Senate Select Committee on Select Committee on Minority Economic Development

Good afternoon, everyone. The Select Committee on Minority Economic Development in California will now come to order. First of all, let me just say thank you to everyone that joined us. I know it's not easy to navigate getting in here, so we appreciate your time and the opportunity to be with you for such an important discussion.

I want to thank my colleagues who are with me here today. Senator Menjivar, San Fernando. We have Senator Valladares and Senator Maria Elena Durazo. Once again, thank you to all of them because it's been a busy season and to be here is really quite remarkable.

So thank you and we'll give you a chance to say opening remarks in a little bit. But I'm State Senator Susan Rubio. I am the Chair of this Select Committee. And the purpose of this hearing is to explore how California can better support minority communities in economic development, with a specific focus on media and entertainment industries.

We held our first Committee hearing in Sacramento in July. It was a very good discussion. The first hearing provided valuable insight into California's economy. We learned about the significant role minorities play through their hard work and entrepreneurship. Today we are continuing the Committee's broader mission to address barriers to minority participation.

But it is worth highlighting that the discussion as we go through this discussion that economic growth and prosperity is not a zero sum game. My helping minority groups thrive expands the entire economy. Our communities, job for one is a job for all.

And so this is an important conversation because we know how much minority entrepreneurs and businesses provide to the State of California. We are not the fourth largest economy by accident here in the State of California. I absolutely believe that we play a critical role in providing to this economy. And so helping sectors succeed definitely helps everyone succeed.

This is what California has taught us in the past. We all do better. Everyone does better when everyone has an equal opportunity to participate.

And although we have made tremendous progress, I think it's worth noting that there are deficiencies and we still have a long way to go to ensure that everything is equitable and that everyone continues to reach that full potential. Throughout the years, the Legislature has focused on several minority groups.

So just to be very clear, in today's Committee, we will focus on Latino business development across sectors, Latino procurement opportunities, job creation, and reducing red tape to those opportunities. But again, with the particular focus on California's entertainment industry and how it impacts California as a whole and how minority owned businesses and creators can fully benefit.

As we know, the entertainment industry serves as an economic engine, stimulating numerous related services, services and supply industries, including advertising, print media and hospitality. For example, the California Film Tax Credit program, which the Legislature recently expanded and modernized, which was a little bit of a challenge with a lot of discussions we got there.

IT has generated 27 billion in economic activity and it supported over 200,000 jobs. Moreover, 32.4 billion in annual advertising revenue was derived from California audiences. In addition, we have now another sector that continues to grow. The social media entrepreneurship sector continues to also provide opportunities for economic development.

And we see younger and younger earners coming to that the forefront, earning over 130,000 per year. That's the average.

So in today's hearing, we will dive deeper into data that can help us understand the economic landscape, also understand the power of investment in diverse media businesses, understand the impact of supplier diversity initiatives, and together we can identify ways to increase investment, remove barriers that keep minority communities from fully participating and benefiting.

Lastly, based on what we hear today in our discussion discussions, we will be bringing back recommendations to the Legislature and pushing for greater investment in minority owned businesses. Now, I would like to turn it over to my colleagues wishing to say a few words. I'll start with Senator Durazo. Would you care to say opening remarks? Thank you.

Thank you very. Hello. Hello. Hello. Yeah. Yes. Thank you, Madam Chair, Senator Rubio, for convening this hearing and the leadership that you provided to the Senate, particularly on minority economic development. And thank you to TikTok for hosting us today.

We're at this moment here when we know, on the one hand, minority owned businesses contribute hundreds of billions of dollars to California's economy and support millions of jobs statewide. But when it comes to media and communications, we're leaving money and communities on the table.

U.S. Latinos are leading the streaming revolution, allocating 55% of their TV time to streaming, 18% higher than the national average. We're early adopters and we're the consumers driving innovation. But we remain below population parity, both on screen and behind the camera. So it's not just about representation, it's about economics. Businesses hire locally, buy locally, and invest locally.

We recirculate the money that goes to these businesses. But the reality is California's advertising spending targeted underserved communities dropped from 50% to just 23% in 2023. So the panelists that I understand will hear from today represent trusted messengers to keep our communities informed. That kept our communities informed during COVID 19.

They were the ones who drove census participation and who literally saved lives during disasters. So when local media dies, democracy suffers. This is infrastructure, not entertainment. The question isn't whether California can afford to invest in diverse media businesses. Question is whether we can afford not to.

So I hope that we can commit to policies that match our diversity with dollars. Thank you very much. Thank you, Madam Chair.

Thank you. I'll turn it over to Senator Valladares. You may proceed.

Thank you, Madam Chair. And I just want to extend my gratitude for your leadership and your steadfast commitment on this Committee and thank everyone for being here today. Obviously, we have a full room here and it's amazing to see the turnout because this is such a. An important issue to discuss.

And for me though, this issue, economic minority development, isn't just about policy. It's personal. It's about empowering communities like mine in the Antelope Valley, in the Santa Clarita Valley, in the Victor Valley, to build wealth, to create jobs and to pass opportunity onto the next generation.

And when minority owned businesses grow, our neighborhoods thrive and our state grows stronger. And that's why it's critical that the Legislature understand what's working, what's not, and how we can produce real growth for our businesses. So looking forward to this conversation and I have lots of questions lined up. Thank you.

I'll turn it over to Senator Menjivar.

Thank you, Madam Chair. Good afternoon. I am the Senator that represents a big hub of the sector that we're going to be diving into.

I represent so many studios in the City of Burbank and the San Fernando Valley that has been at the heart of so many of movies that we grew up watching, from ET to Casablanca to even Patrick Swayze having his home.

And so many people investing in the San Fernando Valley in film and TV and media as a whole. What I'm really interested in is how can we expand those jobs? Because when Senator Valaderis and I go visit tours, when we look across people working there, we do not see a diverse workforce.

When we see the people behind the cameras directing films, we do not see diverse directors bringing different types of stories to the TVs that shape and mold our future.

Because if you've seen what we see on TV and being the reality of our everyday lives, for me, I'm interested in how we invest into our young, into our future, of what we need to do more in our schools and not just colleges, but in high schools particularly.

I have, I mean, one example I have is that a high school in my district has invested to build a sounding stage so they can teach on how to do what's everything behind TVs.

I also think about my two brother in laws who work as IATSE union Members in this industry and the opportunity that comes with being in this industry of being a middle class American to earning a six figure income in a job that brings stability. So I'm really much interested in how we can help grow, grow this industry.

What else is needed from us? We were all very instrumental in doubling the tax credit film. But now that we've done that, we want to make sure it's touching every single corner of California.

Thank you. So once again, thank you so much, all of you for joining us today.

I want to take a moment to thank TikTok for allowing us to host this here in this facility and also take a time to acknowledge that a lot of the folks that were hit from the wildfires, whether it's Palisades or Eaton fire, where a lot of the industry folks either not necessarily in the forefront of the camera, but behind the scenes.

So we're still, our heart is still with all of those that were impacted who are some of them still struggling to get back on track and get their jobs back. So once again, I'm State Senator Susan Rupio and we will begin. Our first panel will start off and the title is Maximizing Media Investment in Local Community Growth.

We will take questions after the entire panel has concluded. We have two panels, so first we will begin with Michelle O'Grady Caballero, CEO and founder of Team Friday. So you may begin when you're ready. Thank you.

Is this on? Okay. Good afternoon, Senators. Thank you so much for the opportunity to be here. I'm here before you as an academic and practitioner, a lifelong Angelino, a media psychologist, a small business advocate and an entrepreneur.

I represent not only just my agency, Team Friday, but also the countless diverse and community based media businesses across California ready to drive economic transformation in our state. I know how hard it is to contract in the public sector. My agency took seven years to get our first prime county contract.

It took us 10 years to get our first state contract with the state agency today. I want to share with you compelling evidence and expanding procurement initiatives and investing in opportunities for diverse media contractors isn't just the right thing to do. It's one of the smartest economic strategies California can pursue. Let me begin with the numbers.

In 2020, California's minority owned small businesses contributed $414 billion to our state economy. That's 8% of California's total economic output. These businesses support nearly $170 billion in labor income and 2, 2 million jobs annually. Think about that for a moment. We're not talking about charity.

