Athletics

‘Parallel Economy’ Grows As The Mainstream Blocks PublicSquare And XX-XY Athletics

July 28, 2024

PublicSuqare Times Square billboard of Elon Musk’s X post about having more children.

Courtesy of PublicSquare

An overwhelming 82% of consumers say they shop with their values and three-fourths will go elsewhere if they find their values conflict with the company, according to a Harris Poll commissioned by Google Cloud.

While consumers still prioritize price and convenience, values have become the third leg of the stool when it comes to their shopping choices. Yet values are a deeply personal thing, and there’s no one-size-fits-all way to align corporate values with consumers.

Take most any environmental, social or governance (ESG) or diversity, equity and inclusion (DEI) policy that have been widely adopted by corporate America and you’ll find a significant number of consumers stand on one side or the other.

That’s what Tractor Supply discovered when it canceled its DEI policies because of feed back from its core customers. The decision immediately raised the ire of the National Black Farmers Association which called for the resignation of Tractor Supply President Hal Lawton.

Given the deep divides in the country, what is called a “parallel economy” has emerged where consumers can vote with their dollars for businesses that share their more traditional values. It’s too simplistic to characterize it by political party affiliation or the Red State/Blue State divide, yet that’s how it is evolving.

And regrettably, social media tech giants like Meta and TikTok, which have become the engines of commerce today, are selectively blocking parallel-economy businesses that espouse values that run counter to their more progressive ideals.

PublicSquare, the emerging online marketplace that serves traditional values-driven consumers, has encountered viewpoint discrimination trying to reach its target audience via Google and social media. However, since “necessity is the mother of invention,” it has found workarounds to build its customer list to five million in only three and a half years.

Start-up XX-XY Athletics brand founded by Jennifer Sey, former Levi’s president and national gymnastic champion in her youth, is on a mission to preserve women’s sports and spaces by selling athleticwear for men, women and girls. But it’s been banned from advertising on TikTok and blocked by Meta and Comcast from reaching like-minded consumers.

“It’s like shadow banning for businesses. It is all part of censoring wrong think,” Sey wrote on Substack.

“It keeps happening in more and more subtle but insidious ways. It is a stark reminder of the challenge we are up against as a new business, with a message that strays from the left-wing narrative. Big Tech and corporate media will seemingly do anything to limit our ability to get our messages out there,” she continued.

Banned And Blocked

In June, XX-XY Athletics got permanently suspended from advertising on TikTok after running a pro-women’s sports ad that allegedly violated its advertising policies. The ad was factually correct; nonetheless, it was deemed to contain “offensive content” by the TikTok censors. TikTok uses a mix of technology and human interaction in its content moderation.

TikTok’s Decision

Specifically, the ad was found to have “inappropriate or unsuitable content” around “sensitive topics” that may be considered “hate speech” or promote “hateful ideologies” to “exclude, oppress or otherwise discriminate against individuals based on their protected attributes.” Among TikTok’s protected groups are gender and gender identity.

XX-XY can appeal the decision and the video remains available on its TikTok channel, but it can not be run as an ad or be distributed through TikTok’s “For You” feed service. Here you can see the piece that caused the furor.

It’s ironic since TikTok loudly waves its flag as a supporter of U.S. small businesses (SMBs). TikTok claims it contributed $15 billion in revenues in 2023 to small businesses advertising on the platform, in a study conducted by Oxford Economics.

Among the 1,000+ SMBs surveyed, a majority (52%) said they rely on the TikTok app to stay competitive and 88% reported a sales boost after advertising on TikTok. In addition, nearly three-fourths value the TikTok app to reach new, diverse audiences.

From the perspective of 7,500 TikTok users surveyed, some 71% value the platform to introduce them to products they would be interested in but wouldn’t have discovered otherwise. A majority (56%) also said they were able to make better-informed purchasing decisions from insights gained on the app.

So much for letting TikTok users gain insights from a brand about preserving women’s and girl’s sports and keeping them safe on the court, in the playing field and locker rooms.

“I never imagined that in my lifetime it would be considered hate speech to merely suggest women are worthy of equal opportunity, privacy, and safety,” shared Riley Gaines, the host of OutKick’s Gaines for Girls podcast and one of the nation’s most visible supporters of women’s sports.

“TikTok and many other media outlets and corporations have taken the side of those who embrace this anti-woman, anti-reality ideology. The real perpetrators of ‘discrimination’ are any and all who stifle the speech and expression of people like me who are demanding the bare minimum: women to be treated equally and fairly,” she continued.

Paula Scanlan (L), Jennifer Sey (C), Riley Gaines (R)

Courtesy of XX-XY Athletics

Meta Hamstrings XX-XY

Gaines, who is an XX-XY brand ambassador, is a flashpoint in the company’s battle with Meta’s Facebook and Instagram. Meta’s Advantage Plus advertising tool doesn’t allow the company to tag Gaines to serve XX-XY Athletics ads to her 400k+ followers who are likely to be on board with its message. Sey has found such tagging lifts return on advertising spending three-to-four times.

After discovering this hitch, Sey conducted a test on Advantage Plus and found that Tulsi Gabbard with nearly one million followers was unavailable to XX-XY, as were Outkick’s Clay Travis, Christian influencer Isabel Brown and 90% of some 100 conservative-leaning influencers she tested on the platform.

