Startups fight for a foothold
THE FRIDAY BEFORE HALLOWEEN,
Josh Weinstein was set to take his first trip to Cuba: bags packed, visa in hand, leased Beechcraft turboprop booked for Sunday pickup at Sarasota Bradenton International. Then the dispatcher called. We have verbal approval to fly to Havana, he told Weinstein, but we’re still waiting on one last stamp from the Cuban government. Don’t worry, he explained—this happens all the time. Unfortunately, the government offices were now closed for the weekend. “We’ll keep pushing,” he promised.
Weinstein is president of Witzco Challenger, a $12 million family business that builds heavy-haul trailers in Sarasota, Florida, and ships them all over the world. Witzco lost about half its sales in ’08 and ’09 during the Great Recession. That was not long after Weinstein, former treasurer of his local stagehands union and grandson of Witzco’s founder, took over the company from his aunt and uncle, and he’s been scrambling to recover ever since. Exports are a big part of his business, about 35 percent, but they’ve been slipping lately. The stronger dollar hasn’t helped.
His unlikely solution: Cuba. The forbidden market less than an hour’s direct flight from Witzco’s central Florida factory is suddenly bursting with pent-up demand. Tourism in Cuba is soaring, on pace to exceed 2015’s record 3.5 million visitors, including a growing number of Americans who find a way to qualify for one of 12 exceptions to the Treasury Department’s limits on travel. (U.S. tourism is technically still banned.) Weinstein’s betting on a construction boom, spurred by the Cuban government’s plan to double the number of hotel rooms in the country by 2020, in pursuit of economic growth. “The first thing they’re going to have to do is infra- structure,” Weinstein says excitedly. “Water, septic, cable, electricity, communications. They’re going to need heavy equipment. My trailer moves the heavy equipment.” Not exactly a Cuba expert, Weinstein wants to see for himself. “I don’t really know the market, only what I’ve been able to Google,” he says. So he booked a booth at Cuba’s international trade show, slated for the fall.
Sunday night, the stamp came through. Monday morning, he was on his way, a day later than hoped. (The first lesson anyone learns when dealing with Cuba: It’ll happen when it happens.) Forty-five minutes across the Everglades to Miami to top off the tank—gas is much cheaper in the U.S.—and then another 45 minutes across the Straits of Florida to Havana. Upon landing at José Martí International Airport, Weinstein and his posse of two—all wearing khakis and Witzco golf shirts—were met in an otherwise deserted terminal by unsmiling customs officials, who opened one of Weinstein’s bags. In it was a stash of trade-show paraphernalia—candy, logoed pens, and sales pamphlets in Spanish, English, and Russian (in case there were any Russians left in Cuba, Weinstein figured). The pamphlets raised eyebrows. Propa-
ganda, declared one of the officials. Where is your approval? A discussion ensued. Weinstein turned on his charm. Maybe a little bit of money changed hands. “It’s the cost of doing business,” Weinstein says. “I’m OK with it.”
And the Witzco delegation was in.
WHEN PRESIDENT OBAMA flew to Havana last March, it marked the first visit to Cuba by a sitting American president since Calvin Coolidge in 1928. His posse numbered more than 1,000. Among them: Brian Chesky, founder of Airbnb, Dan Schulman, CEO of PayPal, and Fubu founder and Shark Tank judge Daymond John. The president drove straight to the Meliá Habana Hotel, where he addressed the staff of what used to be the United States Interests Section of the Embassy of Switzerland in Havana (it’s a long story) but is now a fullfledged U.S. embassy. There he spoke of his desire to “forge new agreements and commercial deals” with Cuba, in line with the main thrust of U.S. policy as of December 2014, when the current wave of reforms began.
A lot’s happened since then, including the death of Fidel Castro; the removal of Cuba from the U.S. list of state sponsors of terrorism; the restoration of full diplomatic relations; the resumption of regularly scheduled flights by U.S. airlines, including American, Delta, United, and JetBlue; authorization for U.S. hoteliers Marriott and Starwood to pursue Cuba deals; service agreements involving U.S. cell-phone providers; and glory, hallelujah, the granting of permission for American visitors to bring home Cuban rum and cigars.
But that doesn’t mean Cuba is open for business. There’s still the nettlesome matter of the embargo—a dense web of constraints, restrictions, and outright prohibitions, some in place since 1960, that, despite the recent thaw, prevents anything approaching normal business relations. Most commerce between the United States and Cuba is banned outright. Everything else is a hassle. For instance, while U.S. companies have been permitted to sell food and medicine to Cuba since the Clinton administration, the U.S. government often requires Cuban customers to pay the full amount up front. (That, in a nutshell, is why Cuba buys nearly all its rice from Vietnam, rather than from nearby U.S. growers.) And if you’re an American trying to do anything in Cuba, you had better bring plenty of cash, which is all anyone accepts. Unless you happen to have a credit or debit card from Stonegate Bank— a Fort Lauderdale, Florida, institution that has a temporary
BETTING AGAINST THE EMBARGO Josh Weinstein, the third-generation president of Witzco Challenger, a Sarasota, Florida–based company hit by the Great Recession, is hoping to rebound by riding the anticipated tourism boom in Cuba.