Launching a Web3 Fractional CFO Practice with Nauman Mustafa from HashLedger

[00:00:00] Nauman: Full-time CFO need is always there, but it all depends on the stage of the company. So usually at an earlier stage of the company, they realize that we don't need someone for let's say 40 hours a week. We just need an insight from someone who has an idea of how industry works, you know, is quite updated to any new changes happening in laws, regulations, or accounting standards.

[00:00:25] Nauman: And looking at our financials gives us some set of insight that we are not able to see. 

[00:00:32] Nauman: One more important timing where someone might think and say, hey, I need a fractional CFO immediately is when you immediately need for a special transaction. 

[00:00:43] Nauman: So whether you decide suddenly that, hey, we will be doing a token launch, so maybe that is something that you have never done before and then you realize, okay, now I need to bring in a Fractional CFO.

[00:00:55] Umar: Welcome to The Accountant Quits podcast, where we help accounting and finance professionals learn how to manage a business using crypto. 

[00:01:04] Umar: Fractional leadership is on the rise. 

[00:01:07] Umar: Startups can benefit from the expertise of C-suite professionals without the six figure salary hit. Seems like a win-win. 

[00:01:15] Umar: And if you're web3 startup hitting your first round of VC funding, here's the cold truth.

[00:01:21] Umar: If your financial strategy, operations and compliance game on tight, you're not scaling, you are flatlining. Or worse, imploding. 

[00:01:30] Umar: That's where a Fractional CFO comes in. They go beyond the scope of traditional accounting and help startups with fundraising, managing runway, and their treasury strategy, and overseeing audit readiness.

[00:01:44] Umar: A web3 CFO requires expertise in areas like enterprise wallets, token economics, DeFi, and the ever-changing world of digital asset regulations. 

[00:01:55] Umar: To help learn what it takes to launch a fractional web3 CFO practice, today I have the pleasure of speaking with Nauman Mustafa, the Managing Partner at Hash Ledger and CFO at Celo Foundation.

[00:02:09] Umar: Nauman's been around the block. He started his career in PricewaterhouseCoopers assurance team, built out the finance function of Coins, the largest crypto exchange in the Philippines, and played a key role in their Series C fundraise. 

[00:02:25] Umar: While Nauman is still in the early days of building his practice, his learnings and journey could be a source of inspiration for many of the finance professionals looking to become a fractional web3 CFO.

[00:02:38] Umar: Lastly, if you're new to this channel, I'd really appreciate your support to help us group by liking this video and subscribing. 

[00:02:46] Umar: Now enjoy my conversation with Nauman. 

[00:02:49] Umar: Nauman welcome and thanks for taking the time to be here. 

[00:02:53] Nauman: Thanks Umar I really appreciate this opportunity to be part of your world famous podcast actually.

[00:02:58] Umar: Very welcome. I wanna start with, the topic of how you launched your Fractional CFO practice. So, Nauman like many of the web3 accountants I've interviewed on this podcast, you started your career at a Big4. In your case, like I mentioned, it was Pricewaterhouse in their assurance department. You spent more than five years there.

[00:03:20] Umar: And then you went into the industry and you worked at Coins.ph, which is basically the largest cryptocurrency exchange in the Philippines. 

[00:03:29] Umar: And after seven years there, you joined the Celo foundation as their CFO. 

[00:03:34] Umar: So you're still the CFO at Celo and in July 2024, you took the leap and launched your own fractional CFO practice. So I wanna ask you, how has your background in the assurance department at PwC and then in the industry at Coins and Celo Foundation helped in launching a crypto accounting and tax practice? 

[00:03:56] Nauman: Sure. Thanks Umar for, for introduction and your kind words.

[00:04:00] Nauman: So PwC and this is something that, like every person from PwC or even other Big4 would actually appreciate, is that like that was a place where I was able to build a very strong foundation around the importance and idea of financial controls, governance, best practices, and just the notion of coming in the room and solving problems.

[00:04:27] Nauman: And if it means that you have to roll up your sleeves to do it. You have to do it . So PwC absolutely created the foundation. 

[00:04:35] Nauman: 2016, I was living in Philippines, and that's when I met with the two Co-founders of Coins, Ron and Runar.

[00:04:46] Nauman: And, at that time they brought up an idea that, hey, we have launched a startup in Philippines. It's a wallet service and it is being powered by blockchain. I had no idea what blockchain is, by the way, at that time. And, they were going through a rapid growth and they wanted me to join them as their first, finance person.

[00:05:05] Nauman: And eventually the Head of finance actually. 

[00:05:08] Nauman: For me that experience, those seven years are one of the golden period for me as far as blockchain, accounting and taxes is concerned. Now, if you take yourself back in 2016, there is no crypto exchange that's listed at that point of time. There is very like very less, information about how to do accounting and taxes for crypto, how to treat them differently, how to treat different transactions differently.

[00:05:32] Nauman: And on top of the accounting part of it, you are dealing with the taxes, you're dealing with the compliance, you're dealing with the regulators. 

[00:05:38] Nauman: So for us, this was like, like one of the most unique opportunity that we are spearheading one of the, one of the upcoming technology in FinTech. And while that was being done, the idea and the experience of the startup from the seed phase to multiple raises, dealing with regulators, investors, and then eventually having two exits, in Coins.ph.

