THE DAY – Tranquil California Gets an Elon Musk Makeover

Tim Perry was an engineer at Space Exploration Technologies Corp. Earlier this year when he started looking for a new job. He was found less than a mile from his old employer’s front door.

Berry is located in Hawthorne, California, which is a largely working-class city of 88,000 and is about a 10-minute drive from Los Angeles Airport. He’s one of a small army of aviation professionals who have descended on Hawthorne in recent years. Drawn by Elon Musk’s SpaceX, the most valuable startup in the United States, many highly skilled engineers have stayed put because of the city’s cheap rent and burgeoning aviation startup scene.

Berry’s new employer is Launcher, a company that helps move satellites into orbit at a low cost. He says he would not have accepted the job if it required traveling too far. “I’m not a big fan of the East Coast or New York, sorry,” Berry says. Instead, he kept his key completely intact. “I was very happy to still be able to work at Hawthorne.”

Local officials are delighted, if a little surprised, by the city’s role as a startup hub. “Hawthorne has a lot to offer,” says councilman David Patterson. It’s close to Los Angeles’ vibrant aviation scene, which has many of its own startups, but it isn’t too expensive. There was an effort a few years ago to create an accelerator at Hawthorne, says Patterson, but the idea never got past the discussion stage.

It turns out the city didn’t need one. For seven of the past 10 years, the Musk, SpaceX and tunneling venture Co. , are the only start-ups in the city that are attracting venture capital. By 2020, Hawthorne startups not owned by Musk have earned $105.2 million. And last year, those startups attracted $356.7 million, according to research firm PitchBook. The city is on track to double that number this year.

Several cities have tried to create their own versions of Silicon Valley, some with more success than others. Busy destinations like Austin, Texas — Musk’s recently adopted home — and Miami have drawn fleets of software developers during the pandemic’s explosion of remote work. San Francisco is still demanding Twitter. But Hawthorne is a different kind of boom. The city’s startups weren’t backed by the ease of Zoom meetings so much as by the ready availability of actual physical space—that, and an excess of the kinds of people who know how to use factories, lathes, and 3D printers.

It’s a good time to be a hub for high-tech manufacturing. With stock markets faltering, less tangible inventions such as cryptocurrency have faced reckoning. And increasingly many engineers and programmers don’t just want to deal with ones and zeros or sell targeted ads – they’re looking to create real objects. Just as the rise of software-based companies like Google and Facebook in the early 2000s ushered in a nearly two-decade-long era when software ventures became the dominant type of startup, the success of SpaceX and other hardware companies is helping change the ambitions of leading businesses. Venture capitalist Marc Andreessen summed up industrial fervor in his heartfelt cry for 2020, “It’s time to build.” In recent years, the interest of venture capital and engineering alike has gravitated toward physical inventions—particularly airborne.

Of course, in Hawthorne, as with any success story, there is an uncomfortable side, too. Familiar themes of gentrification and inequality gnaw at the edges, even as the city prepares for explosive growth.

Named after novelist Nathaniel Hawthorne, the town holds early fame as the childhood home of the Beach Boys. It was also the residence of Jim Thorpe, the first Native American to win an Olympic gold medal, as well as of Marilyn Monroe (then Norma Jean Baker). The greater Los Angeles area has a rich history of aviation innovation, and Hawthorne’s first taste of aerospace stardom came in 1939, when aviation pioneer Jack Northrop founded his company there. SpaceX has gone from Musk, as an unstable startup, to forming Northrop Corp. buildings in 2008.

SpaceX quickly became an established member of the space industrial complex, with facilities across the country and a critical role in the United States’ celestial ambitions. In 2016, a few engineers left the company but remained in nearby El Segundo, California, founders of Second Order Effects, a consulting firm. To help other startups as well as big companies. The creation of Second Order Effects helped launch the startup scene in the region, says Sean Arora of MiLA Capital Advisors, which has been supporting businesses in the region for years.

Arora says he’s seen a slight uptick in the number of startups at Hawthorne in the past few years. It helps, he says, that the companies Musk runs tend to burn employees off, even while inspiring them. “SpaceX teaches people that hard work and optimism can make the impossible possible,” Arora says. At the same time, “several alumni I spoke with say that while the company’s goal was compelling, they felt professionally undervalued.”

