Scaling a Startup to $50M ARR: Timeless Wisdom From Diane Prince’s First Step in a 30-Year Entrepreneurial Journey

Rui: If you’re looking for stories, strategies, and actionable advice on how entrepreneurial careers start, you’re in the right place. I’m your host, Rui, and this is the Startup Journey podcast, the show where every week. I sit down with different entrepreneurs, experts, and thought leaders to dig deep into what it takes to get a startup off the ground.

Today I’m joined by serial entrepreneur and business coach Diane Prince. She launched her first business in 1996, a recruitment startup that, six years later was making an annual revenue of 50 million. She sold that business and since then, built several other startups across several verticals. And that is exactly the story where we’ll be focusing today Onstaff.

So Diane, thank you so much for taking the time to sit down with me today. How are you?

Diane: Hey Rui, I wish I could pronounce your name better. I’m really good you.

Rui: My parents thought that I would be working for the Portuguese market only, so they gave me really a tough name with that R there.

So it’s pronounced “Hu”i, but because I work with the rest of the world most of my day, I actually go by Rui most of the time. So you actually did a great job with that pronunciation anyway. Can you give us a quick overview of Onstaff.

Diane: Absolutely quick overview. Okay. As you said, it was, this was my first entrepreneurial venture.

Really knew nothing. And it was at a time when there, there wasn’t all of this information about entrepreneurship and startups and all of that. So it was we built it from a lot of common sense, I don’t know. Maybe a lot of not common sense, made a lot of mistakes, but it.

To, to now to, as I kept building businesses throughout the years and as technology advanced light speed, light speed, I was able to, it also enabled me to share my experiences and help other entrepreneurs in a lot of different ways throughout the years. By, by, from the vantage point of how startups are today versus what it was like.

Back then without all of the information.

Rui: Absolutely. And it’s interesting, and the reason why I want to have this conversation about a startup, a company that started a while ago, is that I believe that there are common pitfalls and common problems, and building a business is building a business and.

People are, for me, the core of any successful business and people are still there. So technology obviously increased speed in most things, but some of the, let’s say, golden rules still apply. So with that in mind, one question. Let’s start with the question about the idea. So how did the idea for Onstaff came up?

Diane: Yeah, so it was really a decision first, what. We wanted to get out of it what we wanted to achieve more than, okay, this is a problem that we’re passionate about and we wanna solve. So it was really, I was in my late twenties and so was my co-founder, and we wanted to, we had the idea that what if we could build a business and grow it and sell it and retire in our thirties?

So it really came from that. 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 outta the company because so many other decisions are based on that because then we had to brainstorm and come up with ideas.

And so during that idea process, we were able to filter out what would be the best idea for us because there were a lot of different businesses that we could start. But we had to look at an idea that would have product market fit, which as is the most, one of the most important things to determine success.

And also something that could be a vehicle to get us to that goal of selling and retiring in a few short years.

Rui: Perfect. So clarity, right? Having clarity, actually you reminded me of some financial planners. I know knowing what you want guides the rest of your decisions. So I agree it’s super important.

And although the typical success case that we see is usually nowadays, at least from my experience, is someone that has. Spends 15 years in a given industry, the tax and inefficiency sets out to build a solution for it. There are many ways to build a business. Okay. I understand that completely.

So you, as you said, you had multiple options at the time. What made you decide for this one, and then how did you set out to build the first version of this business or to get some sort of validation in the road to product market fit?

Diane: Yeah, so it just, It seemed to make sense, so obviously we weren’t sure.

But it was, we started by being a staffing agency. We’re a temp agency for, and it’s called title insurance. It’s something that’s really specific here in the United States. It’s boring. I won’t go into it. It has, when you buy a property, it’s and my dad had spent his entire career as an executive he started out like bottom of the ladder and worked his way up in title insurance and I was always like, please kill I industry.