[00:06:02] Nauman: That, that was one of the most unique experience that I got. 

[00:06:05] Nauman: Moved to Toronto in 2018, and then in 2022 when I left Coins, I took like, a year and a half sabbatical break. That's when I guess I saw a lot of people in crypto taking breaks. That was not one of the best periods of crypto, I guess. 

[00:06:19] Nauman: But I took a parental break and during that time, surprisingly, a lot of people were reaching out to me, folks who were in their Series A, folks who were doing the seed round and engineers and product designers who were the founders of the company and were struggling with the, the setting up of the books of accounts, whether it's gonna be to do some special projects on M&A to help them to do ESOP of their tokens, help them to put together a SAFT document.

[00:06:51] Nauman: And that gave me sort of an inspiration that, okay, blockchain accounting and taxes is a niche field, and we are just at the start of this journey. 

[00:07:04] Nauman: One should think about, especially if I have 7 years behind me in this. I've seen the, I've seen the difficulty of getting the things done. I think I should be able to get this done in a much better way.

[00:07:15] Nauman: So that was inspiration. And you know, without, without having any formalized name, I just started doing work for people as a freelancer. And, just the idea that can this be formed into a full fledged practice? 

[00:07:29] Nauman: While that was happening, Celo Foundation happened and, I decided to, you know, jump onto joining blockchain industry again and look into the technology from a very different side.

[00:07:39] Nauman: Right? Once you are on the exchange, there's one side of the table, now you're part of the, the foundation and those responsible to create the underlying technology powering blockchain and financial inclusion. So that basically brought me back into the industry, met with amazing people, and that's when I decided that, okay, last year, and this is again, I got a lot of encouragement from Rene, who is the one of the founders of Celo, he was quite encouraging me to go ahead with this idea of pursuing a like my own accounting practice, just specializing in blockchain accounting and taxes. For me, this now is a journey where I'm sort of balancing both out and it's, it's, it's actually turned out quite great. Because it creates a synergy between these two roles at every point of time.

[00:08:31] Nauman: Right? The best practices that I learned from Celo Foundation I can implement in my firm and the things that I learned from other clients that might impact whether there are, I don't know, like a new DEX that people are using for dTWAP for example, or a new tool that people are recommending, a new banking partner that they're recommending.

[00:08:51] Nauman: And I can see that as a way to compliment Celo. So these are actually sort of complimenting with each other. 

[00:08:57] Umar: Now, for the listeners, I wanna go through the differences between, what a Fractional CFO does and a full-time CFO. So I was going through a report that I came across. It's called the Business Talent Group report. It focuses on industry trends of hiring interim professionals, not just for finance, but across all company functions.

[00:09:18] Umar: And I just wanna share some interesting stats with you guys. The request for Fractional CFOs rose 46% year on year, 2024 to 2023, and Controllers and Heads of FP&A increased by 114%. So, why I'm sharing that is because the demand for Fractional CFOs and other interim professionals is increasing. 

[00:09:42] Umar: So I wanna ask you, given your experience as both a Fractional CFO, and a full-time CFO, how do these roles differ in terms of responsibilities? 

[00:09:53] Nauman: I would say, okay, so it all depends on the client that you're dealing with at this point of time. Right. Some of the basic reasons that one would choose Fractional over a full-time CFO would be situations like the scale of operations, which scale the company is in at the, at the moment, and usually like some of the clients that I'm dealing with, even though they are in the second, third year of operation, they are still convinced that this can continue for a longer period of time. And, and, and that is because their company, the product is in a way that for them, they don't see themselves having a full-time CFO and they just need a bit of insight, but a quality insight.

[00:10:43] Nauman: A few times a month and being able to address their problems, in a more flexible way. 

[00:10:47] Nauman: So it is really, depending on the scale of the company at this point of time, there's also commitments, right? Like a full-time CFO obviously. And in my case, because I'm at Celo Foundation, I'm available to them seven days a week to get it done.

[00:11:01] Nauman: Here the commitment is usually that the client does not need to commit to a full-time CFO throughout the way. So they say we need a couple of hours a month, and we can discuss the financial performance, we can discuss the burn rate, we can discuss the budgets, we can discuss any upcoming special transactions, any upcoming raise, a potential to raise money through, let's say AngelList or through like a separate round. 

[00:11:24] Nauman: All of these discussions are something that they would like to go through a different person in the room, but they don't want to commit to a full-time person coming on board for that purpose. Again, it's a scale of operations, right? 

[00:11:36] Nauman: Next I would think of the oversight, right? So like if I put myself in the shoes of a full-time CFO at Celo Foundation, I'm responsible for day-to-day operations for Celo foundations and other group companies also, which means that any money coming in, any money going out, I'm responsible a hundred percent for it. And it's not just from financial perspective, but especially from compliance perspective. I'm a hundred percent responsible for that one. 

[00:12:00] Nauman: As far as oversight for a Fractional CFO is concerned, usually they are, what I've seen is a very project based oversight or a transaction based oversight.

[00:12:12] Nauman: So it's a very limited oversight that they do, and you would give them a project and that's gonna be a hundred percent oversight for them to get them achieved. 

[00:12:20] Nauman: Cost, obviously, as you mentioned before, that cost is gonna be a very key component over here. When you get a full-time finance team and a full-time CFO on board, there's a number that sort of goes along with it.