We're talking about supporting an economic engine that already generates more revenue than the entire GDP of many states. Despite contributing the massive economic impact, minority owned businesses, including media firms like my own and agencies still face systemic barriers to accessing contracts procurement opportunities that could multiply this contribution exponentially.

Not only in that, but in the subsidies that are granted within tax credits and other economic engines. One of the most powerful concepts and economic development principles that we practice has been the local multiplier effect. This framework helps us understand something critically important. Not all economic investment is created equally.

When a state invests in large non local corporations, including large public media conglomerates, that money is more likely to leave our communities. But when we invest in local diverse businesses, something remarkable happens. For every dollar spent with a local business, that money can recirculate two to three times within the local economy before leaving the region.

Circular procurement practices confirm that we can prioritize diverse local media contractors. We're not just supporting one business. We're creating a ripple effect that touches suppliers, employees, subcontractors and entire neighborhoods. We cannot talk about procurement and how that can shape media investment without addressing the crisis facing our small and independent media organizations.

The local radio stations, community newspapers, independent journalism outlets and community focused entrepreneurs that form the backbone of civic life in California. 65 million Americans live in counties that only with only one local newspaper or none at all. Since 20041/3 of America's newspapers have closed. California has not been immune to this loss.

The Brookings Institution comprehensive analysis demonstrates that the loss of local journalism creates measurable harm to the democratic participation with small and medium sized organizations and entrepreneurs uniquely positioned to maximize the circular economy effect I discussed earlier.

When state contracts with agencies like mine, we connect dollars back to small businesses from talent to local owned radio station or independent news organizations. Alongside the national media conglomerates, 100% of that local investment contract stays in California.

These organizations hire local journalists, purchase equipment from local vendors, rent local studio space and their owners spend their income in California communities. This is where strategic investment creates transformation. Research on community radio's economic impact demonstrates that community broadcasting stations serve as engines of local economic development. We know this from our own work with public health.

Senator Durazo, you mentioned trusted messengers. We utilized local and diverse media and their talent to create trusted messengers who connected essential fact based information to communities they reach. Public procurement serves as one of the most powerful policy tools for driving economic transformation and connection.

When the government acts as a strategic buyer, it doesn't just purchase services, it shapes entire markets. Yet despite our state's creative strength Minority and women owned media companies remain underrepresented in contracting opportunities.

Nationally, less than 2% of all marketing and advertising spend goes to diverse owned media businesses, leaving untapped talent and stifling innovation and economic growth for these sectors. California has an opportunity to change that narrative and lead the nation in breaking down these barriers. Government procurement policies directly influence business adoption sustainable and equitable practices.

When procurement specifications prioritize local, diverse suppliers, the market responds. As someone who studies and works in media and local economic development, I rely on evidence based frameworks to guide my research and business decisions.

A comprehensive analysis examining our circular economy implementation across cases found that regional planning and public procurement serve as most as the most effective interventions for creating closed loop and resilient local economies. Senators, I urge you to consider for evidence based interventions. First, procurement goals should be established that reflect California's demographics.

Minority owned businesses represent 45% of California firms. Our state contracting should reflect that reality. While I know that this has been a long goal of state procurement, it isn't a requirement. Research on public procurement confirms that setting explicit targets drives measurable increases in diverse businesses participation. Media, advertising, marketing procurement studies are also needed.

Second, circular procurement principles that prioritize local economic impact should be implemented when we award with the local multiplier effect in mind. Every dollar circulates through the community, generating two to three times more regional economic benefit. The traditional lowest bid approaches do not. Third, create dedicated funding streams and specific technical assistance programs for diverse and local media businesses.

Minority owned businesses face persistent capital barriers. They're also less likely to be prepared for public sector contracts. They're significantly less likely to receive venture funding, bank loans and despite strong performance metrics. And fourth, insured departments request that small independent media organizations be included in public information campaigns and civic engagement contracts.

Local news organizations, local radio stations can be more effective at civic engagement than national media or social media platforms because they have established credibility and deep community knowledge.

And while state procurement projects may not be able to contract directly with these media outlets, they can instruct media and marketing agencies like my own holding the contracts to do so. California has always led the nation in innovation, creative policy and economic transformation. The research and data is compelling and the opportunity is immense.

Diverse media contractors, from creative agencies to community radio stations to independent journalism organizations, creates jobs, stimulates local economy, builds resilient circular economic systems our state needs for the 21st century. That number could double or triple with strategic procurement investments creating thousands of jobs, billions in tax revenue and economic prosperity that reaches every corner of our state.

But beyond a number there's something fundamental at stake. When we lose our local newspapers, we lose connection and the very stories that keep our neighborhoods alive. Agencies like mine rely on that ecosystem to tell stories for our clients. With its unparalleled creative infrastructure and diverse talent pool, Los Angeles and California stands ready to lead this transformation.

Our small independent, community led media organizations are ready to serve and deliver. But we need state policies that match our ambition. Thank you for your time.

Thank you very much, Michelle. We will now turn it over to Jay Torres, CEO and founder of Colectivo. Once again we're going to Reserve our questions until the entire panel is completed. You may proceed.

Very good. Thank you so much. Good afternoon Madam Chair and Committee Members of the Committee, thank you for holding this hearing. It's necessary and much appreciated. My name is Jay Torres. I'm a producer, director, four time co Chair of the Directors Guild Latino Committee, the DGA PAC and a native born son of Los Angeles.

I founded Collectivo as a service disabled veteran Latino owned studio focused on film, television and emerging media. I've directed Desperate Housewives, an Alien, the only Latino Director on those two shows, produced Mr. Mom for MGM Voodoo and edited award winning music videos seen by billions.

Rarely where there are Latinos on those crews both above and below the line. But with Latino owned production companies, our crews look like the places that we live and work in today. I want to focus on how California can turn its creative diversity into measurable economic growth.

As we all know, Latinos make up roughly 40% of California's population, yet hold under 4% of Director, writer and producer roles and fewer than 5% of lead on screen roles. Based on the USC Annenberg Inclusion Initiative, we as far as that's concerned, even the crews are even less represented as well.

And it's not a talent gap, it's an access gap. Even with the new film tax incentives, those are not reaching Latinos. A McKinsey report estimated $18 billion of annual loss in unrealized revenue from underdeveloped Latino led projects. That's a resource sitting beneath the surface, ready to be mined into jobs, small business growth and state revenue.

To unlock it, California needs to make practical levers. Capital access broaden the state backs financing and production incentives so qualified independent studios can compete on equal footing. Workforce pipelines to expand the training through colleges, guilds and veteran programs to keep skilled workers employed here. Encourage brands who receive incentives with the state to work with Latino owned businesses.

Geographic incentives for communities that are not traditionally included within the film production community. Veteran included. According to the California Department of Veterans Affairs. 20% of California veterans identify as Hispanic or Latino, compared to 9% nationally. In Los Angeles County, 26.7% of veterans identify as Hispanic or Latino in 2023.

Integrating work veteran retraining into film and media production strengthens both the workforce and local economies. Transparency and accountability track how incentive dollars are used and how many verified California jobs each project creates.

Eliminate wording and verbiage that say best efforts because that just allows an out for the people who are using the incentives to be able to get the incentives from the state. And this isn't about preference, it's about performance and potential. When access expands, the economy grows.

California can lead again by building an entertainment economy that reflects its people and maximizes its creative capital. Thank you for this time. I appreciate it.

Thank you so much for that information. We will now move over to Arturo Carmona, CEO for Latino Media Collaborative. You may proceed when you're ready. Thank you.

Thank you, Chairwoman Rubio and Members of the Committee. My name is Arturo Carmona. I'm the President of the Latino Media Collaborative. And we're an organization that thrives across California and the southwest, representing over 180 different media outlets, print, Digital, broadcast outlets, serving our communities every day.

And we challenge the dominant narrative using a Latino lens that provides high quality, culturally responsive content that promotes civic engagement while also supporting the advancement of the sector through capacity building and advocacy. What we're seeing is common themes, what I would presume across the table. Elizabeth, a lot of what you said really impacts our Members.

