El Segundo's Aerospace Legacy and Future Challenges

El Segundo thrives as a hub for innovation, attracting top talent in aerospace and technology despite challenges from companies relocating.

### The Evolution of El Segundo: A Hub for Aerospace and Innovation
* ✈ El Segundo has a rich history dating back to World War II, playing a **crucial role in the national defense system** with the production of **warplanes**.
* 🏗 The largest wooden structure west of the Mississippi, still operational today, contributes to the manufacturing of the **F-18 fuselage**, showcasing the town's **longstanding aerospace tradition**.
* 👩 With a high concentration of PhDs and engineers, El Segundo is recognized for its **intellectual capital**, particularly in **aerospace and emerging space companies**, including many connected to **SpaceX**.
* 🌌 The potential relocation of SpaceX's headquarters to Texas raises concerns about talent retention and the region's competitive edge, as El Segundo boasts the **"most important five square miles economically in Southern California."**
* 💰 Efforts are underway to secure incentives and investment to keep the aerospace industry thriving in El Segundo, including a **new venture capital fund launching with $500 million** aimed at supporting local growth.
* 🌱 The city is diversifying its economic base beyond aerospace by attracting **venture funding for various industries**, reflecting a **shift in focus over the past five years**.
* 🏙 With a diverse population and a commitment to community, El Segundo remains an **attractive place for families and businesses**, despite the challenges of operating in California.
* 🤝 The local government is actively working to **enhance manufacturing capabilities** and maintain the region's status as a **hub for innovation and defense**.

The space the defense industry in El Segundo has got such a long history. Can you just take us back to what first prompted it to become such a key area for startups? If you go back to World War Two, El Segundo was critical to the national defense system, with war birds coming right out of El Segundo. I was actually in the factory that was making some of those airplanes back in the mid-1950s, still being used to this day. It's the largest wooden structure west of the Mississippi, and it still makes part of the F-18 fuselage. And that tradition and history of El Segundo being central to national defense continues today. Bring us now to what it means for the town. Well, El Segundo has had this long tradition of really bright engineers in aerospace, even in petroleum, working on really hard, complex problems. And today we've got more PhDs and engineers per square mile probably than

anywhere else in the United States. We've got a lot of companies working on space and national defense, many of which are SpaceX companies. As Tom Mueller, one of the early founders at SpaceX, who actually brought rocket technology to Elon Musk, likes to say, You can't really throw a rock and also go no with hitting a SpaceX alarm working on another company. So, it's grown into new space companies. Other industries now are seeing former space professionals working on hard tech industries like micro reactors, portable nuclear power, and all kinds of alternative technologies. You mention their SpaceX alarm. Does it matter, therefore, that SpaceX itself is looking to move out of California and move over to Texas in terms of a headquarters at least? Yeah, that would really be significant for the region. We would hate to see that happen. There's still we have probably the greatest density of intellectual capital.

I like to say with the most important for five square miles economically in Southern California. So still got some very significant competitive advantages in El Segundo and Southern California. And people want to live here. People want to create here. And we've got this incredible nucleus of talent working on space and defending our country. You say you'd hate for it to happen, but will if it as and when it does happen, do you think it will take away some of that pool of talent or do you think you can secure them to stay? We're working on incentives to keep people here. SpaceX, as you know, has so much capital invested in Hawthorne, started in El Segundo, then moved on to Hawthorne. So we'll do everything we can to keep the industry here. We're working with government officials, with the DOD, in terms of how to further enhance our manufacturing capability here in El Segundo, we're looking at

incentives for companies to stay here as they grow into additional square footage with different rounds of funding. So we're going to do whatever it takes to keep the industry here. Does that take outside investment, government investment? How do you ensure that you can build that infrastructure, keep it here? Well, the good news is we can't really talk about which one yet, but we have a major venture capital fund that's actually launching in El Segundo with about a half a billion dollars for their first raise. This is former SpaceX. People are involved. We've also got there's a lot of government funding, nods, a lot of capital that's going into space and other national defense programs in El Segundo. So we're looking at partnering with all levels of government and private industry to continue to grow the base here. What makes a community so rich, though, is diversity. And what's interesting is that you have a background in the Navy, but you have

background as an entrepreneur yourself, and not all of it in the space industry. How do you ensure that ultimately you diversify away from just space and manufacturing? Yeah, we're. We're doing it now, so. Years ago, we set out to reshape the brand identity of our city. Back ten years ago, when I was the chairman of that kind of economic development for the city. And we focused on other industries that we can bring here, and that's been happening. So in the last five years, what's really changed for us is the amount of venture funding. We have companies raising $5,100 million and greater rounds. Five years ago that didn't happen here. So we're doing everything we can to work with those different industries outside of space defense and aerospace, which have traditionally been our strongholds to grow the diversity of our revenue base. And we're actually a diverse city as well. We're 40% nonwhite, got people from all

walks of life. It's an incredible place not only to build your business, it's an even better place to build your families. What is perhaps the tension there is the reason we're seeing Space X move from Hawthorne is in many ways a political viewpoint on how to raise a family. Is that something that people talk of much? Not in El Segundo, Not too much. We focus on, you know, we've got this incredible community, an incredible school district, great sports programs. Everyone that has ever lived here really cherishes their time here, wants to stay here if they can. And so for us, that hasn't really been an issue. We it is tough. Let's be honest. It's difficult to do business in California. And we're working really hard to focus on our competitive advantages to keep those companies here, recognizing that we have a significant density of intellectual capital here in El Segundo.

El Segundo Mayor on SpaceX Contribution to the City

Welcome to the Bloomberg Technology YouTube channel. Subscribe for original series and mini-docs on game-changing technologies, profiles on innovators, live conversations with experts, and breaking technology news & analysis from Bloomberg TV.

Bloomberg Technology

The Defense Industry's Impact on El Segundo

El Segundo's defense industry has a rich history, dating back to World War II when it played a crucial role in the national defense system.

The town is home to a high concentration of engineers and PhDs, particularly in aerospace and space-related companies, with many linked to SpaceX.

The potential move of SpaceX's headquarters to Texas could have a significant impact on the region, as El Segundo boasts a unique density of intellectual capital.

Economic Importance of El Segundo, Southern California

El Segundo has significant competitive advantages and is a desirable location for talent in the space and defense industries.

Efforts are being made to retain talent through incentives and partnerships with government officials.

A major venture capital fund is launching in El Segundo, aiming to raise half a billion dollars, along with government funding for space and national defense programs.

Diversifying Beyond Space and Manufacturing

The speaker is actively working to diversify their city's economy away from space and manufacturing.

They have focused on attracting other industries and have seen a significant increase in venture funding for local companies in the past five years.

The city itself is also diverse, with 40% of the population being nonwhite, contributing to the effort of growing a varied revenue base.

Building Businesses and Families in El Segundo

El Segundo is a great place to build both businesses and families, with a strong community and excellent school district.

The city's focus on sports programs and community engagement has created a loyal resident base.

Despite the challenges of doing business in California, El Segundo aims to leverage its intellectual capital to retain companies in the area.