[00:12:34] Nauman: For startups who have raised couple of million dollars for them, every penny really counts. So they want to get that level of quality and output, but they don't want to commit to a full-time cost associated to it. And there's also a flexibility part of it, right? Like you can scale up, you can also scale down.

[00:12:53] Nauman: Let's say if a startup is unable to perform really well and they decide to scale down, it's much easier to scale down fractional services versus a full-time service. So these are some of the, some of the, real life examples that I've seen why someone might choose Fractional CFO or a full-time CFO.

[00:13:11] Umar: Now, speaking about costs, I also wanted to look at the numbers of hiring a fractional CFO versus a full-time CFO. So I actually went on salary.com and I saw that the average annual salary for CFO in the US would be above $400,000.

[00:13:27] Umar: And now if you add bonus and benefits that amount would exceed $700,000. Now in web3, those numbers tend to be higher. I looked at the Web3 Finance Compensation report by Request Finance, and it states that CFOs in Web3 earn 17% higher. 

[00:13:45] Umar: Now, obviously when you are hiring like a fractional CFO, that cost would be much less.

[00:13:51] Umar: Now, I assume there would, there should be pushbacks from web3 startups when they receive pricing proposals from a web3 fractional CFO, and that's why I wanted to share those numbers. So my question to you is, therefore, when should a startup consider hiring a fractional CFO instead of a full-time one?

[00:14:11] Nauman: All right. I think this is a continuation to the previous question here right. And as I mentioned that it really matters, the cost of a full-time CFO and especially in web3, the cost being so high, the need for a Fractional CFO is something that we do sometimes feel as a challenge when we speak to the clients that they.

[00:14:32] Nauman: They are still in a very early stage to understand the importance of getting some sort of CFO oversight, irrespective of whatever size of operations they are dealing with. What we have done from the start, actually I can, I can tell you that is that that has been my, my experience is that we have started to implement the value add on to having a Fractional CFO embedded into our current engagement. So whether I have a crypto recruiter as my client, or I'm dealing with a crypto market maker as my client or a crypto labs as a client, even though they're asking to make sure that their books of accounts are maintained in the right order and dealing with any treasury issues, we add on giving them some sort of crypto some sort of, fractional CFO oversight. 

[00:15:23] Nauman: So whether this could be a regular update on their treasury, on their burn rate, on where the funds are and sort of what to keep an eye on. There could also be giving them updates coming out from IRS in US, CRA in Canada or FASB in terms of any accounting changes that would be happening, and more importantly, sort of integrating them into anything new that's happening in the industry.

[00:15:47] Nauman: Right? So if there's a news coming out from somewhere, let's say the like like the recent one that happened with the Bybit hack, we had to go and tell all of our clients that, hey, now you have to be a little bit careful when dealing with Gnosis Safe. Obviously it's already out there, but sometimes people are not aware about it.

[00:16:03] Nauman: So those are some of the insights that we sort of try to keep on giving to the clients constantly. And that has been and embed into pretty much all of our engagement. In terms of the idea that when should someone consider a fractional CFO or a full-time CFO, there's a benefit of full-time CFO that fractional CFOs can never provide.

[00:16:29] Nauman: I don't even want to start on that one, right? The idea that you have someone that works with the highest integrity, a custodian of all assets of the company, and being, being a gatekeeper that allows the founders and the management team to focus on the stuff that they do the best. So a full-time CFO need is always there, but it all depends on the on the stage of the company. 

[00:16:54] Nauman: So usually at an earlier stage of the company, they realize that we don't need someone for let's say, 40 hours a week, you know, for four weeks, a month. We just need an insight from someone who has an idea of how industry works, you know, is quite updated to any new changes happening in laws, regulations, or accounting standards.

[00:17:17] Nauman: And looking at our financials gives us some set of insight that we are not able to see, to take an action on. So that is the stage of the company that they start deciding into on, hey, now I need like a full-time CFO for the purpose. 

[00:17:33] Nauman: One more important timing where someone might think and say, hey, I need a fractional CFO immediately.

[00:17:41] Nauman: And as I said, the word immediately is when you immediately need for a special transaction. So whether you decide suddenly that, hey, we will be doing a token launch. So now it's like things that you have never thought about and now you are doing a token launch, alright. 

[00:17:57] Nauman: Or you say that there is a big investor coming in.

[00:18:01] Nauman: But we need to make sure that besides the founders who might be engineering expert, product expert, we want to show to the investors that we have someone who puts some level of financial control, financial transparency into the board. And so we need a Fractional CFO coming in who we can represent. As saying that, okay, he's the person that you will be able to get a much better transparent financial information and he will be there to implement better controls in the process.

[00:18:28] Nauman: So that is, again, if there's an immediate need for it. 

[00:18:32] Nauman: Next would be once, let's say the round is done. Now you realize that you have a bunch of VCs, a bunch of family offices who are your investors, and now you have to deal with something called investor relationships. So maybe that is something that you have never done before, and then you realize, okay, now I need to bring in a Fractional CFO and he can speak the language.

[00:18:55] Nauman: That they want to speak and he can also speak the language that I want to speak. And he bridges the gap between what investors are expecting, in terms of whether they might have their own templates that they want to get a fill from, from their own reporting perspective. 