In fact, especially when you look at California being a major minority majority state with over 60% of the residents being non white, over 80% of economically insecure individuals in California coming from communities of color and continuing to see reporting.

In fact, a bill passed three years ago by Assemblywoman Blanca Rubio which required DGS to monitor and track media spending. Advertising spending in the state found that advertising spending is in decline for ethnic and community media, where we saw it being 50%. I think Senator Durazo, you highlighted this point.

We had 50% of advertising spending in 2021 going to ethnic and community media, where we're now just seeing it at about 23%. And so we're headed in the wrong directions. And what we're also finding is that advertising and outreach efforts by the State of California are heavily, heavily concentrated.

Since 2021, state agencies have executed over 1.5 billion in advertising and marketing outreach agreements, and just 10 vendors have secured 76%. Then that's 1.5 billion of all awarded contracting dollars. And yes, that's 10 marketing firms have managed about 1.5 billion or 76% since 2001.

The state continues to fail to partner with small and mid sized marketing media marketing firms and outreach firms that reach California's most underserved communities. A key finding on underinvestment is an incomplete DGS report that came out in 2023. It indicated that traditional media outlets targeting ethnic Communities received less than 8% of spending.

Specifically for Latino community, that reflected only about 44% 4% of the spending. The bulk of the funds go to large PR firms and digital platforms that often lack any connectivity or understanding of our communities.

And as a result of these big marketing firms not having that understanding of our communities and our community outlets, the funding is not reaching our sector. A commitment to California based media to ethnic media and community outlets is desperately needed when you're looking at the selection process of firms.

What we saw last year is the passage of AB 1511, a bill led by Assemblymember Santiago which was signed into law. It went through heavy amendments and at the end of the day it merely requires now agencies to increase state advertising spending in ethnic and community media. A lot of the teeth of this bill were taken out.

We originally were trying to adopt a New York style Chicago style law that required that at least 50% of all advertising spending go to ethnic and community media that was taken out. But we continue to work towards the mission of increasing spending.

What we're seeing that this bill with the requirements that it has media state agencies are now putting together plans to increase investments in ethic and community media.

We're seeing that some capacity building is happening, but a lot of work remains and a lot of new information is emerging as we're working to hold agencies accountable to increase their spending. The intent is to leverage trusted messengers to spread critical information.

As successful as it was during the COVID 19 pandemic, as I mentioned, New York and Chicago are leading the way. But in California our law did not establish a mandatory set aside which is a major gap. And one of the things we're seeing is preventing us from holding these agencies accountable.

When you're dealing with small and mid sized businesses, being able to track over 100 agencies that are spending many times tens of millions of dollars in outreach, it's a very difficult task for small and medium sized media organizations.

So existing bidding barriers, high staffing minimums, very short deadlines in responding to RFPs, very large contract scopes, often disadvantaging requirements that don't allow Bigger firms to partner with small and mid sized firms are just some of the many, many variables. That. We'Re seeing as part of diversifying the way these funds are spent.

So without further policy the promise of AB 1511, it will be impossible to reach and diversify advertising spending. New York for instance, in the since enacting their floor of 50% advertising spending, they have seen increase $72 million of direct investment to local community media over the last five years. That's an expansion of over 200%.

In Chicago we're seeing similar expansion of investments in local community media. So I think San Francisco is already on its way to doing this as well. So what we're seeing is that when you put strict requirements, you really manage the rules of the game and how money is being spent.

You can see realistic increases in spending in ethnic and community media. As I try to explain a second ago, the current model puts the onus on ethnic and community media to maneuver through hundreds of agencies, numerous RFPs in comparison to New York, that has an organized structure that has an office of ethnic and community media.

They negotiate master contracts to provide common sense pathways for ethnic and community media. They maintain an organized vendor database where ethnic and community media can monitor and raise their hand when they're interested in particular opportunities.

And the the New York Office of Ethnic and Community Media also oversees compliance so that the hundreds of agencies are in fact complying. They're reporting and providing transparent implementation of these ordinances. We try to do this as I mentioned last year. Unfortunately the Bill was significantly gutted by the Administration and the work remains undone.

I think that the promise of enacting sound policy is there. I think sustaining small businesses, bolstering the over 366 ethnic and community media outlets across California offers major promise.

As referenced by one of my colleagues here on the dais, the economic impact of supporting minority owned and small businesses that provide over $192 billion in economic impact in the state and provide 2.5 million jobs is where we want to see policies focused.

We also see that ethnic and community media are central in countering misinformation and serve as trusted partners of the community. And there couldn't be a more important time to protect these media outlets that are vulnerable but serve yet a critical source of trusted information.

So we really look forward to working with you and envisioning policies that can allow state outreach and advertising dollars to reach our ethnic and community partners. As the reality is that the laws are really set against our outlets to be competitive in that space.

Thank you thank you very much for that testimony. We will now move over to our final participant in this panel, Thomas Trujillo, CEO of Morello Media. You may proceed when you're ready. Thank you. Thank you very much.

Hello. Okay, first off, good afternoon. Hi Senators. First off, thanks for bringing us all together about talking about this. I am honored to be here. Merlo Media is the largest minority broadcaster in Los Angeles.

And I'm also someone who really believes that radio and locally owned media can unlock a lot of economic pathways for Latinos in our Latino communities. So I put together a few talking points, just three, and some details of why I think these are kind of the best paths for us to go forward.

The first one is that I believe media should be considered an economic infrastructure more than just entertainment. It is entertainment, I'm not giving that up.

But it's really an economic infrastructure play because it can determine who hears about a grant, who hears about a workforce program, a business loan, or even that the opportunities even exist, exist in the first place. In California, Latino GDP is now over $1.0 trillion annually.

California's total GDP is 3.9, so a little bit over 25% and alone it's one of the largest economies. There's 85,000 Latino owned employer businesses, represents 11% of all businesses, 670,000 jobs, 25 billion in payroll. So what I'm trying to point out is that the ambition, the creativity and the entrepreneurial spirit are already there.

But we do think what's missing is a structured access to opportunity and a lot of information. This is why I do think radio can remain unmatched. Radio really over indexes like other mediums. In LA here it's 116% for radio listening compared to the General population. And then nationally, 97% of Hispanics listen to radio every month.

It's near universal. But what it really represents is trust. And I know you mentioned that earlier, you know, trusted messaging, when we can use a trusted messenger, it really gets across. So radio, which is what I work predominantly in, isn't just background noise. It's where important information becomes action.

So if we wanted to accelerate minority economic development, we should treat the access to that information through trusted and culturally aligned media partners. The second area would be access, specifically access to capital and government opportunities.

Right now, most minority owned businesses are asked to complete to compete in a procurement system that really feels like it's built for $1.0 billion companies. The portals, the RFP requirements, the scale of the contract. As others had mentioned here on this board, it's very difficult.

They Assume you have to have a legal Department, a compliance team, cash reserves that most of us don't have. You know, a small, locally, you know, owned media company. Even though we have four amazing properties, you know, it's, it's not as big as some of our competitors by any stretch.

And to reach into those deep Latino communities, you shouldn't have to navigate some of the same process. So having the access is a huge part, I think what's going on. And it's not about making it easier to use that word, it's really about just making it possible.

You know, I'm not trying to say we need it easier, just make it possible. So next would be government communication and procurement should differentiate for scale and impact. So there should be a dedicated track for minority and small media operators that reflects the communities are being served.

And then, you know, I'll add, we're not alone in wanting this clarity. As others have said, you know, all minority companies should talk to each other more. It's great to have a panel to hear some of these common things that are happening. We should meet more often to discuss this.

And that brings me to my next point, which is, you know, coalitions, partnerships, anything we can do to help us. Because reach alone is not enough. We need to convert the economic power and the communication power into more of an economic mobility.

What it means to me is minority owned media companies working together, not just competing partnerships with community colleges, high schools, workforce boards, turning media platforms into gateways for young people to enter creative, technical and entrepreneurial fields.

It also means aligning with Latino owned and minority owned business networks, chambers, trade groups, so that when an opportunity flows through, real businesses and real people are ready to receive it. And it means that government agencies are treating minority media not just like broadcasters, but as community partners, as an economic navigation.

