Senate Select Committee on California, Armenia and Artsakh Mutual Trade, Art and Cultural Exchange

The Senate Select Committee on California Armenia Artsakh Mutual Trade, Art and Cultural Exchange will come to order. Good morning everyone. I'm State Senator Anthony Portantino, and I'm honored to chair this select committee and welcome you all to our first hearing post pandemic. Obviously none of us were idle during the pandemic, though we were distant.

So it's important that we're going to hear from some of the projects and some of the things that we've been working on both in California and in Armenia, which is the purview of the Select Committee to foster better exchange and cultural and business opportunities. So for individuals wishing to provide public comment, we are going to take public comment at the end of the hearing.

We have a toll free participant number, which is 877-226-8163 I'll say that again, 877-226-8163. And the access code is 161851 again 161-8051. We have representatives who are participating remotely. And for our remote participants, please mute your phones or your computers when you're speaking because we don't want to have feedback when you're talking. For today's hearing, we'll be hearing all of the panels and witnesses on the agenda prior to taking public comment.

Once we've heard all of our presentations, we'll open up for public comment. Like I said, I've had the pleasure of going to Armenia four times and visiting Impact Hub a number of times and excited that they're with us today. Also, we're going to hear an update on what's going on in Glendale with our tech hub. And we're going to hear from Hero House, one of the recipients of a state grant that went through to the city to continue to foster tech incubation in our wonderful city of Glendale.

We're going to rival, northern California. They're going to say that Silicon Valley is the Glendale of the north, not the other way around. And so we're going to hear from the Mayor and Hero House. We're also going to talk about the possibility of a direct flight from Los Angeles to Armenia. Obviously, California is home to the largest Armenian population in the country, and we're going to hear from experts about that.

So we recognize it's a difficult situation. We're going to do our best to try to put some meat on that discussion. And then we're also going to hear from a group of Glendale residents about the Buy Armenia Program, which is trying to foster more Californians to purchase goods from Armenia and talk a little bit about supply chain and transportation issues related to that.

So we have a robust agenda and we are going to go right into our first agenda item, which is an update on the California Armenian trade desk. And we do have two board Members from Impact Hub with us. And for those of you who don't know, several years ago the Governor and the representatives of Armenia signed a historic trade agreement at MOU in New York right down the street from the UN.

And I happen to haney been honored to go to that historic signing. And so we have an agreement between the state of California and Armenia to foster more business opportunities. I believe the two board Members that we have with us today are not making presentations. So we have on the line with us, we have Rafi Hessami. Rafi, and you went to Stanford, right? That's

Correct, and was a proud California resident for 30 years before moving to Armenia.

I just want to make sure that everybody knows that Stanford is in the house.

And then we have Narine Mizrahan who is also a co founder of Impact Hub with us as well. And so I'm going to be making the comments and then you guys may add some things to that. That's the program. So again, since we started the conversation for hosting a California trade desk at Impact Hub, again, for those of you who don't know, impact Hub is a fantastic incubator in the heart of Yetovan that has launched many successful startup companies and has a California connection.

Many of the board Members are Californians and started here and repatriated back to continue to foster relationship between California and Armenia. And so there's a lot of intellectual capital, fluid intellectual capital both between Armenia and California. And so we had some setbacks because of the pandemic. But there has been a series of workshops that have been hosted by a legal expert and certified both in Armenia and US business.

There have been workshops for small and medium enterprises on the legal structures of California and some of the esoteric peculiarities of starting a business both in Armenia and here. So there have been actual workshops on that subject to help these small businesses just continue to grow. The Impact Hub has hosted the By Armenia team from California and organized community events to explain how Armenian small businesses can join their platform, making it possible to sell their made in Armenia products to Californians.

Impact Hub is connected two companies, one a tech company and one a solar panel producer with the Governor's office of business development and trying to foster more partnerships. Again, that's two direct relationships that have been encouraged through this partnership.

They've had a number of discussions between April and August of 2022 with representatives of GoBiz on having more workshops, trainings and in sessions on the trade desk. There's a draft plan of activities prepared and then obviously COVID interrupted some of the relationships. So we do have direct relationships with US businesses and we have a plan moving forward.

Some of the things that have come out of these workshops and discussions is obviously we want to foster some of the financial investments to both Armenian and US companies. There's lots of opportunity, lots of intellectual capital. They're now focusing on supporting and developing the circular economy and bringing a systematic shift to circularity in Armenia and engaging the government and citizens in more startups.

There's a two to three year plan that looks robust. And so I just wanted to make sure that we reported back to Californians about how the plan and how the trade desk had its genesis. And again, for those of you who don't know, when Governor Newsom became Governor, he had a vision to have a series of eight trade desks around the country, and the one in Yerevan was the first ones that we launched.

And so we've got representatives, I don't know if Narna or Rafi, you want to add anything to the comments that I made to flesh it out at all? This would be your Honor.

No, I think, Senator, I think you covered most of the achievements. Obviously, I think we've got this is a good start and we're looking to expanding the cooperation between Impact Hub, or I should say Armenias in the State of California and using the trade desk at Impact Hub to do that. We would welcome any future visitors from the Senate or from the state of California to come and visit the trade desk.

We'll be happy to introduce them to some of the initiatives that are going on. I think some of the other items that are on the agenda for today, such as the work that's going on in Glendale and with Hero House. I mean, these are obviously very connected.

I think in your comments, you mentioned that we have worked on helping Armenian companies better understand things like legal structures and ways of doing business in California and for tech, as you know, California is still a very strong sort of target market and a place for people to launch from for startups that are in Armenia.

So I think we definitely see things heading in the right direction, and we're looking forward to expanding the set of activities and the relationship that we have. But we want to thank the state of California for giving this opportunity to us.

