Becoming a Web3 CFO with Zac Hogg from Solana Foundation

[00:00:00] Umar: What are the web3 tools that you use that also integrate with Solana? 

[00:00:05] Zac Hogg: Of course, the block explorers are always something we're always using. Just to see like transactions on chain. I usually default to SolScan. When we do like on chain AR, we might get a payments on chain, but they're generally in stablecoin.

[00:00:17] Zac Hogg: I'll just like record like a bank account. Of course, there's listeners on here. They're like, woah, woah, woah, like you can't do that because then the stable coin is recorded one for one with the reporting currency and the USDC isn't always one for one with US dollars. And I think the caveat there is the Solana Foundation is Swiss based, right?

[00:00:36] Zac Hogg: So we have a few different accounting standards in Switzerland. 

[00:00:40] Zac Hogg: The best time to start is obviously, it's obviously now, you're never too late. The best place to start is just doing some stuff on chain and doing some transactions. And the only way to do that is not do stuff on exchanges, but like, you know, getting your own self custodial wallets, testing how the technology works.

[00:00:56] Umar: Welcome to The Accountant Quits podcast, where we help accounting and finance professionals learn how to manage a business using crypto. 

[00:01:05] Umar: This is the sixth episode of the Becoming a web3CFO series, where I dive into the inspiring stories of accounting and finance professionals who transitioned from traditional finance into web3.

[00:01:18] Umar: A recurring theme among the CFOs I've interviewed is their common starting point. A lot of them started out at Big4 accounting firms. I call these places boot camps for accountants. You're surrounded by some of the brightest minds in accounting, work on massive clients, and the name on your resume alone gets people to take you seriously.

[00:01:41] Umar: Yes, the hours are grueling and the starting pay is modest, but for those willing to embrace the grind, the payoff isn't just a paycheck. It's the foundation of a career that stands out in the crowded accounting space. 

[00:01:55] Umar: The Accountant Quits aims to highlight the stories of accounting and finance professionals who have successfully made the leap from traditional finance to blockchain.

[00:02:05] Umar: And today I have the pleasure to be speaking with Zac Hogg, the Financial Controller at the Solana Foundation, the organization dedicated to the decentralization and adoption of the Solana ecosystem. 

[00:02:19] Umar: Zac's journey started with nearly three years at PricewaterhouseCoopers in their assurance department, before he made the leap into the industry, working at companies like eToro and now the Solana Foundation.

[00:02:33] Umar: Since many of you have similar background and aspirations to start working in web3, I hope this episode will serve as a source of inspiration. 

[00:02:43] Umar: Lastly, if you're new to this channel, I'd really appreciate your support to help us grow by liking this video and subscribing. 

[00:02:50] Umar: Now enjoy my conversation with Zac.

[00:02:53] Umar: Zac, welcome and thanks for taking the time to be here. 

[00:02:57] Zac Hogg: Thank you for having me on. It's a pleasure to catch up.

[00:02:58] Umar: Before we dive into how you discovered blockchain, can you take us back to the beginning of your career? What was your journey like becoming a CPA, working in PriceWaterhouse Assurance Department and later transitioning to the industry? I saw from your LinkedIn profile that you worked at a publicly traded company on the New York stock exchange called International Flavors & Fragrances.

[00:03:23] Zac Hogg: Yup, that's right. That was IFF and they combined with one of DuPont's businesses around the time I was leaving. But, before my time at IFF I was at PwC for a bit. But really how I got into PwC, I think it was the best way to start, this off.

[00:03:37] Zac Hogg: Which is I was studying accounting and finance at the University of Waterloo. A very strong program from, one of Canada's best universities. I studied accounting finance undergrad for a few years, then did a whole extra year just studying corporate finance classes. Before then doing my EMAC back in 2015.

[00:03:56] Zac Hogg: So that, university is great in terms of academia and brand name. And I feel like, being there for five or six years, learned a lot and, had a lot of great professors, a lot of great experiences. But what I didn't really get out of that experience was the ability to go, do any international work experience or go into these study terms because I was lucky enough to be connected with business students at other universities across Canada through this little group called the Canadian Association of Business Students.

[00:04:22] Zac Hogg: I kinda got active in that through my, own School of Accounting and Finances Student Association, where we went and met with other student associations and business student associations and other business schools to learn about best practices. Through that, that I saw that all these other students that were, very committed to extracurriculars, got the ability to, to travel a little bit and, see other, continents, other countries and all that.

[00:04:44] Zac Hogg: And, I was just stuck in Kitchener-Waterloo and, Ontario for my, five or six years of studying and getting ready to work professionally. And there just happened to be a PWC office in Bermuda that actually hired our University of Waterloo EMAC students right out of school as basically as new associates or experienced associates, I think.

[00:05:05] Zac Hogg: And it just so happened that the US PWC firm was all of a sudden looking for people halfway through our EMAC year. And posted on what our job board at the time was called job mine and a handful of us got the opportunity to go and fly down to New York and do like a dinner and interviews.

[00:05:22] Zac Hogg: And we were all hired on the spot when we got down there and did the interviews with the partners and whatever. 

[00:05:28] Zac Hogg: So that's how I actually got into New York was just really very lucky experience. Now when I got into the PwC team

[00:05:37] Zac Hogg: in January 2016, I asked to work in the technology group in the assurance group, and they were nice enough to give me a spot there. So there, I actually did get to work on these companies for the next year and a half or so, working with smaller finance teams, smaller companies that are like series that, they're not going to be super small cause they have to afford the PWC fee. But they were series D, series E.

[00:06:01] Zac Hogg: Series F kind of companies with smaller finance teams. So I got to work directly with the CFOs or controllers or like the head accountants of these companies and see like how they're building financial statements and stuff. So that kind of was like the groundwork.

[00:06:14] Zac Hogg: It allowed me to see like some smaller teams, smaller groups, see like what FinTechs really look like. And then from there, the next year and a half or so at PwC, I then got moved into you know, working on public companies doing that stuff in the SEC reporting stuff. Doing the SOCs audits, seeing a first time SOCs audit, that, that sort of thing.

[00:06:36] Zac Hogg: PCOB reviews so, that was like a big change for that second year and a half. And then I basically decided I, I done the small company stuff, done the big company stuff. I wanted to do some more small company stuff. That just wasn't really working at the time. I wasn't going to be able to work on smaller clients anymore.

[00:06:52] Zac Hogg: So I decided instead that I would rather. Of doing audit. I, I try to go and, work in industry for a bit. So there used to be like these headhunters, if you're working in Big4, like, once you get close to Senior Associate, you're going to a senior auditor or whatever you want to call the role.

[00:07:09] Zac Hogg: You're going to get headhunters reaching out to, to poach you. And a lot of them at least would give you like, maybe stuff you're not really ready for yet. So actually it was like very helpful. Cause it'd be like, here's a role, here's what we're looking for this role. I could look at it and be like, Oh, in a couple of years.

[00:07:24] Zac Hogg: And I could be doing that if I did these other little things that are on their pre reqs that they're looking for a role like this. So basically the idea was, something like a manager of financial reporting seemed intriguing to me at the time.So that's what led me into work in IFF, International Flavors & Fragrances. Basically there was a role helping out with SEC reporting, focused on it, stock compensation, cash flow statements, and EPS. And those just happen to be my areas of focus in my last major audit client at PwC.