[00:19:11] Nauman: Or they might just want to speak to someone to understand that there is better controls and better governance in the place.

[00:19:16] Nauman: More importantly now it comes to the point where it allows engineers and product designers and people who are actually good in those things to focus on their business areas, right? Like the last thing you want is like, it's, it's not that difficult for them to even work on the financial work of it, but they're rather focused on the areas that they do the best and then they allow someone else to deal with, the nuances or the questions or the concerns around finance, accounting, taxes, corporate structures, corporate governances.

[00:19:48] Nauman: So these are some of the examples that I've usually seen that people might think about getting a freshman CFO instead of getting a full-time CFO. 

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[00:21:38] Umar: Now as the Founder, I'm sure you're doing a lot of prospecting and to generate leads. 

[00:21:44] Umar: In web3, this challenge is even greater. Many startups, they prioritize funding in the early stages and they overlook building a proper finance function until later. You're still in the early days with HashLedger, but I wanna ask you, what has been some common objections leads have and how do you handle them? And looking back, has there been any pricing mistakes you've done over the past months?

[00:22:13] Nauman: Fantastic question for someone who has just been nine months into the practice, actually I can, I can tell you on-hand experience of what it is. I think what's important here is that when you price your work, and that does not only go for an accounting practice or Web3 accounting practice, that can go for any service level.

[00:22:31] Nauman: You have to understand that your goal should be to strike a nice balance between the price to be charged and the value to be given to the client. That is the goal that you want to achieve over here, and your effective success happens over the idea that you have successfully kept the client for a long term.

[00:22:56] Nauman: So that is, that is what your eventual goal is gonna look like. Some of the mistakes in pricing that I feel, I've seen someone doing and even I was probably one of them also would be that we jump to a price very quickly without understanding a very detailed scope of work. One thing that I've made sure from day one is that I don't want to overcommit and underdeliver.

[00:23:21] Nauman: So it is really important that you take time to really understand the scope of work, as much as possible. A lot of times there's misalignment between what client is expecting and what you promise to deliver, and that also causes a lot of friction in the process. I have an idea that, and I've, and I've seen this happening, is that usually clients already have a number in their mind.

[00:23:45] Nauman: That they'll work with. So it's not just you that have done the research about what industry are, they have done the research also. Either they are something they've been paying before, or if this is the first time they have called a bunch of their friends and be like, hey, how much does this usually cost?

[00:23:59] Nauman: So they already have a number in their mind, right? So you are not gonna be surprising them with the higher or lower number. You want to find a way to come to that number as close as possible and agree to the scope of work that you are okay to perform for. So these are some of the challenges I would say that I've sort of learned in the, in the last nine months.

[00:24:18] Nauman: I've been fortunate to be able to reach out to other professionals who are also providing similar services. And to my surprise in web3 and that, and that's something that happens constantly. People are very happy to share their experiences. 

[00:24:35] Nauman: People are very collaborative. People already tell me what not to do, what to do, and that has obviously helped me avoid a bunch of mistakes that I could have done.

[00:24:46] Nauman: To the point where you mention about a pricing structure, I'm, I'm assuming that's what you want to, like, to know that, how do you want to design a pricing structure? Actually, for me, as I said to you before, what really matters is once the client, and you're discussing with the client about this, it's, it's okay not to give the price on the first conversation.

[00:25:06] Nauman: You want to make sure the client gets comfortable with the idea that you will get access to their records, you want to see their books of accounts and what position it is. You want to know how many wallets are you talking about? You want to know how many transactions a month those wallets have, what type of transactions they usually have.

[00:25:29] Nauman: And usually I get these things done now because if I can get an NDA assigned, the client is comfortable to share that information with me. 

[00:25:36] Nauman: While asking these questions in in depth at the back of the mind, you are already calculating, that how much work I would need to do, whether I need to implement a sub-ledger, you know, if it's, if it's what, what other controls I need to build in.

[00:25:51] Nauman: If this person is from US, person's from Canada, which part of the world the person is in, whether its functional currency is different, how do I make sure that these things are done? Whether there are chains that these, that the client is using that let's say subledger has not implemented yet. How am I supposed to solve that problem?

[00:26:07] Nauman: So these questions actually give you the insight of the effort that you and your team actually have to put into the client to make sure that you deliver what the client is expecting. So that for me, has been, has been my number one goal whenever I speak to a new client, I want to get a very deep understanding.

[00:26:25] Nauman: It is pretty much as if I'm about to join them as an employee and my success in my work is gonna be by understanding the entire operations of the company. That actually provides a much better, input to the pricing strategy. That's it. 

[00:26:41] Umar: Yeah. I think with crypto, from my conversation with other founders as well, underpricing is like the issue.

[00:26:48] Umar: If at the beginning of the onboarding call and when you're prospecting, you, you don't have enough information, into their token flows and how much activities they basically have on chain, you could underprice. 

[00:27:01] Umar: So maybe a good follow up question to this would be let's say once they're onboarded, you've already done the prospecting call.

[00:27:09] Umar: How does the new process and checklist look like? Do you provide clients with a template to like document their wallet addresses, wallet purposes, other key details that you would need, in the beginning to maybe prevent like this constant back and forth with the client and also that you really understand like the true scope of work.

