Product

From Start-Up to Scale-Up: Growth Stage Wisdom From Tommi Forsstrom, CPO at Workstep

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Apr 21, 2023

From Start-Up to Scale-Up: Growth Stage Wisdom From Tommi Forsstrom, CPO at Workstep

“Their revenue growth is stalling. Their cost of mistakes is going up, and everything is stalling and slowing and getting harder.” For most people that doesn’t sound like a job opportunity with much appeal, but it’s  the point where Tommi Forsstrom usually joins a startup. Tommi is a product management executive who specializes in helping companies navigate “the growth stage,” that adolescent era of startup development where a company has found product-market fit and needs to scale  – and to do that they need to make some hard choices. 

Here’s Tommi Forsstrom on Crafted, Artium’s new podcast.

Listen and subscribe to Crafted: Apple Podcasts | Spotify | All Podcast Apps

Dan Blumberg: Hey listeners, amazing news, the Webbys have honored Crafted as one of the best technology podcasts of the year. We'd love it if you could share the news. If you've been waiting for a sign to share this podcast, let this be it. Please text a few friends a link to Crafted, the podcast about great products and the people who make them. Okay, on with today's episode.

Tommi Forsstrom: There's so many books, so many blog posts, so much amazing content about how to survive the startup stage, the early stage. And then you find that success people crash and burn because there's nobody there to help them through what happens between, oh shit, we have product market fit and ringing the bell at the New York Stock Exchange.

Dan Blumberg: That's Tommi Forsstrom.

Tommi Forsstrom: If you want to go pedantic, it's Tommi Forsstrom. If you want to go the safe route, it's Tommi.Dan Blumberg: I'm not from Finland, so I'll stay safe. Tommi is a product management executive who specializes in helping companies navigate the growth stage. He's currently the chief product officer at WorkStep, a platform that helps supply chain companies engage and retain their frontline workers. Previously he was VP of product at the online learning app, Teachable and stock photo finding site Shutterstock, and he's advised many startups on all things growth. On this episode Tommi walks us through the awkward years just after a startup becomes a scale up.

Tommi Forsstrom: Where I usually find companies is their revenue growth stalling, their cost of mistakes is going up, their technology is more complicated.

Dan Blumberg: He'll share his framework for identifying what's working and what's not, as well as how to say goodbye.

Tommi Forsstrom: One of the hardest skills for product people is like shoving rabbits back into hats. Killing features is so hard.

Dan Blumberg: And we also hear how Tommi approaches career growth with practical tips for job seekers. Welcome to Crafted a show about great products and the people who make them. I'm your host, Dan Blumberg. I'm a product and engagement leader at Artium where my colleagues and I help companies build incredible products, recruit high performing teams, and help you achieve the culture of craft you need to build great software long after we're gone.

Tommi, thanks so much for joining us. You have a really great succinct bio on your LinkedIn profile and I just want to read it in full and then ask a couple questions from it. So you say you are a, "Product leader specializing in the transformation of companies from startup to growth stage, building sustainable growth from product market fit." And then you go on to say, "I like 'em lean, agile and evidence-based." So first of all, kudos for packing so much into so few words. That's an art. Second, I want to dig in. Your specialty is the growth stage. Can you share what unique challenges companies often face at the point where they've found something, it works, they need to scale it and make it sustainable?

Tommi Forsstrom: Yeah, it's a really weird era and it's hard to define exactly when it starts and exactly when it ends. There's so much debate about what does product market fit even mean, and when are you there, and when is it time to switch gears. I usually loosely define it as the journey from 10 million to a 100 million. To me, it's very much like the human adolescence, where your childhood, your early years is just running in different directions, doing whatever. You try every hobby, you try whatever, and you're accumulating the set of experiences.

And then when you get to your adolescence, it's like you start understanding a little bit what makes you uniquely you, and you start pairing down to the things like, you can choose your main hobby. And the companies coming to the growth stage usually have very similar characteristics. They come to the growth stage because they've been hustling and grinding crazy for the first two years, three years, five years. And it's usually very instinct and intuition based. And so it's a lot of just throwing stuff at the wall because the cost of mistakes is nothing. You spend a couple of days on a feature, who cares? You throw it out there, you have maybe 20 customers. The early stage is very much times at bat oriented, take as many swings as you can.

You take a swing and you hit a home run. The problem is you've probably taken a hundred other swings. So you come into this like, "Oh shit, we have product market fit moment." You have that one thing that works, but you have 99 other things that you've done, and shipped, and left out there that really don't. And so you don't necessarily know which one of those a hundred things that you did. And so you're in this weird thing where, "We're going to scale this company and we're just going to do more of all of those a hundred things."