Fantastic. Narnate, do you have anything you want to add? Fantastic. One thing, Rafi, that we talk about a lot, and I see my colleague Senator Menjivar has joined us, who is a Member of the select committee. One thing that I find exciting is just the intellectual capital, the sort of the fluid nature of a lot of the tech workforce and entrepreneurs sort of flowing between Armenia and California. It seems like it's bearing fruit and very positive both for, California and Armenia.

Absolutely. I think if you look actually, especially in the tech industry, as we know, many American tech companies, hart based in headquarters in California, and many of them Haney, significant operations in Armenia, so Nvidia VMware service, Titan down in Glendale, Disco. So they're both soria of old established companies as well as newer, what used to be startups that are growing very rapidly, that are headquartered in California, that are actually making use of the talent in Armenia.

And you're right, there's a two way thing going on. So they'll bring folks from their Armenia teams to their offices in California for additional training and get exposure to how things work here. So I think it's been fantastic and we look forward to, as I mentioned earlier, to seeing these relationships grow. So, Senator Menjivar, this is representatives of Impact Hub, which is the host for the California trade desk in Armenia, and both of them have connections to California.

And we just sort of did an overview of some of the workshops specializing in low to help Armenian companies learn about California low and how to create companies here and then talking about the intellectual capital that has gone back and forth between both Armenia and California. So that's where we're at right now.

And no, I think it's exciting and obviously, as you pointed out, service Titan is in Glendale and certainly has a presence and as we talk later with by Armenia and then also with Hero House, all of these subjects are very much interrelated. And I just wanted to make sure that we talked about establishing the trade desk that California residents could see and feel and hear what's going on, that it's an exciting place to be and just the strong connections between California and Armenia.

Did you have any questions you want to ask? All right, well, thank you. I really appreciate you guys being here. Feel free to stick around. As we move on to the next subject, you may want to add some things. I know when Hero House presents. Again, we talked about sort of the synergy that's going on because a lot of the tech startups sort of go back and forth between Hero House and Impact Up.

So with that, we're going to move on to our next subject. We're going to talk about the technology incubator in Glendale. In Glendale, they actually have Tech Week and started a focus on tech. And several years ago I was able to get a grant to the city to help launch some of those tech incubators. And again, I believe very strongly in that we should let the public know how that money is being spent and that it's actually working and helping.

And so we have the mayor of Glendale, Dan Brotman, who's going to provide an overview of how the city is managing its tech incubator and the state's resources. And then we're going to hear from Armine Galastian, who is the managing Director of Hero House, which was one of the recipients of one of the grants that the city then facilitated and gave out. So, Mayor Brotman, please say hello and share what's going on.

Thank you, Senator. I'm happy to be here. And to my side here, maybe he could come a little closer, is Bradley Calvert, who is our head of community development, which includes economic development, and is the key person overseeing a lot of these activities that we're doing. I'm in a mile wide and an inch deep, so I want Bradley here for any specific questions.

But first of all, I want to thank you for the $1 million grant that we received from the office of GoBiz. It's helped us start two accelerators. One is Hero House, which we'll be hearing about in more detail. But the focus there is bringing not only Armenian entrepreneurs to the region, but entrepreneurs from around Eastern Europe. And I just learned about some discussions going on apparently with a company out of the Ukraine that provides public ebike charging.

And apparently their product is supporting ebike delivering munitions at the front line in the Ukraine. So we're getting into some interesting things, but that's Hero House and Armenia will talk in more depth about some of the successes they've had. The other is the Kids X digital health accelerator run by people from the Children's Hospital of Los Angeles. The focus there has been finding technology solutions to improve pediatric health.

And I know we've stern two successful exits so far and out of that program and other successful capital raisings. But Bradley can give us a little bit more detail if you want to drill down into that. We also, as you know, we hold Tech Week every year, usually in September, October. This year I think is our 6th or perhaps our 7th year of doing this.

We bring people in to talk about all the things that startup companies need to understand fundraising, human resources, developing a culture. We attract investors and we give opportunities for networking. And we've had about, I think on average about close to 1000 people a year coming to the event. What we're starting to see from all these activities and the presence of some major tech companies here service Titan was mentioned in Disco.

We aye starting to see some spin offs from those companies and synergies with some of the smaller companies that are present here, opportunities that they have to either partner or just rub shoulders with some of the folks at the events we hold around town. So that's exciting. These things take obviously a lot of time to evolve.

Silicon Valley didn't happen overnight, so we just have to keep working these things and making sure we're making the connections. One of the challenges is that we need to focus. Tech is very broad, and so we're really looking at what specific segments make most sense here. One of them clearly is biomedical because we have three major hospitals here in, Glendale, so there's a lot of synergy there.

Also transportation is an area where we're seeing a lot of activity and the area of consumer privacy and data security. But this is all evolving and we'll see over time where the big wins are. We also are looking to partner with Burbank, especially around media. Multimedia and design are some things we're interested in.

And we've launched an initiative called Upstart Valey with Burbank. I think taking a regional approach really makes a lot of sense for us, and I think I'll leave it there. If you have specific questions or want just want to drill down a little bit more into some of these. Bradley can fill in those details.

Senator, do you have any questions?

This is my first select committee hearing on this. I'm here to more observe, not absorb, more than listen, than anything bains here.

Absolutely. Just from a casual observer, it seems like Tech Week continues to grow every year and that there's lots of excitement not just within Glendale, but with all of Southern California. And sort of Glendale is becoming the hub. Would you agree, Mr. Mayor?

Yes, we've seen .... maybe Bradley you can tell us more, but I know we've seen significant growth. I've attended the last couple, and they've been very exciting and active, and we've attracted some really interesting people to speak.

Is there anything you want to say about Tech hub? I mean, Tech Week?

I think it's become kind of the premier tech kind of related conference in the Valley. In fact, the Valley Economic Alliance does look to us to be kind of the leader in tech and developing tech in the Valley. So I think your comment about Glendale emerging in that fashion is very accurate. We do see Tech Week kind of expanding and growing a bit more as we continue to move on, maybe incorporating other disciplines such as multimedia design, things of that nature, really, because there's a lot of interrelationships and synergy there, and.

