I’ve heard plenty of terrible ideas, and I’ve also heard plenty of great ideas that are doomed to failure because it’s obvious that the person presenting the idea is incapable of seeing it through to fruition. In either case, I think it’s my duty — as a friend, a colleague, or in whatever capacity — to be honest without being a dick. It can be a fine line.
People are always going to be seeking validation, and I think you have to accept that as given. Some measure of “Do you approve of what I’m doing?” is always going to be baked into these sorts of conversations. Some folks ask it outright; others merely dance around it or imply it. Either way, politely acknowledge it and then move onto the practical advice.
To that end, I think practical advice can be given. The trick is not giving unverifiable advice on the viability of the concept, but rather, teasing out how well the presenter has thought things through. It’s not about poking holes for the sake of poking holes, but about challenging the person to think about all sides and ramifications of the problem he or she is trying to address.
Some of the best advice I’ve ever received on startups came in the form of what, at the time, I’d considered pushback from would-be investors, friends, or mentors. It took some healthy distance from the ideation/pitch phase in order to receive the wisdom for what it really was. At the time, man oh man, I hated hearing it. But in retrospect, I am glad I did. Some very smart people saved me from some very stupid moves, and I owe them my eternal gratitude.