02 Sep 2018
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Havana Rising

Megumi Gordon and the impossible adventure of building a business in Cuba’s ascendant private sector
by Dan Morrell; photographed by Eve North

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When hotel manager Alessandro Benedetti worked for Kempinski chain locations in Spain and Switzerland, morning meetings were a time to go over the numbers and discuss strategy for the days ahead.

But ever since Benedetti moved to Havana in February 2017 to help open and operate the 246-room Gran Hotel Manzana Kempinski La Habana—the city’s first-ever luxury hotel—his morning meetings begin with something much more basic: “How much water do we have in the tanks?”

On a sunny April day in the airy second-floor lobby, Benedetti explains: Early every morning, 10 tanker trucks filled with water arrive at the hotel’s Habana Vieja (“Old Havana”) location to ensure that guests of the high-end hotel can enjoy the luxury of a morning shower. The Kempinski, says Benedetti, is not connected to the city’s water system—unable to rely on either its safety or its availability. (Makeshift water tanks are ubiquitous on city rooftops, potable water access an egalitarian issue in the city.)

These kinds of complications, Benedetti notes, are commonplace. “Last week we had no lemons,” he says with a broad smile. “And Thursday we had no chicken.” Working with state-owned partners for supplies—a requirement for operating in the country—sometimes requires creativity. A recent umbrella order took about three months to fill (“I guess there are no umbrellas in Cuba”), and even something as common as room upgrades requires oversight by government auditors, who conduct a daily, detailed review of a massive stack of the hotel’s records. “The amount of paper, it’s incredible,” he says.

Benedetti’s revelation of the water delivery is a slight surprise to Megumi Gordon (MBA 2014), cofounder and managing partner of HabanaLive, an offshoot of an educational travel business founded six years ago by her brother-in-law. Gordon works with partners like Benedetti and the Kempinski to plan events and conferences at the hotel; today, they are discussing a joint US road show to sell Cuba as a travel destination to luxury and corporate travel agents and some related marketing materials—including an FAQ covering basic facts about the country and legal questions about travel from the United States. (“Which is still legal,” says Gordon, noting that the misconception is widespread.)

But most of what Benedetti lays out about the challenges he faces operating in Cuba’s nascent private sector isn’t at all surprising to Gordon. For the past year, she’s been helping build out this Havana-based travel and consulting business with her husband and brother-in-law and is reliant on a rising network of Cuban entrepreneurs to deliver deep, curated travel experiences to leisure and corporate travelers alike.

And as hard as it can be to overcome infrastructure issues, Gordon’s challenges go well beyond lemon shortages and umbrella access: She’s a first-time entrepreneur trying to build a family business in a country with an ever-shifting stance toward business—and with revenues dependent in part on three unpredictable elements: Cuban politics, US politics, and the weather.

The potential payoff? Making the first footprint in the sand. Watching a country take a new shape.

Being part of a revolution.

Keeping up the vintage American fleet at Havana’s NostalgiCars can sometimes require relying on complex shipping routes to avoid sanctions—traveling from the United States to Panama to Jamaica before arriving in Havana four to six weeks later.

The history of Cuba’s private sector is relatively new, short, and complicated. After the fall of the Soviet Union in 1991, the country lost its financial benefactor and main trading partner, entering what is referred to as “the Special Period,” which would last until the mid-1990s. Gas shortages led to farming and distribution disruptions, which led to food shortages. The average Cuban lost 12 pounds. There were rolling blackouts, and factories ground to a halt. In the summer of 1994 alone, more than 30,000 Cubans fled to the United States via boats and makeshift rafts.

Faced with these economic realities, Fidel Castro’s government began some private sector experimentation, including allowing Cubans to open small, family-run businesses out of their homes—things like restaurants and taxi companies. Over the years, though, even those small openings were further restricted or rolled back, the relationship between the government and capitalism remaining antagonistic. But in 2010, President Raúl Castro announced plans to let go of 500,000 state workers and laid out an expansion of the private sector that granted operating licenses for 201 jobs—everything from the highly specific “flower wreath arranger” and “Benny Moré Dance Team” to the more general “artisan” and “accountant”—and the floodgates opened. That year, the government reported that 157,000 Cubans worked in the private sector; by last year, the number had jumped to more than 575,000—or about 12 percent of the workforce.

The burgeoning non-state sector was put under klieg lights in March 2016, when President Obama visited Cuba as part of a thawing of historic tensions between the countries. During his visit, Obama hosted an entrepreneurship conference attended by the likes of former Xerox CEO Ursula Burns and Airbnb CEO Brian Chesky. The president announced that American businesses were ready to invest in Cuba and its people. “America wants to help you take off,” he told them. In other words, Cuba was open for business.