There's a competition associated with it as well.

Don't folks compete to... well tell the folks about that?

They do. We essentially have what we call a pitch fest. A number of different startups with their ideas come and present. We have a panelist that usually includes local business leaders, some of our elected Members as well, and we offer a suite of services and packages to them. It could be things related to marketing, some direct funding, some assistance in helping them set up their business here. That's probably our most popular event that we host.

And I know that you gave out two grants. How many applications were there for those grants? When the first round?

Well, I'd have to go back and look at that. I would like to say it was close to a dozen or so, if I'm not mistaken.

Yeah, and I point that out because that just shows you the appetite. for incubation of ideas. To have a dozen businesses competing for a local grant I think is exciting. It is fantastic. Well, thank you for that.

We're going to go right to Armine from Hero House, which was one of the grantees who received, I believe, was half a million dollars from the city. So she's in person. So come on up and tell us. You're sitting here. Is that or the podium? Good. Morning. Good morning.

I'm going to quickly share the presentation on the screen to make sure everyone who is joining over zoom can see the screen.

Over the last two and a half years, SmartGate VC has become an instrumental supporter for the tech community and tech startups emerging in the region. I'm happy to share some of the results that we have been able to accomplish. We have implemented various business support initiatives, including a startup accelerator program, regional events, business relocation initiatives, student internships, hackathons conferences.

Over the last two and a half years, our team has actively worked with and collaborated with over Jones thousand beneficiaries through the initiatives of Hero House. I think giving a bit of background about SmartGate VC and the work we do will be helpful in grasping the results and the accomplishment of the program that we have been running.

Smart Gatevc is an early stage venture capital firm which is investing in deep tech AI companies. It specializes in investing and launching these companies to US market. Over the last two and a half years, we have invested in 25 portfolio companies and we plan to invest another $30 million in the next five years in the Glendale and bigger Los Angeles area.

For every $1 million that we invested in these early stage companies, our Portantino companies have brought in additional $45 million of capital which will be mostly spent in California and bigger United States. Through the collaboration of the city of Glendale and SmartGate VC, we have run three batches of the accelerator program that was mentioned earlier. Through these three batches of the program, we have already been able to work with 33 startups that come from ten countries.

These startups come not only from Armenia, but bigger Eastern European countries, and we'll see some of the startups that move to us as a result of the program. These companies have raised over $6 million of funding. This funding was used to set up operations min California and for some of them to relocate fully to California Hero House Glendale, which became their next headquarters base.

Here are some of the logos of the companies that moved to United States after the program. And if you look at the photos below, you'll see some of the teams that are currently working from Hero House in Glendale. As you can see, we already have seven companies that have either partially or fully relocated to Glendale as a result of the program. Our companies are serving some of the top known customers and partners in the industry tech industry.

If you look at the logos, you'll see that our companies are partnering with some names, including Meta, Nvidia, Google, UCLA Metal, Children Hospital, UMass, Children's Hospital, East Coast, NASA, Discord and many others. In addition to the economic achievements that we mentioned, our companies have been getting publicity through the prestigious tech publications, among them capturing the cover of Time magazine being featured by Forbes, National Geographics, TechCrunch, Washington Post, and many others.

This in addition to their work in Glendale brings publicity to Glendale as a technology hub and next tech center in California. I included some photos which will capture the spirit and the work that is happening in Hero House. You can see some of the founders with the founder and CEO of Service Titan based in Glendale, Bahakuzoyan.

And you'll see also photos from our pitch competitions that we host in Glendale and demo days. All the logos and the big names are also heavily backed by what our founders say about us and the work that we're doing.

Wendell I want to take a second to read one of the statements by the founder and CEO of Esperbionics Dima Gadza esperbionics is medtech company which is building the next generation of prosthetic robotic hands. The company started in Ukraine. They joined the program first batch back in 2020 and recently the company moved to United States.

Currently, they are going through FDA approvals to make the prosthetic hands available all across US hospitals. So Dima says Hero House has been an amazing support for us and helped us a lot during the inception period.

If I compare Hero House program with other accelerators we work with, I can say that it is the best because the team offers sincere and direct feedback and dives deep into our business challenges. Hero house, in addition to hosting the accelerator program, has been also actively involved and had a pivotal role in Glendale Tech events in 2022.

Last year, three day long events were hosted at Hero House Glendale, during which Senator Anthony Portantino also honored us by joining one of the panels. During these three day long events, marketc brought together over 50 speakers from bigger Los Angeles area, East Coast, San Francisco, Bay Area to talk about the innovation, AI, BIOI, biotechnologies and sustainability.

As you can see from the logos on the slide, we were able to capture the attention of the major tech and startup players not only in Los Angeles but also in greater California. During these three day events, we had hoover 350 people joining us every day at Hero House to meet the speakers, to network, to get to know the work that our companies are doing.

We have been able to accomplish partnerships with local universities, research labs and tech players and corporations which we plan to nurture and grow in the upcoming years.

I included also and would like to show a short video which captures some of the work that we did and some of the memorable moments of last year's Glendale Tech Week if we still have time, I'm happy to address any questions or comments. If you have any?

That was very impressive. And like I said in the beginning, I think we oftentimes the state gives out grants and we don't see what happens to them. And that's one of the reasons why I wanted to have you here, so people could see that mathis little half a million dollar grant is really paying big dividends.

I mean, just by the sheer number of experts you brought together to talk to the community is immeasurable right now. How many startups are located at Hero House just like today?

Right now we have seven teams working from Hero House space. The space itself is a 7000 sqft space, but we have only limited number, of the offices, which basically means the companies come to Hero House grow enough not to fit in Hero House and they go out and rent their own offices. We have two companies that we are expecting will be moving out very soon because they already are big enough to have their own offices.

