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| BUSINESS TECHNOLOGY; Thriving in What Was the Soviet Silicon Valley |
By RAYMOND BONNER,
Published: April 27, 1994
Even for those who believe in fairy tales, the story of a computer software company in this Caucasus republic can leave one laughing in disbelief. In the waning years of the old Soviet Union, when it first allowed some experimentation with private enterprise, four Armenian brothers decided to start a computer company here. They had no money and, worse, no computers.
Some seven years later, their company, Aragast B, has 100 employees whose accomplishments include writing software for banks in Siberia and selling computerized dictionaries to schools as far away as California. The brothers also staved off local gangsters who demanded a piece of the business. Trying to Be Competitive Aragast B is hardly a challenge to Microsoft, though the Armenian company contends that its dictionary, which translates English into Armenian, Russian and Arabic, is superior to those offered by American software manufacturers.
But Aragast has grown in a newly independent country where to say the economy is in shambles would be to exalt it. Along any street in the Armenian capital, more stores are closed than functioning and those that are open offer an anemic selection of goods. Industry is operating at 30 percent of capacity, thanks to a fuel shortage that results in electricity being available only two hours a day. By unofficial counts more than half a million Armenians have fled in the last three years, reducing the population of this New Jersey-size country to three million.
"Yes, the country is near the bottom, but still there is a lot of energy," said Gourgen Martirossian, president of Aragast B, and the youngest of the brothers. "Historically, we have seen worse times, times when not only the economy was destroyed but we lost our people -- the genocide." He was referring to the slaughter nearly 80 years ago of hundreds of thousands of Armenians by Turkish forces. "We know how to recover," Mr. Martirossian said.
It is understandable why the brothers would choose to start a computer company. Armenia was once the Silicon Valley of the former Soviet Union. Forty percent of the mainframe computers for the Soviet military were designed here. At one time 5,000 people worked at the Yerevan Computer Research Institute, a downtown complex of stone buildings so secret that ordinary Armenians did not know what went on inside. The decaying buildings are largely empty now, except for Aragast's offices on the third floor.
But how could a computer software company begin without computers? "That's an interesting question," Mr. Martirossian said with a laugh. "We went to the customers and used their computers."
The brothers were used to having nothing. Their parents were schoolteachers and as children, Gourgen and his next older brother, Babken, had to share a pair of pants for school. If the boy who attended the morning sessions tarried, the boy waiting at home would miss his afternoon classes. While recalling those days, Gourgen Martirossian sat in his office wearing a pin-striped suit, broad-collared white shirt and tie.
His oldest brother, Armen, is the general manager of Aragast, a holding company that includes banking, insurance, agriculture and retailing units. Babken and Karen, the fourth brother, also work for the company.
From the beginning, Aragast B focused on banks as potential software customers. "Even when the economy is bad, banks are the last to die," Gourgen Martirossian explained.
Using the old Soviet-made computers at Armenian banks, the brothers developed software to computerize the daily operations of the banks. When they demonstrated their software at a bank trade fair in Moscow recently, two Russian banks also bought copies.
"The amazing thing was they paid cash right away," Mr. Martirossian recalled with a mixture of awe and pleasure.
Such fledgling capitalists throughout the former Soviet Union have found one of the greatest challenges is getting work out of workers grown accustomed in the Soviet era to being paid for just showing up.
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