Cuba Educational Travel (CET) was perfectly positioned to take advantage of the opening. Founder Collin Laverty had first visited Cuba on a family trip as a teenager, later completing an educational exchange program as an undergrad; he moved there full-time in 2005, spent seven years developing a deep network of contacts, then set up CET in 2012 to offer travel services to school groups and political think tanks alike. Three years later, in 2015, Michael Laverty—Gordon’s husband—joined his brother to help start Havana Strategies, focused on advising US companies on ways to navigate the newly opened market. At the height of the thaw, demand for consulting had become so strong that the brothers were having to turn away potential clients. It felt a bit like a gold rush.

This ascendant atmosphere was part of the reason Gordon and Laverty agreed to move to Havana. The decision came in January 2017, when Gordon was working in a sales position at Castlight, a Bay Area B2B health care technology company. The couple had met while Gordon was working for the Clinton Foundation in Africa, and Laverty had just launched a logistics business in South Sudan. After they were married in 2014, they found themselves increasingly spending more time apart—with Michael traveling frequently from San Francisco to East Africa and then to Cuba. It felt like a crossroads. “I woke up one day and had this feeling that, one, Michael and I are spending far too much time apart, and, two, this is not the life that we had imagined for ourselves in terms of having a really good partnership and thinking about starting a family,” Gordon says.

Gordon’s deep network allows her to provide clients with unique, curated experiences, including private concerts—here with trumpeter Yasek Manzano Silva (top)—and rum and cigar tastings with a local cigar “sommelier” (bottom).

And there was romance in the challenge of Cuba, she says. Her life in San Francisco was easy—moved by Ubers, fed by Seamless, life arranged with the tap of a screen. “The San Francisco lifestyle is just incredibly pleasant,” says Gordon. “But I think as Michael and I were taking stock of that, I really had this feeling that this is not what I actually want to get out of life.” There was this chance to not only be on the frontier, but to live in a fundamentally different environment, says Gordon, “where neighbors talk to each other in person and people play dominoes in the street, and where I have to persevere to find soy sauce.”

In June 2017, with their San Francisco apartment packed up, President Trump announced that he was “canceling the last administration’s completely one-sided deal with Cuba.” In reality, the policy changes entailed reinstating some minor restrictions on US travel, but in effect, it sent the message to potential American visitors that Cuba was once again closed. Two months later, reports began to surface of US Embassy officials suffering brain injuries; declaring it to be a possible “sonic” attack, the United States issued a travel warning, reduced its embassy staff by two-thirds, and expelled 15 Cuban diplomats. In September, Hurricane Irma hit Cuba, killing 10, ravaging the power system, and destroying more than 14,500 homes.

In four months, the market had completely shifted. Official Cuban estimates claimed that US visitors dropped 30 percent that December alone.

The couple completed their move to Havana weeks after Irma hit, but Gordon was unshaken. “I ask myself sometimes, ‘Are we crazy for having done this?’ ” she says. “And I do have my own doubts.” But she comes back to a question pulled from the Mary Oliver poem, “The Summer Day”—famously posed to MBA graduates as part of Tony Deifell’s (MBA 2002) Portrait Project: “Tell me, what is it you plan to do with your one wild and precious life?”

“I think about that question, and Michael and I think about that question,” says Gordon, adding that with the privileges they’ve had, if they don’t take risks in life, they’re wasting it. So, yeah, maybe her parents think she’s a little bit nuts for doing this, she says.

“But that feels good. It feels like we’re supposed to be doing things in our lives that wouldn’t be a good idea if everybody else was doing them.”

There was this chance to not only be on the frontier, but to live in a fundamentally different environment, says Gordon, “where neighbors talk to each other in person and people play dominoes in the street, and where I have to persevere to find soy sauce.”

There was this chance to not only be on the frontier, but to live in a fundamentally different environment, says Gordon, “where neighbors talk to each other in person and people play dominoes in the street, and where I have to persevere to find soy sauce.”

Cuba Educational Travel, now with 25 employees in Cuba and in the United States, is a true family business. Gordon is a managing director, along with Michael and Collin Laverty and one of Collin’s college friends, Adam Linderman. In the early days of CET, the Lavertys’ father helped run the books; today, Collin’s father-in-law helps with accounting. Gordon works with her mother-in-law on marketing projects; her own mom is trying to help the company break into the Japanese market; and her grandmother sets up meetings with organizations like the Museum of Fine Arts and Temple Israel in Boston.

Working with family can pose challenges, says Gordon. “When you’re working with your partner, any given conversation that we’re having about a work decision, Michael and I bring our entire selves to that conversation.” Gordon does this thought experiment when she starts to get upset: If I was talking to a Castlight coworker about this issue, would I be as enraged? “Then that makes me realize, ‘Oh, I’m getting angry here because I’m talking to my husband right now, and I need to take that off and realize I’m actually just talking to my business partner.’ ”

Gordon’s day often revolves around Wi-Fi access, which can be expensive and spotty in Havana. Most days, she works from a nearby public park with a Wi-Fi hotspot. A landline, ever dependable, gets heavy use.