They need more space. Their teams are getting bigger. So we are expecting to bring in new teams to Hero House to make sure we keep the number of companies in Hero House and we keep the space full of smart conversations and innovative spirits.

And how many in Hero house in Yerevan? How many? At the moment,

I think we have. Around five teams in Yerevan right now. The space is a bit smaller in Yerevan, so we can't fit too many teams there.

So the space is bigger in Glendale than in Yerevan?

Yes, the space is bigger in Glendale.

Actually, I've toured both. Then you're right, it is bigger. One of the things that you and I have talked about, which you're very proud of, is the number of women entrepreneurs and women the gender imbalance, I mean, given in US tech world, you're doing significantly better with your gender makeup, if you could comment a little bit about that. And I know you've been very proud of your work on that.

Yeah, absolutely. So I always say this. When we look at the companies, we focus purely on the qualifications of the founders and the strength of the technology that the founders are building. But we have had the luck of attracting impressive female founders to our community and being able to work closely with female founders.

If you look into our portfolio, we have invested in at least four female led companies, and all of those companies, fortunately, have been able to raise all on rounds after us. One of them just graduated from Berkeley, Skydeck. He's based between Los Angeles and Glendale. Back and forth. The other one is based in east coast, back and forth between Glendale and east coast.

And our team, if you look into our team, majority of our team Members are females. Out of the 17 people that we have, eight people that we have in the team, five are females. So I've been fortunate enough to work closely next to amazing female entrepreneurs. And it's pleasure to see number of AI deep tech female founders growing in Glendale.

Great. And when I did my tour in Yerevan of the facility, I think of the five people who took me on a tour, four were women, only one. And you knew all of them.

Yeah, we always joke about that. I always say back in Armenia, when I used to hire the team, I wood hire all the females. And then when I left Armenia, one of my male colleagues started hiring. And then, we got a couple of male people coming in, which is exciting too, because you want diversity, we want different opinions. So, yeah, excited to have majority of the people in the team to be females.

And when I took Assembly Member Autumn Burke to Armenia pre pandemic, she was very excited by even within the classroom, just within the tech world, how much gender balance there was there versus here, where, of course, 98% of the code writers in the US. 98% are men. And as the father of daughters, it's exciting. Very cool to see you're like the godmother of the whole thing.

Thank you. If I can make one small addition, I think I always say this in Armenia, the space is tech. Space is so competitive that no one cares if you're male or female. People just want to hire the best talent. If the best talent is female. That's why we have one of the highest female tech employment in all across Eastern Europe and bigger Europe.

So that's impressive and that's very exciting to see. I think that's because we have very competitive talent and a bunch of companies hiring in Armenia.

Fantastic. So would you say the Hero House is doing well?

Yeah, I would say we are doing very well. We are exciting for what's to come. I'm very much looking forward to we have a lot of capital to deploy in Glendale, in bigger Los Angeles area. So we are very much looking forward to building strong pipeline of tech companies and growing Glendale, tech with that.

And I would assume that if Senator Menjivar wanted to come to a tour of Hero House, you would be excited to have her come to a tour.

We would love to do that. We would love to have you and show you the space, introduce you some of the companies.

Fantastic. And just this is a softball question, but the state investment was well spent.

Yeah, I think I want to mention this one more time. None of this would have been possible if it wasn't for the state investment. The only way we would have moved to us was through the state local grant. And that's because of this grant that we have all the operations of your house that we were able to work with these companies, invest in Glendale, hire a team in Glendale, be present and be lucky enough to join the community in Glendale.

And I think that's we hear about businesses leaving California, but you talked about a half a dozen businesses that relocated to Southern California from other countries. Yeah, we're attracting this talent.

Yeah. So the companies that hart in Eastern Europe, most of them eventually move to California because they target US markets and to be able to sell to us, they want to be close to their customers. So what we are trying to do is instead of dismounters moving to San Francisco Bay Area, which is the primary locations that most of them target, we want them to come to Glendale.

Because if you compare the two regions, you'll see that Glendale is way more affordable, nicer place to live, has all the resources, very close to Burbank Airport. The talent is amazing. They're surrounded by some of the top universities in the region. Caltech, USC, UCLA are just like caltech is 20 minutes drive from Glendale, so they have everything they need.

The office spaces are plenty to come and to set up in Glendale. The only thing they need is the small space initially to start from, which is right now Hero House, and then grow from there. As they attract more funding, they are able to have their own spaces, their own offices, and they grow out of Hero House. They just need the initial support to move to Glendale instead of going to some other region, say San Diego or San Francisco, and then grow from there.

Now, we heard earlier from Impact Hub, and obviously you're familiar with Impact Hub and there is some synergy between Hero House and Impact Hub.

Yeah, we have been working with, a number, of I know a number of companies that overlap between us and Impact Hub. And I think Rafi and the rest of the team at Impact Hub would also say this, we work closely with each other. If there are companies that have specific impact component, Impact Hub is there to support them.

We have a number of companies who have spaces or founders who have desks at Impact Hub because the community is there is amazing. Yeah. Excited.

I can just maybe add to that armenic. I completely agree with that. Impact. Yes, I'm still here. So we've had a number of startups, we host what we call fellows. So there are different impact investing programs in Armenia where either through a startup competition or some other sort of evaluation mechanism, they're given the opportunity to basically incubate their startups at Impact Hub.

And it's usually one or two up to three team Members that will be there for several months. And then there's a sort of natural graduation for some of them to seek angel investment or early stage investment, which is what Hero House and Smart Hub offers.

So we see this kind of it is an ecosystem where we're all aware of what we're each doing and we do expect that in the future we'll continue to have some people that will start out very small with us and then move on to Hero House and then move on to greater level of success and establish operations in California as well. So, yes, I definitely think this is a partnership that's worth continuing.

And I mentioned that because obviously the state has a presence with Impact Hub in Yerevan through the trade desk and Glendale has the presence with Hero House in Glendale. And so we have both the state relationship and the local community relationship. And the more we cooperate and collaborate, I think it makes it justifies both the presence in both worlds.