This is how I think we can move beyond messaging into a more measurable outcome. There's an old saying, you know, one hand washes the other and the rest that saying is, and together both hands will wash your face. But make progress. Here we really have to kind of help each other out to get to that next step.

It's not a proverb, I think it's political wisdom. So when minority companies do work together, I really don't think we don't just reach communities, we can mobilize them. So in kind of closing, I would say that California does have the most dynamic Latino economic engine in the country.

The question before us is whether we are going to treat that engine as a market to be spoken to or, or as partners to build with. So to summarize, I think we should really recognize media as an economic infrastructure for communication. We need to design procurement and capital access with more intentionality for small and minority owned businesses.

And we need to build more coalition based partnerships that can convert the communication into opportunity. So as a representative of Merrill Media, I'm here to help out. We're ready to help. Let us know what we can do. And thank you again, Senator Rubio.

And the Committee, thank you for that testimony. There's a lot to digest there. And I have to tell you, when I, when you refresh my memory of all the facts that we have, it's really infuriating because there's so much that we can be doing to expand access and it's not like we haven't tried.

I believe you talked about a Bill that was watered down. I was co author to that Bill and so it is a challenge. So I'm going to be respectful my colleagues, I'm going to turn it over to them first. For any questions, I will start with Senator Menjivar.

Thank you, Madam Chair. On that point, I'll just go to you Arturo, to that. Can you share the pushback? What was the worry in getting to that 50%?

I think it is just control.

I think what we saw is that particularly but some of the big spenders like Covered California, the Department of Public Health, in working with the governor's office at the last minute, we saw pushback, particularly on the 50% threshold as well as other requirements that we were looking to impose to level the playing field across departments to make it easier for, for mid and small sized news outlets or media companies to be able to build a relationship.

For instance, we had a capacity building component so that there's a common playing field across all the over 100 agencies so that all of them understand the diverse media ecosystem that we have in California. Because you have a great set of disparities where some agencies are doing a good job. The vast majority are not.

So they took off the training requirement. They took off the 40. We had started at 50, then it went to 40% spending threshold that was taken off.

And are you saying Arturo and I apologize.

Yeah, yeah, go.

Are you saying that in the 50% threshold, state departments and entities like Covered California are included in that 50%? So they were worried that they were going to get moved out.

They were worried that they were going to get moved out. Some of the concerns said, hey, what about if we're promoting in a, in the County of Nevada county where the vast majority of the communities are white, we work with them to add exemptions for those types of counties.

We were working with them to find solutions to those types of really not the ordinary target populations for a lot of these priority programs because the priority programs usually reach underserved communities of color in language, immigrant communities.

So we keep coming up with obstacle, obstacle from the Administration to provide these minimal thresholds to invest in minority owned media and community owned media as well. Because it's not just about minority owned media. We want to support community owned outlets.

We want to support journalism outlets that are, that have reporters, that have staff and are invested in California. A lot of times we see firms that are investing in directly into digital platforms, directly into national firms or national media companies. So we need to make sure that we reengage these policies next year and we finish the job.

Because what we're seeing in the implementation of AB 1511, we're just reproving the myriad of challenges that small, medium sized and larger Latino and minority owned companies are facing in securing outreach and media investment. And that's not going to go away.

The state's going to continue to invest hundreds of millions of dollars a year in outreach and communications. And those monies need to go into firms and outlets and communities that are connected to the communities that they're serving.

While this isn't the same topic, I've also encountered the same issue in the health procurement world where one of my bills this year was shelved, was killed because I was asking procurement in the health for a system called CalAIM to happen with local entities.

Because about 70% are out of state contracts to nonprofits out of state and organizations out of state. And I hit the same roadblock from the Administration where they said, well, they're bigger entities, they know how to handle, they don't look like the communities they serve and they're not the trusted messengers.

So I'm hearing that it just seems to be an overall issue of umbrella of putting or lacking the emphasis on our local communities.

I'm sorry, we have recommendations.

We're running into the same issues with ours, especially with larger contracts, 50, $100 million contracts where sure, you might have a requirement for a larger firm, but then there's ways to design RFPs to mandate partnering with ethnic and community media, partnering with media outlets that understand the regional media ecosystems that mandate homegrown outlets that are actually hiring reporters, hiring staff.

There's a series of solutions. So we'd love to cross pollinate on those experiences you're you're facing in the health arena because they go across the board. Senator, we'd love to figure out how we can organize around this and join forces.

Madam Chair, can I squeeze one more question into Michelle? Absolutely. Thank you so much. I'd like to if you can elaborate on two points you mentioned. Less than 2% marketing opportunities go to ethnic, community owned and less likely to be prepared for coming contracts.

I think they're intertwined a little bit more on what you mean by less prepared.

Yeah, I think it speaks to the capacity building. I think the procurement is designed for large contracts. It took us, like I said, 10 years to be seen as prepared to prime a state contract. And so I think what happens with local media outlets and I think just even mid sized outlets is it takes a lot.

It costs us about 5 to $10,000 of staff time to reply to an RFP. That is a lot of money for a small media business to undertake. And then we're competing with large national conglomerates and large national media, large national advertising agencies on that. They can weather that kind of procurement.

I think the other thing, you know, something that came up when we were responding to a state RFP for state parks, we had already done measure A in Los Angeles. We had already done a lot of work around that.

The requirement in the RFP was that we had to have a $10 million Reserve and we had to be able to withstand not receiving payment from the agency for a year. I don't know how many small agencies or even mid sized companies could withstand that. So I think to that point it's the capacity building.

In order to also one, we ended up talking to a small business advocate. But that's because I know the system to be able to push back and say why is this requirement a requirement? But I think it's navigating being able to understand how to navigate that system. It's very complex and it's very convoluted even in the requirements.

And so any mistake you automatically get dinged and put out. Right. And so if you don't know every turn to kind of look through, through as you're even looking through an RFP process, then it becomes almost impossible to compete.

You're kind of answering them and never getting them because you don't actually know the system in which it actually is constructed. There's no standardized RFP process, which is also another issue. Every Department, every even sub Department within the Department has their own RFP process. And so there's no standardization.

And I think that's also contributes to the lack of capacity or technical assistance understanding.

Because Go Biz doesn't provide assistance.

I'm sorry, go business and provide assistance. They do, they do. But they can't provide a business across every Department and sub Department. Right. So you have CDPH, which holds a huge majority of advertising contracts.

They have 10 departments that have their own subcontracts and then departments and programs within that that are grant funded from federal to nonprofit to Whatever, Right. So it's five different potential areas just within one Department. Go Go Biz. Can't. They're not, they're great, but they're not able to kind of deep dive into every procurement process.

So I think if there's a standardization of procurement process, you move that's kind of technical and capacity barriers and you're able to. More businesses are able to understand or even partner or compete across those large contracts.

Thank you. Any Member. I'll turn it over to Senator Valladares. You may proceed.

Thank you. So as someone who wants to see Latino minority owned businesses grow, I also recognize the legal and the practical limits California faces under Prop 209, which prohibits the state from granting preferential treatment based on race or ethnicity.

And that obviously makes it complicated to set contracting quotas or percentage, even percentages, even with the best of intentions. So for me, the real conversation isn't about mandates, it's really about access. And you've said it here. I think each and every one of you have detailed how complex it is, how complex the procurement process is.

So if we really want diversity, then we have to fix the procurement process. Now I can also understand with CDPH how, you know, they're in, you know, the health realm, right? Like the, they have to be spot on when it comes to their, their process.

So whether it's go biz, I mean, I don't understand why or have have there ever been conversations as to why either the Department or go biz can't offer trainings or information or maybe every agency should have a procurement. Do they? We don't have anywhere to hear from.

I mean, every Department has a small business advocate and they're kind of responsible, but they kind of get assigned by a Department lead to run to be the small business advocate. So whether they're passionate about it or not, they kind of just get put into that space. And so if you're a small business, you can contact them.

How helpful they'll be in that particular setting, is kind of determined on how eager they are to want to help you along in the process. I think the procurement process is really interesting and I think from Your point around 209 is it can be location based, right? Like Los Angeles is majority Latino.

Like, so I think when we're talking even about ethnic media and local community media, it's really about where is it, where does it need to be placed and who does it need to be reach and what is the best avenue in which it can, it can get there.

