On the IndexFunds website, there they list the heroes in their pantheon. They mention that Burton Malkiel's A Random Walk Down Wall Street, clearly laid out the argument for indexing. He presented these theories to the private investor, even making a plea to any institution to sponsor an index fund. "Fund spokesmen are quick to point out you can't buy the market averages. It's time the public can." This was in 1973.
Also in 1973 John McQuown at Wells Fargo and Rex Sinquefield at American National Bank in Chicago both established the first Composite Index Funds. Clearly, the idea was in the air. John and Rex are now very rich. With hindsight, their idea seems rather obvious. It highlights that sometimes you can be successful doing something pretty obvious that others are afraid to do merely because it hasn't been done.