[00:07:55] Zac Hogg: It was just something that, fit really well, and it was at a time, too, when, working at PwC for years, getting a somewhat early promotion to senior, it, it's like you said in your intro, there's a lot of long hours and like I also alluded to, like, not, necessarily very competitive compensation other than the name of the firm that you're working for.

[00:08:16] Zac Hogg: So for me, it was like, oh, there's a company that I can work on the other side of the fence on like the industry side, work in my specialties that I've already, built up at PwC focusing on cash flow statements, stock compensation, EPS. And I can go and do that, get some work life balance, get some industry experience and start to, ascend through, these other sort of opportunities in the future.

[00:08:38] Zac Hogg: So that was like the groundwork first few years of my career was Waterloo, PwC ECS, and PwC and public tech companies then jumped into SEC reporting at IFF for a couple of years.

[00:08:52] Umar: All right. So, I worked in different geographies and at the time, a lot of headhunters would reach out to work for other accounting firms, like I would have a lot of those headhunters. Sometimes when you're working in these Big4 like, or large accounting firms you only know what you know, so you're not really looking out to the industry and it might be something that allows you to further grow in your career instead of sometimes.

[00:09:19] Umar: It seems like you've learned everything when you've been working there, let's see, for like five years. Sometimes they're not really sure of how to get out, then go into the industry. ` Let's speak more about your career change. In November, 2020, you're offered a job at eToro. So for the listeners, it's this trading platform.

[00:09:38] Umar: It's got 38 million users across 75 countries. They have over 1500 employees. So it's a pretty big company. So you were working again out of the New York office. You were doing month end closings, preparing annual financial statements, helping with external audits. I saw you even rolled out a new invoicing system for all the US entities.

[00:10:01] Umar: It sounds like a lot, and I'm pretty sure it was. Is that experience at eToro what inevitably led you to falling into the web3 rabbit hole? And I want to ask you back then, what was it with blockchain that aroused your curiosity?

[00:10:16] Zac Hogg: Great question. I appreciate that. So it's probably easier to answer the last question first before the first part of the question. So, I had a friend in university and he was very interested in finance and financial markets, capital markets and banking and so forth. But when we were actually in this accounting and finance program, it was an accounting program that had some finance.

[00:10:40] Zac Hogg: And then as we. We're studying to our sort of time in university, the program finally became truly "and" finance. So he was one of the very few people that was like really gung ho about not just studying some accounting, but he was really there to be in finance. He worked at a few banks earlier on in his co op terms.

[00:10:59] Zac Hogg: And then eventually upon graduating, he, he did some investor relations work, he did some consulting but we were interested in like, investing together, doing, some stuff you talk with friends about like, oh, building a fund or something like that, but we had no real work experience, industry experience to do that or any real, there's no tangible real sort of outlook to do it, but it's more so a pipe dream, so to speak.

[00:11:20] Zac Hogg: But, yeah. He was actually pretty good at like picking single ticker stocks and stuff like that. And he'd floated the idea of like, Oh, there's this thing called Bitcoin. You might want to be interested in it. You might want to read up on it. You might not want to look at it.

[00:11:34] Zac Hogg: And so that was at the time that I was, probably on the way out from PwC. And so this is a couple years before I joined eToro. Timeline wise, and I was, reading up more on it, learning about it, what people normally do. Like, they buy a little bit of it. They hold it on a Coinbase account.

[00:11:48] Zac Hogg: And then they read some newsletters that they get emailed from their other friend about it. And then they continue to learn a bit more about it. And then they, figure out those other L1s or other altcoins. And I started to dabble with those a bit. So that kind of piqued my curiosity, but again, it was hard to learn about this thing other than.

[00:12:05] Zac Hogg: Like I just said, which is like getting emails or getting Twitter screenshots from people about random stuff. And during my time at IFF, while I was, doing all this dabbling on the side, realize, I work in an SEC reporting role I know how to do these 10K reports, SEC reporting is not going to change.

[00:12:23] Zac Hogg: Five, 10 years down the road. But if I would, but I want to do something, learn something, it's a time is now to try this, before this does become a bigger thing. It'd be good to, get in a little bit before, before it takes off even more than it already had at the time.

[00:12:38] Zac Hogg: Right. So, so he got me interested back a couple of years before I actually went, and started looking for roles in web3. 

[00:12:46] Zac Hogg: At the time, I don't think we called it web3, we just called it crypto. But or digital assets, I think, but we hadn't learned that mnemonic yet. I don't believe, but anyways, so he got me interested in it and then, sometime in 2020 I think in the summer I said like, okay, like, I think I'd like to get a number two role in finance, it's some sort of like crypto digital asset shop. Doesn't matter what, just want to get in and start doing something, start learning start doing this, for real, like every day. And it was tough because again, like things hadn't really taken off so much yet. Like there was things like Blockfi.

[00:13:21] Zac Hogg: That we're taking off, especially like in New Jersey, they had like a main sort of office or a lot of roles. I think, like Coinbase obviously at the time and then maybe like Gemini and like Blockchain.com, I think. So there's these few listings and roles for like some sort of accounting role, but like never really stuck and there wasn't really the right fit, especially for me as someone who's like a little junior.

[00:13:44] Zac Hogg: But I was very fortunate enough to come across a posting on LinkedIn for eToro. to be an Assistant Controller with only like, three to five years of work experience. And they're just looking for really a CPA to help them do accounting. I was like, so it's perfect fit. And like you were introducing eToro in the question. 

[00:14:03] Zac Hogg: Really the introduction is only needed for the US people. Everyone outside the US knows what eToro is. They're very big company. But in the US are very small. So they had just started their money services business or MSB, I think in June of 2019, so it'd been around for about a year, but the product itself hadn't been in the US for like almost a decade.

[00:14:23] Zac Hogg: They really had no US presence. So they were looking to just get started with the MSB business, built out an equities broker dealer, then eventually get into options as well. So it was a point in time where they were very small. Not very much US brand presence. I happened to come across it.

[00:14:39] Zac Hogg: I think I even applied to this posting on LinkedIn twice. It just like, spun for a while. And then a couple months later I applied to it again. That second time it actually got picked up. I had a phone call with a few people and it went right from there. They were very excited to have someone like myself with the background that I had, and I was very excited for, again, like I said, number two role in finance.

[00:15:02] Zac Hogg: It's something crypto related. 

[00:15:04] Umar: Was there at the time something with respect to accounting about blockchain that also made you curious about the technology?

[00:15:14] Umar: Because you're obviously like a CPA, did you look at it also from an accounting lens? Because when I first started to learn about it, also like read Bitcoin, put some money there.

[00:15:23] Umar: But for me, when I start to look into how it impacted accounting. Like, yeah, I would say that even piqued my interest even

[00:15:33] Umar: more. 

[00:15:33] Zac Hogg: Yeah. So, so I've had this kind of conversation with one of the engineers here. That oddly enough, studied Masters of Accounting at the University of Texas. 

[00:15:42] Zac Hogg: But anyways he asked me this, I think it's the point you're trying to get to, which is like, Blockchain has like this solution for like accounting where I can get a transaction on chain and it's like an AP for someone's AR. And then we do the transaction hash and then it like nets at everyone's books.

[00:16:03] Zac Hogg: Yeah that's not really here yet. I don't know when it will be here, but that answer is only from now. Like back at eToro days, it was really purely just to be like, I want to get into crypto digital assets, web3 of some variety. I want to learn how to do this. I just want to learn more about this.

[00:16:23] Zac Hogg: And again, at the time that was just like, learning a bit more about Bitcoin, learning a bit more about Ethereum, learning a bit more about what proof of stake is. Because those assets were proof of work at the time, understood, how mining worked wanted to learn other stuff about it.

