The Struggle of the Cuentapropista

Ask any Cuban what they’d like to improve in their country and most don’t know where to start. A few will rattle off half a dozen ideas, but when pressed for solutions often draw a blank. The most enterprising Cubans, however, have already selected the problems they want to solve and are taking their ideas from idea to invention.

They face myriad challenges, but many find ways to rise above. There’s no lack of world-class design and development talent on the island, but most of these individuals struggle to access to the resources and information that they need from the get-go. This is, of course, tied to lack of affordable, convenient, and reliable internet access on the island.

Connecting in Cuba

For several, the Cuban government allowed artists and musicians to privately sell and license their work. In the early 2000’s, the government started to allow other citizens to apply for licenses to sell their work in other industries. As of 2010 this included several blue collar jobs and services such as cellular phone repairs, tailors and seamstresses, party planners, fitness trainers and computer programmers. Traditional professions such as law, medicine and architecture are not authorized for self-employment. They face many obstacles, the first of which is the need to apply to the government for a license, which carries an annual fee and tax obligations based on imputed income.

All face the handicap of limited internet access, but for coders and those in creative industries, this is especially problematic. Cubans gain access to the internet content through a variety of methods, whether it’s public wifi hotspots, the illegal intranet or the Packete Semanal, the weekly terabyte hard drive. Though programmers can code and share information with one another while offline, internet access would make their work easier and more productive. Some connect at work or university, but this requires them to have a full-time job or be enrolled as a student. Many rely on public wifi hotpots that cost two dollars per person per hour, a significant cost.

This, combined with the lingering difficulties in US-Cuban relations, means that even simple things like calling outside the country are difficult. Cell phone calls between the US and Cuba are $2 per minute or more, and services such as Skype and Google hangouts are either blocked or too slow on most Cuban connections. Something as simple as a weekly conference call can be an insurmountable challenge.

Though Cuban has relatively modern computer science classes in their universities, programmers don’t learn all they need to know in the classroom. Most developers are self-taught, learning what they can by sharing information among themselves on flash drives and USB sticks. Limited internet access makes this a challenge, especially when it comes to most online learning platforms. These structure their courses around streaming videos, which are very difficult to access on Cuban bandwidth.

The Limitations of the Embargo

Though the US and Cuban have begun to normalize relations, the US embargo is still in place. Though businesses are allowed to work with private citizens, they’re prohibited from doing business with the Cuban government without a specific license. And while US sales of software services to private Cuban citizens is generally permitted without a license from the Department of Treasury’s Office of Foreign Asset Controls (OFAC), many companies choose to ban all sales to Cubans out of fear that they may make an unauthorized sale and potentially incur hefty fines.

Cubans have found a variety of ways to get around this, often relying on applications designed for low bandwidth, like the popular messaging and calling app IMO. Communication services like Slack are often blocked as well, hampering developers’ capability for real-time communication. Texting from Cuba to the US is even blocked from Cuban phones.

Simple things like web hosting is a tremendous problem. Web hosting services based in the US won’t do business with Cuban citizens or process Cuban credit cards. Some aren’t even accessible from within the country. Cubans must therefore use hosting platforms based outside the US.

This may seem simple, but can pose major problems. For example, a well know app development group based in Havana used a hosting service in the Europe, until it was acquired by a US company. At that point, the group was notified that they would no longer be able to host their site on that platform. They had to switch their entire platform to a new service.

Tools of the Trade

Programmers lack easy access to some of the most important tools. Some development platforms, like XCode, aren’t available in Cuba, nor are Google’s documentation site and Google Code. Programmers have ways to get around this, like using a VPN to fake a connection in the US to access or download the services.

Software is equally difficult to access. Anything that needs to be purchased physically must be brought in from outside the country. Designers who rely on applications like Photoshop and InDesign often use outdated versions, as in recent years Adobe moved all its products to a cloud-based subscription model that can’t be legally accessed in Cuba.

The licenses for these products are exceeding expensive for Cuban’s, anyway, with a month’s subscription costing over a month’s salary. Most of these programs are pirated, and rarely used in school. This doesn’t get around the fact that they can’t sell their programs without properly licensing the platforms.

