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The Future (and Past) of Cuban Startups [analysis]

cuban startups featured
Larry Press
Written by Larry Press

The future of Cuban startups has a lot of potential, and a storied past. Larry Press analysis.

merchise meetup cuban startupsaNewDomain — Last week three Cubans who have experience working abroad organized the Merchise Startup Circle, a meetup intended to spark the formation of a tech startup community in Cuba. This meetup makes me hopeful that Cuba can develop a vibrant startup community. One reason I am hopeful is that, while they are lacking in financial capital, they have human capital, which is more important.

Education to Innovation

To be successful, the industry software needs demanding, knowledgeable users as well as skilled technicians. Cuba has placed a historical emphasis on education, so this shouldn’t be an issue. For instance, Cuba spends 12.8 percent of its GDP on education, which is the highest rate in the world and Cuban literacy is 100 percent.

Another indication of Cuba’s commitment to education is seen in the United Nations Development Program’s Human Development Index (HDI), which they report annually. The HDI is composed of sub-indices for education, health and economy, and, of the nations in Latin America and the Caribbean, only Chile outranks Cuba on the HDI or the Education index.

So, it’s clear that Cubans are well educated. The bigger question is are they trained and demanding when it comes to technology? Again, I would have to say “yes.” While Internet access hardly exists in Cuba and the population has infrequent, slow access to the intranet (Cuba’s in-country network), there is still a tradition of training the youth in computer use and literacy.

Fidel Castro created the Youth Clubs of Computing and Electronics (YCC) in 1987, opening 32 clubs to promote and teach computer technology. Below you can see Castro making a dedication at the YCC headquarters in the old Sears store in Havana. He expressed envy of the young people, who would learn this new technology, and has supported the YCCs since that day.

cuban startups fidel castro YCC

There are 611 YCCs in Cuba today, and 2.25 million citizens (adults and children) have completed YCC classes. Better yet, the YCCs are not just concentrated in the large cities, but have placement all over the island, so those with interest can learn despite location.

Internet and intranet in Cuba

That said, Cubans do have experience with the intranet and Internet, mostly from school or work. There are a few paid Internet access points called “CyberPoints.” There are currently 155 CyberPoints in Cuba, but ETECSA, the sole provider of Internet and telephone access in the country, has plans to increase that to over 300 this year. Despite the high cost — roughly a week’s salary for an hour of Internet — the citizen’s desire to get on the Web is growing. (Knowing who uses the CyberPoints, and specifically how, would be fascinating.)

Trained users will demand and shape tech products, but what about developers? The YCCs train and support hackers as well as users. Their Free Technology Users Group is active in information exchange and support of development. For example, they have been involved in developing and contributing content to EcuRed, Cuba’s faux Wikipedia. The photo shown below was taken at a 2015 users group freeware festival.

cuban startups free technology users group

In a 2011 report on the state of the Internet in Cuba, I looked at Cuban universities and found their general enrollment rates and expenditure per pupil were high, another indicator of potential user demand, but what about technicians? In 2011 Cuban universities produced 5,407 technical science graduates and 572 in natural science and mathematics. One university, the University of Informatics Sciences (UCI), which specializes in information science, has graduated 12,648 engineers in computer science since it was founded in 2002.

In my 2011 report, I compared the UCI curriculum with the computer science curriculum at Carnegie Mellon University, and found that:

The work-study balance – ten semesters of professional practice and three studying business topics – differentiates UCI from U.S. universities. Students are expected to work on useful applications in education, health, sport and online government — writing software, building Web portals and developing multimedia products.

While they may not have experience with the latest technology, Cuban graduates should be ready to do practical work and good students may gravitate toward startups since state enterprises are the only alternative source of employment.

Even without domestic users, outsourcing can help bootstrap a tech community and Cuba’s outsourcing prospects look good. Cuba is close to the large U.S. market, sits in the Eastern time zone and there are many Cuban expats in the U.S. and elsewhere with professional and family ties to Cuba. Cuban developers have been doing small-scale, sub rosa work for U.S. firms for some time, but now that we have approved work by independent Cuban programmers (as opposed to state enterprises) that work can expand openly.

cuba hdi rankings cuban startups

I checked the 2014 A.T. Kearney Global Services Location Index™ and it turns out that the top ranked nation for outsourcing is India — Mexico (4th) and Chile (13th) are among the top 15. Given their UNDP Human Development and Education indices, Cuba looks like a formidable competitor to all three.

