Due Diligence Blind Spots

Every investor has a due diligence checklist. Market size, competitive landscape, unit economics, team background, technology moat.

But the most important questions often aren't on the list—because they're uncomfortable, hard to quantify, or require admitting you don't know.

The Blind Spots We Don't See

Team dynamics under stress. We ask about team composition and track records. We don't ask: What happens when you disagree about strategy? When did you last have a serious conflict, and how did you resolve it?

These questions feel intrusive. But team dysfunction kills more companies than bad markets.

Founder motivation. We ask about passion for the problem. We don't ask: What else were you considering? If this fails, what would you do? Are you building this because you have to, or because it seems like a good opportunity?

The answer predicts how they'll handle the inevitable hard moments.

What they're not telling you. We ask direct questions and evaluate the answers. We don't spend enough time on: What didn't they mention? What did they gloss over? What changed in their story from pitch to diligence?

Omissions and inconsistencies often reveal more than statements.

The Questions That Feel Uncomfortable

"Show me your cap table and explain every decision." Not just the current state—the full history. Who got what and why? Were there messy situations? How did they handle them?

This reveals integrity, judgment, and how they'll treat future stakeholders.

"What are you pretending not to know?" This is the Patrick Lencioni question that cuts through performative confidence.

Founders who can answer honestly demonstrate self-awareness. Those who deflect are either lacking it or unwilling to show it.

"Why hasn't someone else built this?" Not the softball version about timing. The hard version: What's actually preventing this? Is it just because nobody thought of it (unlikely), or is there a structural reason it's hard?

If they haven't grappled with this seriously, they'll discover the reasons the expensive way.

What We Optimize For vs. What Matters

We over-index on credentials. Top school, top company, top investors. These correlate with success but don't cause it.

Meanwhile, we under-index on: Has this person ever built something from nothing? Have they recovered from failure? Do they learn from feedback?

We over-index on market size. TAM analysis, growth projections, comps to adjacent markets. All useful, all easily manipulated.

Meanwhile, we under-index on: Do enough people care about this problem right now to be early adopters? Can this company actually reach them? What needs to be true about market development for this to work?

We over-index on technology. Patents, technical complexity, competitive moats. These feel defensible on paper.

Meanwhile, we under-index on: Is this level of complexity necessary? Can this be maintained? Does complexity create value or just look impressive?

The Reference Check Failure

Most reference checks are theater. We call pre-approved references who say pre-approved things.

Better approach:

Ask the founder for contact info for: Their last three co-workers, including one who left on bad terms. Someone they fired. Someone who reported to them and didn't get promoted.

If they won't provide these, that's data. If they will, the conversations tell you what actually working with this person is like.

Ask references: What would need to be true for you to work with this person again? When did you last disagree, and what happened? What do they systematically get wrong?

The second question matters most—everyone has weaknesses. The question is whether they're aware of them and compensating for them.

The Financial Model Trap

We spend enormous time on financial projections—despite knowing they're mostly fiction.

More useful questions:

• What's your burn rate really driven by? (Not projected—actual.)
• When did you last revise your model, and why?
• What assumptions drive the most variance in outcomes?
• If revenue is half what you project, what changes?

The value isn't in the numbers—it's in watching how they think about scenarios and adjust plans.

The Culture Blind Spot

We ask about culture in abstract terms. "What are your values?" "How would you describe the team dynamic?"

Better questions:

• Tell me about your last bad hire. How did you realize it, and what did you do?
• Walk me through how decisions actually get made. Who was in the room? Who decided? Who disagreed?
• What has someone been fired for? What has someone NOT been fired for that surprised you?

Culture is what you do, not what you say. These questions reveal actual behavior.

The Exit Assumption

We assume founders want the same exit we do. Reasonable IPO or strategic acquisition in 5-7 years.

We should ask:

• When you imagine success, what does that look like? (Not what they think we want to hear—what they actually imagine.)
• How big does this need to be for you to feel you've succeeded?
• What would make you walk away?

Misalignment on exit expectations kills returns even when the business succeeds.

How to Fix Your Process

Document your blind spots. What questions do you systematically not ask? Why not? What would you learn if you did?

Add disconfirming questions. For every bullish thesis point, ask a question designed to challenge it. Don't just look for reasons to say yes—actively look for reasons to say no.

Check your reference points. Are you comparing this to your best deal or your average deal? Anchoring to outliers makes everything else look mediocre.

Track your omissions. When deals go wrong, ask: What didn't we investigate? What question didn't we ask? Build a library of "questions we should have asked."

The Meta-Question

The biggest blind spot might be assuming your diligence process is comprehensive.

It's not. No one's is. Every process has gaps—often shaped by what you're comfortable asking and what you're trained to evaluate.

The question is whether you're actively working to identify and close those gaps, or assuming that thorough = comprehensive.

The uncomfortable questions are uncomfortable for a reason: they reveal truths that might kill the deal.

But better to kill it in diligence than after you've invested.

Ask the questions you're avoiding. The answers might surprise you.