In this edition of our series, The Startup Journey Interviews, I had the opportunity to sit down with the remarkable Diane Prince.
Diane’s track record is nothing short of extraordinary, with nearly three decades of experience nurturing startups into successful businesses.
Having built seven companies that have collectively generated over $300M in revenue, achieving five successful exits in the process, she has made an indelible mark on the startup ecosystem.
Diane isn’t just an established serial entrepreneur, but also a successful business coach. Leveraging her years of experience, she guides other founders on their entrepreneurial journeys, like teaching them her five essential secrets that every entrepreneur must know, for example.
Her expertise and insights have proven to be invaluable to many who aspire to follow in her footsteps, and I’m glad to have the opportunity to share them with you today.
That said, with seven companies to choose from, it was a challenge to work out exactly which one we should focus on for this interview.
After brainstorming this challenge with Diane, we landed on her first-ever venture – Onstaff, a company she built from the ground up – all the way back in 1996.
The reason? Because so many of the core tenets of entrepreneurship are timeless. They’re just as relevant today as they were three decades ago, yet many entrepreneurs forget them.
Lessons like the importance of clarity when setting goals for your startup – which became a focal point of my discussion with Diane.
Whether your goal is to scale and become the CEO of a 100+ person company, plan for an early exit, or seek a strategic merger with a similar company in your niche, understanding your ultimate objective is crucial.
Diane shares valuable insights on this topic, and many others from her tenure in the startup world, drawing from her own experiences in navigating these diverse paths.
Whether you’re an aspiring entrepreneur, a seasoned business owner, or someone who’s passionate about the mechanics of building a successful business, there’s something in this conversation for you.
Let’s dive in by getting to know Diane, and Onstaff, a little better.
Rui: Diane, thanks for taking the time to sit down with me today. To start, can you give us a quick overview of Onstaff?
Diane: Of course! Onstaff was my first entrepreneurial venture.
I was young and I really knew nothing. And this was back in 1996, at a time when there wasn’t all of this information about entrepreneurship and startups and all of that.
So we built it from a lot of common sense. Or maybe a lot of not common sense. We made a lot of mistakes, but we managed to find success along the journey.
And then, I kept building businesses throughout the years.
And as technology advanced at light speed, it enabled me to share my experiences and help other entrepreneurs in a lot of different ways.
Startups today are nothing like they were back when I started out, and it’s been interesting to see that evolution over such a short amount of time
R: Let’s talk about your idea for Onstaff. So how did the initial idea come up?
D: The first decision for us was about what we wanted to achieve and get out of the project.
It wasn’t a case of “Here’s a problem that we’re passionate about and we want to solve it.”
I was in my late twenties and so was my co-founder. We had this idea that if we could build a business, grow it and sell it then we could retire in our thirties.
And it might sound selfish or whatever. But I really do believe that founders need to have that knowledge of what they want to get out of the company they’re building. So many other decisions are based on that.
Which meant the first step for us was brainstorming to come up with ideas.
During that idea process, we were able to filter out what would be the best idea for us.
We knew we had to find an idea that would have product market fit, which is one of the most crucial factors in whether or not you’ll succeed.
The idea also had to be something that could be a vehicle to get us to that goal of selling and retiring in a few short years.
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R: So it was about having clarity. And it’s true that knowing what you want guides the rest of your decisions. I agree it’s crucial.
The typical success case that we see nowadays is someone that has spent 15 years in a given industry, finds an inefficiency and sets out to build a solution for it.
But your story is certainly proof that there are many ways to build a business. As you said, you had multiple ideas at the time. How did you settle on the idea for Onstaff?
And how did you set out to build the first version of this business and get some sort of validation on the road to product market fit?
D: It just seemed to make sense.
Obviously, we weren’t sure. Essentially we were a temp agency for the title insurance sector.
Title insurance is something that’s really specific here in the United States. It’s boring. I won’t go into it. It has to do with when you buy property.
My dad had spent his entire career as an executive he started out at the bottom of the ladder and worked his way up.
And I was always like, “Please kill me if I end up in this industry.” But it just seemed like a really good idea.
Especially considering how well the market was doing in Southern California (where we were based) at the time. More than that, there was a lot of available talent and the companies we were targeting didn’t have the right solution to fill their rosters.
