California Senator LaPhonza Butler is on to something! Please sign the Petition!
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How TikTok Users Can Buy TikTok
A white paper on an idea for TikTok users making a bid to acquire TikTok
Executive Summary
Let US based TikTok users use Reg CF to buy TikTok as individual retail investors. Hold the money in escrow in a Special Purpose Vehicle. Immediately IPO and turn it into shares.
In response to the U.S. government's national security concerns leading to the potential shutdown of TikTok, We propose a solution that would empower the 170 million U.S. resident content creators on TikTok to purchase shares in a Special Purpose Vehicle (SPV) to buy the company. Participation in this scheme would be limited to US citizens and account holders only. The goal is to allow the US and European investors who currently own approximately 60% of the company to realize a return inspire of the politics, by applying a unique solution.
This approach not only offers a favorable outcome for existing investors and employees but also provides a unique opportunity for retail, non-accredited investors to gain equity in a high-growth tech platform. This approach could also be emulated for future situations where multi-national companies caught in the middle of geo-political events can step away by allowing the US based employees to take ownership via an ESOP type entity.
This arrangement and the use of an SPV Syndicate is entirely unique and is based on the situational dynamics of the current climate.
Introduction
TikTok, owned by ByteDance, is valued between $50 billion and $278 billion, with a vast user base ( over 1 billion globally) with significant revenue generation. It is the number 1 app in the USA. However, its Chinese ownership has raised concerns in the US (and other countries), resulting in scrutiny and full or partial bans in various countries, including the U.S, India and most recently Canada.
We propose that selling the company to U.S. investors, including its content creators, could mitigate these concerns
State of Play
The TikTok Shop makes the sale impossible. It is took good of a gem and no other platform has anything close.
TikTok is more that just a social media video platform. It is wrongly compared to Instagram and Snapchat in mainstream media. It is an immense e-commerce platform, leveraging video to provide direct product distribution from individual sellers and creators. Imagine if Amazon had influencers selling directly via video then you can realize how different TikTok is to its competitors in scope. Since Bytedance holds sales figures, there is no telling how much money TikTok actually generates. I am confident US sales constitute a large portion of their sales.
US platforms are woefully behind and will be sued if they try to copy TikTok’s intellectual property.
While Snapchat and Instagram have similar technologies and are not directly aligned and deeply integrated with Chinese distribution and manufacturing as TikTok is. Can Instagram build an affiliate program to match TikTok? Yes but it would take years, and would not provide the same pricing. The nearest onshore partner would be Walmart, which could choose an emerging social media platform to emulate the TikTok Shop. The commonly sold idea, that users will simply migrate to Instagram Reels, YouTube Shorts, Pinterest or Snapchat is simply not true. It is more likely that they will utilize a VPN to access a banned TikTok. Bytedance’s prospect of a sale is unlikely. Although a large portion of TikTok is owned by foreign investors, they would simply have to eat their investment and adjust to a world where a banned TikTok would continue to exist and their profits would remain there.
TikTok and the Supreme Court
Will TikTok’s suit against the United States succeed in over turning the ban on free speech grounds. I think not. In my humble opinion CIFUS and the military of the United States will present enough evidence privately convince the Supreme Court that this simply needs to be done. It does raise the specter that a national debate on privacy can commence, but the biggest counter argument for a TikTok ban is China’s reticence to allow Facebook, Twitter and other social media platforms to operate in China. If this were allowed, then the ideologies that underpin their government will be called into question.
Our Solution: Sell TikTok LLC (USA) to its US based employees. Let them form and ESOP and incorporate all Bytedance employees. All the new entity to license the necessary technology while re-building key parts to US specifications.
Employee ownership is an option that I believe has not been explored. This is due to the fact that although TikTok is “based” in the US, all management and design decisions are still made by its parent company ByteDance. Much of the engineering that powers its vast feature set is still done in China as a result, Employee Shared Ownership - a US idea in which a company can be sold to its employees, is not something that would be likely considered as a solution to the TikTok ban.
According to our research, ByteDance is required to give the government of China a “golden share” of 1% of the company and full access to its internal records for internet access in mainland China. Lost in much of the debate about the TikTok Ban, is the fact that TikTok itself is unavailable in China and they receive a censored version. Many innovations like TikTok shop are tried in China and then passed on to TikTok
Market Opportunity
TikTok has a substantial presence in the U.S., with over 150 million monthly active users as of early 2023. Its extensive engagement and demographic reach make it a lucrative platform for advertisers and a significant player in the social media landscape. By allowing non-accredited investors to participate in the acquisition, we can democratize investment opportunities and address the rising demand for equity participation in high-growth startups.
The Proposal
Structuring the SPV
Formation of the SPV: Create an SPV specifically designed to facilitate the acquisition of TikTok by U.S.-based employees and content creators.
Retail Investor Participation: Enable non-accredited investors to purchase shares in the SPV through a RegCF model, abstracting the regulatory complexities.
Compliance and Regulatory Framework: Ensure all regulatory requirements, including FINRA compliance, annual filings, and tax obligations, are managed by the SPV.
Benefits
For Investors: Retail investors gain access to a high-value investment opportunity typically reserved for accredited investors.
For TikTok: Maintains platform continuity while adhering to U.S. data privacy and security laws, enhancing user trust and compliance.
For U.S. Economy: Keeps TikTok’s operations within the U.S., preserving jobs and fostering economic growth.
For Everyone: Global goodwill from cooperation between antagonistic parties due to user activism a successful outcome fiscally for all parties involved.
Challenges and Solutions
U.S. Government Approval
Challenge: Ensuring that the acquisition meets U.S. national security requirements.
Solution: Collaborate with U.S. regulators to ensure compliance and address any security concerns through stringent data privacy measures.
Chinese Government Approval
Challenge: Navigating ByteDance’s ownership structure and obtaining approval from Chinese authorities.
Solution: Propose a fair market value offer and emphasize the benefits of divestment to ByteDance’s investors while ensuring compliance with Chinese regulations.
Market and Operational Risks
Challenge: Managing the transition and maintaining user engagement.
Solution: Leverage TikTok’s existing U.S. management and operational teams to ensure a smooth transition and continuous platform innovation.
Financial Projections
Valuation and Investment
TikTok’s Current Valuation: Estimated between $50 billion and $268 billion.
SPV Fundraising Target: Aim to raise approximately $50 billion to $100 billion from retail investors and institutional partners to acquire TikTok using Reg CF as a mechanism.
Revenue Streams
Advertising Revenue: Continue to capitalize on TikTok’s robust ad revenue.
E-commerce Integration: Expand social commerce features to drive additional revenue.
Conclusion
Our proposal offers a novel solution to the challenges faced by TikTok due to geopolitical tensions. By facilitating an SPV for U.S. content creators and non-accredited investors, we can secure TikTok’s future while democratizing investment opportunities. This approach ensures compliance with regulatory requirements, maintains platform integrity, and delivers substantial returns for investors.
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Social Media: https://www.change.org/p/let-s-buy-tiktok-to-save-it