Startup Generator Program in Armenia

In July, CRDF Global invited 3 Day Startup CEO Cam Houser to travel to Yerevan, Armenia to help facilitate the CRDF’s Startup Generator program. The program combined aspects of business plan and pitch competitions for science and technology university students with ideas for new technology ventures. The goal of the program is to introduce these students to fundamental entrepreneurship concepts and educate them on high-impact early stage startup practices.

Tupac and the Armenian Diaspora

I heard bass pumping from the car before I saw it. A Tupac song was booming from a seriously overpowered stereo system from the car that pulled up next to our cab that morning. In 3 Day Startup’s home state of Texas, this is normal: hip hop and car culture go hand in hand.

But Armenia?

The Armenian diaspora includes 7.7 million Armenians who live across the globe–more than double the 3.3 million Armenians that reside inside that country.

Half of a people residing outside of the homeland’s physical borders represents a massive network.  No doubt that network carries all kinds of information–love letters, financial data, sports scores, fashion trends, and even the music of legendary American west coast rappers.

Student Attitudes Towards Startups In Armenia

While American rap culture has made it to Armenia, ideas such as Lean Startup and Customer Discovery are still taking hold. Before visiting the country, the biggest startup story tied to Armenia I knew of was Reddit/Hipmunk/Breadpig founder Alexis Ohanian. Alexis is half-Armenian, spent three months in Yerevan as a Kiva Fellow, and has shared his experience reconnecting with his Armenian heritage.

When I arrived, I found that Startup culture in Armenia is in a fledgeling state, especially in the university setting.  Indeed, the brand of failure carries more weight here than in other parts of the world and the investor community is small, risk-averse and more connection-dependent than average. But the challenges facing Armenia are not unique. In fact, these obstacles are more the norm in communities across the world, and they are norms that governments, non-profits, entrepreneurs, investors, and organizations like CRDF Global and 3DS are trying to rapidly reshape.  Make no mistake, our efforts are not aimed at remaking Armenia into Silicon Valley’s image, but rather to build on Armenia’s unique strengths and mitigate some of its weaknesses. After forty programs in communities across the world, we have a sense of how to strengthen the spirit of entrepreneurship and nurture it at nascent stages. Creating and supporting thriving entrepreneurship ecosystems is our specialty and this is exactly why I was excited to represent 3DS in this part of the world.

When I inquired about startup investing, the students all admitted that investors in Armenia are not easy to find as there are no explicit angel investing groups aggressively seeking out early stage opportunities. In this discussion, the students were stating a simple fact–not complaining or moaning. They expressed confidence that as their business evolved, they would solve the funding problem in some form or fashion, whether from internal or external sources. It was then that we began a discussion about customer funding and their eyes lit up.

Մենք դուրս ենք գալիս փողոց՝ քայլելու (Armenian for “Taking it to the Streets”)

Day two is when we kicked the students out of the building during the “Talking to Customers” workshop. When I explained what I wanted them to do–stop potential customers on the street to better understand the problem their ventures solve–I received the usual reactions: stares of disbelief, nervous fidgeting, and the is-he-really-expecting-me-to-do-that? face. Entrepreneurs (especially young entrepreneurs) tend to fall in love with their product or service. This is problematic because your customers and users wanting to buy your product is more important than you falling in love with your product. Direct contact with potential customers is a great way to start understanding the size and shape of the problem you are trying to solve and what you need to do to make your customers fall in love with your solution. This experience is a key part of every 3 Day Startup and we are continually impressed by how often this approach improves ideas for the better. (Btw, shout out to Ash Maurya from whom we learned much about how to talk to customers).

The CRDF Startup Bootcamp was held in a resort town north of Yerevan that served as a training facility for soviet-era winter Olympics atheletes so teams were limited in how many folks they could reach. But the participants were extremely giving in terms of their own networks to help connect teams to customers. Everywhere I turned, I saw students with consumer-facing ideas talking to passersby and students with business-facing ideas on the phone. Even the team with the most difficult-to-reach customer base (government border security offices) established contact with some high-ranking officials and received some constructive feedback.

Two hours later the mood had reversed: some teams received positive feedback and some teams received negative feedback, but all of the teams were now excited that they had developed this capability. We went around the room and shared everyone’s learning and takeaway of talking to customers before spending the afternoon implementing this feedback.

Kinecting Cars and CleanH20

Here are two of the teams I worked with:

Kinecting Cars wants to make the driving experience safer for luxury car owners. The company installs a Kinect on the dashboard which monitors the driver’s facial and head movements: if the kinect’s visual sensors identify behavior indicating the driver is falling asleep at the wheel, the system triggers an alarm to wake the driver to prevent an accident. During the presentation, founder Arman took a confident, casual stance at the front of the room–his team had recently won the Microsoft Imagine Cup for Armenia so his delivery had some swagger. But he knew what he was talking about: he had a firm grasp of car accident data and understood the potential for a product like this to save lives and support a successful business. Kinecting Cars received 2nd place at the STEP Startup Generator.

CleanH20 wants to help travelers avoid drinking unsafe and unsanitary water when abroad. If you travel to a foreign country and are doubtful about the water quality, this company makes a sensor that attaches to your smartphone and provides an analysis of water potability. Whether it was Narineh and Jane fearlessly talking to customers or Narek and Arshavir seeking out extra time with the mentors, this was the team that reminded me the most of students at a typical 3DS event. They attacked every challenge, dutifully defined tasks and roles, and distributed work skillfully so as to take full advantage of every team member’s talents. CleanH20 took first prize.

All of the entrepreneurs spent the weekend nailing early-stage fundamentals of their business–defining their market and refining their pitch–in hopes that they can reach prototype and funding stages. The energy level was not at typical 3 Day Startup levels (I never saw anyone go to the hospital for drinking too many energy drinks) but it was impressive. The teams  were open to constructive criticism, understood the value of the opportunity, and improved dramatically over the 2-day program. I’m eager to see where the future takes them.

Big Network, Big Possibilities

And that future could be bright. The globally distributed network of Armenian people carries information to all corners of the world. But that channel does not yet carry word of new Armenian startups. Companies like Kinecting Cars and CleanH20 aim to change that conversation. All they have to do is build a prototype, land some beta customers, prove they are building something people want, and nail product/market fit.

Ok, nobody said it would be easy.

But the network is already there. The atmosphere is ripe and I could feel hope and possibility in the presentations and work sessions. These young entrepreneurs are eager for a success story from one of their own and perhaps Kinecting Cars, CleanH20, or one of the other Startup Generator teams will make some noise in the coming years. In the meantime, I’m gonna go bump some Tupac. 

Many thanks to the organizers, sponsors, and partners of this program: CRDF Global, The US Department of State, and the Enterprise Incubator Foundation. Shout out to Alla, Zhenya, Eldar, Olga, and Sofia, as well as fellow mentors Marty and Alex.

P.S. I really could have used the CleanH20 technology. I believe it was the water that sent me to an Armenian emergency room the day before I flew home:

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