In addition to the usual Space Dirt news and info you’re accustomed to, I thought it’d be fun to do a deep dive into a place many people who get this newsletter (and where I work) call home: El Segundo.

Warning: this is less nuanced journalism and more a celebration of El Segundo. However, to amplify the celebration idea, we attempted to include information that: 1) We had never seen fully fleshed out, 2) Interesting to us, and 3) Echoed our sentiments perhaps better than we could articulate (via curation of some outstanding content that we had nothing to do with, but enjoy).

If you’re not into El Segundo, skip past the first part of this newsletter, and you’ll find February’s Space Dirt.

Let’s go!

THE RESURGENCE OF EL SEGUNDO

THE HISTORY OF EL SEGUNDO IN 5 BULLETS

Rather than a long, drawn-out history, here are a few inflection points that helped shape present-day El Segundo.

• In 1911, John D. Rockefeller’s Standard Oil of California purchased an undeveloped site with shore access and affordable land near populated areas to draw workers for a new oil refinery. In Spanish, “El Segundo” translates to "The Second One." And thus, because this refinery happened to be Standard Oil's second refinery in California, El Segundo was so named. Standard Oil of California became Chevron in 1984.

• El Segundo was incorporated as a city in 1917.

• In the post-World War II era of the late 1940s and 50s, Douglas Aircraft, Hughes Aircraft, Northrop Aircraft, and North American Aviation (Rockwell) all opened operations in El Segundo —> In the mid-1950s, Southern California Edison completed a major electrical generating station to power the burgeoning new aerospace center —> In 1960, The Aerospace Corporation and Los Angeles Air Force Base joined to create what is referred to as "The Aerospace Capital of the World."

• In the 1990s, the aerospace and defense industries underwent a wave of consolidation. During this period, the two prevalent business strategies were to 1) relocate large production operations to more economically favorable areas and 2) phase out retiree pensions as part of employee compensation packages. Since much of the aerospace work in El Segundo and the South Bay was engineering and development-centered, the second strategy incentivized technical talent to move freely between companies and migrate to startups, which often offered success-oriented incentives such as company stock.

• In 2003, SpaceX set up shop in El Segundo at 1310 E Grand Ave. It’s been said that Elon chose the South Bay because the area is rich in aerospace and automotive talent. Eventually, SpaceX employees began leaving and forming their own startups, building their own hardware, and often hiring former coworkers. The ripple effect of this hard tech entrepreneurship became known as the SpaceX Effect.

WHAT MAKES EL SEGUNDO… El SEGUNDO?

If you check out any of the content I share below, you'll notice themes like "community," "ecosystem," and "talent" come up time and again. It's not uncommon for one business to help another. And vice versa. Many of the founders are on the younger side and, to an extent, are growing up together as they attempt to raise VC money and strive to change the world. In short, it's not your father's Midwest manufacturing outfit. It's a vibe. It's Gundo.

Of course, there are certainly elements in place that help foster this culture.

With its low gross receipts tax, El Segundo is recognized as the most business-friendly city in Los Angeles County. Speaking from personal experience with clients, the City of El Segundo's response time and communication on requests like permitting has been outstanding. These two factors alone help Gundo stand out in Greater Los Angeles. 

But then you throw in the VC funding, defense, and other government contracts, as well as the presence of large aerospace companies that perform major development programs, and it's easy to see why the economics for rapid development are in place in El Segundo.

And it's not stopping anytime soon. The new companies offer well-paying jobs attracting young talent from all over the U.S., enabling El Segundo to continue the momentum from the SpaceX Effect, arguably the bedrock of the current Gundo ecosystem.

Lastly, what would a piece written by a commercial real estate broker be without at least mentioning location? El Segundo is centrally located to a wide range of entertainment options, is close to LAX, features nearby housing for technical talent, and has a diverse set of fast-growing companies focused on solving complicated technical challenges in a "think tank" environment.

As you can see, many of these success factors overlap, creating a bit of a perfect storm for the hard tech industry. 

WHAT I’M SEEING NOW + THE FUTURE OF EL SEGUNDO (FROM A COMMERCIAL REAL ESTATE PERSPECTIVE)

As a commercial real estate broker and since this newsletter is inspired by the intersection of hard tech + commercial real estate, I thought you might be curious for some insight on the real estate situation in El Segundo.  

While there’s much more to consider when looking to lease an HQ or any type of space for that matter than the rental rate, the first question I always get is, “What’s the rent?” So, let's hover around there for this top-level look. 

As an aside: For hard tech companies exploring new commercial real estate space - at a minimum - you should be looking at the building's electrical systems, ceiling height, overall condition of the space, ITAR compliance, and asking questions like, will the Landlord pay for any improvements? The answer to this question alone can be more important than the asking rent. If you want to go into more depth on what you should look for in your search, reply to this email. Aside (rant) over!  

Back to rents. It's no secret El Segundo commands among the highest rents in the South Bay for the hard tech scene. And given the finite amount of space coupled with the uptick in popularity, we don't anticipate those rents coming down anytime soon.

