The inside story of Dave Clark’s tumultuous last days at Flexport: Standoffs, politics, and spin
Dave Clark (L) and Ryan Petersen (R)
Getty Images
On Sept. 13, Flexport founder Ryan Petersen took the stage at North America’s premier supply chain conference in Phoenix. It was exactly a week after he’d forced out his hand-picked successor as CEO, ex-Amazon executive Dave Clark, so Petersen could once again run the show.
Sitting in the first few rows of attendees was Clark, the man he’d ousted just a year into the job. Petersen was surprised that he showed up, according to people with knowledge of the matter. Days earlier, Petersen had excoriated Clark, alleging he’d secretly expanded the company’s headcount and taken on unnecessary leases without Petersen or the board’s knowledge. On X, formerly known as Twitter, Petersen wrote, “Strategic Plan, Day 1: Make better decisions!”
With Clark sitting a few feet away, Petersen struck a different tone.
“I think we’re going to look back and go, ‘Wow I’d probably do that all over again because of the progress that we’ve made,'” Petersen said, in an interview on stage.
Doing it over again would seem to suggest hiring Clark wasn’t a bad decision. Petersen went even further, personally commending Clark for orchestrating the $1.3 billion purchase of Deliverr from Shopify, picking up supply chain technology for last-mile deliveries. That deal was announced in May.
“I’m very, very lucky because I wouldn’t have had the courage to go and do that acquisition, but I give all the credit in the world to Dave Clark,” Petersen said. “There’s no one probably in the world who would be better at running that last-mile e-com fulfillment network. Personally, I don’t have any experience and I would’ve been pretty intimidated to try and go pull that off.”
The mixed messaging from the 43-year-old Flexport founder underscores the dysfunction surrounding the sudden firing of Clark, who previously spent 23 years at Amazon and built its mammoth logistics network on the way to becoming one of Jeff Bezos‘ top deputies. It’s also indicative of a bigger challenge facing Flexport, whose software is designed to simplify the process of transporting goods. The company was valued at $8 billion by private investors in early 2022, just as the economy was turning and the 10-year tech bull market was coming to an end.
As a high-valued company backed by powerful VCs, Flexport has been trying to simultaneously operate in Silicon Valley startup growth mode while also restraining expenses to reflect the new economic realities and to cope with supply chain bottlenecks.
This account is based on conversations with people close to Clark and Petersen. They requested anonymity to discuss confidential interactions. Their perspectives have been corroborated by internal documents and communications reviewed by CNBC.
Petersen has publicly said Clark overspent, overhired and overpromised, something his allies echoed to CNBC. He burned through cash and kept Petersen in the dark about key financials and an ambitious expansion into providing end-to-end supply chain tools for small and medium-sized businesses. People close to Petersen pointed to a number of previously unreported incidents that eroded his confidence in Clark.
But documents viewed by CNBC and sources close to Clark undermine those claims. They show that Clark, who arrived when the company was struggling to bill customers and track containers, worked closely with the board and Petersen to implement decisions that Flexport now suggests were ill-advised.
Evidence to support Flexport’s claims of financial mismanagement is lacking, raising questions about whether that narrative was put forward to justify Clark’s exit.
A Flexport spokesperson rejected that characterization.
“Ryan Petersen returned as CEO in order to restore Flexport’s culture of customer engagement, and drive the growth and cost discipline required to return the company to profitability,” the spokesperson said in a statement.
Get IPO ready
Clark arrived last year as the perfect hire for a tech startup trying to disrupt the age-old logistics industry. He’d built Amazon’s logistics unit into a juggernaut that rivaled carriers like UPS and FedEx.
Ryan Petersen, chief executive officer of Flexport, participates in a panel discussion during the Milken Institute Global Conference in Beverly Hills, California, U.S., on Wednesday, May 4, 2022.
Bloomberg | Bloomberg | Getty Images
Since 2021, Petersen had been seeking a successor for Flexport’s then-operating chief, Sanne Manders, in part to address what several ex-employees described as lingering issues with the company’s troubled billing processes. Fixing that was Clark’s job.
