Tech Entrepreneurship in Cuba

Liam Wall
Liam Wall
Apr 21, 2017 · 5 min read
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Cuba has been in the news quite often. From the reestablishment of diplomatic ties to changing American regulations, there is a lot of uncertainty surrounding the island. These issues could be further complicated as President Trump’s policy towards Cuba takes shape. Last semester, I visited Havana with a group of students and professors from Johns Hopkins University to study the nation’s history, culture and politics. While I was there, I sat down with several of Cuba’s top technology entrepreneurs, bold innovators who are writing Cuba’s new future, one line of code at a time.

All American businesses in Cuba were nationalized in 1960. When the Soviet Union dissolved in 1990, Cuba lost many of the subsidies that made its economic model mathematically possible. After over a decade of economic depression, Cuba began to make some serious steps towards privatization. The private sector now accounts for 25% of GDP, up from just 5% in 1989. Of course, the state is still without a doubt the primary economic actor, but the entrepreneurs I spoke to are optimistic about future growth. Cuba now allows its citizens to work for themselves as cuentapropistas, a Spanish word that roughly translates to freelancer. There are 201 authorized job titles for these micro-entrepreneurs. That may seem like a lot of opportunities, but the positions are incredibly specific and limited in scale. The list includes titles like “seller of wicker furniture” and “bed-frame repairman.” This is the context for the startup scene in Havana, a far cry from the fame and glory of Silicon Valley.

I met the founders in Hotel Habana Libre, a high-rise tourist hotel that is luxurious by Cuban standards and popular with the Europeans and Canadians who have been wintering in Havana for decades. The hotel, then known as the Habana Hilton, actually served as headquarters for Fidel Castro and his troops during the Cuban Revolution. The hotel is located in Vedado, a bustling seaside neighborhood whose wide avenues are lined with crumbling mansions and other relics of the city’s former wealth.

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Author (left) with Wendy Rafael (center) and Luilver Garcés Briñas (right) in Havana

I waited to meet entrepreneur Luilver Garcés Briñas in the lobby, nervously hoping that my Spanish and his English would be good enough for us to communicate. The Spanglesh conversation that followed changed my perspective on Cuba and what it means to be an entrepreneur. Garcés is tackling a problem that was a nuisance for me during my stay in Cuba but an everyday reality for the natives: Internet accessibility. Unless you are a doctor or government researcher, internet access is forbidden in private homes. Cubans rely on expensive government-run cyber cafes and “WiFi parks,” public places in major cities where smartphone internet access can be purchased. If you are walking down the street in Havana and you suddenly encounter a group of forty people staring at their phones, you have found a WiFi park. Despite these measures, only about 5% of Cubans have access to the internet, one of the lowest Internet penetration rates in the world. The mobile phone penetration rate, on the other hand, is nearly in line with similar countries in the Caribbean. 61% of Cubans have a mobile phone, not too far behind the Dominican Republic, a nearby country with a similar GDP per capita, where 84% of people have a mobile phone. Luilver Garcés Briñas noticed the discrepancy between Internet and mobile phone penetration in Cuba and saw an opportunity. His company, Knales (pronounced like ca-na-les, which means channels in Spanish), sends SMS updates to users who subscribe to various channels. For a modest fee of 5 cuban centavos CUC (also 5 cents USD, the CUC is pegged to the dollar), you can receive weather updates, sports scores, local and international news or social media notifications. The service is certainly cheaper than buying a WiFi access card that costs about $2/hour. Garcés hopes that improving technology, easing regulations and a growing Cuban market will propel his business. His success has has not gone unnoticed; shortly after our chat, Garcés was honored at the 10x10k Conference in Miami, where he was awarded a $10,000 grant and named one of the top ten tech entrepreneurs in Cuba.

Later, I sat down with Wendy Rafael, a former classmate of Garcés from Universidad de Havana and a fellow winner of the 10x10k grant. Rafael created Cubaroom, an online platform for finding vacation rentals on the island. Wendy faces a unique problem. His clientele are almost all foreign, but embargo laws prevent him from advertising on any international platforms such as Google, Facebook or Tripadvisor. All of his marketing is organic. Cuba’s technological isolation is a major obstacle to overcome, but sometimes it can also be a barrier to entry for competitors. Cubaroom enjoyed a short period of relative monopoly over Cuban online accommodations booking before Airbnb entered the market. Over 4,000 Cubans have signed up to be Airbnb hosts in Cuba, reflecting not only the strong tourism business but also Cuba’s long tradition of private guest houses called Casas Particulares. Rafael is still confident that his business has a better understanding of the Cuban market and its idiosyncrasies. When I asked him if Airbnb was a potential acquirer of his company, he gave me a blank stare. After I briefly explained the way venture funding and acquisitions worked in the US, he responded with a nervous laugh and reminded me that this was Cuba. True.

My third and final interview was with Nelson Rodríguez Proenza, an entrepreneur and a patriot. He views his work as a service to his country. Despite all of the challenges involved in running a business in Cuba, he claimed that he wouldn’t want to work anywhere else. Rodríguez founded Autocubana, Cuba’s first online auto classifieds. Like many politically savvy entrepreneurs in Cuba, Rodríguez has a major regulatory tailwind at his back: Personal car sales were illegal in Cuba until 2014. Before then, cars could be passed down from generation to generation, but not sold without a special permit. Seeing a huge opportunity, Rodríguez used his own savings to start the company. For many foreigners, Cuba is synonymous with classic cars. The embargo and the effects of socialism limited the supply of new cars to Cuba so that most of the cars on the road today are decades old — either relics of pre-revolution Cuba or boxy Soviet Ladas imported during the 80s. Now, over 1,300 of those vehicles are on sale on Autocubana.

Each of the entrepreneurs I met displayed a formidable combination of optimism and go-getter hustle. These traits seem to be common in Cuba. Everyone has a little bit of entrepreneurial spirit, unfortunately, often out of necessity. Government salaries on the socialist island average about $25 a month so taking a second job, either as registered cuentapropistas or an under-the-table equivalent, is a common way to make ends meet. Perhaps Cuba could teach Silicon Valley a lesson in bootstrapping and creative problem solving?

Your local student venture capitalists…

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