The Promise of Cuba: Executive Summary

THE PROMISE
OF CUBA
EXECUTIVE SUMMARY

J. Walter Thompson Intelligence
has spent nine months interviewing
economists, industry leaders and
journalists about the evolution of
the Cuban economy in the wake of
relations with the United States being
normalized.
About
This Report
In January a team of five researchers spent 10 days
on the island interviewing more than 40 Cubans
about their lives, the economy and opportunities, as
relations with the United States improve. Interviews
were conducted both in English and Spanish, using
translators when necessary.
Researchers were able to move freely around the
country without interference from government
officials. Some participants, specifically those
who work for state-run organizations, said they
were required to get permission to talk to the
agency team. At no time were any of the team’s
notes, photos or videos reviewed by Cuban
government officials.
Some interviews were conducted under
agreement of anonymity because the participants
were sharing insights on activities that are
politically sensitive in Cuba.
“The Promise of Cuba” on video
J. Walter Thompson filmed many of the
interviews for this report, and has produced a
three-part video exploring the Cuban economy,
changes in tourism, and Cuban technology.
Watch it at jwtintelligence.com
2INTRODUCTION THE PROMISE OF CUBA

Cuba as an open market has been the stuff of tempting dreams and
what-ifs for many years—but now that possibility is looking closer
than ever, especially as the US and Cuba enter a new chapter in their
political dialogue.
It’s this enticing promise that impelled The Innovation Group at J.
Walter Thompson, with support from Mirum, J. Walter Thompson’s
global digital agency, to set forth on an exploration of how that future
picture of Cuba would look.
The digital angle, and input from Mirum specifically, was not
accidental. What we found compelling about Cuba was the huge white
space for consumer technology and digital marketing there—see our
Q&A with Michael Nelson, head of innovation at Mirum Reading, in the
appendix to this report.
There are, however, major infrastructural challenges to overcome
before the opportunity can be realized. Few people, even the young
entrepreneurs from our Cuban Upstart generation, have access to
reliable phones or the internet. And yet there’s a huge appetite for
access to digital platforms, entertainment, communication and tech
products—as this report reveals.
We also found the concept of the new Cuban consumer compelling.
Are US brands considered aspirational? Does our usual generational
segmentation of millennials and generation X apply? The circumstances
and upbringing of equivalent age groups in Cuba are radically different
from those in the US. What is the consumer attitude to packaged goods,
US brands, and commercialization? What new hot product categories or
staples might emerge as Cuba starts exporting?
This study is as much an inside-out examination as outside-in, and
explores how Cuba will evolve and flourish as a consumer market, as
well as a tourist destination.
I’d like to thank Mirum for partnering on this study. I’d like to thank Todd
Copilevitz of J. Walter Thompson Atlanta for spearheading it. I’d also like
to thank The Innovation Group team: Shepherd Laughlin, director of
trend forecasting, and Emma Chiu, creative innovation director.
opening letter
Lucie Greene
Worldwide director, The Innovation Group
3THE PROMISE OF CUBAOPENING LETTER

01 INTRODUCTION

Across Cuba there is a sense that a bold new future is
imminent. It’s a future where trade with the United States
reaches $13 billion almost overnight, and a new surge of
Cuban entrepreneurialism finds a way to coexist with the
country’s existing values.
It’s all so close, if only …
If only the United States will lift its 56-year-long embargo, more commonly
referred to in the country as a blockade. The sanctions and Cuba’s response to
them have created a unique country that superficially appears stuck in the past.
If only Cuba’s aging revolutionary generation will agree to share control with
a new generation of Cuban young adults who are determined to bring the
country into the twenty-first century, and who envision a greater role for
private enterprise in Cuba.