We identified that, in theory, we were solving a problem that the market had. “In theory” because we identified this pre-launch.
I’d also “temped” my way through college and grad school, so I had some experience in the sector. So it really was a mix of where the market was and putting our different experiences into a mixing bowl and combining them into this business.
Related: How a Y Combinator Lesson Helped Our Startup Scale to a $19M Valuation [Founder Story]
R: And how did you finance the operation at the start?
This is a discussion that comes up a lot in these days. If you should bootstrap or get a personal loan or go straight to VCs.
What was it like back then?
D: To start, it was friends and family, a.k.a. my parents. I was very fortunate to be able to call on them to help us get started.
They lent us $35,000. And that got us to a position where we started becoming profitable.
At that point, our main cash output was payroll. Essentially, the employees were the product. So we borrowed another $30,000 to keep that ticking over.
So the total “friends and family” was $65,000, which we repaid within a year from profits.
Our next step was a credit line from the bank. And then, as we brought on co-founders, we had each of our co-founders actually invest in the company.
That was the first time we took that form of outside money.
They would come in as co-founders with specific roles and a salary, but they would also put money into the company. So they had a stake in the game as well.
R: And that was through sweat equity, I’m assuming? How did you negotiate that with them?
D: Yes but it was more than sweat equity too. Mainly because they also had decent salaries. When we were looking for those co-founders we also asked them “What do you want out of this?”.
So we purposefully found people who had clarity on what they wanted to get out of co-founding with us.
One co-founder we brought in wanted to be CEO of a publicly traded staffing company. And we already knew we wanted to retire ASAP. So it was really a perfect match for both of us.
We also needed someone to help with the workflow, mainly because in the middle of all this I had just had my first baby.
So it was a type of sweat equity I guess, but they also put in significant amounts of their money. We were, purposefully, really generous with our equity. Something I think is quite different from how startups are structured today.
It’s something many people will advise against. It’s something I’ve faced many times since then. Like my new business, Founders Go Here. I was talking to someone and she was telling me “Why don’t you just hire people and keep 100% equity?”
My response is, with the goal I have for the business, why do I care about 100% equity?
My goal is to sell the company for $45M. If I end up with $20M with the equity I have in the company I’m more than happy with that.
So, in terms of Onstaff, we were very generous with our equity. But they also worked extremely hard. We also had a deal that if they hit certain milestones along the way they would get more equity so they would make more when we finally sold the company.
For example, we had people that started at 10% and, because they hit their milestones, they ended up with 15% by the end of the project.
Related: Lessons Learned From Over 25 Years in Silicon Valley [Founder Story]
R: Let’s talk about early adopters. This is 1996, so the internet wasn’t there to help at the time.
Subsequently, growing this business to $50M in revenue in six years is quite an accomplishment for that era.
I want to start with the marketing strategy.
Who were your first clients and how did you get to them?
D: First we thought about the company where my dad worked. He’d been there for a while. We were like, “Ok that company will be our client, we’ll be fine.” We met with them and talked through everything, and they ended up not being our earliest adopter.
And that was kind of interesting. I’d put out ads, acting as if we had jobs for people. When we received the first resume, I quit my job the next day. My coworkers turned to me and said “Isn’t this a big risk?”
And I remember looking around at the cubicles surrounding me and I just said “Yeah it is, I’m sorry but I’ve got to do it.”
Then, we looked into that resume, checking references, etc. Then we interviewed her. And remember, we were kids who knew basically nothing about this industry. I remember her looking at us with this “who the hell are you lot” expression on her face.
After the interview I phoned some of her previous employers to ask about this potential temp we could send out to companies. These previous employers started asking questions about who we were. I basically pretended we were this big agency.
People would ask who we were and my reaction would be “Oh, you’ve never heard of us? That’s weird” And it really just started snowballing.
R: Fake it till you make it. Got it. Let’s talk about the path to growth, what happened next?
Did you take any money from investors? Did you bootstrap the business?
How did you go from those first couple of clients to hitting $50M in revenues?
D: The next chunk of money that we brought in was through a traditional credit line at the bank.
And I will never forget, we had just bought our first house. The banker looked at us and said, why did you buy a house?