Petersen and Clark worked together as co-CEOs for the first six months. In March, Petersen transitioned to executive chairman.
The co-CEO arrangement would free Petersen up to do what he loved – “getting beers with customers,” in the words of two former Flexport employees. Clark, a self-described “builder at heart,” was at the wheel.
Among Clark’s goals was to help Petersen prepare Flexport for an IPO, something the company had discussed doing within a two- to three-year window, according to a person familiar with the matter and documents viewed by CNBC.
“There’s a perfect complement of skill sets,” Petersen told Forbes in June 2022. “Mine are much more creative, zero-to-one founder time, and Dave is the supreme executor and a legend in the supply chain world.”
Buying Deliverr was meant to be the first step in turning Flexport into a more full-scale logistics service for its customers.
Shopify had acquired Deliverr in May 2022 for $2.1 billion. But the e-commerce software company was getting hammered by Wall Street as its Covid pandemic pop faded. By January 2023, CEO Tobias Lutke knew he needed to get rid of Deliverr. Around that time, Lutke first approached Petersen to float the possibility of a deal, according to a person familiar with the matter.
Petersen told Clark he should engage with Shopify’s team, according to a person with direct knowledge of the negotiations. Initial talks fell apart, but resumed when Flexport executives learned that Shopify was about to execute deep cost cuts and was eager to sell Deliverr.
Clark and Petersen flew to Miami to meet with Shopify’s leadership. As a transaction was nearing, Clark, who had a reputation as a deft negotiator, got Shopify, which was already an investor in Flexport, to sweeten it with $40 million in cash and the framework for a $260 million convertible note that could help Flexport on its path to an IPO, according to an internal document analyzing the deal.
The sale would be announced alongside Shopify’s first-quarter earnings report on May 4.
“We did not change the terms of a deal or rush it just to have it line up with an earnings call,” Shopify said in a statement. With Flexport, “we are tightly mission-aligned to ensure the success of our merchants, which is why we chose to deepen our partnership with them earlier this year.”
The night before the announcement, Petersen appeared at a “Tech Talk” at Flexport’s Bellevue, Washington, office to pitch the “Flexport vision” to hundreds of people. An attendee asked Petersen whether Flexport would ever get into last-mile logistics.
Petersen paused, glanced at his watch, and said to keep an eye on the morning news, according to a Flexport employee who witnessed the exchange and by a person who was told independently.
The comment alarmed Clark and Flexport executives, who were concerned that Petersen had disclosed material nonpublic information about a publicly traded company, according to people familiar with the matter.
Petersen didn’t respond to calls or messages from CNBC, and the company declined to make him available for an interview. A Flexport spokesperson didn’t respond to CNBC’s question about whether Petersen was aware of concerns about his statement at the event.
The ‘whistleblower’
Clark’s first quarterly board meeting as sole CEO was June 1. His second was Aug. 31, days before he was forced out.
The board was made up largely of investors who were betting on the founder. It included Founders Fund’s Trae Stephens, who had helped start defense-tech firm Anduril Industries, and Michael Ronen, who left SoftBank in 2020. Andreessen Horowitz was represented by Bob Swan, an operating partner at the firm and former CEO of Intel.
Bob Swan, then-interim chief executive officer and chief financial officer of Intel Corp., reacts during the inauguration of the company’s research and development facility in Bengaluru, India, on November 15, 2018.
Samyukta Lakshmi | Bloomberg | Getty Images
For much of the summer, Clark had pushed then-CFO Kenny Wagers and his financial planning and analysis team to realign Flexport’s year-end and 18-month forecasts, according to a person close to the situation.
The reasons were obvious. At the beginning of 2022, it cost around $14,500 to move a single container across the Pacific. By late 2022, prices of ocean freight from Asia to the U.S. West Coast were down 90% from a year earlier, due largely to weakening global demand. Because Flexport makes money by charging fees for the transportation of goods, the company’s business was getting hammered.
But Wagers and Stuart Leung, a Flexport finance executive and a close Petersen ally, were reluctant to pare back forecasts, frustrating Clark, who felt those projections were overly optimistic.