purchase $6 billion in goods and services from the United States annually, and
send $7 billion in exports back the other way.
Until the embargo ends, Cuba remains a market of 11 million people that is off
limits to all but a few US industries, despite its location just 90 miles from Key
West. Its economic infrastructure is far from ready to handle a tidal wave of
American goods and services, let alone Western-style marketing—or, for that
matter, the American tourists who are already streaming into the country at
levels not seen since the 1950s.
Cubans interviewed for this report, at all levels of society, said they are
cautiously optimistic that the embargo is in its final stages. Their hopes got a
major boost in December 2014, when the US president and Cuba’s President
Raúl Castro announced a normalization of relations. A survey for the
Washington Post last year found that 73% of Cubans were optimistic about
their family’s future.
“Sooner or later the embargo will be lifted,” says Rafael Hernández, who
for 28 years was CEO of the Cuban government’s organization in charge of
international trade. “I can’t even tell you how much will change. No one knows.
But I know it will be amazing.”
In Havana, there’s no escaping the fact that the urban landscape has been
scarred by chronic material shortages. But, at the same time, everything
about the city reflects the remarkable ingenuity of the Cuban people, from
the Eisenhower-era Chevrolets and Cadillacs that are miraculously still in
good working order to signs of an information economy that is emerging
against incredible odds.
The recent spike of interest in Cuba from abroad is undeniable. Barely a day
passes without an announcement that a major US brand is taking an interest
in Cuba, whether it’s JetBlue, Google or Airbnb. The eighth installment of the
Fast and Furious film franchise is due to shoot in Cuba, and the Showtime
comedy House of Lies filmed there in January 2016. Even Karl Lagerfeld is due
to touch down to show Chanel’s cruise 2017 collection in May.
Most significantly of all, President Obama visits Cuba in March 2016, the first
sitting US president to do so since the 1920s.
But what lies beyond the hype? Is Cuba really set to take off?
So much depends on the embargo. In June 2015, experts from the US-based
Peterson Institute for International Economics testified before the United
States International Trade Commission that, if allowed, Cuba was likely to

Havana Centro, Cuba. Photography by Robin Thom. Image courtesy of Sail Cuba

Michael Nelson visited Cuba as part of our research team, representing the
global digital agency Mirum, part of the J. Walter Thompson Company. We
spoke to him about his impressions of the country and the takeaways for
digital marketing and advertising.
Visiting Cuba for the first time, what were your initial impressions
of technology in the country?
Even though I knew they didn’t have much internet access, I guess it was
still quite shocking to be there and to experience that first hand. I myself got
online for about five minutes during the two weeks that I was there, so that
was quite a shock, I suppose. Talking to people, I was really impressed by the
way they use technology in building websites and apps to solve problems
that are specific to Cuba: we saw a lot of apps that were built to work entirely
offline, such as versions of Wikipedia, Yelp, mapping, and so forth.
For many people, Cuba seems “stuck in the past,” which by
definition suggests a lack of innovation. But did you see innovation
in Cuba?
It really felt like innovation has been a part of Cuban history and culture for
the last 60 years. It’s not a new thing—obviously innovation in software is a
fairly new thing, but they’ve had to innovate in other ways for as long as the
embargo has been in existence. Look at things like maintaining all the old
American cars and Harley-Davidsons with whatever parts they can find, and
making wifi boosters out of Pringles cans: there’s a real history of innovation,
and now we’re seeing the younger generation apply that same kind of
innovative thinking to software, websites and apps.
Would you compare this kind of activity with hacker or maker
culture in other countries?
It’s not the same as what we have when we use the words “hacker” and
“maker.” With those terms, we immediately think of people programming on
devices like Arduino and Raspberry Pi—very accessible, fairly cheap bits of
kit that can be combined with sensors and motors to make something cool.
They don’t have any of that, really. The things they’re hacking and making are
out of necessity—like transport, phones and wifi boosters. I’d be very keen to
see what would happen if and when they do get access to all that stuff that
we take for granted, because hacking in a broader sense definitely seems to
be a feature of the culture and the mindset there.