However, she could tag Meagan Rapinoe’s and Joe Biden’s followers, neither of whose audiences would be aligned with XX-XY’s message. Note: Meta did not return my multiple requests for comment.

“What’s so egregious is it handicaps an entire class of businesses, and most of these businesses are probably not as sophisticated as we are, and don’t even know this is happening,” Sey said.

“We only discovered this a few weeks ago. It’s insidious and built so deeply into the system to disadvantage a company like ours that doesn’t get on board with the right messaging.”

Comcast Roadblock

XX-XY hit a roadblock with Comcast too when it demanded that its ad carry a “paid-for-by” disclaimer required by law for political ads. “We’re selling athletic apparel not promoting a political candidate,” Sey said, so she took her money and walked away from Comcast.

However, she points to the welcome reception given to Nike’s “One Day We Won’t Need This Day” ad or Always’ “Run Like A Girl” commercial which ran similar values-based advertisements with no disclaimer because they communicated the politically-correct message.

PublicSquare Creates An Ecosystem

PublicSquare went public a year ago as PSQ
ProShares Short QQQ
Holdings. Initially it was an online marketplace but has since expanded to include house brands like EveryLife for diapers, soaps and lotions and Eden for feminine care products.

It’s also building a fintech arm through the acquisition of Credova, a buy-now-pay-later service for the firearms and shooting sports industry and in-house development of an uncancellable payment platform called PSQPayments. Former Klarna North America CEO Brian Billingsley has been brought on to spearhead the PSQPayments project.

Evolving Business Model

PublicSquare is pursuing a path to transform it into a “true holding company leveraging the economic power of our total addressable market (TAM),” founder and CEO Michael Seifert shared, noting its TAM numbers 100 million consumers and they aren’t all Republicans. Its internal polling finds 26% of PublicSquare shoppers are registered Democrats and 22% are Independents or no party affiliation

“What started as a marketplace has evolved into an economic ecosystem,” he continued seeing great things ahead for the company’s more expansive look across the products and services it can provide to businesses and customers who participate in the parallel economy.

“Many of our business merchants are on payment processor number two, three or four after being canceled,” he said. “It’s become a troubling world when economic transactions are wrapped in with ideological bias, so we are creating an open highway where our merchants and customers can transact in peace.”

PSQ is still in the early growth stages, but it generated $3.5 million in revenues in the first quarter ended March 31, 2024. Net operating loss was over four times as large, or $15 million, but it is holding $19.3 million in cash on its balance sheet. It expects year-end run-rate revenues in the $47 to $53 million range.

Workarounds

PublicSquare has encountered much the same viewpoint discrimination as XX-XY on television and across social media channels, having numerous ads pulled by Meta and Google. “We’re trying to give them money to advertise family-friendly products. That they don’t want our business is a departure from common sense,” he said.

Till the established advertising channels wake up, PublicSquare has had to be creative to reach its market. “Limitations breed creativity so the silver lining in all of it is we’ve gotten really good at grassroots guerilla marketing,” he said.

For example, when Elon Musk took to X to declare “Having children is saving the world,” PublicSquare put his post in a Times Square billboard for only 30 minutes and had its grassroots influencers take pictures of it and promote it on X with its own “make more babies” message for the EveryLife diaper brand.

“After that, we had our best month ever drawing in new customers, and we got the attention of the world’s wealthiest man who spread the message saying, ‘I have nothing to do with the billboard, but I fully endorse the message.’ We experienced four million views in our first 48 hours, all for less than $7,000; talk about return on advertising investment,” he bragged.

And in June when other brands were celebrating Pride Month, PublicSquare turned its attention to the National Fatherhood Initiative donating 10% of sales to the cause.

Plus, it has instituted a corporate policy to give a $5,000 baby bonus to any employee or their spouse who have a baby or adopt. That news earned PublicSquare over 25 national media hits, including an appearance on Fox News.

Parallel Economy Gains Momentum

Both Sey and Seifert feel momentum growing for their values-based brands that go against the mainstream narrative. To provide more tailwinds, PublicSquare and Rumble will host an inaugural Parallel Economy Summit in October in Orlando, FL.

“Our aim is to bring together values-aligned consumers, business owners and thought leaders to build a stronger connection within the Parallel Economy,” Seifert said in a statement.

Featured speakers will include Donald Trump Jr., Vivek Ramaswamy, Governor Doug Burgum, accomplished business executive and author Pat Lencioni and surfer Bethany Hamilton, who after losing her arm to a shark, turned her energy to her Christian faith and family. Besides keynote speakers and breakout sessions, the Summit will also have a “Shark Tank”-like pitch competition for entrepreneurs.

Jennifer Sey will take the podium too, but in her outspoken way will push back on the idea of a parallel economy.

“I reject the parallel economy positioning because it makes us second-class citizens,” she said. “I don’t want to show up and put a finger in their eye when I’m there, but we shouldn’t accept being relegated to the parallel economy.

“In the case of our brand, 70% of Americans agree with our mission. So the other mainstream athletic brands are actually the ‘parallel economy’ not us,” she quipped.

Seifert welcomes Sey’s dissenting voice because that’s the free speech his company defends.

“The heart of the parallel economy is the spirit of competition and free markets. For a long time, corporate America said ‘If you don’t like it the way we are doing it, go build your own,’ thinking it couldn’t be done. But we are doing exactly that.

“The parallel economy exists as an ecosystem that challenges the mainstream juggernauts. It’s a free market in its most pure form,” he concluded.