Wagers and Leung did not respond to CNBC’s interview requests.
Clark ultimately prevailed, but the revised forecasts distressed Petersen. Clark, Petersen and Wagers met in Texas in mid-August to fine-tune the forecasts.
A source close to Petersen told CNBC that the meeting went poorly for Clark because a so-called whistleblower — identified as a senior finance executive — stepped forward shortly before it began and told Petersen that the numbers being presented were “not real.”
The source referred to the senior finance executive as a whistleblower because of the information he disclosed to Petersen about Clark.
Documents seen by CNBC and conversations with people with direct knowledge of the board meeting make it clear that there were no substantiated whistleblower actions or allegations of financial impropriety.
Flexport’s spokesperson told CNBC in a statement: “There was no whistleblower nor was there any financial misconduct. Any allegations to the contrary are completely false.”
On Sept. 15, shortly after CNBC spoke with the Petersen source, legal counsel for Clark sent a cease-and-desist letter to Flexport. The letter, viewed by CNBC, instructed the company to preserve and retain all communications involving Clark’s departure. The letter disputes the existence of a whistleblower and lists specific allegations as false and defamatory, including Petersen’s claims that Clark was an unfit CEO because he overextended the company’s lease obligations.
Five hours after the letter was sent, the source close to Petersen contacted CNBC and asked to retract their statements and all details related to Clark’s firing or about the so-called whistleblower. CNBC declined to retract his statements.
Petersen has since deleted several of his posts criticizing Clark.
Dave Clark, Amazon’s former senior vice president of worldwide operations.
Lindsey Wasson | Reuters
The letter cited two documents that had been presented to the board. Both were viewed by CNBC. The first was a pre-acquisition financial analysis of the Deliverr deal, and the second was a review of Flexport’s first-quarter numbers. The Deliverr analysis was presented by the co-CEOs to the board for their approval and was shaped by multiple prior board meetings.
Clark’s camp suggested that other factors may have led to the abrupt firing.
For example, politics.
Days after Clark was ousted, Petersen sent him a message — seen by CNBC — blasting one of his key female executives for wasting her days at the company on “far left-wing political activism.” The executive is a registered Republican.
Stephens, the Founders Fund partner, also shared his contempt for that executive weeks before Clark’s departure, a person familiar with the board told CNBC. Stephens did not respond to CNBC’s request for comment.
Petersen is also a venture partner at Founders Fund, the firm started by Peter Thiel, who was a prominent supporter of President Trump’s 2016 campaign and more recently bankrolled Senate candidates in Ohio and Arizona. Many of Thiel’s closest confidantes at Founders Fund and elsewhere in the venture industry are outspoken conservatives.
Petersen’s sole public political contribution in 2023 was to a Democratic political action committee associated with Sen. Joe Manchin of West Virginia. He doesn’t talk much about politics on social media or in interviews.
Clark has donated to candidates on both sides of the aisle. Upon his departure, The Wall Street Journal reported that he was considering running for governor of Texas, but two people familiar with his thinking say it’s not happening anytime soon.
Flexport told CNBC that an employee’s politics are not relevant in personnel decisions.
“Ryan Petersen does not care at all about anyone’s political or personal affiliations. That is their business,” the spokesperson said. “It is inappropriate for any employee to spend an excessive amount of time during work hours on activities unrelated to their role.”
A person familiar with the female executive said her noncorporate endeavors were largely related to charitable organizations.
Clark has largely remained silent since he was forced to resign on Sept. 5, though in private he’s expressed frustration at how his former team was being treated by Flexport, according to people close to him. Many of his allies at Amazon who joined him at Flexport were summarily fired by Petersen shortly after his departure.
On Sept. 13, Flexport’s chief legal counsel, Chris Ferro, contacted Clark. Ferro told him that his resignation a week prior had not been accepted, according to a person familiar with the conversation.
Instead, Ferro told Clark that Flexport’s board met the day after Clark resigned and voted to fire him for cause, the person familiar said. Ferro said the board minutes didn’t yet reflect why Clark had been fired, the person said.
