The Future of Manufacturing is Based in El Segundo

A day in the epicenter of the American Manufacturing Renaissance

A small city in Los Angeles County has assumed a near mythical status in the world of hardtech entrepreneurship. The storied American adage “Go West, young man” once again has a definite meaning: go to El Segundo.

The tweet heard ‘round the Gundo

I was laying on my couch, on my morning scroll when a tweet hyping up some CAD plugin floated across my feed. Boosters were extolling this software package’s potential to revolutionize manufacturing, but to me, those claims rang hollow. It’s simple; the only way to revolutionize manufacturing is to actually change the way things are built, not to sell software. I said as much in a quote tweet and put my phone away knowing this little sentence will only be seen by 40 people ever.

A few hours later, I checked twitter and found that my throwaway tweet had gone somewhat viral. Apparently I had kicked a beehive and now the online manufacturing community was dunking on me, ratio’ing me and otherwise expressing their disapproval of my comments. I knew I was correct, so I dug in. Manufacturing has lower margins than software and, thus, has attracted less investment and seen less development; this is obvious to anyone paying attention, or at least that was my understanding.  My refusal to concede ground further inflamed the discussion and, as anyone who uses social media knows controversy creates engagement.

During this episode, an account with a frog avatar reached out inviting me to check out his factory in El Segundo. I had seen a few posts alluding to startups in Southern California and a few weeks prior, I had seen a video tour of his shop. I was about due for an LA trip so I decided ‘why not’. I booked a plane ticket about a week later.

One Day in El Segundo

I blocked out a full Friday to see what was going on in El Segundo. After a 45 minute flight down the California coast, I landed at LAX around 9:30 am. Fortunately, El Segundo’s northern border is defined by the airport, so the commute in LA’s notoriously gridlocked traffic wasn’t too bad. My first stop was visiting Cameron Schiller, the man who founded Rangeview, the man who invited me down, and the man who would end up being my tour guide for the day. I dragged my suitcase towards the front door and, as I approached, a tall young man with a stubbly beard and surfer hair filled up the doorway.

“Hey, I’m Jim.”

“I’m Cameron. Not a frog in real life.” An allusion to his online persona

I followed Cameron into his shop. The factory had a few desks in the front with a few employees working on computers and production equipment was through a doorway in the back. In all the midwestern factories I’ve visited, stern graying men with clipboards enforce strict protocols requiring safety glasses and steel-toed boots. Cameron was sauntering around his factory in joggers and flip-flops. Bicycles, surfboards, and gutted formula SAE cars occupy the unused corners of the shop. I’m not in Ohio anymore.

“You’ve seen the video, right?”

“Yeah, but not for a while” I replied.

Cameron walked me through the process for turning CAD models into highly precise, cast aluminum components he and his team have developed at Rangeview. Although I have an engineering degree and have spent the better part of 8 years working in automotive development, I haven’t worked directly with manufacturing techniques in a while. I felt my brain working hard to activate long-dormant neural pathways. What’s the difference between fused deposition modeling and selective laser sintering? And then stereolithography is somewhere in between?

It was immediately obvious that Cameron was intimately familiar with every step required in the process from the chemical, thermal, and mechanical properties of each material to the exact capabilities and limitations of every piece of equipment used in the shop. Every single detail, like the color of the lightbulbs on the ceiling and the torque of the motors on the 3D printers, had been specifically selected to optimize the efficiency of Rangeview’s foundry.

We walked out the backdoor and into the gently sloping alley and Cameron showed me the neighborhood. These small warehouses had all been built in the 1950s to support the Apollo and later Space Shuttle manned space programs with many of the original tenants being rocket part fabricators. The 480V power delivered to each building is enough to run significant manufacturing operations; a crucial benefit for today’s crop of startups.

Cameron described the different businesses that were operating in the neighborhood.

“That guy makes drones (based), that guy is B2B saas (cringe), that guy is freezing embryos (weird), that guy stores his cars in that shop (cool), that guy is making gas turbines (based).”

