everyone, this is Celia

ft. And this

is eating shot. And in today's episode of this object, gonna talk about how to due diligence with people and about people

like talking about more than just sales

and market. We just want a bullshit and chat about business and life, and hopefully, while we're doing that, provide along value Teoh for people trying to get shit way. Don't want to give you feedback. That's

bullshit. You want you to do

your best. We'll get inspired about this from the prior episode where we talked about investor relationships and how to deal with your investors after you taking their money. We got into a little bit of a discussion around the quote unquote negative investors, people that are actively making your business worse and making your life more difficult. And I think during that part of the discussion last episode we realized as the one golden tip that you gave to people in order to prevent that, that pounders need to do their due diligence about those investors before taking their money. And I think that's when for both of us we thought we need to make an episode about this because It's such an important tool is a founder that is really underutilized. I see so many founders not do their due diligence about

people. Yeah, it's one of my favorite topics. I have to say I've been a victim to this if you want to call it that or I've been, you know, I have hired people. I have gotten investors. I have have gotten in partnerships and things like that without actually doing really intelligence. And most the time it worked out fine for me. But the few times where it did it, where the time when I was like, OK, I should have done more homework about this person. And and I realized once I figured that out and I realized it wasn't that hard, Um, I started doing it so much more so, yeah, let's let's talk about

this. Yeah, so I mean, let's talk about the concept of due diligence. I mean, what does it really mean? It doesn't mean that much other than you want to do a liberal research to figure out if you can find information about this person before you get into business with them and information. Either that that encourages is your initial impression and can double down on that. Or that raises red flags that you want to explore further with that person before going into business with him. And you should do due diligence before hiring people. And you should definitely do due diligence before you co found something with somebody. And before you take money with him and they kind of even when your partnership in any kind of relationship, you should go out, and obviously you can do some research online. But I think what we're gonna zero in on is reach out to people that have had this type of relationship with this person and find out what their experience has been. Good, that ugly anything in between to learn from there from that past history to give you more information about what you can expect from this person in the future,

and you can do these kind of reference calls of due diligence calls, you can ask for them and get, you know, references. So get connected with certain people, right? If it's an investor's the example that we discuss prior, you could tell that investor Hey, we would love to talk to 23 founders that you've recently invested in to see what their experience has been working with your firm or working with you individual indirectly and and then you could kind of get those connections handed to you from that person on. You can do it indirectly. You could just go in research and find out who is this investor invested in and ping a few of these funders and say, Hey, we're talking to invest X y Z We're thinking about taking their money. I saw that you raised money from them whatever. Two years ago, three years ago,

a month ago. Can I get just 10 minutes of your time and get some experience? I mean, we even did this once in Ah, least like we were looking at an office space and we're unsure about the building would show about a few things with the landlord, and we just looked at the list of tenants and we saw another startup that was actually Soto 1,000,000,000 to Google a few years ago. And we know and we sent the founder and emails that they were thinking about renting office space. You have been there for two years. Can you give us a few piece of advice, and you give us some really good if it's just an email back and forth and give us some background information about the experience in that building and what we should or shouldn't do and expect or shouldn't expect, So you can always you can do directly. You could do like these back this, these whatever they're called black background checks or something like that. Something that you just reach out without asking the person you're dealing with to connect you with these people.

Yeah, that's the easiest way, right? Um uh, and you also don't want to limit yourself to that way. Try to find, like so the investor investor example. Try to find a way. Try to find people that have been funded by them that might have had what you might think is a negative experience, not necessarily with them, but in their startup. So one of my favorite things to do is if the investor hasn't introduced you toe, you know somebody who's actually went out of business, Akwa hired. Or you know, something that would be more of ah, startup failure for lack of a better word.

Uh, you uh, you would go. You could just reach out to those founders and just ask them, Hey, you know, considering taking investment from his person, I know you had a certain experience with your company. I would love to talk to you for five or 10 minutes about it, and that could be super valuable, so I wouldn't just limit yourself to the introduction to get from the investor or anybody. I would also go out and find your own people

to talk to. Absolutely. And then let's talk a little bit about both scenarios when you get introductions or references for your due diligence from the Let's take the investor of the business part of the future employees when they say Yes, I'm gonna connect you to these two or three people to me, watching who they chose, who they pick to connect you with is a first tell like it's It's not just when I talk to them that that's not the only piece of data. I even just look at the ones that they introducing us to when we, uh, when we ask employees future potential employees for references, we do specifically tell them, Hey, give us three references and tell us why you've chosen these ones. We won't understand the idea behind it, and then when I look at the references they give me, that's the first. That's the moment I start judging right. So if somebody gives me three references from the same company,

