In this video Michael, a veteran CEO, explains why the recent Supreme Court oral arguments suggest the ban on TikTok will likely stand, a development that threatens the 7 million small businesses that operate on the platform. He outlines TikTok’s scale—150 million daily active users and over a billion daily interactions—while highlighting that the $15 billion in annual sales generated through TikTok Shop translates to an average of only $2,000 per small business, a negligible share of the U.S. economy. Using a trading‑card seller who built a multi‑hundred‑employee business entirely on TikTok as a case study, Michael illustrates the concept of “platform risk,” where reliance on a single channel can jeopardize a business if the platform changes or disappears. He advises small‑business owners to diversify across multiple channels to avoid a single point of failure. Finally, he shares his policy view: the ban itself is not the goal; rather, TikTok should operate under American ownership to mitigate foreign‑government influence and misinformation risks. He invites viewers to comment on this stance.
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So pretty horrible news out this week if you are a user of TikTok or someone that has built a business on TikTok. Uh, the platform, uh, itself went in front of the Supreme Court, uh, and after listening to some of the oral arguments and questions that were put forth by some of the judges, uh, it doesn't sound like the Supreme Court is going to help TikTok, help stop the ban of TikTok that Congress put into practice and passed last year in 2024. So pretty bad news. And if you're one of the 7 million small businesses, according to TikTok's numbers, who has a presence on the platform and is doing business there, it's exceptionally bad news. So this video will talk a bit about how we got here, some of the claims that TikTok is making around the impact on small business. And then lastly, we'll talk a bit about this idea of a thing called platform risk and what you should do if you're a small business that is dependent upon TikTok and it's potentially going away. So stay tuned. Hi, I'm Michael. I'm a 20-year-plus CEO. I talk about business and I explain it in the context of things going on in the real world. So if you like that kind of stuff, please subscribe. So not going to rehash how we got here from kind of day one of the idea of short-form video, but there have been a lot of attempts to try to do what TikTok did. Different versions of it, Vine, other kind of stuff. Uh, and nobody really cracked the code until TikTok did after getting introduced in 2016. And the influence and rise of the platform, uh, has been meteoric. Uh, to put it in perspective, depending on who you talk to, TikTok says there's 150 million active daily users on the platform and over a billion interactions a day with the app. Uh, to put that in perspective, that makes it the number 4 largest social media platform in the United States. And, you know, just like with Facebook and Instagram and Twitter and the others, uh, when you have eyeballs like that, uh, small businesses are happy to step in and figure out how to build businesses and monetize those eyeballs. So, you know, ByteDance, the Chinese company that owns TikTok, you know, they started to figure out a number of the things that just had eluded the technology in the social media industry. They figured out how to do live e-commerce and selling and live selling and all that kind of stuff. They also figured out how to enable people to have shops where they were able to convert basically the eyeballs that people were, you know, putting onto the different content in TikTok into sales for small businesses. And TikTok's numbers on all that was eventually by 2023, TikTok Shop and the different types of e-commerce that were in the platform were enabling $15 billion of annual sales. So not a small number. I mean, it's real money, but like, let's put that number into perspective. And I think we're starting to dig into here as I looked into this, why a lot of TikTok's claims to try to save itself have fallen flat. So by its own math, TikTok has 7 million small businesses doing work of some sort on the platform, some sort of commerce on the platform. And they're doing $15 billion in revenue. Okay. If you roughly do the math. That's about $2,000 per small business. And I don't know if you've spent time like working your local flea market or a farmer's market on Saturday. I mean, there are guys with avocado stands, uh, that do more than that on a weekend. And so your average business on TikTok is just doing $2,000, uh, a year in revenue. Uh, it's not much. So it shows that most of them are side hustles or really just kind of wasting their time on the platform. And similarly, if you do the math in terms of the entire US economy, which is, you know, let's say roughly $29 trillion, this amount of commerce is basically just, as my grandfather would say, a bump on a pickle, just not much at all. It is 0.000056 of the entire US GDP. So while $15 billion sounds like a big number, people who understand the economy have looked at it and said, well, not that big of a deal. And look, I'm not going to do a video here and say that no creators haven't— have built real businesses on this platform. Like, like most things, there's a power law distribution where a handful of the returns are happening with a few of the folks. So there are definitely folks who have built big businesses on the TikTok platform, you know, and researching kind of this issue and digging into it. You know, I ran across a guy who had built a trading card platform, right, where he was doing live kind of unopenings of trading cards, baseball cards, sports cards, all that kind of stuff, collectibles. And, you know, he had built a real business, hundreds of thousands, if not millions of dollars a year in revenue based on building content around this. So, you know, there's, there's no doubt that there are a handful of folks, if not hundreds of folks, who've built real businesses there. But in the grand scheme of things, like the commerce being done on TikTok, not much of a, not much of a thing. And so I think that's where for us as small business people, the story of this Trading Card Guy is, is pretty illustrative and something we should be mindful of. And the thing he demonstrates here, and to give a bit more context on his trading card business, the article I read showed he, he has a couple hundred people working for him, kind of doing, doing the trades on selling these sports cards and collectibles online. You know, that's a real group of people, but he's built the whole business on one platform and one channel. And if you look at economic theory and business theory and stuff, this is a thing called platform risk. And the idea is that you've built your whole business on the existence of one channel or one thing. And look, platform risk can happen around social media platforms, right? There, there are tons of stories of people who built big audiences by doing a certain thing online and then tried to turn that into a business. And well, basically, the algorithm changes or something changes the platform or like in the case of Twitter, somebody buys it and changes everything. And suddenly what you did before and what you're capable of doing around your topic, your audience just goes away. And there are tons of stories around this in social media, but it also happens in other things as well. I know folks that have built businesses entirely dependent upon somebody else's software and that company that owns that software decides to come in and own their business. In other words, compete with them by giving their, their business away for free, their product away for free as a feature, and you look up and your whole business goes away just like somebody turned off a light switch. And so that's why, you know, when you own a business, it's important to understand your level of kind of platform risk and understand the magnitude of that. And look, there are great businesses that are built on the backs of the Amazon platform or the eBay platform, uh, or in this case, the TikTok platform. Uh, but going into it, you need to understand that, well, basically what created your business, the emergence of that platform, uh, can be the same thing that'll eventually kill it. And you have to be okay understanding that it might all go away and hopefully plan for a situation where if it does all go away, like for some of these TikTok creators and this card guy that I talked about, it doesn't put you in a state of ruin personally. And sometimes it's impossible, but if you can, that's where your small business should think about how you basically diversify away from that single point of failure that could ruin everything for you. So most folks I end up working with, uh, and most companies I've involved in, you know, have 1, 2, or 3 channels to create awareness and to create sales and to create value for their customers. To where if one goes away, well, it'll hurt, but it won't bring the whole house of cards down. So, uh, I promised in closing this video that I would give you my opinion on whether the TikTok ban is a good thing or not. Um, look, I don't think TikTok was getting banned. TikTok was needed to be owned by Americans, an American corporation. I think it's too risky given how much misinformation and and how much just control the platform has over the way young people think for it to be owned by a company that has strong foreign government influence. And I think what our Congress has done has been really smart and I'm in favor of TikTok living on, but it needs to happen under American ownership, not by a company that is, well, frankly controlled by a foreign government. So that's where I think. So what do you think? Tell me below.