All in, the companies in the alley had received more than 100 million dollars in funding over the past 5 months. I was floored. A quiet deluge of money is pouring into hardtech development right here in this unassuming patch of Los Angeles County.

We walked back into Rangeview to chat with Aeden, Cam’s co-founder, and our discussion shifted to a longtime interest of mine: what happened to the American manufacturing base? How did it get so thoroughly gutted? I talked through my ideas regarding the economics and social status associated with the manufacturing industry and engineering education in the US. We all independently came to the same conclusion: for too long, too few smart people have been working in US manufacturing. But not anymore. There is a revolution afoot in manufacturing that will be as significant as the digital and internet revolution of the past 25 years.

The next stop was Cambium just a few loading docks up the hill. Chris, a bearded man with a SpaceX hat, greeted us at the door and explained what he was working on. He’s a PhD material scientist who is currently developing the next generation of high-strength monomer composites for aerospace applications. Like the previous shop I’d visited, BMX bikes sat in between extremely precise — and expensive — metrology equipment. This “work hard, chill out” mentality seems to pervade El Segundo, a far cry from the “work hard, play hard” attitude so prevalent in the Chicago young-professional scene of my 20s.

Cameron mentioned that many of the startups make parts and assemblies for each other in exchange for use of specialized equipment or other similar arrangements. I began to grasp the idea of a startup ecosystem. University leaders and local politicians often tout the ‘budding a tech hub’ platitude. In fact, the 2022 CHIPS act even dictates what grants are going to be made available to certain industries in pre-specified locations in an attempt to spur the development of “Regional Technology and Innovation Hubs”.

In El Segundo the opposite is emerging. Startup founders buy parts and services from each other and rather than via a top down, executive decree they coordinate through a loose network of group chats and twitter DMs. By selling to each other, each startup is developing its own manufacturing capability while simultaneously growing a customer base and providing the other startups exactly what they need exactly when they need it. In a very real and organic way, these founders are building their own business by building up those of their neighbors.

Cameron led me across the alley to Smokey Hollow Roasters, a coffee shop which serves as sort of a meeting room or community center for this budding industrial hub. With a bare wood interior and electrical drops from the ceilings, it feels more like the factories and startups in El Segundo than the posh coffee shops found in other parts of LA. Like the other businesses I’ve toured, Smokey Hollow is bustling with activity; nearly every table, chair, and couch is occupied with someone staring diligently at a laptop. The productive energy is palpable.

On the way out, Cameron ran into another founder he knew. This guy is near the end of closing a massive round of funding for his turbine startup. He casually mentioned that he’s very busy because he is also serving in the military. There is something unique in the milieu here, a mix of chilled-out surfer vibes, Silicon Valley startup hustle, and military discipline that all collide in this explosion of engineering development.

We strolled back down the alley and popped into Lightcraft, a drone company that specializes in drone cinematography and videography. Much like the other shops I’d toured so far, Lightcraft was full of flying machines of all shapes and sizes. Mostly quadcopters, these machines were in all states of assembly and disassembly. Each aircraft had a different payload: some had video cameras, some had microphones, others had film props. Like the other shops,  sporting equipment like ski boots and skateboards were stashed in the corners and other unused space. Davis, the proprietor, described the work he did and his role in starting and growing the business. He also gave me one of the day’s most important lessons: the correct pronunciation of the city’s name. It’s el suh-GUN-dough, not el say-GOON-dough but locals affectionately just call this place ‘the ‘Gundo’

Cameron and I returned back up the alley to the composites shop to meet Soren, the founder and CEO of Neros Technologies. As is the norm for fast-growing startups, Cambium had outgrown its office and was looking to expand. As is also common among the El Segundo startup pack, they sublet extra or otherwise unused space to one another in an apparent effort to keep the ecosystem intact. One interesting fact about this building was that it was once Mike Tyson’s indoor weed farm. It even has a podcast studio where Tyson would record his podcast Hotboxin’.