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The Design Community

One major benefit of working in Cuba is its robust and growing design and developer community in Cuba. There’s an impressive degree of camaraderie, likely the result of a group of intelligent individuals who realize that the only way anything will get better is if they get better for everyone. You can find the designer’s work in galleries, bars, event spaces, and even a shop or two scattered throughout the city.

Most designers and developers work as individual freelancers, completing projects for government-run companies, international business, and other cuentapropistas. They create websites, posters, and even advertising campaigns and packaging. Some have started to experiment with forming groups of cuentapropistas, essentially agencies, while others have begun building products and services that they can turn into a sustainable business.

While developers often struggle with access to information, designers and makers often find it very challenging to find the physical resources they need. Lack of basic materials comes through everywhere, from the universities and beyond. Many industrial designers, for example, must rely completely on computer simulations to demonstrate their work. Prototyping materials simply aren’t available.

Both materials and equipment are difficult to come by, and many entrepreneurs often turn to recycling or the black market to make ends meet. Some sectors, such as artists, are able to obtain a license from the government that allows them to import and export their work. But the imports are fairly restricted and require time on a waiting list. The government also sets import quantities on an annual basis, and if supplies run out, artists can face a very long wait. Artists materials also aren’t the government’s highest priority, as it’s already facing annual cutbacks due to the reduced oil shipments from Venezuela.

Developing a Business Plan

One common challenge that all Cuban businesses face is how to make money from their customers. In the US, businesses are often struggle with how to convince customers to pay for their services, Cuban entrepreneurs often face a much more fundamental challenge: how to physically receive payments from their customers.

Cuban businesses operate entirely in cash, as very few Cuban customers carry cards and most businesses lack the infrastructure to take them. While this isn’t a major issue at a restaurant, it places unique constraints on an app developers and those relying on online advertising.

The idea of physically collecting cash payments from a network of distributed customers of an online service is unthinkable in the US, but this is exactly what some Cuban developers must to. They hire teams of salesmen to sign up costumers and collect annual payments.

Others choose to focus instead on a less fragmented market: the emerging Cuban cuentapropistas. Apps that promote businesses and venues, for example, often charge businesses to be a member of their app, and charge additional fees for premium features.  This of course benefits the businesses, as it provides another avenue to promote their business in a country where this is quite a challenge.

Marketing in a Country without Advertisements

One of the most unique things about Cuba is that it is almost completely devoid of advertisements. The few billboards and posters are put up by the government to espouse the ideals of the revolution. Private citizens have few ways to advertise their businesses and services, and must resort to more creative means.

Online advertising is a challenge in Cuba. All official media is controlled by the state, which doesn’t support advertisements. Some unaffiliated news services have started to emerge in the past several years, but it’s still a relatively small sector.

Paid promotions are mostly blocked as a result of the embargo. Not only are Cubans prevented from paying for these services, many don’t allow them to target their advertisements to Cuba. Neither Facebook nor Google allow customers to pay for targeting promotions to a Cuban audience, which means entrepreneurs must rely on organic traffic and word of mouth. Not that many Cubans are checking Facebook or Google enough to make a difference.

One way that many entrepreneurs promote their business is through El Paquete, the weekly terabyte hard drive distributed throughout the country. El Paquete contains a variety of pirated international content, but also features local content that creators pay to have included. This ranges from Cuban-produced music to new magazines to locally made apps and games.

App developers regularly check the Paquete to verify that their programs are actually included. El Paquete is produced at a central location and then distributed to a variety of local middlemen who add and remove content. Some app developers find that their programs aren’t included in El Paquete when its finally delivered to customers. They theorize this is because one of the middlemen is removing it because he’s not getting a cut of the proceeds.

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Supplying Their Business

Buying equipment and materials in Cuban can be quite a challenge. Importing is nearly impossible, forcing most cuentapropistas to work with what is already available on the island. Even something like buying office chairs and desks is a struggle. Most rely on a mix of whatever they can buy on the street or hire someone to make. There are no legal ways to buy something like a decent laptop in Cuba.