It was just seemed like a really good idea. It was also because of how the market was in Southern California, where we were at the time, we were just recovering from an earthquake, a lot of pe there was a lot of available talent. The companies that we were servicing didn’t yet have this solution.

They were using staffing, but, and it was very up and down, like they would lay people off twice a month. So it was solving. We identified that theoretically first because it was before we launched it that we were solving a problem that the market had. And then also I had throughout college and grad school, I temp all the, like I would really fast and I would go to Europe and then no one typed there back then so it was putting together like different experiences that we had into the business.

Rui: Okay. How did you finance the operation at the start? And this is a discussion that comes up a lot in these days, right? If you should bootstrap or get a personal loan or go straight to to VCs for a pree round. How was it like back then?

Diane: Yeah. To start, it was friends and family, aka my parents very fortunate and privileged.

But they led us $35,000. And that was, and then after we started and we were becoming profitable, our main cash output was payroll. For our, basically that was our product, we’re employees. So we borrowed another 30,000. So the, to that total friends and family was thousand. And then we paid it back within a year from profits.

And then we ended up getting, the next step was a credit line from the bank. And then we brought on, as we brought on co-founders, they ev each of our co-founders actually. Also invested in the company. So that was the first time. Then we took that form of outside money. So they would get roles in, in salaries, but they also put money into the company.

So they had a stake in the game as well.

Rui: Okay. So that was through sweat equity. I’m assuming, how did you negotiate that with them? How did that go?

Diane: Yeah, and it was more than sweat equity too, because they they also had decent salaries and it was, it, and it was similar to. Similar to what I said about how we knew what we wanted to get out it.

We found people who had specific things that they wanted to get out It too. Co-founder that we brought in, he wa his goal was to be CEO of a publicly traded staffing company and we wanted to retire. So it was like, so it was really perfect. And we also needed, someone had

needed to bring someone in to, to help with the workflow. Yeah. So it was, so they had so there was sweat equity I guess, but it was also, Bought they put money in significant amount, significant amounts of money in. And and we were also really generous with our equity. And I think that’s very different than how most startups are structured today.

But that was something that really, like I, with my new business that I was telling you about, founders go here. I was talking to someone and she was like why don’t you. Just hire people and you have a hundred percent equity. I’m like, what do I care? Like I’m planning, I’m, my plan is to sell it for 5 million.

I’m like, it does not matter to me if I have good 20 million, added 5 million. So anyway in brief, we were generous with equity, but they also worked a lot. And they were also were, they were also tied into, and as they had certain steps to hit that would give them more equity, that would lever more levers to hit where they would get more equity when we finally sold the company.

They might, someone might started at.

Rui: Perfect. You mentioned that when you were talking about the 20 million of versus 45 and being generous with equity reminded me of a really smart young entrepreneur I met recently. We were having a conversation about her experience in Y Combinator going through the program, and at some point she mentioned something similar, Bethany, so I’ll put you to in touch, I think, because I think it’s interesting.

It would be interesting for you to connect. I think you would get along very well anyway. That’s besides the point. Now let’s talk about early adopters because Starting that business right after the quake when the market conditions were volatile, let’s say. But considering that this was prior to the.com bubble, right?

So internet really wasn’t there to help at the time. Growing this business to 15 million in revenue and just six years is actually quite an accomplishment. I want to start with really the start of the marketing strategy. Let’s talk about early adopters. Who were your first clients and how did you get to them?

Diane: Yeah. And at first we thought since my dad was in the industry and he’d been at the same company, we thought that they were gonna be, we were like, okay just that, that company was our client, we’d be fine. They ended up, we met with them and everything, and they ended up not being our earliest adapter.

And and that was kind of interesting. And we just started working. Like we just, I quit my job first and started, I. Put out ads acting as if we had jobs for people and people started applying. And that was actually when I first got the first resume. I quit my job the next day and my coworkers, isn’t this a big risk?