Once Soren had a chance to check out the space, he, Cameron and I walked a few blocks over to Neros’ garage. Soren’s shop is a two story garage and seemed to be staffed by three or four engineers. I haven’t been on a college campus in a while, so perhaps I’m just getting old, but it seemed like every member of Soren’s engineering staff was under 20 years old. These kids looked young. Soren showed me the equipment he uses to make the frames of the drones and then we walked upstairs to chat.

“These are currently being used on battlefields” Soren declares as he holds Neros’ product, a small drone.

Soren explained that Neros was growing very fast and he needed a way to scale out production of the current model while simultaneously working on developing the new one. He thought it would be best to bring someone in who has lots of experience making things, not just a 20 year old.

This prompted me to ask, “Wait, are you 20 years old?”

“Yeah”

“So I’m guessing you didn’t go to college?”

“Nope”

“How did you learn how to engineer drones?”

Soren launched into his experience. He developed an interest in drones when he was around 7 years old and began experimenting soon after. He started racing drones competitively and through that hobby he developed a deep expertise with the technology. In fact, he finished high school early to pursue drone racing which set him on the path to eventually found Neros.

I was impressed and a little shocked with the progression many of these founders followed. Few had graduated college and a surprising (to me) had not done a traditional high school curriculum. Perhaps I haven’t fully appreciated the effect of closing schools and telling the kids not to come for 1.5 years. During the covid pandemic, every one of these young founders was quite literally kicked out of school, so it shouldn’t really come as a surprise they don’t have a strong affinity for the education system.

Cameron and I walked back to Rangeview for a driving tour around El Segundo. Cameron explained the history and the geography of El Segundo. The city is wedged in between LAX to the north and the Chevron Refinery to the south. El Segundo gets its name for its being home to Chevron’s second refinery in California (El Segundo means ’the second’ in Spanish). The Pacific Ocean forms the western border of the city and I’m not really sure what the eastern boundary is, but it’s probably close to the 405.

The city exudes an Americana that I have only experienced yet in the Midwest: a championship Little League baseball team, an Art Deco high school, a single story, pre-war downtown, a city park with a lawn that was suspiciously green for November in Southern California. The aerospace heritage of the city was on full display. There are several murals depicting the bombers, fighter planes, and spacecraft that were developed and manufactured here over the past 80 years. Others depicted scenes from the oil industry and its role in the development of Southern California. The industrial heritage of El Segundo is a significant point of civic pride.

“This is the only manufacturing city left in the country” Cameron declared as we roll through downtown.

"I can think of a bunch in the Midwest" I reply

“Yeah, this is the most Midwestern place in California” Cameron shot back.

I can see why he makes the claim. El Segundo vaguely reminds me of some of the factory towns I used to drive through while traveling across Indiana, Illinois and Ohio. However, this city feels more like a simulacrum of the American factory town rather than the real thing. Starter homes in Midwestern factory towns don’t cost 1.6 million dollars. Ambitious young men don’t move to Midwestern factory towns to get rich building VC-backed companies. I’ve worked at factories in the Ohio River Valley. I’ve worked at truck dealerships in rural South Dakota. I’ve also had a front row seat for the twin electric vehicle and autonomous driving bubbles and their subsequent busts. El Segundo feels more like a VC powered tech town than it does an Ohio truck factory town; it feels like San Jose larping as Youngstown.

Cameron drove west toward the Pacific Ocean, glistening in the afternoon sun. Oil tankers sat on the horizon, moored to offshore pumps. Beachgoers filled the parking lot and the sand. The waves were nearly non-existent as the winter swell has not yet picked up.  “Sometimes I’ll walk down to this cafe for my 1-on-1s” Cameron points towards a beachfront cafe. He’s doing a pretty good job selling the California beach lifestyle. Growing up in the suburbs of Chicago, my only exposure to California’s culture came from listening to the Beach Boys and watching skateboarding videos. This afternoon, El Segundo’s oceanfront feels like it’s straight out of a Brian Wilson song or a Rodney Mullen video. We stop to fully appreciate the idyllic scene. But Cameron has a business to run and I have more people to meet so it’s time to head back into town.

