Tuesday, June 28, 2016

Disappointment after President Obama's trip to Cuba

President Obama meeting with Cuban entrepreneurs last March

Shortly before President Obama went to Cuba last March, I wrote a post on Internet-related announcements that might be made during the trip. It was pure speculation -- things like a Havana-Florida undersea cable or copyright and cyber-security agreements, significant infrastructure deployment -- and none of it happened.

However, The President did make some Internet-related announcements. He said Google would be announcing wireless connectivity during his visit and Stripe would offer their Atlas service to Cuban entrepreneurs -- providing a US tax ID, bank account and Delaware incorporation along with use of their global payment service. Stripe said they would be working with the Merchise Startup Circle in Cuba. The President also announced that Cisco would be offering their Cisco Academy training at Cuba's University of Information Science.

So, what has come of all this? Not much.

Google's wireless connectivity is the biggest disappointment. I've speculated on significant infrastructure and content investments Google could conceivably make in Cuba, but all they announced was a single WiFi hotspot at the studio of Cuban artist Kcho. Google supplied 20 Acer Chromebooks and a number of Nexus 5 phones with Cardboard viewers, and got a lot of publicity in return. Perhaps this is a necessary relationship-building step (Kcho is well connected), but in itself this hotspot is less than a drop in the bucket -- 99% hype and 1% substance, like Kcho's previous hotspot.

How about the deal with Stripe and their Cuban partner Merchise? In March, I contacted Merchise and Stripe to learn more about their business relationship. Merchise had nothing to say about their relationship with Stripe and Stripe said "Merchise is a partner in the the Stripe Atlas Network ... it isn't so much that we expect them to represent or market Stripe in Cuba; rather, if they know any specific entrepreneurs or businesses in Cuba for whom Stripe Atlas would be helpful, as a Network partner they can refer those entrepreneurs to us for early access to the Atlas program."

Last week, I asked Stripe if anything had come of the partnership to date and was told they had no concrete updates, but they had "been in touch with many Cuban entrepreneurs." I also asked Cisco about the status of and plans for their Cuban project, and was told that at this time they had nothing to add to what was said in the blog post announcing the relationship last March.

So far, nothing concrete and significant has come of the Internet projects Obama announced.

In addition to these announcements, The President met with Cuban entrepreneurs who described their businesses and briefly discussed them with him. During the meeting, he also introduced AirBnB co-founder Brian Chesky, praising him as a successful Internet entrepreneur and a role-model for young Cubans.

President Obama has continued his emphasis on entrepreneurship, most recently hosting 11 young Cubans at the Global Entrepreneurship Summit.

I've written about Cuban tech startups and support them wholeheartedly, but President Obama's upbeat tone overstates their potential impact. Internet companies focused on the Cuban market will not make a significant contribution until Internet access and the economy are improved considerably. Even then, no company will come close to the success of AirBnB with its $24 billion valuation without global reach. There is a potential market for Cuban educational and entertainment content and network services in Spanish-speaking nations, but Cuban entrepreneurs will not be able to go after those opportunities without major policy changes.

Update 6/30/2016

I heard from the Merchise Startup Circle with respect to their Stripe partnership. They confirmed that they do not represent Stripe or sell Atlas membership -- their role as a member of the Stripe Network is to refer potential customers to Stripe. They are not alone in this -- they are one of over 100 incubators, accelerators, investors, and others who can refer top global entrepreneurs to the program. They do not receive a commission for the referrals and they do not hold equity in the enterprises they refer. Their payment is the satisfaction of supporting and encouraging the Cuban startup community. That is consistent with the tone of their meetings and their academic roots.

As mentioned above, Stripe says they have been in touch with many Cuban entrepreneurs and I bet most of them were referred by Merchise.

Update 11/4/2016

This is not directly related to the Internet, but it is yet another disappointment after announcing optimistic plans for US entrepreneurs to work with Cuba.

The Obama administration gave a US company permission to build a tractor factory in Cuba's Mariel free-trade zone, but the Cuban government has refused to permit them to do so. Some say their reluctance to deal with US companies (other than those supporting tourism -- airlines, hotels, room rental and mobile phone roaming) is an effort to pressure Congress into eliminating the embargo.

Oggun tractors will be built in Alabama, not Cuba

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