which is three years ago, but no references for more meat from more recent company that work for Why, if they only give me references from people that where their peers vs, there's no reference in the anybody who was there. Manager All that is is telling me it's not a K o criteria, but it's the beginning off, letting me know. Why is this person only giving me this very Stoute, you know, group of people to talk to, right? Why can I Onley talk to people that they work with five years ago as Pierce? There's no manager there. There's nobody who work for them. There's no word from any of these other companies that's usually raises a red flag was something that I try to explore and find out more about why So the and this could be the same thing for investors. If they only get you in touch with,

you know, specific people that they've invested in many, many years ago in the past. Fund? Yeah, that they just invested in the past three months, but no founders that have been working for in a long appear of time. Those are tells for me. Those are at least red flags or things that I want to find out more about because they're telling me something about the way you choose your references is telling me something about

you. Yeah. I really love that. That's a really good start. Um, you're your own diligence on the other type. Right? So, you know, make sure your thoughtful about the intros you have you make and there are people that would about for you. Um, yeah, So I think you know what? When you this is other other big, big piece of this for me, it's like when you talk to people, whether they whether someone has given you the reference to talk them or you found it that yourself often times,

it's, uh not everyone is very direct are very helpful when they when you ask them, you know about somebody. So what you want to do on this is, You know, this comes from a lot of, like, diligence on, like, team members when you're bringing them on. But one thing you want to do is you actually want to ask them about specific scenarios or story or experiences. For example. You know, if this were an investor, it would be like when, you know.

And I was talking to a calendar I would ask, um, when you were going from some through something hard. Um, you know, can you tell me what your experience was with this investor? Right? And it could be, And in their case, they would go out, go when to start talking about We're about to run out of money, or we have this really difficult decision to make. And you know, so and so you know, was this way. And sometimes you have to get underneath it,

right? They might be like, Oh, yeah, you know, I emailed and they were a little bit helpful, you know? And then you you would want to ask you What do you mean by a little bit helpful? What did they actually help you with? So you want to dig in, do a little bit of like getting to the sort of bottom of kind of the feedback. So that's one big tactic. I would say that if it's ah, if it's like an employee or some kind of relationship like that, we're trying to hire somebody. You usually will be able to find more stories because you either have a manager or you have a coworker that you're talking to.

In most cases on DSO or someone and a manager could be someone higher up a couple layers or whatever, depending on what's going on in those cases. It's gold because what you can say is, you know, tell me about a time when you disagree and and I would love to understand how, you know, drawn, You know, we're asking by John. John reacted in that situation. Eso That's been those kind of things you want to do. You don't want to just rely on what they tell you. You want to actually ask them questions about situations and get their feedback in the digging

deeper. Yeah, I love that. And also you need to start. You need Teoh read between the lines, right? So So a reference call. If somebody connects you with somebody. If it's kind of an active reference, this person better be, Ah, strong reference again for me. If they're kind of a week references that kind of like so so about them. That's a no go. And I found this a lot of times when I did reference calls for investors that Founders didn't want out, especially the farmers had taken money. They didn't want to tell me this in West of Sucks.

Be horrible to work with. Please don't take that money right. It's not quite something they were comfortable saying, but they would just be very timid in their enthusiasm about that investment would be like, You know, yeah, this investor, you know, we've taken the money. He's very well, meaning We found him to be, you know, very enthusiastic and wanting to be very involved, sometimes a bit too much. But we still always appreciate it if the line of ref, if the line of statements they make about this investor keeps in that level of very tempered enthusiasm and kind of things that are not quite negative,

but also not positive to me, that that is like a found of screaming at me please don't take their money. They're really difficult to work with, right? So somebody needs to be somewhat enthusiastic and not if it's a reference that comes out of the blue and you just reach out to somebody that might tell you hadn't worked that much with that investor, or I don't know, we were working with their firm, but with another partner or something like that. But if an investor says, Here's somebody you should talk to If you want to get a reference about me and that person is not somewhat strongly positive, that's a negative in my book. So you want to start reading a little bit between the lines you want to? I love you. Examples like asking for specific scenarios and situations and moments because sometimes you have people don't want to share too much proactively one trick or hack if you want, so that I used and I'm and I mentioned this in prior episode about hiring and interviewing people for jobs. One game that I play with people when we hire them is that I at the end of the hiring process,