Q&A: Michael Nelson
HEAD OF INNOVATION, MIRUM READING
9THE PROMISE OF CUBAQ&A

How could you see a digital agency like Mirum benefiting from
Cuban innovation in the future?
If and when Cubans are able to access the technology that the developed
world takes for granted, then I think it’s quite feasible that Cuba could become
the next hotspot for driving advances in technology, because of their in-built
culture of innovation and their free access to high-level education. There are
lots of engineers in the country, and companies like Mirum should pay close
attention to this, because we want to be involved in those new advances and
innovations. So if and when the embargo gets lifted, it’s going to be really
interesting to apply their skills and knowledge to the things we’re trying to
build, and to give them the tools that we’re using and see what they can come
up with. I’m sure we’d see some pretty special things.
How would you characterize the attitude of Cuban youth toward
technology and toward entrepreneurship?
For young people who can actually afford tech, it isn’t all that different from
the young people in the UK and United States—they seem to have very high
expectations in terms of performance and ubiquity of technology, and they
all want the latest devices. They don’t really think that their connectivity
problems should inhibit them from accessing technology. The people who are
making the websites and apps recognize that; that’s what’s driving them to
come up with all these unique offline solutions.
In terms of entrepreneurship, we spoke to several people in their mid-twenties
who were entrepreneurs. They came up these great ideas and had enough
capital to put a small business together, hire a few people, and all of a sudden
they’re not just computer science graduates any more, they’re entrepreneurs
starting their own businesses. We spoke to a lot of people who are doing that
kind of thing, so there definitely seems to be a strong entrepreneurial mindset
among young people in Cuba.
Michael Nelson,
Mirum Reading
Q&A: Michael Nelson
HEAD OF INNOVATION, MIRUM READING
10THE PROMISE OF CUBAQ&A

Biographies of selected interviewees
Margarita Alarcon
A media analyst and
contributor to the Huffington
Post, Alarcon was born
in Havana to parents who
fought in the revolution.
She grew up in New York,
where her father was Cuba’s
ambassador to the United
Nations. She has lived in
Cuba since the early 1980s.
Miguel Coyula
An expert in architecture,
urban planning, social
services and Cuban history,
Coyula was a professor at
the University of Havana and
a visiting professor
at Harvard and NYU.
Tracey Eaton
A journalist and an assistant
professor at Flagler College,
Eaton was Havana bureau
chief for the Dallas Morning
News from 2000 through
2005. Since then, he has
traveled to Cuba more than
100 times as a reporter.
Cristina Figueroa
Cristina Figueroa is curator
at Estudio Figueroa-Vives, a
studio and gallery founded
by her father in the family
apartment. One of the first
private venues for art to
emerge in socialist Cuba, the
studio has played a vital role
in Havana’s cultural life for
20 years.

Yondainer Gutiérrez
Trained as a usability expert,
Gutiérrez launched one of
Cuba’s most successful
mobile apps, AlaMesa, which
provides listings and reviews
of the nation’s growing base
of restaurants.
José Fuster
Fuster is an artist who
specializes in ceramics and
paintings. He is best known
for more than 80 locations
throughout Cuba that he has
renovated and decorated,
including playgrounds,
entire neighborhoods and
medical clinics.
Marlys Fuego and
William Pérez
Marlys Fuego and William
Pérez are artists who,
together, form Studio
Alcázar, which occupies a
mixed-use building that the
artists have renovated with
support from the Cuban
government. Fuego’s work
deals with themes of gender
identity and eroticism, while
Pérez uses locally sourced
materials to comment on
working-class life
in Cuba.
11BIOGRAPHIES THE PROMISE OF CUBA