[00:16:37] Zac Hogg: It was less so about the sort of that promised horizon of like, triple ledger accounting on chain, everyone's transactions fully immutable or, public record sort of stuff. Obviously, these things were interesting as a technology for other use cases, but as it related to accounting, I would say less so.

[00:16:57] Zac Hogg: It was more so just the ability to work in this space and to learn more about it. In other use cases that are already out there and prevalent.

[00:17:06] Umar: Before we continue, let's take a quick commercial break. When I started this podcast three years ago, I always wanted it to be the tip of the iceberg, representing something much greater. Our growing community is something I'm immensely proud of. 

[00:17:22] Umar: And so when we launched the first of its kind Crypto Accounting Academy at The Accountant Quits to train accounting and finance professionals on how to manage a business using crypto.

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[00:19:53] Umar: Now, So you worked for little bit more than two years at eToro. And in December, 2022, you joined the Solana Foundation. I think all the listeners will be familiar with what Solana is, but the Solana foundation is a nonprofit organization, which is dedicated to the decentralization, adoption and security of the Solana ecosystem, as stated on their website. Now, a lot of people listening right now and looking at you, you have this very privileged position to be the Financial Controller at Solana Foundation. And I'm sure a lot of people would want to be in your shoes. Now, could you take us back to when you found out about this new opportunity at Solana Foundation, how the hiring process looked like and whether your previous experience at eToro was the key difference in being hired?

[00:20:46] Zac Hogg: I would say definitely the time that I had at eToro was like very helpful to get an opportunity like this. Like when you're looking to join like a major Layer one protocol some sort of like, mining company, validator company, and they're going to work in finance and accounting.

[00:21:03] Zac Hogg: They want to know that you have an understanding of how digital assets work. How crypto works, how doing the accounting for this stuff works. And I know I didn't get into it as much in the last question, but when I was at eToro, like what I did was, is I, Whenever you join anywhere as like the first CPA, it's always going to be the same sort of rite of passage.

[00:21:21] Zac Hogg: There's going to be someone on the outside that's not the CPA, they're not the internal CPA some sort of accounting background, and they're doing, outsource bookkeeping, outsource accounting, something. There is some sort of GL out there. There's some sort of QuickBooks online account or something like that.

[00:21:37] Zac Hogg: There's some sort of you know Xero or probably not Netsuite, something like that out there that someone's doing some accounting, some record keeping, there has been some sort of, perhaps there's been an audit done who knows. But really the task is like taking what's been done by someone else, like part time.

[00:21:55] Zac Hogg: And then bringing it internally and then you're running it and you're building that out internally. So that was specifically what, Solana Foundation was looking for at the time. So they had just built out a US subsidiary, but they didn't really have anyone running it from a financial operations or like a true, like, CPA background perspective.

[00:22:13] Zac Hogg: So they were looking for someone to help them really. Iron out what they were doing financial operations wise with their US subsidiary, but then also help also again, internally bring things together as like their first CPA from like the outsourced bookkeepers.

[00:22:28] Umar: And what were your first responsibilities at Solana, like when you first started out with the new role? How did the team maybe look like? And yeah, what was your first responsibilities? Like, was it working on the financial reporting process, streamlining operations or something else? 

[00:22:47] Zac Hogg: Oddly enough, in both of the opportunities that I've had, eToro and the foundation now I just, as you said, like, worked about two years at eToro. So, so basically the way it lined up both times was I was joining at the very end of a calendar year, like around December, and then there was a quick turnaround and there was all of a sudden at the beginning of the calendar year, and both of these were normal year ends of December 31st.

[00:23:10] Zac Hogg: So what that meant was, is within like a very short time span, I was going from just like just starting and then there was the end of the year and this is presumably some sort of audit that happens, right? 

[00:23:23] Zac Hogg: And even working in, SEC reporting at PwC, generally when you really advance a level is when you go through, some sort of year end audit of some kind, whether it's you're a PwC and you're doing the auditing and you go through a busy season or a busy season or two auditing a few companies in their full, like, yearly financials or their 10K or earnings releases or quarterly reports.

[00:23:46] Zac Hogg: Or you're doing them and you're preparing them and you're getting them audited by, some larger audit firm and then you release the 10K or the 10Q's or the 11K, whatever. Like that's like every sort of kind of level up, right? And then, so when you come to this, the FinTech experience where not like much is built that's when you really start to learn, like what there isn't, what you need to continue to build out as well.

[00:24:09] Zac Hogg: Right? So. when I was at eToro, there was a couple of bookkeepers. I had gotten them through like an audit or two. And this is that this was again, like I said, a very small business at the time, just doing like crypto MSB stuff. And this was just before Bitcoin had hit 20k in November 2020 when I joined. So there wasn't as much activity there.

[00:24:29] Zac Hogg: So that gave me a little bit more time to really like onboard and learn stuff. Whereas at Foundation, bigger company, lots of grants, lots of stuff happening. Even when I joined after FTX blew up, of course, lots of investments, lots of things happening. Lots of, investment in the developer community and bringing developers to Solana, right?

[00:24:49] Zac Hogg: So, bringing users. So really the main difference was , you have to do your own onboarding experience, right? When you're like the first CPA, you have to learn, how AP is being done, how AR is being done, how bookkeeping is being done, how the on chain transactions are being tracked, how the wallet addresses are being tracked.

[00:25:09] Zac Hogg: What tools you're using to track all these transactions or what tools you should be using to track all these transactions, how T&E is being done, how payroll is done, all these sorts of things. It was like a, there's like a self onboarding, when you're like going to be like a controller or whatever, CFO, there's all these different financial processes and you need to get to the bottom of how each of them is done and how you'd like to do them going forward.

[00:25:34] Zac Hogg: So that's essentially how both roles went. I would say just like one was on steroids compared to the other. Cause at eToro, I was just like part of a very small US team. Not as much happening. And there was a controller already working that right. And he was showing me the ropes, whereas at Solana I was taking over for a CFO that was on his way out as well as like, learning, you're learning all this web3 stuff at the same time, all the on chain stuff.

[00:25:58] Zac Hogg: Whereas etoro was very crypto adjacent, I'd say. It was an FS company moving in cash, moving out cash based on trade volumes, whereas Foundation was running a business. 

[00:26:08] Umar: So if there's people listening who, they have personal experience with crypto, but as you said, they don't have that working experience. You joined, you mentioned at eToro, you had some experience with their crypto MSB business. And for the listeners, MSB means money services business.

[00:26:25] Umar: It's typically for a company that exchanges like currency and they would have to have a money services business license. 

[00:26:33] Umar: Now Yeah, for those people who are like new to crypto or who also aspire to work at a web3 company, how did you go about learning like these different tools, like what do you have to use like how to be very efficient at getting all these data from the blockchain into your financials, was there resources, were there people helping you out?

[00:26:53] Zac Hogg: Yeah, so that's a good question. I think in this space, it's really a lot of like learning by doing. So again, in eToro land again, like, it just like, kinda like an MSB, like you said, money services business in the US where you're really just, you just go into the platform and you buy an asset and then you hold the asset on the platform, right?

[00:27:14] Zac Hogg: So, for us, in terms of accounting, it's just as simple as like, okay, is there cash on the platform? Then it's reported as cash. Does the cash move into another asset? Okay. Then, another entity or someone else in the food chain is gonna, hold some Bitcoin for us on behalf of the customer.

