Interview with VERIUM - Armenian cryptography StartUp

For the cyber security issue of we thought about bringing you an example of security focused Armenian startup. We talked to Gurgen Hakobyan, team leader of VERIUM, who told us about the cryptography system they created and shared his views on this growing sector of Armenian IT. Could you tell us about the VERIUM story? When was it founded? Who are the founders and the team members? Are they all students of  AUA College of Science and Engineering?
Gurgen Hakobyan: The VERIUM system was created by a small team of AUA students in year 2011. It was a project submitted by AUA team to participate in the annual Microsoft Imagine Cup competition. Our team consisted of four members: Nanar Chahverdian, Gurgen Hakobyan, Sergey Sargsyan and Ara Yeritsyan Negarchi. All of us were students of AUA CIS Masters program. Could you tell us more about your main products/solutions?
Gurgen Hakobyan: VERIUM system is designed to prevent counterfeiting of goods. In short, it consists of a special label, which is attached to goods, and a database, which is located in the cloud and is accessed by customers using a mobile data connection. The patented label consists of two layers: public and private. Both layers contain text codes, and those codes are paired in the central database. One of the key differences of our system is that codes are generated randomly and paired randomly as well. There is no specific algorithm that is used to generate those codes (like other similar systems). Public and private codes have different functions. The public code, which is printed on label’s external layer, is used to identify crude counterfeiting, and give access to information system. The private code, which is located on label’s internal layer, is used to for a security check. Once a private code is used, the entire key pair is marked as used in the database, so neither private nor public codes cannot be used again. Is VERIUM the first product/company of your team?
Gurgen Hakobyan: 
Yes, VERIUM has been the first project of our team.  At what stage are you? Do you consider VERIUM still a startup or a fully developed firm? What are the growth plans? Or you are working as individual researchers?
Gurgen Hakobyan: In July, we have received RA Patent AM20130009U for “A system to protect goods from counterfeiting”. We are a startup and we are looking for markets to apply our invention. At what level of development is your solution? Is it already in the marketplace? If not, why have you adandoned it? What are the future plans?
Gurgen Hakobyan: We have the system designed and tested in demo mode, which means it is fully working, however it will require some time to adjust the system for the individual needs of a customer. There are some problems to solve, for example how to quickly to scale the system to very large customers that can require tracking of tens of millions of items but we are confident this problem can be solved. Most people think of cryptography as computer security, but the first market for your product is in the consumer food and beverage industry. How did you make that leap?
Gurgen Hakobyan: 
Our system is created with strong security in mind. The system designed in a way so no one, including system administrators, can tamper with manufacturers goods and their respective codes. The codes are randomly issued to manufacturers and are instantly encrypted with manufacturer’s public key. No one can know, what codes are attached to what goods, except for the manufacturer himself. Also the file with codes cannot be accessed by anyone else than the manufacturer. In other words, we have realized from the beginning that no one will handle such a sensitive information to a third party and have designed the system in a way so the trust bearer is solely the main user of the system. How does your system differ from public key systems like PGP? Are you planning to enter the encrypted digital file business?
Gurgen Hakobyan: We are using public key cryptography as well as many other cryptographic methods. We didn’t design our own cryptographic system, but it is a really interesting field. Encrypted digital file business is however not one of the fields we want to enter, at least for now. We are more interested in consumer level products and systems. Are you planning to sell it in the domestic market or your targeted customers are out of Armenia?

Gurgen Hakobyan: We have offered our system to some of local manufacturers and are currently waiting for their response. Unfortunately, it looks like companies located outside of Armenia are more likely to use our system than Armenian companies. What are other projects you are working on?
Gurgen Hakobyan: Currently, we are only working on our system, we are planning to expand it and introduce many new features such as location awareness to track individual activation of codes, and statistical system for manufacturers of goods. What are your thoughts about the cryptography field in Armenia? Is it growing? Do you think it is an attractive niche for Armenia?
Gurgen Hakobyan: 
We have some world-class cryptography specialists here in Armenia, such as professor Gurgen Khachatrian of AUA, and we have studied cryptography as a separate subject in AUA. There are many applications of cryptography we have seen recently in Armenia, such as the new Tax Service system and similar government systems. This is however a very sensitive field, it has to be audited and checked regularly. What opportunities do you see for young Armenian tech entrepreneurs?
Gurgen Hakobyan: 
Currently, there is increasing demand for young IT specialists in Armenia, and I am sure it will get a boost over time as more and more foreign IT companies open their branches here in Armenia. There aren’t many Armenian startups though, but once the opportunities for small businesses grow, I am sure that young specialists will not only seek jobs but also try to found their own business in Armenia. Many of the top IT countries in the world use their universities as Stat-up incubators. Did you get support from AUA and do you see this as a future way for Armenia to develop start-ups?
Gurgen Hakobyan: AUA has from the very beginning endorsed us and helped us extensively with the project. In fact, our system itself is a result of a project we have created by the AUA initiative. I think that AUA has a great education program that not only includes professional subjects, but also business, management, etc. It is a standard part of CIS program. It is very important do educate students in these fields, which is not really traditional for Armenian education system. We have studied subjects such as entrepreneurship, getting competitive advantage, management etc. I can say that it is extremely useful for any entrepreneur and especially useful if you are going to found a startup. Thanks, Gurgen, wishes the team more and more success!