And so where I usually find companies is their revenue growth stalling. Their organization is getting increasingly dysfunctional, their cost of mistakes is going up, their technology is more complicated, and everything is stalling, and slowing, and getting harder. First you got to do a little bit of triage of, okay, what is slowing you down. And you very fast start understanding that product market fit is not a binary. It's not like the whole product fits the whole market. It's every single time. There's there's a part of the product that is working better than the rest, and there's a part of the market, a customer type, a use case, a whatever, that's much more receptive to your product.

And so doing just a little bit of fast archeology around where is that tightest connection will then lead into this process of doing more with less. There's this counterintuitive, like what got us here won't get us there. The early stage is just like ships ship things fast, add, add, add, add, add. And you come into the growth stage, you have to start pair down, pair down, pair down, and seek leverage. So that to me is the core startup to scale up flip pathology, if you will.

Dan Blumberg: Tommi specialized in growth stage companies while working as a product leadership consultant to insight venture partners portfolio companies. He worked directly with product management luminaries, Melissa Perry and Shelly Perry, and credits them for, as he puts it, indoctrinating him into the importance of the growth stage. After advising a few dozen startups, he took a role as VP of product at Teachable, an e-commerce platform that helps people sell their self-created online courses.

Tommi Forsstrom: When I joined the company, they were crushing it, absolutely crushing it. They had come out the early stage gate flying, already incredible brand equity, incredibly loyal customers. They were somewhere in the 10, 15 million range. They were really crushing it, but it's also really obvious that they were acquiring customers like crazy, but also churning through them at a slightly unsustainable rate. And their product development was already what the customers are saying. It's like, "Oh, it's a little stale and the product isn't really keeping up with the contenders,."

And one of my first things in my first year was that we started really analyzing, first of all, where is all of our product development investment going? And then start doing some attachment rate analysis on like, for this customer type, what features are they using. What features aren't they using? What features are they happy with? What features aren't they happy with. To enable us to be basically get a center of gravity.

Dan Blumberg: Tommi zeroed in on the payment platform that Teachable had built. Payments seem simple, but once you factor in the millions of edge cases like refunds and failed transactions that come with it's a complicated system to maintain. Was it necessary for Teachable to have its own payments platform?

Tommi Forsstrom: It was a good strategy to gain a little bit more revenue, but it was starting to become super obvious what an absolute millstone around our necks it was, because guess what, when you're dealing with money, you're dealing with taxes, with tons of compliance, with all sorts of wild things. And we had already started putting more than 50% of our efforts there. And also the customer satisfaction just wasn't really there and I could easily see it get even worse.

And so for me, it became very clear that a part of our journey had to start figuring out a way to shift more of our attention, more of our resources back to the core of what we're doing. Because that's where our customers, they had incredible aspirations to do more and nobody in the market was meeting them. Everybody was slightly letting them down on what can a modern online course really be. But the reason we weren't able to serve that was that we had already diluted our efforts on that front. That to me was a really classic case study of how you can really hurt your growth stage opportunities by getting a little too eager in the startup stage.

Dan Blumberg: Tommi pushed teachable to unwind its custom payment system at least as much as possible and to use Stripe instead. It was painful but necessary.

Tommi Forsstrom: The thing with some of these growth stage issues is some genie don't go back into bottles all that easily. It's so easy to say, "I come in, I look at what works, what doesn't, and then we start killing." Honestly, one of the hardest skills for product people is shoving rabbits back into hats. Killing features is so hard because I have yet to see a feature that's in prod that nobody uses. And it's especially hard in Teachable's business, which it's not an API product, but it's like a layer in other people's businesses, like Teachable powers, I don't know how many today, but back then it was already 30, 40,000 active businesses. Every time you remove something from the offering, you're basically pulling the rug from under somebody's business. And it's like, how do you do that without causing irreparable brand damage?

Dan Blumberg: Yeah, I've been part of decisions to kill features or kill products, and it's a really hard decision to make. I don't know if you have more advice to product folks out there on how to elegantly kill features?

Tommi Forsstrom: I mean the easiest-

Dan Blumberg: Sunset, I'm sorry, sunset. We don't kill, we sunset, right?

Tommi Forsstrom: I don't know. I feel like I want to kill them sometimes too, but okay, sunset. It's incredibly hard. Basically you just have to approach it as if you're building a feature. The same amount of research, the same amount of discovery. That's a mistake companies often make is that they think that building a feature is hard and you need diligence, and plans, and processes, and then killing a feature or sunsetting a feature is just like flicking off a light switch. But that's where you need all the coordination because you have to have off-ramps.

