Cuba and entrepreneurship: An MIT MBA’s reflections — Alanna Hughes

MIT Sloan MBA Student Alanna Hughes

MIT Sloan MBA Student Alanna Hughes

Soñar no cuesta nada. Dreaming doesn’t cost anything.

As I conclude a study trip to Cuba, I am reminded of this expression that a Dominican colleague frequently used. Whenever I would “think big” – first as a Peace Corps Volunteer, and later as a social enterprise director in the Dominican Republic and Haiti – my friend Hector Romero had the ability to both encourage my idealism and remind me of the challenging reality with this simple phrase.

As someone who came to business school directly from entrepreneurship work in other parts of the Caribbean, I want to dream for Cuba. I want to hope that it is on the brink of something groundbreaking for all those in the island nation with an entrepreneurial bent. However, after having studied it more in-depth, and after having spent time in Havana, my optimism is tainted by some of the skepticism I’d perceive in Romero’s voice years ago. While Cubans as a society should dream big, the prospect of larger-scale innovation driven entrepreneurship, still feels like…well, a dream.

If Cuba truly wishes to become more entrepreneurial, it will need more than its bright minds’ aspirations. It will need to financially invest and politically change – both of which undoubtedly generate significant costs.

Like many dreams, increasing entrepreneurship in Cuba is grounded in some reality. When conducting behavioral science research to prepare for our time in Havana, I stumbled upon several examples of Cuban “hacks” to provide solutions to problems resulting from scarcity, isolation, and censorship. One common example is the paquete semanal – a collection of illegal classifieds, music, and TV series, among others – that is distributed on Cuba’s black market as a substitute for broadband internet. Other examples include metal meal trays repurposed as antennas and chargers built from non-rechargeable hearing aid batteries.

Beyond grassroots creative capacity, Cuba also possesses a highly educated populace that includes thousands of trained STEM graduates well suited to contribute to high tech businesses. Only about 200 miles separate Havana’s inventive and technical minds from Miami’s growing start-up scene and its gateway into other American innovation hubs. From a talent perspective, Cuba appears to hold a lot of untapped potential.

But will this human capital really be so easy to engage? Although our flight from MIA to HAV only lasted 45 minutes, it was clear as soon as we stepped out of Havana’s small airport onto its antique car trafficked streets that we had landed a world away. In spite of the hype we had heard in the American press about Cuba’s ability to “open up,” a lot of the gates currently remain under lock and key.  So few Cubans have regular access to the internet; they have only been allowed to own personal computers and cell phones since 2008, and wifi is only available in a handful of CyberPoints and hotel lobbies – at $5 per hour through pre-purchased cards.

On top of this, and other glaring infrastructural obstacles, from a policy standpoint private employment is limited to just over 200 authorized types of occupations. Although this private sector currently generates almost 10% of Cuba’s GDP, only a quarter of the estimated total of “businesspeople” are registered as tax-paying and full-time privately employed; this subset of 500,000 is less than 4.5% of Cuba’s total population. Even if the Cuban government does expand the scope of legal occupations, this only removes one hurdle. Additional barriers – such as lack of access to funding and private distribution networks – can be insurmountable for even the most resourceful of aspiring entrepreneurs.

I am not an expert on Cuba; the extent of my knowledge is limited to class sessions, our days in-country, and what I have read of my own volition. Although this pales in comparison to the three-and-a-half years I spent immersed in the Dominican Republic, I have been exposed to enough to say that Cuba is very different from is neighbors in Hispaniola or Florida. The next few months and years may bring some previously unimaginable changes, but there is still so much more that Cuba will need to do politically and infrastructurally to enable its people and its economy to “capitalize” on entrepreneurial opportunity.

And, perhaps that is the biggest dream of all: to get a fundamentally socialist economy to accommodate for more innovative market opportunities. Dreams may not cost anything, but actions to open up could come at the expense of Cuba’s ideological history, its public provision of essential goods and services, and its perceptions of what makes for an egalitarian society.

This realization leaves me skeptical of Cuba’s ability to reach its entrepreneurial potential…although I will still fantasize about what could be if I end up being wrong.

Alanna Hughes is a second-year MBA student at MIT Sloan School of Management.

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