Ferro allegedly told Clark that Flexport would be willing to give him a block of 2 million shares — worth millions of dollars — if he signed a separation agreement that included nondisclosure and nondisparagement clauses.
Clark declined, the person said. Shortly after Flexport reached out with the offer, Clark took the stage at the same supply chain conference in Phoenix that Petersen spoke at earlier in the day.
He didn’t hold back.
“The only thing I really regret from the past year was I sort of picked the wrong founder,” Clark said. “Basically, it was a place of extending my reputational halo to a group that, in my opinion, didn’t deserve it. Largely, because about half the team was let go last week on Friday, the most brutal nonseverance packages I’ve ever seen in my life. It was about as disrespectful a way as humanly possible.”
Amazon showdown
On top of the public relations fallout from the Clark saga and any legal wrangling that may follow, Flexport faces staffing turnover and a growing threat from Clark’s former employer.
Flexport recently ousted Wagers as CFO and lost its human resources chief. More layoffs are expected soon, sources said, after the company cut 20% of its staff in January.
On Sept. 12, almost a week after Clark was fired, Flexport executives convened in Seattle to launch an end-to-end supply chain service that would allow sellers to move their products from factories to customers’ doorsteps through integrations with major online marketplaces.
The project was spearheaded by Parisa Sadrzadeh, an executive vice president at Flexport who Clark had poached from Amazon’s logistics unit.
Earlier in the day, and just up the street from Flexport’s event, Amazon had unveiled a strikingly similar service in front of approximately 2,200 attendees at its annual Accelerate seller conference. Flexport had planned to have a booth onsite but was told it couldn’t be an exhibitor, which some staffers suspected was due to the competing supply chain products, according to a person familiar with the matter.
Flexport discussed securing exhibit space at Accelerate months earlier but didn’t meet all the requirements to participate, and its launch wasn’t mentioned in those conversations, Amazon said.
Flexport’s event was underwhelming. In a conference room, about 50 people looked on as Sadrzadeh debuted Flexport’s service and then introduced Petersen, who spoke for roughly 20 minutes, according to Burak Yolga, co-founder of a digital freight forwarding company who was in attendance.
“Flexport announced pretty much the same thing that Amazon announced,” Yolga said in an interview. He said he left after about a half-hour.
The company paid rapper Nelly $150,000 to perform at the event. But in the days leading up to the launch, Petersen opted to squash the performance because the optics were bad after his post about rescinding job offers, a person familiar with the matter said. Despite canceling the event, Flexport still paid the artist.
Republican presidential nominee and former U.S. President Donald Trump gestures at the Bitcoin 2024 event in Nashville, Tennessee, U.S., July 27, 2024.
Kevin Wurm | Reuters
With the levers of power in Washington, D.C., about to change hands, a raft of pro-crypto legislation is expected from Congress and the Trump administration. To date, there’s been less focus on the cybersecurity side of the political effort, which could be an issue for crypto in relation to its popularity among a wary U.S. population.
Cryptocurrency, which includes not just bitcoin but ethereum, dogecoin, and others, has a faithful following among American adults. According to the Pew Research Center, 17% of American adults have traded in crypto, but that market share of American wallets has remained virtually unchanged since 2021. Meanwhile, according to a poll Pew conducted shortly before the election, 63% of adults say they have little to no confidence in crypto investing or trading, and don’t think cryptocurrencies are reliable and safe.
The incoming Trump administration has been touting its crypto bona fides, with a focus on the industry rather than the consumer.
“The No. 1 most important priority for the industry is to make sure they have a regulatory framework so that they can do business,” said Dusty Johnson (R-South Dakota), who helped author the Financial Innovation and Technology for the 21st Century Act (FIT21) that addresses the treatment of digital assets under U.S. law. The law passed in the House with bipartisan support but has not been taken up by the Senate.
FIT21 did contain specific crypto-cybersecurity provisions, which Johnson predicts will be built upon in the new administration.
Glenn “GT” Thompson (R-Pennsylvania), Chairman of the House Committee on Agriculture and a co-author of FIT21, says the cybersecurity provisions in the bill are still key in the upcoming administration.
