Reference Checking Best Practices with Graham Duncan

As venture capitalists, we are in the business of talent identification and evaluation. Sometimes, founder quality is the thing that drives our underwriting for day zero startups.

Can reference checking prowess be an edge for an investment firm? Perhaps yes. The wider and deeper your network, the more likely you have pre-existing trust relationships with the person providing the reference, and the more honest feedback you’ll get. Our Village network gives us an edge when gathering intelligence from the people who know the founder best on the crucial question of whether he or she has what it takes to upend an industry.

We recently hosted a masterclass on the topic, in conversation with Graham Duncan, for founders who are hiring and investors who are evaluating founders. The most important meta lesson that came from the session? For a process (reference checking) widely acknowledged to be super important, few have thoughtfully invested in getting better at the skill. To this end, some of the practical takeaways of the session included:

• The main mission of interviews is to learn things that make you a better reference checker of that candidate later on.
• If you aren’t aware of or can’t imagine the downside of working with this person, you haven’t done enough reference checking.
• Be aware of how your mood and what you say affects the interaction with the other person. You are changing the interaction and self-awareness about this fact is critical. “A window serves as both a mirror and window to see through.”
• The ideal reference check call should take longer than you might think (e.g. 45+ mins). You sometimes need to, in effect, wear the person down over a long period of time before they open up about any real concerns.
• Ask: “How strong is your endorsement of Jane on a 1-10? (If they answer 7, say actually sorry 7s are not allowed, 6 or 8?  If the answer is an 8, ‘What is in that two points?’)” Also, define the scale by giving an example of what 1 means and what 10 means. 
• Talent tends to clump. The talent quality of the list of references provided is itself a signal about the candidate.
• In each reference call, it’s useful to ask, “Who else do you know who knows this candidate?”