[00:27:30] Nauman: Sure. I've seen some practices that do similar, as you mentioned, where they do like an onboarding form. We started doing that at a very early stage, but I just didn't like the idea of giving like a standard template form to the client and telling them to fill it up. And now I have to wait and follow up from the client that they come back.

[00:27:49] Nauman: They might have questions on what type of questions I'm asking, so we sort of scrap that idea of like a template form at a very early stage. 

[00:27:57] Nauman: What I do is that once an engagement is signed, there is already non-disclosure in the place. The client has a better comfort in idea of sharing more information about, about everything of, of the company.

[00:28:10] Nauman: I usually schedule like a very long kickoff call with the client, so it's usually like one, one and a half hour and it can go up to two hours. Also, I tell the client like listen, and this is gonna be the only time when we will be discussing a lot of things. So I really want to make sure that you are comfortable and you can bring more people from your team.

[00:28:26] Nauman: Also, if you want to bring them on board, introduce to me and what we do on those calls is we go through everything. Like think of me as an auditor. So I'll be like, what is your corporate structure? Right? Like, do you have a Delaware company? Do you have a company in the islands who reports to who, who does your taxes?

[00:28:43] Nauman: How does the taxes roll up? Like do you have transactions on chain? Do you use a chain that subledger does not support? Do you have off chain? Do you have access to that off chain exchange very easily. Do they give API to connect to the sub-ledger? What type of banking systems do you use from custody providers also, right?

[00:29:01] Nauman: Like, do you use like the likes of, cold storage. Do you have custodians? Do you use MPC? Do you use multisig? Do you use EOA? Do you use, like, all of these questions are something that I would be asking. And again, I don't think there's any wrong question because you rather ask a question that they will say, we don't do it.

[00:29:21] Nauman: Rather than thinking that, okay, what if I ask this question and they. Uh, be like, why, why is he asking me that question? I don't think there's any wrong question over here. 

[00:29:29] Nauman: You really are trying to take a much deeper dive. You are trying to understand everything and anything. You have two clients. They both have half a million transactions a month.

[00:29:40] Nauman: One of them only does stable coins. One of them does a variety of coins. The scope of work is gonna be extremely different for the same, for, for, for similar transactions, right? You could imagine that the amount of reevaluation work you have to do for a client that does volatile assets versus the client that just does stablecoin.

[00:29:58] Nauman: Like the, the whole setup is gonna be changed. So for me, that onboarding process is where I do the kickoff call, up to two hours of call with the, with the actual, engagement leads. And once I'm able to get this done to the point of nitty gritty as much as possible, those are the notes that I take in.

[00:30:17] Nauman: And then I might go back to the team and then we discuss and say, hey, this is a new client, this is what they need. We can start comparing the work with a different client. Let's say, for example, if both the clients use Mercury Bank, the team is already aware about it. If the client use Gnosis Safe, the team al already knows what that means.

[00:30:38] Nauman: So now these, this is the way that I usually help to onboard the client. 

[00:30:42] Umar: Now I wanna touch on the important role of the CFO with fundraising. When you were at Coins, you experienced the entire journey of the startup from seed round, multiple follow up rounds, the last one being a $30 million, Series C, and also the exits.

[00:31:00] Umar: Now, some of the listeners of our listeners aspire to become CFOs one day. I wanna ask you, what's the role of the CFO in preparing for fundraising at a web3 startup?

[00:31:13] Nauman: I think the fundraising for a CFO in web3 is so different from web 2. My previous experience with Coins, a very web3 native company, but their fundraising was very much web2 actually. So it was pretty much like you go through the round of diligences, you do the round raises, you do valuation of the company, you agree to a price, and then the fundraising happens.

[00:31:37] Nauman: They sign off, the checks come in. You start doing the work, burning the cash, and trying to deliver to the investor. 

[00:31:43] Nauman: But for web3, it's extremely complex. Now, like some of the clients that we are talking to, they are already coming up with a mindset that, hey, this is gonna be a SAFE round, but there's a possibility that in couple of months, a few quarters down the line, or maybe by next year we might do a token raise.

[00:32:03] Nauman: So how do you price that idea, right? Like how do you hybrid the model where you are doing equity and token at the same time, but your goal over here is to make sure that you reduce the dilution of the company. You, you wanna make sure the dilution stays as lower as possible. That is where you need a sort of a Fractional CFO or even a full-time CFO if needed, that could model multiple scenarios for the founders, for the lead investors to understand on how this is gonna work and how the dilution is gonna place. There are unlocking schedules. There is also the idea that usually the tokens are not only going to the investors, but tokens are also going to the core team, to the founding teams.

[00:32:49] Nauman: So, and then they have different unlocking schedules, right? So you wanna make sure that you keep a balance in a way where there is less dilution, but there's also not a situation where there's a major unlock and that sort of causes a panic within the team also. So these are some of the areas where the CFO plays a very important role in the web3 fundraising.

[00:33:11] Umar: And where would you say a CFO, like a Fractional CFO who never had like a web3 client, where would they fall short of working with like a company who's, a web3 project who's fundraising? 

[00:33:24] Nauman: So I, I think that there will be two or three areas that they might have a challenge with. One aspect in my, on top of my head would be a regulatory or a compliance balancing situation where you have investors in a certain region.

