Getting Started

Before implementing Fairly Exact, ensure these foundations are in place:

• Trust: Work only with people you genuinely trust
• Communication: Commit to radical transparency and documentation
• Alignment: All founders agree to the framework principles
• Value Focus: Track contributions by impact, not hours

Warning signs - hesitation about transparency from any founder, insistence on hourly tracking over value creation, unwillingness to honor departed contributors, or resistance to documented decision-making.

Have these conversations explicitly before any implementation. A team that can’t discuss how it will handle disagreement cannot run a ledger together.

A pre-formation ledger is a planning record only. It creates no entity, ownership, membership, compensation right, intellectual-property transfer, or liability protection.

That phase has rules of its own — the entity forms before the first customer pays, what members spend until then is recorded as their balance, and a few things end the phase sooner. Read the Before the Entity guide first, then come back here. If the entity already exists, skip it.

Before minting anything, settle these and write down your reasoning. The numbered values are your team’s settings, not framework law - once set, changing them changes everyone’s math, so treat changes as a governance decision.

1. Your Founding Block#

Not a number - a block. Size what the founders bring to the starting line (prior IP, an existing prototype, work already done, relationships in hand) using the same rubric as every other block. Itemize it as several blocks if there are several distinct things.

If you’re bringing an idea and little else, it’s a small block. That’s the correct answer. Founders hold their position by continuing to contribute, not by starting with a balance. See the Contribution Blocks guide.

2. The Rate (default: $5,000 per size point)#

The scale of the sizing table: an M (size 10) fits a milestone worth ~$50,000. Set it against real contractor rates in your geography and domain.

Do not multiply this by your ledger balance. It prices block size, not ledger units. Minted units = size × stage multiplier, so at Stage 0 (×5) one ledger unit is about $1,000 of work, not $5,000.

The rate is a shared sizing yardstick, not a company valuation. Set it once, use it consistently, and treat any change as a governance decision.

3. Your Review Cycle (default: 90 days)#

How often you close blocks, accept delivered work, and correct the ledger. A block should fit inside one cycle.

The cycle paces review, not sizing - never allocate “the cycle” across whoever was present. Early teams often run a shorter first cycle, because early blocks move shares most.

4. Your Stage Triggers#

The observable event that moves you from each stage to the next. Decide these now, while nobody has a stake in the answer.

5. The LLC Implementation#

Have qualified professionals prepare or approve the governing documents and procedures that give the ledger its intended effect, before another person’s work enters the member ledger. They must address admission, block acceptance, configured voting thresholds, disputes, departures, separate Funding Block and Advisor Block instruments, and both finalization paths. See the Legal and Tax Review guide.

Record the approved implementation decisions. No starting ledger balance or fixed earned percentage belongs on the list.

Two other numbers exist and are deliberately not here. The downside split prices a distressed outcome between cash and sweat, and the conversion share total models one finalization path. Both belong to situations you may not be in, so set each one when it arrives — in the Funding Blocks and Freeze and Finalization guides respectively. Deciding them now means negotiating terms nobody needs yet.

Your first block needs a clear deliverable (working prototype, launched website, first customer), a timeline that fits inside one review cycle, a demonstrable outcome, and written scope agreed before work begins.

Size it by asking what an outside contractor might charge to deliver that milestone, then divide by your rate and round to the nearest triangular size. At a $5,000 rate, a milestone you’d have paid roughly $30,000 for is an S block (size 6). At Stage 0 that mints 6 × 5 = 30 units.

Example: Two Co-founders#

Founding Block - a prototype and 4 months of prior work,
roughly $30,000 as a contractor-equivalent scope proxy
(S, size 6 × 5 = 30 units minted)
  - Technical Founder: 60% = 18 units
  - Business Founder:  40% = 12 units
  Ledger: 30 units. They own 100% of the work done so far.

Block 2 - Alpha release, roughly $50,000 of value
(M, size 10 × 5 = 50 units minted)
  - Technical Founder: 50% = 25 units
  - Business Founder:  30% = 15 units
  - First engineer:    20% = 10 units
  Ledger: 80 units.  Block 2 dilution: 50 / 80 = 62.5%
  Standing: Tech 53.8%, Biz 33.8%, Engineer 12.5%

Block 2 diluting the founders by 62.5% looks alarming until you notice the ledger only held 30 units. Early blocks move shares a lot because there isn’t much history yet. It settles quickly - by the time the ledger holds ~380 units, another 50-unit block moves shares by about 12% (50 / 430).

Every dilution figure above is quoted against a stated ledger size. Get in the habit now. A percentage without a denominator is not a fact.

Daily async updates. Weekly sync on active blocks. Per block a planning session and a retrospective. Every review cycle (default: 90 days) accept delivered blocks and reconcile the member ledger, membership records, voting records, and separate instruments with all stakeholders.

You need a member ledger (spreadsheet or dedicated system), a central repository for decisions, an agreed communication channel, and a formal record of member and manager approvals.

The block lifecycle itself — sizing, planned allocations, the stage multiplier at activation, retro, the ±10-20% band, and non-delivery — lives in the Contribution Blocks guide. Run it from there rather than from memory.

New contributors. Complete the admission, IP, and professional-review steps the governing documents require before work enters the member ledger. Begin each contributor at zero accepted units and explain how the ledger drives economics and voting.

Departing contributors. End active voting eligibility but preserve accepted units. Resolve any in-flight block at retro. Preserve the departed contributor’s balance until finalization, and do not infer a cash payout or other legal or tax result from the framework record.

Funding events. Keep funding instruments and investors outside the member ledger during the dynamic period, and track member balances and negotiated terms separately. See the Funding Blocks guide.

Your first priced round. This requires mandatory freeze and finalization: resolve disputes, freeze the member ledger, calculate path-neutral percentages, and complete either FIXED_LLC or CORPORATE_CONVERSION with qualified professionals. See the Freeze and Finalization guide.

• Sizing by gut instead of documenting the contractor-equivalent scope proxy
• Splitting a milestone into smaller blocks to farm units, or starting with blocks that are too large
• Forgetting to apply stage multipliers, or relitigating a stage transition after the fact
• Basing splits on hours instead of value
• Using the ±10-20% band to paper over non-delivery
• Quoting a dilution percentage without its ledger size
• Changing the rate without recording why
• Treating team-set defaults as if they were framework law
• Skipping documentation “just this once,” or making verbal agreements without writing
• Delaying difficult conversations