Rafael Hernández
Hernandez is an economist
and former head of
Cuba’s Ministry of Foreign
Commerce. He was born
in New York City and his
parents emigrated to Cuba
shortly after Castro came
to power. He is still a proud
New York Yankees fan.
Javier Ernesto Matos Soto
Along with three friends,
Matos Soto has created
one of the most successful
chains of cell phone repair
stores in Cuba. They also
install apps on customers’
phones and create new apps.
MasterCopy (alias)
A distributor of El Paquete
Semanal, MasterCopy
spoke on the condition of
anonymity. He has done
“a variety of jobs on the
streets” prior to his current
job distributing Cuba’s
“offline internet.”
Nigel Hunt
Hunt, a British citizen,
founded the Cubaism
travel agency. He resides in
Havana, is an avid collector
of Cuban Americana,
and also runs the site
cubawhatson.com, a curated
list of events in Cuba.
Yilien Hernandez
A software engineer,
Hernandez has launched
her own business teaching
Cuban businesses how
to market themselves on
social media.
Pedro Pablo Oropesa
Oropesa is chef at Habana 61,
a popular Cuban restaurant
in Old Havana. He has worked
in private restaurants in
Cuba since 2000.
Enrique Núñez del Valle
Núñez del Valle is the
founder of La Guarida,
a high-end restaurant in
Havana and one of the
first paladars, or private
restaurants, to open in Cuba
in the 1990s. La Guarida’s
location was featured in the
Oscar-nominated Cuban film
Fresa y chocolate, and the
restaurant is popular with
distinguished foreign visitors.

Claudia Paredes Plasencia
An instructor at the
University of Havana
specializing in artificial
intelligence, Paredes has
started a hybrid ecommerce
site where Cubans can sell
used clothes. Her team
won first place at Havana
Startup Weekend 2015,
Cuba’s first hackathon.
Robin Pedraja
Pedraja is creative director
of Vistar magazine, a digital
publication that chronicles
Cuba’s underground urban
cultural scene and the first
independent magazine to
emerge in Cuba in 50 years.
Manuel Yepe
A lawyer, economist,
journalist, and professor
of international relations,
Yepe has served as Cuba’s
ambassador to Romania,
general director of the
Prensa Latina news agency,
and Fidel Castro’s first chief
of protocol.
Ricardo Torres Pérez
Torres Pérez is a Cuban
economist and development
expert at the Centro de
Estudios de la Economía
Cubana, University of
Havana. He contributes
to Americas Quarterly,
the Brookings Institution
think tank, and Harvard
International Review.
Pedro Tejeda Torres
Tejeda Torres is co-owner
of Ajiaco Café, a Cuban
restaurant in the seaside
town of Cojímar, outside
Havana. He has worked
in tourism for 32 years at
restaurants including La
Floridita, La Bodeguita
del Medio, and the Hotel
Presidente.
Luis Perez
Perez is an economist and
travel industry consultant
in Havana.

The Promise of Cuba: Executive Summary

Contact:
Lucie Greene
Worldwide Director of the Innovation Group
J. Walter Thompson Intelligence
lucie.greene@jwt.com
Editors
Todd Copilevitz, J. Walter Thompson Atlanta
Shepherd Laughlin, the Innovation Group
Visual editor
Emma Chiu, the Innovation Group
Photography by Todd Copilevitz
About the Innovation Group
The Innovation Group is J. Walter Thompson’s futurism, research and
innovation unit. It charts emerging and future global trends, consumer change,
and innovation patterns—translating these into insight for brands. It offers
a suite of consultancy services, including bespoke research, presentations,
co-branded reports and workshops. It is also active in innovation, partnering
with brands to activate future trends within their framework and execute new
products and concepts. It is led by Lucie Greene, Worldwide Director of the
Innovation Group.
About J. Walter Thompson Intelligence
The Innovation Group is part of J. Walter Thompson Intelligence, a platform
for global research, innovation and data analytics at J. Walter Thompson
Company, housing three key in-house practices: SONAR™, Analytics and
the Innovation Group. SONAR™ is J. Walter Thompson’s research unit that
develops and exploits new quantitative and qualitative research techniques to
understand cultures, brands and consumer motivation around the world. It is
led by Mark Truss, Worldwide Director of Brand Intelligence. Analytics focuses
on the innovative application of data and technology to inform and inspire new
marketing solutions. It offers a suite of bespoke analytics tools and is led by
Amy Avery, Head of Analytics, North America. The full version of The Promise of Cuba
contains more than 50 additional pages
of analysis and interviews on Cuba's
economy, tourism, technology and the
new Cuban consumer.
Download it at:
jwtintelligence.com/trend-reports
#futurecuba

The Promise of Cuba: Executive Summary

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The Promise of Cuba: Executive Summary