I’m like looking around at the cubes that I was surrounded and I’m sorry. Yeah and then it was from, Checking that person’s references. So we interviewed her and she was like, we were kids, knew nothing about this industry. And were looking at us like you.

Have this big agency and then people started asking questions or we’d be like, I’d be like we first, we were, we have an initial name that changed that was weird titles. And they’d like what are you? And I’m like, oh,

obviously you not, I meanly.

Rui: Beautiful. That’s just beautiful. Let’s talk about the path to growth, right? Yes. So you started there then. Did you take any money from investors? Did you bootstrap the business? How did you go from those first couple of clients to a bigger number and then obviously all the way up to the 50 million in revenues?

Diane: The first the next money that we. Brought in was through a credit, a traditional credit line at the bank. And Irene will never forget, we just bought our first house and the banker had come, she said, and she looked at us and she said, why did you buy? We were supposed to put the money into the business.

And I and I just remember like all these times I was like, I felt so oh my God. What?

I’m like, I don’t know. It just seemed like the thing to do, but anyway, we did get, we did the,

Rui: Diane, what do you mean? Founders don’t have it all figured out from the start. What do you mean?

Diane: Surprising. And everybody thinks that every other founder has it figured out except for them.

Rui: Absolutely. Absolutely. It’s the secret book that no one shared with, yeah. And

Diane: then people started buying in. So then after, so that we had the credit line. That was that was, that really helped us. And then it would increase as we grew. And then when we brought in our first. Third executive, then he had to, he put, I think he put in about hundred 50,000 in order to to have his equity.

And then he added, he had a nice, we had we all nice salaries at that time too.

Rui: Perfect. And then it was just organic growth from then on, I imagine. Yeah,

Diane: and it was pretty much, yeah, it was. And it, yeah, I mean it just, at each che of growth, we would do take, do these activit either bring somebody on or, and it was always big to fu to fund the growth, basically.

Rui: Perfect. Okay. So you mentioned a couple of times already the founding team and other people you had with you. I want to go there a bit. Who did you have with you in the early days and what were their roles?

Diane: Yeah, so first it was me and it was my husband. Then my now ex-husband. And so it was the two of us at first, and we had we really switched on and off of roles.

Like we were very, we had similar goals and we worked really well together. Turns out we were better business partners than married people, so we really did just treat it like we were co-founders in this business. And so really whatever had to get done, we would do. We would do invoices late at night.

Like every Tuesday we’d be doing invoices. We’d do payroll, we’d switch off on sales or talking to clients or depending on really who connected most with us. And sometimes he would act like he was my assistant. Sometimes I would act like I was his assistant. Like we just did whatever we needed to do.

And then our first employee we brought on and sometimes we had nothing for her to do. And we were in the house and we’d be like Video games like so awkward. And then we, and she ended up being CEO of one of our other companies executive roles, started

relax. So she, but then she did, that was the first role that was like that. You know that there’s like that, that all important role at the beginning that’s sort of like a catchall customer service, admin, operations that

Rui: I, that’s actually I believe that should be any founding team at the start.

You should do everything because that will give you perspective over the business that will allow you to make then better decisions on who you power to make this, that decision for you in the future. Yeah sounds good to me. You mentioned on Tuesdays doing invoices and all of that. I want to give our listener a peak.

Not that we just have one, but I’m, I address them individually anyway. I want to give them a peek behind the curtain. What did a day in your life back then look like? So how many hours were you working your focus split we already talked about? And it was pretty much anything that was required for that next step.

But how many hours were you working.

Diane: Ru I pretty much worked all the time until I, to the point where I w I went on bedrest with my first pregnancy. So it was really like from 9 96, we started the company. January 96 is when I quit my job, I think December 95 or something like that.

And then from that point on until my third trimester of pregnancy, which was in 19, which two years later, I pretty, I don’t even know, like I worked all the time to the point where I didn’t even realize I was in preterm labor. So I, and that’s when we started bringing people on to help. And that’s when we, in our first co-founder, so I worked, we worked all the.

