[youtube=http://www.youtube.com/watch?v=_9TIspgTbLM]

CBS posted an excellent interview of David Kelley this evening. Kelley discusses Steve Jobs at 3:00 and then again at 7:40, but the whole video is definitely worth a watch. A longer Jobs clip and the transcript is below:

It is a concept that had its genesis in 1978, when Kelley and some Stanford pals took the notion of mixing human behavior and design and started the company that would eventually become IDEO. One of their first clients was the owner of a fast-growing personal computer manufacturer by the name of Steve Jobs.

David Kelley: He made IDEO. Because he was such a good client. We did our best work for him. We became friends and he’d call me at 3 o’clock in the morning.

Charlie Rose: At 3 a.m.?

David Kelley: Yeah, we were both bachelors so he knew he could call me, right? So he’d call me at 3 o’clock and he’d just like, with no preamble, say, “Hey, it’s Steve.” First, I knew if it was 3 o’clock in the morning, it was him. There was no preamble. And he’d just start– and he said, “You know those screws that we’re using to hold the two things on the inside?” I mean, he was deep into every aspect of things.

Kelley’s company helped design dozens of products for Apple, including Apple III and Lisa and the very first Apple mouse, a descendant of which is still in use today.

David Kelley: He said to us, “You know, for $17 make- I want you to-” He gave us that number $17. “I want you to make a mouse we’re gonna use in all our computers.” So what happened here was we’re trying to figure out how to make – so you move your hand and how you make the thing move on the screen. So at first, we thought we gotta make it really accurate, you know? Like when we move the mouse an inch, it’s gotta move exactly an inch on the screen. And then after we prototyped it, we realized that doesn’t matter at all. Your brain’s in the loop! The whole thing was make it intuitive for the human.

But even after they solved that monumental problem, Jobs still wasn’t satisfied.

David Kelley: So he didn’t like the way the ball sounded on the table. So we had to rubber coat the ball. Well rubber coating the ball was a huge technical problem because you can’t have any seams. You gotta get it just right. And so, you know, it would be just one thing — like that.

Charlie Rose: And suppose Steve had said to you “I’d like to have a ball that’s not steel but rubber coated” and you said “No, you can’t do that Steve.” What would he say?

David Kelley: Well the expletives that I would have- are probably are not good on camera, but it was basically, “I thought you were good,” you know? Like, “I thought I hired you because you were smart,” you know? Like, “You’re letting me down.”

It was shortly after that that Steve Jobs came into the picture. For over 30 years they worked together and were close friends.

Charlie Rose: What’s the biggest misconception about him?

David Kelley: I think the big misconception is around that he was kind of like, you know, like malicious. He was like, trying to be mean to people. He wasn’t. He was just trying to get things done right and it was– you just had to learn how to react to that. He did some lovely things for me in my life.

Jobs introduced Kelley to his wife KC Branscomb. And Steve Jobs was also there for Kelley when the unthinkable happened. In 2007, Kelley was diagnosed with throat cancer – and given a 40 percent chance of survival. Jobs, already suffering from his own deadly cancer, gave him some advice.

David Kelley: He came over and said, “Look, you know, don’t consider any alternative – go straight to Western medicine. Don’t try any herbs or anything.”

Charlie Rose: Why do you think Steve said, “Don’t look for alternative medicine, go straight to the hard stuff?”

David Kelley: I think he had made- in his mind, he had made the mistake that he had tried to cure his pancreatic cancer in other ways other than, I mean, he just said, “Don’t mess around.” You know, when we both had cancer at the same time was when I got really close to him and I was at home, like sitting around in my skivvies, you know, waiting for my next dose of something and I think it was the day after the iPhone was announced. And he had one for me, right?

Charlie Rose: An iPhone?

David Kelley: You know, your own iPhone, delivered by Steve Jobs, right after it comes out, was a lovely feeling. Anyway, so he decides to hook it up for me. So he gets on the phone to AT&T and he’s gonna hook up my phone and it’s not going well.

Charlie Rose: This is such good news for me.

David Kelley: And eventually he pulls the “I’m Steve Jobs card” you know, he says to the guy, “I’m Steve Jobs.” I’m sure the guy on the other end says, “Yeah buddy, I’m Napoleon.” You know, like get outta here. But anyway– so never did really get it hooked up.

Charlie Rose: He never hooked it up?

David Kelley: No. Not that day.

Charlie Rose: But he was close. What did he teach you about living with cancer?

David Kelley: Steve focused more on his kids, I think, than anything. And it made me fight more to survive and so that focus on family you know was something that he taught me.

Charlie Rose: You care deeply that you watch your daughter–

David Kelley: Yes.

Charlie Rose: As she continues to grow.

David Kelley: It’s about her– what was her life gonna be like if I died? That’s really motivating.

It was around that time that Kelley decided to commit himself to something even bigger…and why he approached Stanford university and a wealthy client named Hasso Plattner with the idea of setting up a school dedicated to human-centered design.

David Kelley: He thought that was a great idea and he said he’d help me. And I said, “Oh thank you” and then I went back to the development.

Charlie Rose: You had no idea what he meant?

David Kelley: No, the development office at Stanford said, “When a billionaire says ‘I’ll help you’ you should call him back right away.” So turns out, Hasso funded the whole thing.

Charlie Rose: $35 million?

David Kelley: Yeah, yeah. He said, “How much do you need?” And I wish I had said $80 million. He said yes to whatever I said I think.

Kelley now runs the groundbreaking and wildly popular Hasso Plattner Institute of Design at Stanford, the “d. school.” It is recognized as the first program of its kind dedicated to teaching design thinking as a tool for innovation — not just to designers — but to students from all different disciplines.

[David Kelley: I think you can follow your noses a little bit around that. Where’s the big idea? Where’s the excitement?]

Twice as many Stanford grad students want to take classes as are seats available. The lucky 500 students in the program augment their master’s degree studies in business, law, medicine, engineering and the arts by solving problems collaboratively and creatively, and immersing themselves in the methodology Kelley’s made famous. But there are no degrees. It is something Steve Jobs talked him out of.

David Kelley: He said, “I don’t want somebody with one of your flaky degrees,” right?

Charlie Rose: I don’t want them working for me.

David Kelley: Yeah. I don’t want them working for me if they just have your flaky degree but if they have a computer science degree or a business degree and then they’ve come and have our way of thinking on top of that, I’m really excited about it.

Today his cancer is in remission. He spends more time doing the things that he cares about most, including tinkering in his workshop with his 15-year-old daughter.