How Cuba’s growing internet is fuelling new businesses
May 23, 2017
As the internet becomes more widespread in Cuba, online start-ups are emerging. But the problems many of the companies hope to address are also a reminder of how far the island has to go.
Bernardo Romero Gonzalez, a 33-year-old software engineer from Cuba, launched his new business this month: a website where people can order island-made products such as soap, bouquets of flowers and cakes for home delivery.
“It’s like Amazon for Cuba, but with a difference,” he told an audience of New York techies at a conference this month.
The summary was a classic start-up pitch, but it also underscored the obstacles when it comes to starting an online business in the Caribbean country.
Mr Gonzalez is counting on buyers from the Cuban diaspora, which already plays a role in the economy, sending money and other products to the island.
But the infrastructure doesn’t exist for domestic buyers to sustain the market.
Internet access among Cuba’s 11.2 million people is growing.
Between 2013 and 2015, the share of the Cuban population using the internet jumped from about a quarter to more than 35%, according to estimates from the International Telecommunications Union.
The growing market has helped draw the attention of internet giants, such as Airbnb, Netflix and Google, which installed servers on the island and started hosting data there last month.
The rise is also fuelling activity among local entrepreneurs, who are launching domestic versions of sites such as the crowd-review business directory Yelp.
But there’s a long way to go.
‘Third world conditions’
Less than 6% of Cuban households had internet access at home in 2015, one of the lowest rates in the western hemisphere, according to the ITU. (In the UK, that figure tops 91%.)
Wi-fi hotspots in parks and other public places operated by the state-run telecom company remain the primary way to log on.
Service at the hotspots is often slow, expensive and selective, with the government restricting access to the full range of internet sites.
The constraints are shaping the emerging Cuban start-ups.
At this month’s TechCrunch conference in New York, Mr Gonzalez shared a stage with Kewelta, a firm focusing on advertising within decentralised online and offline networks, and Knales, which provides updates on weather, news and other events via text messages and phone calls.
Knales co-founder Diana Elianne Benitez Perera told the audience that “Cubans are disrupters by definition. We always find the way to have first world conditions with third world conditions.”
‘Change in the air’
The government in recent years has taken some steps to boost internet access, increasing wi-fi hotspots in parks and other places, lowering prices and experimenting with home installations.
The measures come amid broader economic changes in Cuba, after the Castro regime loosened rules for private enterprise and the Obama administration eased the US embargo, unleashing large numbers of US travellers.
The Cuba Emprende Foundation started working with the Catholic Church in Cuba about five years ago as the reforms started, funding four-week courses in entrepreneurship from which more than 3,000 people have graduated.
The Foundation helped organise the 10x10KCuba start-up competition in which both Diana and Bernardo participated last year, that led to the invitation to the Tech Crunch conference in New York in May.
“There’s change in the air,” says Anna Maria Alejo, one of the people who helped organise the TechCrunch panel and helped raise about $10,000 (£7,700) to pay for eight entrepreneurs to attend the conference.
“We’re not exactly sure where things will go, but there’s a lot of optimism among these young people,” she says.
Cuba has a relatively high number of well-trained software engineers, especially for a country with its size and degree of internet access, said Kirk Laughlin, managing director of NearShore Americas.
The media advisory company published a report in 2015 that highlighted the island’s potential as a hub for cheap IT labour.
But Mr Laughlin says he’s been disappointed by how slowly the Cuban government has moved to improve the broadband network, especially given interest from international companies and numbers of educated Cubans opting to leave and take their chances elsewhere.
“There is such an opportunity to leapfrog ahead and really light up the island with really robust broadband. That is just not happening,” he says.
“When it comes to online start-ups, there’s a lot of workarounds”.
“That’s great that people have the ingenuity and creativity and in some ways we should applaud that,” he says.
“But it’s still a long way to go to get into the league that Cuba has great qualifications to participate in.”
‘The companies are waiting’
Some say the changes could accelerate after Raul Castro retires next year.
In speeches, Mr Castro’s presumed successor, vice president Miguel Diaz-Canel, has indicated a more open attitude, said Larry Press, a professor emeritus at California State University Dominguez Hills, who has researched the internet in the developing world and writes a blog on Cuba.
Mr Press said media recently praised Revolico, a Craigslist-like site that was blocked by the government after its launch in 2007. More recently, it has been celebrated and has inspired competitors.
But those steps aside, a lot of work remains, he says.
“Those indicate a change of attitude, not a giant change of reality.”
Mr Gonzalez, who has also started computer repair and web development businesses, said he thinks the moment for Cubazon is now, while shipping to Cuba from the US remains limited.
He and the staff from his current business are working to sign up more businesses to sell their wares on Cubazon.
Many of the people he’s talking to don’t have an online presence, he says, but can see the possibility: “The companies are waiting for us.”
Still, he adds, his primary focus for the moment is a basic one: “My goal currently is working.”