While the recent past has seen many hard tech companies start in El Segundo, the lack of bigger facilities has forced companies to look for growth elsewhere. Torrance, Hawthorne, and especially Long Beach have been the benefactors here as companies can 10x their footprint and build out and expand their business's manufacturing facilities.

However, this is about to change. 

El Segundo landlords are increasing the supply of options for hard tech companies. At least 250,000 square feet of space in Smoky Hollow is currently being converted into flex (office and warehouse) space. Most of the space is scheduled to be completed sometime in 2025. I believe this will lead to more companies staying in El Segundo and not venturing south or east, perhaps further bolstering the Gundo ecosystem.

But…

We anticipate this new space to be highly sought after, so those looking for more of a "bargain" will still want to look in Long Beach, Torrance, and Hawthorne. 

A suggestion. One way to potentially pay less than market rent in El Segundo is to sublease another hard tech company’s space. As is often the case, when a company is growing fast, they need to move, and the last thing they want is to pay two rents. (Btw, I know a guy with a website dedicated to helping with hard tech subleases.)

I’M NOT THE ONLY GUNDO FAN

To round out our El Segundo issue, we curated a bunch of Gundo content in many different mediums. Everything from a thread on X to a video, as well as some fine writing to help tell a more complete Gundo story and perhaps add some heft to this Space Dirt issue.

🙏 Founders Fund Partner and early SpaceX employee, Scott Nolan, wrote a Pirate Wires article, Thank God for El Segundo. Having lived here in the early 2000s and, after some time away, returning in 2018, he’s lived more of the Gundo resurgence than most, and his perspective shows that.

⚙ Gundo’s synergy and ecosystem are on full display in this Substack post from Jim (just Jim) entitled, The Future of Manufacturing is Based in El Segundo. The genesis for the article? A Twitter argument that went viral.

🧵 And what El Segundo feature would be complete without a Twitter Thread? Here’s Andrew Cote's thread on his impressions of El Segundo and the hard tech scene after a weekend at the El Segundo Defense Tech Hackathon.

📽 I thoroughly enjoyed Founder’s Fund Entrepreneur in Residence John Coogan’s “GUNDO DEEP DIVE” video he posted on X. Coogan deftly touches on many aspects of Gundo, many with Rainmaker’s Augustus Doricko by his side. In about 17 minutes, you get an authentic feeling of what makes Gundo unique.

𝕏 Deep tech entrepreneur Nathan Mintz does a great job of adding context and truly explaining just how much “the SpaceX (and Tesla) Effect” has meant to El Segundo’s resurgence in his aptly named Substack piece, South Bay LA is Ground Zero for the Hard Tech Wave and Here's Why. Even if you don’t read the article, I’d urge you to check out this Figma map Mintz shares that illustrates “the shear power of the SpaceX network, with over 96 companies and counting formed by SpaceX founders alone and another 61 from Tesla, collectively raising over $19B in capital between them.”

🤨 Finally, you can’t talk about Gundo without talking about hard tech. I’m gonna reference another Nathan Mintz substack post, “What is Hard Tech?,” mainly because it’s the most comprehensive explanation of what hard tech is (and isn’t) I’ve come across. You can check out more of Mintz’s Substack content here.

And now back to our regularly scheduled programming.

REAL ESTATE HIGHLIGHTS

Machina Labs leased 60,000 square feet at 20559 Prairie Street in Chatsworth to expand its manufacturing business. (source: Bisnow)

Senra Systems leased space at 2400 Marine Ave in Redondo Beach to expand its harness manufacturing. (source: Me!)

AIBOT leased 12,291 square feet at 2883 E Spring Street, Long Beach, CA (source: Me!)

Eutelsat OneWeb has sold its 50% share of the factory that built more than 600 satellites for its low Earth orbit constellation (LEO) to Airbus, the operator’s joint venture partner. Financial details were not disclosed. (source: SpaceNews)

Redwire, a space infrastructure company based in Jacksonville, Florida, is expanding its focus on government work with a new facility in Chantilly, Virginia. The 7,300 square foot building will house executive offices, secure workspace, engineering labs and equipment to support Redwire’s national security programs. (source: SpaceNews)

Briggs, Texas-based Firefly Aerospace more than doubled the size of its manufacturing facilities, added two new test stands, and installed state-of-the-art machinery to support the production of Northrop Grumman’s Antares 330 and the Medium Launch Vehicle (MLV) the companies are co-developing together. Firefly’s expanded manufacturing space from 92,000 to 207,000 square feet includes two new large-scale buildings for rocket production, assembly, and integration. (source: Firefly Aerospace)

NOTABLE FUNDINGS

Torrance-based startup K2 Space raised $50 million in new funding as the company works to build monster satellites to match the massive rockets that are coming to market. K2's latest fundraiser was led by tech investor Brad Gerstner's Altimeter Capital. The company expects to launch its first satellite on a demonstration mission later this year. (source: CNBC)

