It was designed by Google's co-founders and posted on the Google home page 14 years ago yesterday, on August 30, 1998. It was a tribute to the Burning Man Festival.
Google posted this tidbit on Google+ yesterday saying:
Today happens to be a lesser-known milestone in Google history: the anniversary of the very first doodle, which our founders put up on our homepage to indicate to users that they were at the Burning Man festival. Two of our doodlers met with +The Huffington Post to talk about how doodles are conceived of and created, their favorite doodles and how they measure success by whether they get an email from mom...
You can read the Huffington Post article as well.
That is what kicked off the concept of Google Doodles, just over 14 years ago today.
Forum discussion at Google+.