Cameron flips a u-turn in the BMW, cranks up the country music, and spins the inline 6 cylinder engine up to its redline. We race up Grand Avenue, flying past the oil holding tanks and the refinery towers towards El Segundo’s main street. I get dropped off at the Richmond Grill, a bar steeped in SpaceX lore. A few minutes later, the inimitable Augustus Doricko arrives, my host for lunch. Augustus and I first met a month prior at a tech blogger meetup in San Francisco. We had bonded over our shared interest in sailing and weather. I had let him know that I was making a trip down to El Segundo and he offered to meet up for lunch. We ordered food and our conversation turned towards the hardtech renaissance happening in El Segundo.

I started by describing my career trajectory and how the manufacturing I knew in the midwest was exactly the opposite of what I found here. When I graduated college in 2015, pretty much all my friends from engineering school moved to Chicago to work in finance, consulting, or tech. This brain drain followed a mechanism that I have written about previously. When I was working in vehicle development in the Midwest, many of the manufacturing and R&D facilities I visited were old, run-down and staffed by men in their 40s, 50s and 60s. I spent a few days across the street from a truck factory in a rework shop with no heat or potable water. My now-abandoned former workplaces have been “explored” on decay-porn, urban exploration youtube channels. I’ve personally witnessed the brain drain out of manufacturing and the ensuing social and physical decay that follows deindustrialization.

Augustus was interested in my perspective and asked me, “Why? What do you think happened?”

I thought about it for a while and responded “Telecommunications and the internet. And the shipping container”

My view is heavily influenced by the work of Dutch-American sociologist Saskia Sassen. Sassen was the first to describe the dynamics that emerged in the 1980s and 1990s in which cities across the world became specialized, each serving as a node in the global flow of information, goods, services, and money. She calls these nodes ‘Global Cities’. With the cost of moving things, people, information and money falling rapidly, winner-take-all economics started to take over. Cities and regions specialized and excelled at certain industries. For example New York became a hub for finance and media, Los Angeles for entertainment and logistics, Houston for energy, The Bay Area for software and tech, Detroit for automotive development, Boston for biotech and higher education. The geographic concentration of entire industries brings many benefits, that together create reinforcing feedback loops. Capturing a sizable portion of a globally important industry results in incredible prosperity. What’s more, the labor market for said industry becomes incredibly deep. For example, if you need to negotiate an arcane business transaction, odds are there is a lawyer or a banker that knows how to do it in New York. Similarly, if you want to be a banker or a lawyer that deals with arcane business transactions, the best thing you can do is move to New York. This process is called ‘urban agglomeration economics’

These dynamics have made these cities home to the highest paying jobs and, for the past 40 years, the urban lifestyle has been seen as increasingly desirable. Educated, ambitious, talented young people have flocked to these global cities to be on the scene and take their shot at success. A job in the professional services industry and participating in the aspirational urban lifestyle is seen as a higher status when compared to working in a factory. The dark side of such an arrangement is fact that winner-take-all dynamics are fractal. They lead to huge inequalities at the city, company, and individual levels. An interesting corollary to this is the coastal bifurcation of the sexes. In the winner-take-all model of urban agglomeration, cities need to specialize or lose out. This naturally leads to different cities specializing in different industries. Different industries attract different types of people and in the US, this has led to a surplus of women moving to the East Coast cities like Boston, New York, Philadelphia and DC and a surplus of men moving to the tech and engineering heavy West Coast Cities of Los Angeles, the Bay Area, Seattle and San Diego. Dudes rock.

Augustus has a simple solution. “Cameron and I have trying to make manufacturing high status again.” He’s working on some media projects to highlight the work that is being done in El Segundo and to shake the image of engineering and manufacturing as an old, decaying industry.