[00:27:31] Zac Hogg: Right? So, there's not really too much accounting going on there other than like, keeping track of, the systems, like what's in cash, what's being held as Bitcoin, what's being held as ETH, what's being held as these other assets. Right? So that, that is more just relying on other teams and other departments, to do that for you.

[00:27:47] Zac Hogg: And then you just recording the number on the balance sheet and then you record it off the balance sheet. But if you don't want to report that on the balance sheet anymore, and then you record it as a disclosure item, that's being held for customer. Customers in terms of assets. But yeah, in terms of actually being like onchain in the web3 experience, a lot of it is like, figuring out who does these things.

[00:28:07] Zac Hogg: When you join, like that list I gave you of like AP, AR, on chain addresses, what wallets we're using, it's figuring out who was doing that at the time or who was doing something closest to that at the time. There was people within the team that dealt with, making on chain payments.

[00:28:22] Zac Hogg: So obviously they were going to be the people I talked about, like how that was done. But also like the bookkeepers were already doing bookkeeping for on chain transactions. Right. So the outsourced bookkeepers were going to be like the first resource for me to learn how things were being done at the time.

[00:28:37] Zac Hogg: Right. So, there was a few people internally that, helped already do custody stuff. And asset stuff. So, obviously work with them to figure out what they were doing and figure out what we wanted to do going forward. And then the bookkeepers were the ones that were already using like blockchain explorers, like the Solana explorer, like Solscan, these sorts of things to track things down or to, get lists of transactions.

[00:29:01] Zac Hogg: And then from there, it was really just more my own, you know, pick your own adventure in terms of figuring out, okay, There's gonna be other tools out there. Let's go and talk to as many tools and providers out there as we can to learn what else is there for us to use. Right. Cause like you're gonna, join and figure out, okay there's things being done right now, but then you just have to go and actually just like going to do research.

[00:29:22] Zac Hogg: I even do that still today for a variety of systems and financial operations that we do. I am always You know, whenever something comes in, maybe I'm not proactive with trying to look for things, but when I am, I usually find a few things, but whether it's AP, whether it's AR, whether it's like, subledger tools, GL systems, payroll providers, token compensation, always looking for different tools out there.

[00:29:46] Zac Hogg: Taking demo calls, reviewing things, giving feedback relevant for Solana specific ecosystem and other Solana users just because it's like an iterative process to continue to improve your accounting tech stack, and what you're doing, but really you have to go and just like get your hands dirty and like just try it.

[00:30:05] Zac Hogg: Try out stuff, try to see what's out there. See if these tools are relevant for you. And really a lot of times you'll just see like, okay, this tool can help us do something a little better than today, but doesn't have these other things that we need that we already have. That's usually the frustrating part when you want, when you go and explore and do some research is like, okay, there's these tools out there.

[00:30:26] Zac Hogg: This can help. But it doesn't help us do what we already do today, so that the lift isn't gonna be worth it in the long run, which is a lot of accounting is a cost benefit. Yeah, we could do this accounting perfect 99. 9 percent of the time, but it's just as material as correct as this other thing and the other thing's a lot easier to do.

[00:30:45] Umar: Yeah we'll touch on tooling in a bit, but first I just had a question on building out the department. So we've had one accountant actually from your team join us earlier this year at the Crypto Accounting Academy. I want to ask you, and maybe this can give some ideas to other L1s, L2s, or other protocols. How does the team look like today?

[00:31:08] Umar: Are you still working with like, external accounting providers or who kind of does what, how big is the team?

[00:31:16] Zac Hogg: Yeah, so, so when I joined it was really just like the president and I that were really internal doing finance full-time and really just me us full-time. And the President obviously had many other responsibilities. 

[00:31:26] Zac Hogg: But yeah, about seven or eight months into, my time at Foundation, we'd already built out our own internal team and we're already rolling off our outsourced bookkeepers. You're always going to be there's always some sort of outside, counsel or consultants, right. In terms of like taxes and these sorts of things. Or whenever you need like help with, specialty accounting, you might have like a specialty accounting firm you use, but in terms of like everyday bookkeeping, everyday accounting and finance, we basically off boarded this other firm within, within a couple of quarters.

[00:31:57] Zac Hogg: And we basically, replaced them with a couple internal folks. So like we have a staff accountant and a senior accountant, and then myself and then a CFO as well. So, the team went from really just a team of one and a couple other, part-time people to a team of four or five.

[00:32:13] Zac Hogg: We also have a headcount related to FP&A now too.

[00:32:16] Umar: Okay. So yeah, it's a small team.

[00:32:18] Zac Hogg: Yes, it's still pretty small, but I think it's a, around the right level, I think especially where I'm now we want to make sure we're operationally lean cause we don't we also intentionally, don't want to grow or have, like a heavy head count.

[00:32:31] Zac Hogg: That was one thing that at my time at eToro, it was like very evident, like, When I joined, like I mentioned it, all of a sudden Bitcoin hit 20k for the first time and then the market started running and when the market started running started making a lot of money. So it's like, oh, there's a lot of money and there's a lot of, especially a platform like eToro, numbers are going up, the bars are green.

[00:32:53] Zac Hogg: That's when like really new people get in and start getting active and there, there's more cash being, going on the platform. And that's when it's like, Oh, we think we might need more customer service people to help with that. And to an extent you're right, except that if you staff based on the high, the high volatility period of May 2021, and nothing's happening the rest of the year, then you're overstaffed pretty quickly.

[00:33:19] Zac Hogg: Right. So, so that's something intentionally think we do here is we don't want to, you know, overgrow or overhire, for roles that we might necessarily not need or for longer term, because the more people you have, the more operational, support you need as well. Right. So, so yeah, four or five might seem big might be small, but for us we try to be intentionally lean and focus on, the key areas that we need to be working on.

[00:33:45] Umar: All right, so I have a follow up question. The bigger the Solana ecosystem actually grows, how does that impact the Solana foundation and the scope of work that you guys in the finance team have to do on a daily basis?

[00:34:00] Zac Hogg: Yeah, no it's a great question because one of our, like the executives has a chart that they like to show every offset or every few months, which is as the Solana ecosystem is growing, intentionally the size of the foundation, should be at least relatively, if not in absolute value should be, starting to drop off. So as the Solana ecosystem is growing, that's great. That's what everyone wants to see. But that should also mean that the opposite is then true. The foundation is, not growing and getting smaller.

[00:34:29] Zac Hogg: Because it's need is less prevalent or less relevant, right? That's the point is that the ecosystem should just be on its own, right? So for us I'd say that over time it should be just as consistent, right? So as the Solana ecosystem is doing more stuff, arguably we should be doing less stuff as well, or have lesser need for a headcount.

[00:34:51] Zac Hogg: Right. So over time, people will even there's a pattern of people that will leave the foundation and become a founder themselves and build things on their own. And that's really like the, really the win, right? But but yeah, I think for us, it's a little different when you're finance because if there's more stuff happening in the ecosystem, that could mean we're giving out more grants.

[00:35:11] Zac Hogg: Or that could mean like there's like a lot of people attending Breakpoint. There's like, sponsorships and tickets and all these things that like fall back on finance. So let's see. Yeah, but really the answer is like, it's going to be a steady state. Like we're not going to be looking to grow people.

[00:35:27] Zac Hogg: Really it would only just be the opposite would be true. It's like we would either be the same number or we'd be less.