Absolutely agree with that, Senator.

Fantastic. Well, thank you very much for, your presentation. Rafi and Armine.

Thank you.

It's exciting. Again, when we expend taxpayer dollars, folks need to see just how that small investment ripples and makes a difference in a community and just continues that entrepreneurship which continues to build. So thank you. All right, we are going to go on to our did you have anything? We're going to go on to our next discussion, which is we're going to talk about transportation.

And Mike Thorpe, if you could come on up. We have Mike Thorpe, who's an aviation consultant at eight one eight, and the owner of a global aviation consulting firm, southern California based firm. Something that I have been hearing about for a long time is what we can do in California to foster more efficient travel between the US in particular California and Armenia.

There are no direct flights. I know we're going to hear from the Armenia folks, too, who have supply chain issues, cargo issues that they'd like to talk about. But here we are, home to 500,000 Armenians living in California, and the most popular destination, I believe, for most of them is Yetevon. And so if you would give us a presentation about what some of the unique challenges I do know we have folks from the airlines who are watching who wanted to hear this discussion, didn't necessarily want to talk.

There's some federal issues related to what they can and can't do, but I know they're in the audience listening and we appreciate their interest min this conversation. And you're our local expert, Mike, on what we can do and if there's anything for the state to do in trying to encourage getting a non stop.

I know myself on the four trips that I've gone, I've had anywhere from two hour to six hour layovers in different cities without being able to fly direct. And it makes it more difficult when we have such a population. So please share your presentation.

Thank you. Chairman Portantino, Senator Menjivar and other Members of the committee who might be viewing virtually, I will give a brief overview of the market. The US, Armenia and Los Angeles. Armenia markets talk a little about how. That's where they were before the pandemic in terms of the level of demand and then how they've recovered since the Pandemic.

But quickly, you mentioned earlier that by far the largest population of Armenian Americans is here in Southern California Min, the Glendale Burbank area. And that is reflected in the air travel between the United States and Armenia Hoover. Two thirds of that travel between our two countries comes from the Southern California Greater Los Angeles market.

So out of about 165 people who travel each way, each day between our two nations, 112 of those passengers come from the Greater Los Angeles market. And that has consistently been the case. The challenge for airlines is obviously geography. Where you're on the far West Coast, you have the largest market, dominant market share, but for a destination that's not only across an ocean, but across the continent as well.

So distance becomes a challenge, but obviously with new aircraft, and each generation of commercial aircraft becomes more fuel efficient. It allows smaller numbers of people to fly farther airplanes, like the 787 or the A 350 from Airbus, the Boeing and Airbus aircraft that are used today. Have created new markets that were not possible 15 years ago, 20 years ago for sure.

So there's feasibility for that market to work. One of the challenges right low has been just the recovery, the slow recovery of international travel from the Pandemic. And that's been for a number of reasons. If you look before the Pandemic I mentioned earlier, there's about 112 people that go between Los Angeles, and yetovan each day both going and coming back, that number was about 132 before the Pandemic.

So overall, around the world, that recovery still not to 2019 levels is very strong compared to a lot of international markets. But the recovery has been slow because different countries have opened up at different times, different stages, but also there's been slower economic recovery that obviously impacts international travel. And the other issue has been the severe global pilot shortage.

So airlines in the US and really all over the world are very challenged to have enough pilots to fly a lot of routes that they like to fly. And that'll continue the case flora number of years until as an industry, we can begin to have that workforce be built back up to where we can, instead of parking planes, putting them into use, open new markets and grow.

So I think those are some of the short term challenges. But the reality is there is a viable market, not necessarily daily service. Clearly that's not enough. Passengers support a flight each day between Los Angeles and Yerevan. But a lot of airlines are very creative, particularly internationally.

And those kind of markets in less than daily service, three times a week, two times a week. And for international markets that can work and work very well, because a lot of people, particularly traveling for business or leisure, they're not going to another country for two or three days. They're going for a series of weeks or at least a week. So that's what we have had discussions with the US airlines about and looked into that.

If you look at the market right now, just on a market share basis, because there's no US or Armenian airline flying between the US and Armenia. And the challenge from the Armenian side of things is there's not a national carrier that has the aircraft obviously to do that. So it would have to be one of the three major US Carriers that has that global network.

But they do have a lot of connectivity with their partners today. If you look before the Pandemic, Aeroflot had about 45% of the market now coming out of the Pandemic that has shifted to Qatar Airways, which is a partner of America, and they now carry about 45% of the market. Wonderful airline, great service, but as you mentioned, it's a long flight to fly a little bit of Qatar, then come back to Armenia.

Air France Delta's partner connects through Paris, which is a shorter connection, a great connection, but that only captures about 10% of the US market and maybe 8% of the LA market. I think it's one that we'll continue to work on, but there clearly is viability there, there's opportunity there. There's been a low of growth that's been talked about today just in the tech sector between the US and Armenia, particularly Los Angeles region and Armenia, but that wilk also continue to grow and also just the growing importance of Armenia as far as a partner for the United States.

So it's an effort that we'll continue to work on. And we do believe that there's viability and feasibility. Certainly there's enough revenue and passenger traffic to support less than daily service today, but there are strategic challenges for the airlines to make that kind of a service happen without I'm happy to answer any questions.

What do you think are the major hurdles? What has prevented it to this point?

I think the biggest problem right now is just growth because of the pilot shortage. But I think also it's just been a market that I think about years ago when I worked at LAX and Armenia's airline at the time came and wanted talking about flying to Los Angeles. Range has always been a challenge. It's a very long flight, but clearly there are flights that long from Los Angeles today they go to points that are further away than Yetovan is.

But I think it's also just not a market that's been very prominent on the international air travel stage. An Armenian airline has not been a partner of a global alliance. Necessarily the alliances that American, United and Delta are Members of the market has been a little bit overlooked. It's not as large as other markets maybe in that region.

