Mongolia: from ore mining to data mining

As planning for the Tokyo 2020 Games gets underway, Olympic organisers will have a much more accurate way of turn loose concepts like ‘sporting buzz’ or ‘Olympic fever’ into precision-targeted marketing efforts to sell their tickets for various events and venues. 

New platforms will be able to predict which people are most likely to attend which events based on data gleaned about their lifestyle habits and based on variables like weather and public holiday behaviour. Data models powered by artificial intelligence will then be able to generate resonant marketing opportunities that might otherwise have been entirely missed in the past.

And while it would be easy to credit Japanese precision and efficiency for these advancements, the new technology is actually being developed from a less likely place—Mongolia. It’s the product of Dentsu Data Artist Mongol (DDAM), a new subsidiary firm employing about 50 engineers in the capital city of Ulaanbaatar.

Data Artist was a Japanese company founded six years ago, focused on consulting and landing page optimisation. By 2015, Dentsu was a major client with growing needs that led to its expansion into machine learning. That year, Data Artist hired its first AI engineer, Amarsanaa Agchbayar, who was Mongolian, to lead what would become the company’s future focus in artificial intelligence.

As he built his future team, Agchbayar knew of other talented Mongolians he could recruit. Their work so impressed Dentsu that when it acquired Data Artist last year, Dentsu decided to simultaneously set up DDAM as a Mongolian-based subsidiary led by Agchbayar as chief executive, who initially hired 20 Mongolian engineers in addition to the five already in Tokyo.

Today, less than two years later, Data Artist employs 130 people with more Mongolians (70) than Japanese (60). Twenty Mongolian engineers are based in Tokyo in addition to the 50 at DDAM in Ulaanbaatar. The company handles all facets of projects, from business solutions to proof of concept and implementation.

Dentsu Data Artist Mongol office in Ulaanbaatar

Much of the work starts with data analysis, helping clients with vast amounts of data to sort through it, glean insights and then build tools to use it. For instance, DDAM has developed a more accurate forecasting system for TV audience ratings from multiple data streams, now used by media planners at Dentsu in Japan.

“By using this you can predict the actual view rates of certain TV shows—broadcast in a channel at certain times,” Agchbayar says. “Our system simply outperforms all other media-planning tools.”

The company is also trying to capitalise on recent breakthroughs in natural language processing, creating Japanese-language models that in the future might be able to write product explanations and marketing content automatically.

Emerging digital marketing and IT

DDAM’s rising fortunes have coincided with the growth of Mongolia’s nascent digital marketing and IT sectors.

Mend-Orshikh Amartaivan is founder and president of The New Media Group, which began as one of Mongolia’s first digital-marketing agencies and has since grown to focus on creative and digital consulting. He says when the company started in 2010, local companies mainly wanted to open Twitter and Facebook accounts and have nice cover images for their websites.

While Facebook remains the dominant social platform in Mongolia, its usage continues to evolve, Amartaivan says. Initially banks would open up Facebook tabs to form ‘digital branches’ to disseminate information. But now more practical tools are being incorporated into the platform, like chatbots, while Instagram has increasingly become a creative marketing outlet for brands.

As the mining boom brought more global FMCG and fast food brands like KFC and Pizza Hut into the country, a plethora of young digital agencies sprung up to serve them. Then in 2014, Y&R set up shop in Mongolia and while VMLY&R still has first mover advangtage, many expect it’s only a matter of time before more global ad holding companies enter.

“Digital marketing over the last three years is being developed rapidly here in Mongolia," says Gabit Bazar, president of local IT holding company Infinite Solutions. “I think it’s really improved its ability to deliver messages to the public”, something that has been aided by a boom in stock exchange IPOs over the past year that has required prospectus information to be pitched in a more sophisticated way to the public.

Yesunzaya Bazarjav and Tsend Khureldorj from Mongolia's Viral Agency win gold at Young Spikes in Singapore

With the plethora of new digital agencies, some have specialised in digital content production. This year one such Ulaanbaatar shop, Viral Agency, sent a young team to Spikes Asia in Singapore to compete regionally with the big holding companies. The team did more than hold its own, winning gold in the integrated competition ahead of DDB from China (silver) and Dentsu and Hakuhodo from Japan (bronze), leading young creative director Yesunzaya Bazarjav to be hailed as a local rising star.

As the industry has matured, the Mongolian Marketing Association has scaled up and now holds a large conference each year including international speakers and is attended by more than 500 marketing professionals.

Likewise, Mongolia’s IT sector pulled-off #DevSummit 2019 in May, its first and largest tech conference in Ulaanbaatar, attended by close to 700 developers, engineers and tech professionals from multinationals abroad like Apple, Amazon, Dell and Airbnb to local startups like Lend.mn and Amartaivan’s main focus these days, an open-source marketing, sales, and customer-service platform called Erxes.

Mongolian Marketing Association SMART Conference in Ulaanbaatar, October 2019

Why Mongolia?

While the importance of Mongolia’s tech sector to the economy shouldn’t be overstated compared with much larger sectors like mining, finance, transportation and tourism, there are reasons why the country has real potential to excel at IT and make it a much bigger part of its future.

