The strange and challenging world of Cuban tech start-ups

2015/07/11

Cuba may have one of the lowest Internet penetration rates in the Western Hemisphere, but that hasn’t stopped the development of a tech start-up community whose young entrepreneurs have aspirations similar to millennials in the United States.

To take advantage of the growing number of paladares, or private restaurants, one group has developed a Yelp-like application called AlaMesa that serves up information on a restaurant’s location, average price and cuisine, in both English and Spanish. You’ll also be able to find the latest on parking, takeout, wheelchair accessibility and whether there’s a wine list or entertainment.

Another group of four young computer scientists is working on Isladata, a Cuban market research database. They have a prototype online that explains the founders’ interests range from data and text mining, artificial intelligence and computer vision to virtual reality. Beta versions of its Cuban real estate and automotive market research are online.

And brothers David and José Ernesto Alonso operate A+B, a workshop that repairs mobile phones, cameras, TVs and other electronic devices. But they say their real interest is developing apps, and they use the earnings from the repair business and updating clients’ phone systems as the seed capital for their own projects.

But the emerging world of Cuba 2.0 is fraught with challenges. Even though many Cubans now have Smartphones, they don’t have data connections and even if they did, they can’t simply go to Apple’s App Store and sign up for their favorites because they have no way to legally pay for them.

So people who have Internet access — one way or another — pass on information. It’s a world of referrals and information passed from person to person by memory sticks or USB flash drives. Tech-savvy Cubans also have begun using Zapya, a local file-sharing app that uses a wireless network to upload files from one device and download them to another. In fact, it’s so popular it’s become a verb, Zapyar, meaning to share files.

Many of the new tech entrepreneurs are reluctant to speak on the record because they’re still employed by the University of Havana or Ciudad Universitaria José Antonio Echeverría (CUJAE) , a scientific and technical campus in Boyeros, and would have to seek approval before giving an interview.

Holding on to such university jobs is essential because these positions afford speedy Internet connections at work and occasionally DSL, or more often pokey dial-up connections, at home for research.

The first time one of the entrepreneurs had access to the full Internet, he said he was “a kid in a candy store,” surfing around for six hours straight.

But Cubans have become experts in resolviendo, or getting around obstacles and finding new ways of doing things.

Now, Isladata’s founders are in the process of developing a business model and say their potential clients are both foreign and Cuban enterprises. The real estate and automotive markets were natural starting places since under relatively recent economic reforms, Cubans can now buy and sell homes and cars without the intervention of the state.

Data that they collect isn’t available from the National Statistics Office, they say. By analyzing digital ads they’ll tell you, for example, that the average price of a house for sale in Cuba last year was $30,000 but in Matanzas it was $38,000 and the most common price there was $95,000. However, there is no data on the actual selling prices.

The most common asking price for a Russian-made Lada was $15,000 while the general price asked by owners of 1955 Chevrolets was $12,000. The owner of the single Jaguar — no year specified — that the Isladata sleuths turned up last year was asking $10,000 for the vehicle.

AlaMesa also was born of the economic changes that are coming to the island. Over beers, a group of friends were talking about the new laws to encourage state workers to become cuentapropistas, who are in business for themselves, and all the private restaurants that were cropping up as a result, said Yon Gutiérrez, who became AlaMesa’s designer.

Even though there are guides to paladares — private restaurants — compiled for foreign visitors, they concluded there really wasn’t a systematic way for Cubans, who make up about 80 percent of the restaurants’ clientele, to get information on pricing, menus and even locations.

They also decided their Android app would have to be very light to download since Internet connections in Cuba are generally poor. Freedom House estimates only 5 percent of Cubans have access to the open Internet though more have access to a slow government-controlled Intranet.

So far, the app has been downloaded by almost 5,000 users who also receive deals and promotions. But the entrepreneurs estimate their information reaches three times as many people as that and that each unique visitor views seven or eight restaurants at a time.

