South Bay LA is Ground Zero for the Hard Tech Wave and Here's Why
Also: it's "Gundo" not "The Gundo" if you don't want the locals to look at you funny
The Sticks
The Wolf: “I’m taking the lady out to breakfast, maybe I can drop you fellas off. Where do you live?”
Vincent/Jules: “Redondo…Inglewood-”
The Wolf: “ssss…It’s your future…I see: a cab ride! Move out of the sticks fellas!”
In this scene from Pulp Fiction, the Wolf shows how most people from the Valley and West Los Angeles view South Bay…the sticks. The irony here is Quintin Tarantino actually grew up in South Bay (Torrance) and I frequently drive by what was once the video store he worked at as a teenager (Locals: it’s now the Happy Veggie off Catalina in South Redondo).
Fast forward to today and this set of beach communities, mostly thought of as the home turf of The Beach Boys and for Olympic caliber beach volleyball tournaments, is now ground zero for the hard tech wave that is the latest hot vertical for Venture Capital. Of the LA Hard tech 50 companies covering all of Southern California, thirty of them are here (including fourteen in the five and a half square mile city limits of El Segundo). In a later post I will focus on what makes hard tech and the different categories. For now I want to focus on what makes South Bay special and for the out of towners, provide a list of places to take a meeting or eat.
South Bay is attracting a unique culture of young Gen Z and Millennial founders in hard tech leveraging decades of experience from more seasoned engineers working in the established engineering firms here. These firms are usually focused on rapid iteration, agile hardware design and prototyping using “new tools” from the local hard tech ecosystem, like additive manufacturing of metal and a full suite of software tools like Duro, Epsilon3 and First Resonance which were inspired or copied from SpaceX’s Warp Drive ERP software. This combination of new mindset and new tools is creating an interesting culture motivated by a common narrative to “break the wheel” of big defense and re-establish American manufacturing and aerospace innovation dominance.
Richard Florida’s theory on talent/network Clustering
One of the most influential books I’ve read in the last fifteen years was Richard Florida’s “The Rise of The Creative Class”. His work is great for understanding why places like San Francisco, New York, Austin and (in the case of hard tech) South Bay Los Angeles are such extreme talent nexuses and they continue to be so in spite of the fact that many of these cities have astronomical cost of living, socialist tax rates/politics, municipal disfunction and traffic gridlock (note: South Bay’s local politics are pretty sane, even by non-California standards.)
Florida’s thesis is simple: the reason the bay area has less than 3% of the US population but 21% of its startups is because the creative class talent that has built the last generation of successful software companies (now huge companies) lives there and the successive generations keep coming there to work for and learn from them. Today’s founders and expert engineers cut their teeth at Apple, Google, Netflix, Paypal, Palantir and others and then went on to apply those same skills (and leveraging their alumni networks) building their own companies and finding capital to invest. Add to this an additional feeder network from universities and research labs (Stanford, Berkeley, LLNL, Moffett Field, etc) and you’ve got an aquifer that feeds a Sierra Madre Wistaria sized tree of start ups and talent.
Historically we saw a similar clustering of talent for aerospace in the South Bay thanks to the high concentration of aerospace jobs in El Segundo, Redondo Beach, Manhattan Beach and Torrance from Raytheon (now RTX), Boeing, Northrop, L3 Harris, The Aerospace Corporation, Honeywell and Robinson Helicopter, among others. There is also a robust network of universities and labs here in LA with USC, UCLA, JPL, Hughes Research Labs (HRL), and Caltech all within 45 minutes of LAX. Hughes Aircraft started here along with spinouts like Hughes Space & Comm, DirecTV and TRW (which was founded by executives who left Hughes in the 50s).
In the past, many engineers who worked at these larger, old school shops would spend their careers in just one of the big companies or hopping between the biggest three companies. The cliche was the “South Bay Triangle” - Raytheon, Boeing, Northrop - switching back and forth between these firms once a decade or so to grab a promotion and bump your salary (I was one of those folks for 15 years). The mindset was they could “play it safe with lots of job security” and “live comfortably like their parents did”. The massive aerospace consolidation of the last three decades, starting with the “last supper” in 1993 (where the government encouraged the contractor base to consolidate), has reduced the footprint and a number of logos of these firms in this area substantially. Add to this the more recent phenomena of CA footprints shrinking much more dramatically for traditional contractors and suddenly many of these professionals are seeing the job security of the triangle is gone and they are much more willing to look around.
Mapping the SpaceX and Tesla alumni networks
The reason South Bay today has become such a hub for new hard tech in one word: SpaceX. The SpaceX alumni and as an extension the Tesla alumni network (I know a number of engineers who spent time at both companies) took Hawthorne by storm and has become the flywheel of the south bay aerospace industry as the rest of the aerospace industry has consolidated and slowly declined in size in the area.
Most importantly, SpaceX alumni have become the entrepreneurial engine driving South Bay. This frequently updated Figma map shows 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 and that’s with this list missing a few notable ones (eg - now shuttered Virgin Hyperloop isn’t on here even though its co-founder Brogan Bam Brogan was an early SpaceX propulsion engineer). The thousands of South Bay engineers who are alumni of these companies are pairing off and experimenting now along with with their newer cousins from Snap, Scopely, Anduril, Virgin Orbit and other large alumni networks to build off of.
SpaceX has grown from twenty engineers in 2004 to a over 10,000 employees here today, building off both Elon’s international draw and network as well as educating a whole new generation of engineers in a new way of doing business. To give you an idea of how huge that is: there are barely 750,000 people living in South Bay and that’s over 1% working at SpaceX. This probably quadruples if you include the alumni network.
