Gyumri = The Future Tech and Creativity City of Armenia

airportAs I landed at Zvartnots Airport in Yerevan on my flight from New York City via Moscow, I was struck by the two buildings next to each other. I could tell immediately that the older one was of Soviet style - nice, but utilitarian. In stark contrast to that was a beautiful modern glass & steel building that would fit comfortably in any European city.

I had seen this before during my travels in Asia during the 1990s. It was right before the quantum leap in economic development that took place in there. It started in Japan much earlier, but then moved to Korea, Taiwan, Hong Kong and Singapore. Thailand, Malaysia, China and India are now experiencing the same economic growth. Within two days of being in Armenia I knew I was witnessing the beginnings of change.

I did not even visit Yerevan at first. I drove strait to Gyumri, the second largest city in Armenia to visit the Gyumri Information Technology Center and it’s director Amalya Yeghoyan. As I walked around the city for hours in the early morning, I could still see the scars of a city ravaged by a devastating earthquake. Being from New Orleans, and dealing with so much tragedy because of Hurricane Katrina, I could see it in people’s eyes. I did see pain, but mostly I saw hope. Just like New Orleans, the desire and hope to remake their city into the culture and art hub that it once was. It was burning in their soul.

As I look back on my two weeks in Armenia, my time in Yerevan was very nice. The young people I met at Yerevan BarCamp 2013 were quite engaging (you can watch the talk below). I also was given the opportunity to share my Ideas with the TV Talk Show on TvTsayg and in my interview with a great online magazine Leaders.am. But Setting Ideas in Motion should be about major changes. I did not see a potential for major change in Yerevan, or good return on investment. My trip to Armenia was mostly influenced by where I see true opportunities and a bright future…and I see Armenia’s IT Industry future is in Gyurmi.

Gyumri = The Future Tech and Creativity Hub of Armenia

gyumri old town buildings

Many people see the images above of Gyumri, will see a bygone era or crumbled past. What I see is potential like I have not seen since I lived in Taipei, Taiwan in 1986. I want to go down on record as predicting that Gyumri, will be the software and design hub for Armenia by 2016 - 3 years. Bookmark my words here if you are in disbelief. I could see the fire burning in the souls of everyone I met. From the students of GITC, to the Rotary Club members, to the people at the local TV station and even to the fish restaurant owner of Cherkezi Dzor (best fish I have ever had in my life}. Everyone wants Gyumri to succeed and wants to know what they can do to make it happen. They also know that the IT industry will provide the income and change which are desperately needed. What they are searching for are the steps needed to make that happen.

Step #1 - Add a Catalyst to Start a Reaction

gyumri techopark

This old building that looks gutted above is near the city center and is the future epicenter of the Gyumri tech revolution. Gurgen Paronyan, the director of the new Gyumri Techopark was so kind to show me around this unbelievably beautiful building. Its restoration and retrofit are now close to being complete and I must confess that is by far the best reuse of an older building that I have ever seen in my career. The Technopark is much more then real estate investment, it is a statement by the government and the people that they want to stand up and be counted.

As I said before, the situation is very similar to Taiwan in the 1986. At that time I was an exchange student in Taiwan and was given a tour of the Hsinchu Science Park. I looked out over a huge area of rice fields and dilapidated houses and my first thought was “these people are CRAZY!” But a wise man explained to me how to see possibilities and potential. He said that the water currently used to irrigate these rice farms will one day supply the needed water to produce computer chips to the world. Then he looked me in the eyes, and at 19 years old, I saw and understood for the first time that burning desire and hope to make a difference. He pointed over to a university and said, “What you don’t see is the brain drain of our best graduates to other countries because of lack of jobs. These rice fields will reverse this because they will grow opportunity and regrow a nation.” Before the project, as many as 80% of Taiwanese students who studied abroad did not return after graduation . Now there is a complete reverse. People from all over the world now study and work in the park.

Hsinchu Science ParkHsinchu is now one of the world’s most significant areas of IT research and production according to a report published at Davos. More than 450 large high-tech companies and thousands of small, mainly involved in the semiconductor, computer, telecommunication, and optoelectronics industries, have been established in the park. It now accounts for 10% of Taiwan’s gross domestic product or over US$40 Billion per year (vs. US$8.8 Billion for all of Armenia). I strongly recommend you read the China Post’s article Hsinchu Science Park a bastion for growth, innovation and cluster-based industries.

