Why President Obama Is Promoting Cuban Entrepreneurship

March 22, 2016, 1:31 AM UTC
Photogaph by Nicholas Kamm—AFP/Getty Images

Entrepreneurship has played a big role in President Obama’s historic visit to Cuba. On Monday, the President joined Cuban contrapuestos, or entrepreneurs, for a meeting with their American counterparts including Stripe co-founder Patrick Collision, Airbnb CEO, and co-founder Brian Chesky, and Julie Hanna, executive chair of micro-loans startup Kiva.

Entrepreneurship is key to jump-starting the Cuban economy, according to Carlos Gutierrez, the former CEO of Kellogg who was born in Cuba and served as the U.S. Commerce Secretary under George W. Bush. Gutierrez, who noted that he remains a staunch Republican, said Obama’s visit convinced him that the U.S. is “on the right track as a country and as an administration.”

Guetterrez pre-empted questions about Cuba’s troubling track record on human rights by pointing out that entrepreneurship is human right. “The right to make a living is one or our most precious rights,” he said at a press briefing in Havana. “Cubans are being enabled to start their own business and to develop their own future, their own vision for their life, and we are contributing to that.” (Cuba’s human rights problems were on full display to the world when dozens of pro-democracy dissidents were arrested hours before President Obama arrived.)

Cubans have many challenges to overcome in starting their own businesses. The communist nation has only recently begun allowing very limited Internet access in the country, for starters. A trade embargo and bureaucratic red tape are tough hurdles to overcome, and startup capital isn’t plentiful in a country with an average monthly wage of $20 to $30 a month. But the message today was that entrepreneurship lets Cubans take control of their lives.

Until the country fully opens its economy to the world, some Cubans are becoming entrepreneurs by turning their homes into businesses by renting them out to tourists. They’ve been doing that via registered casas particulares since the 1990s. The arrival of home sharing platform Airbnb last year has helped them reach a much bigger audience and allowed many hosts to supplement their meager incomes. While in Havana, I met college professors, lawyers, and an Olympic Gold Medalist who all said income from Airbnb was critical to their livelihoods.

In a year, Airbnb has grown to 4,000 hosts and 13,000 guests who spend an average of $250 on their stays. The growth has mostly been through word-of mouth. With a government-controlled media, advertising is non-existent in Cuba.

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For that reason, President Obama is eager to point to Airbnb as an American business that can successfully operate in Cuba while also helping the Cuban people. At the entrepreneurship summit, the President told the room of media and Cuban entrepreneurs that Airbnb was a good example of “the power of the Internet, and why having an Internet infrastructure is so important” (But only after momentarily “bragging on” Chesky for his young age and the speed at which Airbnb reached its $25 billion valuation.)

Chesky in turn touted Airbnb’s capacity for diplomacy. Home stays forge connections between Cubans and Americans, often changing misconceptions the two groups had about each other. “[American visitors] say they come here with 50 years of questions and they have three days to ask them,” he said. Airbnb estimates that 20% of the Americans visiting Cuba book home stays via its platform.

Payments services including Stripe and PayPal have announced plans to bring services to the country that will help Cubans collect and send money electronically. “When we talked to entrepreneurs today, they’re all eager to access the Internet and other markets in the world,” PayPal CEO Dan Schulman said in a press briefing. “As business leaders, what we can do is express to the government here and in Cuba our desire to further this commercial relationship, because it matters and it makes a difference.”

Update: This story has been corrected to note that President Obama said he was “bragging on” Airbnb CEO Brian Chesky, not “ragging on.”

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