{"id":42687,"date":"2015-02-25T10:37:25","date_gmt":"2015-02-25T15:37:25","guid":{"rendered":"http:\/\/oncubamagazine.com\/?p=42687"},"modified":"2015-02-25T11:45:47","modified_gmt":"2015-02-25T16:45:47","slug":"cubas-tech-start-up-sector-people-are-hungry-to-work","status":"publish","type":"post","link":"https:\/\/oncubanews.com\/en\/cuba\/economy\/cuban-economy\/cubas-tech-start-up-sector-people-are-hungry-to-work\/","title":{"rendered":"Cuba\u2019s Tech Start-up Sector: \u2018People Are Hungry to Work\u2019"},"content":{"rendered":"

(originally published in K@W<\/a>)<\/strong><\/p>\n

Growing up in Cuba, Jose Pimienta didn\u2019t see the Internet until 2006. He and his friends taught themselves computer programming with a Russian textbook on the Pascal programming language that had been translated into Spanish. Even in university, when he finally had access to the Internet, Pimienta, now 27, was limited to 20 megabytes per month of data \u2014 a small fraction of what fits on a thumb drive today. Yet, in 2013 when PayPal hosted its first-ever global hackathon competition in San Jose, Calif., with a $100,000 purse, Pimienta and two partners placed third for developing a peer-to-peer lending app called LoanPal.<\/p>\n

\u201cIn Cuba, you have a lot of people who have done things with limited resources and no real access to knowledge,\u201d Pimienta, who emigrated to Miami in 2009, says. \u201cYou have a lot of talent there.\u201d Pimienta is proof of the level of talent Cuban universities are producing. He and his Cuban partner won the regional PayPal hackathon in Miami two years running, and he\u2019s now working with clients in the United States, Europe and Cuba, building websites and brands from the ground up, while employing former Cuban classmates.<\/p>\n

Presidents Barack Obama and Raul Castro on December 17 made an historic announcement that the adversaries, separated only by 90 miles, would work to reopen diplomatic channels, ease travel and trade restrictions, and allow for U.S. banks to start processing transactions on the island. But even before the announced thawing of relations, Cuba was developing sought-after computer programmers and a tech start-up community that has drawn interest from entrepreneurs and industry giants like Google.<\/p>\n

\u201cYou have a highly educated workforce, excellent programming talent and a huge amount of opportunity for companies that want to invest in the knowledge economy<\/a>,\u201d notes Faquiry Diaz Cala, CEO of Tres Mares Group, a private equity investment firm in Miami that has partnered with Pimienta. \u201cThere\u2019s already demand for these programmers. There are full-blown projects that are being done in Cuba by guys who are working underground because they haven\u2019t really opened up the sector yet.\u201d<\/p>\n

There is no official number for the size of the information technology sector in Cuba or the number of trained professionals. But Diaz says Cuban universities are churning out large numbers of graduates who have learned to program with limited resources<\/p>\n

\u201cThese guys are sought after because their programming is so tight,\u201d Diaz notes. \u201cAnd their programming is so tight because they have learned with limited access to time on computers and limited access to the Internet.\u201d<\/p>\n

That could change. New regulations announced by the U.S. Treasury Department allow for the export of technologies to Cuba that were previously banned under economic restrictions against the island. That, coupled with economic reforms slowly rolled out by the Castro government, has positioned the Cuban technology and start-up sector as one of few areas of the Cuban economy truly poised for growth. Before the island can transition into a tech hub, however, it has to overcome serious hurdles including a lack of critical infrastructure, laws that limit foreign investment and government control of access to the Internet.<\/p>\n

\n

\u201cWe know from previous transitions that a gradual transition \u2014 such as the ones staged in China or Vietnam \u2014 were better than those that followed the so-called shock-therapy recipes.\u201d<\/h2>\n

\u2013Mauro Guillen<\/a><\/span><\/h2>\n<\/blockquote>\n

Not an Overnight Process<\/strong><\/p>\n

While the joint announcements made by Obama and Castro were met with much enthusiasm, analysts warn that the outcome of the thaw between the two countries will largely rely on a long, arduous process of negotiations, which began in January when assistant secretary of state for western hemisphere affairs Roberta Jacobson traveled to Havana for two days of discussions with the Cuban government. \u201cThe fact that they were meeting at all is hugely significant,\u201d says Cynthia Arnson, director of the Latin America program at the Washington-based Wilson Center, a think tank. \u201cBut this is going to be a process, and it\u2019s not going to happen overnight.\u201d<\/p>\n