[00:35:33] Umar: All right. Now you've been a frequent speaker for the last class that we have at the Crypto Accounting Academy. And I'm really grateful to actually have you come on three of our cohorts now so far. And actually one of the recurring questions we have from each cohort from the students is about the web3 tech stack for accounting.

[00:35:57] Umar: So. I'm curious to ask you for the listeners this time. If you could share, what are the web3 tools that you use that also integrate with Solana. 

[00:36:07] Zac Hogg: Yeah, no it's always great to speak with the students or younger or newer professionals in the space. So wanted to thank you for what you're doing there and what you're building for all these people that want to get in the space.

[00:36:16] Zac Hogg: I think it's great! So yeah, that's always a popular question. Like, what tools do you use to do these things? 

[00:36:22] Zac Hogg: There's a few different things that we do use. Obviously like the first thing is of course like, block explorers are always something we're always using.

[00:36:29] Zac Hogg: Just to see like transactions on chain. So I usually default to Solscan I used to use the Solana Explorer a bit more. I know some people like Solana FM. For whatever reason, I'm just like treating my core just usually just default to Solscan when looking at stuff.

[00:36:43] Zac Hogg: Just like on, just like for on chain transactions. When it comes to stuff like AR and AP, we're not at a stage like where we're super advanced doing like on chain stuff and needing like other specialized tools. So when we do on chain AR, for example, like, we might get a payments on chain, but they're generally in stable coin. So that's like very easy to run through the back end. That's just like a bank account is like a stable coin address or a stable coin program token accounts address. And then that's just like a balance. I'll just like record like a bank account.

[00:37:15] Zac Hogg: Of course there's listeners on here. They're like Whoa Whoa Whoa! Like you can't do that because then the stable coin is recorded one for one with the reporting currency and the USDC isn't always one for one with US dollars and you might be right, And I think the caveat there is so yes, I'm a US trained CPA.

[00:37:33] Zac Hogg: I'm a Canadian trained chartered professional accountant as well. But the Solana Foundation is Swiss based, right? So, we're not always talking one to one. As well, in terms of the rules that we're using. 

[00:37:47] Zac Hogg: So we have a few different accounting standards in Switzerland, but it's also based on who your auditors are, what your auditors will agree to, how well do you argue the point, right?

[00:37:58] Zac Hogg: So, you know, our foundation when we use stable coins, we're never, transacting with them at discounts or premiums. We're really just transacting with them as a placeholder for US dollars. And their on chain US dollars and when we ever redeem or mint, it's always one for one.

[00:38:18] Zac Hogg: And when we look at the prices throughout the year or at the end of the year it's still at 99.9 or 1.0001. And we put a memo in to memorialize that, but we take a very very convenient practical expedient and that, our stable coin balances are really one to one with that currency.

[00:38:36] Zac Hogg: So that helps a lot in terms of being able to do the accounting a lot more simplified. 

[00:38:41] Zac Hogg: But because of that, we don't need like specialized tools to be like, okay, this on chain transaction is for this AR invoice. You can just match that up with like manual bank transactions. Being stablecoin transactions.

[00:38:52] Zac Hogg: So it makes things a lot easier for us. And that means we don't need specialized tools to really do that. Other than just like, again, the blockchain explorers with the transactions. 

[00:39:02] Zac Hogg: Then separately for AP. So AP is a little different. So for AP we actually need to make payments and do that sort of stuff.

[00:39:09] Zac Hogg: And, one thing I think with tooling that happens is that, like I said earlier about, something comes along. And it does something that's helpful. It doesn't do the other stuff you already need or you already have, so your lowest common denominator isn't met and you can't like move ahead with a new tool or you don't want to use a new tool for just one little thing.

[00:39:28] Zac Hogg: And so for AP, there's a lot of tools coming out like crypto AP and doing crypto AP on chain or, connecting wallets and stuff, which I think is great. The problem is like, I already have a platform, an AP solution, bill.com, but it has everything in it. So, it's a true single database of all the AP stuff, because I can record things that aren't paid in bill.com as paid, right? So that means is I can get everything in there and do all the same approvals, all the same workflows. There's just that when it comes time to payment, I'm going to have to do the payment somewhere else. And that I think is what's important. Is like people are building things that are just like crypto specific sometimes.

[00:40:11] Zac Hogg: It's like great, but like businesses are on chain and off chain. I didn't need everything in one place, right? So the more that we can have fiat legacy stuff with on chain stuff in one system I think is what will be the, like the more dominant player, the more dominant sort of system or the better version.

[00:40:33] Zac Hogg: Right so, today we follow a fiat legacy banking rail system because it allows for marking things as paid. You can do stuff outside the platform so we can still do all the same rails, but then it's just, using other tools like Airtable databases to come up with all your payments that you want to do.

[00:40:51] Zac Hogg: And then from there, we do have some other tools for on chain payments. So. For a long time, we were using Zamp, which was built on Solana for a while. They were very very great to work with. They built out like a very easy to use, like, batch payments tool, like CSV upload, batch approvals, very intuitive tool, great to work with, built a very strong tool. 

[00:41:12] Zac Hogg: And now we moved to the, using some, like, custom APIs and working with, like custodians or other wallets to make those payments. But Zamp was what we're using for a long time that worked very well. Trying to think of like other stuff that we use. 

[00:41:25] Zac Hogg: Obviously subledgers are , usually the most popular question when you get into this topic. And for subledgers, generally what I find is that there's a lot of companies that are building subledgers. And they obviously build the EVM first because for historical purposes and because it's, the largest altcoin out there.

[00:41:45] Zac Hogg: So, so they're generally building for EVM and, so ERC 20 and Layer 2s, right? So when they start building on Solana or for Solana, they generally build only with this concept of withdrawal authority addresses are like main addresses. They don't build with stake authority addresses, or sorry, stake addresses in mind.

[00:42:04] Zac Hogg: So the problem with that is, Solana has this concept of withdrawal authority addresses and stake addresses. And these are addresses that are owned by other addresses, essentially. And so then the problem is when the subledgers are built, they're not built with that logic in mind. And so the subledgers are effectively not usable or not useful.

[00:42:26] Zac Hogg: Unfortunately, because they're just not built with this logic and we do a bit of native staking on chain. So we need that logic built in if we're going to use a subledger tool. It's just a matter of fact, right? So, so there's a lot of subledgers out there that don't really get this built.

[00:42:42] Zac Hogg: Don't really have that built. But there's a few that do. So there's the current subledger we use is Cryptoworth. So that they have that kind of, they were like one of the first ones in the market that were able to build that sort of functionality, that logic, that like this address owns other addresses, transfers between these addresses are just the same thing.

[00:43:00] Zac Hogg: They're not like actual sends or receives, they're just like actions on chain. And then the actions within this address that it owns are owned by that address or the action of pulling in that address into that address that it's owned by. So these things are helpful for us.

[00:43:15] Zac Hogg: But, yes, so Cryptoworth is the tool we use today. That built in that logic. 

[00:43:19] Zac Hogg: There is a few other subledgers out there that are starting to build that logic as well that we've reviewed. But but, yeah, it's. Solana is admittedly like a little tougher and tougher for that.

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[00:45:09] Umar: For people who are staking their assets on Solana as the Financial Controller, what's the tool that you would typically be using to track like the amount of staked assets, to track the amount of staking rewards that you would receive or how would your financial process look like for that? 

[00:45:27] Zac Hogg: You mean like, internally here or like just like anyone that wants to try to do that themselves? 

[00:45:33] Umar: So for any company that has Solana staked, like to just for them to understand the financial process.