Step #2 - Create IT Leaders

Next door to the science park are two of Taiwan’s science and engineering powerhouses, National Chiao Tung University and National Tsing Hua University. Education was the key that unlocked the door to the park’s success. I was quite impressed with the Gyumri Information Technologies Center and what they have established after 8 years of building IT education in Gyumri - with the backing of FAR. While meeting both the students and administration staff, I felt the energy, enthusiasm and again, could see hope and that desire to do better. GITC is going to be a great contributor to Gyumri, but they can not do it alone. Economic development, especially in the IT industry, is an about creating an ecosystem and each part needs to feed and support the other. Currently that does not exist in Gyumri. GITC was a critical first step and the Techopark is a great second step.

One area that is important is media. iTechnology.am and Leaders.am are both good examples of online publications that are trying to build the future IT leaders in Armenia. But these are focused and have limited exposure. Where is mainstream media like TV? How can we weave in IT as a fundamental part of society like it is in Silicon Vally, Hsinchu in Taiwan or Bangalore, India? We need to get other sectors of society to focus on and become involved in the development and success of the IT Industry.

The real positive for me was the desire at all levels of GITC to reform and build whatever is needed to accomplish the goal of making Gyumri a world class tech city. One area of reform will be the development of FREE online education in the IT space, which will be able to reach the critical mass of people. We need to educate 300 people a year, not 30. LearnIT.am will fill the gap. It will grow into Armenia’s first full online IT school that focuses on developing both business and IT knowledge and skills. It will provide, in cooperation with GITC, a place to get the needed skills to participate and profit in the IT Industry. But for the IT ecosystem to prosper, you need an army of people.

Step #3 - Set a simple goal of 500 IT workers

As I sat in Le cafe, the only stylish cafe in all of Gyumri, a simple thought kept coming back to me. There is little chance that corporations will open branch offices in Gyumri, like Synopsys or Mentor Graphics have done in Yerevan. The only way true way for success is for Gyumri citizens to create their own.

After much thought and a coffee, the number appeared to me like a vision…500. I think given Gyumri’s population it is a very reasonably number. First I want to point out that not all 500 have to be programmers. On the contrary, we need to all services that are needed in our ecosystem. We need to target design and graphics, SEO/SEM, Sales & Marketing IT specialist and project managers. There is a HUGE misunderstanding that it IT education needs to focus only on programming.

I looked up the average salary for IT workers in the US and it is $84, 690 according to the government statistics. Lets say freelancers make half that income and average $42,000. If we take that number and cut it in half again we get about $2000 per month. Now, $2000 is not an unreasonable goal for a trained professional IT person. But that would be a fantastic salary in Gyumri, especially if there were 500 averaging $2000 per month.

I am a numbers guy, so lets do the calculation to see impact on the Gyumri economy. The direct impact would be 500 x 2000 x 12 = $12,000,000 per year. That may not be much to many people, but to Gyumri it will be HUGE. The most important reason is the economic impact is discretionary income, which equals gross income - taxes - all compelled payments (bills). In the case of Gyumri, because the basics expenses are low, discretionary income would be $1000. That would be many times more then the current discretionary income of $150 for an average worker in Gyumri now.

The common economic gauge of discretionary income is 2.5 times. Meaning that, for every dollar of discretionary income, it will circulate two and a half times. [This would include savings because the theory goes that the bank will lend out the savings, which will in turn create more economic activity] So, the total economic impact for Gyumri would be $6,000,000 [taxes and bills - half of the $12 million] and $15,000,000 [discretionary - 2.5 times the other half] for a total of $21,000,000.

You say NO WAY!! I say it can and will be done - we just need to learn from others who were successful and apply their methods to Gyumri. Let start with the city’s assets:

1. Well educated populace
2. A long and strong tradition of arts and creativity
3. Low cost structure
4. Rare architectural assets of old buildings that are screaming for renovations
5. An incredible entrepreneurial spirit among the young
6. Low Taxes: there is 0% VAT tax on exports and a flat 5% tax on corporate revenue, which is fantastic for high profit industries like tech
7. And above all desire and hope - which is priceless