I'll do a ping Pong game where we both tried to actively discourage each other from working with each other. So all share something that's really a negative about our business and our company. They'll share something that's difficult about themselves, and we go back and forth and the gold is to share as much honest kind of things about each other. That might be a surprise down the line, so that if we can discourage you from wanting to work together, let's do it now before we start investing in this relationship further and if we can share honestly so many kind of negatives about each other and we still are excited about working together, it's not a guarantee, but the chance of pretty good that we're not gonna be surprised anything that that was hidden from us in the future. And people love that gain a usually in the back and forth. They share one of two things there are usually wouldn't share in an interview with me, and I use that I always use it in the reference calls because it gives people permission to talk about these things. All say, Hey, John, When I talked to Bob,

Bob said that one of these weaknesses is that when things get really tough. Sometimes he might get irritated and he might. We just vento be more negative. Will be, Ah, Bickmore. Easy to irritate the then than usual, but that if you know how to a handle him in those situations, it's all really harmless. But it's something he wants to work on. I'm wondering when you were working with him. Can you remember a time when he was really irritated? Where what? He mentioned to me, What comes to mind for you and how can you explain to me how that waas So what I basically say is I say Bob told me, Has this weakness?

Can you tell me more about this weakness? And because they know that Bob spoke about this to me, They feel the permission to actually talk honestly about it, versus if I just asked them, Hey, what's something that Bob sucks at? It's a tough question to ask. People will not be comfortable sharing stories about this because they want. They don't want a back step the person, and that's totally understandable. So by having some, uh, some weaknesses that the person shit with me, I can use these in the reference calls to elicit more information about this, to get more stories. And maybe the person is you know what?

Yeah, but, you know, maybe a little bit blue bit grumpy, But it was never a problem. I think he's super self critical about it. That's a different reaction that sometimes or once where somebody was like, you have fallen Glad Blob brought this up because he's a huge asshole. When he's like when things are stressful, you would come into the office and scream at people. You can get different answers that add a little bit of coloring to this and give you the kind of information to decide to really want this person, the company or not. So that's been a a hacker trick that really healthy is getting a weakness from the person and they using it in a reference call to give people permission to honestly talk about some negatives

with me. Yeah, I really like that. Remember a time thing as well of like, can you remember a time that, you know, uh, you know, this person was this way and giving him a reference for what they said. They're gonna feel a lot more comfortable telling you things, right? Yeah, really good trick. So, yeah, What else do we want to talk about? Diligence here.

Yeah. What else can you do? So you So you obviously you can go online and research for you a little bit. You can. We talked to people who have worked with them. And then again, I think I think we glanced over this. But I think it's really important when you when you're trying to do due diligence. You really want to talk to people that have had enough time to really have built a relationship with the person you're trying to get more information about. So it don't just talk to the last in the investor example. Don't just talk to the last two investment they made in the last three months. These people will not have a lot of information. A lot more information than you have really reach out to people that have worked. Trying to figure out is that anybody that has raised money twice from this investor three times from this investor is anybody has worked with this vessel for five years. Eight years of 10 years is anybody that has crashed and burned with their investment from this particular investor investor, try to get a and a breadth, the depth and breadth of of founders with very different relationships with this person.

A lot of more data than you have, Um, because again sometimes and that takes a bit more effort on, it's much easier to just reach out to people that have recent relationships with the person you're trying to learn more about. The unfortunate truth is that if it's very recent, they don't have a lot of information. They just don't know either. Ah, and most likely they're gonna be stewed to way more positive, you know, outline on this person. Just because they just recently closed a partnership with them will raise the money from them or higher this personal whatever. Ah, work for this person. So really try to go back and find people that have very a variety of different experiences with this person and hopefully a long term relationship with this person. That's I'll tell if you can't find any person that has been working with him for a long time.

It's usually a bad sign to me as well, but why can't this person have long term relationships in the market that they're in. Ah, there's usually a battle of a that signe eso tried to do that as well. Besides talking to people to do your due diligence, that's the That's the main thing I typically dio. Did you do anything else? Do you do any kind of crazy? 01 other thing that I would do maybe that with investors, and I'm not sure about that. But with employees, one thing that we started doing is doing background checks. This sounds so old school. That is not something that we did forever. This is something we started doing once we started using a certain software provider that for all our HR needs that did the background checks automatically. And my co founder was like,

Sure they do it. Let's just do it If it's just a click of a button, I'm curious, and I think the second or third person we did this with the background checking back and there was some really disturbing stuff in there, and we were like, Holy shit will never offer somebody a job anymore before doing a background check like, um so So a background check is something we do now for employees at least before we hire them. It's kind of a standard part of the process just to be safe, but something we didn't use you. But is there anything else that you're doing? The due diligence process?