“FIT21 requires important cybersecurity safeguards for financial intermediaries engaging with digital assets,” Thompson said in a statement to CNBC, adding that FIT21 includes explicit provisions to ensure that regulated firms take steps to evaluate and mitigate cyber vulnerabilities to protect both the services they offer and assets they hold on behalf of their customers.
“These cybersecurity requirements are critical for protecting digital asset markets and market participants,” Thompson said.
Some experts, however, doubt that there will be as much action on the security side of the legislation, given that crypto proponents are closely advising the Trump administration.
“Personnel is policy,” says Jeff Le, vice president of global government affairs and public policy at Security Scorecard and a former assistant cabinet secretary in the California governor’s office. The top ranks of the incoming economic team, made up of SEC Chair-designate Paul Atkins, Commerce Secretary Howard Lutnick, and Treasury Secretary-designate Scott Bessent, “have had a track record of supporting cryptocurrencies,” Le said.
Among other major posts in his second administration, President-elect Trump has appointed venture capital investor David Sacks to be his AI and crypto “czar.”
Crypto industry’s role in political realignment
The crypto industry donated significant sums to the 2024 election cycle, contributions that were not limited to the GOP, but focused more broadly on lawmakers with an industry-friendly view of crypto regulation. It’s likely that will continue to influence political calculations. The pro-crypto and bipartisan super PAC Fairshake and its affiliates have already raised over $100 million for the 2026 midterm elections, including commitments from Coinbase and Silicon Valley venture fund Andreessen Horowitz, an early backer of Coinbase. Top Andreessen Horowitz executives have been tapped for roles in the Trump administration.
“We have the most pro-crypto Congress ever [in] history, we have an extraordinarily pro-crypto president coming into office,” Faryar Shirzad, chief policy officer at Coinbase, recently told CNBC.
“It is rare to see cryptocurrency proponents advocate for increased regulation in the space, regardless of reason,” said Jason Baker, senior threat intelligence consultant at GuidePoint Security.
Baker says the anonymity and independence of cryptocurrency are often cited as primary benefits that legislation would curtail, and cryptocurrency’s decentralized nature makes it hard to regulate in a traditional sense.
“Given current signaling from the incoming administration and the interests of cryptocurrency proponents influential to the administration, we do not anticipate significant advances in cryptocurrency regulation within the next four years,” Baker said.
If there isn’t much action on regulation, there are some obvious ramifications for cybersecurity, he said, driven by the correlation between a pro-crypto Washington, D.C., and bullish bets by investors on digital assets.
“Cybercrime is often driven by benefits from increasing cryptocurrency value. In ransomware, for example, ransoms are commonly demanded in USD, but payments are made most frequently in bitcoin. When the value of bitcoin increases, cybercriminals will benefit,” Baker said.
The value of bitcoin has risen significantly over the past three months in what has been a risk-on market environment.
“Future de-emphasis on cryptocurrency regulation may positively signal that cybercrime operations in bitcoin remain viable and unlikely to suffer government disruption to operators in the space,” Baker said.
Cybercriminals have also been changing tactics to evade legislation and scrutiny, Baker added, switching to more under-the-radar cryptocurrencies like Monero.
Ransomware’s potential role in Congressional action
Baker predicts regulation centered on organizations issuing cryptocurrency payments — whether in the form of a ransom payment or for other purposes — is more likely achievable and palatable in the current regulatory environment.
“This could include, for example, increased requirements for reporting ransom payments when made, a policy which has been floated without gaining substantial traction in recent years,” Baker said. This approach can be argued as regulating end users and purposes rather than the underlying cryptocurrency itself.
In addition to ransomware payments to restore access to technology systems, there are other reasons why payment in cryptocurrency is common in digital extortion schemes, including to protect the identity and operational security of the criminal. Private organizations may also opt to use crypto to purchase leaked data or credentials which have been made available on illicit forums.
There could also be situations where private individuals attempt to report and receive payment for discovered vulnerabilities under a “bug bounty” program — whether voluntary or coerced (so-called “beg bounty”). They may request payment in cryptocurrency out of personal preference or general desire for privacy, and private organizations may or may not oblige.
