685: (Solo) The $500,000 Lesson I Had to Learn the Hard Way

**Nathan Chan** (0:01)
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So today I'm going to tell you a story that I've only shared in pieces and it's not a comfortable one, but it might be one of the most useful things that I've ever told you. So a few years ago, I lost half a million dollars in 30 days. Not in crypto, not in some special speculative bet or some special mining stock in my actual business.
And this is a business that I built for my parents' basement. The one that I poured everything into for years, like literally launched it off like $3,000 on a credit card. And here's the part that makes this story worth telling is, the loss itself wasn't the dangerous part. The dangerous part was actually everything that led up to it. Specifically, a version of me that had stopped being careful because I thought I'd figured everything out.

**SPEAKER_2** (1:54)
Here are the stories, learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to The Foundr Podcast with Nathan Chan.

**Nathan Chan** (2:08)
Your most dangerous moment as a founder isn't when everything's falling apart. It's when everything's actually working. And I've actually spoken to so many other founders and it's so crazy when you feel on top of the world, when you are absolutely killing it. And it's like, I never forget, like I saw like a Facebook post where I was doing something and somebody wrote, Oh my God, Nathan, everything you touch turns to gold. I actually started to believe it. And it's always during these moments, I've spoken to many other founders, when you think you're killing it and things are growing and everything's exciting. And it's like, go, go, go. That's when you need to pay attention. So wherever you're at in your journey right now, I want you to listen up because this is super valuable. This is something that I've learnt the hard way. Early days Foundr, we started to grow the education out of the business, and we're spending a lot of money on ads, and we're peaking at about a million dollars a month. And it was working. We had a really good return on ad spend. And for those who don't run paid media, basically, we were getting a really positive return, like, at least, at least, like a 1.7 to 2X. And it was, you know, like a very, very, very high margin product. And, you know, we were getting, you know, for every dollar that we put in, let's just say a $1.60 to $2 back. And you can kind of do the math, right? And this is like, this is just on paid ads, right? And at that scale, a million dollars a month, a significant margin, like the machine was cranking. We had like a team of like, I want to say at least like 40 plus people dedicated to building, stoking that machine, keeping it active, just cranking.
Then almost overnight, basically, returns halved and it actually got to negative.
And we went basically from making money on every dollar we spent to losing every dollar. And we had no backend system set up.
No strong unit economics that we were relying on being profitable on literally day one every day. And basically, we were hemorrhaging cash and I'd never done a restructure before. I'd never had to let anyone go. I could've let people go, but not like let go of whole teams. And the thing with paid media at that scale is you just can't flip a switch. And we had a lot of operating costs relying on it, had all these commitments. And so by the time we fully pulled back that particular month, we lost half a million dollars. And like I was literally like broken.