From the title page of the 1st Edition D&D Monster Manual
I may get the details on this wrong, as it is oral history, heard from Tim Kask about 3 years ago at GaryCon. I asked him about his hand in creating the bulette, and to the best of my knowledge this is paraphrasing what I was told:
Gary was always on the lookout for new monsters. He found some Taiwan toy "dinosaurs" that didn't look anything like dinosaurs at a dime store. He brought them back and told the TSR employees to make monsters for D&D out of them.
Tim grabbed what we now know as the bulette.
Dwarven ponies were running rampant in Tim's game at the time. He decided a predator was in order. As the party was resting with the ponies tied to a tree, a pair of bulettes burrowed up and grabbed the ponies. They ripped them apart, and once their bellies were full, left again. (I don't know if the adventurers actually killed one.)
Bulette are a stereotypical monster. They are big, tough, and stupid. They are a complete mystery, rising from the depths to cause havoc and destruction, with no known reproduction or social habits. They exist to feed and to strike fear into adventurers hearts.