And a lot of the growth that has happened in that part of the world has come from very well funded carriers in the Arab Gulf region, in Qatar and the United Arab Emirates and in Turkey with Turkish Airlines as well. So you have a lot of the growth that has happened min some of the other ayes but I think also just there's not been the economic strengthening that's been happening recently.

I think it's not been highlighted in the same way. So it's just a matter of ... there... are just markets with international air travel that aren't they're kind of overlooked until people realize the amount of demand, the viability, the opportunity. And so I think that's what we're doing is elevating the awareness of the market with the airlines and that's really the first step in getting them to see not just the viability but also the growth potential. And that's something that's unique with the US Armenian market. And you've been presenting all of that economic data directly to the airlines.

Yes, and again, for the record, I know the airlines are tuning in today. They just didn't want to certain federal. Yeah, they can't talk about those sorts of things. They can't talk about those things. But I know out of respect for the conversation are here and I want to give them the respect flora being willing to at least listen to the conversation. What can we do as state legislators? Is there a role for us? How can we be cheerleaders to this? What can we do from a spree decor or an ally?

Yeah, that's a really great question. And just to be clear to your comments a moment ago, I hope I've made clear that there are challenges for the US carriers and this is certainly. If it was a slam dunk, it would have happened. Yeah, and sometimes you have to also help. I always tell people that when you're running a global airline, you're looking at dozens and dozens of opportunities around the world. And so it's a multi year process to get this to happen with airlines.

That's why I wanted to have this conversation because again, I just want to know if there's a role for us, what can we do as an ally of the state with the largest Armenian population, with constituents that come up to me constantly and say I'd travel more if we had direct flights?

Yes. To answer that question, and it's a really important question, there are two things, I think. First, one of the wonderful things about the Armenian American community in Southern California is that they put their support behind initiatives like this and not just support and talk, but financial incentives and support.

And there's an effort underway to try to begin to do that and create a support basis to help airlines during that difficult launch period when it's expensive to launch a new market, particularly a market in a country where none of them fly to today, there's an upfront investment that airlines need to make.

But one of the things that the state can do is make a commitment that when it has state travel to Armenia that they use if there's not an available nonstop flight, which there isn't today, that they use code share partners, american Airlines or Air France with Delta? American Airlines min Qatar you can buy an American airline ticket through Qatar Airways or you can Delta with Air France, but at least it shows support for those US carriers that have developed at least that partnership.

For a partner that can make that connectivity to Yerevan, that's a good first step. And then I ting just continued outreach and conversation with the US. Carriers about not just the travel, that the travel of people going back and forth, but an important thing is the opportunity for air cargo. One of the things that the Pandemic really showed all of us around the world is that air cargo keeps the world economy alive in a way that no other form of trade can.

The old industry yardstick was about half of the weight of goods that are shipped around the world are carried on airplanes, but they account for 40% of the value. So there's no replacement for that. And so as you have trade grow and whether it's perishable commodities, whether it's high value goods, those kind of things need to be carried by airplanes.

So that's a whole part of the business that also underwrites and supports for a passenger airline the cost of operating that passenger flight. They're primarily in the business of carrying people. But that cargo and trade growth is really important to we talk in industry about filling the belly of the plane that none of us see. But that is extra revenue that helps really drop to the bottom line or offset expenses that they might not otherwise cover with the airfares that they're charging passengers.

So how do we quantify that cargo potential? In your economic modeling, have you looked at the cargo piece of it or you've only focused on the people piece?

I've focused on the people piece. The cargo data is not always as easily available, particularly for the US.

Giving you more work to do.

Yeah, well, and part of it is having the people who aye trade experts in the US armenia market begin to help quantify and provide projections. Because if you look at US trade data, which there's a lot of, I wouldn't say small, I'd say a nascent relationship, it's one that is really just beginning. But there's a lot of growth potential and I don't know that anyone has a really good handle on what that growth potential is.

So understanding better the types of commodities, agricultural or otherwise industrial, that are shipped back and forth or traded today between Armenia and the US. And looking at those commodities and saying these are the kind that would be put in airplanes, there's a great opportunity to grow that there, but also better understanding how the growth in the tech sector, for example, here and in Armenia, how that translates to trips.

How that translates to more and more need for people going back and forth? But also there's cooperative efforts that for example, tourism is typically not necessarily the higher yield travel, but it's very important. There could be cooperative partnerships between tourism California and Armenia's tourism board to look at people coming from there to here more often or Californians looking to go to I know every tourism board is about bringing people to their country, but there could be partnerships and bridges built where more people in our state can discover and find the wonderful things that there are in, Armenia to see and to experience and vice versa. So there's some of those ways that the state can support and continue to build the basis for eventually having that nonstop flight.

Have you talked to the governor's? Office of Business Development? Have, you made contact with GoBiz.

We have not yet talked with GoBiz about the flights between Armenia and the US.

I would think that would be a conversation to have. We can help facilitate.

I've worked with him on other issues and for other clients and in my past. In the airport entry. So yeah, I'd be happy to do that.

Yeah, I think that would be something. And obviously, any other thoughts or ideas that we, as the Legislature.

Legislature can do. Like I said, it's something that constituents have brought up. And even when I was having a meeting with the prime minister five years ago. It was something that came up in that meeting that I know is a priority from both sides.

I think one of the greatest things to do is continue to have meetings like this and continue to talk about it and, frankly, ask for updates.

Right.

Expect progress and ask about progress.

Absolutely.

Thank you. Senator, any questions? No, you're good. No, that you answered all my questions. Obviously, I'm pleased you took the time to be here. And I know that the local industry folks have brought you on to help them try to facilitate this, because California's economy will do better if we can facilitate this transportation.

And the subject you brought up is our next presentation, are from the Buy Armenia folks, who again, I had a meeting with them last year, and they talked about the need for more cargo space. So that's part of the synergy of this conversation. So thank you, Mark, for being here.

