Last month, timed to President Obama’s historic visit to Cuba, a glut of U.S. companies announced plans to operate in the country.
Tourism industry players like Carnival Cruises, Starwood Hotels & Resorts Worldwide, and Marriott International announced their expansions into Cuba. Payments companies PayPal and Stripe did likewise. Google is planning to offer its Fiber internet service on the island, Cisco is opening an IT academy there, Caterpillar signed a deal to distribute equipment in the country, Verizon is offering roaming cell phone service, and General Electric is working on a deal with the Cuban government.
For now, many of these announcements are symbolic. A trade embargo is still in place. President Obama wants to lift it, but doing so would require Congress to pass a law.
Until that happens, the U.S. government is making exceptions for American businesses that want to move into Cuba. Business is the easiest way to “normalize” relations between the two countries after 56 years of a trade embargo, according to the White House. Progress on political issues such as Cuba’s human rights record has been slower-moving.
There’s one American company that has been doing real business in Cuba for the past year: Airbnb. After the U.S. made American travel to Cuba legal (a special educational travel visa is required), the home-sharing startup made Cuba a priority. In its first year, the company hosted 13,000 travelers in 4,000 homes across 40 cities. Cuba is the fastest-growing market Airbnb has ever entered. (For more on Airbnb's expansion, read "How Airbnb Pulled Off a Coup in Cuba.")
Jordi Torres, Airbnb’s regional director for Latin America, has led the company’s efforts in Cuba, making at least ten trips there over the last year and a half. During a stomach-churning taxi ride with a reporter through the hilly tobacco country outside Havana, he shared some of the lessons Airbnb has learned about doing business in Cuba—lessons that may prove helpful for Fortune 500 companies that follow suit.
- No moonshots.
Cuba represents a unique opportunity to learn about building connectivity from scratch, which is irresistible to the futurists of Silicon Valley. While in Cuba, I heard plenty of stories about Silicon Valley companies arriving with ambitious, moonshot-style proposals. But while the Cuban government is becoming more receptive to change, they’re not as receptive to anything that comes off as radical and sweeping.
Airbnb executives like to say they’re taking a “measured approach” in Cuba. The company was lucky that Cuba had an existing network of casas particulares, or home-sharing rentals, which meant registration, regulations, and taxes were already in place. And while Cuba is currently undergoing major changes, Airbnb has been careful to be viewed as one piece of those changes -- not the catalyst.
“We want it to grow at its own pace,” Torres says. “We are not here to drive change, we are here to empower the hosts that want to change something.”
- You’re going to need workarounds.
Every business looking to operate in Cuba will face challenges, but the most common ones will be around payments and the lack of Internet.
The Cuban economy runs on cash. To get up and running, Airbnb needed to set up a remittance vendor that could worth with Cuban bank accounts. Then it needed to create trust with their Cuban customers. The idea that Airbnb hosts wouldn’t get paid until a few days after their guests left was unnatural for the hosts, so Airbnb had to do lots of in-person convincing. “We worked hard to get them to give us a try, get their first booking, and see that the money comes,” Torres says. “Once they see that the money always comes, this builds trust and they talk to each other a lot.”
Airbnb worked around the Internet problem by allowing people to manage bookings for multiple properties. That way hosts without Web access could list their spaces on the site through a “broker” with Internet access. (This is against the rules in other countries, because it helps some hosts create the “illegal hotels” that Airbnb is trying to eliminate.)
- Throw out your assumptions.
Basic assumptions about launching in a new region don’t apply in Cuba. It only takes a few minutes for an Internet-savvy person with a standard connection to create a listing on Airbnb. In Cuba, it was taking hours for brokers to create listings on behalf of the people in their networks. Once Airbnb’s managers realized what a burden listing creation had become, it took a hands-on approach. Airbnb sent representatives to homes to help hosts with uploading photos, editing listings, and navigating the platform.
- Teach Cubans about American expectations.
When Airbnb was preparing to launch in Cuba, the team noticed that hosts didn’t see any problem with taking guests to a different house from the one they’d booked (if, say, the water was out, or there was a double-booking). But American guests expect to get what they see online, so Airbnb had to carefully educate hosts about that rule. The hosts were receptive, Torres says. “When it comes to quality standards they are over-delivering,” Torres says. “Cuba has five-star experience, which is a metric of experience quality that we use internally. It’s above the average.”
- Managing expectations goes both ways.
Even as American tourists flood Cuba, it’s important to remind them that traveling there does not compare to other parts of Latin America or tourist-friendly Caribbean islands. Basics like water and transportation can be unreliable. American ATM and credit cards won’t work. Verizon’s (very expensive) roaming cell phone service is extremely spotty. And there’s virtually no Internet.
Rather than warn travelers with a standard message on their site, Airbnb encouraged its hosts to communicate these challenges directly to their guests before they arrive. Torres says that “starts the immersion process that ultimately happens throughout the trip.”
- Don’t expect to advertise
Driving around Havana and the Cuban countryside, I was struck by the lack of billboards. There is little advertising in Cuba, and it’s wise for U.S. companies to expect growth to come organically.
"We want to be respectful of the ways people behave here,” Torres says. “We think the best way to make growth happen is through proactively vetting hosts and reaching more hosts through word-of-mouth.” He added: “Everyone in Cuba is pretty vocal about what they do and they share their experiences.”