The important question is what steps are needed to create our 500 IT workers…

1. FREE, online and flexible IT and business education
2. IT Education - in native Armenian Language, not only English
3. Women - The #1 asset I saw in Armenia was the highly educated women who were not able to participate in the economy because of childcare.
5. Web and Mobile Technologies - one of the lessons I learned from both Hsinchu and Bangalore was to focus. Hsinchu is primarily focused on hardware engineering and Bangalore on software outsourcing. For Gyumri, I think the primary focus should be web and mobile.
6. Design and Creativity - A core part of web design is graphics and media. People who only talk about programming are short sighted and have never had to develop a web site. Design and graphics play a critical role in web development, can be very profitable. Furthermore, it is easier to train then programming.
7. Flexibility - In recruiting, educating and working with our 500 warriors we need to be flexible. We need to have meetings, classes and seminars on different hours of the day and on weekends. We need to provide some kind of child care if your goal is to target women.
8. Tools - By focusing on specific tools for specific tasks, we will have highly skilled workers who are world class in using specific tools like WordPress. This will make a huge difference and is much more effective then just a general education. iTechnology.am was recently very successful (over 185,000 reads) in trying to propose WordPress as an economic development tool. View the presentation to get an idea…

Step #4 - Provide a Network to Collaborate

As a businessman, my job is to find investments that will have the greatest return. It’s simple, if Gyumri had tree lined streets, manicured parks and stylish cafes like Yerevan, then there would be little opportunities for return on investment. The cost of doing business in Yerevan is not much lower than many places in Europe and the cost of software programmers is much higher than in India. So Gyumri has many advantages from a cost point of view, but it’s main asset need to be the people.

The key to the long term success of Gyumri will be the collaboration and network of IT professionals into a community. The traditional large IT companies are not going to relocate to Gyumri. The only way to succeed is for the people of Gyumri to grow their own opportunities. This is what is going on around the world with collaborative work spaces. A good example of that is Google Campus in London:

For Gyumri, I think a fantastic example is here in New York City where I live. It is named General Assembly. It does a great job with IT education, business development, start-up investments, office space and creating a strong network where their community can support and do business with each other. Each person can offer their services in areas where they are strong, and then find others in the network to help and collaborate with them to finish projects. It is a true win-win!!! It is driven by demand, free enterprise and profit. But rooted in community.

The question is how do we create an effective and profitable creative collaboration space in Gyumri. One of the changes that Gyumri needs is human energy. It is a dreary city, no doubt about it. How can we transform the people’s desire for hope and change? How do we transplant the entrepreneurship and human energy of the people from Google Campus in London to Gyumri? How can we create a physical space that will spark the flames of hope in the people of Gyumri?

Also during my visit to Yerevan, I had the pleasure of visiting the Tumo Center for Creative Technologies. and Marie Lou Papazian, the center director, was so kind to give of her time and ideas in a conversation about ideas. It is clearly one of the most impressive centers for fostering creativity using technology.  I would even call the Tumo Center the muse for the Gyumri center.  But there is a HUGE difference between the two, even it our missions might be similar. I am 100% focus on business and using IT as a path to economic development. Tumo has a much grander and long term vision. I want people to be trained and working by Christmas.

My vision is that such space needs to be Creative & Modern (like the Tumo center) and allow people to gain better skills online and in person (like General Assembly) and have energy and fun (like the cafe @ Google Campus in London). I believe that it is possible to make it happen and I will put forth my resources and capabilities to turn this dream into a reality. We will create the 500 IT workers and the epicenter of this movement will be our creative collaborative space.

Step #5 - Develop a Start-up Eco System

No one is made equal. If there is a good programmer who enjoys doing the more difficult PHP back end code, they can partner with a few graphics designers who can work together to complete a project and share the profits. A few good people in our army of 500 will bubble to the top and start their own firm and directly hire people who are looking for steady work and pay - I say FANTASTIC!! That is the way the system works.

My vision is that the the ecosystem will function in a virtuous circle with IT education (LearnIT.am and GITC) developing and training new people on a consistent basis. Then the creative collaborative space helps build a community of freelancers and small start-ups in Gyumri. Then as the start-ups start to grow, they will incubate in offices and use programs at the Gyumri Techopark. We will promote the IT industry and the success we have achieved in Gyumri which will then encourage others to start the journey by developing their talent at LearnIT.am or GITC.

Many of these ecosystems give themselves names like, Silicon Valley. We need to name and brand our ecosystems.I propose Digital Pomegranate. Do you have any ideas or proposals? Please write in it the comments or contact me direct at [email protected]

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