“Megumi is organized and strategic,” says Collin Laverty. “She’s brought a balance and a grounding effect to the business.” Just as important, she offers an outsider’s perspective on the opportunities—things the more tenured founders may have missed in the crush of day-to-day operations.

Gordon’s days can be filled with any part of the business—arranging itineraries, managing on-the-ground partners, shepherding guests—but she’s focused on building up HabanaLive, the company’s new meetings, incentives, conferences, exhibitions (MICE) business, and growing CET’s luxury leisure business. This means meeting with partners like the Kempinski and cultivating new business, leaning on her sales experience at Castlight, and scouring her personal network to look for potential clients. The market has been a bit of a revelation to her, a whole world of corporate planners contracted by the Oracles and Genentechs of the world to put together deep, off-site experiences. “All of those companies, as it turns out, do tens if not sometimes hundreds of these sorts of trips and events every year.”

Gordon has seen the possibilities of this market. In April 2016, CET brought 330 Netflix employees to Havana for the company’s quarterly business review. More than 300 Spotify workers visited in January 2017 for a company meeting. In the fall of 2019, Gordon is bringing a group of about 250 YPO members for their annual conference—and the Kempinski’s availability was a big factor in closing that deal. “In terms of volume, there’s nothing more attractive than MICE business,” says Collin Laverty. “And at least for the American market, it really hasn’t been done here. So there’s tremendous opportunities—we can be first movers.” The long-term vision is for HabanaLive to bring business leaders to Cuba for travel, piquing interest in future trade and investment.

Arranging these kinds of massive events requires deep connections throughout the government and the private sector, which is critical in a country run by personal—not transactional—relationships, says Gordon. It’s one of CET’s key differentiators. Built on the foundation of Collin Laverty’s 13 years in Havana, that network allows the company to deliver unique cultural experiences.

Over the past year, Gordon has built relationships with Cuban entrepreneurs—the guides, the musicians, the restaurateurs, the vintage-car tour operators—who help provide these experiences to visitors. “It means taking the time to understand and learn about that person and their story, meeting them in their home, meeting their family.” That human connection, she says, is often valued above the financial incentive in Cuba. Gordon gives an example: When hiring a group of economists from the University of Havana for a consulting job, Havana Strategies offered more money to show its thanks for stellar work, only to be told that it would be inappropriate. What ultimately incentivizes Cubans, she’s found, is “that feeling of ‘I trust you, you care for me, I’m going to care for you.’ ”

You hear this from CET’s partners. I ask Zoila Avilés, one of the company’s guides, what it’s like to work for CET. “I never feel like I’m working for them,” she says, as we walk in Old Havana, streets awash with uniformed school children and shoppers visiting state stores for rationed food staples and licensed farmer’s markets. “I feel like I’m working with them, so I choose to work for them. They have done so much for others.” A young female hip-hop duo, La Reyna y La Real, after an impromptu concert in their living room, offer a heartfelt acknowledgment to CET for helping secure an appearance at a Kennedy Center Cuban arts festival. And CET’s Malena Hernandez thanks Collin for a recommendation that helped her land admission to a master’s program in international affairs at UC San Diego, where he had earned his graduate degree. She starts this fall. “I feel like I’m in a cloud, in a dream,” Hernandez says.

While these relationships are built on trust, there’s also a shared entrepreneurial spirit between CET and its partners. They, too, operate in gray areas, against the tide. Julio Alvares Torres, owner of Havana’s NostalgiCars, which offers tours of the city in one of its eight restored 1950s American cars, says to keep up its fleet, the company has to either make new parts on its own or use a complex shipping route that runs from the United States to Panama and then Jamaica before arriving in Havana to avoid sanctions—a trip that can take between four and six weeks. Dorian Carbonell Fernández, a high-profile hair stylist with a massive social media following and both tech startup and reality TV aspirations, says there are only two professional, salon-level hair product brands generally available to him, and—even then—access is woefully inconsistent. “You have to be prepared to know what you’re buying, because many times not even the sellers know what they’re selling,” he says. Yamina Vicente, cofounder of Decorazón, an events and destination-wedding company, says that most successful businesses in Cuba employ at least one person with a US visa who can import necessary goods from the States in their luggage.

Vicente says advertising can be complex too. To reach the Cuban market, she has to rely on el paquete—a sort of informal, underground media delivery service hand-distributed weekly to subscribers via flash drives filled with everything from the latest Game of Thrones episodes to last week’s Yankees game. For $20 a month, short video promos for Vicente’s company are added to the drives by the neighborhood distributor. Hip-hop duo La Reyna y La Real also use the service for promotion, noting that most of their fellow musicians advertise this way.

