more headaches. If you don't love the design part of it, it's not a good business. So he left in 1981.
Pang: When did it become IDEO?
Kelley: It became David Kelley Design in 1981, and then we changed to IDEO in 1990, when we merged with some real industrial designers.