Even if the negotiations are successful, fully opening the Cuban economy will take time, notes Wharton management professor Mauro Guillen, who is also director of The Lauder Institute. \u201cThat process of transition from all points of view \u2014 the legal, the economic, the financial, the monetary, the regulatory \u2014 is going to be very complicated. It cannot happen all at once. It cannot happen overnight,\u201d he says. \u201cWe know from previous transitions that a gradual transition \u2014 such as the ones staged in China or Vietnam \u2014 were better than those that followed the so-called shock-therapy recipes.\u201d<\/p>\n

Standing in the way of fully normalized economic relations between the U.S. and Cuba is the economic embargo first instituted by John F. Kennedy in 1962 and then later strengthened by Congress. There is a near-zero chance of it being lifted. The U.S.Treasury has exercised its limited ability to make exceptions to the embargo, but removing the embargo completely needs Congressional approval. Republican lawmakers are mostly opposed to loosening restrictions against Cuba. The Republican-controlled Senate may even block Obama\u2019s nominee for the ambassadorship.<\/p>\n

\u201cAll of the economic bottlenecks that existed before still exist, despite [the] much-lauded FDI [foreign direct investment] law,\u201d says Christopher Sabatini, former senior director of policy at the Americas Society and Council of the Americas (AS\/COA). \u201cIt\u2019s not going to be a windfall that will save and shore up [the] economy.\u201d<\/p>\n

To be sure, full normalization of the economy has the potential to bring an enormous windfall. The Peterson Institute for International Economics estimated in a 2014 paper<\/a> that Cuba, which currently attracts about $500 million in FDI, could lure as much as its Caribbean neighbor the Dominican Republic, which has $17 billion in FDI, including $2 billion from the U.S.<\/p>\n

And the Cuban government has identified information technology as one of the sectors it is seeking to develop under the reforms to its economy that President Raul Castro began to roll out in 2008. \u201cToday\u2019s situation does not allow computer activity to address many of the needs required by the population,\u201d deputy minister of communications Wilfredo Gonzalez Vidal said in an interview with Granma<\/em>, the official newspaper of the Cuban Communist Party. The government sees technology as \u201can industry of strategic development for the nation, strengthening the economy and providing broad access to contents of digital services,\u201d he said.<\/p>\n

The government has a multi-part plan to develop the industry that includes promoting training, focusing on government and electronic commerce, allowing for new business models, and cooperating with international actors to improve content and infrastructure and the availability of equipment.<\/p>\n

\n

\u201cThere are full-blown projects that are being done in Cuba by guys who are working underground because they haven\u2019t really opened up the sector yet.\u201d<\/h2>\n

\u2013Faquiry Diaz Cala<\/span><\/h2>\n<\/blockquote>\n

Perhaps the most significant sign of both the Cuban government\u2019s approach and the international interest in the island came on February 9, when Netflix said<\/a> it would immediately begin offering streaming service to the island.<\/p>\n

Severe Limitations<\/strong><\/p>\n

Netflix\u2019s announcement drew headlines, but also exposed the severe limitations that pose a threat to the development of the information technology sector. Penetration rates for cellular telephone usage and Internet connectivity remain uncommonly low: Only 5,360 home and business broadband Internet connections exist in Cuba, according to theInternational Telecommunications Union<\/a>. Roughly one in 10 Cubans regularly use mobile phones, according to Freedom House<\/a>, citing 2011 figures.<\/p>\n

Among the country\u2019s largest investments in telecommunications infrastructure came in 2013 when it activated a $70 million undersea cable<\/a>laid by the Venezuelan government, giving the country a dependable link to the Internet.<\/p>\n

Still, most Cubans won\u2019t be able to afford to access the Internet or buy a cell phone in the short term. An hour of access to the web eats up roughly almost one fourth of the average Cuban\u2019s monthly salary. And most Cubans can only check e-mail or visit government-approved sites through a domestic intranet.<\/p>\n

Pimienta knows the government-imposed obstacles well. He is currently partnering with Cuba-based designers on jobs from international clients. Due to restrictions on file sizes, his partner has to send large files broken up into as many as 30 e-mails, which are then pieced back together. Beyond that, he is not legally permitted to pay his Cuba-based employees. \u201cI supply them with equipment and technology instead,\u201d he says.<\/p>\n

