Silicon Valley’s First Beer Startup  

Silicon Valley, long known as a tech town, got its first brewery when Palo Alto Brewing Co. opened its doors. (Photo courtesy Wonderlane via Flickr)

In 1967, Kenneth Kolence co-founded one of the world’s first computer software companies. It was headquartered in the San Jose, California, area that would by the start of the next decade become known as Silicon Valley because of the amount of technology firms based there.

About 13 years later, Kolence co-founded one of the nation’s first microbreweries, also in Silicon Valley, which is marking its third annual beer week starting July 24. Kolence used his business experiences in the tech sector to steer the Palo Alto Brewing Co. away from what he saw as the pratfalls that had doomed other brewery startups. (The name was a bit deceptive: The brewery was in Mountain View, Palo Alto’s then-lesser-known neighbor—i.e., pre-Google HQ.)

To do this, he also leaned heavily on the research of his son, Jeffrey, the brewery’s other founder. The younger Kolence wrote his senior paper at California Polytechnic on the operations, equipment and costs of smaller breweries in the U.S. and Europe. Post-graduation, he spent six weeks studying at the old Whitbread Fremlins brewery near Canterbury, England.

Meanwhile, his father did what tech executives seem to do constantly, then and now: He raised funds—lots of it, in fact, and relatively fast. The Palo Alto Brewing Co. had banked $400,000 before it brewed its first beer. The money went not only toward state-of-the-art equipment for the seven-barrel brew house and the electronics to control it, but toward malt from England as well as filters and chemicals to mimic the waters of famed English brewing town Burton-on-Trent.

Not surprisingly, the Kolences’ first offering, beginning in late 1983, was what they called London Real Ale, a bitter in the English style. They distributed the 10 to 12 barrels a week they produced to a half-dozen or so bars in San Mateo and Santa Clara counties, where it retailed for $2 to $2.40 a pop.

Apparently, the bitter was a commercial hit, popular in particular with British ex-pats in Silicon Valley. As for the Kolences, the startup brewery’s initial success seemed preordained. After all, as father and son told The New York Times in November 1983, “making beer is not much different from making integrated circuit chips.” (That article, which misspelled the pair’s surname, was also notable for perhaps being only the second time the national newspaper of record had used the terms “micro-brewery” and “micro-breweries.”)

The Palo Alto Brewing Co. would not last. Like so many startups in Silicon Valley, it went bust shortly after the Kolences’ sold it in 1985 to Bob Stoddard, a former sales rep for Miller who would go on to start a brewpub in nearby Sunnyvale. (A current Palo Alto Brewing Co., launched in 2009, is no relation to the precursor.)

Before its 1987 bankruptcy, due in large part to a too-rapid expansion, the Palo Alto Brewing Co. danced one more time with Silicon Valley. Stoddard’s operation became the first brewery that Pete Slosberg and Mark Bronder contracted with to brew the beers for their Pete’s Brewing Co., launched in 1986. Slosberg and Bronder had met while working at ROLM, the Silicon Valley firm noted for its computerize telephone systems. Pete’s itself survived well into the 21st century.

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Tom Acitelli is the author of The Audacity of Hops: The History of America’s Craft Beer Revolution. His new book, American Wine: A Coming-of-Age Story, is available for pre-order. Reach him on Twitter @tomacitelli.