Rui: So how was this is, this may sound like a tricky question, but it’s not. So at some point you had to release the baby, right? Because, and not yours, obviously the company. That’s why yeah, because you were doing everything, focusing on everything Uhhuh, but at some point you had to empower someone else to do it, and you were really young.

Yeah. How was that? Was it easy? Was it hard? Did you make any ma mistakes there? That

Diane: I think it was really easy because we stayed and we stayed. We stayed really in touch with our goals and our visions. So every time that we did bring on somebody, cuz then the next, first we brought in somebody, I think his role was like president and he was helping to hire people and talk to, then he started talking, like talking to investors and that kinda thing as we were looking to sell.

And then we brought in an operational person, which take a huge, I mean that, that was amazing. Like that was an incredible hire. No, I mean for me, I’m. Pretty good at letting go, and I don’t I believe in the E-myth, like the, that’s not me. I’m not that person that’s just like holding onto everything.

Rui: Absolutely. And that’s a great thing because I see a lot of projects where founders, although they have the best intentions, and actually if they apply their brains to the task, it may. Actually produce a better result than anyone else would do. But by micromanaging everything, they’re actually hurting the growth of the business really severely.

So this is something that I never get tired of stressing out. Perfect. So let’s talk about the exit a bit before I go into a rapid fire session of questions. Take us through the exit a bit. How was it, the negotiation? How, what, how did the opportunity come by? Was it aligned with the goals that you had?

Did it appear early, too early or too late? What was that like? Yeah.

Diane: And yeah, and one and I think it’s worth noting that one thing that I’ve learned is how much different the founder mindset is when they’re ready to exit versus when they start the business and they’re like, you start it and you’re watching every penny.

And a lot of founders I work with at some point, They are, don’t like their business anymore. Like they just wanna get out. And I see that a lot with even like profitable service based companies or, other companies that are profitable and running well. They just hate it.

And so that’s one of the reasons why I think it’s so important to build your business a lot based on what you want and how you wanna live your life. Like when you make decisions are you gonna go, are you gonna raise money from bcs? Or, how are you gonna do this? And we were really We are sort of at that point, like it was so stressful and we, and the thing is like at the beginning, you’re watching pennies and then away

s’s. Which, and I have, I have had other exits since then, but it’s every single time as a gamble, right? I have learned, and I still believe this, that I think you’re usually best in the company that you’re in for, I dunno, it’s just maybe anyway, I think we sold too soon, but because we were so ready to get rid of it, it was just causing us a lot of stress.

So we first we hired an investment banker who went and. To investors. We talked to strategic buyers, private equity firms, and we had a deal that they went the, it was the it was the company that was the holding company for monster.com. We had that deal. They were doing diligence when nine 11 happened.

So they were all actually from. The, their due diligence team, and they would, they were all in person in la. They flew in from New York. Their office was in the trade center. So yeah. So when that happened, the deal fell apart a few days later and I learned then one of our advisors had said, the deal will fall apart.

I can’t remember how many times. He said seven times. This one did fall apart though. And then we decided to, It wasn’t the time to sell that we were gonna regroup, we were gonna build, we were thinking about acquiring smaller companies. That would be the good timing. And then while we were in that process, one of the co one of the business broker we called said I actually have someone who might wanna buy you.

So then we went back into the process and it was about, it took about, it was about a six month process and that deal finally closed.

Rui: Okay. Thank you for that. So Diane, a couple of rapid fire questions now. Yeah. And here, I don’t want you to just step into that experience. You’ve built, what, seven companies?

Five successful exits? You’ve been working with successful entrepreneurs from all over the world, small to big companies. So I really want to. Squeeze that knowledge and share it with my audience here today. So let’s focus on everything you’ve learned for the past few years working in, in, in startups.

That’s it. So can you share one key lesson you learned on the offer on product?