[00:45:41] Zac Hogg: Yeah, so like if you're staking on chain, like natively what you need to do or what you're going to be looking to do is you want to. One, you're going to have a withdrawal authority address that owns other stake addresses that are then actually doing the delegating and staking. So.

[00:45:57] Zac Hogg: You need something that rolls up one, my balance in a withdrawal authority address, but then two rolls up my balances in the stake addresses. Then what happens next is the staking rewards are going to come through those staked accounts and the staking addresses earn staking rewards, not through like atomic transaction hashes.

[00:46:18] Zac Hogg: So if you're like, look on like, other chains to come, sometimes it comes through as like actual transactions. So the receives of SOL are what I call reward slots. They get dropped into your staking address. And so tools like Solscan you can see that in there.

[00:46:34] Zac Hogg: It'll show that they've gotten better at showing these things. But that's the other part. It's like, so you need to one you need to know that relationship between the two types of addresses and then two, you need to know that , the staking rewards are coming through in transaction hashes.

[00:46:47] Zac Hogg: So if you're just looking at hashes, you're not going to see them. You're not going to find the staking rewards, right? So, yeah. So that increasing balance is added to these reward slots. And then now there's MEV. Now there's the GEODE staking client that a lot of validators use that now gets, through the GEODE Merkle Authority, you got the minor extracted values.

[00:47:05] Zac Hogg: So. That is actually a transaction hash and generates by one, one signer. I could recite a few characters of the, of that address, but I don't think that would be helpful for anyone on the call. So I'll keep that to myself. But but that signing address is the GEODE Merkel Authority.

[00:47:19] Zac Hogg: So you'd see transaction hashes now on stake accounts as well for receives of that MEV. Those are like the kind of the core and the crux of trying to do that accounting on chain. And if you're someone that's more retail. And you're looking for tools for that.

[00:47:35] Zac Hogg: I think it was awaken.tax is a tool I've used and demoed out and provided feedback to their team recently awaken.tax is probably the best one that I've seen thus far in terms of giving you both options. Do you want to track on rewards as they come in at fair market value, or do you want to track them when you actually withdraw the stake?

[00:47:54] Zac Hogg: So that gives kind of power back to the person in terms of their own tax approach, which is Do I have dominion and control over this when I'm receiving the reward slots? Do I want to record that income event at that time? Or do I want to record the income when I've actually withdrawn the stake?

[00:48:10] Zac Hogg: Or I don't think that the creation of an asset is itself an income event.

[00:48:16] Umar: Also wanted to like, in the subledger. How do you see the data in like the subledger? Because I was just speaking to someone yesterday who was really not satisfied with how one of the subledger they're using, how the staked assets are being reflected in that subledger. Actually, they were not being reflected.

[00:48:33] Umar: That's why they were like, so unhappy.

[00:48:35] Zac Hogg: Some of these platforms that can give you the option to do, you know, staking rewards when you receive them, or, you want to wait until you withdraw it.

[00:48:42] Zac Hogg: There's a few different ways to do that. In terms of like business, then you need tools that can do, those same things. So what you're looking for in a subledger tool is a tool where. In my sort of like perfect world is one where I can enter in a withdrawal authority address and then when you enter the withdrawal authority address, that subledger tool will then know like what staking addresses are associated with it.

[00:49:06] Zac Hogg: So there's a few different ways to do that, but there's ways on chain that you can find staked addresses for a withdrawal authority address. 

[00:49:13] Zac Hogg: So, yeah, so you're looking for a subledger that can automatically natively pull those in. Otherwise the problem is then you'd have to define all the state addresses yourself and try to enter them all in as well into the pot for which I don't think is the ideal scenario.

[00:49:28] Zac Hogg: I don't think that works well. Once, once you have that, once you have that sort of native understanding of that linkage and they can pull on those different staking addresses, then that will allow the subledger to then understand that the transactions between these staked addresses, your other withdrawal authorities, this withdrawal authority address, they're all kinds of internal transfers, whether they're, yeah, moving a staked address to another withdrawal authority, whether it's withdrawing the stake d to a withdrawal authority that you own. Or to another withdrawal authority that you don't. So that native understanding is what you need to start doing the basic accounting. And then also then what should happen is again, you need the subledger to understand the reward slots and how staking rewards are not through transaction hashes.

[00:50:13] Zac Hogg: They're through the reward slots. Cause it's generally a subledger is looking for transaction hashes, not going to be looking for this. Right. So you need the subledger and the engineers and the people who built it to understand, what the reward slots and what staking rewards actually look like.

[00:50:28] Umar: Perfect. Thanks for sharing. My next topic that I want to go through is on your experience of going through an external audit. Now for the listeners, or if there's people joining who are not very familiar with what the purpose of an external audit is or how it's conducted. So external auditors, usually audit assertions such as completeness, existence, accuracy, valuation, to devise their audit procedures in order for them to have reasonable assurance, whether these financial statements are not materially misstated.

[00:51:04] Umar: If auditors are listening, they're very familiar with all that lingo I just threw out. Now, oftentimes the management letter from the auditors, they will serve to highlight some weaknesses in internal controls. 

[00:51:17] Umar: Now, given the lack of literature around setting up the finance function of web3 companies, especially around wallet management policies, I want to ask you if the Solana Foundation has gone through an external audit and what's been some of the learnings you've gathered on having proper documentation and policies regarding internal controls? 

[00:51:38] Zac Hogg: Another great question. I think this kind of leads back to the my practical expedient comment earlier, which is when we're having these conversations, we might not be talking from the same lens or the viewer might not be in the same sort of lens of like jurisdiction or rules and whatnot, because when you ask that question, it might be right in the sense of, someone again, maybe listening in the US or Canada or somewhere in Europe, where those.

[00:52:01] Zac Hogg: guidelines or expectations don't really exist yet or they're more informal. Because the Solana Foundation, like we mentioned is Swiss based. Switzerland has had for years a pretty substantive framework in terms of your web3 companies, web3 foundations.

[00:52:18] Zac Hogg: Audit standards for these foundations and related internal controls, expectations for these companies, businesses, foundations, organizations what have you. So, so yeah, so being in Switzerland, if you're a web3 foundation, you are registered with the Swiss Federal Foundation Authority, just like any other off chain fiat legacy foundation. 

[00:52:43] Zac Hogg: You're registered with the same authority and you do the same thing as any other side of the foundation, which is you file an annual report, which includes an audit of your foundation's financials.

[00:52:53] Zac Hogg: And because of those rules, like you have to go get an audit. So you go to, a Swiss audit firm and you get them to do an audit and they're going to have what, whether it's in house or someone else, they're going to have the framework for auditing web3 companies, and they're going to have an expectation of a list of internal controls, and they even give you a very thorough report about all the different controls and where you stack up in terms of, certain expectations that they have for how a web3 financial operations should be structured and how your internal control systems should be structured.

[00:53:26] Zac Hogg: So there is in fact a very detailed rubric, in Switzerland because this country has been open to this industry for a number of years that they have very well refined their process to do audits and to audit not only just financial substantively, but to audit, internal control systems and control environments.

[00:53:45] Zac Hogg: So in terms of, I think you're also then you're going to ask about like how long it's actually go. So because of that, it's, it makes it, I wouldn't say easier, but but it very much provides like a very good structure to that. So yeah, so as part of, having been at PwC for a couple of years, doing auditing, I have a good sense of like how audits go and how they're structured.