So I don't even know that we have to even say it's ethnic. It can be location. Just like I think for the Nevada county example, it's like, yeah, you would do a predominantly white media buy in Los Angeles, you would do a predominantly Latino buy in Stockton, you would do a predominantly Latino buy in Fresno.

You know, it just depends also on the message.

And I think to the point that some of the panelists made is that the trusted messenger is really important to the message and I think to the conversation that the state wants to have with certain communities who tells that message is widely like determined, determines whether that person will go and get whatever service and output.

And we already know when people don't come forward for a service, that service gets cut. And it's not by lack of wanting to get the service or needing the service.

It's usually because they don't even know that the service exists because they're not getting media and they're not getting messaging that actually reflects and speaks to them in a way that's culturally sensitive, that's culturally inclusive on any of those levels.

So I have one more question and just like a follow up here. I'm sure everyone here would be fine with more money coming to Los Angeles. Unfortunately, there are probably 25 to 30 other Members in the Senate that may want to fight with us on that always.

So are there examples of other states that have policy or procurement processes that have helped level the playing field? I know, I'm not sure if in Florida, New York, you had mentioned some of that. And can we simplify that for. Is it just a recap maybe?

Arthur, There are a number of examples, both in the media ecosystem, but also in the General just procurement arena. I'd be happy to put a compilation. A number of Latino organizations are putting together a report around the Olympics where we're going to see hundreds of millions, if not billions of dollars spent on contracting from construction to others.

And Latino companies and firms continue to get just a minimal share of the pie. And so we, we'd be happy to compile a set of recommendations to you to look at.

But there are cities like Detroit, many cities are actually ahead of the game compared to LA and compared to the state in reaching disadvantaged rural, disadvantaged coastal communities, suburban communities. So we'd be happy to compile a report on that.

Thank you.

And I'll just add really quickly, I think for cdph, which is a highly regulatory, or construction, which is highly regulatory, the procurement can go to the larger entity that might be able to withheld, like hold it, that doesn't preclude them from not recirculating that locally, you know, and putting that to say, we want you to have a local supplier for this, or we want you to engage in a 5% or 10% set aside for local hire or anything like that.

And local hire, you know, has proven to work over a lot of different economic development engines. It can certainly work for media companies.

Thank you. Would you like to ask some questions? Well turn it over to Senator Durazo.

Thank you, Madam Chair. This is the same old thing. Same old thing. You know, as long as I've been around the same thing. It's just the structure is rigged. Structure is set up in such a way. You all gave plenty of examples of how you can't beat it.

And if there's a. If you start to beat it in one corner, you know, then you get something like. What do they call it, Whack-A-Mole. You know, something gets solved here and then it doesn't. So. And there's. There's procurement within the private sector, which frankly, isn't doing much better.

So it can't be just that government isn't functioning the way that it should as far as doing the right thing. For all the reasons that you all laid out, private sector excludes minority and small businesses. Public sector, our government does it as well. So question is, for me, it's a matter of will. The will's not there.

We gotta push it to create the will. And I think that's why my colleagues are here and there are other colleagues. And I'm glad to hear that there are examples of how it's being done and done the right way and in other places, what moves them.

It would be a good thing for us internally to understand what moved it to happen in Detroit, what moved it to happen and wherever else it took. But it is. I remember being on the Budget Committee and the census came up, and we not only had to fight for a bigger.

A bigger pot, but we also had to fight for that bigger pot to be used in areas of the state to reach our hard to reach communities, including indigenous languages. There are lots. Lots of communities that had these different needs, but only the local outlets could address that.

That's not something that somebody at the highest levels of state government would ever think about. They don't run across that because they're not at the local level.

So all these important examples that you gave, I guess considering we're up against a system, even though we're in the system, we're up against a system Is question if you all could come up with priorities, maybe it is going back and fixing AB 1511, is that a priority? Or are there two or three other priorities?

Because you all know it takes years. But if we could put it on a Shorter time frame than what it has been, you know, by the Administration. But I think I've seen big issues get taken on and somewhat a lot of progress being made when there's a real focus.

And either we put a real focus on one or two or three policies that we know are going to make a difference. However, the focus can be done because there's so many issues that come before the state.

And you know, unless we decide we're deliberate and intentional about fixing, significantly fixing two or three things, it's going to get caught up with everything else, fires and this and that. I mean, there's so many urgent things, which I think, by the way, you're all a part of helping with those urgent things like health care and fires.

But that's just the only question I could, you know, for all practical reasons.

I'll start if that's okay. I think you hit the nail on the head, Senator. It's, it's prioritization every year. Hey, what are your top 23 priorities? Unfortunately, this has not fallen in those. And I appreciate what you said in terms of what we can do moving forward. I think it's the procurement process to the Senator's comments.

It's getting the procurement process right, prioritizing it and pushing it through. And I think we'd be happy to work with Maruelo, I know we work closely and with other folks in the sector to put together a set of recommendations to. To have a cleanup bill to AB 1511 that requires. That puts the onus on the state.

That puts the onus on the state. Not on the media outlets, not on small outlets. San Fernando Sun that has a staff of three people and they have to track 100 different departments in a, I love them $10,000 procurement application process or in Pulso and it serves the indigenous community or radio Vilingue in the Central Valley.

Or, you know, we can go down a list, a very long list.

Maruelo, many others, puts the onus on the state to develop a pipeline that provides a set of freeways where people can just get on and have a simple process that requires training of all the different departments so that they understand our media outlets so that we can really facilitate a level playing field and our folks can compete.

The reality is that the resources are going to digital behemoths right now they're going to meet seven to eight marketing firms that are many national. They don't share the values of the State of California. They're going to national communications companies that are actually working against the values of our communities.

So we really need to be doing a more in depth analysis about how our state is funding the media ecosystem that it's putting funding behind the values that we represent that are supporting our communities. And we're excited to work with you, but we need to prioritize the efforts issue.

I think if we prioritize it, I don't think it's that difficult. Is really moving a right set of solutions and it's really in the procurement process. And the Senator here highlighted.

I'm sorry, just a follow up. As much as it could be, we decide here what the priority could be. It's you all deciding what the priority is. And if you all come up with a list of 20 things, it ain't going to happen.

So my question was more along the lines of what you all say would be the most helpful and a priority.

Would you like us to put something together for you and send it back to you? Okay. I think what Arturo was saying, sorry is in line by the way. And I understand what Senator Valladares said also. They can't just be on, you know, protected categories. It has to be set up in a way that's fair.

And I like also your comment. Give us a training process for RFPs or standardize the RFP so that it's as easy as going on the Internet and literally looking it up. How do I apply for an rfp and you can find step.

I don't care if it's step one through 200, but as long as there's steps and process so everyone kind of knows what to expect.

Was that your last question, Senator Durazo? Okay, so thank you to all my colleagues for their questions. And yes, we, what we intend to do is bring recommendations back. But I do agree with Senator Durazo in that we can pick 30. But we've seen over and over how things don't happen. And again, I said it earlier.

It is infuriating to see so much wealth and opportunity and yet minority businesses sometimes are left out. I want to go back to what you said, Mr. Carmona. AB 1511. Like I said, I was a co author and it was a struggle and they did water it down. Go back to a bill.

I believe it was you who mentioned a bill by Blanca Rubio about tracking early on. Can you share a Little bit more about that bill and where it's at.

That bill unfortunately sunsetted. That's another amendment that was added to Senator Menjivar's reference of constant pushback on setting kind of systemic long term policy solutions. So it sunsetted. It required DGS to collect the media spending reporting across every agency of the state. All we wanted is just a very transparent snapshot of where our funding is going.

The Department of, you know, Public Transportation, DMV. I mean there's millions and millions of dollars being spent and yet we don't have a clear picture for where our money's going.

A lot of times we're seeing that, you know, 20 million, $50 million is being spent on a marketing firm and they just say, hey, we're spending on this marketing firm for this particular objective. But we don't know where that marketing firm is spending it. And we want to know where they're spending it because that's state dollars.

We want to know if they're going to la, to Latino media outlets, LGBTQ outlets, black communities. So that type of transparent analysis of the media spend of our state is now no longer in place because that bill sunset it.

