The Day – A sleepy California town gets a makeover with Elon Musk



Tim Berry worked as an engineer at Space Exploration Technologies Corp. earlier this year when he started looking for a new job. He found one less than a mile from his former employer’s front door.

Berry is located in Hawthorne, California, a mostly working-class town of 88,000 about a 10-minute drive from the Los Angeles airport. He is part of a small army of aerospace professionals who have descended on Hawthorne in recent years. Attracted to Elon Musk’s SpaceX, America’s most valuable startup, many highly skilled engineers stayed behind due to the city’s cheap rent and thriving aerospace startup scene.

Berry’s new employer is Launcher, a company that helps put satellites into orbit at low cost. He says he wouldn’t have taken the job if he had to travel too far. “I’m not a big East Coast or New York fan, sorry,” Berry said. Instead, he kept his ride entirely intact. “I was super happy to be able to continue working at Hawthorne.”

Local officials are thrilled, if a bit surprised, by the city’s turn as a startup hub. “Hawthorne has a lot to offer,” says Councilor David Patterson. It’s close to LA’s vibrant aerospace scene, home to many startups, but it’s not as expensive. A few years ago, there was an effort to create an accelerator at Hawthorne, Patterson says, but the idea never made it past the discussion stage.

Turns out the town didn’t need it. For seven of the past 10 years, Musk’s companies, SpaceX and tunneling firm Boring Co., have been the only startups in town to attract venture capital. In 2020, Hawthorne startups not owned by Musk brought in a respectable $105.2 million. And last year, these startups attracted $356.7 million, according to research firm PitchBook. The city is on track to double that number this year.

Many cities have tried to create their own versions of Silicon Valley, some more successfully than others. Bustling destinations like Austin, Texas — Musk’s recently adopted home — and Miami have attracted fleets of software developers during the pandemic’s remote work explosion. San Francisco still claims Twitter. But Hawthorne is a different kind of boomtown. The city’s startups haven’t been boosted by the ease of Zoom meetings so much as by the immediate availability of real physical space — that, and a surplus of people who know how to use mills, lathes and 3D printers.

It’s a good time to be a high-tech manufacturing hub. As stock markets stumble, less tangible inventions like cryptocurrencies have faced some reckoning. And increasingly, many engineers and coders don’t just want to manipulate 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 led to a roughly two-decade era where software companies became the dominant type of startup, the success of SpaceX and… ‘other hardware companies is helping to change entrepreneurial ambitions. Venture capitalist Marc Andreessen summed up the industrial fervor with his 2020 heart-cry, “It’s time to build.” In recent years, the focus of venture capitalists and engineers has been on physical inventions, especially airborne ones.

Of course, in Hawthorne, as with all success, there is also an uncomfortable side. Familiar themes of gentrification and inequality eat away at the edges, even as the city is poised for phenomenal growth.

Named for novelist Nathaniel Hawthorne, the town rose to fame as the childhood home of the Beach Boys. It was also the home of Jim Thorpe, the first Native American to win an Olympic gold medal, as well as Marilyn Monroe (then Norma Jeane Baker). The greater Los Angeles area has a long history of aeronautical innovation, and Hawthorne’s first glimpse of aerospace stardom came in 1939, when aviation pioneer Jack Northrop founded his company there. Musk’s SpaceX, as a scrappy startup, moved into former Northrop Corp buildings. in 2008.

SpaceX has quickly become an established member of the space-industrial complex, with facilities across the country and a vital role in America’s celestial ambitions. In 2016, a few engineers left the company but stayed in nearby El Segundo, California, founding Second Order. Effects, a consulting company to help other startups as well as bigger companies. The creation of Second Order Effects has helped energize the startup scene in the region, says Shaun Arora of MiLA Capital Advisors, which has supported businesses in the region for years.

Arora says he’s seen an increase in the number of startups in Hawthorne over the past few years. It helps, he says, that companies run by Musk tend to burn out employees, even inspiring them. “SpaceX teaches people that hard work and optimism can make the impossible possible,” says Arora. At the same time, “many alumni I speak with say that while the company’s purpose was compelling, they felt professionally undervalued.”

