Founding members Donald Fagen (1/10/48 –) and Walter Becker (2/20/50 – 9/3/17) named their band after the “Steely Dan III from Yokohama”, which was mentioned in “Naked Lunch” by William S. Burroughs. The device was a large, steam-powered adult pleasure device.

Both Fagen and Becker were part of the counter-culture of the late 1960’s and early 1970’s. “Rolling Stone” magazine hailed them as cultural “anti-heroes” of that period. They were avid readers of “Beat Generation” authors, including Burroughs.

They both attended Bard College in Annandale-on Hudson, New York, where they obtained the reputation for ignoring classes, chain-smoking, and using “dope”, in the traditional’ “beatnik” style. They met by chance in 1967, as Fagen walked past a café at which Becker was playing piano and introduced himself. The two discovered that they enjoyed the same kinds of jazz, rhythm-and-blues and rock music, and collaborated on songwriting.

They began playing covers of rock songs in area bands, including their own Don Fagen Trio. Eventually, they added their own songs to the playlists. When Fagen was graduated in 1969, the two moved to Brooklyn, where they sold a few of their songs and were noticed by the manager of the band, “Jay and the Americans”, which they joined for a while.

In 1971, they realized that the musicians they had been working with could not cope with their musical compositions and formed their own band, taking the name from the device in Burroughs’ novel.

More Info: en.wikipedia.org