Of course, we were supposed to put the money into the business.
It was one of the many times where I just thought “God what have I done? Am I an idiot?” But it just felt like the right thing!
Anyway, luckily we did get the line of credit for the business and it was fine, but it was one of those moments.
R: You mean founders don’t have it all figured out from day zero?! *wink*
D: Surprising right? The funny thing there is actually, as a founder you feel like everyone else has it all figured out apart from you!
R: Absolutely, like a secret book that everyone knows about except you!
D: Yes, exactly!
Once we had the credit line, people started buying into the business, which in turn allowed us to increase our credit line.
Then when we brought in our third executive, he put in about $150,000 to receive his equity.
That was a nice point in the journey we were all on nice salaries at that time.
R: That’s a nice feeling – when the hard work starts to pay off.
And I imagine it was organic growth from there.
D: Essentially yes, and at each stage of growth we would always be looking to bring on the next hire to fuel that growth.
Related: How This Unicorn Founder Built an Airline Out of Necessity
R: And what roles did those people you had with you in the early days fill out?
D: I started out with my then-husband. And we very fluidly switched roles depending on what the business needed and what the other person was doing.
Turns out we were actually better business partners than a married couple.
Whatever needed to get done, we did it.
Sometimes he would act like my assistant, sometimes vice-versa.
We would do payroll and invoices, then we’d switch to sales or talking to strategic partners, you get the idea.
Then our first hire was a 17-year-old who, sometimes, we had nothing for her to do. We would just say “Hey, do you mind chilling and then when we have something we’ll give you a shout.”
But she was an important person in the early stages, she was our “catchall” operations, admin, and customer service person that wears many hats.
She later became the CEO of one of our other companies – and now has an executive role at Meta, so her journey has also been very interesting.
R: That makes a lot of sense. As a founding team or early hire of a startup, I believe you should do everything.
This idea of “wearing many hats” will give you such a valuable perspective over all aspects of the business that you’ll be in a much better position to make important decisions in the future.
You already mentioned that you were fluidly switching roles and doing lots of things but I want to get a better understanding of what a typical week looked like for you when you started out.
D: I pretty much worked non-stop. I left my job in January 1996 and was at full speed all the way up until I was put on bed rest during the third trimester of my first pregnancy, which was two years later.
I worked so much that I didn’t even realise I was in pre-term labour. That’s when we brought on the first co-founder and really started bringing people in to help.
Related: Building a Successful Fintech by Listening to the Market (Founder Interview)
R: So you had to deal with letting go of the company slightly. Instead of doing everything yourself, you have to empower someone else to do it – and you were very young at this point.
How did you handle that transition when you had your first baby?
D: It was really easy because we were really in touch with our goals and vision. So when we brought someone on, we made sure that they aligned with that vision completely.
We first brought in someone to take on the role of President. And he helped us to hire and then, eventually, talk to investors as we were starting to think about selling.
Then we brought on an operations person, which was huge. That was an incredible hire because it took so much off our plate.
But also I’m not someone that has a problem with letting go, I don’t hold onto everything.
R: And that’s a great thing. I see a lot of projects where founders, although they have the best intentions, hurt their startups with micromanagement.
And yes, if they applied their brains to the task they may get a better result than anyone else, but that’s not sustainable as you grow a business.
This is a topic that I feel can’t be stressed enough.
I’d like to talk about the exit – because it’s a valuable thing for our community of entrepreneurs to have some notion of.
So, how did the opportunity come about? What was the negotiation like? Did it align with your goals?
D: I think it’s worth noting how much different the founder mindset is when they’re ready to exit versus when you start the business.
In the beginning, you’re watching every penny. Which is a tough reality to live in. A lot of founders I work with, at some point, don’t even like their business anymore.
They just want to get out. And I see that a lot with even profitable service-based companies or, other companies that are profitable and running well. They just hate it.
That’s one of the reasons why I think it’s so important to build your business based on what you want – and how you want to live your life.
It’s something that will affect every decision you make.
With Onstaff we’d kind of reached that point. It was so stressful that we’d gone from watching the pennies to being willing to walk away from millions of dollars.
I think we sold too soon because we were so ready to get rid of it, it was just causing us a lot of stress.