The talent pool of rocket-savvy engineers created by SpaceX was a major draw for Launcher founder Max Haot, who decided to locate his company in Hawthorne after considering other locations like Austin, New -Orleans and Pasadena, California. Haot has hired at least 14 former SpaceX employees for its Hawthorne-based team of about 55 people.

Another advantage: Hawthorne is cheap. Launcher’s 24,000-square-foot facility was “much more affordable” than space in slightly fancier neighboring towns like El Segundo, Haot says. Additionally, while these neighboring towns may house large warehouses, landlords are busy renovating them for higher-rent uses more suited to software-based businesses. Haot looked at some warehouses that were once wired for 1,000 or 2,000 amps of electricity and after renovation could only handle a few hundred amps. That’s fine for most businesses, but not for in-orbit startup, where engineers work on power-hungry projects like figuring out how to power rockets and run multiple 3D printers at once.

Joel Ifill, founder of precision airdrop company Dash Systems, is also taking advantage of Hawthorne’s low rents. It pays well under $2 per square foot. Ifill’s company operates just north of SpaceX, out of a hangar at Hawthorne Municipal Airport.

“Shed space is usually one of the cheapest square footage you’ll find in big cities,” he says. In his caverns, Dash has room for his Cessna 208B Grand Caravan turboprop plane, offices, a small engineering workshop and an area with a rug, coffee table and sofa, perfect for watching the constant stream of small planes take off and land. (That includes occasional sightings of Musk’s jet.)

Ifill doesn’t currently employ any SpaceX alumni, but he’s found plenty of other top companies in the region to choose from. These include Lockheed Martin, Boeing and Northrop Grumman, all with 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 Hawthorne startups have little to do with rockets or satellites. Ring, the next-generation doorbell company now owned by Amazon.com, is based in the city. The same goes for Stellar Pizza, an automated pie company run by ex-SpaceX engineers.

Most, however, take a spatial approach. Another example is Venturi Astrolab, based in a former bus bench factory just south of SpaceX. Venturi makes rovers that founder Jaret Matthews hopes will be selected for future NASA Artemis lunar missions.

“We build big robots,” says Matthews. “We need a lot of space to test them.” This includes the interior, as well as a covered area behind the building dotted with basalt to better simulate conditions on the moon. Besides himself, Matthews’ team includes several former SpaceX employees.

Downtown Hawthorne doesn’t yet look like a thriving business center. Its main thoroughfare includes car dealerships, ramshackle storefronts, and a 24-hour laundromat. This is where Luis Castaneda, a part-time handyman, was sitting one recent afternoon. He’s noticed more high-end workers in town, he says, and blames them for the rising prices. The room he rents costs $700 a month, he says, compared to $400 for a similar room 10 years ago when he first arrived in the city.

Alejandra Alarcon, 29, grew up in Hawthorne, in a home she shared with her mother, brother and grandmother. Almost every house on the block had a similar demographic makeup. Now, she says, newcomer households are usually made up of a couple with a dog and no children. She admits to mixed feelings about SpaceX, its offshoots, and the resulting prosperity for the city.

“SpaceX brings jobs to Hawthorne,” she says. “I’m not convinced that SpaceX is bringing jobs to residents of Hawthorne.” Alarcon commutes about seven miles north every day for his job at a university in the Westchester section of Los Angeles. She loves having a new brewery or two in her Hawthorne neighborhood, but finds it disconcerting as well.

“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 stunned to see a glitzy new apartment complex open last year. It’s on Crenshaw Boulevard, a seven-lane road two miles east of the city’s largely abandoned mall.

Rents for the building, called Millennium South Bay, are $3,725 for a two-bedroom apartment, a building office official said — well above the city’s median of $2,285, according to Zillow. The new building’s website promises easy access to the beach and other local restaurants. But the Millenium’s most attractive amenity is, of course, SpaceX’s headquarters, located a block down the street.

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