Pimienta hopes new regulations will make it easier to work with Cuba-based designers. To that end, he and several partners have launched a website that highlights the work of Cuban designers and programmers. He hopes to bring together dozens of professionals from across the island, showcasing their work. \u201cWe want people to know about the talent that exists in Cuba,\u201d he says. \u201cWith these regulations changing, we want to be able to provide companies with access to Cuba. You\u2019re an American firm and you want to go to Cuba? We know the market both in the U.S. and in Cuba. And we can help you build a brand.\u201d<\/p>\n

Changing the Image<\/strong><\/p>\n

The popular image of Cuba, at least in the United States, is that of a closed-off, tightly controlled island where the Castro regime has a hand in nearly every facet of life. Miami-based entrepreneur Hugo Cancio sees the potential of the Caribbean island, where he was born, beyond its appeal as a tourist destination full of the robust cigars, vintage cars and aged rum for which it has become associated. \u201cCuba is more than that. You\u2019re talking about a country of 11.2 million highly educated people. It\u2019s about more than just the Castros,\u201d he says.<\/p>\n

\n

\u201cThere was a Cuba here before 1959, and it\u2019s a Cuba that is still here today.\u201d<\/h2>\n

\u2013Hugo Cancio<\/span><\/h2>\n<\/blockquote>\n

An understanding of Cuba is the message Cancio tries to relay to readers of his magazines and websites, including the flagship OnCuba publication. The magazine informs readers about Cuba\u2019s cultural uniqueness, its history and current events. \u201cThere was a Cuba here before 1959, and it\u2019s a Cuba that is still here today,\u201d he says. Yet, perhaps more revealing than Cancio\u2019s message is how he built the magazine and website with homegrown Cuban talent.<\/p>\n

Cancio plucked some of the island\u2019s best and brightest, trained them to produce a bilingual publication, and hired a handful of programmers to maintain the website. \u201cThe talent here is extremely highly trained,\u201d he notes.<\/p>\n

Cancio says he has worked with U.S. companies that have expressed willingness to get into the Cuban market when it opens. \u201cIt\u2019s amazing to see how interested American businesses are in Cuba,\u201d he notes. \u201cWe believe there is going to be hundreds of millions of dollars flowing from the U.S. to Cuba and Cuba back to the United States, eventually.\u201d<\/p>\n

The potential is so large that it could attract major U.S. companies, such as AT&T, Verizon and Google, the latter of which has already said<\/a> it is interested in expanding its reach on the island.<\/p>\n

How quickly investments proceed likely depends less on U.S. regulators and more on the rules that Cuba sets for investment. The state-controlled ETECSA (Empresa de Telecomunicaciones de Cuba S.A.) and its subsidiary Cubacel (Telefonos Celulares de Cuba S.A.) currently have a monopoly on the telephony sector.<\/p>\n

Welcome News<\/strong><\/p>\n

However, the early signs in the negotiations between the U.S. and Cuba are welcomed news for entrepreneurs. \u201cI think that you\u2019ll see a lot more direct assistance to the private sector \u2026 in the form of technical assistance so that they can grow and prosper and perform at a high level. That\u2019s what\u2019s happening on the black market already anyway,\u201d notes Ted Piccone, a senior fellow at the Brookings Institution who follows Cuba. \u201cCreating institutions that respect property rights \u2014 this kind of thing is a whole new concept in Cuba. A major transformation is underway.\u201d<\/p>\n

Regardless of how quickly reforms take place, Pimienta says there is already buzz around the potential for change in Cuba. Greater access to knowledge from U.S. companies and the ability to import needed technology and equipment can only benefit the start-up industry in Cuba, he adds.<\/p>\n

\u201cThe reality is that there are people hungry to work. They\u2019re creative and they are just waiting to show what they can do,\u201d he says. \u201cIf this happens, it would be wonderful for the people of Cuba.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

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Even in university, when he finally had access to the Internet, Pimienta, now 27, was limited […]<\/p>\n","protected":false},"author":3134,"featured_media":42689,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[13904],"tags":[],"ppma_author":[33546,8689],"class_list":["post-42687","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cuban-economy"],"acf":[],"yoast_head":"\nCuba\u2019s Tech Start-up Sector: \u2018People Are Hungry to Work\u2019 | OnCubaNews English<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/oncubanews.com\/en\/cuba\/economy\/cuban-economy\/cubas-tech-start-up-sector-people-are-hungry-to-work\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cuba\u2019s Tech Start-up Sector: \u2018People Are Hungry to Work\u2019 | OnCubaNews English\" \/>\n<meta property=\"og:description\" content=\"(originally published in K@W) Growing up in Cuba, Jose Pimienta didn\u2019t see the Internet until 2006. 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