At first glance, it doesn’t feel like the future will be made in El Segundo. A small city of 17,000, just south of Los Angeles International Airport, it’s the sort of place you glance at from your taxi as it whisks you on from arrivals to somewhere more exciting. But here, in a jumble of old industrial buildings under the shadow of a giant Chevron refinery, a group of entrepreneurs are embracing the country’s emerging “hard tech” revolution, something which could soon transform both America and the wider world.
Rather than simply growing the social media sinkhole, hard tech focuses on building real-world equipment. “We’re inventing the new factory town, and recovering the sense of what works in America,” says Cameron Schiller, whose Rangeview Corporation startup uses 3D technology to make castings for the metal parts used in aerospace. And if Schiller feels his team is fighting the right fight, he’s far from alone. El Segundo, after all, is home to around three dozen such firms, the biggest concentration in the region, together making everything from drones to engines, drilling systems to satellites.
As Schiller implies, all this could finally restore America to the kind of blue-collar prosperity it enjoyed after 1945. It could also protect the country against threats from overseas and even take the country to the stars — if, that is, El Segundo can fend off competition from both other states and the looming threat of China’s own high-tech space sector.
The emergence of El Segundo, known to locals as “Gundo”, comes after decades of struggle. With the end of the Cold War, America’s traditional aerospace industry stumbled. Big contractors like Lockheed and Boeing got fat and lazy, particularly given the lack of competition after the Soviet Union’s demise.
Over recent years, and especially with the end of the Pax Americana, the country’s aerospace sector is making a comeback, jumping by 7.1% in 2023. Yet this revival isn’t really focused on poorly managed primes — Lockheed Martin’s Artemis moon rocket has been plagued by delays and failures — but rather on the smaller firms snatching up their engineers. Scattered like lost pennies from LAX to coastal San Diego, a stretch of about 100 miles, these firms are concentrated in old industrial areas like El Segundo, where the daytime population reaches 50,000, or else Long Beach’s Douglas Park, with a million square feet of industrial space.
Around 40 of these new firms are spinoffs from SpaceX, which is now worth an estimated $350 billion and whose founding headquarters once sat just 11 miles east of Gundo. One good example here is Relativity Space, a Long Beach-based outfit that develops reusable rockets and raised $650 million in 2021. Another spinoff is Impulse Space, a satellite developer that lately secured $300 million of its own.
As the SpaceX connection suggest, this is something new. For if American tech was once dominated by coders and marketers, these jobs are increasingly disappearing off to Bangalore, with software firms from Salesforce to Google facing eye-watering job cuts. Not that it’s all bad. For if algorithms are on the way out, America’s virtual economy is being replaced by what Delian Asparouhov calls “harder tech”.
Cofounder of Varda Aerospace, Asparouhov set up the firm with yet another Elon Musk protégé. More to the point, and like many of its neighbours in El Segundo, his company is interested in solving distinctly practical problems: in this case, testing pharmaceuticals in zero gravity. “There is an aerospace renaissance,” the Bulgarian MIT graduate explains. “This can’t be done with AI — you need people to build spaceships. It’s a paradigm shift.”
It’s hard to disagree with that last phrase, and not just scientifically. For if firms like Varda represent a more practical form of science, the “hard tech” revolution, with its circuit-boards and machinists, equally implies a different kind of corporate culture. They may, after all, flap like palm trees to the political winds: but, in general, the lords of Silicon Valley are socially progressive, and believers in an elite culture that has little in common with everyday Americans.
With the military implications of satellites and space, however, spots like El Segundo are rather more comfortable in their Right-wing patriotism. “There’s a sense of being comfortable in America,” says Tom Feldman, founder of Durin, a startup that wants to use new technology to bolster mining. “There’s a nationalist theme here. We feel we are building for America. That’s why there’s so much concern about who has the biggest flag.” That sentiment is echoed by the area’s broader cultural vibe. Lunch for Feldman is less about locally sourced salads or Asian fusion and far more about comfort food at Wendy’s Place, a wood-panelled diner where young engineers eat eggs, pancakes and meatloaf amid calloused-handed older aerospace workers.
To establishment media outlets, El Segundo’s “bros” appear a threat to everything they hold dear. To quote Vanity Fair, they love fast cars, tobacco, and “their Lord and savior Jesus Christ.” These nerds, the liberals report, are inspired by blue-collar aesthetics, wearing tattered jeans, leather work boots, and dark t-shirts with company emblems embroidered on their breast pockets.
And, to be fair, this cynical tone isn’t totally unreasonable: waving the Stars and Stripes can be lucrative indeed, with almost half of 2024’s top 100 defence startups newcomers to the scene. These firms have together secured $52 billion in private capital, far more than they received from defence or space agencies. The majority were located in California. Tiny El Segundo, for its part, was home to four, equal to San Jose and its 970,000 people.