How Cuban Culture Factors In

Of necessity, Cubans are resourceful. The old cars that Cubans have managed to keep running are as well-known as Cuban cigars. Home-brew computers are common, and before the government cracked down, homemade TV dishes were ubiquitous in Havana. There are even illegal satellite links in Cuba. These are just a few examples of Cuban resourcefulness in the face of constraints. For more, watch this video:

Video: Cuba’s DIY Inventions from 30 Years of Isolation

The legacy of years of socialist rhetoric might also contribute to the success of a startup community. The early ARPA/Internet community or Silicon Valley in the ’70s and ’80s provides examples of success that were partially due to a somewhat idealistic, cooperative culture and a sense that the participants were doing something important.

When the PC revolution was just getting under way, computer clubs sprang up around the country. One, the Homebrew Computer Club (HCC), met in an auditorium at Stanford University in the heart of Silicon Valley. The meetings featured a “random access” session during which people stood up to ask for help or offer to share information.

At one meeting I attended, Steve Wozniak offered schematics and a parts list for anyone who wanted to build a copy of the single-board computer he had designed, while his partner Steve Jobs stood at a table showing off wire-wrapped versions of the machine. After the meetings, “competitors” met at a hamburger place in Menlo Park (I forget its name) to talk about their latest S-100 bus boards.

cuban startups HCC apple

The early Silicon Valley user/maker community was very much influenced by the “counter culture” movement that valued sharing, cooperation and appropriate technology. The Whole Earth Catalog (“access to tools and ideas”), the People’s Computer Company, the Community Memory project and later the Whole Earth ‘Lectronic Link exemplified the values in the Silicon Valley.

Might the Merchise Meetup and the YCC Freeware Festivals turn out to be Cuba’s HCC?

Reality vs. the Dream

I’ve been painting a rosy picture — talking more about what I would like to see happen than what I think will happen. “Silicon Malecón” faces many obstacles.

Readers know well the sad state of Cuban Internet connectivity. As neuroscientist Frances Colón, acting science and technology adviser to Secretary of State Kerry says,

More than anything else, Cuban science and technology entrepreneurs need connectivity to finally move into the 21st century of scientific discoveries and technology development.”

A lack of capital is another obvious problem, but Cuban entrepreneurs with good ideas and organizations will be able to attract capital if government polices encourage foreign investors. That being said, the Cuban economy is already looking up as tension with the U.S. eases. Cuba may find it desirable to finance significant parts of its own Internet infrastructure.

A lack of business and marketing experience may also hinder Cuban entrepreneurs. That should be mitigated by close ties between Cubans and the expat community. Business schools are also eyeing Cuba. There is also Proyecto Cuba Emprende, which offers:

… training and advisory services to Cuban entrepreneurs who wish to start or improve a small business in order to contribute to the development of an entrepreneurial culture, social progress and to improve the quality of their lives.”

The biggest problem for the startup community may be Cuban bureaucracy and the power of incumbent state software enterprises. Will the government stifle startups with micromanagement and regulation (as exemplified by their list of jobs eligible for self-employment) and taxes? Will politically entrenched state software enterprises like Albet and Desoft view startups as competitors to be beaten, or will they be a training ground for future entrepreneurs? (This is similar to the question of the infrastructure policies of ETECSA).

I’ve mentioned some of the things the Cuban startup community has going for and against it. Let’s hope it takes off.

For aNewDomain, I’m .

Images in order: Cuban Internet Books by Aaron & Carol via Flickr; Merchise Meetup screenshot by Larry Press; Fidel Castro screenshot by Larry Press; free technology users’ group by Juventud Técnica; Cuba HDI Rankings by Larry Press; HCC Meeting by ComputerHistory

About the author

Larry Press

Larry Press

Based in Los Angeles, Larry Press is a professor of information systems at California State University at Dominguez Hills and a senior editor covering tech issues here at aNewDomain.net. Check his Google+ profile to contact him or see what else he is up to: http://bit.ly/viXqr4.