Armenian Prime Minister Nikol Pashinyan was barely six months removed from leading one revolution when he made the call for another.
“We hope the Armenian science, the government and the public will come to a unique consensus on this issue and the new technological breakthroughs in Armenia will bring a new technological revolution,” he said in October 2018.
Technology had played a key role in that year’s Velvet Revolution, when a nationwide civil disobedience campaign spread through encrypted messaging apps, social media and live streaming to sweep away a ruling regime beset by economic stagnation and accusations of corruption.
Now IT is being made a focal point of the new government’s economic plan. At the World Congress on IT (WCIT) last week in the Armenian capital of Yerevan, details of that plan were presented to a global audience. The Sargsyan regime had won the bid to host the event, but its successor was using it to launch a vision for a new digital Armenia, based on education changes, tax breaks, new funding streams – and an enormous diaspora.
The digital diaspora
Armenia is a rare example of a nation whose people largely live abroad.
The total worldwide Armenian population is 7 to 10 million people, but only 3 million of them live in Armenia. This vast diaspora expanded rapidly in the aftermath of the 1915 Armenian genocide, which caused the deaths of an estimated 1.5 million Armenians and forced hundreds of thousands of survivors to find new homes overseas.
A growing number are now returning home to help mould the future of their country. They include Sofi Babayan, the COO of fashion tech startup WANTZ, who left London a year ago to work as an advisor and mentor to Armenian IT startups.
“The feeling after the revolution was that much more is possible to do in the country, and that the country is now more open to the world,” she says. “Before, everybody knew that any business was quite controlled, especially if the business becomes a bit bigger and visible. The previous government would try to control it and you wouldn’t be very free. That was the general sort of atmosphere in the country. And after the revolution, I think everybody felt that more is possible and you’re free to do it. At least it’s the feeling. We’ll see the results.”
The diaspora will play a central role in the government’s plan to build a “Silicon Mountains” in their homeland. It was well-represented at the WCIT where celebrity speakers Kim Kardashian and Reddit founder Alexis Ohanian discussed the democratising power of tech on the stage of the Karen Demirchyan Sports and Concerts Complex.
Ohanian later joined System of a Down frontman Serj Tankian, Minister of High-Tech Industry Hakob Arshakyan and American-Armenian doctor and filmmaker Eric Esrailian to announce a new initiative dubbed HyeConnect, a non-profit professional social network of focused-based communities of Armenians around the world.
Details remain sparse and no launch date has been announced, but Arshakyan suggests it would serve as a professional social platform that would connect Armenian talent with the financial institutions and international tech community they need to create homegrown products and services.
“I think this could be a comprehensive plan to make Armenia a centre, because we want to give this to the region,” he says. “It’s not only for locals but also for other entrepreneurs.”
Babayan is optimistic about the concept but adds it needs to be insitutionalised to work.
“Skills and networks are sometimes more important than the money, to be honest,” she says. “Especially for a small Armenian startup, for example, to be able to talk to someone in Silicon Valley or to have an advisor from Silicon Valley, which would then bring money.”
Armenia’s digital strengths are low cost and high productivity talent, which has made the country an attractive outsourcing destination for multinational IT giants. The challenge now is to turn that into a hub for domestic product creation.
That change is already happening. Armenia has a growing range of startups, the poster child for which is Sequoia-backed image editing app PicsArt, which harbours hopes of soon gaining unicorn status. Many other members of the sector participated in the revolution, such as Mariam Gyulumyan, a cofounder and business development manager of Lucky Carrot, a peer-to-peer employee engagement platform.
Her company counts the Armenian IT ministry among around 15 clients it has attracted since it was founded earlier this year. Gyulumyan doubts the ministry could have successfully adopted the platform under Armenia’s previous government and is cautiously optimistic about the digital plans of its successor.
“They still need to work on a strategy but they’ve got a better understanding, and we see that they are really working on it,” she says. “And we know that everything doesn’t happen in just a blink of an eye. We know that they need time and we know it’s not just the tech community they’re thinking of in Armenia – there are thousands of problems for the ministers to think about. But we know that they do have a better understanding of what Armenian needs with regards to the tech community and what should be changed.”
Arshakyan was another prominent supporter of the revolution. The Minister of High-Tech Industry had worked as a systems engineer and regional partner manager at National Instruments, an American software firm, and founded a startup before making the switch to politics.
“The way the government was acting, I didn’t like the corruption level and the priorities. And when the revolution happened, I joined the government because if you are fighting some system and then it fails, you should take the responsibility of implementing the ideas that the people were fighting for,” Arshakyan tells Techworld.
Down a dimly-lit corridor from where we sit, an enormous bust of Vladimir Lenin is tucked away in a corner. Armenia had been a constituent republic of the Soviet Union until 1991, and the digital legacy of that era lives on, even as Armenia looks further west for its future.
Armenia had been an IT hub in the USSR and designed 40 percent of the mainframe computers used by the Soviet military, earning it the nickname of “the Silicon Valley of the Soviet Union”. But when the USSR collapsed, so the Armenian tech sector followed, leading much of the county’s talent to flock overseas.
The government aims to harness the technical legacy of the Soviet era to develop the future IT sector by focusing on specialist skills in machine learning and artificial intelligence.
Arshakyan feels that the country’s love of chess will help. Despite its size, Armenia is one of the strongest chess-playing nations in the world, and the country has made the game a compulsory part of its primary school curriculum.
“Ten years they were world Olympiad champions – this small country – that means that the algorithmic thinking and strategy building is very well developed,” he says.
That algorithmic thinking will only translate into successful businesses if it receives financial backing. The government plans to create a national venture fund and already offers grants, tax exemptions and incentives to people who found startups in Armenia, but the pot of capital remains shallow.
Angel funding is limited and overseas funding hard to attract, as international investors remain unfamiliar with the country’s legal infrastructure.
“One of the fields that both the government and the private sector in Armenia need to work on is seed investment possibilities, because you can’t nurture entrepreneurship without giving the risk-takers some money,” says Babayan.
Into the centre
The theme of this year’s WCIT was “the power of decentralisation”. It alludes to the revolution spreading among the people without the control of a central authority, but also to the government’s objective to remain open to international collaboration, rather than reliant on individual powers that have historically so often guided its fate.
That internationalist desire unites Babayan, the tech sector consultant, Gyulumyan, the startup founder, and Avinyan, the Minister of High-Tech Industry.
Their landlocked country shares borders with Georgia, Iran, Azerbaijan and Turkey. The borders with the latter two nations are closed due to tensions over the disputed territory of Nagorno-Karabakh, while the former are embroiled in conflicts with the US and Russia. Armenia will have to look beyond its neighbours to create a thriving tech sector.
Decentralisation thus paradoxically becomes the model through which Armenia can become an IT centre, by embracing an internationalist vision free from geopolitical constraints.
“That’s I think the path to become a centre,” says Avinyan. “If you are looking at only Armenia you will not be the centre.”