[00:33:42] Nauman: And you have a token issuance happening at a, at, at a different region. So you have to be aware about what are the compliance and regulatory requirements, that you're not clashing with each other. It's a very thin line. When, and we have gone through this historically speaking, right, like where people, where, where the regulators are sort of identifying a token as a security, or if it's not a security, this is a, this is gonna be a very key aspect that you need to keep on, keep your mind open.

[00:34:10] Nauman: And you have to know, what complexities might arrive. The second, it would also be the tokenomics, integration here. So designing the token at the launch strategy, that aligns with the long-term vision of the investors and the founders. So this is gonna be the second part that the person, might find a bit of a challenge, especially if it's a web2 Fractional CFO, to really have an idea that, how a SAFE can be converted into a SAFT maybe, or if it's like a pre-sign SAFT or if it's like a side round. Those all of this nuances is something that, a web2 CFO, or a web2 Fractional CFO will find some challenges in web3. 

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[00:36:30] Umar: Now I want to go through your experience of building a team, at HashLedger. It's almost been nine months since you officially launched. Could you share with the listeners, your journey in hiring, in finding people, training, and other challenges you've encountered, about building your firm?

[00:36:52] Nauman: Absolutely. Like any founder for any services, the first day you do everything. So obviously that that is something that you have to agree to, and you are willing to do that. While you are managing finances for other people, you also have to keep in mind that you have to manage your own finances also.

[00:37:10] Nauman: So you have to understand what your burn rate also looks like. So these are gonna be some of the challenges that maybe a any upcoming accounting firm might face and they have to look into. I've been fortunate. 

[00:37:21] Nauman: Thankfully, that in the last nine months we have grown our team almost 5x. And, the people that, are a part of HashLedger that, and they work with me in this accounting practice, are those who have had experience with blockchain accounting for the last at least 10 years.

[00:37:43] Nauman: They speak the blockchain language. It allows me to start speaking in the terminologies that it's much easy for them to take an action on, so I can always advise them what to do, what not to do, or where to check this information from. And more importantly, they are, they are sort of accountants who have this keenness to learn more about blockchain accounting or like, because the way blockchain is evolving, every day, you have to keep up to the new, the new protocols, the new way of doing things in, in the case of blockchain. 

[00:38:19] Nauman: One of the thing that we started doing, as a part of our practice is that on a monthly basis, we dedicate roughly 10 to 15% of our time at the moment, to sort of an educational round for us. So, which means that the whole team sits together and everyone discusses maybe they on the client had a unique experience, whether there was a new chain that was launched, there's a news out there.

[00:38:50] Nauman: Because of that, that has been the way different due to the accounting, some of the challenges that they're facing, some of the new DeFi protocols that is difficult to read on certain chains. So this is the education part of it that they do. The second thing that I've done is that they have agreed to, and they do it regularly, is that they spend time during their education time to listen to your podcast most of the time.

[00:39:15] Nauman: So they like to hear some of the old listeners, and they really like to catch up on what their experiences have been. 

[00:39:22] Nauman: There's another channel that they use, it's called Whiteboard Crypto. So they sort of try to learn a bit more about some new coin that's coming in, or some new chain that's coming in, or some new rollup that's happening and they like to understand a bit more on what it is.

[00:39:38] Nauman: And lastly, they have actually started using AI a lot now. So if there is if there's a new terminology, or if there's a new protocol, and they like to learn more because they want to know about how it works, so they can think like an accountant, but that's only possible once you know how it works.

[00:39:57] Nauman: They can use the likes of Perplexity Pro. And that just gives them a very specific answer. They understand how this works, and then they start thinking about, okay, this is how the triple entry system would work. This is how I would see it in the blockchain data. This is how I would read the blockchain data.

[00:40:12] Nauman: This has been one of the very core reasons why I feel that in the last nine months, we have had a situation where the team has evolved in a much faster pace than I expected. And I think in some aspect they probably know more than me actually. 

[00:40:27] Umar: Yeah. I mean, yeah, that's you want to hire people who are, who want to learn, who are curious, and at the end, who actually know more than you.

[00:40:35] Nauman: Yeah. Agreed. I think what I want to also add is that we have not forgotten how we used to do things in web2, by the way. So there was, there were few areas that we always had checks and balances while dealing with web2.

[00:40:51] Nauman: So that comes with us in web3 also. So accounting hasn't changed whether web2 or web3, right? At the end of the day, we have to prepare financial statements for investors or regulators. That's what matters. So your controls hasn't changed. So if in web2 you would never start a bank reconciliation without having a bank statement, we do the same thing in web3.

[00:41:09] Nauman: We will not start reconciliation of an exchange without the exchange statement. 

[00:41:14] Nauman: If it's onchain, we need to use the likes of the tools of DeBank. We always need to think about what's the source of truth. We need one source of truth, and that's gonna be our checks and balances to make sure that there's a stronger integrity on the data.

[00:41:28] Umar: Yeah, very important point you mentioned. Now, as a Fractional CFO, you're obviously spending a lot of time with your clients and at the same time you're having to build HashLedger from scratch and scale. I wanna ask you, maybe for this first year, what would you say are the areas you're focusing on to build your systems in servicing your clients and managing your team?