A quality laptop can only be acquired outside the country, meaning Cubans must be able to travel or purchase it from a mula, or mule. These mulas travel to and from the US or other nearby countries for the sole purpose of bringing back products for resale. This adds considerable costs to the price of a computer, as it now includes the cost of the ticket, the baggage fee, the import taxes, and the fee for the mula. This can easily double the cost of many devices.

Entrepreneurs also struggle to find software platforms for their business. US-based ERP (enterprise resource planning) and CRM (customer relationship management) software is largely blocked. Most use software developed outside the US, like Odoo. SaaS platforms like Salesforce.com are completely blocked inside the country, not that these would be useful with the limited and slow internet access. Even basic services like Google Apps for Business are blocked. The same goes for services like Outlook. If developers want to use emails with their domain name, they have to use a less-common mail hosting platforms.

The Cuban government recently began supporting this growing community by renting workspaces to cuentapropistas. While these spaces are quite expensive, they allow the renter to purchase monthly internet access for around $600 a month. The price is too high for entrepreneurs just starting out, but feasible for those with a bit of revenue. The connection is slow, but as of now this is one of the only ways for private citizens to get internet access. These workspaces are scattered throughout the city; one is even located in the art-deco Bacardi Building in Old Havana, a fitting tribute to the entrepreneurial spirit.

Managing Money

Cubans are able to open domestic, personal bank accounts and deposit cash and transfer funds, but this usually requires an hour or more of waiting in line at the bank. Their savings can be transferred between accounts, but transferring the money outside the country is difficult, and to accounts held in the US is still impossible.

In the past few years, services like Paypal and Venmo started blocking transactions that even contained the word “Cuba.” This was in response to a substantial fine levied at Paypal for violating terms of the US embargo. This has scared away banks and financial service companies. Online banking for the majority of US banks can’t even be accessed within Cuba without a VPN. So far, only one US bank has started doing business in Cuba. Though it is very limited in who it does business with, it allows customers to use ATMs and transfer money and access their accounts from Cuban banks.

Cubans can’t sell or even upload their apps on Google Play or the Apple App Store, the two most common app marketplaces. This means the apps must be downloaded from the app developer’s website, shared from a friend, or accessed on El Packette. It restricts nearly all apps to Android, as apps can only be download to an iPhone from their propriety app store. Few developers in Cuba work on iOS apps at all.

Finding Funding

Cubans are not permitted to incorporate a company, instead relying on their licenses as cuentapropistas. This license allows them to work for themselves, and in some cases hire employees. But without something like a company, Cubans struggle with how to share ownership or accept investment.

Some find a way around this, usually by starting a company in the US or elsewhere. While it’s no longer explicitly illegal, it is still extremely difficult for Cuban citizens to incorporate companies in the US. Still, some entrepreneurs manage to get around this. Some Cubans have dual citizenship, usually in Spain, and others have friends and family living in the US that will incorporate a company for them. Stripe, a US-based online payment company, recently announced that it was opening its Atlas program to Cuban entrepreneurs, which would allow them to incorporate companies in the US, but as of yet none have been successful.

Entrepreneurs also struggle to raise funds to expand their operations. Cuban banks are able to give personal loans, but these are small, on the order of $500 per person. Foreign banks won’t provide loans to Cuban citizens, especially since they lack any collateral. Most entrepreneurs rely on cash loans from friends and family, usually those living outside the country. In some cases, this type of funding may come in the form of an “investment” but because companies are still not recognized legal entities in Cuba,

This also means that co-founders rely on handshake deals to operate. Usually one of the founders will have a license operate as a cuentapropista, and the others own parts of the enterprise only so far as they trust the founder. Some entrepreneurs have found a way get around this, essentially drafting up a futures contract for their shares in the company. These contracts state that, in the event that companies become legal in Cuba, the founders will each take a certain number of shares of the company.

Though Cuba certainly presents its share of challenges to cuentapropistas, these new entrepreneurs are finding ways to overcome. Each problem, when broken down, has a solution. The pieces are there, they just need to be assembled.

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