[00:54:06] Zac Hogg: And having been at a couple through eToro even before Solana Foundation yeah, really the auditors just trying to make sure the numbers make sense. And so for us, the auditors are going to want to make sure that the numbers that we report in this annual report on the audited financials to the Swiss Federal Foundation Authority that are, what we're reporting is accurate, materially accurate.

[00:54:28] Zac Hogg: That's the purpose of the audit and they want to make sure that we are then following the rules of, that the Federal Foundation Authority sets out for foundations.

[00:54:36] Umar: Yeah, so for the listeners, a takeaway that I want is, and we also go through this in the Crypto Accounting Academy, when sharing how to get audit ready. So oftentimes like accounting finance professionals, they're very busy in their day to day tasks.

[00:54:54] Umar: But what auditors are looking for is that you've actually documented all your financial process, accounting process, like auditors live by the maxim that if it's not documented, it's not done. Right. So, yeah, one of the takeaways that I wanted the listeners to remember is like, you actually have to document all your like for example, the wallet management policy, who has the authority to sign transactions, what's the process to store your private keys for example.

[00:55:21] Umar: So all these things are what auditors would actually be

[00:55:25] Umar: looking for at year end. 

[00:55:26] Zac Hogg: That's a great point. I think I was lucky enough when I was at PWC that I met touch on very briefly, but one of the public clients I worked on for a little while they had spun out from a, another public company. And so they were purporting for the first time under like SOCs 404.

[00:55:40] Zac Hogg: So like it was their first time being attested. On their internal control environment, their internal control system, and actually the operations of those controls. And so that, that kind of meant that I was like really in the weeds of how various business processes and KCFR key controls over financial reporting were built out and auditing or reviewing and whatever, all of these different business processes and all the documentation and how it was all, you know how it was all structured.

[00:56:10] Zac Hogg: So that, that was like a very that wasn't an audit where you just go in, okay the controls are the same as last year. Let's get a test of one, let's do it. Like, no, like we had to like basically audit the whole implementation of the whole control system for various, for all the relevant business processes to financial reporting.

[00:56:28] Zac Hogg: Right. So, that, that was a learning experience. I was, it was a learning experience and because of that, then it became very easy when I moved on from that. Okay. It wasn't relevant to my IFF experience, to be frank, but that's fine. But then when I moved to eToro again, like, nothing was really documented.

[00:56:44] Zac Hogg: So I could actually document out, here's how we do AR. Here's how we do AP, all these things that we're doing. And then here's the, here's what the key control is, or here's what I think the key control is. And then, it's a substantive audit, so no one really cares. But, they're just gonna, do a test of details.

[00:56:59] Zac Hogg: You document all that out. So then the auditors come, they're like, Hey, like, how do you do these things? Or like, let's do a walkthrough. So, okay here's the documentation. Here's how we do these things. And then you just roll that forward again to, to Solana. Those, all those various business processes I mentioned before, all of them touch financial reporting in some sort of way or fashion that they eventually all become a journal entry or a number of journal entries.

[00:57:21] Zac Hogg: Right. So, that, and that's what auditors are going to care about. They want to know how the numbers get in there. So that's the whole point of what I call BP KCFR business processes and key controls over financial reporting is document that goes through like all the different things that happen in terms of financial operations and all the different things that go into a number hitting the general ledger.

[00:57:41] Zac Hogg: And obviously outside of that as well is whole other piece of the ICS and the web3 company is all of the wallets and wallet management and asset custody is a whole different animal. But that at least is the business processes and key controls documentation is going to be, is going to be, An expectation in any type of business, especially for, when it comes time to the auditors, want to review that and walk through how everything gets done.

[00:58:05] Umar: Yeah, for the auditors, like proving the ownership assertion, especially if assets are held in a self custodial way and proving the completeness assertion is the most challenging for when they have to audit digital assets. So I believe they would be really stressing on whether the client has like good policies over there.

[00:58:27] Umar: And oftentimes this is why now in web3, like. A lot of audit firms have an exercise, which they call audit readiness, that they would come and get the client audit ready before actually doing the final audit. Now, I also want to go through some of the differences working as a Web2 versus web3 accountant that you've observed, again, to serve as a source of inspiration, perhaps for Web2 accountants.

[00:58:55] Umar: So if you had to compare and contrast as the role of a web2 Accountant/Controller versus someone in web3, what would you expect, let's say the web3 Accountant or Controller to be good at?

[00:59:10] Zac Hogg: Alright, so what the web3 accountant is good at compared to the Web2 accountant? 

[00:59:16] Umar: So, yeah what would the web3 accountant, let's say, what should they be good at? Which yeah, traditionally the Web2 accountant wouldn't have to do in their daily job. It's very new, right? So it demands a lot of self curiosity and willingness to learn. But If you had to hire someone tomorrow in your team, what do you really expect them to be good at?

[00:59:38] Zac Hogg: Right, good question. I think, the obvious answer is obviously some sort of understanding of, how on chain blockchain technology works and how on chain transactions work. You're going to need to know that and the web2 accountants and right. Maybe that's too easy of an answer but you're going to need to know like how transactions work on chain.

[00:59:57] Zac Hogg: You're going to need to know like how the technology works. But obviously there's. There's a difference, right? So you're just in web2, you're just dealing with like bank accounts and, some payment processors, right? So like in web3, like there's the whole, like, is that like the wallet completeness and this sort of thing?

[01:00:15] Zac Hogg: So, so there's just a whole other piece of like web3 accounting, which is just being if you use the word curiosity, I think it's more so like, you need to be more entrepreneurial in how you do accounting because you need to be ready to roll up your sleeves and like, figure stuff out.

[01:00:32] Zac Hogg: Because like there's no, sometimes there's no counterparty or a bank to tell you what a payment's for. Right. So you need to figure out what it is, and hopefully you have processes and procedures in place that you're going to do that anyways. But there's sometimes you have to like figure out, figure things out.

[01:00:47] Zac Hogg: That are a little bit more complicated than just like looking at it in the bank and asking the bank what the payment was for asking the listed counterparty, what it's for. 

[01:00:54] Zac Hogg: I think as well as, web3, I've been alluding to like in, in Switzerland, there being some more rules or, there being some some ways of getting things done because it's been around for a while.

[01:01:05] Zac Hogg: And in the US we're just like figuring things out or figuring out how we want to do some stuff. So, so what I find is in web3 accounting is probably more is always more interesting or there's always more stuff going on because in web3 there's always embedded native FX and anything you're doing on chain except for the stable coins, like I said, of course, but otherwise there's always like native FX.

[01:01:29] Zac Hogg: As well. Right. So you have to come with a lens of like, everything is already going to be more complex. And because that's more interesting, a little bit more exciting than just like, just like a basic business on Web2 or Fiat legacy rails. But. But you have to be more willing to, to, it's going to be more complicated.

[01:01:46] Zac Hogg: You have to be, more interested in, in, in doing something that's more complex. And I think what I'm lucky is that I went to a very good school that worked on like very like hard technical accounting pieces and solving complex things and turning them into succinct solutions.

[01:02:03] Zac Hogg: So like the Canadian CPA exams. Or CA exams previously you do these cases and it'd be like a 40 page case. If you go through the case, you have to analyze all the accounting things and you have to turn into a solution within a certain amount of time. It's sitting there in the exam room on the laptop, right?

[01:02:21] Zac Hogg: And that's really what, web3 can, sometimes be, day to day, which is like, here's some transactions on chain. It is to figure it out, turn it into something and then turn it into a journal entry, right? So, there's a constant taking something that's complex and try to simplify it to its core and say, like, okay, this is what's happening.