“While there are doubtless other options for organizations to use cryptocurrency in some form, these are the primary forms we see on a regular or more frequent basis,” Baker said. “Though such actions would almost certainly have downstream impacts on cryptocurrency value by virtue of their impact on transaction volume,” Baker added.
Steve McNew, global leader of blockchain and digital assets at FTI Consulting, thinks some cyber-crypto legislation may happen, especially governing when a company victimized by a ransomware pays their attackers in cryptocurrency.
“There’s more than just public policy at issue,” said McNew. If a company has been compromised in a cyberattack and is required to make public disclosure of the ransoms it paid out, it can result in the company becoming a bigger future target for other criminal enterprises, McNew said. While it might make sense, on one hand, to provide disclosure as to where funds are going and what cryptocurrencies were used in a payment, doing so can put the company (and by extension its customers, employees and partners) in harm’s way.
“So, any policy decisions around cryptocurrency disclosures in this context will require balancing the need for transparency around the use of cryptocurrency in criminal matters alongside the risks such transparency might exacerbate,” McNew says.
Though FIT21 passed the House with broad bipartisan support, it did not address these issues specifically.
Le expects some legislation action that may attempt to address this topic. “The next Congress could see more traction for proposed legislation like Cryptocurrency Cybersecurity Information Sharing Act of 2022, which allows companies to share information regarding cybersecurity threats with the federal government and with one another,” he said.
Le said Congress may also revisit the work of outgoing Financial Services Chair Patrick McHenry (R-North Carolina) and Rep. Brittany Pettersen (D-Colorado) and the Ransomware and Financial Stability Act of 2024, which aimed at “strengthening the resilience of the U.S. financial system against ransomware attacks, establishing clear protocols for ransom payments, and ensuring that such payments, including those involving cryptocurrencies, are made within a controlled and legally compliant framework.”
But he added that it is unclear if the Trump administration will continue the Biden administration’s leadership role in the International Counter Ransomware Initiative, a 68-country coalition aimed at preventing the payments of ransomware.
The broader bitcoin governance battle
McNew says that many basic parameters surrounding crypto, even down to its definition, could hamstring legislation, even aspects of it intended to foster innovation and adoption of the industry.
“U.S. lawmakers have work to do in determining roles, responsibilities, and basic parameters for how the industry will be governed before any meaningful legislation can take hold,” McNew said. As an example, establishing a designated authority for digital assets is an imperative that has yet to be addressed.
Basic governance structure was a major sticking point during the Biden administration, and a primary reason Securities and Exchange Commission Chair Gary Gensler was a thorn in the side of the crypto industry.
“Lawmakers must decide whether responsibility will fall under the SEC, the CFTC, or another body. Issues around taxation and broker-dealer definitions for digital assets markets will also need to be defined and provided with a set of clear rules for legislation to be effective,” McNew said, adding that given how closely divided the House will be in the next session, it may be tough to craft an agreement.
Jakub Porzycki | Nurphoto | Getty Images
Before Jack Nader started posting beauty videos on TikTok in 2023, he was working as a Starbucks barista in Chicago and living at home with his parents.
But after Nader, who’s now 21, started taking his videos seriously in April of that year, his TikTok account blew up. With more than half a million followers, he was able to generate enough income through brand sponsorships and his share of ad revenue that he quit his coffee shop gig and got his own apartment.
“This is my 9-to-5 job,” Nader, who said he makes between $1,000 and $12,000 per month as a creator, told CNBC. “This is what I do to make a living. This is how I pay for my groceries. This is how millions of small businesses make their money.”
Nader’s new reality, however, is far from stable. TikTok, which is owned by China’s ByteDance, is nearing a Jan. 19 deadline by which it has to be sold, or it faces a ban in the U.S. Like many other creators who have come to rely on TikTok, Nader has been urging his fans to find him on other social media apps before he potentially loses them altogether and the substantial income stream that they represent.
“Not everyone from my TikTok following is going to come over, and that’s really sad,” Nader said.