Augustus grabs the check and then we pick up two of his employees and head back to the industrial park to visit a commercial space he’s looking to lease. As with many of the other founders I’d spoken with, Augustus’ company is growing fast and needs more space; the hardtech renaissance is playing out in real time. Augustus and I didn’t get a chance to talk about what his company, Rainmaker, is working on. Augustus and his team are developing technology that will detect when atmospheric conditions are favorable and then deliver particles to promote the growth of clouds and precipitation. His thesis is simple: rather than ration out water as aquifers and reservoirs dry up, it’s more beneficial for everyone to modify the atmosphere in key conditions in such a way that more precipitation falls. This techno-optimistic spirit of abundance is ubiquitous in El Segundo.

Augustus wanted to show me what another founder, Zane Mountcastle, was building at his company Picogrid. Picogrid is building a software platform for collecting and managing data form large Intelligence, Surveillance and Reconnaissance networks. The product that was on display in the shop was Lander, a tower with some thermal imaging cameras and radar all powered by a large solar panel. Next to this setup, was a pallet loaded up with green pelican cases and wrapped in pink plastic wrap and black straps. "That’s headed to Ukraine tomorrow," Zane informed us as he motioned to the pallet.

I often see headlines such as "Senate approves $20 Billion for Ukraine aid" but I had not considered what that actually means. Large dollar amounts being appropriated by congress for various programs is part of how a government functions and something that anyone who reads headlines is accustomed to. However, defensive positions aren't held with wire transfers and tanks are not blown up with database entries. Physical systems need to be produced, shipped and deployed on the battlefield. And I was standing in the middle of a just-in-time defense supply chain. Over the course of the day, there had been allusions to various developments in the war in Ukraine and how the ecosystem of El Segundo startups is actively responding to the changing requirements of the conflict. From this sunny patch of the Southern California coast, it is easy to forget that there are active armed conflicts happening at this very moment but the palletized reconnaissance towers served as a reminder that the machines and systems are being built in El Segundo and immediately shipped overseas.

Because the American manufacturing base has been so thoroughly decimated over the past 30 or more years, the DoD seems ready to buy any system that meets their requirements. Perhaps this immediate need for physical products is why so many of these startups are growing so fast. Though I've never started a company, I can imagine that finding customers is one of the hardest parts. In El Segundo, the opposite seems to be true. The customer, the DoD is trying to find as many companies as possible to buy from so these startups are nearly guaranteed a stream of orders as long as they can prove their products meet the requirements.

We spoke with Zane about the issues that he is facing and the opportunities he sees and he echoed many of the similar points. He said the suppliers are super helpful because as he grows his business, they get to grow theirs. The whole defense industry is growing at the moment and the bottleneck seems to be physical production. After Picogrid, I called an Uber to go visit my cousin, with whom I'd be spending the rest of the weekend. My mind was still trying to process all that I’d seen over the course of the day.

Why Here? Why Now? Why These People?

The scale and the speed with which people were building businesses in El Segundo is staggering. What is more unexpected is the youth of the people doing it. Nearly every founder I talked to was younger than me, some by a substantial amount. Very few of them had graduated college and a surprising amount had not even graduated high school. Recently, I have been thinking about and researching the purpose and methods of engineering education. One of the conclusion's I've come to is that the purpose of education, especially college education, is primarily job training. However, starting a company and working at a company are two very different things. Seeing all these founders that had successfully raised rounds of money and were actively building out teams and businesses seemed to be a proof by contrapositive of my education thesis.

