The History of Silicon Valley: Birth of Computers and the Internet

Part 2 of a 2 part series on the circumstances that gave birth to the world’s current hub of innovation — Silicon Valley

  • Part 1 explained how Silicon Valley got it’s start. Part 2 explains how Silicon Valley deepened its foothold in tech and gave them a central role in the PC and internet revolution.
  • World War II brought about the idea of a general purpose computer that could be reprogrammed to accomplish many things.
  • The early computer industry moved to Silicon Valley where transistors and integrated circuits were becoming commercialized.
  • The Homebrew Computer Club started in Silicon Valley where many electronics geniuses like Steve Wozniak shared their ideas about PCs
  • ARPA created ARPANET to share information between distributed groups of scientists.
  • The first two nodes of this network was in UCLA and Stanford, giving Silicon Valley a central role in its development.
  • Eventually ARPANET joined other networks around the world and became autonomous, creating the internet as we know it today.
Alan Turing’s Colossus computer

The First Modern Computers

Before the development of electronic computers, the term “computer” referred to people, not machines. It was a job title, designated to someone who performed mathematical equations and calculations by hand. Typically these “computers” were women that, when grouped together were called a computer pool. These women played a major role in advancing the sciences at this time, however they often made mistakes that became quite costly.

A “computer pool” working for NASA

The world was in need of a machine that could run these calculations faster and more accurately. There were a number of inventors that devised such machines, but they were all built to solve highly specific problems. The notion of a computer as a general purpose machine did not become prominent until after World War II.

During World War II, the British needed to devise a way to crack the code that the germans were using to communicate with each other. There were far too many possible combinations for anyone to do this manually before the codes reset each morning. A brilliant mathematician named Alan Turing found a way to use the vacuum tube technology used in radio and television to create a machine that could crack the german code very quickly. This computer was named Colossus (depicted above). In theory the Colossus could be reprogrammed to solve any similar problem, making it one of the first general purpose computers ever.

There were a few other similar machines invented around this time frame, two notable ones were the Harvard Mark 1 and the ENIAC. These machines were huge leaps forward, but they had pretty significant drawbacks. They were extremely large, manually programming these machines was very laborious, and they were very prone to break down due to external factors. In fact the computer bug got its name because a moth was caught in the Harvard Mark 1 and it took weeks to be found.

“First actual case of bug”

In the 1950s and 60s the semiconductor industry was just getting going out in Silicon Valley. William Shockley’s transistors were many times smaller and much more cost effective than vacuum tubes (part 1). Because of this, the idea of computers moved away from top secret government laboratories, and out west, where the parts it needed were becoming commercialized.

Soon, Jack Kilby and Robert Noyce (part 1) upgraded the transistor into the even more efficient integrated circuit (IC). Robert Noyce and Gordon Moore ended up creating their own company to create these integrated circuits, and called it Integrated Electronics (Intel for short).

Their plan was to create specialized ICs for computers made for solving specific problems. However with the help of some notable venture capitalists and fellow scientists they realized that there was a much better opportunity in selling a general purpose IC that could be used to make just about any computer. This is what is now known as the microprocessor, and is used to power all of our modern day electronics today.

Homebrew Computer Club

Homebrew Computer Club

When Intel released their 8080 microprocessor chip, they ignited a revolution in Silicon Valley. This revolution came in the form of the Homebrew Computer Club. The club held it’s first meeting in March 1975 was held in one of its members’ garage in Menlo Park in Santa Clara County. This meeting is more or less formally known as the launch of the personal computer revolution.

The club arose from a spirit of sharing “hard-won technical information” with other computer enthusiasts who developed their devices for the fun of tinkering around in this fascinating field of electronics. Despite their disdain of commercialism, some of these young hobbyists found themselves almost overnight as millionaires when their machines got acquired. Engineer and entrepreneur Len Shustek recalled the Homebrew meetings:

“We sort of all united around this neat technology. There was this notion that we could do things, and we ought to be able to do things, that big companies could.”