The SpaceX talent font builds on the existing talent pipelines from the traditional aerospace contractors. This creates a talent ecosystem with lots of candidates who have the specialized skillsets that are like oxygen for hard tech companies. Need a manufacturing engineer with expertise in electroplating for space applications or 3D printing for rocket engines? Chances are fifty of them live in South Bay. How about a software engineer who also speaks fluent radar systems engineer and understands how to program fire control radars? Probably two hundred of those down here too. It’s basically impossible to find some of these specialties in other parts of the country, and even harder to find them in large enough numbers to build out functions in midsized companies. Another resource: if you can’t hire the right person, chances are there are 5-10 consulting firms or lab assets on speed dial you can call (or an experienced founder like myself can find for you) that can help you solve your problem.
This is why you are seeing such a huge concentration of hard tech companies here: there is simply no larger concentration of such a broad swath of hard tech talent anywhere else, bar none and it’s been that way since two million aerospace industry jobs moved into Los Angeles to build aircraft during World War II- and never left.
Additionally, an automotive industry cluster developed here in the last sixty years including Honda’s R&D division (Torrance), as well as GM Research Labs in Torrance (where the EV1 was developed and the automotive radar invented) and formerly Toyota North America and Nissan North America Headquarters were in Torrance as well. This has led to numerous automotive start ups such as Canoo, Fisker, Faraday and several others being headquartered here. There are thousands of engineers, finance people and others with relevant experience here - not to mention the annual draw of the LA Auto Show!
Conclusion
Despite some pandemic era exodus to far flung states and locales, most talent has not de-camped. Most founders are choosing to build where they know they can hire people and they understand the lay of the land rather than starting somewhere new with a new coordinate system.
For hard tech and hardware, South Bay is the talent epicenter because of SpaceX and other late stage companies like Epirus, Hadrian, ABL and others who themselves are building on 60 years+ aerospace innovation going back to Hughes Aircraft, TRW, Northrop and Rockwell. We are seeing a massive hard tech ecosystem emerge here which is spawning new teams and new start ups almost daily. Things are changing so fast in South Bay that today at lunch, I had someone bring up no less than three new South Bay hardware start ups that I hadn’t heard of before (and I’m fairly dialed in). The pace of start up formation down here is peaking and investors are advised to follow the advice of A Tribe Called Quest and leave their wallet down here:
Addendum: where do I eat/drink down here?
For those of you looking for a great place to take a meeting, celebrate or just drink a junior associate under the table on a weeknight, here’s a few of my favorites and recommendations after nearly 20 years of living here:
Gundo:
The Purple Orchid - An Exotic Tiki lounge. The Singapore Slings and Mai Tais are legendary and you may even encounter some south bay aerospace OGs wearing Costco brand Tommy Bahama knock offs non-ironically.
Rock N’ Brews - Open air seating, great apps, 80s/90s MTV on cycle to unleash your inner X/Old Millennial and 50+ beers on tap
Richmond’s - Old School Bar & Grill. Get the chili size and a Schooner
Chef Hannes - this is my go to nice restaurant in El Segundo. He was Arnold’s chef and the Ragu Lamb Pasta and the Chicken Schnitzel are both top shelf.
Manhattan Beach:
Shade Hotel - the Zinc bar scene is great. They also have beer taps in some of the suites that you can have set up for you if you plan on staying for a while.
Tin Roof Bistro - Beautiful open air seating outside, great cocktails. Try the Indian-spiced Spinach Dip as an appetizer.
The Arthur J - it’s as good as any steak house on the west side but won’t cost you $350 a person (unless you really want it to). The house martini comes with Fried Olives, which are amazing.
Hermosa Beach:
Barnacle Bill’s - come for trivia night!
Paisano’s - best Pizza in South Bay. Make sure you get the Mama’s stuffed cheese bread too because your cardiologist has kids to put through Vanderbilt.
Redondo Beach:
Phanny’s - for decades this South Redondo restaurant has been the category king of the breakfast burrito category. The locals won’t take you seriously if you haven’t been there to wait in line and behold the neon sign.
The Bullpen - old school steak house in Riviera village (the foot of PV in South Redondo) with live music Wednesdays. Great cocktails and prime rib (cheap too) and enough Mahogany to impress Ron Burgundy.
HT Grill - Firepit and Bloody Mary’s make for great Sunday brunches. Try the Norwegian benedict.
Torrance:
Smog City Brewery - this is near the industrial cluster where many of the start ups are located north of downtown Torrance. Cosmic Brewery and Monkish are also a few blocks away off Western (if I didn’t add this, some beer nerd would likely flame me).
The Depot - a good place on the edge of downtown if you need to wine & dine at lunch.
Hawthorne:
The Proud Bird - ok technically it’s Hawthorne adjacent (across from LAX) but it’s great for large parties with a Bludso’s BBQ station in the cafeteria and the old airplanes outside are really cool. Try The Holding Pattern in the bar if you are killing time.
LA Ale Works - just blocks from SpaceX, this is a great place to go if you are looking to mingle with the younger talent pool.
Palos Verdes (PV)
The Original Red Onion - this Sonoran style Mexican powerhouse is a cultural institution on “the hill” (as PV is called by the locals) with Mexican food how it was when we were kids. Bottomless chips and salsa, chile con carne and any of the house margaritas will leave you wanting to clear your calendar for the rest afternoon and go horizontal.