[01:02:44] Zac Hogg: Here's what the journal entry should be because it's this thing and then it balances itself out. But you don't really do that in Web 2. Someone gives you a journal entry worksheet and you just do it, right? So there's a lot of seeing new things, there's these types of transactions.

[01:03:00] Zac Hogg: And then figuring out, okay, like how does, how should this get into the general ledger? How should this be booked?

[01:03:04] Umar: Yeah. Thanks for sharing. On the episode that I had done with Patrick Camuso, so the Founder of a crypto accounting firm. So when he hires like accountants, he would typically make them read transactions on the block explorer. So yeah a hiring tip if there's someone listening right now, so you have to know how to read transactions on the block explorer different block explorers. 

[01:03:29] Umar: Zac i'm looking at the time. I want to be mindful Of the of your time so we can go through a last question and an exciting one. Not Related to accounting, perhaps. 

[01:03:40] Umar: I want to finish the episode by asking you, are there some projects in the Solana ecosystem today that you're excited about? They could be tied to web3 accounting and finance, but they don't have to?

[01:03:52] Zac Hogg: , Accounting and Finance, I always find it's more proprietarial type things being built as opposed to like open source things. So that's why it's always tough. It's like, oh, we have a need for this, but like, it doesn't like, there's no open source stuff. So like, it's not, it's hard to throw like a grant at it or something like that, right?

[01:04:08] Zac Hogg: So generally I'm not as like intrigued, but again, I'd love it for my own day to day job and doing day to day accounting and finance, but usually less intrigued by, stuff like that and more intrigued by, actual like on chain, use cases. I think.

[01:04:23] Zac Hogg: For me, and maybe it's for other people that listen to people talk about Solana, it's a broken record, but I think this, I think the Firedancer Validator client will be a big deal for Solana. So very excited to see that continue to progress. On its timeline. Yeah, that will provide Solana another validator client.

[01:04:41] Zac Hogg: And, today only Bitcoin and Ethereum have multiple validator or proof of work clients to do that. So that'll be a big deal. It's also, as was seen at Breakpoint in Singapore. Two months ago. It's a very sophisticated system and it will provide, it should provide a lot more transaction throughput for the blockchain itself.

[01:05:02] Zac Hogg: So these are big deals. So I think that's interesting to me. As well as there's these other things that are coming around like sling money is an interesting product where we're leveraging stablecoin rails or leveraging the Solana blockchain to create basically like a PayPal or a Venmo or interact e-transfer in Canada.

[01:05:23] Zac Hogg: Basically doing that on chain and within like within an app that can be used globally and you could do it not even person to person. You just do it. Between yourself. So you can move even money between your own bank accounts between countries instantly on chain for like, basically, for the cost of a penny, I'm not sure. But these sorts of things are interesting to me where you can move again. Really, it's really just, blockchain transaction across. Yeah, moving value over space and time for basically nothing, right? So that's another one that's interesting to me as well is, getting a Web2 front end with a web3 back end.

[01:06:01] Zac Hogg: I think those projects are always interesting because they it conceives itself to maybe bring in the masses on chain without knowing that they are, I think is always interesting.

[01:06:11] Umar: Honestly, I'm on the website of sling.money right now. You would never know this is like, there's blockchain behind it. It just looks like 

[01:06:19] Zac Hogg: Exactly. That's that is also what makes it so alluring. It gets rid of the the web3 funkiness, jankiness.

[01:06:27] Umar: I'll definitely check it out. This is more like for individuals, right?

[01:06:32] Umar: Rather than companies. Okay. I'll check now. Interesting. Zac, so the objective today of this series is really to share your experience and, have this be a source of inspiration for people who want to transition in this industry. 

[01:06:48] Umar: As closing thoughts, if there was one takeaway you would want to share, like for the listeners how would you summarize this episode for today or one message would you have for the listeners.

[01:06:58] Zac Hogg: Yeah, I think in terms of like web3 accounting, I'm not a CFO per se. I'm just a, just a Controller, the guy doing accounting and financial operations. But if you want to get involved in the space, you want to you do this day to day. The best time to start is obviously, it's obviously now you're never too late.

[01:07:14] Zac Hogg: The space is continuing to grow. More of these opportunities continue to get out there. Yeah. The best place to start is just by, just doing some stuff on chain, doing some transactions and the only way to do that is, not using, not do stuff on exchanges, but like, getting your own self custodial wallets, testing that out, testing out how the technology works, and then just meeting people that work in the space and looking for opportunities if that's your, if that's your interest, if you're, if your interest is more, yeah, on tools and if you're already in the space, you want to do this better I'd say, just, continue to, it's the same as the other example, but just continue to explore, research other things try them out and and generally you'll hopefully find something.

[01:07:57] Zac Hogg: There's a last question, which I like to ask to my guests before they leave is, do you have a favorite quote or let's say like a Maxim that you live by? Some people in my personal life might say, like, I like to say it is what it is, or, yes and no, like, sometimes this is just a number and you have to explain it and and then sometimes there's a lot of yes, this is an answer, but there's always different edge cases or exceptions to rules, right?

[01:08:21] Zac Hogg: And say, I'd say a lot of day to day now, especially with like Solana on chain, blockchain data and reviewing different tools and different stuff is like, okay, is it completely accurate? Like it, can it be reconciled and it's like almost like a broken record. And yeah, this was stuff, that even back to PWC, like, the key reports and test reports, is the data completely accurate?

[01:08:43] Zac Hogg: Right. It's very important stuff, but I think it is like, vital to do your role because again, like when you're working in Web2 get the banks, the bank information and bank transactions. It's all kind of their kind of there for you. But in terms of like getting actual like information on chain, do it yourself. DIY, right. So, you're getting, making sure that things are complete and accurate. 

[01:09:06] Zac Hogg: Is even more important and even more on you, the the accountant to do that. So that's very important. And then a fun one I'll throw out is you forgot the stake accounts is, I say it way too often to people building subledger tools. So I guess that's one to finish off on.

[01:09:23] Umar: Perfect. Zac, thanks so much for your time today. And not only for today, but for Yeah, for being a guest at the previous cohorts of our academy. I think the listeners can feel how generous you are with your time and with the knowledge that you want to share. And that's the feedback that we received as well from our students at the academy.

[01:09:46] Umar: So thanks a lot for that. And thanks for sharing all this knowledge. I'm sure this will help to inspire like a lot of people thinking to work in this in this industry. If people want to reach out to you or yeah, just connect with you. I'm sure you should be receiving probably too many of these requests.

[01:10:03] Umar: So maybe that's not a good idea.

[01:10:05] Zac Hogg: No, yeah, no, I appreciate it again. I thank you for for for, for getting all these interested people an opportunity or to start to learn about how to do this in their profession. 

[01:10:15] Zac Hogg: I think, I think this is great. I also appreciate the, the podcasts The few episodes that you can hear every now and then about someone's career as opposed to like a specific topic, I always think it's interesting how people have advanced through their careers.

[01:10:26] Zac Hogg: And I thank you for having me on This is great. And yeah, in of how to reach out to me, like I'm on LinkedIn at Zac Hogg and then all my letters are after that.

[01:10:40] Zac Hogg: That's the best way to reach out 

[01:10:41] Umar: Perfect. Well, thanks a lot for today Zac and we'll stay in touch.

[01:10:46] Zac Hogg: Of course. Yes. Talk soon.