And even if it's just a small minority of your customers, sunsetting features recklessly can create so much damage to your brand that it's really not worth it to just rug pull people. And especially like you said, when you're in the B2B space, it's one thing if Facebook removes a button, boohoo, I'm just not clicking that button anymore. It's another thing if Stripe closes an API and 50,000 businesses have their payment processing turned off. The second you push something out the door, you always have to have that, "What will I do if this doesn't work? How will I kill this? How will I ramp this down?" But that's the problem is the early stage, you don't do that. You need to move fast, times at bats over everything. And so nobody ever has contingency plans of what if this doesn't work.

Dan Blumberg: Tommi is now chief product officer at WorkStep.

Tommi Forsstrom: It's lattice for the blue collar worker. We gather sentiment through surveys, pulse, milestone, whatever, always on surveys, different ways of gathering employee sentiment. We analyze it, we provide predictive analysis on leading indicators to turnover reasons, and we connect that data to things like performance and even customer satisfaction.

So at first I was like, "That's not super interesting." But then I started scratching the surface and researching supply chain workforce issues, and researching how left behind the American frontline worker is, and how many of them there are. And it's millions actually, tens of millions of people who are wildly underserviced by technology. And I get excited by underserviced, basically markets where any modern technology is an incredible quality of life improvement. And that feels rewarding to me.

Dan Blumberg: And are you finding what you described as a hundred things have been tried and now it's time to figure out what are the most important few?

Tommi Forsstrom: Yeah. Again, if I go with the analogy of the human adolescence, normally I join companies when their equivalent human being is 15 years old, but WorkStep I joined with as a 12 year old. The initial product is incredibly strong, but we're still at that stage where just pushing it to 10 million is the number one thing, which means I need to align myself a little differently. I need to align myself more as let's push that analysis a little further. Let's push the scaling tactics a little further, just push and hustle and trust our instincts.

And it's been fun because it's been challenging my own approach a little bit. Usually when I join a company at the sweet spot where my skills become relevant, a lot of almost irreparable mistakes have already been made. Like sometimes in the growth stage when you come in, you have to do some pretty aggressive moves. The way WorkStep is moving now I feel like we're going to come into the growth stage and together we'll have been able to prevent a lot of those things that if I had airdropped in at 15 million or 20 million, I'd have to describe much more jarring treatments for.

Dan Blumberg: You've positioned yourself as an expert in a very specific thing, product leadership at growth stage companies. How did you identify your niche? And also if you could speak to the value of specialization in your career generally?

Tommi Forsstrom: So my journey basically is I was supposed to be a math teacher. We're talking like mid '90s. I went to the University of Helsinki specializing in math and pedagogics, minoring in computer science. And guess what? Dotcom boom basically meant if you could render, "Hello world," you had a high paying job. And for a 20 year old, okay. So I got sucked into software engineering and just focused on software engineering as my day job for a good 10 years.

I found myself in New York City in 2012 as a CTO of a tiny startup. At that point, somebody asked me as we started finding some success, raising some money and scaling, somebody asked me, "Why don't you hire a product manager?" I'm like, "What the hell is that?" And so I did a little bit of research. Back then New York wasn't hip to the product game yet. It was very much a Silicon Valley thing, but I found enough job descriptions to be like, "Holy crap, this is me. Why am I not the product manager?" And that was an aha moment where I do not care as much about the building of things as I am about the things in and of themselves.

And then funnily enough, as I then landed on the product lane, I started finding myself much more drawn to the practices, and the processes, and the policies. And how do you run the factory that creates products? And so that sucked me into product leadership. And then when I got there, I realized, "Oh, there's this business layer, there's this customer layer." And so I just got yanked, and yanked, and yanked into, there's another level, there's another level.

And the growth stage thing clicked when I found myself at Inside Venture Partners where I had really superb mentors who basically banged into my head the importance of the growth stage and also how underserviced the industry is in people who know how the growth stage works. And I was like, "This is super exciting, this super interesting, and by the way, very few people who know how to do this." So in that moment I was like, "This is me now. Hello me."

It's been all growth stage from there on out, I just got so infatuated with the problematics and witnessing so many great companies and so many great founders crash and burn because they couldn't find the right help. There's so many books, so many blog posts, and so much amazing content about how to survive the startup stage, the early stage. And then you find that success people crash and burn because there's nobody there to help them through what happens between, "Oh shit, we have product market fit and ringing the bell at the New York Stock Exchange."

Dan Blumberg: It's often a stage where folks bring in Artium, is when the things that got you here are not going to get you to that next stage, whether that's technical debt, or people are not able to agree with each other, or set a clear path forward.

You and I first met after you wrote a blog post that caught my eye a couple years ago in which you shared your framework to job hunting and how you evaluate competing opportunities, and I'd love if you could share a bit of that framework.