Homebrew soon outgrew the garage and met in a Stanford auditorium, where engineers, hobbyists, entrepreneurs, activists, and social scientists gathered to share information, buy and trade electronics parts, and even form companies. Apple would likely not have been started if it wasn’t for these meetings, which Steve Wozniak played a central role. This is what Woz had to say about the club:

“The Homebrew Computer Club was the highlight of my life. I was too shy to ever talk in the club meeting, but the way that I could communicate sometimes was by doing good designs. I was very skilled at a certain type of circuit design.”

Homebrew’s spirit of information sharing and entrepreneurship mirrored the rest of the Valley at the time. Because of this, they were able to advance the field of electronics into the personal computing industry much faster than any large company or government lab could have. In fact many people think that the Homebrew Computer Club was the origins of the open source movement that is spanning the globe today.


When the USSR launched Sputnik satellite, the United States created the Advanced Research Projects Agency (ARPA) in order to stay one step ahead of the soviets. ARPA set up research laboratories at a number of top universities and businesses all throughout the country. The majority of them were at west coast universities where the majority of the top researchers were.

One such researcher, Joseph Licklider, convinced ARPA to work on a network that would allow these distributed laboratories to share information more efficiently. The project was named ARPANET.

One of ARPANET’s first major innovations was the implementation of packet switching. This is where different computers send messages along the same set of wires instead of each getting one. Every packet had an address which it would look up on a table with all the addresses in the network on it. Then the packet would be sent to a nearby computer that was closest to the destination. Then the second computer would get the packet, look up the address and repeat the process. At the time packets were sent over phone lines.

ARPANET was started in 1969. The first node was in UCLA, the second one was at Stanford. Later UC Santa Barbara and University of Utah were added as the third and fourth nodes.

The first four nodes of the ARPANET

Stanford was central to this early version of the internet. They were the official record keeper of every node on the ARPANET. This meant that they had an address of every computer that was on the network, so when a computer sent a packet to another computer they would look up the address on Stanford’s database.

This positioned Silicon Valley as the center of this new network, which greatly accelerated their understanding of how this network could eventually be used. This also brought a lot of government research money over to the Stanford and Silicon Valley area which helped spur even more innovation in the valley.

Vint Cerf & Robert Khan the founders of the TCP/IP protocol

Internetworking Architecture

In the mid 1970s other countries started to develop their own networks. Everyone formatted their packets differently so it was very difficult to connect two networks to each other.

The solution to this was a protocol called TCP/IP which we use today. The TCP was a standard way to format packets and the IP was a standard way of assigning addresses to every computer on the network. This “internetworking architecture” is where the internet got its name.

Map of the internet in 1993

This became an inflection point in the growth of the network. More and more computers joined the internet, which at the time was nothing more than a series of digital bulletin boards and a way to email fellow researchers. This growth eventually meant that Stanford couldn’t continue to be the official record keepers of all of these computers.

Thus the ARPANET engineers re-engineered the system, creating the DNS system. Instead of separating each host and arranging them in a random order the hosts were arranged into domains. First came the top level domains like .com and .edu. Within these domains there was a lower level such as and It’s now the DNS’s job to figure out where to send your packets, not yours.

This new DNS system meant the centralization of the internet at Stanford was coming to an end. ARPANET too needed to remove themselves as the backbone of the internet, so ARPA handed control of the internet over to the National Science Foundation (NSF) who eventually handed over the reins to the internet service providers (ISPs) that control the internet today.

The engineers at Stanford, previously tasked with maintaining the network, were the most knowledgeable people in the world in terms of its potential. Now that the internet was decentralized they could focus all of their attention on commercializing and building on top of the internet, instead of just maintaining it. This newfound freedom caused the birth of many of the first internet companies right there in the valley.

Before you go…

If you want to get more startup advice like this check out our mobile app Playbook. With Playbook you can follow all of your favorite startup authors like Y Combinator, Marc Andreessen, Andrew Chen, & more. We’re still working on product market fit so we’d love to know what you think!