The argument goes like this:

1. College is training to be an employee (college implies employee).

2. Employees are not entrepreneurs. (employee implies not entrepreneur)

3. College implies not entrepreneur (1 and 2 transitive).

Take the contrapositive of 3

4. Entrepreneur implies not college

Perhaps the El Segundo entrepreneurs form a non-representative sample size, but it seems like something could be there. The dropout turned successful founder has become a Silicon Valley trope with notable examples like Mark Zuckerberg, Bill Gates, Steve Jobs, Elizabeth Holmes. This meme is so powerful even the HBO series ‘Silicon Valley’ features a college dropout turned founder as the protagonist. These glamorous examples obscure the fact that the vast majority of successful founders are not college dropouts, or at least haven’t been in the past. Could the nascent success of El Segundo’s young founders be indicative of an opportunity as large as the internet boom of the 2000s? Is it an indication of a failing secondary and post-secondary education system? Has American manufacturing gotten so sclerotic that a bunch of 20 year olds can rewrite the rules for an entire industry? Is it indicative of an investment bubble in hardtech startups? Perhaps the answer is some combination of all of these.

I don’t consider myself to be that old, but the environment in which I came of age was markedly different from the one these founders dealt with. When I first entered college, the internet was a place to watch funny videos and social media was for posting photos of parties you went to. In the 12 years, our collective relationship to technology, social media, and, as a consequence, each other has been completely inverted. The culture war’s largest theater is social media and our culture, especially youth culture, is now defined by memes, videos, and posts. Rather than meet in person then later connect online, as was common in my youth, contemporary relationships usually form in the opposite way: meet online then meet up IRL. In fact, a series of online interactions is how I wound up in El Segundo for an IRL meeting with the entrepreneurs. These founders came of age in the Trump-era online culture wars and their vernacular reflects the influence of this online culture. Things that are good are declared ‘based’. Likewise things that are bad are declared ‘cringe’.

As described in my piece “The Bottom Is In”, the manufacturing sector has been in decline for over 30 years when measured by nearly every metric. There has been a drop in manufacturing output, manufacturing employment, manufacturing as a share of US GDP, manufacturing companies in the DJIA, and, perhaps most deleteriously, a precipitous drop in the number of talented people going into manufacturing. Not only have we lost much of our manufacturing capability and supply chain, we have lost out on almost two generations of productivity gains and process improvements. It is as though US manufacturing is frozen in the 1980s.

The supply chain crises caused by covid lockdowns combined with Russia’s invasion of Ukraine and later the war in Israel have shown how inadequate our industrial base is for a world that soon may rapidly deglobalize. It is imperative to our national security that we figure out how to make things quickly, efficiently, and cheaply and the hardtech ecosystem I stumbled into is leading the way.

So What’s Next?

The pace of investment and growth concentrated in El Segundo was far beyond what I was expecting. I anticipated a few guys in a warehouse tinkering around with 3D printers but I instead found a dynamic, well-funded hardtech ecosystem. These companies are growing fast and El Segundo is small and expensive. If the growth continues — and I have no doubt that it will —   these companies will have to look elsewhere for expansion. In my conversations with Augustus and Zane, both founders addressed this issue. Zane said he is considering a larger facility in the Great Plains to expand his operations due to a variety of logistical and political factors.

Augustus said that much larger industrial spaces are available in nearby Hawthorne for roughly half the cost per square foot as the smaller spaces in El Segundo. This is promising, as keeping the R&D efforts close to scale production is a big efficiency driver. What’s more being integrated in a thriving ecosystem seems to be helping all the startups. Perhaps one day these businesses will grow to the size of Anduril or SpaceX and play crucial roles across large swaths of the US economy. Personally, I think the cost of real estate and the cost of living will make Southern California a difficult place to fully rebuild the American industrial base.

There are industrial regions like my native Midwest and the Piedmont of the American southeast that have good locations for logistics and a capable workforce. In addition, defense spending comes from congress and congressional representatives will each want some spending in their districts. The complete rebuilding of US industrial capacity cannot happen in one concentrated place, but it needs to happen right now.

The re-industrialization of the US is quite literally a once in a lifetime opportunity. In a world absent of global supply chains, the sourcing and refining of raw materials, their transportation, intermediate production, and the final assembly will all have to be done domestically or in a nearby country. The precipitous drop of manufacturing as a share of GDP and as a share of total employment will be reversed. This will eventually happen all over the country, but for the time being the future of American Manufacturing is based in El Segundo.