How do you start and use a board of advisors?

I have a relatively new software startup that is pre-launch. I'm starting to get into a lot of issues/areas/whatever that are outside my realm of expertise. I've been thinking about trying to setup a board of advisors to help out with this. I already have a few people that I bounce Ideas off of that sort of play that role, but I was thinking of somewhat formalizing the board of advisor concept. I have a couple questions for people on this:

1. Is there value in formalizing a board of advisors for a small software startup?
2. How have others put together a board of advisors? ie, how did you "formalize" it?
3. How do I ask someone that I sort of know, but not really, to be a part of the board? I have a couple, local business people whom I have respect for that I'd like to include, but am not sure how to approach them on it.
4. What specific things do others so with their board of advisors? ie. group meeting, 1-1 meeting, email questions, etc?
5. Is it okay to ask someone that I have a paying relationship with to be on the board? I'm thinking of my accountant here.

A board of advisors is really useful if:

1. You trust the people on the board
2. You respect their opinions
3. You believe they can behave as an advisor and not take it personally if you ignore them.

In this interview, Peldi from Balsamiq Studios explains how he built his board and what exactly it did (and didn't) do for him.

There's a pretty simple litmus test I use for advisory board members: would I be worse off without their advice?

That may sound ridiculously simple, but really ask yourself if your advisors are going to help you come up with solutions to the really big startup problems, like overcoming extreme technical hurdles, finding investors and helping to mentor you as a leader. Any member of a startup team, be it employee, investor or advisor, must provide strategic value. If they don't, then don't bring them on board.

To answer your specific questions:

1. No, there isn't much value in a small startup, unless you really are leaning on this person for operational mentoring. Or unless they are a superstar in your industry and will actively bring investors or customers to the table.
2. It's as formal as you choose to make it. My advice would be to set out specific goals and timeframes for these advisors. That way both parties know what is expected, and there is no question of the value being exchanged (i.e. your equity for their effort). These might be things like providing 3 quality investor introductions per quarter, or meeting with your technology team twice per month for an architecture review.
3. Find out what networking events they attend and bump into them. Spend some time getting to know them in an informal setting, then setup a formal meeting. Or, use LinkedIn, someone you know probably knows them. Get a warm introduction from a friendly 3rd party. Also remember that you are also gauging their merit, don't put yourself into the position of a supplicant, as that is a sure fire way to get pushed around.
4. Group meetings will never get you anywhere, as everyone will have strong opinions and it will devolve into a mom and apple pie meeting with no clear outcome. As I said above in #2, set out specific goals and timeframes, then follow-up individually on each task. Make sure you're also building the relationship and not just asking for work product.
5. What value would your accountant bring to the table? Were they a CFO of a Fortune 50 company? If it's just your accountant and they aren't giving you strategic advice that you couldn't pick up from any startup blog, then it's not appropriate.

--
Mike

Not specific to the formation of a board, but this did help me with information about what they might expect.

Top 20 Tips for Emerging Company Board Meetings
http://www.cooley.com/63160

(See responses to a similar question.)

Disclaimer: helping companies arrange boards of advisors is part of what I do for a living, so if this response appears at any time to be self-serving, I apologize.

1. Absolutely! Advisory boards can be a huge source of advice, and, even better, can set the table for the types of partnerships that can turn a small startup into a thriving venture.
2. I can't respond to that here without getting a little spammy. Please see my profile if you'd like to know more.
3. Generally, it's best to use a third party for these things. That changes the approach from "Won't you please be a member of my advisory board" to "Hey, I'm working with a company I think you'd find really interesting; would you like to meet the founder?". It's a whole different dynamic.
4. Most advisory boards I work with meet quarterly -- but that doesn't mean there isn't any interaction in between! In one case, the CEO has a scheduled call once a week with one of the advisory board members. Believe me, they want to be helpful just as much as you want to be helped! Phone calls and email are part of the deal.
5. No. You pay your accountant for his or her advice. It's not really fair to ask them to provide it for free (or for options or similar longer-term compensation). Besides, you can get their counsel any time by just paying for it. For your advisory board, you want people who bring real strategic value to the table, value you couldn't just get by hiring a consultant or counselor.

I hope this helped. Good luck!

Scott

Frankly, I think there is tremendous value in a startups board of advisors. You need experienced input, evangelists, introductions, and support.

Nothing to formalize, this isn't your board; these are relevant individuals willing to put their name beside yours in support of what you're doing.

How to get started? Network and just ask for support.