The TikTok risk has been present for years, but was amped up in April, after President Joe Biden signed a law that requires ByteDance to divest the short-form video app this month. If ByteDance fails to sell TikTok in time, Apple and Google will be forced by law to ensure their platforms no longer support the app in the U.S.
President-elect Donald Trump, who favored a TikTok ban during his first administration, has since flip-flopped on the matter. Late last month, he urged the Supreme Court to intervene and forcibly delay implementation of Biden’s ban to give him time to find a “political resolution.” His inauguration is Jan. 20.
Trump’s rhetoric on TikTok began to turn after he met in February with billionaire Jeff Yass, a Republican megadonor and a major investor in ByteDance who also owns a stake in the owner of Truth Social, Trump’s social media company.
The Supreme Court heard oral arguments from both sides on Jan. 10. During the more than two-hour session, justices peppered TikTok’s head lawyer with questions about the app’s ties to China and appeared generally unconvinced by TikTok’s main argument, that the law violates the free speech rights of its millions of individual users in the U.S.
On Thursday, businessman Frank McCourt’s internet advocacy group Project Liberty announced it had submitted a proposal to buy TikTok from ByteDance. Calling it, “The People’s Bid for TikTok,” the group said it would restructure the app to exist on an American-owned platform and prioritize users’ digital safety, though it didn’t disclose terms of its bid.
Jack Nader, 21 of Chicago, is a full-time TikTok creator who has begun moving his content from the Chinese-owned app onto Meta’s Instagram Reels and Alphabet’s YouTube Shorts.
Courtesy of Jack Nader
A ruling could come at an point. Nader isn’t waiting for a resolution to figure out what’s next.
He’s currently downloading four or five of his TikTok videos each day to save them as he migrates his content to Meta’s Instagram Reels and Alphabet’s YouTube Shorts. After downloading the videos, Nader re-edits them, optimizing the clips for each app.
“It took me over a year and a half to build the following that I have right now on TikTok to make it my full time job,” Nader said. “Now it’s kind of about rebuilding that entire brand on another platform, which is not ideal.”
Nader said he isn’t yet making any money from Reels or Shorts.
‘This isn’t just a silly app’
Danisha Carter, 27, is in a similar spot. A resident of Los Angeles, Carter has been a full-time creator since 2021, posting social commentary and lifestyle videos. Although she’d known about the TikTok ban for months, she said she had a wake-up call in the middle of the night in November.
“I need to start taking this seriously before I lose access to the platform that I built and the followers that I built,” Carter said, recalling her panicked realization. “I need to not waste any more time.”
Carter, who previously worked in luxury retail, has ended her TikTok videos by telling her followers that they can find her on YouTube, Instagram and Patreon.
“This isn’t just a silly app that people have been using to post dance videos,” said Carter, who makes about $4,000 per month on average from her TikTok activity. “It’s been remarkable in terms of changing people’s lives, changing people’s businesses.”
Danisha Carter, 27 of Los Angeles, is a full-time TikTok creator who has begun ending her videos by asking her fans to follow her on YouTube, Instagram and Patreon before the Jan. 19 law banning the Chinese-owned app takes effect.
Courtesy of Danisha Carter
TikTok could still find a way to stay operational in the U.S., but if the app does get suspended, YouTube, Facebook and Instagram are poised to be the biggest winners in the fallout, experts predict.
TikTok has about 115 million monthly active users in the U.S., well behind YouTube at 258 million and Facebook at 253 million, according to market intelligence firm Sensor Tower. Instagram has 131 million. Short videos, the kind that mimic clips on TikTok, are gaining viewership across those apps, accounting for about 41% of user time on Instagram, Sensor Tower data shows.
While TikTok has a smaller userbase in the U.S. and lower share of total ad dollars than its top rivals, it’s the dominant platform for creators, particularly those focused on short-form content.
Influencer marketing platform HyperAuditor defines a creator as a user with over 1,000 subscribers. TikTok has nearly 8.5 million people in the U.S. who fit that category, compared with about 5.2 million on Instagram and 1.1 million on YouTube, according to HyperAuditor.