Diane: Okay. Yes. When it, when you have product market fit, you know it, it’s things click and it’s. So much easier. When it, and it really is. I did, it’s, but in the timing, the timing in the market, which I think is, which is, goes into product market fit is the most is the most common.

The factor that determines most, whether you’ll, your business will succeed or not. So absolutely important. And it might not be the thing that you think that people

Rui: need. So one key lesson you learn on marketing.

Diane: Once I hired other people to help me with marketing, it was a complete game changer. So when I hired my first PR firm, we saw whole, it was a whole different game, just completely up level, the whole company.

So hire, I think it’s important to hire other people to help you with it if you’re not a marketing

Rui: person. Perfect. So one key lesson you learn on managing

Diane: people. I was a terrible manager for many years and then I learned to let things go. I learned that I am not always right and I learned to give people space to to succeed and also be oh, I guess the one, one key us.

I’m saying several things, but. I think the most important thing is be direct and let people know what your expectations

are

Rui: of them treating adults like adults. Yeah. Perfect. So can you share one key lesson you learn on creating and maintaining a good culture?

Diane: Yeah, I’ve heard it described as create your own drama, and sometimes I’ll hear things after the fact and I’m like, oh, that’s right.

And even like with my clothing business that I had creating, having people get engaged in where you’re going. So Ty into the. And what I got out of that quote of create your own drama is get people involved. Get people excited about where you’re going. And that way there’s, that’s the drama.

That’s the drama in your business that you want is everybody’s just super engaged and and wants to, everybody has, might have different goals, but they wanna be on the same rocket ship.

Rui: Love it. Absolutely. Okay, so now can you share one resource that was invaluable to your success?

And this can be a book, a podcast, a mentor, anything really that you think made a difference in your career.

Diane: Yeah. I go back to one of my favorite books is Rework. Love it. Yeah, it’s just I love how it’s just common sense and cuts through a lot of the bullshit that’s out there now in startup ecosystem.

Rui: That’s a great recommendation. Thank you. So now let’s assume that just now someone goes through the door and says, Diane, I’m starting my business now. What is. The first advice that you give them?

Diane: I always ask them first what they want outta it. What is it from their own life that they want out of it?

And when they start telling me about the problem that they’re gonna solve for other people, I try to direct them to find, that’s great, but also you have to know what you’re gonna get out of it. Cuz this is how you’re gonna live your life for the next several years. I

Rui: love this clarity angle. I think it’s really important and it’s not, I don’t see it often and I think it could make a difference because it will force you to organize the path ahead.

So love it. Diane, I’m gonna put you on the spot now. Who should we interview next? Someone in the entrepreneurial ecosystem that you really respect.

Diane: Okay. I thought about this cuz I know you asked this question and I have, so I have a slack workspace of about hundred founders. And I have so many people, I don’t wanna pi, I’m not gonna pinpoint just one, but I would love to, and I was thinking about it today and I’m like, okay, this person would be great, this person.

But a lot of, different founders have so many different perspectives. So you, you might even wanna hop on the Slack workspace and see and meet some of these folks, but but I have a lot of different people that I’d love to introduce you to as I was introduced to you by Nelly.

Rui: Absolutely.

Ah, she’s amazing. Yeah, I actually, I need to speak with her. I have something in mind that I need to do with her. Anyway, Diane, I would love to do that, to, to get introduced to that. It seems like a fun bunch of people. So yeah, let’s talk about that later. Anyway, thank you so much for taking the time.

I know you’re very busy for taking the time to sit with me today. How was it for you? Was it fun? It’s

Diane: always fun with you guys. Yeah. Yeah. Love it.

Rui: Thanks. Great. So thank you once again. It was lovely. Meeting you again now to our listeners. I hope you found the conversation useful. I know I certainly picked up some valuable insights from Diane.

Thank you for listening, and I’ll see you again in the next edition of the Start of Journey podcast.