Banks.am has sat down for a talk with Gurgen Khachatryan, co-founder of Galaxy Group of Companies and Chairman of the Board of Directors at Ucom, who spoke about the challenges of entrepreneurship in Armenia.
The Galaxy group unites 15 companies and employs over 3000 people as of December 2018. The average monthly salary at Galaxy companies makes AMD 315,000. The group operates in IT, broadcasting, sales, service, and real estate sectors in Armenia.
“The Swedes decided to work until noon on Friday. They’re increasing the week-end.”
“Do you always work on week-end?
“I often do, but I try to keep Sundays for my family, my daughters and friends. I’m very busy during the working days, but sometimes I manage to find time to take my kids home from school and kindergarten.”
We meet Gurgen Khachatryan in his office on 1 Kiyevyan St. on Saturday, at 14:30. A fresh issue of The Economist, the paintings on the walls and the bookcase are the first things that catch our attention in Khachatryan’s office.
He says he has been reading a lot in recent times. A few weeks ago he finished the “Collective Genius”, now he is reading Yuval Noah Harari’s “21 Lessons for the 21st Century”.
Sport and art
“Sport is very important. It awakens your ability to fight for your goals and teaches you to work in a team and develop your willpower.”
Khachatryan plays football and tennis in free time. He doesn’t play professionally, but he is a big fan of team sports. His daughters inherited this love for sport: the elder plays tennis, the other is enrolled in figure skating class.
Khachatryan has fondness for art as well, especially for the works of Armenian painters. He insists he can recognize Armenian visual arts at once by the colour palette.
“When I finally decide to hang the painting on the wall, it means the painting has a special meaning, history for me. I am convinced that people of art live in a different world. You cannot just love art, you have to study it.”
With that remark, Khachatryan points at the painting in the corner of the room.
“I share with them how my day went, what I think, and we speak the same language. Many of my friends are people I met in school and university, and their children are friends with my children now.”
For Khachatryan, honesty and selflessness are key values in friendship. According to him, business environment makes it very difficult to make friends.
“It’s important to understand the language they prefer to speak, in figurative meaning, and speak it to them. You need to have principles and be flexible in the business environment, and understand the individual interests and expectations in the given relationship.”
The lesson taught by Harvard
“Harvard was the place where I realized that all large and small companies are facing the same problems and challenges in any corner of the world.”
Khachatryan believes that Harvard Business School teaches leadership skills that you cannot learn in any other higher education institution. It also provides an environment of equality for everyone, which teaches the art of flexibility in communication.
The lesson taught by life
“It is very important to have consistency and never back down.”
Khachatryan came across some curious statistics while studying at Harvard: 80-90% of people starting a business fail and wash their hands of the matter, thinking themselves to be a failure. The other 10-20% decide to try again, and the possibility of failure drastically drops in their case.
“Mistakes can’t hold you back from achieving your goal. Every mistake is a beginning of a new business. Don’t forget that details matter. They are the foundation of success.”
The first business and the first failure
“I had my first business experience while in the university. I was a freshman, my friend and I really wanted to found a business to have our own income.”
Gurgen and his friend decided to open a catering point in a park in Yerevan. They organized everything and sold ice-cream and juice after classes. Their daily profit never made more than AMD 35,000-50,000, and they had to close the failed business. Later they realized that the lessons they learned were more important than the money.
“One of the lessons we learned at that time was social responsibility. It really matters. If you are an entrepreneur and a taxpayer, you have to work responsibly.”
“Each company in the Galaxy group has a share of social responsibility.”
That is what made them think about opening a fund, Gurgen Khachatryan says. They plan to launch Galaxy Foundation in the near future.
The foundation will focus on educational, cultural and social programs, all of which should be innovative. The companies of Galaxy group also plan to implement innovative programs in public schools in cooperation with the Ministry of Education.
The importance of innovation
“I believe that Armenia’s small size and limited opportunities are actually an advantage and we should use it.”
In 2008-2009, the team of Ucom, where Gurgen works as Chairman of the Board of Directors, negotiated with the Swedish company Ericsson to import their new technologies into Armenia. They wanted to be more than a telephone and internet operator.
“Ericsson came up with the idea of TV catch-up service at that time and wanted to test it. We convinced them to choose Armenia and imported the technology, which changed the notion of the possibilities of television.”
According to Khachatryan, that technology played a significant role in development of Ucom brand. Since then, at every private meeting the board members ask: what new technologies are there? Can these technologies be imported or created in Armenia?
That is how they came up with the idea to open the first regional Innovation and Technology Park.
Innovation and Technology Park
“One of my professors at Harvard studied innovative technologies and always spoke about them. The topic seemed appealing, so I started researching it and found out that various industries worldwide were going through continuous transformations.”
That is why Gurgen thought of creating an ecosystem that would include IT, engineering, financial, banking, healthcare, military, agricultural, industrial media and broadcasting companies.
He also decided that it should be publicly owned and should remain open for all companies willing to invest in innovations.
“Our dream is to see Armenia on the innovation map, and this is a great opportunity to make it happen.”
From young entrepreneur to head of large corporation
“On that journey, the team and the people I surrounded myself with were the key factor.”
All 15 brands of the Galaxy group were created from scratch, in three phases. The first was the idea generation, when they researched the market, defined their niche and decided what the new business should be about. The second phase was the development. They put together a strategy and a business plan, found partners and investors, and formed the management team. Finally, the operation kicked off and Galaxy took on the oversight as the chair of the board.
“It is a funny story. My brother and I wanted to open a watch store, so we would travel to Basel, knock the doors of all brands without a hint of embarrassment and say: “Hello, we’re from Armenia, we have secured financing from the bank and we want to open a watch store.” We had no business plan or strategy, so for the first two years, the brands would listen to us and show us the door politely. We did not become discouraged and returned the following year to try again. The funniest point is that everyone remembered us. They said: “Ah, here come again those two brothers from Armenia.””
The staff of Galaxy
“We try to find champions in their respective fields and bring them to our company. As a leader, you should never be afraid of working with people who are smarter than you. It is very important. You should keep in mind that you don’t know many things, you are just learning many others, and your function is organizational. The more clever people work for you, the easier it is for you to give them freedom in their work.”
According to Gurgen Khachatryan, Galaxy Group of Companies has changed the rules of the game in Armenia’s business ecosystem. It created new rules of competition by improving the quality of service and tackling innovative challenges.
Moreover, Galaxy attaches importance to retraining and training events.
Sacrifice for success
“A successful entrepreneur sacrifices the most valuable thing – the time.”
According to Gurgen Khachatryan, the business strategy has to secure the most important factor – motivation. He believes that people sacrifice their time for a good idea and it should be taken into account.
Khachatryan names four rules of a successful entrepreneur: be honest, try to make your dreams come true, don’t be afraid of mistakes, and don’t give up after the first setback. Instead, says Gurgen Khachatryan, analyze it and figure out why it happened and what lesson you can learn from it.