[00:41:49] Nauman: Accounting firm practice like I would say even like a legal practice, there's a lot of trust and integrity involved here. So for me, in the initial days, we agreed on few things like by default, and this is something, these are some practices that I've learned from all of my experiences, and especially at Coins.ph from the, from the Co-founders.

[00:42:15] Nauman: So we have kept security as one of the top priority for us, which means that we will not take shortcuts on security. We will not be sharing the same access for everything. No, we will make sure that there is proper verification in terms of security. All of the team members are issued a YubiKey. So that makes sure that there's a third level of security that makes that anything that's 2FA has to be on a hardware device like YubiKey.

[00:42:40] Nauman: As far as, I would say stack practices are concerned, we for communication purposes, we usually do whatever client is comfortable with. So it's not just one fits the all model. 

[00:42:54] Nauman: Like most of the clients like to use Slack, so we stick to the Slack. Some people say we wanna stick to Telegram. We stick to telegram.

[00:43:00] Nauman: So that's are some of the stuff that we try to be flexible with. But overall, we made sure that whatever basic lean stack that we can start a journey with, we have already started this journey with.

[00:43:12] Umar: Now when it comes to web3, tooling, a sub-ledger, a tax tracking tool are the best friends of the accountants. Starting with the web2 tools, could you share what your tech stack looks like and how they made your life easier? And then following up with the web3 tools. I wanna ask you if you usually tend to stick with working with only one sub-ledger and tax tracking tools.

[00:43:35] Umar: And what advice would you give accountants start accountants starting to onboard these tools? 

[00:43:42] Nauman: I think the web2 stack tools, like besides the communication tools with the clients, we've, we've done pretty much quite simple stuff, right? Like just the Google Suites, Microsoft offices. 

[00:43:54] Nauman: For for maintaining books of accounts, we are keeping both QuickBooks and Xero as our options, but people are still sticking around for QuickBooks. So using QuickBooks as a way to getting it done. The team is sort of QuickBooks, trained. From web3, now, this is the aspect that I, I've sort of learned in the last 10, 12 years.

[00:44:15] Nauman: There are, there are a lot of tools and they're doing fantastic things out there. I don't know how it's possible to be an expert or really good in all the tools. 

[00:44:26] Nauman: It is for me that that is, that's, that's a bit difficult journey to digest. So for us, we have started to live with the idea that for individuals who come to us for their corporate taxes, we will use a certain tool.

[00:44:41] Nauman: And for corporations that comes to us for their monthly accounting and corporate taxes, we will use a certain tool. We will recommend that tool for the idea because we've been using it, the team is comfortable with it. The Founders of those subledgers are sort of keen in making sure if any problem arises, they would solve it. 

[00:45:01] Nauman: And, overall, it, it sort of allows us at the end of the day to get the job done and it, it doesn't matter which tool you use, you have to get the job done. That's it. So this is, this, this has been sort of our basic principle. Some of the free tools that we've been using, which is like for on chain data, we have seen information coming from DeBank.

[00:45:22] Nauman: That's one of the very, very favorite tool of my company. It's just an amazing way to read any EVM information out there. Versus let's say like, like some of those block scans. And, uh, yeah, so those, those are some of the tech stacks that I can think of. 

[00:45:40] Umar: Yeah, DeBank is amazing. I also confirm I love using it. 

[00:45:45] Umar: Now I think it's time to speak about HashLedger. Could you provide, the listeners with an overview of the services you provide at HashLedger? Do you only work with clients transacting with crypto and also, when it comes to onboarding new clients, what jurisdictions are you currently focused on?

[00:46:04] Nauman: Sure. So HashLedger as the name goes, it's sort of a balance between, like a nice bridge between web2 and web3. From accounting perspective, the team has done web2 the team has done web3 for the last 10 years. So as far as the work is concerned, we go all the way to full suite white glove service, whether it's gonna be basic bookkeeping for SMEs, whether it's gonna be, treasury management, whether it's gonna be tax preparation and practices all the way to the professional CFO services.

[00:46:38] Nauman: And the crypto subledger, crypto reconciliation, all the way to that part. So the team is, is ready to do that job. They've been doing it for multiple clients already in the last nine months. 

[00:46:49] Nauman: To the clients. Yes, we did launch with the idea that we only want to be, sort of crypto native, crypto only, accounting and tax advisory practice.

[00:46:59] Nauman: But obviously there is a lot of web2 services that also comes down the way and people come with references. We just don't say no to it. We still pick it up and get it done for them. We will not say no to it. 

[00:47:12] Nauman: One of the core principle we start from day one was that if we are serving web3, we need the clients to sort of understand that how serious we are with web3, to the point that we make sure that we only charge for our services in crypto.

[00:47:31] Nauman: So clients can only pay us in crypto. 

[00:47:33] Nauman: If they need non crypto, that's also possible, but we encourage paying in crypto. 

[00:47:37] Nauman: And, to our team, that we pay, we pay them also in crypto. So it really allows the client to understand that, hey, it's not just because they're saying web3, but they are still sticking themselves to web2 practices.

[00:47:50] Nauman: They're actually practicing web3 to the point that all of us are having our own income coming in crypto also. So that has been one of the journey for us. Finally, as you mentioned around, sort of what's the vision and what, what, what we're trying to look at at the moment. We are focusing on North America at the moment.

