HP Started in a Garage With $538

In 1938 Dave and Lucile Packard rented the ground floor of a house at 367 Addison Avenue in Palo Alto, California. Behind it stood a small shed, where Dave’s friend Bill Hewlett lived, and a one-car garage. The garage became a workshop.

Hewlett and Packard had met as engineering students at Stanford, where their professor, Frederick Terman, encouraged graduates to stay in the area and build companies instead of leaving California. In the garage, working part-time, they took his advice.

1938: $538 and a drill press

They did not have much to start with. HP’s own history puts their working capital at $538, made up of cash and a used Sears-Roebuck drill press.

They tried several things. Their first product came out of Hewlett’s study of negative feedback: a resistance-capacitance audio oscillator, an electronic instrument used to test sound equipment. They called it the Model 200A. According to Hewlett Packard Enterprise’s history of the company, the number was chosen so that customers would think they were dealing with a firm that already had a full line of products.

The 200A had one big advantage. All About Circuits, in a history of the instrument, notes that competing equipment in 1939 typically cost between $200 and $600. Hewlett and Packard’s design was simpler, smaller and much cheaper.

Disney’s eight oscillators

The 200A caught the attention of an engineer at Walt Disney Studios. Disney was preparing Fantasia, an animated film with a new multi-channel sound system, and it needed a reliable way to test its recording equipment and the speakers in the theaters that would show it.

Disney asked for changes. Hewlett and Packard modified the design, creating their second product, the Model 200B, and Disney ordered eight of them. HP says Disney’s engineers used them to test the channels, recording equipment and speaker systems in the twelve specially equipped theaters that first showed Fantasia in 1940.

The oscillators lasted. In the summer of 1964, HP’s employee magazine reported, Disney still had three or four of them, and despite 25 years of being moved around the studio lot they were working “just fine.”

1939: A coin toss

On January 1, 1939, the two men made it official and formalized their partnership. Someone’s name had to come first, so they settled it with a coin toss. The company became Hewlett-Packard.

The first full year was modest. Wikipedia, citing HP, puts the company’s 1939 profit at $1,563 on revenue of $5,369. It was enough to keep going.

They did not stay in the garage long. In 1940 the business moved to larger quarters on Page Mill Road nearby.

From garage to giant

Hewlett-Packard grew into one of the largest technology companies in the world, making test instruments, then calculators, computers and printers. In 2015 it split into two companies: HP Inc., which sells personal computers and printers, and Hewlett Packard Enterprise, which sells technology to businesses.

HP Inc. alone reported net revenue of $55.3 billion for its 2025 fiscal year.

The garage

The building outlived its tenants’ modest start. California registered it as Historical Landmark No. 976 in 1987, and on May 19, 1989, it was dedicated as the “Birthplace of Silicon Valley,” with both founders present. HP bought the house and garage in 2000, restored them, and rededicated the site in December 2005. In 2007 the property was listed on the National Register of Historic Places.

It is a private museum today. Visitors can look at it from the sidewalk.

What the record shows

• A small first order can matter more than its size. Eight oscillators were not a fortune, but they gave a garage business a famous customer and a story HP still tells.
• Cheaper and good enough can open a market. HP’s oscillator worked well and cost a fraction of the instruments it competed with.
• The garage was the start, not the story. HP moved out within about two years. The legend is the garage; the growth came after it.
• Some decisions do not need a meeting. The order of two names on the door was settled with a coin.

Garages and small rooms appear often in this archive. Apple’s third founder left within days of signing on, and Microsoft’s first big deal was built on software it bought rather than wrote.