An Inside Look at Cuba: Potential for Emerging Businesses

As U.S. relations open up with Cuba, more and more Vistage members and Chairs will be exposed to developments there and may see potential business opportunities. I have traveled to Cuba a number of times since 2002, often with Vistage members, always in humanitarian and people-to-people programs under a license from the U.S. Treasury Dept/OFAC. It’s fascinating to see first hand what is changing there, what is not, and to be able to talk with Cubans about economics, politics, and everyday life from their point of view.

My first trip, in 2002, was quite a shock. Havana was (and in many ways still is) a time capsule from the mid-twentieth century – not just because of the dominance of 1950’s American cars. Some offices still had old fashioned typewriters (they have since disappeared and have been replaced by laptops without internet access as we know it). Homes had either ice boxes or rudimentary refrigerators manufactured in Russia (now replaced by better-made Chinese refrigerators). Instead of buses, the transportation system generally relied on large passenger trucks, shaped like camels, which were attached to a lorry. They were always packed and sweltering. They have since been replaced by modern Chinese buses – still packed and sweltering – which have a history of breaking down often.

In 2002, there were no contemporary ‘world-wide’ restaurant chains like Starbucks and McDonalds (and there still are none). The shattered economy was shocking. People were (and many still are) living on food ration books that were supposed to last a month, but actually lasted only 7-10 days. Exquisitely beautiful old buildings were decaying, crumbling, some with missing exterior walls that had collapsed — and people were still using them. Only a very small percent of the buildings in historic Old Havana had been restored (restoration of Old Havana’s buildings later became a miraculous success story), and the number of buildings the government officially admitted collapsed each day was alarming – as was the death toll of people living inside these buildings.

During that first visit, I fell in love with the Cuban people, who, despite extreme personal hardship, somehow have the ability to live in the moment, make music, keep strong family ties and responsibilities in the face of dire economic adversity, and live their lives with few expectations of material resources. Their resilience, ingenuity to make-do with what they have, and creativity are remarkable. These people are well educated and cultured by any country’s standards, yet they are living in what we would consider poverty. We have traveled to many countries, and Cuba has been the only country where almost everyone loves people in the United States.

Under the current people-to-people license, we’re required to meet with Cubans from different walks of life, so we have in-depth discussions with artists, dancers, healthcare workers, architects, teachers, musicians, business managers, social service directors, entrepreneurs, and would-be entrepreneurs. We have frank conversations with them about their work, daily challenges, and new opportunities made possible by changes that have been happening in Cuba. Our government license regulations, if followed, actually make trips to Cuba far better than most touristic trips to other countries.

Since 2002, many more people have computers and cell phones and they can buy and sell houses/apartments. The Cuban government continues to expand opportunities to start small businesses. And some people have money to invest — huge sums by Cuban standards, small sums by American standards. Louis, who we met a few years ago as a tour guide in a cigar factory, told us he bought a 1958 Ford for $20,000 and is using it as a taxi business. He said, “I’ll get my return on investment in 2 1/2 years!” I still smile when I think about his budding capitalist thinking!

A growing source of wealth comes from starting restaurants, “Paladars,” in private homes. Today, there are some terrific paladars, serving wonderful food by any standard, and the owners/chefs miraculously find special foods and ingredients that are not commonly available to Cubans. Other Cubans are operating small hotels. Cuba is not prepared for a large influx of tourists – already, good accommodations are in very short supply, and some American-standard hotel rooms are over-booked. Some groups of visitors have been left stranded and roomless when they arrive at a hotel at which they were booked. As more and more Americans travel to Cuba, the lack of hotel space will become more acute.

One change that was already underway before Obama’s announcement was the first planned art exchange between an American museum and a Cuban museum. The Bronx Museum and the Museo Nacional de Bellas Artes in Havana will be having exhibitions in each other’s galleries. My longtime Vistage member Holly Block, Director of the Bronx Museum, is opening her museum’s exhibition in Havana this May, and Museo Nacional de Bellas Artes will open its exhibition in the Bronx, New York, in 2016.

One of the Vistage CEO members who traveled to Cuba with me a few years ago is a Cuban American who had not been to Cuba since he was 5 years old. He and his American wife visited his Cuban relatives and different neighborhoods in Havana and were devastated by how people were living. Their relatives live in a 6th floor walk up apartment and they have to haul water up six flights in order to flush the toilet. The CEO and his wife told us about their impressions with tears in their eyes. He said, “If I were CEO of this country, I would be ashamed.”

Well before the surprise announcements about upcoming changes between the U.S. and Cuba, many Cubans were becoming more and more impatient about the pace of change. The younger generation, born after the Revolution, want improvements in their material lives. They want to have access to an internet which is not only unblocked but is also fast. Cubans absolutely don’t want to give up free education and free medical care, the two major successes of the Revolution. At one time the younger generation wanted access to cell phones, which now they can afford. Many people don’t use phones, however, because it’s too expensive. Everyone uses phones for texting.

There is more potential for emerging businesses in Cuba, and there are also many challenges. We have to see what rules and policies evolve. Some American investors may jump right in, and others will be wary – suspicious that there’s too much risk, that investments and property ownership won’t be secure and could be diminished or taken over by changes in the Cuban government (like what’s happening in Russia). Big companies can afford to take risks easier than small to mid-size businesses.

There are some Cubans with money to invest. Some Cubans are entrepreneurial by nature and they are creative, innovative, resourceful, fearless, not afraid of failure, and able to work around all obstacles. Others have had their work ethic ruined by the government system (as happened in Russia), and foreigners may not want to hire them. When they opened the first McDonalds in Moscow, they hired only Russians who had not yet been in the workplace. They wanted to train their workers and instill in them a good work ethic.

There will be winners and losers. The scariest thing to me was hearing one cocky American traveler say — as he stood overlooking the Malecon, the magnificent ocean drive and esplanade, lined with decaying, beautiful buildings — “Imagine all the new condos that can be built here.” I’d hate to see Havana become another Miami. I’m hoping it’ll retain its essence and I’m grateful for having chances to see it before the changes come.

Norma Rosenberg is a Master Chair with Vistage in New York City. She can be reached at
Norma.Rosenberg@Vistage.com.

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