Yet if a dash of patriotism isn’t bad for the balance sheet, the two are hardly incompatible. Indeed, the Gundo squashbucklers arguably echo the conquistadors that roamed California in the Age of Exploration. As one of Hernán Cortéz’s captains explained back in the 16th century, the Spaniards crossed the seas to both “serve God and His Majesty” and “to grow rich, as all men desire to do.”
“If a dash of patriotism isn’t bad for the balance sheet, the two are hardly incompatible.”
Historical analogies aside, it’s obvious that the upstarts are making a real splash with the White House. Shaym Sanker, CTO of defence giant Palantir, sees Donald Trump as a chance to break the “manager” mode of Boeing and Nasa, a view that is fair enough when challenger firms like Anduril are now worth over $30 billion. “This is where the exciting things are happening,” agrees Ian Cinnamon. The 33-year-old cofounder of Apexspace, which builds buses for satellites and rockets from its El Segundo factory, describes the production process as something that ends not in digits: but in something more tangible.
Cinnamon is clearly proud of these developments, especially compared to his rivals further up the coast. “Silicon Valley,” he says, “is not so exciting.” Perhaps — but the El Segundo boom is clearly about much more than tech bro rivalries. For if firms here are making it big in defence, they’re also adapting to, and indeed shaping, the future of warfare thousands of miles from California. Faced by the rise of drone and missile attacks from Gaza to Yemen to Ukraine, the Pentagon is rethinking the equipment it needs, all part of a $36 billion procurement overhaul. Arguably somewhat less essential are the eye-wateringly expensive tanks and jet fighters produced by legacy firms — replaced by cheap and replaceable alternatives.
In truth, though, the biggest pool of money splashing around Gundo isn’t from the Defense Department, but rather the burgeoning space industry. In a sense, of course, El Segundo is just following global trends. Boosted by a huge surge of investment, space industry global revenues have jumped tenfold since the early 2000s, from $175 billion in 2005 to almost $385 billion in 2017, a growth rate of just under 7% per year. All told, the space economy is now estimated at $570 billion, and could reach $1.2 trillion by 2040.
Here, at least, Southern California can rely on its history. For if the Boeings of the world are in trouble, the state retains almost twice as many aerospace engineers as second-place Texas. These skills, including those of skilled machinists and other blue-collar specialists, provide the sinews of the new space economy. One great example here is Arkisys, a small startup located 25 miles from El Segundo. Squatting in a low-rise building, across the road from an old-school pasta joint and a Mormon church, it is developing ports to service satellites in space. These sites are serviced by robots, controlled from Earth, which can help with everything from repairs to fueling.
“This is the right space because it’s the bastion of historical space intellect,” says Dave Barnhardt, Arkisys’ professorial founder, who among other things has worked at high levels at DARPA, the originator of the internet. At 63, Barnhardt is a grizzled veteran compared to most other space people, wearing the button-down shirt and slacks that once were the preferred uniform of engineers.
Fair enough: its reservoirs of talent have allowed California to expand its dominance of aerospace. The Golden State enjoys a 19% share of the global space industry, dovetailed by 40% of the government’s largest space-related programmes.
Yet here, as elsewhere, California’s dominance is threatened by rivals. The two obvious internal candidates are Texas and Florida. Unlike California, both boast their own Space Commissions, combined with lower costs and friendly taxes. No less important, both Texas and Florida have all-important rocket launch sites, not least iconic spots like Cape Canaveral. Together with California’s continued bickering with space leaders — his heirs may have plumped for El Segundo, but Musk himself left the state after tiring of its wokeness — and the exact contours of American aerospace remain uncertain.
What’s not in doubt, though, is that this technology looks set to dominate our century. For if those robots and satellites are all impressive enough in theory, they could yet be used as a geopolitical battering ram.
Combined with the kind of drone technology developed by the likes of Palantir, and it’s little wonder America’s leading rival is taking the hard tech revolution so seriously. Under the tight control of the Chinese Communist Party, Beijing’s deep tech companies reflect a desire to dominate human affairs both on the ground and amid the stars. Though it didn’t put an astronaut in space until 2021, the People’s Republic enjoyed a record number of launches last year, not least when the Tianwen-1 (“Heavenly Questions”) mission drove a rover on the surface of Mars. China is also the first country to return samples from the far side of the Moon. The country’s future goals are no less ambitious, including a mission to Jupiter and its moon, Calisto in 2029 and 2038 plans for establishing a research base on Mars.
The impact of the new hard tech has implications back on Earth too. Both Russia and China are developing space-based military systems, while satellite communications, such as Starlink but also proprietary systems serving soldiers on the ground, have become critical to military conflicts from the Middle East and Ukraine to a possible fight over Taiwan. Wars will be won on earth, in short, but the critical battles may be in space.
If this were a battle of bureaucracies, China’s chances would be excellent: as Rand Simberg, one industry veteran rightly says, today’s Nasa wouldn’t be able to pull off Apollo 8. But if the American federal government is creaking, it’s equally clear that El Segundo represents something of a way back. Filled with small, innovative companies, the industrial parks of Southern California are a denim-jeaned riposte to Chinese central planning. What could be more American than that?