[00:48:09] Nauman: I think this is a pretty big, pretty big pie to focus on. There is, there's just so much amount of innovative work happening, inside North America that it does not even allow us to look into somewhere else, but, hopefully in long term we are focusing to go a bit more towards Asia. That has been a part of my career for a very long time, and I think that that area is also, that region is also something that I would like to be a part of.

[00:48:36] Nauman: Finally, things that I tell my, my team on day one is that, our goal is one thing, just get the job done. That's it. At the end of the day, it doesn't matter. We have to get the job done. It's not an employment. We are serving the client, and the client expects to get the job done on the time, and that's how the team works with.

[00:49:01] Umar: Perfect. Now, a last question that I wanna ask you today, Nauman. 

[00:49:06] Umar: A big part of me doing this podcast, and doing what we do at The Accountant Quits is to inspire accountants to, to transition into web3. So I wanna ask you like, becoming an entrepreneur and launching your own firm.

[00:49:21] Umar: It's a daunting but also rewarding process. So I'd like to end the conversation today on any advice for accountants contemplating on the idea of launching their own practice. 

[00:49:33] Umar: Your career path, Nauman, is quite inspiring. You've lived and worked in three different countries so far from Pakistan, Philippines, and now Canada.

[00:49:41] Umar: You're qualified accountant from the Institute of Chartered Accountants of Pakistan and also registered CPA in in Ontario. A lot of people can look at you as a role model, and I wanna ask you, what advice would you give other accountants looking to launch their own practice or to start working in the web3 industry?

[00:50:03] Nauman: It took me almost, I would say, 20 years in my practice to come up with the mental strength and energy and courage to start a practice like that. Obviously I would say that, oh, I wish I did this 10 years ago, but, I would say that this practice depends not only on competence. 

[00:50:25] Nauman: This also depends on integrity.

[00:50:28] Nauman: This depends also on trust. This also depends on reputation. And you have to be a thousand percent ready that you are about to plunge into this. 

[00:50:40] Nauman: There is a comfort that you have when you are an employee of someone. There are challenges too, but there's also a comfort zone. 

[00:50:48] Nauman: Here. Yes, as you mentioned, it's rewarding. But the journey is, has its very unique problems that you have to deal with, and you have to be ready to do that thing. So I would say that, you know, if you have in you that, you would not look for reasons for failure, instead, you would find ways to successfully getting it done.

[00:51:12] Nauman: Then I would say it's time to start now. There is never a good time. There's, as I said earlier, there's always a shortage of good CPA, good accountants, and if you can deliver a better practice, then I think it's a great idea to do it. I started, during my sabbatical and I was just testing my waters and I was seeing if I can actually deliver.

[00:51:34] Nauman: I have never been a situation where I have to deal with clients. Obviously, my client was my employer only for a very long amount of time, but now that's different. I am accountable to multiple people, multiple stakeholders or multiple clients, and, that's it. So I think that that is a mindset that you need, before you do anything like this.

[00:51:56] Nauman: But I would always encourage someone to go for it because there will always be, a need for a good CPA and especially in web3. 

[00:52:06] Umar: Yeah, I completely agree. And I also look back and tell myself I should have been doing this a long time ago, like, being an entrepreneur. Once you've tasted it, like you enjoy it, and, but it, it requires a lot of grit and perseverance that, I don't know.

[00:52:22] Umar: Sometimes it sounds sexy to say like you're a Founder or something, but it's so much work in the beginning, you have to do everything like you mentioned earlier. 

[00:52:31] Umar: So I like to always end the podcast Nauman, with asking my guest, do you have a favorite quote or a maxim that you live by, let's say?

[00:52:42] Nauman: I, I would say that, and I've tried this for a very long time, and I think blockchain accounting is forcing me to getting it done more constantly is basically the only way to stay ahead is to constantly, reinvent yourself. That for me has been my mantra, and that I'm already seeing that that's actually helping me.

[00:53:05] Nauman: So that has been some something that I try to live by. 

[00:53:10] Umar: Thanks for sharing. I, I love it. Nauman, thanks a lot for coming in today. If people want to reach out to you, if they want to learn more about HashLedger, and also if you are, let's say, if, if there are opportunities right now to join your team, where should they go and how, how should they reach out to you?

[00:53:29] Nauman: I'm easily reachable via LinkedIn, or via Twitter. So naumannazim is my Twitter handle. You can maybe include that in, into the description. You can also add my LinkedIn profile there. 

[00:53:42] Nauman: They could reach out to me and as I mentioned. Like sometimes just a conversation actually turns out a different opportunity, something that I could help by.

[00:53:53] Nauman: I like to live with that idea that if I can speak to someone and help them in a different way, then why not so easily reachable. That's it. 

[00:54:02] Umar: Perfect. Well, thanks a lot for your time today, Nauman. The title of the episode where today was on how to launch your, fractional web3 CFO practice. I hope the listeners have found it useful and inspiring and yeah, please feel free to reach out to Nauman if you need any crypto accounting tax advisory or fractional CFO services.

[00:54:23] Umar: Nauman, it's been a pleasure and we'll be in touch. 

[00:54:27] Nauman: Thanks Umar, really appreciate it and hope to see you in one of the events this year. Take care.