El Segundo-based satellite ground station startup Northwood Space has raised $6.3 million in seed funding from Founders Fund and Andreessen Horowitz, with participation from Also Capital, Long Journey Ventures, BoxGroup, and Humba Ventures. More on Northwood Space below. (source: Data Centre Dynamics)

Menlo Park’s LeoLabs announced it has raised an additional $29 million in financing. This latest funding enables LeoLabs to scale up its insight delivery by further investing in advanced end-user applications and partner integrations. New investors include GP Bullhound, 1941, and Dolby Family Ventures. This extension was also backed by strong support from existing investors, including Insight Partners, Velvet Sea Ventures, Space Capital, MDSV Capital, and the AngelList Syndicate led by Dylan Taylor. (source: PR Newswire)

Stealth Seattle startup, Interlune, has been around for at least three years but has made almost zero public announcements about its tech, has raised $15.5 million in new funding and aims to close another $2 million. This is the first public indication that the company has closed any funding since a $1.85 million seed round in 2022. Interlune’s goal is to be the first company that harvests natural resources from the moon to use here on Earth. (source: TechCrunch)

AGREEMENTS & PARTNERSHIPS

El Segundo’s AnySignal, specializing in radio frequency (RF) connectivity and sensing platforms, has partnered with Long Beach-based Vast, a pioneer in space habitation. This strategic collaboration includes the development of an advanced space communication system for Vast’s upcoming Haven-1 space station, underscoring the dedication of both entities to forging the future of space interconnectivity while prioritizing safety and reliability. (source: Medium)

Torance-based space robotics startup GITAI will launch, via SpaceX's Falcon 9, its 1.5-meter autonomous dual robotic arm system (known as S2) to the International Space Station. (source: Space Voyaging)

San Diego-based company Natilus, developing unmanned aerial vehicles (UAVs) to ship air cargo, is teaming up with ZeroAvia, a British/American hydrogen-electric aircraft developer, to produce a zero-pollution autonomous cargo plane. Natilus will be using ZeroAvia’s ZA600 hydrogen-electric engine as a propulsion option on its blended wing body (BWB) cargo plane. The strategic partnership has the potential to start replacing traditional cargo planes that emit planet-warming pollution into the atmosphere. ZeroAvia now has experimental certification from both the CAA (U.K.) and FAA (U.S.) secured, plus $10 billion in pre-orders. (source: TheCoolDown)

Santa Ana’s Overair announced a new strategic collaboration with private jet management company fixed-base operator (FBO), and infrastructure developer Clay Lacy Aviation to establish emission-free, ultra-quiet electric aviation operations throughout the Southern California region. Overair and Clay Lacy plan to develop electric charging facilities at Clay Lacy’s FBO locations at John Wayne Airport in Orange County and Van Nuys Airport in Los Angeles. Finally, the partnership will explore the establishment of new vertiport facilities and services across Southern California. (source: Overair.com)

WHAT I’M CONSUMING (AND ENJOYING!)

⚙️ Loved this inspiring TechCrunch feature on Hadrian Automation’s origin story and how its Australian founder and CEO, Chris Power (great founder name!), plans to revitalize American industry by leveraging the power of automation.

📽 One more feature on Hadrian. This one is a 27-minute video deep dive on Hadrian from the prolific John Coogan (I also referenced his deep dive on El Segundo above). Once again, Australian founder Chris Power’s story and embodiment of the American dream shines through.

📺 Another CEO profile. This one from CNBC features former Disney Channel star Bridgit Mendler, who is launching a startup in El Segundo, Northwood Space, backed by venture investors including Founders Fund, Andreessen Horowitz, and Also Capital. Northwood aims to build satellite ground stations designed with fast production and deployment flexibility first in mind.

🌕 For the first time since 1972, American hardware is on the moon. Intuitive Machines has landed a spacecraft - Odysseus - on the south pole region of the lunar surface, in a historic first for a private company. For mission updates, go to this link on Intuitive’s website.

🏜 I feel like things are starting to pick up… A Varda Space Industries capsule landed in the Utah desert as part of the company’s efforts to demonstrate space manufacturing technologies. The Varda-developed capsule was part of a Rocket Lab Photon spacecraft launched in June 2023 on SpaceX’s Transporter-8 rideshare mission. Varda used the spacecraft to test space manufacturing technologies, producing crystals of a drug called ritonavir that would be returned to Earth in the capsule.

✈ Forbes leans on Dan Magy, co-founder of San Diego-based startup drone maker, Firestorm, for some perspective on the friction between the Pentagon’s Defense Intelligence Unit (DIU) and the drone developer community.

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Thanks for reading.

If you’d like your office and/or manufacturing space or business profiled - or even your city! - let me know. It’s always fun to explore and share the many different components of the space business.

As always, I’m here to help with your real estate needs.

Erik Stiebel
Founder and Vice President
CA DRE License #02080746
(c) +1 424.241.4795
[email protected]