For those who can’t download the app, the AlaMesa founders provide an offline application that is updated every 15 days. It’s passed along via el paquete semanal, a weekly package or compilation of American TV shows, programs from Spain and Italy, recent movies, MLB games, Mexican soap operas, digital copies of magazines, apps, websites, advertising and more that is customizable and copied and distributed on portable hard drives and USBs to people all over Cuba who view the content on their home computers.

Cubans describe this alternative to broadband as “Internet in a box.”

In the paquete, the cellphone numbers of commercial contacts are listed for those who want to insert advertising in the middle of a sports game or other popular program.

Customers can buy as much or as little of the paquete as they want. The entire weekly package is one terabyte and costs 2 CUCs (around $2), but some customers only want one show or a few music videos. There are sellers and resellers of the weekly package all across the island and exactly who is at the top of the pyramid remains something of a mystery.

AlaMesa listings are just part of the copious content that comes out every Tuesday in el paquete.

The listings also are available at alamesacuba.com and can be downloaded by foreign visitors before they leave home for use on the island. AlaMesa also has a Facebook page where it posts culinary and entrepreneurial news and recipes like a recent one for coffee pudding. It has more than 4,200 likes. And soon AlaMesa will debut on Google Play.

Currently AlaMesa has 600 restaurant listings in nine Cuban provinces. Local representatives collect information for listings from restaurant operators in each province. Restaurateurs pay for ads and also for photos included with their listings.

Meanwhile, because the Alonso brothers’ self-employment license is for repairing electronics, they do fix cellphones and computers. But they say it’s much more profitable to focus on software, unlocking phones that are purchased abroad and updating operating systems for clients.

“Their phones are not prepared to handle Zapya and other new applications so they crash their systems and they need our help,” said David Alonso. There are now about 3 million cellphones in Cuba and increasingly they are Android Smartphones.

José Ernesto Alonso said he and his brother are using the money they make from repairs and systems updates to fund their own software and hardware development projects. “Getting funding for development is difficult in Cuba,” he said.

The brothers prefer slow, step-by-step growth for their company, said José Ernesto. “There’s a lot of potential because Cuba is so behind in all of this.”

But some of the tech entrepreneurs realize their window of opportunity may be fleeting — especially if the big boys come to town under a tech opening outlined by President Barack Obama. New U.S. rules allow American telecom and Internet companies to sell goods and services and joint venture with Cuba partners — both government and private — to improve telecommunications and Internet service for the Cuban people.

“We have a window of a couple of years before any of the big players come in and try to push others aside,” said one of the AlaMesa founders. “But I try not to be naive about it. Winter is coming.” Still, Cuba’s small start-up community knows the market and Cuban culture so they’re still hoping for opportunities.

So far, it’s unclear how engaged the Cuban government wants to be with U.S. telecom and Internet companies. On July 1, it began rolling out expanded Wi-Fi service at 35 hotspots around the country and has lowered the price of connections from $4.50 an hour to $2. The new network points are available to anyone with permanent or temporary Nauta.cu accounts, which are available from ETECSA, the state-run telephone company.

A leaked ETECSA document also seems to indicate the government has drafted a plan for development of home DSL service using Chinese equipment but ETECSA has said the document was only being used for training.

Google has already come to call several times — ostensibly with a plan to massively expand Internet on the island via Wi-Fi connections and cellphones. Twitter executives have been talking with the government. And Netflix announced in February that Cubans with high-speed Internet connections and access to international payment methods would be able to subscribe to the service and watch movies and TV shows for fees starting at $7.99 per month.

Both Wi-Fi connections and Netflix cost a lot for the average Cuban but some techies suggest people are willing to pay when it comes to something that is useful to them. The demand, they say, is huge and now that expectations have been raised, Cubans are going to want much, much more connectivity.

“There’s going to be a tsunami coming down,” said one tech entrepreneur.

By Mimi Whitefield for Miami Herald

Original article: http://www.miamiherald.com/news/nation-world/world/americas/cuba/article27056917.html

 
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