So we, as part of the solution that we want to put forward as a Latino media collaborator like to put forward is that as an essential tool we need to have an annual clear snapshot the way New York does it. We know exactly where their money is going. We can track that.

They've seen a 200% expansion of their spending in ethnic and community media. We don't have that type of ability. And you know, with the digital tools out there, it's very easy. We just need to put the onus and the state to be able to produce that transparent reporting.

Unfortunately the bill sunset it and it was just a one time report. Senator.

Well, I think that's one of the opportunities that we have here to revive that bill. You know, we put sunsets sometimes to see if it's working and clearly other states already have it. I don't see why we don't want information. We've often heard, right, information is power and we need that information.

And sometimes all of us are sort of blindly moving around not understanding the data. And I think that's why it's important to have you here today to understand the data and understand the opportunities.

But I think I could see that being one clear cut policy that we can sit down, discuss and see if we can revive it and move forward with that. The other thing is I spent yesterday all day at a conference similar to what we're having here. But that was a different industry on supplier diversity.

And I heard one of you say that we need to remove words such as best efforts. And you know, because yesterday I, you know, I was encouraging because a lot of businesses decide to meet the minimum standard. You know, the issue we were discussing yesterday, I believe it was 20 or 25%.

And then there's companies that do really well, and then there's other companies that. And there's no mechanism to hold these companies accountable. And, and I think everyone has best efforts. But, you know, what we want is results. So I think that's something we need to discuss.

Goal versus, I don't want to say mandate, because we have to be really sensitive as to how those mandates also impact businesses. We want that. We don't want them going out of business because our mandates are too huge. But there's an opportunity to, again, as a Committee, sit down and discuss where that middle ground is.

How do we go from a goal to a mandate, but somewhere in between, find that sweet spot where our businesses can thrive, but also ensure that smaller businesses are coming along. I also believe I heard you talk about the Olympics. Senator Durazo and I belong to The Olympic Committee, L.A. 28.

And we were there, I think it was last week, myself and a few other Members. And I was really, you know, I guess shocked to learn that contracts are already out and about. And, you know, when you think LA28, you think it's going to be 23 years from now, and they're already putting out some contracts.

And if you don't have a standardized way to get in the game, it's really difficult. So we hear you on all those points and we. Do you offer to put together, let's call it a memo of recommendations. I already have a lot of ideas. I see my colleagues also writing notes very diligently.

But if you give us, let's just say, the top 10 ideas that you think are. That we can tackle, that are feasible, that are something. We talked about that Bill, AB 1511. To me, that's a simple way to support the Rubio Bill just having data at our fingertips.

But I also know that when the tax credit conversation came to us, the Latino Caucus, we had a lot of conversations with the industry and it was a pushback.

I believe, actually Senator Smallwood-Cuevas, who's, I believe this is her district, was also very clear about making sure that we're able to track the amount of money that they're investing, because that was the goal as minority caucuses the Black Caucus, the Latino Caucus, and.

And it's still a challenge because we got a lot of pushback as well. So just know that you have advocates here. That's where we're trying to go from here.

Gather the information, set a goal, put a plan in place and take some of your recommendations and see where we can align and find common ground to put our energy and effort behind it. Okay, so thank you so much for that. We are going to move over to our second second panel.

So I We only have two, so not all of you need to move. If you feel you want to get comfortable, we have the second panel is titled Growing Business through Social Media. And with us is Geneve Villagres, Vice President of U.S. policy, public policy at TikTok. And thank you for having us here.

Second panelist is Annie Leal, social media business influencer. And hopefully we all learn a thing or two and become a little bit wealthier by the time we walk out of here. Okay, so thank you. And we're going to start with Genevieve. We'll turn it over to you. And when you're ready, you may proceed.

Madam Chair and Members of the Committee, first of all, welcome to TikTok. We're very happy to be hosting you at our headquarters. My name is Geneve Villacares and I am on the US Public policy team. And as a resident and native of east la, I am very privileged to be leading our efforts in California.

TikTok's mission is to inspire creativity and bring joy. As you may know TikTok, you may know TikTok as an entertainment platform for more than 150 million Americans. It's also a resource for 7.5 million entrepreneurs and small businesses. The magic of TikTok is that it recommends content based on what a person likes rather than who they follow.

This opens up a whole new way for people to discover products and services. This also means businesses can reach audiences that they didn't even know existed. In 2023, we launched TikTok Shop, which takes viewers from discovery to purchase by by connecting them to what they love.

This allows businesses to sell directly on platform without having to set up their own e Commerce website. TikTok's ability to connect businesses with niche audiences is especially impactful for minority owned businesses who may not have the budget, staff or resources needed for traditional advertising.

For example, 83% of African American small businesses on TikTok reported increased sales at least once after promoting their business or products on the platform. That figure rose to 86% for Latino owned businesses and 88% for Asian American and Pacific Islander owned businesses.

For small businesses, an increase in sales means hiring more people from the community, expanding their footprints and building their dreams. Take for example, Brandon and Tina Castaneda, a mother and son team from Senator Valladares district in Lancaster. They started a business by making and selling birria spice bombs in their home.

It's a product that celebrates Mexican dishes and simplifies the cooking process. After launching their business on TikTok Shop, they saw their sales jump to 18 million in the first year. Today, 85% of their sales come from TikTok Shop.

Brandon and Tina now employ 15 people directly, and through their manufacturing partners, they're supporting jobs for an additional 50 to 80 people across California. Another example is Brandon Hurst, an LGBTQ business owner from Senator Menjivar's district. After losing his job during the early days of the pandemic, Brandon, like many others, discovered a newfound love of plants.

He started selling them via our TikTok Live feature, making plant buying easy, fun and educational. Selling Live on TikTok was an instant success for Brandon. In just under two years, he sold over 80,000 plants. 100% of his sales come from TikTok Shop. He generates about 60 to 80,000 in sales every month and employs nine employees.

We were very proud to bring these small business owners to the State Capitol back in February to meet with lawmakers and share their stories firsthand. To help further illustrate the impact of TikTok and small businesses, you'll now hear directly from a creator who joined us in Sacramento.

She has successfully leveraged TikTok and TikTok Shop to grow and scale her business and redefine what's possible. She represents the heartbeat of inclusive economic empowerment, and I know that her story will resonate deeply with this Committee. And with that, I'm pleased to introduce Annie Leal, CEO and founder of I Love Tomoe.

Thank you. But before we go further, I just want to invite those that are in the back. There's some chairs in the front, so if anyone wants to take this opportunity to come and grab a seat. I know it's uncomfortable to stand for this long period of time.

I'll pause for a second in case anybody wants to join us.

Okay.

And give Durazo an opportunity to sit down. Thank you. So, Annie, I am so excited to hear how do we make millions? Help us out. We're all eager. That's why we're here. You're like the reason why I came here today. So when you're ready, you may proceed.

Sure. I'm so excited to be here. I love. I loved any chance that I get to speak for business owners and business owners who have grown their platforms on TikTok. So I was born and raised in Mexico in Monterreyno Leon. And my family and I moved to the United States about 10 years ago.

And when we moved here, my dad was diagnosed with diabetes and it just completely shook our lives. I saw my dad eating nothing but candy growing up and suddenly he couldn't have it.

And then when he was going through his diet changes, I noticed that he was able to find sugar free versions of every American candy, chocolates, caramels, anything that you could possibly imagine, but no Mexican candy. Which I thought was crazy, knowing that Latinos have some of the highest rates of diabetes in the country.

I had a corporate job, but I had this idea that I wanted to make chamoy. Everybody knows chamoy. Yes, yes, Great. I'm in such good company, and I wanted to make it so that he could enjoy it made with better ingredients. So I dedicated some months to creating the product.

And when I was ready to launch my business, which was supposed to be a side gig, you know, I didn't want to make it a huge deal. I made 700 bottles that I wanted to sell in six months. That was the goal. I didn't tell anybody that I was doing this besides my close friends and my family.

I started a TikTok channel. Did not tell anybody, not even them that I was starting a TikTok channel, because as many people, I was shy to be on camera. And I posted my first video. And my first video was me at the CO packing facility here in California.