Meanwhile, TikTok accounts for 9% of digital ad spend on social media platforms in the U.S., according to Sensor Tower, compared to 31% for Facebook, 25% for Instagram and 21% for YouTube.
Should TikTok go away, “this equates to billions of dollars potentially up in the air for competitors to seize,” Sensor Tower told CNBC in an email. Emarketer estimates that Meta and YouTube could grab about half of the reallocated dollars should a ban go into effect.
That type of market shift has taken place elsewhere. India banned TikTok in June 2020, when the app had about 150 million monthly users in the country. A year later, Instagram’s monthly active users in India had increased by 20% while YouTube’s had gone up 11% year-over-year, according to Sensor Tower estimates.
“That’s when we saw the biggest jump in Reels utilization ever,” said Meghana Dhar, a former Instagram executive who was at the company at the time of the India ban. “Should TikTok get banned and creators have to scramble, between YouTube Shorts and Instagram, a lot of creators are already hedging their bets.”
At Meta, leaders within Instagram scheduled numerous impromptu meetings on Friday after listening to the oral arguments before the Supreme Court, a person familiar with the matter told CNBC. Though many within the company had long expected TikTok would remain active in the U.S., leaders at Instagram began directing their teams to prepare for a potential influx of users should the ban go through, said the person, who asked not to be named due to confidentiality.
(L-R) Sarah Baus of Charleston, S.C., holds a sign that reads “Keep TikTok” as she and other content creators Sallye Miley of Jackson, Mississippi, and Callie Goodwin of Columbia, S.C., stand outside the U.S. Supreme Court Building as the court hears oral arguments on whether to overturn or delay a law that could lead to a ban of TikTok in the U.S., on January 10, 2025 in Washington, DC.
Andrew Harnik | Getty Images
Need to diversify
Kristina Nolan, vice president of media services at marketing agency DMi Partners, said the TikTok situation is the latest example of why social media creators should always be diversifying their followings.
“We’re consistently reminding them to create audience depth on other platforms,” said Nolan, whose agency works with more than 50,000 creators.
In recent weeks weeks, DMi has seen more of its creators start to migrate followers elsewhere in a variety of ways, Nolan said. But they have to be careful. Nolan said that some creators worry that TikTok will “shadow ban” them, or reduce their exposure to users, if the technology recognizes that they’re promoting profiles elsewhere.
Some creators will suggest followers find them on “fbook,” for example, rather than writing out Facebook. Others will bleep out just enough words to get the message to their followers while hoping to avoid TikTok’s detection, Nolan said. Some creators are teaming up with brands to incentivize users by holding prize giveaways for users who follow them on other apps, she added.
“They’re obviously not saying, ‘Come over to Instagram,'” Nolan said. “They’re like, ‘Go follow me on’ and they’re mouthing it.”
After working on a horse farm, Nealie Boschma, 27, was able to move to Los Angeles and live full-time as a creator after starting to post videos to TikTok in 2022.
Courtesy of Nealie Boschma
Even with multiple other options for finding large audiences, creators are worried about trying to rebuild their business and whether enough followers will migrate with them.
“Whatever is going to happen is going to happen, and we’re just going to make the most of it,” said Nealie Boschma, 27 of Los Angeles, who has been living as a full-time creator since 2022. “That’s just how I have to look at it, so I don’t panic.”
Despite the potential upheaval, Boschma, said she views the potential ban as an opportunity to expand her career and get more creative.
Boschma started making TikTok videos after quitting her job working on a horse farm, choosing to live off of her savings while experimenting as a creator. Boschma’s bet on herself worked and she’s earned enough to live in Los Angeles, paying for her own place and a car.
Now she’s making sure her TikTok fans see the links to her other profiles so they can find her on other apps, including YouTube. If the ban goes through, Boschma said she plans to make a video specifically asking her fans to follow her elsewhere.
It’s going to be quite a lift, as she currently has 2 million TikTok followers compared to just 278,000 on YouTube. But Boschma said she is going to try her hand at making longer-form videos, something she’s always wanted to explore.
“Whether TikTok goes away or not, I do think something will work out” Boschma said. “I’ll find my footing in other places, like I did on TikTok.”
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