Banning TikTok Will Actively Hurt Small Businesses

I started my company in the direct-to-consumer (DTC) boom of 2020, and we launched in 2021. During that time, there were billion-dollar exits, exemplified by notable DTC success stories, such as companies like Dollar Shave Club and Harry’s being acquired for billions of dollars by industry giants like Unilever and Edgewell Personal Care. Bonobos, another DTC pioneer, was acquired by Walmart for over $310 million, showcasing the appeal of digitally native brands to traditional retailers. These successes underscore the potential for DTC businesses to disrupt industries and achieve significant exits, whether through acquisitions or public offerings, solidifying their position in the market and inspiring aspiring entrepreneurs. That opportunity is being stifled by the potential pass of a bill that would effectively ban TikTok.

I began with a small business, August, in the same space, aiming to disrupt the period care category. However, just as I launched, the DTC bubble began to burst.

This was exacerbated by the skyrocketing costs of advertisements, with numerous DTC brands facing closure after burning through millions, including venture capital funding. Platforms like Meta-owned Instagram and Facebook became oversaturated, necessitating a primarily paid model approach. Additionally, the introduction of iOS 14.5’s App Tracking Transparency framework further compounded challenges in targeting ads effectively and measuring ROI accurately. This impacted DTC businesses’ ability to track user behavior and target ads effectively, as it restricted access to valuable data used for personalized advertising. Without access to such granular data, businesses found it harder to refine their ad targeting and measure the effectiveness of their campaigns accurately.

In a world driven by American capitalism and the pursuit of the American Dream through entrepreneurship, especially in a post-pandemic era where consumers increasingly expect delivery convenience and direct-to-consumer service, small businesses face a daunting challenge. Where do we find success, especially in our early days? For many, including myself, the answer lies in TikTok.

When we launched our brand, August, a lifestyle period brand, in June 2021, I embarked on a journey of understanding TikTok’s dynamics by posting dozens, sometimes over a hundred times a day. Despite being a recent college graduate who completed the last two years of my education via Zoom during the pandemic, within six months, I amassed 2 million followers. Today, I boast 4.1 million followers on TikTok, and this traffic has extended to other social platforms, accumulating an additional 1 million followers, primarily on Instagram and YouTube. TikTok’s superior video editing capabilities allowed me to craft content efficiently, serving as the cornerstone of my strategy. While I’ve garnered hundreds of thousands of followers on Instagram and YouTube, my approach remains rooted in TikTok, where I create and edit content before reposting on other platforms.

In a landscape marked by rising costs, major corporations possess substantial marketing budgets, enabling them to invest millions in advertising. Conversely, small startups lack the financial resources and historical data to compete on the same level. TikTok presents a unique opportunity to level the playing field organically. Unlike Instagram, which primarily caters to existing followers, TikTok’s algorithm-driven “For You” page prioritizes new content discovery, fostering constant top-of-funnel brand awareness.

For businesses, this represents a treasure trove of brand exposure. My own company’s growth and success, transitioning from a DTC business to launching in national retailers like Target last year, stem from cultivating brand awareness on TikTok and translating it into website traffic and organic search interest. In the realm of consumer industry investments, investors now scrutinize metrics reflecting low customer acquisition costs (CAC) and high return on advertising spend (ROAS). In a landscape dominated by Facebook and Instagram, achieving these metrics becomes increasingly challenging. As a result, underdog DTC businesses face diminished prospects. However, platforms like TikTok Shop offer new avenues for smaller enterprises to attain overnight success in a fiercely competitive environment.

With the venture capital landscape evolving to prioritize profitability, investors seek brands capable of organic growth rather than relying on exorbitant advertising spending. TikTok uniquely positions itself as a platform conducive to this approach.

As one of the millions of businesses and creators potentially affected by a TikTok ban, I strongly oppose such actions. TikTok isn’t merely an app; it’s a dynamic platform that fuels innovation, sparks creativity, and fosters community engagement. Its reach transcends borders and demographics, enriching the lives of millions worldwide. Banning TikTok would not only stifle entrepreneurial opportunities, but also impede cultural exchange and global connectivity. Instead of stifling innovation, policymakers should recognize TikTok’s pivotal role in shaping the modern digital landscape and work toward fostering an environment that nurtures creativity and entrepreneurship for all, ensuring that the American Dream remains within reach for every aspiring entrepreneur and creator.

Nadya Okamoto is a viral content creator, who has more than 4 million followers on TikTok. She is a fierce advocate for reproductive rights. She is also the co-founder of period care brand August.

The views expressed in this article are the writer’s own.