cuban-houses 1180

Dave’s Tip No1: Understand the local flow and do business with people who ‘get it.’

Graham Greene’s ‘Our Man in Havanais brilliantly funny.  Written in 1958, he takes the mickey out of the British secret service’s MI6.  They were shown up to be gullible and inept, falling for a Pommy bullshit artist, Jim Wormold, who fooled them into thinking sketches of vacuum cleaner parts were plans for a ‘supergun’.  The secret service lads were given the run around over a supposed Missile Crisis, four years before one actually happened for real.

I think I met the real Wormold on my trip to Cuba last week.  James (for that was his name), a Scotsman, sat next to me on the short flight from Cancun to Havana.  From his bag he proudly produced a stash of ‘Cohiba’ branded e-cigars. You couldn’t make it up.

E-CIGARS!!!!  Now call me an old traditionalist, I just about get the whole e-cigarette thing – helps you give up, only problem is you look like a dick sucking on a fairy-lit Christmas tree.

But E-cigars????

I tried one whilst waiting in the rain to be picked up from Havana’s José Martí airport by a lawyer who is chancing his hand as a taxi driver – one of Cuba’s new entrepreneurs.  Have you ever inhaled battery acid?  Trust me, stick to the real thing. I prefer Partagas No2’s myself.

Poor old James.  He was about to hand over $5K of stock to a ‘local partner’.  I don’t think he’s going to threaten the Cuban cigar industry just yet. And I’m not sure of his chances of seeing the $5K again.

But it got me thinking.

It’s not mad ideas, but proper business intelligence and working with people who are well entrenched which are the keys to unlocking the massive investment opportunities in Cuba.

We spent last week in Cuba with the team, our partners, and advisers, working on the strategy for growing our multiple businesses.

We were joined by the world renowned strategist John Caswell of Group Partners.  John advises the bosses of some of the biggest corporations on the globe as well as many government leaders.

I’ve got to tell you, it was a pretty bloody intense week but I’m seriously glad we did it. Lots of drawing on walls, with John visualising our ideas, lots of discussion about objectives, market dynamics and how best to execute a super-charged growth strategy as a regulated company doing business in Cuba. Now that’s a serious challenge in itself (no thanks to US Government making foreign investment tricky).

Our challenge isn’t the number of opportunities, but ‘CRACKING THE CODE’, which means understanding and moving with the ever shifting sands of Cuba. And doing so as a new economy emerges from a complex ocean of heritage, politics, and market dynamics.

Cuba’s got lots of smart people, a plan, and an economy that’s going to go gonzo before your very eyes.  4% growth already and it’s not even out of the starting blocks.  Untapped demand with industries that are poised to spring into action.

Tourism is driving this economy faster than you can blink. A massive Thompson Holiday cruise ship was in Old Town Havana all week with an even bigger ship expected this week. Not to mention the Chinese who were everywhere. My blog about the 2016 Chinese Invasion of Cuba is worth a read again. It’s real. I’ve seen them all over Old Town.

Another challenge for any potential Cuban investor is to learn from the expensive and tragic lessons of others who have gone before us.  For us these lessons are opportunities.

Many a business has entered Cuba and showered the place with big ideas, grandiose investment, and massive promises. They have failed and spent $millions in the process. They’ve failed because they’ve applied models, attitudes and methods designed for a very different world.

Even on a micro-scale, tourists think they can just walk into Havana and buy into, or partner up with, a local cigar or rum entrepreneur with cash. I’ve even met people in Havana who think they can buy one of those fabulous old houses on 5th Avenue and they’re off to the races. No chance. I guarantee they’ll lose their money this way. Investments like this are illegal and have no security.  In fact this a sure fire route to doing time in a very small room courtesy of the Government.

The best way to approach Cuba is to reject the traditional arrogance and blind faith of the western style businesses and to respect the knowledge and wisdom of the people already operating successfully in Cuba. This means working alongside Cubans and helping them create value on their terms and within Cuba’s evolving legal framework.

Investors need to get under the skin of what’s really going on. Proper hands-on business intelligence is what’s needed.  Forget the rumour mill and ‘hearsay’ – It’s usually wrong.

Investing correctly in Cuba is and will not be, easy given Cuba’s history. It’s no surprise that there are dramas, subtleties and uncertainties around every corner.

But that’s why I’m in Cuba— it’s where real value exists. It’s only by fathoming out the answers to these many complex situations that opportunities can emerge.

 

Written by David Lenigas