Instead of only requesting positive references, Sequoia partner Doug Leone asks founders, "Who would be your worst reference and why?" The goal isn't to find perfection, but to assess the founder's clarity, honesty, and self-awareness in how they answer the unexpected and challenging question.

The key trait for scaling a company is ownership. To screen for it, ask candidates about their mistakes. A-players will admit a genuine flaw, like having trust issues that lead to micromanagement. B-players will offer a veiled brag or fake weakness, which is a major red flag.

A common trait among great founders is their ability to listen and engage on any topic, even in areas where they are the expert. They absorb outside perspectives from everyone, including those less skilled, and incorporate that feedback to arrive at better solutions.

A critical positive signal for investors is a founder who can honestly self-assess their skill gaps. This humility and willingness to hire people who are better than them in specific areas, even with differing personalities, demonstrates the maturity needed to scale a business.

Identify your founder archetype (e.g., 'Ball Hog,' 'Workhorse') to understand your strengths and weaknesses. Then, build your team with complementary archetypes. A 'Ball Hog' who closes deals but controls everything needs a 'People Pleaser' who naturally supports and executes, preventing internal conflict.

An investor can gauge a founder's depth by their preparedness. If a VC's questions during a 60-minute pitch reveal strategic holes the founder hasn't already considered, it's a strong negative signal about their level of obsession and foresight.

A venture capitalist's first question to a founder is about a major failure. An inability to answer ends the meeting, as it signals a lack of experience in confronting and overcoming adversity, a crucial skill for leading a startup.

A rising tide lifts all boats. The true test of a founder partnership emerges during downturns. Diligence should focus on teasing out traits like adaptability, humility, and accountability, which predict how a founder will react when plans inevitably go awry.

To gauge a leader's coachability and the company's health, ask them to describe a time they were wrong about the market and how the organization pivoted. A leader who can't admit to missteps or share learnings is a major red flag, signaling a lack of self-awareness that will hinder growth.