Definitely is where they got started, but Steam is where they made the money to be the industry magnate they are today. They almost ran out of money making HL2. Without steam they would probably have been bought up and eaten years ago.

It's interesting to think of an alternative outcome, where they needed to keep making games to make money. I think there is something special about the small team and structure at Valve that would have let them stay nimble and release great games, but as above the industry loves to consolidate good studios and turn them inside out.