“If you dig deep into Cuba’s history, it’s full of events that have forced people to be resourceful,” says economist Ricardo Torres, from the University of Havana’s Center for the Study of the Cuban Economy, over lunch at Río Mar, a waterfront spot overlooking the juncture of the sea and the Almendares River. Torres explains that when Cuba was a Spanish colony and treated with a mercantilist approach, the people had to figure out how to work around restrictive trade policies to make ends meet. “I do believe that entrepreneurial spirit is in our DNA. It’s just that, unfortunately, we haven’t had a model that fully uses it,” he says. “We’ll soon have it.”

CET guide Zoila Avilés offers two oft-repeated phrases that sum up the Cuban entrepreneurial experience. La luche, or “the struggle”—the daily push to get by. With the average Cuban state salary hovering around $30 a month, something has to give.

And Cubans, she says, have found solutions the way they always have: inventado. They make up their own.

Noise of the May Day rally begins around 4:30 a.m. in Havana. Drums thump, car horns bleep, a low din of bustling humanity builds. Eventually, nearly 900,000 Cubans will march in the parade commemorating International Workers’ Day, carrying Cuban flags and pictures of Che Guevara and Fidel Castro. The country’s new president—Miguel Díaz-Canel, the first non-Castro leader since the revolution in 1959—looks on, waving at the masses processing through Revolution Square, with his predecessor, 86-year-old Raúl Castro, by his side.

In August 2017, as Raúl Castro prepared to step down, Cuba froze the issuance of new non-state licenses. The government noted it was likely a temporary measure—an effort to perfect the system and root out any corruption. For Gordon and the other entrepreneurs operating in Cuba, it was another sign of uncertainty—the “dance,” as Gordon calls it, of the Cuban leadership, unsure of its direction.

By the early afternoon of May Day, with the noise of the parade starting to die down, Gordon sits in the courtyard of a casa particular—a private-home-turned-hotel—and traces her tolerance for operating in this kind of ambiguity.

“I do believe that entrepreneurial spirit is in our DNA. It’s just that, unfortunately, we haven’t had a model that fully uses it,” says University of Havana economist Ricardo Torres. “We’ll soon have it.”

“I do believe that entrepreneurial spirit is in our DNA. It’s just that, unfortunately, we haven’t had a model that fully uses it,” says University of Havana economist Ricardo Torres. “We’ll soon have it.”

The daughter of a Japanese social worker and an expert in Japanese history (Harvard professor Andrew Gordon), she spent third grade in a public school in Tokyo, where her classmates mocked her curly hair, calling her “Ramen head.” “These things are traumatizing for an elementary school kid—when you don’t fit in perfectly,” she recalls. And there were different customs and norms that required acclimation. The school had no janitors, so the students were responsible for cleaning; Gordon had to get over her dislike for certain Japanese foods—the baby shrimps with heads and eyes intact, whole fish with a belly full of eggs, the bottles of thick whole milk—all unappealing requirements for recess. Eventually, though, she grew to love the experience. “By the end, I felt kind of like a Japanese kid. The transformation that occurred for me in third grade, going through that very uncomfortable process, was life changing.”

That willingness to throw herself into the unknown found her working in Africa for the Clinton Health Access Initiative after earning her undergraduate degree from Harvard, spending five years growing the initiative’s malaria treatment program and traveling widely on the continent. “I was often, say, the only half-American, half-Japanese, non-African person of my age in a room talking to counterparts to try to get something done.” But that feeling of discomfort, being unsure of her surroundings? “There was little bit of a thrill or a sense of adventure that came from that. I loved it.”

This ease with the unknown would seem to make her a natural entrepreneur. “Running my own business wasn’t initially in my own DNA or my family’s story,” says Gordon. “But now that I’m doing this, there’s something very intoxicating about the feeling of, ‘Oh, this whole thing is something that I’m creating.’ That’s really a reason to wake up in the morning and also something that’s terrifying on a level that I hadn’t appreciated before.”

She can lean on the mission during the valleys, though. “We want to build meaningful, enduring relationships between Cuba and the rest of the world, and the rest of the world to Cuba,” she says. It’s about the exchange of ideas, the exchange of culture. “My whole life has been about, first, understanding the nature of the relationship between the United States and Japan, and how that bilateral relationship is a really positive one. I felt that personally in my own home—speaking two languages, living in two cultures, going back and forth between those worlds,” she says. “And that continued when I was in Africa. I feel it very much on a personal level, as well as on a global, macro level.”

The streets are quiet now. Gordon reflects on the future—an impossible thing to conjure, given the unpredictable variables she faces, on both a daily and a long-term basis. It’s an uncomfortable gray, but it’s where she thrives.

“The end of the story isn’t written yet,” she says.

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