I have been in the full-time advice business for over 5 years now as co-founder of The Startup Factory--a seed investment fund married to a heavy mentorship program. Our task is to put startup founders in a position to engage in a fire hose of advice across a large number of advisors.
Giving great advice is very hard. Providing bad advice is easy and the problem is that most people can't tell the difference between the two. Getting bad advice influences your decision-making in ways you don't see sometimes.
Giving great advice is one part content and one part delivery. Great content derives from an advisors experience. Great delivery seems to seep into your soul and feels like a warm blanket instead of a bullhorn to your brain.
I advocate to all entrepreneurs to find a set of advisors they can depend on for great advice. But how do you find the great ones from the bad ones?
Here are 5 signs that your advisor is a fraud:
They talk before listening. How can you give advice if you have not heard what the fundamental issue is? I coach our advisors to listen to the entire talk thread before weighing in. Sometimes you can find out that the issue is actually something completely different. Solid follow-up questions from an advisor before they lend their words are a great sign.
They give advice in areas of zero personal experience. Great advisors weigh in on issues in which they have direct experience. Bad advisors will weigh in on anything. Whenever a founder asks me what I think of their new website or product design I refuse to answer. I then ask them a set of questions about why they picked certain design elements or call-to-actions or even colors. Opinions are a dime a dozen as they say and my opinion on design has zero value. I am just another opinion and frankly my opinion on design is as valuable as a random person on the street.
They weigh in on things that are trivial. Great advisors are used for general strategy, business development or partnerships opportunities, hiring or firing key employees, etc. If an advisor wants to deliver advice on issues you find unimportant, move on.
They bullhorn their words instead of serving as a guide. There are a couple fantastic mentors at TSF (Jed Carlson, Bruce Boehm & James Avery). What each of these advisors due is ask a series of questions that guide you to a decision or opinion. In most cases they never actually tell you what they think. This is the single largest differentiator between good and bad advisors.
They want something in return. This one is tricky. I believe strongly that you should compensate great advisors with a small amount of equity earned over time. However, there are many advisors who want to be paid for their advice. Beware of these guys as their personal agenda (creating compensation opportunities) clouds their ability to provide great advice. Most great advisors are former entrepreneurs themselves and as such have a large giveback component.
Surround yourself with great advisors and you put yourself in a position to succeed. Surround yourself with average or bad advisors and you risk moving your company forward.