To do that, we first hired an investment banker who went to investors. We talked to strategic buyers and private equity firms, and we had a deal with the holding company of monster.com.
They were doing diligence when 9/11 happened. Their office was in the world trade centre.
And then we decided it wasn’t the time to sell. That we were going to regroup, we were gonna build. We were thinking about acquiring smaller companies. That would be good timing.
And then while we were in that process, one of the business brokers we had called and said “I actually have someone who might want to buy you.”
So then we went back into the process of exiting. It took about six months and that deal finally closed.
Related: Selling a Fintech Before Launch by Leveraging Your Most Valuable Resource: People
R: Thank you for that. So Diane, a couple of rapid-fire questions now.
Here, I don’t want you to just call on the experience you had at Onstaff.
You’ve built seven companies and had five successful exits. You’ve been working with successful entrepreneurs from all over the world as a business coach to both small to big companies.
So I want to focus on everything you’ve learned from all the startups you’ve founded and entrepreneurs you’ve worked with.
Can you share one key lesson you learned about product?
D: When you have product market fit, you know it. Things just click.
Everything just gets so much easier.
And when it comes to product market fit, timing, I believe, is the factor that determines most whether or not your business will succeed.
R: What’s one key lesson you learned in marketing?
D: Once we hired other people to help me with marketing, it was a complete game changer.
So when we hired our first PR firm, it was a whole different game. It just completely levelled up the whole company.
My advice there is it’s important to hire other people to help you with it if you’re not a marketing person.
Related: Inside the Marketing Playbooks of Unicorn Entrepreneurs: Lessons for Your Startup
R: And one key lesson you learned on managing people?
D: I was a terrible manager for many years and then I learned to let things go and be a kinder person.
I learned that I’m not always right. I learned to give people space to succeed.
And the final key thing to managing people, which I think may be the most important factor, is to be direct and let people know what your expectations are.
Related: 5 Key Lessons on Finding a Co-Founder From Award-Winning Entrepreneurs
R: Hiring adults and treating them like adults.
D: Exactly that.
R: With that in mind, can you share one key lesson you learn about creating and maintaining a good culture?
D: I’ve heard it described as creating your own drama.
What I mean by that is to engage your team on where you’re going. Tie them into your vision, and get them excited about it.
You want everyone to be super engaged and, although people may have different specific goals, they’re all on the same rocket ship with you navigating in the same direction.
Related: 7 Entrepreneurial Mindset Lessons from Founders That Raised Millions
R: Love it. Okay, so now can you share one resource that was invaluable to your success?
D: One of my favourite books is Rework. I love how it’s just common sense and cuts through a lot of the bullshit that’s out there now in the startup ecosystem.
R: Great reccomendation.
For the final question let’s pretend that, just now, someone burst through the door and says “Diane, I’m starting my business tomorrow.”
What’s the first advice that you give them?
D: I would first ask them “What do you want out of this startup?”
And when they start telling me about the problem that they’re going to solve for other people, I try to redirect them back to them by saying “That’s great, but also you have to know what you’re gonna get out of it.”
Because, as I’ve touched on in my own story, this is how you will live your life for the next several years.
You have to be crystal clear about your end goal, whether it’s planning for an exit, growing and becoming a CEO of a 100-person plus company, or merging with a similar company in your niche.
Whatever your specific goal is, make sure you have it in your mind and constantly work to complete it.
It’s clear why Diane has earned her place among the successful serial entrepreneurs I’ve had the pleasure of speaking to.
Her journey from creating her first company, Onstaff, to building an empire of successful startups that have collectively generated over $300M in revenue, is a testament to her tenacity, vision, and business acumen.
Moreover, her journey serves as a powerful reminder that success in the entrepreneurial world isn’t just about financial gain. It’s also about the journey, the learnings, the failures, and ultimately, the impact you can have through your ventures and experiences.
Thanks for reading.
Rui is a partner and CMO at Altar.io. He’s been dedicated to B2B marketing for his entire professional career. After spending eight years honing his craft at Portugal’s first B2B marketing agency, he joined Altar, where he leads both the marketing and sales department under the same umbrella.
His current focus is on business strategy, getting to know Altar’s customers and occasional early-stage strategy discussions with the entrepreneurs we work with.