During due diligence, the most revealing portfolio company reference checks involve asking CEOs leading questions. Frame inquiries to suggest the private equity sponsor is taking undue credit for successes. This tactic encourages frankness and uncovers the true dynamics of value creation and deal sourcing.

Standard reference checks yield generic praise. To identify true A-players, ask their former colleagues a high-stakes question: “Would you quit your current job to work for this person again?” An enthusiastic “yes” is the strongest hiring signal you can get.

To truly understand a potential financial partner, the Chomps team went beyond the supplied references. They found a founder whose company didn't succeed under the PE firm's investment. His positive review of the partner's character, despite the negative outcome, provided the most powerful signal of trust.

David Cohen of Techstars advises founders to request references from a VC's failed investments. This reveals how an investor behaves during difficult times, providing a more honest assessment of their character and support level than speaking only with successful founders.

Franchising is a different business model focused on systems, training, and brand protection. Before considering it, a founder must first prove their concept is replicable by successfully opening and operating a second company-owned location. This provides the necessary data and validates the model's scalability.

To build a successful franchise, a business must first prove its model is profitable and repeatable. This requires operating three to five corporate-owned stores to perfect unit economics, training systems, brand voice, and operational simplicity before licensing the model to others.

Much online startup advice comes from founders with a single lucky success or a large pre-existing audience, making their advice often not repeatable. Seek guidance from those who have demonstrated success multiple times, proving their methods are based on skill and strategy, not just luck or circumstance.

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.

Instead of seeking feedback broadly, prioritize 'believability-weighted' input from a community of vetted experts. Knowing the track record, specific expertise, and conviction levels of those offering advice allows you to filter signal from noise and make more informed investment decisions.