The talent pool of seasoned rocket engineers classified by SpaceX has been a major draw for Max Haut, the founder of Launcher, who decided to locate his company in Hawthorne after considering other places like Austin, New Orleans and Pasadena, California. Haot has hired at least 14 former SpaceX employees for his Hawthorne team of about 55 people.

Another plus: Hawthorne is cheap. The 24,000-square-foot Launcher facility was “much more expensive” than the space in slightly more picturesque nearby towns like El Segundo, Haot says. Additionally, while those neighboring cities may have large warehouses, the owners are busy renovating them for higher-rent uses, more suitable for software-based businesses. Haot looked at some warehouses that were previously wired with 1,000 or 2,000 amps of electrical power, which, after renovation, was only able to handle a few hundred amps. This is fine for most companies but not for orbital startups, where engineers work on electricity-intensive projects like figuring out how to power rockets and running multiple 3D printers simultaneously.

Joel Eiffel, founder of Dash Systems for precision airdrop, is also taking advantage of the lower rents at Hawthorne. It pays well under $2 per square foot. Ifill commercial operates just north of SpaceX, outside the hangar at Hawthorne Municipal Airport.

“Hangar space is usually one of the cheapest square footage you’ll find in big cities,” he says. In the cavernous excavations, Dash has space for a Cessna 208B Grand Caravan helicopter, desks, a small engineering shop, and an area with rug, coffee table and sofa, perfect for watching the constant flow of small planes taking off and landing. (This includes accidental scenes of a Musk plane.)

Ifill doesn’t currently employ any SpaceX alumni, but has found plenty of other top companies in the area to choose from. Those companies include Lockheed Martin, Boeing and Northrop Grumman, all of which have offices in El Segundo. “We have people from Tesla, Virgin Galactic, Wet Design,” he says, referring to a water engineering company based in Sun Valley, 30 miles north.

Some of the Hawthorne startups have nothing to do with rockets or satellites. Ring, the next-generation doorbell company now owned by, is headquartered in the city. So is Stellar Pizza, a robotic pie company run by former SpaceX engineers.

However, most of them take a space path. Another example is Venturi Astrolabe, which was founded from a former bus seat factory south of SpaceX. Venturi is making rovers that founder Garrett Matthews hopes will be selected for future NASA missions to the Artemis moon.

“We build big robots,” Matthews says. “We need a lot of space to test it.” This includes the interior, as well as a covered area behind the building filled with basalt to better simulate lunar conditions. Besides him, Matthews’ team includes several former SpaceX hands.

Downtown Hawthorne doesn’t look like a thriving business hub. The main drag features auto dealers, rundown storefronts, and a 24-hour laundry. This is where Luis Castaneda, a handyman part-time, was sitting one afternoon. He’s noticed there are more superior workers in the city, he says, and blames them for the higher prices. The room he rents is $700 a month, he says, compared to $400 for a similar room 10 years ago, when he first arrived in town.

Alejandra Alarcón, 29, grew up in Hawthorne, in the house she lived in with her mother, brother, and grandmother. Almost every home in the building had a similar demographic mix. Now, she says, newcomer homes usually have a couple with a dog and no children. She admits of mixed feelings about SpaceX, its subsidiaries, and the city’s ensuing prosperity.

“SpaceX is bringing jobs to Hawthorne,” she says. “I’m not convinced that SpaceX is creating jobs for Hawthorne residents.” Alarcon commutes about seven miles north every day for her job at a university in the Westchester section of Los Angeles. She would love to have a new shop or two in the Hawthorne neighborhood where she lives, but finds it troubling, too.

“When I walk into these spaces, I stop feeling like I’m in my hometown, because everyone looks so different from the people I grew up with,” she says. “Everyone I grew up with was working class.”

Alarcon was surprised to see a new shiny-looking apartment complex that opened last year. It is located on Crenshaw Boulevard, a seven-lane road two miles east of the city’s largely deserted shopping centre.

An agent in the building’s office said rents in the building, called the Millennium South Bay, come to $3,725 for a two-bedroom apartment — well above the city’s average $2,285, according to Zillow. The website of the new building promises easy access to the beach and other local restaurants. But the Millennium’s most tempting amenity is, of course, the SpaceX headquarters – located just a block down the street.


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