And I was filling a bottle of sugar free chamois and I just put simple text saying, I created this product because my dad was diagnosed with diabetes. This was before TikTok shop existed. So it was, you know, people had to find my product online.

And I put my phone down and when I picked it up three hours later, it had gone viral. And it was hundreds of comments of people being like, I was just diagnosed with diabetes and I thought that I was going to have to give up Mexican candy. I'm pregnant and I have gestational diabetes.

And all I want is chamoy and Chilito and we sold those 750 bottles in six days instead of six months. And it just completely, completely changed my life. And you know, when I was starting my company I was told by some people that my product was too niche, that Mexican candy was not mainstream enough.

But I was opening up tick tock and seeing people from all nationalities, all backgrounds trying Mexican candy for the first time and loving it. So then when, when TikTok shop came to be, it was an absolute no brainer for us to join the platform. And that's when things really, really changed and, you know, exploded.

And I'm just so, so grateful to be here and to have this company that I love so much.

Thank you so much, both of you. I'm going to turn it over to my colleagues. Anyone wishing to ask questions, we'll start with now. Let's start further out today. Durazo, you may proceed.

She's passing it to me.

Oh, you're passing it. So we'll go to you now.

Thank you. Thank you. Well, first of all, congratulations. That's a phenomenal story and you know, you have the heart of an entrepreneur and it's clear to see and you've been successful at it. I had gestational diabetes too and I actually ordered, I told my husband I want an Ayes cream cake the day I deliver.

So I'm really curious to kind of understand the challenges that you're facing or that you, you have faced or where you can find additional support specifically on your marketplace on this platform.

Yeah. So I mean, when I started my business, one of the biggest worries was how am I going to reach customers. I've spent all of my money building the business. Right. I took the savings that my parents wanted me to buy a house with. That did not happen.

I invested it into the business and you know, creating the formula, getting the operations ready. I did not have any money for marketing and that's why, if I'm being completely honest, that's why I chose social media. That's why I chose TikTok. It's free, anybody can do it.

So if you're a business owner, for me it's like a no brainer to join the platform and start posting because it's one of the very few things that are free for a business owner. Things that have helped our growth a lot has been one, obviously TikTok shop.

The fact that we can just have people purchase, already have their information, their credit card on the platform, if you're scrolling and you see my video of a Fruit cup with Chamoy at 2am I want you to follow that craving all the way to checkout, right?

And the fact that the people can do that on the platform is amazing.

Another thing that was really difficult and it's really difficult for business owners and I'm sure you guys have heard this is a lot of the ways that people find businesses is because you maybe saw an influencer posting about it, posting about their favorite restaurant, their favorite lip kit product, et cetera.

When you're a small business, that's a huge gamble, like paying an influencer. And you'll get quotes of 1,000 to $10,000 and you don't even know if it's going to convert. You don't even know if that audience makes sense for your product. Something that has been life changing for us has been the affiliate program.

So the affiliate program on TikTok basically gives the ability to anybody. You don't have to be an influencer. If you love a product and you've purchased, which is that, which is the best part, right, Is like they have the product in their hands. They can even prove that they purchased it before from the platform.

If you love the product, you can post a video saying I love it and this is how I eat it to your close friends. You don't have to be an influencer. You can have 500 followers to however many and you can make Commission from that product. So for a product like mine that is culturally niche, right?

It's Chamoy. If you know, if I'm talking to a group here, I can tell you guys what Chamoy is and you immediately understand.

So I'm like, I can go into my whole spiel that it's sugar free, but if you're somebody from a different cultural background, the way you explain Chamoy to your community might be different and it might be in a way that I don't know how to do. That affiliate gave real customers the ability to do that.

So now sometimes I open my TikTok and I see people that I have no idea who they are posting about my products because they love it and they're able to make Commission and make a living for that. So that has been some of the tools that I really, really love.

One of the things I wish we were just talking about this, that I just wish was more available to people was that they knew how easy it can be to use these tools that are free. I live in downtown, so every Saturday I walk the farmer's market and all of my favorite vendors I'm like, do.

You have a TikTok? You should start posting because they just don't know how. You do not need a social media team. You do not need fancy equipment. You just need a phone and be okay sharing your story 20 times.

So my second question is to kind of understand a little bit better the TikTok side of things. One just kind of run me through the basics. So not every, you know, TikTok market is probably as successful as yours. So what is it? I want to say the typical process. And obviously there's a successful story here.

What does that look like in terms of, you know, the business side of it for these small businesses as you're kind of a partner with them? And then what challenges are you seeing in your marketplace for both your business side of the platform and then obviously the account. Would you call them account owners or profiles?

I'm not sure what the name for that is.

Yeah, sure. Thank you, Senator, for that question. So I'll tell you kind of a little bit more about sort of our how people can sell on TikTok. So there's a couple different ways. One, Annie mentioned you simply as a business owner. Post your video. So this is organic, this is natural.

This is you just talking about your product from a very, you know, heartfelt way. And again, it's free. Then there's an opportunity to go live, which I mentioned in my remarks. Brandon, the plant guy, that is his revenue stream is he is very successful and going live is literally going live.

So you essentially, you know, you've got your product and you maybe have someone that's helping you, that's reading the comments, that's sort of engaging with the folks on TikTok that are interested in your product, and so they're helping you kind of moderate through that selling process. And then there's obviously our dedicated shop page.

So at the very top, as you're scrolling through TikTok, at the very top, you'll see a section that says shop. So you can also click on that and that directs you to a page that will have all sorts of products that you can discover on your own and purchase that way.

And then she mentioned the affiliate program, which is, I think, probably one of the coolest, most incredible things that we offer. Because as she mentioned, there's any. Anybody like, I can love a product, you can love a product, and we can talk about it on our.

On our own platform and then earn a Commission without having to have my own business without having to. I'm just a lover of a product. And I'm talking about it. And then I'm able to earn a Commission and Annie as a business owner gets to set the Commission that she's willing to give me for promoting her product.

So it's a really nice kind of unique revenue stream that we're able to offer folks that are interested in love products but are not necessarily the business owner themselves. And then of course we have paid ads which pretty, pretty self explanatory.

So it's a diverse kind of marketing opportunity for communities, minority communities and all over up and down the state.

And in terms of the compliance side, so do you, whatever revenue is collected does that. The market side, whoever is selling that has to track that. Do you guys send any type of breakdown of what revenues happened over a year or do you guys track that for individual profiles?

You know, I actually, I don't know the answer to that question. I'm happy to follow up with you, but if you want to speak to it from the business side, for sure.

I mean there's, there's a TikTok shop, Seller Central, which is not that different from any online marketplace. So I can see my sales, I can track them throughout, you know, the day, the week, the month. There is a small transaction fee, being completely honest, TikTok being the lowest one that I've seen.

So it's, for me, it's a no brainer. We get tax information, you know, in order to open a shop, you need to submit the, you know, proof that your business is registered and legit banking information, all of that.

And then I can't speak for any other category that it's not the food category because that's the one that I'm in. But there's additional compliance, you know, issues that we need to prove. So like, you know, one of the, one of the things that happened was like, zero, I was missing something on my label.

We went and fixed it so we were able to have these products on site. So all of that is just pretty standard.

Awesome.

Well, congratulations to you both, to both TikTok and to you for this success. And you know, this is, I think whether you're millennial Gen Z, I gotta fall. This is, this is the new way people are buying things, which a decade ago I would have never bought anything online.

And now I buy probably half of the things that I buy online. Thank you. We're good.

Senator Durazo has a question.

Thank you. I'm sorry I missed a portion of this, but I'm really excited. I heard you mostly speak and really congratulations. Thank you. So much. It's really wonderful.

So both of you, unless you already answered this question, is what did we as government do you think we're in the best position to do to help?

And knowing that, especially with today's Select Committee on Minority Economic Development, from that perspective, I'm sure there's other things maybe out there, but from that perspective, what do you recommend we can do that would be helpful to you?

Sure. I mean, I think for me specifically, I. And I'm kind of saying it more for, like, other business owners, I. When I talk to people about TikTok shop, they have a lot of questions, the same questions that you guys had. And I think once you're in the platform, TikTok can answer a lot of those things.