And we'll go to our next presenters, which are Nishan and Lilit from Buy Armenian, and have a presentation for us. They're there. There they are. So give us your presentation and we'll have some questions.

Good morning, everyone. I'm actually glad that we were the last to speak because I got to hear a lot of the participants here. I want to start out by thanking Mr. Portantino for having Lilit and I present to this select Committee on the Armenian Artsakh Mutual Trade.

Before I start our presentation, I had a couple of comments to Mike, who just had the presentation on the direct flight from Armenia to, Yerevan to Los Angeles. And one of the questions was, how do we get more passengers on the flight? And so on. I think one of the things that it's really important is to advertise what Armenia can be as a destination for tourism. And you touched upon that towards the end.

There's so much history in Armenia. There's so much to seek to see that people actually don't think of Armenia when they're planning on their vacation. Maybe they're thinking about Japan or Europe or South America, but it's very rare that you see, oh, I'm planning my family summer trip to Armenia.

And that's what we need to do is we need to market Armenia as a destination. for tourism, and whether it's the history and the arts and the culture that's available there, that's I think one of the things that somehow some committee or some group needs to do that to work on that, to make Armenia as a tourist destination.

So I wanted to say that at the outset and hopefully the rest of the people there, and I'm sure a lot of people agree that that would be very helpful as far as getting money into Armenia and also the cooperation between California and Armenia in that sense.

So, having said that, I want to just have Lilit, who is the main founder of Buy Armenian--it's actually by Armenian, not by Armenia--she can go over how the idea came about during the war. I'll let her go through that, and then I'll have a few things to say myself.

Hi, everyone. Thank you for the opportunity. So Buy Armenian. Started during the war, October 2020. I was thinking, what can I do for my country? And then I said, let's open a Facebook group and start advertising Made in Armenia and encourage people to buy Armenian. That's how it started.

I opened the Facebook group and it started growing people started joining from Armenia. People started joining from California and all over the world. And then it started growing so much that I couldn't do it myself. So I asked Nishan for his help. I said, we do have a Facebook group that are people supporting Made in Armenia, and what's a better way of encouraging or standing next to our people than presenting advertising their products? So that's how it started. I'll let you, Nishan, continue.

So, as Lilit said, when it started out in October, hordes of people started joining the group. And we noticed that there was people from Armenia advertising their products on our website, and people having to on the Facebook group actually, and people having to go and contact those vendors, trying to send them money via MoneyGram. And there was a lot of moving parts.

And so we decided with Lilit that it wood be a great idea if we can create a website, a marketplace where all these vendors can advertise their products and sell them to the outside world, mainly to the United States. And so we have been to, as it was mentioned, we have been and presented at Impact Hub. We featured Sarah on one of our meetings.

Annually we go to Armenia and hold symposiums and invite speakers of high caliber from Armenia to present to our vendors how to improve their customer service, their package presentation, how to increase the value of what they aye selling, how to improve the products, and thereby overall improving the quality of the service and the products.

We really are considered a Armenian Amazon. At one point it was mentioned here, I think, that things don't happen overnight. And we are in a process we've had our Buy Armenian business for a little over two and a half years, and we are growing. And we have an office in Armenia, an office here in Glendale.

Most of our employees are from Armenia, although we have a few here, and also in Armenian in Lebanon and Armenian in Germany. So we try to present the quality and the valuable products that are created and manufactured in Armenia to the outside world. Last year we had the opportunity, and I want to say one of our success stories, many success stories is to present six companies small companies to TJ Maxx and Home Goods from Arts and Artsakh and Armenia.

That's right. Biobardez was a company in Artsakh, that makes teas, herbal teas, present. And we got the order from Home Goods and hopefully next week, we have heard that they are putting in another order and it will now include ten different Armenian companies.

Unfortunately, we told them that right now we cannot promise delivery from Artsakh because of, as everyone knows, the issues with transportation to Artsakh and people coming out and products coming out. One of the things, as Senator Portantino had mentioned, we discussed at one of our meetings is the shipment coming from Armenia to Los Angeles before the Ukraine-Russian War, as I believe it was Mark mentioned that Aeroflot had 45% of the amount of transportation, whether it's passengers or cargo.

We used to do all the cargo transportation through Aeroflot, but after the war we do it through Qatar, which is actually, I would say more expensive, maybe by as much as 50% more. And so in the last two and a half years, we've imported over 150 tons of products from Armenia. But I can say that that would easily have been maybe even double if the cargo transportation fees were not so high.

We've looked into with several interested parties about maybe having a cargo plane that transfers cargo from in and out of Armenia. Of course, as you can imagine, that is quite a feat and it would require a lot of financial support. I'm glad that that's being discussed and I'm glad that Mr. Portantino is looking into that because that would really help, I believe, the economy of Armenia.

One thing that also I would say that the importance of what we are doing for the economy of Armenia as far as the small and micro businesses, many of our vendors are graduates of Impact Hub. I'm sure that if we go down a list that there will be many who have gone through Impact Hub have either won prizes as far as being the incubator there. Just to give you a quick overview, for those who don't know, Buy Armenian has over 1100 vendors and more than 95% of them are from Armenia.

95% are women. I want to mention that.

And that happens to be the case. Yes, we do have many women who are vendors, entrepreneurs who have gone through the ranks of, you know, going to whether it's Impact Hub or other incubators, Iris Incubator is another one in Yerevan that we've worked with. So we are proud of what we've done. But we've got a long way to go. We're right at the tip of the iceberg still and there's still a lot of work that needs to be done. One of the things that we wilk be looking for also is to see if we can get any grants or I'm not sure.

Let me ask an important question. We talked about the cargo piece going back to what Mark was saying, trying to create the economics. And obviously we want to make sure that there's cargo that would go from both California to Armenia and Armenia to Yerevan. Do you have any of that potential cargo economics that we can share with Mark? Because one of the things you said is that there would be more importing and exporting if there was more cargo space.