In the case of DDAM, Mongolia has several advantages for a company like Dentsu to recruit IT engineers. Cost effectiveness is one of them, certainly compared to Japan. But it doesn’t tell the whole story, as other more cost-effective markets like China and India already have well developed IT industries.

Lkhagvasuren Erdenechuluun, DDAM’s chief financial officer, says that in their case, the quality of work from Mongolian engineers simply spoke for itself. “That was recognised not only by Data Artists but also by clients. So that’s why there was this trusted relationship between the Japanese engineers and the Mongolian engineers,” she says.

“Japanese people are very precise and are very good at what they do, but we Mongolians provide a solution very fast so I think that’s a good combination,” Agchbayar says, leading him to share his more anthropological theory.

“I think Mongolians are good at doing proof of concept work because of our nomadic lifestyle," he says. "We faced problems every day but had to deal with it by ourselves because no one was there. That was how as nomadics we lived. I have no scientific proof of this, but I believe it.”

Math: it’s all starting to add up

But there’s another important legacy from Mongolia’s past that is a factor, albeit from more recent history. Over the last century, Mongolia’s school system has largely been modeled on a Soviet-style education with a strong emphasis placed on mathematics. Mongolia has long been a strong contender at global math competitions. Agchbayar is himself a bronze medal winner at the International Mathematical Olympiad.

This strong mathematics foundation has made it possible for newer generations of Mongolians to excel at data mining and algorithmic coding work, with the more entrepreneurial among them setting up IT businesses of their own.

Bazar was one of seven classmates who upon graduating from college in 2007 set up Infinite Solutions, what they hoped would become a world-class IT company, despite there being a very low understanding of IT in the country at the time, he says.

Bazar went to the US in 2008 and tried to absorb all he could in Silicon Valley, eventually developing the company's first product, an app to locate the nearest golf courses. Other joint ventures have continued to follow Bazar as he travelled back and forth from Silicon Valley, including a CRM and marketing platform called Shuffle, allowing businesses to track customers and interact with them. 

The lessons learned enabled the company to apply its skills more practically in Mongolia’s domestic market, launching the country’s first smartphone banking app and eventually P2P money lending applications. Now president of Infinite Solutions with 120 employees, Bazar says 90% of Mongolian banks use some form of its Internet banking technology. This year the company launched Mongol Chat, a social network and payment app with functions similar to WeChat.

As more products hit the market, more software engineers and data scientists were required. “Whenever we’d interview young graduates in Mongolia—or anywhere really—you’d spend almost a year to train them with relevant current technologies. And the biggest question that came to our mind was—what the heck were you doing for four years [in higher education]?” Bazar says.

Nesting a new generation 

The problem led Bazar and some other cofounders who worked abroad at Facebook and Amazon to start a pilot project two years ago, an after school IT boot camp for about 80 kids in Ulaanbataar called Nest Academy. The aim was to prepare them for what the big tech companies really required. 

The results, Bazar says, were phenomenal. “We understood that if you guide them in the right way, they can be successful. It has nothing to do with age.”

Nest High School

So this year, they expanded with government consent to form Nest High School, a full-fledged private school with 200 students in grades 10 through 12. It teaches standard education like math and languages in the mornings, then IT skills in the afternoons. Foundational basics like algorithms are taught in the first year, while in the second year students can specialise based on their abilities. The artistic-minded students can focus on user experience and graphic design, for instance, while computing-minded students can go into a back-end learning stream. The third year involves practical internships at banks or consumer brand companies and students are given options to work another gap year before entering college.

To Bazar, it’s only natural that the education system needs to be reimagined to focus on applying skills in the real world. “Before students graduate, they dream of going to Stanford or Harvard—we’ve brainwashed them that they must. So they go to Stanford and suddenly the dream becomes ‘Oh, I want to go to Google. And now, Google says, okay if you have those IT skill sets then we don’t require a particular college degree.”

“We really do have that good technical background per se,” he says of Mongolia’s math knowledge. “But we lack the practicality.” Bazar says the goal is not just to train engineers and coders, but increasingly develop project managers who can apply technology problem-solving to a wider range of businesses and build a more entrepreneurial generation.

Mongolia’s future in technology

“Honestly, my vision is to really build a Mongolian Silicon Valley—to have that infrastructure so that we have the universities, so that we have those products used in Mongolia, in Asia or anywhere in the world,” Bazar says. He wants to see companies like Apple, Facebook, Google and Microsoft set up R&D investments in Mongolia “so we improve not just economically but as a society as well. This is where we’re going.”

The sentiment may sound ambitious, but he’s not alone. “Our dream is to create an industry in Mongolia that is bigger than the traditional mining industry," Agchbayar says. "That could be the AI industry, I hope."

Erdenechuluun agrees. “Young people and the government see the technology industry as a new way to grow our economy. We’re doing mining all these years but the country is still not doing that well. We still have poor people. But this AI industry might be very suitable for us because the population is not that high,” she says. “If we have even a few people with high knowledge and experience, those people can create something for the country. Maybe AI and technology is the thing that can make our future better.”