Want a 9-figure exit? Get worse at Facebook ads.

Want a 9-figure exit?

Get worse at Facebook ads.

The biggest lesson from Chubbies’ mistake-fueled journey to a 9-figure exit is that we had to get worse at Facebook ads in order to generate the profit growth that drove the attractive valuation at exit

Here are the 3 mistakes I made, the 3 lessons that came out of it, and the 3 things you can think about if you’re trying to figure out how to become more profitable…as told through a conversation I had yesterday with a founder that absolutely didn’t happen.

*we catch up after they tell me they’re growing revenue at 50% annually, but not able to grow revenue while growing profit. i then drop the above info from our Chubbies experience*

Founder: But Preston, whatever do you mean?

Me: Let me first clarify tactically what I mean when I say that we had no choice but to get worse at Facebook ads in order to save our business.

Founder: finally

Me:
- We drove return on ad spend DOWN
- We started driving FEWER Facebook conversions with our ads
- Our CFO nearly had a coronary

Founder: Why would you do such a thing?

Me: We nearly optimized ourselves out of business

Founder: Enough with these pithy sayings. Give me 3 mistakes, 3 lessons, and the 3 things I can action on right after I get out of this made-up meeting

Me: Sure, here we go

Mistake 1: Thinking Facebook success would equate to business success. We thought if ROAS went up, revenue must go up. That worked for a while, until it didn’t. Then, each additional purchase we drove with our Fb ads seemed like it got progressively less and less profitable

Lesson 1: ROAS only focuses on a tiny portion of your business and the value your ads drive within an even tinier period of time. I learned I was completely missing the forest through the trees

Action 1: Learn how to calculate the total $ return over 90 days, not yesterday’s last click


Mistake 2: Ignoring the most important part of our business: the machine that causes people to purchase from us by coming through owned and organic traffic sources. We didn’t see that less and less of our revenue was coming from owned and organic traffic sources over the prior 5 years

Lesson 2: We needed to allocate people, time, and money to understanding & building a machine that drives these purchase decisions

Action 2: Allocate a whole person (maybe it’s you) to own 2 KPIs: the % AND $ of new customer revenue coming from owned, earned, and organic traffic sources


Mistake 3: Forgetting the 95/5 rule

Lesson 3: 95% of people seeing our ads simply are not in the market for our product right now

Action 3: Given that’s the case, rather than allocating 95% of your resources trying to convince the 5% to buy from you now, put together your action plan to prep the 95% to purchase from you without needing to be convinced. The only way this happens is by building your brand - AKA getting people to think about your brand automatically when they decide they are in-market to purchase in your product category

—
Thanks for reading. If this post was helpful, here are 4 things you can do right now to 

• Get more strategic + tactical nuggets on brand building, 

• Tactics on connecting brand building to financial impact, 

• And specific things you can do to build strong emotional connections with your audience: 

1) Subscribe to the Brand Builders podcast on YouTube or Spotify, and Apple Podcasts. 
2) Apply to join our brand builders slack community (suuuuper small group exclusively for brand founders and operators), 
3) Follow Tom and Preston on Linkedin for regular posts on this stuff
4) And heck, share this with someone