More cargo space at a more economical price. I'm guessing that if, let's say, the direct flight, the passenger direct flight is something that is able to be realized, like Mark mentioned, cargo would be able to also be transported with the same flights, and so that would bring down the per kilogram or per pound transfer rates, and when, it's simple Economics, when prices go down, when the demand goes up, the price goes down and vice versa.

And so sometimes it's prohibitive, the transportation is prohibitive because of the fee for the transfer. And so if we are able to create a means where cargo is able to go directly from Los Angeles, let's say, and bringing the price down, I'm certain that and we can probably come up with some numbers and we can look into that and maybe have contact with Mark. So that way we can share information, which I don't have currently with me right now.

Yeah, I want to make sure that I connect you to him so you guys can talk about the overall economics, because that would help everybody if we can get that information.

Absolutely.

Yeah. So when you have your manufacturers in Yerevan, what's the typical path that that good takes?

Right now, currently, what happens is if somebody purchases a product online, the the vendor takes that product, packaged product to our office in Armenia that gets put together for a week. And then weekly we have flights that we use right now, Qatar Airways, to bring those items to California and then distribute them here, as I had mentioned at the beginning for a minute, since we're now opening also a physical location in Glendale whereby people, instead of having maybe it's something that they need for this weekend, for example, and they can't wait until the cargo arrives.

So we'll have talk from maybe about 40 vendors whereby they can go and purchase it physically. All the products will be made in Armenia. And so we're very keen on the made in Armenia aspect of it and connecting not only economically promoting the Armenian product, but also Armenian service and culture and so on.

Right. And obviously, from our perspective, we want to see goods flowing in both directions.

Absolutely. You may know that there are several transportation companies in Glendale that transport goods from California. And I believe, if I'm not mistaken, California itself is probably the second largest importer into Armenia after the Soviet Union. That is pre war, pre Ukraine-Russia war.

So we're probably number one right now. Hold on, Mark, did you have any questions? Did you have anything for these guys while you're still here? Yeah, come on up. I'm sort of ad libbing here because Mark's here and you're there and thought maybe he might have a question or two and you guys should connect to each other as well.

Yeah, that'd be wonderful. I'll make sure I provide my contact information. I'd love to have any information that he has about air cargo trade. A lot of it right now, there's just a paucity of it in the lack of it in the US. Government's databases. And so I think because this is so rapidly growing and emerging, it'd be great to really get a much better feel, particularly, I think, from the Armenian perspective, they tend to have much better data than we do in our country. So I'm happy to provide my contact info to your staff.

Absolutely. I'll type in our email address here. You can email me, and then we'll get

and Oste can facilitate that. And you're in SoCal, right?

Yes, I'm in Orange County.

He's in Orange County.

So you guys can get that. No, this is exactly what I wanted to bring out, that there is this potential. You guys are doing such a great job post ward, stimulating the economy, getting all of that entrepreneurship, getting the wood there, and just the connections to the major retailers that you've been able to facilitate is extremely laudable and helpful. I'm sorry, you want me to say something? Yeah.

If I can also mention, I briefly mentioned the store, the Buy Armenian store. It's actually a store and event center and what we are also planning on having events where we can present the items that are there as a showroom to buyers of different companies, whether it's Whole Foods, Nelsons, or Trader Joe's, and other Armenian and non Armenian markets so that they're able to look, feel, and then get pricing and order.

So we're very excited about that. And hopefully we'll be able to create more jobs in Armenia, create more economic transfer in both directions, both for Glendale and in Armenia. Last year when Mr. Ardy Kassakhian was mayor, he gave a presentation about the city of Glendale, and obviously he had the companies that started out in Glendale, and they're big right now, such as Service Titan. And I said maybe, hopefully Buy Armenian would be up there, and one day in the future, someone will say, well, By Armenian started in Glendale. So hope that's something of a goal for us.

We can all celebrate that. Well, I appreciate you sharing your story, and we're all trying to figure out the best way to help both California and Armenia and continue the trade and the tech and the goods and what we can do. So I appreciate all of you being here. We're on a little bit of a tight schedule, so I'm going to go into public comment. And thank you too, for being here, Mike.

So I'm going to again, thank all the presenters for presenting their purpose, their mission. It's exciting that we've got this great trade desk at Impact Hub. It's exciting that we've got Hero House in Glendale. It's exciting that Buy Armenian is in Glendale, and that we're working on trying to facilitate travel and good services. So with that, I'm going to read the public comment line again. It's 877-226-8163. That's 877-226-8163. And the access code is 161-8051.

There's. Anybody who wants to make a brief public comment? This is a public comment opportunity. We're happy to hear from you. I don't know if we have anybody queued up. Moderator.

Thanks. For public comment, please press one, then zero at this time for public comment, we have no response in queue at this time.

All right, we've offered the opportunity for public comment. I want to thank my staff Aspik for helping and my chief and my team for putting this together. I want to thank those who traveled from Southern California to be here and then the folks who participated from Armenia via Zoom and also the mayor of Glendale and by Armenian for all of you participating in our first select committee hearing of this legislative cycle. And thank you all for putting it together.

I know there were a lot of tech issues. We were on multiple continents in multiple time zones. And Rafi, it's good to see you. Someday I'll be back to Yerevan. I can't wait.

I can't wait to have you back, Mr. Chairman.

Absolutely.

And I will say one thing that Nishan mentioned, the beauty of Armenia and the rich history and culture, it really should be on the top of everybody's tourist destination. It is a vibrant, exciting, history rich place. And the food is fantastic as well. And so that's my commercial for all the folks who are looking for a tourist destination.

And thank you all for being here. And we'll have another one of these, I'm sure, in the near future. And I just want to say thank you all for participating. And we're fong to put all of the connections together, those folks who want to network and keep the conversations moving forward. So thank you, everybody. We're going to adjourn this meeting.

Thank you.

Thank you.

Thank you.