718: (Solo) Why Your Profitable Ad Account Isn't Scaling (It's Not Your Ads)

Nathan Chan (0:01)

Hey Foundr fam, before we jump in, I wanna take a quick moment to talk about our sponsor Omnisend, the email marketing and SMS platform built specifically for e-commerce founders. We've been recommending Omnisend to Foundr students and members of our platform for a while now because it just works. So whether you're launching your first store or you're scaling it to seven figures, it really helps you automate your marketing and get results. And did you know, on average, Omnisend customers make $79 for every $1 they spend, which is an insanely good return on investment. And if you're already on another platform, here's the thing. In just five days, you could actually be paying 35% less without doing an absolute thing. Omnisend will move every flow across, list and template. You just show up when it's done. And finally, because you're part of the Foundr community, you get 50% off your first three months with the code Foundr50. Just head to omnisend.com/foundr and that's Foundr without the E to get started. All right, now let's jump in the show.

Hey guys, Nathan here. Welcome back to another episode of the Foundr to Foundr solo podcast. So I've been doing a lot of enrollment calls for Foundr Operators. Talking to Foundr every single week, we're really kind of growing out this incredible community of DTC Foundr that are scaling their brands. And it's so fascinating these conversations I have I'm seeing a bit of a pattern which you guys will find interesting. Someone gets on a call and they're doing like a five or six times ROAS, they're printing money, like they're literally printing money, and they're not scaling it, and they're terrified to spend more. And this episode is really about why, and this common thing that I'm seeing amongst not all Foundr, but a lot of Foundr, and the principle behind it. And if I understood this 10 years ago, I would have made tens and tens of more millions of dollars. It's kind of crazy, and it's a big claim, I know. So, hear me out.

SPEAKER_2 (1:56)

Hear the stories, learn the proven methods, and accelerate your growth and future through entrepreneurship. Welcome to The Foundr Podcast with Nathan Chan.

Nathan Chan (2:10)

So let me set the scene. Foundr Operators is our community where we help DTC founders scale with Facebook ads, we help you with your CRO. It's an amazing community where we help you scale, right? And we have access to all this awesome data. We can see what's working. We help you with creative, all that good stuff. So we help you scale. And we have people applying to find out more around how we can help them. And I keep hearing the same thing. Like, Nathan, my ads are working, but I just don't know how to scale it. And I want to get a higher return. And I'm like, OK, why aren't you scaling? Why aren't you spending more? And every single time, there's this pause. And it's just like, oh, well, I don't feel confident enough in my numbers to go bigger. Think about how, like, insane that is. You have a machine that turns one dollar into five dollars or six dollars, even with, like, you know, 60, 70% gross margins, right? So you're really profitable. And you put more dollars in, not because the machine is broken, but because you don't fully trust the dashboard. And I get it. Like, founders have described this to me as somewhat gambling. Like, it's scary. It's scary to increase ad spend. And I get it, because I was that person. Like, for years, I was that person. So, you know, the problem that these founders have is they're not bad at business. Most of these people are, most of them are, like, super sharp, right? They've got an amazing product, right? And they're growing it, but they know that it could, could scale. And they know it could grow more. And they know they can scale this. And it deserves to be into the hands of more people's hands. But they're making decisions based on how they feel and also on first purchase, which is the front end. Like, did I make money on this sale today? And if yes, keep going. If not, pull back, cut the campaign. And here's the thing, the fastest growing DTC brands are the ones that are oftentimes losing money on the first purchase, breaking even on the first purchase. And they're scaling aggressively because they know their numbers so incredibly well. Like for Nick Shackleford, who's our lead, lead operator at Foundr Operators. You know, we follow his system. Scaled breeze from zero to 60 million dollars in two years. Do you think he was profitable on first purchase? Well, now it's a subscription business, right? You don't have to be a subscription business, but you've got to have a really solid back end. So you've got to really know your LTV. You've got to really know what your payback period is. And these are things that like, like I said, I'm looking at Foundr's numbers and they're doing like a 6X returns and they're not scaling. It is crazy, right? And this, this is a quote from Dan Kennedy. You know, the title of this episode, the company that can spend the most to acquire a customer wins. So if you can't tell me your 90 day LTV, your lifetime value over 90 days, your repeat purchase rate, your average order frequency, your subscription conversion rate, if you have a subscription, you are flying blind. You have a profitable business, but you have no idea how profitable. And that gap between what you know and what you need to know, that's what keeps you small. And the companies that are doing 2 million, 3 million, 5 million dollars a month, 10 million dollars a month like IMA, they are losing money on the front end and they are happy with that. They are happy to lose money because they know their numbers on the back end. So well. Don't forget this guys, the company that can spend the most to acquire a customer wins. So it's not the company with the best product, not the best creative, not the cleverest funnel, the company that can spend the most. Now, real quick, before we jump in, I want to shout out one of our sponsors, Xero. I've used Xero from day one of Foundr. 13 years now and it's still how we run the business today. It's cloud accounting software built for Foundr's exactly like us and it automates all the admin that I used to do when I first started Foundr. Invoicing, chasing payments, expenses, all the accounting. It really helps me get paid faster and keep an eye on cash flow. So Foundr listeners, get a crazy 95% off for the first six months, just sign up to our form at foundr.com/zero.