Tommi Forsstrom: The way I look at, it's like I build a matrix. I love spreadsheets, so I just geek out on formatting and creating spreadsheets. I basically build a spreadsheet where the rows are the companies that I'm talking to, the columns are all the things that matter to me as decision making dimensions, and I just normalize everything to 1 through 5, or 1 through 10. And I try to give every criteria a weight, not all criteria are created equal. And then I go through everything as like, "This is a 1 out of 5. This a 5 out of 5. This a 3 out of 5," with the full knowledge that it's highly speculative and very qualitative in a lot of ways. Maybe something like compensation you can clearly benchmark, but how much do I trust the founder?

And for me, the most critical aspect about that process is I punch those numbers in and I get a readout. "This company's on top and it's gets a score of X, Y, and Z." That doesn't mean I'm like, "Yes, I'm going for this job." I meditate, if you will, on how do I feel about this readout. If I feel like, "Ugh, I don't like this," that probably means there's something unarticulated about some other company.

And this actually how I ended up at Teachable, which I also wasn't super jazzed about at first blush. I had I think five or six companies I was talking to and everybody was either giving me an offer or at offer stage. And I was punching the numbers in and Teachable was never number one, but it was always either two or three. After I was going through this process, I was like, "I think Teachable is not the job I want, but it's the job I need." I need that everything is okay or better. It's been super helpful for me to help really understand what's going on in my mind.

Dan Blumberg: We'll link to Tommi's spreadsheet and blog posts on job hunting in the show notes. Here's another tip.

Tommi Forsstrom: The way I look at it's like an enterprise sales-driven sales process. I'm the product, my CV and my pitch, my spiel, my interview sound bites, they're my product marketing. So I need to understand who the buyer is, so basically who's the hiring manager. Who am I interviewing with? What does the CEO need? What does the engineering leader need? So I have to have this clear understanding of what am I selling, who am I as a product.

And then the managing the interviews, managing the who I send CVs to, who I get connected through the backdoor and whatever, what recruiters I work with. That's basically sales ops. You have a funnel, everything in the funnel is at different stages. Every stage has a different probability and a predicted close date. You just start making a real process out of it.

And one of the biggest mistakes I see people do in job hunting is they choose the job that they want and they just put all their eggs in that basket. Any sales leader that would do that, just hunt the one big customer they want is going to fail. You need to have a diverse, solid pipeline. Get as much stuff at the top of the pipeline, basically just prospects, prospects, prospects. Send CVs even to companies you're not that jazzed about because worst case, you're going to get better at interviewing. Because guess what? Interviewing is a muscle. You're going to suck at it at first so don't go for your dream job as your first interview thing.

And then just rinse, repeat, iterate on it. Just a good product leader, every time there's a closed loss deal in Salesforce, a good product leader goes in like, "What is wrong here? Is it the product? Is it the positioning? Is it the value props we're putting forth? Is it the wrong type of buyer?" You need to learn from every one of those. So again, it just boils down to very basic product tricks of, know your customer, know your product, its strengths and weaknesses, connect the dots between those.

Dan Blumberg: I want to go back to the growth stage for one last question. Is there a company that you point to as like, oh my God, they crushed it in the growth stage?

Tommi Forsstrom: Whoa, that's a really solid question. I do like the way Stripe... Who doesn't Stripe except all the other payments companies out there? If you look at their timeline of product development, they came out of gate guns blazing early on, but they had a really long lull of seemingly not releasing anything. They had a long dry spell where they were just riding their core product.

And then suddenly the last couple of years it feels like they're shipping not just features, but offering that could be at its own individual company, seemingly every freaking month. There was this crazy cornucopia of stuff coming out. And I do think that they put in the time after they found that initial success and they became the seen darlings of payment processing. They took their time to slow down to speed up, and they made sure they're ready for then the next level of aggressive expansion, which is where they're at right now. But had they done that with an immature product footprint and just like crazy threads all over the place, I don't think they would've been as successful as they are. But at least on a high level, it really for me fits the picture of dare to slow down to speed up, as long as the early wave is strong enough, and for them it really was.

Dan Blumberg: Tommi, thanks so much. This has been really, really fascinating stuff.

Tommi Forsstrom: Thank you. It's been really fascinating talking with y'all.

Dan Blumberg: That's Tommi Forsstrom and this is Crafted from Artium. At Artium, we build incredible products, recruit high performing teams, and help you achieve the culture of craft You need to build great software long after we're gone. We artisans love partnering with creative people to build their visions of the future.

If you have a product that's ready to scale up or needs to get off the ground, let's talk. We've turbocharged a great roster of startups, scale-ups, and big enterprises. You can learn more about us at thisisartium.com and start a conversation by emailing hello@thisisartium.com.

If you like today's episode, please subscribe and spread the word about this now Webby honored podcast because once people discover Crafted, they can't help but say-

Tommi Forsstrom: "They were crushing it, like absolutely crushing it."