But just getting started and get, you know, letting people know that these tools are available for them, that they can, you know, I wish there was ways that we can give. Business owners have had their businesses for 1015 years. They've been successful, you know, by word of mouth, but things are getting harder.

I wish there was more opportunities for them to get, you know, some sort of training or onboarding onto social media, onto TikTok, for them to see that they don't need to hire somebody, they can do this internally, that they could. It could really flip their. Their businesses around. And, and probably the same for affiliates.

You know, anybody who's like a big fan of products, I think I always. The best affiliate, in my opinion, is the mother of a household because I buy the brands that I do because my mom did that 10 years ago. You know, this is not true. She did 30 years ago. I'm older, but it's the same thing.

I'm like, there's so much influence in the power of a regular consumer, and I wish they knew that they could be monetizing that through platforms like TikTok.

And to that 0.1 of the things that we'd be willing to offer to any Legislator that's interested is doing an event in your district, potentially partnering with the local chamber, where we could bring some experienced creators, successful creators, and maybe do a training with some smaller business owners and teach them the tips and tricks on how to create content and how to have it perform successfully.

Yeah, I can give you an example. So my. One of my suppliers, he had his own brand but wouldn't really promote it anyway. So he was. Mostly. The majority of his business was being the provider of my ingredients. And he had just such a fun family.

And I was like, Carlos, you can also just start posting about your products. That you could do that. They're crazy successful now, Senor Michelada. They make really good, like Taki powder. Very unhealthy compared to my business. But you need both. And he just didn't know that he could do that.

And now that has become a really great big part of his yearly revenue, which is great.

Well, thank you. I do have several questions. I'm just going to post the question and then I'm going to reach out to you separately so we can have a discussion only because we do want our audience to have an opportunity to ask. Any of the panelists are here for any questions.

One of the issues that I find conflict with myself, I've been teaching for 20 years. I know that as California, as a Legislature, we continue to create these programs, these pathways to college careers.

And now I find that we have to figure out how to equip our young individuals a lot younger on how to adapt to using technology. By way of example, as a teacher, we're always giving a mandate on how teach, you know, numbers and how to type, I'm sorry, how to write a sentence.

And I've been fighting this with the Education Committee for a while that I think that we can no longer afford not to teach them how to type because that's what everyone's doing. And I haven't won that battle yet.

But I will reach out to you because I feel that we continue to revamp education K through 12, but we keep leaving the technology conversation out. It has to be more specific, a little bit more deliberate because like you said, sometimes they don't know the power of what they have unless we expose them to it.

So I will reach out to you separately. I do appreciate, Genevieve, you talking about your ability to partner with local chambers. I have, I believe, several of my chambers here and I would like to take you up on it. And I know that any of the Senators would as well.

So we're so thankful for all of you that have been patient. I've learned a lot, but this is going to be my best friend. I'm going to come back a millionaire next year or I might not if I become a millionaire. Right. I'll just quit Senate.

But to all of you that have been patient, I want you to have the opportunity to ask any of our panelists. They're all in the audience. So we're going to start with why don't we, may I ask. There it is. Yes. Bring a microphone. Let's just put it in the center.

And anyone that wants to ask a question, do me A favor. Can we just put it over here on the side so if people want to line up, they can just, you know, line up and we don't crowd the center. There you go.

Hi, my name is Jeff Valdez. I'm the Principal with New Cadence Productions. And everything the media panel talked about was, it's worse than that. Just to let you know, as the Senator said, it's been like that for a long time.

We recently had a big meeting at Procter and Gamble in Cincinnati, and they are the largest advertiser in the world. And when we talk, it was very interesting. We said, we're not focused on dei. We're focused on P and L and growth.

Because if you focus on P and L and growth, DEI and inclusion happens organically, in particular with Latinos, because we're so underserved. And the reality is, we talked about the fact that we're not a minority. We're in California, we're a majority. I think we need to change our narrative and our use of words.

We also had the conversation about ethnic. We're the General market. So I would encourage everybody to change our mindset how we even perceive ourselves, because that's how others perceive and treat us, too. And the good news, everybody's saying, well, what are the list of 10 things? There's actually two silver bullets is the good news.

The two silver bullets is the Fund defunds. The Fund defunds that exist, which are billions and billions and billions of dollars, are funded by Latino firemen, policemen, teachers, and government workers. And they're massive funds which Fund, the hedge funds and the other private Equity.

They put 1% of that money, it's probably a majority of that money is from our community. 1% makes its way back to us. Right? So the first thing that could happen that would be transformative.

I'm so sorry, I just have to remind you, I'm going to give each Member of the audience two minutes to speak. And so you're down to 30 seconds.

So the transformative part of that is if you change that 1% to. To 19%, which is reflective of our. Well, even more than that, because we're much higher than that. The second part is these Fund to funds also hold huge positions in stock of these media companies. And the language they speak is money.

If you show up at the annual shareholder meeting with the proxy for millions of shares, you can facilitate change overnight because you have all the leverage. That's it.

Thank you so very much. Anyone else wishing to speak, you may come up to the microphone. I know it's intimidating, but we want you to ask the questions. We have a lot of intelligent people in this room.

It's not intimidating. Everybody should get up and say, hi there. Of course I know you. How are you? I'm Nancy De Los Santos. I'm a producer writer with a new romantic comedy called 'Say a Little Prayer'. I know it's a shameless plug, but can TikTok help us as independent producers trying our best to get the word out?

It's so difficult. It's so difficult. And I see you have a product. We have a product, I guess, but we would not be making money directly because it's on different websites and platforms.

I've been in the business a really long time, and it used to be the movie goes in the theater and then it's on television, and now it's so complicated. And so we are doing our best as three Latino filmmakers to get the word out. Can we do it through TikTok?

Which scares me, I have to say, because I'm just getting on Instagram. I'm so, so sad.

This is scarier. So if you can do this, I'm like, please.

So thank you.

Genevieve, you want to answer that question.

And the answer is, yes, of course you can do it. And I'd be happy to chat with you after this and learn a little bit more about what you're interested in.

Great. Okay, that'd be great, everybody. Say A Little Prayer. Romantic comedy.

Thank you so much. Good seeing you. Anyone else wishing to ask a question or make a comment? Okay, come on. I would hope that everyone's wanting to ask these questions, but good news, that means we all did our jobs right. We're so thankful for the conversation today.

As we all heard, there's so many deficiencies that we need to not only continue to study, but tackle in a very specific way. And so clearly you saw the commitment from all of us.

Senator Manjevar had to step out a little sooner for an event she had, but this Committee will continue to have hearings, to continue to explore just other industries. I'm going to go to my friend over here. Do we know what next date we have?

December 2nd.

December 2nd. Where?

In San Jose, Access to capital.

Okay. In San Jose, access to capital for minority owned businesses. So if you can join us, please join us. We're going to be advertising it, of course, but for those that just heard it, all of you are welcome to join. And I just want to take a time to thank all the staff that put this together.

Genevieve, you're up here. Thank you. To everyone that made this happen, your staff that helped facilitate this, we have an entire team from Sacramento as well. Let's give them a big round of applause there. That the tech people. And so with that, I just want to say, once again, this has been an incredible learning experience.

We continue to gather data. Doesn't mean that we're concluding and you don't get to speak to us. If you want to feel free, we can give you our cards. Send us the information because I will continue to pass it down to the Committee.

There are several on the Committee that couldn't be here, but our goal is to come back in January when the legislative session reconvenes and see if we can start with a couple of bills that you will find meaningful and that could actually help us tackle some of the pressing issues you all express. So to you, congratulations, Annie.

What a great story you have. You know, we all. I have elderly parents who are getting older and they love chamoy, and I may have to buy a couple of bottles for them. So we thank you for your time. Geneve as well, thank you for your time. Closing remarks, ladies. Okay, thank you. And one more thing.

And we do have a reception, and everyone's invited. Can you share where we have the reception at?

Reception.

It's going to be right outside where you came in. Maritas and food from a Wahakan restaurant.

Okay. Oaxacan restaurant. So please join us across. And everyone's welcome once again. Thank you. And the Committee. The Committee hearing. The Select Committee hearing on minority economic development in California is now adjourned. Thank you, everyone.