I really like the background check one, especially as your company growth in scale says. For team members, it's really good. Ah, you know, it's surprising how people just don't do basic things online. So whether it's an investor, team member, whatever, did you actually search them on Google? Did you? Did you stop them on Facebook or Twitter or whatever? You know, whatever. Did you look at their Pinterest board? Right,

So we would, uh we That stuff is so much easier and so much cheaper from a time perspective of just doing research on somebody online than even talking to somebody about them. It gives you different kinds of data, But a lot of people have put a lot of stuff out there you can figure out even if their attitudes, you match up with the kind of culture in your company and things like that really easily. So I would highly recommend just doing more thorough online research about somebody. I've found all kinds of things there and also like, you know, it can tell you how they how they actually communicate in writing online in a lot of cases, whether it's things a written on blood, close comments they've made or anything like that. So I think, you know, if I were to go due diligence, the first step would just be starting. Teoh,

you know, spend a lot of time online about this person a lot of time meeting 20 minutes, 30 minutes, which is a lot of time to repurchase person, and you'll learn a lot of a lot of interesting things. And it'll even inform the kind of questions you can ask people you talk to them about or you know them themselves.

Yeah, so it's the basics that can make a big difference. Um, we had somebody a few months ago. That was that was in the interviewing process in the early stages, and he followed me on Snapchat and falling back. And then I saw just a few snaps from him, um, where he was on vacation on some beach in Miami and all of his snaps were just super. Do she mean spirited things about other people on the beach and especially the people that were not in tip top shape and looked like, you know, whatever models he would make just really do she comments of all these people being ugly and said, and this is that I was like, Whoa, all right. This person needs to the deleted for my Snapchat. And then this is not somebody that's gonna fit into our culture,

not somebody we wanna work with every day. Um, so, yeah, just look looking for somebody on Twitter on instagram on a bunch of the social outlets. It's surprising how people will pretend to be a certain person in there in the interview and their professional life. And then they publicly will be something different, something that just shows that they might be great people, but not right for your company, not right toe work with you or your team. Um, so spending 5 to 10 minutes of doing a little bit of online research can pay big dividends and avoiding big mistakes. And this is not just for employees. Investors up people to business partners have people to pretty much everybody. You deal with is a human being, right?

And they have profiles and they have other prior relationships. And you want to figure out who you're dealing with before you get into business with them. This is something people so frequently don't want to do. I just said this the other day where a friend of mine was like in talks with this company to go into a big business partnership with them. And again, I was like, Have they ever done this before With a startup? They have any proof that they can work with a company like yours? Do you know anything like this? Seems like I was just very, um, skeptical that this relationship will end up well. So I wanted to put them to do their homework and then due diligence before they invest so many resources and so much energy into this partnership. And I could even sense, like, a resistance to to want to do this because sometimes we don't want to know,

right? Sometimes we're so excited, blinded by this investor wants to give me money. I don't want to go do some homework and find out that it's somebody I don't want to work with. I wanted just to take that money and believe the story. Believe the thing. So a lot of times this, like do your due diligence is like telling people to eat broccoli and you know, workouts to be healthy. They just don't want to hear it. They know it's probably the right thing to do, but they really don't want to do it. And it's super frustrating because they go into these relationships. And then I had this with another friend of mine. A year later, I told them to do due diligence they didn't and then a year later,

you know in the first few months were telling me every Wikus, if that would prove anything to me, that this person so awesome and so I was like, Dude, I'm not even asking. I don't care like why you keep sending me. Benzema's about how great this person is. I don't really don't care. And then now they have this huge issue with them and legal shed and everything, and he almost derailed the whole business and that are showdown on the board and all that and and I I had to restrain myself, never said. I told you so I never mentioned a word about I just listened to all their venting and trying to be a good friend and a good kind of founder. That feels the pain. But it's tough. All that was thinking. Motherfuckers.

Why didn't you just make three calls before you invested? Ah, to be investment from these people? Um, yeah. Do you? Due diligence, Even if you don't want to do it. That's my main story. Easy. It's everything in your body and soul. Soul tells you it's great. It's gonna work out that I have to do it. Please do

it. We're ending with that. I can't. And I can't even add to that ran. Except, you know, just do your fucking diligence, or you're gonna get screwed.

There you go. That's it. From us for history. Please do your diligence that you're gonna be screwed.