Star­tups fight for a foothold

Inc. (USA) - - FRONT PAGE - By DAVID WHIT­FORD Il­lus­tra­tions by EDEL RO­DRIGUEZ


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.

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